<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1997
REGISTRATION NO. 333-32167
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SERVICEMASTER LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE ONE SERVICEMASTER WAY 36-3497008
(STATE OR OTHER DOWNERS GROVE, ILLINOIS 60515 (I.R.S. EMPLOYER
JURISDICTION (630) 271-1300 IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE ONE SERVICEMASTER WAY 36-3482710
(STATE OR OTHER DOWNERS GROVE, ILLINOIS 60515 (I.R.S. EMPLOYER
JURISDICTION (630) 271-1300 IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
SERVICEMASTER INCORPORATED OF DELAWARE
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE ONE SERVICEMASTER WAY 36-3858106
(STATE OR OTHER DOWNERS GROVE, ILLINOIS 60515 (I.R.S. EMPLOYER
JURISDICTION (630) 271-1300 IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
VERNON T. SQUIRES
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ONE SERVICEMASTER WAY
DOWNERS GROVE, ILLINOIS 60515
(630) 271-1300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
ROBERT H. KINDERMAN JAMES A. FLORACK
KIRKLAND & ELLIS DAVIS POLK & WARDWELL
200 E. RANDOLPH DRIVE 450 LEXINGTON AVENUE
CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10017
(312) 861-2096 (212) 450-4000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective as determined by
market conditions and other factors.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest investment plans, check the following box. [X]
<PAGE>
(Cover page continued)
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
TWO CORE PROSPECTUSES
This Registration Statement contains two proposed forms of core prospectus.
One core prospectus is intended for use with offerings of Debt Securities
registered on this Registration Statement. The other core prospectus is
intended for use with offerings of equity securities registered on this
Registration Statement.
DEBT PROSPECTUS SUPPLEMENT
This Registration Statement also contains a preliminary Prospectus
Supplement which the registrants intend to use together with the prospectus
included herein for use with the offerings of Debt Securities in connection
with a proposed underwritten offering of $150 million in Notes with a 10-year
maturity and $150 million of Notes with a 30-year maturity. The registrants
presently intend to consummate the offering described in the Prospectus
Supplement as soon as practicable after the Registration Statement becomes
effective.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 6, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 1997)
THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP LOGO
$150,000,000
% Notes due , 2007
ISSUE PRICE: %
$150,000,000
% Notes due , 2027
ISSUE PRICE: %
FULLY AND UNCONDITIONALLY GUARANTEED BY
SERVICEMASTER LIMITED PARTNERSHIP
Interest on the % Notes due , 2007 (the "2007 Notes") and on the %
Notes due , 2027 (the "2027 Notes") (collectively, the "Notes") is pay-
able semi-annually on and of each year, commencing
, 1998. The 2007 Notes and 2027 Notes may be redeemed at any time at
the option of The ServiceMaster Company Limited Partnership ("The ServiceMaster
Company" or the "Company"), in whole or in part, at a redemption price equal to
the greater of (i) 100% of their principal amount or (ii) the sum of the pres-
ent values of the Remaining Scheduled Payments (as defined herein) thereon dis-
counted to the redemption date, on a semi-annual basis, at the Treasury Yield
(as defined herein) plus basis points (for the redemption of the 2007
Notes) or basis points (for the redemption of the 2027 Notes), together
with all accrued but unpaid interest, if any, to the date of redemption in ei-
ther case. See "Description of Notes--Optional Redemption of 2007 and 2027
Notes" herein.
Each series of Notes will be represented by a Registered Global Security (as
defined in the Indenture) registered in the name of The Depository Trust Com-
pany (the "Depositary") or its nominee. Interest in the Registered Global Secu-
rities will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary (with respect to beneficial interests of
participants) or by participants or persons that hold interests through partic-
ipants (with respect to beneficial interests of beneficial owners). Except as
described in the accompanying Prospectus, Notes in certificated form will not
be issued. See "Description of Debt Securities--Global Securities" in the ac-
companying Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT (2) COMPANY (1)(3)
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<S> <C> <C> <C>
Per 2007 Note % % %
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Total $ $ $
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Per 2027 Note % % %
- -------------------------------------------------------------------------------------------------
Total $ $ $
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</TABLE>
(1) Plus accrued interest, if any, from , 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting" herein.
(3) Before deducting expenses of the Company estimated at $860,000.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters by Davis Polk &
Wardwell, counsel for the Underwriters. It is expected that delivery of the
Notes will be made in book-entry form only on or about , 1997
through the facilities of the Depositary, against payment therefor in immedi-
ately available funds.
J.P. MORGAN & CO. GOLDMAN, SACHS & CO.
BA SECURITIES, INC. FIRST CHICAGO CAPITAL MARKETS, INC. NATIONSBANC CAPITAL
MARKETS, INC.
August , 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY,
THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID
FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or by any Underwriter.
This Prospectus Supplement and the accompanying Prospectus do not constitute an
offer to sell or the solicitation of an offer to buy the Notes by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder and thereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or thereof or that
the information contained or incorporated by reference herein or therein is
correct as of any time subsequent to the date of such information.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PROSPECTUS SUPPLEMENT
<S> <C>
ServiceMaster.............................................................. S-3
Recent Developments........................................................ S-5
Capitalization............................................................. S-6
Use of Proceeds............................................................ S-6
Selected Historical Financial Information.................................. S-7
Description of the Notes and Guarantee..................................... S-8
Underwriting............................................................... S-10
Legal Opinions............................................................. S-11
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Information by Reference.......................... 2
ServiceMaster.............................................................. 4
Ratio of Earnings to Fixed Charges......................................... 5
Summarized Financial Information for The ServiceMaster Company............. 5
Use of Proceeds............................................................ 6
Description of Debt Securities and Guarantee............................... 6
The Reincorporating Merger and the Partnership Liquidations................ 19
Plan of Distribution....................................................... 20
Validity of Debt Securities................................................ 22
Experts.................................................................... 22
</TABLE>
S-2
<PAGE>
Unless otherwise indicated or the context otherwise requires, all references
herein to: (i) the "Parent Partnership" refers to ServiceMaster Limited
Partnership; (ii) "The ServiceMaster Company" or the "Company" refer to The
ServiceMaster Company Limited Partnership; and (iii) "ServiceMaster" refers to
the Parent Partnership and The ServiceMaster Company, together with all
entities affiliated with these two limited partnerships and their respective
predecessors. As described in this Prospectus Supplement and the attached
Prospectus, the shareholders of the Parent Partnership have approved a
Reincorporating Merger, which is scheduled to occur on or before December 31,
1997. The Reincorporating Merger will install ServiceMaster Incorporated of
Delaware as the ultimate parent in the ServiceMaster enterprise, and the term
"ServiceMaster" as used in this Prospectus Supplement with respect to periods
at and after the Reincorporating Merger refers to ServiceMaster Incorporated of
Delaware and its subsidiaries.
SERVICEMASTER
ServiceMaster provides a range of services to individual consumers, businesses
and institutions in the United States and over 30 other countries throughout
the world. ServiceMaster is functionally divided into three operating units:
Consumer Services, Management Services and International. Consumer Services and
Management Services are the principal operating units.
CONSUMER SERVICES
ServiceMaster Consumer Services provides specialty services to homeowners and
commercial facilities through seven market-leading companies. The services
provided by these companies include: lawn care, tree and shrub services and
indoor plant maintenance services under the "TruGreen-ChemLawn" and "Barefoot"
service marks; termite and pest control services under the "Terminix" service
mark; home systems and appliance warranty contracts under the "American Home
Shield" service mark; residential and commercial cleaning and disaster
restoration services under the "ServiceMaster" service mark; domestic
housekeeping services under the "Merry Maids" service mark; home inspection
services under the "AmeriSpec" service mark; and on-site furniture repair and
restoration under the "Furniture Medic" service mark.
ServiceMaster focuses on providing easy access to its various services and
establishing relationships to provide one or more of these services on a
repetitive basis to customers. Since 1986, the number of domestic customers
served by ServiceMaster Consumer Services has increased from fewer than one
million customers to more than 6,500,000 customers. The International unit is
primarily responsible for overseeing the Consumer Services businesses that are
conducted in foreign markets. The services provided by the seven Consumer
Services companies are part of the ServiceMaster "Quality Service Network" and
can be accessed by calling a single toll-free telephone number: 1-800-WE SERVE
or by contacting the individual companies directly.
TruGreen-ChemLawn. As of March 21, 1997, TruGreen-ChemLawn (following the
acquisition of Barefoot) was operating in 47 states through 198 company-owned
branches and 126 franchised branches. With over 3 million residential and
commercial customers, TruGreen-ChemLawn is the leading provider of lawn care
services in the United States and also provides interior plantscape services to
commercial customers. TruGreen-ChemLawn also provides lawn, tree and shrub care
services in Saudi Arabia through a licensing arrangement and in Canada through
an affiliate. The TruGreen-ChemLawn businesses are seasonal in nature.
In February 1997, ServiceMaster, for the benefit of TruGreen-ChemLawn,
completed the acquisition of Barefoot Inc. ("Barefoot") for aggregate
consideration having a value of approximately $237,000,000. At the time of the
transaction, Barefoot was the second largest provider of professional lawn care
services in the United States.
Terminix. With over 3 million residential and commercial customers, Terminix is
the leading provider of termite and pest control services in the United States.
As of December 1996, Terminix was providing these services in 45 states and in
Mexico through 316 company-owned branches and 250 franchised branches. Terminix
also provides termite and pest control services through subsidiaries in
Belgium, The Netherlands, Norway, Sweden, Ireland, the United Kingdom, Germany
and Mexico and through local licensees in 11 other countries. The Terminix
business is seasonal in nature.
American Home Shield. American Home Shield ("AHS") is a leading provider of
home service warranty contracts in the United States. AHS warranty contracts
cover the repair or replacement of built-in appliances, hot water heaters
S-3
<PAGE>
and electrical, plumbing, central heating, and central air conditioning systems
that malfunction by reason of normal wear and tear. Service contracts are sold
through participating real estate brokerage offices in conjunction with resales
of single-family residences to homeowners. AHS also sells service warranty
contracts directly to non-moving homeowners by renewing existing contracts and
through various other distribution channels which are currently being expanded.
As of December 31, 1996, AHS was providing services to approximately 503,000
homes through approximately 13,000 independent repair maintenance contractors
in 49 states and the District of Columbia. AHS also provides home service
warranty contracts through licensing arrangements with local service providers
in three other countries.
ServiceMaster Residential/Commercial Services ("Res/Com"). ServiceMaster,
through Res/Com, is the leading franchiser in the United States in the
residential and commercial cleaning field. Res/Com provides carpet and
upholstery cleaning and janitorial services, disaster restoration services and
window cleaning services to over 1.6 million residential and commercial
customers worldwide through a network of over 4,500 independent franchisees.
Res/Com provides its services through subsidiaries in Germany, Ireland and the
United Kingdom, through an affiliate in Canada, and through licensees in 13
other countries.
Merry Maids. Merry Maids provides domestic house cleaning services. With
approximately 225,000 customers, Merry Maids is the leading provider of
domestic house cleaning services in the United States. As of December 31, 1996,
these services were provided through 27 company-owned branches in 18 states and
836 licensees operating in 49 states. Merry Maids also provides domestic
housecleaning services in the United Kingdom through a subsidiary, in Canada
through an affiliate and in five other countries through licensing arrangements
with local service providers.
AmeriSpec. AHS acquired AmeriSpec in February 1996. AmeriSpec is a leading
provider of home inspection services in the United States. During 1996,
AmeriSpec conducted 85,000 home inspections in 41 states and Canada. AmeriSpec
provides home inspection services in Canada through licensing arrangements with
local service providers.
Furniture Medic. ServiceMaster acquired Furniture Medic in July 1996. Furniture
Medic provides on-site furniture repair and restoration services in all 50
states. As of December 31, 1996, these services were provided through 549
licensees. Furniture Medic also provides its services in Canada through an
affiliate and in two other countries through licensing arrangements with local
service providers.
MANAGEMENT SERVICES
Management Services is organized into three discrete operating units, each
providing a separate functional service on a nationwide basis. These units are:
Healthcare Services (including Diversified Health Services); Education
Management Services; and Business and Industry Management Services. The
services provided by the Healthcare Management Services unit and the services
provided by ServiceMaster Diversified Health Services have been integrated to
provide a coordinated range of services to the health care market.
ServiceMaster pioneered the providing of management of support services to
health care facilities by instituting housekeeping management services in 1962.
Since then, ServiceMaster has expanded its management services business such
that it now provides management of a variety of support services including the
management of housekeeping, plant operations and maintenance, laundry and
linen, grounds and landscaping, clinical equipment maintenance, food service,
energy management and total facility management. The Diversified Health
Services' portion of Healthcare Services provides management and other services
to nursing homes, skilled nursing facilities, assisted living facilities and
home health care agencies. ServiceMaster's general programs and systems free
the customer to focus on its core business activity with confidence that the
support services are being managed and performed in an efficient manner.
As of December 31, 1996, ServiceMaster was providing management of support
services to approximately 1,800 health care facilities and to approximately 700
educational and commercial facilities. These services were being provided in
all 50 states and the District of Columbia. Outside of the United States,
ServiceMaster provides management services through a subsidiary in Japan,
through affiliated companies in Canada, Japan, Germany, Mexico, and the United
Kingdom, and through licensees in 15 other countries. The International unit is
responsible for overseeing the management services which are provided in
foreign markets.
S-4
<PAGE>
INTERNATIONAL
The International unit oversees the management of support services and consumer
services in international markets through licensing arrangements, ownership of
foreign operating companies acquired by ServiceMaster and joint ventures.
The International unit currently owns controlling interests in Terminix Peter
Cox Ltd., a leading pest control and wood preservation company in the United
Kingdom; Terminix Protekta B.V. and Riwa B.V., each a leading pest control
company in the Netherlands; Anticimex Development AB, a holding company for the
leading pest control company in Sweden; and the Stenglein group of pest control
companies in Germany.
BACKGROUND
The Parent Partnership and its immediate subsidiary, The ServiceMaster Company,
were formed in December 1986 as limited partnerships to succeed to the business
and assets of ServiceMaster Industries, Inc., which began operations in 1947.
The principal executive offices of the Parent Partnership and The ServiceMaster
Company are located at One ServiceMaster Way, Downers Grove, Illinois 60515-
9969. Their telephone number is (630) 271-1300.
RECENT DEVELOPMENTS
Second Quarter Operating Results. On July 24, 1997, ServiceMaster reported
record revenues for the second quarter of 1997 of $1 billion, up 10.2% over the
comparable 1996 period, reflecting solid growth from base operations and
acquisitions. This marked the first time in ServiceMaster's 50-year history in
which quarterly revenues exceeded $1 billion. Net income of $75.7 million was
up 6.2%, with earnings per share increasing 21% to $0.40.
Revenues for the six months ended June 30, 1997 rose 10.3% to $1.8 billion. Net
income for the six months was $122.6 million, a 9.7% increase over 1996, with
earnings per share increasing 18% to $0.60.
Share and Option Repurchase. On December 31, 1995, ServiceMaster completed a
transaction with WMI Urban Services, Inc. ("WMUS"), a wholly owned subsidiary
of WMX Technologies, Inc. ("WMX") in which WMUS contributed its 27.76% interest
in ServiceMaster Consumer Services L.P. to ServiceMaster and, in exchange
therefor, the Parent Partnership issued to WMUS approximately 40.7 million
unregistered limited partner shares of ServiceMaster and an option to purchase
approximately 2.8 million additional shares of ServiceMaster's limited partner
shares (the "Option"). On April 1, 1997, the Parent Partnership completed the
repurchase from WMUS of all the restricted shares of the Parent Partnership
owned by WMUS and the Option (the "WMUS Repurchase") for the sum of
approximately $626 million. ServiceMaster financed the WMUS Repurchase with
short-term bank financing.
Share Dividend. On May 9, 1997, ServiceMaster's Board of Directors declared a
three-for-two share split effective June 25, 1997. All share and per share data
included herein have been restated for all periods presented to reflect this
three-for-two split.
S-5
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1997: (a) the actual consolidated
capitalization of the Parent Partnership and (b) the consolidated
capitalization of the Parent Partnership as adjusted to reflect the sale of the
Notes offered hereby and application of net proceeds therefrom as described
under "Use of Proceeds." No separate financial information for The
ServiceMaster Company has been provided in this Prospectus Supplement because:
(i) the Parent Partnership does not itself conduct any operations but rather
all operations of the ServiceMaster enterprise are conducted by The
ServiceMaster Company and the direct and indirect subsidiaries of The
ServiceMaster Company; (ii) the Parent Partnership has no material assets other
than substantially all of the ownership interest in The ServiceMaster Company;
and (iii) all of the assets and liabilities shown in the consolidated financial
statements for the Parent Partnership are located at The ServiceMaster Company
and at the direct and indirect subsidiaries of The ServiceMaster Company.
<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------
AS
ACTUAL ADJUSTED
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................ $ 91,047 $ 91,047
========== ==========
Current maturities of long-term debt..................... $ 16,324 $ 16,324
Long-term debt:
Notes payable.......................................... 386,001 386,001
Revolving credit facilities............................ 686,915 390,063
Other.................................................. 93,590 93,590
2007 Notes............................................. -- 150,000
2027 Notes............................................. -- 150,000
---------- ----------
Total long-term debt................................. 1,166,506 1,169,654
Total Debt............................................... $1,182,830 $1,185,978
========== ==========
Total Net Debt........................................... $1,091,783 $1,094,931
========== ==========
Minority interest........................................ 2,939 2,939
Shareholders' equity..................................... 402,559 402,559
Total capitalization (including short-term debt)......... $1,497,281 $1,500,429
========== ==========
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes are estimated to be approximately
$297 million. The Company expects to use the net proceeds from the sale of the
Notes to repay a portion of its borrowings incurred to finance the WMUS
Repurchase. The indebtedness to be repaid with the proceeds of the Notes was
incurred under a five-year revolving bank credit facility, which matures April
1, 2002 and bears interest at floating rates (equal to approximately 6% at June
30, 1997). Affiliates of J.P. Morgan Securities Inc., BA Securities, Inc.,
First Chicago Capital Markets, Inc. and NationsBanc Capital Markets, Inc. are
lenders under the revolving bank credit facility. See "Underwriting."
S-6
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The summary of selected historical financial information set forth below as of
and for each of the years in the five-year period ended December 31, 1996 has
been derived from the consolidated financial statements of ServiceMaster, which
statements have been audited by Arthur Andersen LLP, independent public
accountants for ServiceMaster. Such information is contained in and should be
read in conjunction with the consolidated financial statements and accompanying
notes included in ServiceMaster's Annual Reports on Form 10-K for such years,
incorporated herein by reference. The historical data as of and for the six
months ended June 30, 1996 and 1997 are derived from unaudited financial
statements which, in the opinion of ServiceMaster management, reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the financial position and results of operations for such
dates and for such periods. Historical results for the interim periods ended
June 30 are not necessarily indicative of the results for the full year. No
separate financial information for The ServiceMaster Company has been provided
in this Prospectus Supplement because: (i) the Parent Partnership does not
itself conduct any operations but rather all operations of the ServiceMaster
enterprise are conducted by The ServiceMaster Company and the direct and
indirect subsidiaries of The ServiceMaster Company; (ii) the Parent Partnership
has no material assets other than substantially all of the ownership interest
in The ServiceMaster Company; and (iii) all of the assets and liabilities shown
in the consolidated financial statements for the Parent Partnership are located
at The ServiceMaster Company and at the direct and indirect subsidiaries of The
ServiceMaster Company. For certain summarized unaudited financial information
for The ServiceMaster Company, see "Summarized Financial Information for The
ServiceMaster Company" in the attached Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- ----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT FOR PER SHARE
(UNAUDITED) DATA)(1)
OPERATING RESULTS
Operating revenue....... $ 1,828 $ 1,657 $3,458 $3,203 $2,985 $2,759 $2,489
Cost of services
rendered and products
sold................... 1,411 1,294 2,681 2,500 2,356 2,193 2,030
Selling and
administrative
expenses............... 260 230 482 451 415 393 326
Restructuring charges... -- -- -- -- -- -- 70
------- ------- ------ ------ ------ ------ ------
Operating income(2)..... 157 133 295 252 214 173 63
Non-operating expense... 30 18 43 74 71 55 37
Realized gain on
issuance of subsidiary
shares................. -- -- -- -- -- (30) (105)
Provision for income
taxes.................. 4 3 7 6 3 2 1
Cumulative effect of
change in accounting
for postretirement
medical benefits....... -- -- -- -- -- -- 8
------- ------- ------ ------ ------ ------ ------
Net income(2)........... $ 123 $ 112 $ 245 $ 172 $ 140 $ 146 $ 122
======= ======= ====== ====== ====== ====== ======
Net income per share(2). $ 0.60 $ 0.51 $ 1.13(3) $ 0.96(3) $ 0.80(3) $ 0.84(3) $ 0.72(3)
Cash distributions per
share to shareholders.. $ 0.23 $ 0.21 $ 0.44 $ 0.42 $ 0.41 $ 0.40 $ 0.39
FINANCIAL POSITION AT
PERIOD END
Current assets.......... $ 579 $ 494 $ 499 $ 393 $ 331 $ 291 $ 258
Current liabilities..... 499 403 426 373 304 244 207
Working capital......... 80 91 74 20 27 47 51
Total assets............ 2,200 1,809 1,847 1,650 1,231 1,122 1,006
Non-current liabilities. 1,295 606 608 518 484 471 511
Minority interest....... 3 14 17 13 135 118 78
Shareholders' equity.... 403 787 797 747 307 289 210
Book value per share.... $ 1.97 $ 3.61 $ 3.68 $ 4.18 $ 1.76 $ 1.67 $ 1.23
OTHER DATA
Ratio of earnings to
fixed charges(4)....... 3.85x 4.76x 5.16x 4.83x 4.72x 4.55x 3.85x
</TABLE>
- --------
(1) All per share data reflect the three-for-two share splits in 1992, 1993,
1996 and 1997.
(2) Operating results on a basis which excludes restructuring and unusual
charges, gains on issuance of subsidiary shares and the change in
accounting for postretirement benefits in prior years are as follows (there
were no such unusual items in 1994, 1995, 1996 or 1997):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- -----------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Operating income.............. $ 157 $ 133 $ 295 $ 252 $ 214 $ 173 $ 141
Net income.................... 123 112 245 172 140 116 94
Net income per share.......... $ 0.60 $ 0.51 $1.13 $0.96 $0.80 $0.67 $0.55
</TABLE>
S-7
<PAGE>
(3) Most operations conducted by The ServiceMaster Company and its subsidiary
partnerships have been conducted since 1986 free of federal corporate
income tax. The Internal Revenue Code as presently constituted will impose
federal corporate income tax on ServiceMaster's operations beginning in
1998. In anticipation of this change, in January 1992, ServiceMaster's
shareholders approved a Reincorporating Merger the purpose of which is to
reorganize the ServiceMaster enterprise so that ServiceMaster Incorporated
of Delaware (the "Successor Parent Corporation") will be substituted for
the Parent Partnership as the ultimate parent in the ServiceMaster
enterprise. See "The Reincorporating Merger and the Partnership
Liquidations" in the Prospectus.
As a result of the Reincorporating Merger and related transactions (which are
collectively referred to herein as the "Reincorporation") and the WMUS
Repurchase, ServiceMaster will be entitled to recognize a step-up in the tax
basis of its assets, which will be amortized against ServiceMaster's taxable
income in future years, resulting in an annual cash benefit currently
estimated at between $20 and $25 million. Reincorporation will have no impact
on the "book basis" of ServiceMaster's assets reflected in the Selected
Historical Financial Information above and in the financial statements from
which such information was derived. The tax basis step-up will result in the
recognition of a deferred tax asset on ServiceMaster's balance sheet and a
corresponding unusual gain in ServiceMaster's income statement in the period
of Reincorporation. The exact amount of the tax basis step-up (and the
deferred tax asset and unusual gain that will result therefrom) will depend
in part on the price and trading volume of the Parent Partnership's shares
prior to the Reincorporating Merger. It is currently estimated that the
effective book tax rate upon Reincorporation will be approximately 40% of
pretax earnings. This estimate is necessarily subject to change based on
changes in circumstances, statutory tax rates, etc. Pro forma earnings per
share would be $0.69 in 1996, $0.59 in 1995, $0.49 in 1994, $0.51 in 1993,
and $0.43 in 1992, assuming Reincorporation had occurred at the beginning of
each respective period.
(4) In the calculation of the Parent Partnership's ratio of earnings to fixed
charges, "earnings" consist of income from continuing operations before
income taxes, fixed charges (excluding capitalized interest) and minority
interest expense of subsidiaries with fixed charges and "fixed charges"
consist of interest and amortization of debt expense, including the
interest portion of rental obligations deemed representative of the
interest factor.
DESCRIPTION OF THE NOTES AND GUARANTEE
The following description of the particular terms of the Notes and Guarantee
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Debt Securities and
Guarantee set forth in the Prospectus, to which description reference is hereby
made.
GENERAL
The Notes will be issued under the Indenture (the "Indenture") dated as of
August 15, 1997 among The ServiceMaster Company, as issuer, the Parent
Partnership, as guarantor, and Harris Trust and Savings Bank, as trustee (the
"Trustee"). The Notes will be guaranteed by the Parent Partnership and will
rank pari passu with all other unsubordinated indebtedness of The ServiceMaster
Company. Capitalized terms not defined herein have meanings as set forth in the
Indenture.
The 2007 Notes will be limited to $150,000,000 aggregate principal amount and
will mature on August , 2007 (the "2007 Notes Maturity Date") at 100% of
their principal amount, unless earlier redeemed pursuant to the terms thereof.
See "Optional Redemption of 2007 Notes and 2027 Notes" below. The 2027 Notes
will be limited to $150,000,000 aggregate principal amount and will mature on
August , 2027 (the "2027 Notes Maturity Date") at 100% of their principal
amount, unless earlier redeemed pursuant to the terms thereof. See "Optional
Redemption of 2007 Notes and 2027 Notes" below.
The Notes will bear interest at the rate per annum set forth on the cover page
of this Prospectus Supplement from , 1997 or from the most recent
interest payment date to which interest has been paid or provided for, payable
semi-annually on and of each year (an "Interest Payment Date"),
beginning , 1998 until the 2007 Notes Maturity Date or the 2027 Notes
Maturity Date, as the case may be. Interest will be payable to the persons in
whose names the Notes are registered at the close of business on the or
, as the case may be, next preceding such Interest Payment Date.
The Notes will be issued as Registered Global Securities. See "Book-Entry
System" below. Principal of and interest on the Notes will be payable, and the
transfer of Notes will be registrable, through the Depository Trust Company, as
Depositary (the "Depositary"), as described under "Description of Debt
Securities--Global Debt Securities" in the Prospectus.
The Notes are not subject to any sinking fund.
GUARANTEE
The Notes are unconditionally guaranteed as to the payment of principal,
premium, if any, and interest in respect thereof by the Parent Partnership,
pursuant to the Indenture, as described under "Guarantee" in the accompanying
S-8
<PAGE>
Prospectus. The Guarantee will constitute an unsecured obligation of the Parent
Partnership and will rank equally in right of payment with all existing and
future unsubordinated and unsecured indebtedness of the Parent Partnership.
OPTIONAL REDEMPTION OF 2007 AND 2027 NOTES
The 2007 Notes and the 2027 Notes will be redeemable in whole or in part, at
the option of the Company, upon not less than 30 or more than 60 days prior
written notice, at any time, at a redemption price equal to the greater of (i)
100% of their principal amount or (ii) the sum of the present values of the
Remaining Scheduled Payments (as hereinafter defined) thereon discounted to the
redemption date, on a semi-annual basis, at the Treasury Yield plus basis
points (for the redemption of the 2007 Notes) or basis points (for the
redemption of the 2027 Notes), together with all accrued but unpaid interest,
if any, to the date of redemption in either case; provided, however, that
interest installments due on an Interest Payment Date which is on or prior to
the date of redemption will be payable to holders who are holders of record of
such 2007 Notes or 2027 Notes, as the case may be, as of the close of business
on the fifteenth day next preceding such Interest Payment Date.
"Treasury Yield" means, with respect to any redemption date, the rate per annum
equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price of the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security selected
by the Independent Investment Banker as having a maturity most comparable to
the remaining term of the 2007 Notes or the 2027 Notes, as the case may be,
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the 2007 Notes or
the 2027 Notes, as the case may be.
"Independent Investment Banker" means J.P. Morgan Securities Inc. or, if such
firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing in the United
States appointed by the Board of Directors of the Company in good faith.
"Comparable Treasury Price" means, with respect to any redemption date, (i) the
average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, the average
of the Reference Treasury Dealer Quotations for such redemption price.
"Reference Treasury Dealer" means each of J.P. Morgan Securities Inc. and its
respective successors; provided, however, that if such firm ceases to be a
primary U.S. Government securities dealer in New York, New York (a "Primary
Treasury Dealer") or otherwise fails to provide a Reference Treasury Dealer
Quotation, the Company will substitute therefor any other Primary Treasury
Dealer.
"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issues
(express in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New
York, New York time, on the third business day preceding such redemption date.
"Remaining Scheduled Payments" means, with respect to any Notes, the remaining
scheduled payments of the principal thereof to be redeemed and interest thereon
that would be due after the related redemption date but for such redemption;
provided, however, that, if such redemption date is not an Interest Payment
Date with respect to such Note, the amount of the next succeeding scheduled
interest payment thereon will be reduced by the amount of interest accrued
thereon to such redemption date.
BOOK-ENTRY SYSTEM
Upon issuance, all 2007 Notes and all 2027 Notes will be represented
respectively by one or more Registered Global Securities. Each Registered
Global Security representing any of the Notes will be deposited with, or on
behalf of, the Depositary and registered in the name of a nominee of the
Depositary. The provisions set forth under "Description of
S-9
<PAGE>
Debt Securities--Global Debt Securities" in the accompanying Prospectus will be
applicable to the Notes. Accordingly, beneficial interests in the Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Except as described under
"Description of Debt Securities--Global Debt Securities" in the accompanying
Prospectus, owners of beneficial interests in the Registered Global Security
will not be entitled to receive Notes in certificated form and will not be
considered holders of Notes.
Ownership of beneficial interests in the Registered Global Security will be
limited to institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold interests through participants.
Payments of principal, premium, if any, and interest will be made in
immediately available funds to the Depositary's nominee as the registered owner
of the Registered Global Security. Under the terms of the Indenture, the
Company and the Trustee will treat the person in whose name the Registered
Global Security is registered as the owner of the Notes for the purpose of
receiving payments of principal, premium, if any, and interest and for all
other purposes. Therefore, neither the Company, the Trustee nor any other agent
will have any direct responsibility or liability for the payment of principal,
premium, if any, or interest to owners of beneficial interests in the
Registered Global Security.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
dated the date hereof (the "Underwriting Agreement"), the Company has agreed to
sell to each of the underwriters named below (the "Underwriters"), and each of
the Underwriters has severally agreed to purchase, the principal amount of
Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF NOTES
-------------------------
NAME 2007 NOTES 2027 NOTES
---- ------------ ------------
<S> <C> <C>
J.P. Morgan Securities Inc.................... $ $
Goldman, Sachs & Co...........................
BA Securities, Inc............................
First Chicago Capital Markets, Inc............
NationsBanc Capital Markets, Inc..............
------------ ------------
Total..................................... $150,000,000 $150,000,000
============ ============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the Underwriters
are obligated to take and pay for all of the Notes if any are taken.
The Underwriters propose to offer the Notes directly to the public initially at
the initial public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession
not in excess of % of the principal amount of the 2007 Notes and % of the
principal amount of the 2027 Notes. The Underwriters may allow, and such
dealers may re-allow, a concession not in excess of % of the principal
amount of the 2007 Notes or % of the principal amount of the 2027 Notes to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed by the Underwriters.
The Notes are new issues of securities with no established trading market and
will not be listed on any national securities exchange. The Company has been
advised by the Underwriters that the Underwriters intend to make a market for
the Notes, but are not obligated to do so and may discontinue market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
In connection with this offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes.
Specifically, the Underwriters may overallot the offering, creating a syndicate
short position. In addition, the Underwriters may bid for, and purchase, Notes
in the open market to cover the syndicate short position or to stabilize the
price of the Notes. Finally, the underwriting syndicate may reclaim selling
concessions allowed for distributing the Notes in the offering if the syndicate
repurchases previously distributed Notes in transactions to cover syndicate
short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end these activities at any time.
S-10
<PAGE>
The Company and the Parent Partnership have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments which the
Underwriters may be required to make in respect thereof.
When more than 10% of the proceeds of a public offering of certain securities
are to be paid to members of the National Association of Securities Dealers,
Inc. ("NASD") participating in such public offering or to affiliates of such
members, Rule 2710(c)(8) of the NASD's Rules of Fair Practice requires
disclosure of such fact.
Each of J.P. Morgan Securities Inc., BA Securities, Inc., First Chicago Capital
Markets, Inc. and NationsBanc Capital Markets, Inc. and/or certain affiliates
thereof is a member of the NASD. The Underwriters and/or their affiliates may
indirectly receive more than 10% of the net proceeds from the offering of the
Notes as a result of the use of such proceeds to repay borrowings by the
Company under a five-year revolving bank credit facility. See "Use of
Proceeds."
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have engaged and may in the future engage in commercial
banking and investment banking transactions with ServiceMaster and its
affiliates.
LEGAL OPINIONS
Certain legal matters in connection with the Notes will be passed upon for the
Company by Vernon T. Squires, Esq., Senior Vice President and General Counsel
of the Company, and for the Underwriters by Davis Polk & Wardwell, New York,
New York. As of the date of this Prospectus Supplement, Mr. Squires holds
255,887 shares and options to acquire 54,000 shares of limited partnership
interests of the Parent Partnership.
S-11
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 6, 1997
PROSPECTUS
THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP
DEBT SECURITIES
The ServiceMaster Company Limited Partnership ("The ServiceMaster Company")
may offer from time to time in one or more series its debt securities
consisting of debentures, notes or other evidence of indebtedness (the "Debt
Securities," which term shall include any guarantees thereof), in amounts as
may be sold for an aggregate public offering price of up to $950,000,000 on
terms to be determined at the time of each offering. The Debt Securities may be
issued as unsecured Debt Securities that will not be subordinated to other
obligations of The ServiceMaster Company. The payment of principal and interest
with respect to such Debt Securities will be unconditionally guaranteed by
ServiceMaster Limited Partnership (the "Parent Partnership"). The Parent
Partnership holds the entire limited partnership interest in The ServiceMaster
Company, which interest represents 99% of the entire equity interest in The
ServiceMaster Company. See "Description of Debt Securities--Guarantee." The
Debt Securities may be offered separately or together, in separate series, in
amounts, at prices and on terms determined by market conditions at the time of
sale and to be set forth in one or more supplements to this Prospectus (each, a
"Prospectus Supplement").
The specific terms of the Debt Securities for which this Prospectus is being
delivered will be set forth in the applicable Prospectus Supplement, which will
include, where applicable: the specific title, aggregate principal amount,
authorized denominations, maturity (which may be fixed or extendible), interest
rate or rates (which may be fixed or variable) (or manner of calculation
thereof), if any, the time of payment of interest, if any, any terms of
redemption at the option of The ServiceMaster Company or repayment at the
option of the holder, any terms for sinking fund payments, additional
covenants, initial public offering price, purchase price and other terms with
respect to the Debt Securities. The Debt Securities may be issued as Original
Issue Discount Securities to be sold at a substantial discount below their
principal amount and, if issued, certain terms thereof will be set forth in the
Prospectus Supplement related thereto. The Debt Securities will be represented
by global notes registered in the name of a nominee of The Depository Trust
Company, as Depositary. Beneficial interests in the Debt Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary (with respect to participants' interests) and its
participants. Except as described in this Prospectus, Debt Securities in
certificated form will not be issued in exchange for the global notes. See
"Description of Debt Securities--Global Debt Securities."
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Debt Securities
covered by such Prospectus Supplement.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
The Debt Securities may be offered directly to one or more purchasers,
through agents designated from time to time by The ServiceMaster Company or to
or through underwriters or dealers. If any agents or underwriters are involved
in the sale of the Debt Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in the
applicable Prospectus Supplement. See "Plan of Distribution." No Debt
Securities may be sold without delivery of a Prospectus Supplement describing
the method and terms of the offering of such Debt Securities.
-----------
The date of this Prospectus is
<PAGE>
AVAILABLE INFORMATION
The Parent Partnership, The ServiceMaster Company and ServiceMaster
Incorporated of Delaware have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), for the
registration of, among other things, the Debt Securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits and schedules to, or
incorporated by reference in, the Registration Statement as permitted by the
rules and regulations of the Commission. For further information with respect
to the Parent Partnership, The ServiceMaster Company, ServiceMaster
Incorporated of Delaware, and the Debt Securities offered hereby, reference is
made to the Registration Statement, including the exhibits thereto, and
financial statements and notes filed as a part thereof or incorporated by
reference therein. Statements made in this Prospectus concerning the contents
of any document referred to herein are not necessarily complete. With respect
to each such document filed with the Commission as an exhibit to, or
incorporated by reference in, the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
The Parent Partnership is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, the Parent Partnership files consolidated reports, proxy
statements and other information with the Commission. Upon consummation of the
Reincorporating Merger described in this Prospectus (which is scheduled to
occur on or before December 31, 1997), ServiceMaster Incorporated of Delaware
will become the successor to the Parent Partnership and The ServiceMaster
Company and will become subject to the informational requirements identified
in the preceding sentence. Reports, proxy statements and other information
filed by the Parent Partnership may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices located at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material
may be obtained by mail from the Public Reference Branch of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding the Parent
Partnership, The ServiceMaster Company and ServiceMaster Incorporated of
Delaware. In addition, such material may also be inspected and copied at the
offices of the New York Stock Exchange. Partnership shares issued by the
Parent Partnership are listed on the New York Stock Exchange.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference in this Prospectus: (i) the Annual Report on Form
10-K of the Parent Partnership (File No. 1-9378) for the year ended December
31, 1996 (the "1996 Form 10-K") and (ii) the Parent Partnership's Quarterly
Report on Form 10-Q for the period ended March 31, 1997. All documents filed
by the Parent Partnership pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities and the other securities
registered on the Registration Statement shall be deemed to be incorporated
herein by reference and to be a part hereof from the respective dates of
filing of such documents. As indicated in this Prospectus, the Parent
Partnership, The ServiceMaster Company and ServiceMaster Incorporated of
Delaware are parties to a Merger and Reorganization Agreement, which provides
for a Reincorporating Merger that is scheduled to occur on or before December
31, 1997. Upon consummation of the Reincorporating Merger, ServiceMaster
Incorporated of Delaware will (i) assume the obligations of The ServiceMaster
Company on all Debt Securities issued prior to the Reincorporating Merger and
the obligations of the Parent Partnership under its Guarantees of those Debt
Securities and (ii) become the successor to the Parent Partnership as the
ultimate parent in the ServiceMaster enterprise. All documents filed by
ServiceMaster
2
<PAGE>
Incorporated of Delaware after the Reincorporating Merger pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
and other securities registered on the Registration Statement shall be deemed
to be incorporated herein by reference and to be a part hereof from the
respective dates of filing of such documents.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of the Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to
each such person, upon written or oral request. Requests should be directed to
ServiceMaster at One ServiceMaster Way, Downers Grove, Illinois 60515-9969,
Attention: Investor Relations (telephone number: (630) 271-1300).
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SERVICEMASTER COMPANY, THE
PARENT PARTNERSHIP OR SERVICEMASTER INCORPORATED OF DELAWARE. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE DEBT SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY
SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
3
<PAGE>
Unless otherwise indicated or the context otherwise requires, all references
herein to: (i) the "Parent Partnership" refers to ServiceMaster Limited
Partnership; (ii) "The ServiceMaster Company" or the "Company" refer to The
ServiceMaster Company Limited Partnership; and (iii) "ServiceMaster" refers to
the Parent Partnership and The ServiceMaster Company, together with all
entities affiliated with these two limited partnerships and their respective
predecessors. As described under"The Reincorporating Merger and the
Partnership Liquidations" below, the shareholders of the Parent Partnership
have approved a Reincorporating Merger, which is scheduled to occur on or
before December 31, 1997. The Reincorporating Merger will install a
corporation as the ultimate parent in the ServiceMaster enterprise and that
corporation is called the "Successor Parent Corporation" in this Prospectus.
The term "ServiceMaster" as used in this Prospectus with respect to periods at
and after the Reincorporating Merger refers to ServiceMaster Incorporated of
Delaware and its subsidiaries.
SERVICEMASTER
The Parent Partnership and The ServiceMaster Company were formed in December
1986 as limited partnerships to succeed to the business and assets of
ServiceMaster Industries Inc., which began its operation in 1947. The Parent
Partnership is a holding company whose limited partnership shares are listed
on the New York Stock Exchange and whose principal asset consists of all of
the common limited partner interest of The ServiceMaster Company. The actual
operations of the ServiceMaster enterprise are conducted by The ServiceMaster
Company and its subsidiaries. Accordingly, The ServiceMaster Company has
essentially the same degree of ownership of the businesses which make up the
ServiceMaster enterprise as does the Parent Partnership and the descriptions
of those businesses incorporated into this Prospectus are essentially the same
with respect to The ServiceMaster Company as they are for the Parent
Partnership.
The Debt Securities will be issued by The ServiceMaster Company. The Debt
Securities will be guaranteed by the Parent Partnership.
ServiceMaster, through its subsidiaries, provides a range of services to
individual consumers, businesses and institutions in the United States and 30
other countries throughout the world. ServiceMaster is divided into three
operating units: Consumer Services, Management Services and International.
Consumer Services and Management Services are the principal operating units.
ServiceMaster Consumer Services L.P. is a wholly owned first-tier subsidiary
of The ServiceMaster Company and provides services to over 6,500,000
residential and commercial customers through seven market leading companies:
TruGreen L.P., which provides lawn care, tree and shrub services and indoor
plant maintenance under the "TruGreen," "ChemLawn," "TruGreen-ChemLawn" and
"Barefoot" service marks; The Terminix International Company, L.P., which
provides termite and pest control services under the "Terminix" service mark;
American Home Shield Corporation, which provides home system and appliance
warranty contracts and home inspection services under the "American Home
Shield" and "AmeriSpec" service marks; ServiceMaster Residential/Commercial
Services L.P., which provides residential and commercial cleaning and disaster
restoration services under the "ServiceMaster" service mark; Merry Maids L.P.,
which provides domestic housekeeping services under the "Merry Maids" service
mark; and Furniture Medic L.P., which provides in-home furniture repair and
restoration services under the "Furniture Medic" service mark. These services
are part of the "ServiceMaster Quality Network" and may be accessed by calling
a single toll-free telephone number: 1-800-WE SERVE.
ServiceMaster Management Services L.P. is a wholly owned first-tier
subsidiary of The ServiceMaster Company and is organized into three discrete
operating units: ServiceMaster Healthcare Management Services, Education
Management Services and Business and Industry Management Services. Each of
these three units provides to its respective customers a variety of supportive
management services, including the management of housekeeping, plant
operations and maintenance, clinical equipment maintenance, laundry and linen,
grounds and landscaping, energy management services and food service. In
addition, Healthcare Management Services provides management and other
services to the long-term care, assisted living and home health care markets.
4
<PAGE>
On January 13, 1992, the Parent Partnership's limited partners approved a
Reincorporating Merger. The purpose of the Reincorporating Merger is to
install ServiceMaster Incorporated of Delaware as the ultimate parent in the
ServiceMaster enterprise. The Reincorporating Merger is scheduled to be
consummated on or before December 31, 1997. When and if the Reincorporating
Merger consummates: a subsidiary of the Successor Parent Corporation will be
merged into the Parent Partnership; as a result of the merger, each
outstanding limited partnership share issued by the Parent Partnership will be
converted into one share of common stock issued by the Successor Parent
Corporation; and the Parent Partnership will become wholly owned by the
Successor Parent Corporation. ServiceMaster expects that after the
Reincorporating Merger, the Parent Partnership and The ServiceMaster Company
will be merged or liquidated into the Successor Parent Corporation. Upon
consummation of these actions, the Successor Parent Corporation will become
the successor to both the Parent Partnership and The ServiceMaster Company
Limited Partnership. ServiceMaster intends to change the name of the Successor
Parent Corporation to "The ServiceMaster Company" not later than the time the
Partnership Liquidations (as defined) are completed.
Upon consummation of the Partnership Liquidations, the Successor Parent
Corporation will assume all obligations of The ServiceMaster Company on the
Debt Securities and will become the primary obligor on the Debt Securities.
See "The Reincorporating Merger and the Partnership Liquidations."
RATIO OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
the Parent Partnership for the six months ended June 30, 1996 and 1997 and
each of the fiscal years 1992 through 1996:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
--------------- -----------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated ratios of
earnings to fixed charges... 3.85x 4.76x 5.16x 4.83x 4.72x 4.55x 3.85x
</TABLE>
The Parent Partnership's consolidated ratios of earnings to fixed charges
were computed by dividing earnings by fixed charges. For this purpose,
"earnings" consist of income from continuing operations before income taxes,
fixed charges (excluding capitalized interest) and minority interest expenses
of subsidiaries with fixed charges and "fixed charges" consist of interest and
amortization of debt expense, including the interest portion of rental
obligations deemed representative of the interest factor.
SUMMARIZED FINANCIAL INFORMATION
FOR THE SERVICEMASTER COMPANY
The Debt Securities being offered hereby will be issued by The ServiceMaster
Company. The ServiceMaster Company is the only direct subsidiary of the Parent
Partnership. Set forth below is summarized unaudited financial information for
The ServiceMaster Company as of and for each of the three years in the period
ended December 31, 1996. Such information should be read in conjunction with
the consolidated financial statements and accompanying notes included in the
Parent Partnership's Annual Reports on Form 10-K for such years, incorporated
herein by reference. This information is substantially the same as the
corresponding information reported for the Parent Partnership because: (i) the
Parent Partnership does not itself conduct any operations but rather
operations of the ServiceMaster enterprise are conducted by The ServiceMaster
Company and the direct and indirect subsidiaries of The ServiceMaster Company;
(ii) the Parent Partnership has no material assets other than substantially
all of the ownership interest in The ServiceMaster Company; and (iii)
substantially all of the assets and liabilities shown in the consolidated
financial statements for the Parent Partnership are located at The
ServiceMaster Company and at the direct and indirect subsidiaries of The
ServiceMaster Company.
5
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996 1995 1994
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current assets......................................... $ 499 $ 393 $ 331
Noncurrent assets...................................... 1,348 1,257 900
Current liabilities.................................... 426 373 304
Noncurrent liabilities................................. 651 561 527
Minority interests..................................... 16 12 134
INCOME STATEMENT DATA:
Operating revenue...................................... $3,458 $3,203 $2,985
Cost of sales.......................................... 2,681 2,500 2,356
Selling and administrative............................. 482 451 415
------ ------ ------
Total operating costs.................................. 3,163 2,951 2,771
------ ------ ------
Operating income....................................... 295 252 214
Income from continuing operations...................... 247 174 141
Net income............................................. 247 174 141
</TABLE>
USE OF PROCEEDS
The ServiceMaster Company (and the Successor Parent Corporation after the
Reincorporating Merger) intend to use the net proceeds from the sale of the
Debt Securities for general business purposes, which may include, but are not
limited to, repayment, redemption or repurchase of outstanding indebtedness;
repurchase of outstanding shares issued by the Parent Partnership (or the
Successor Parent Corporation after the Reincorporating Merger); acquisitions,
capital expenditures and working capital requirements; and such other purposes
as may be specified in the relevant Prospectus Supplement. A description of
any indebtedness to be refinanced with the proceeds from the sale of the Debt
Securities will be set forth in the applicable Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEE
The Debt Securities will be issued under an Indenture (the "Indenture")
dated as of August 15, 1997 among The ServiceMaster Company, as issuer, the
Parent Partnership, as guarantor, and Harris Trust and Savings Bank, as
trustee (the "Trustee"). The following description of certain provisions of
the Indenture and the Debt Securities summarizes the material terms thereof
but does not purport to be complete, and such summary is subject to the
detailed provisions of the Indenture to which reference is hereby made,
including the definition of certain terms used herein, and for other
information regarding the Debt Securities. The Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
Numerical references in parentheses below are to sections in the Indenture.
Wherever particular sections or defined terms of the Indenture are referred
to, such sections or defined terms are incorporated herein by reference as
part of the statement made, and the statement is qualified in its entirety by
such reference. Any Debt Securities offered by this Prospectus and the
accompanying Prospectus Supplement are referred to herein as the "Offered Debt
Securities."
GENERAL
The Indenture provides for issuance of Debt Securities by The ServiceMaster
Company in an unlimited amount from time to time in one or more series. Debt
Securities may be denominated and payable in foreign currencies or units based
on or relating to foreign currencies. Special United States federal income tax
considerations applicable to any Debt Securities so denominated will be
described in the relevant Prospectus Supplement.
6
<PAGE>
The Debt Securities will be unsecured obligations of The ServiceMaster
Company and will be guaranteed by the Parent Partnership. The Indenture does
not limit the amount of additional indebtedness that The ServiceMaster Company
or the Parent Partnership may incur and does not contain provisions which
would afford the holders (the "Holders") of the Debt Securities protection in
the event of a decline in The ServiceMaster Company's or the Parent
Partnership's credit quality resulting from highly leveraged or other
transactions involving The ServiceMaster Company or the Parent Partnership, as
the case may be.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Offered Debt Securities (to the extent such
terms are applicable to such Offered Debt Securities): (i) the specific
designation, aggregate principal amount, purchase price and denomination; (ii)
currency or units based on or relating to currencies in which such Offered
Debt Securities are denominated and in which principal of, premium, if any,
and any interest on such Offered Debt Securities will or may be payable; (iii)
any date of maturity; (iv) interest rate or rates, which may be fixed or
variable, and the method by which such rate or rates will be determined, if
any; (v) the dates on which any such interest will be payable; (vi) the place
or places where the principal of, premium, if any, and any interest on the
Offered Debt Securities will be payable; (vii) any redemption, repayment or
sinking fund provisions; (viii) whether the Offered Debt Securities will be
issuable in registered form or bearer form ("Bearer Securities") or both and,
if Bearer Securities are issuable, any restrictions applicable to the exchange
of one form for another and to the offer, sale and delivery of Bearer
Securities; (ix) any applicable United States federal income tax consequences,
including whether and under what circumstances The ServiceMaster Company will
pay additional amounts on Offered Debt Securities held by a person who is not
a U.S. person (as defined in the Prospectus Supplement) in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether The
ServiceMaster Company will have the option to redeem such Offered Debt
Securities rather than pay such additional amounts; and (x) any other specific
terms of the Offered Debt Securities, including any additions to or
modifications or deletions of any events of default or covenants provided for
with respect to such Offered Debt Securities, and any terms which may be
required by or be advisable under applicable laws or regulations (Section
2.03).
Debt Securities may be presented for exchange and registered Debt Securities
may be presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Debt Securities and the Prospectus Supplement.
Subject to the limitations provided in the Indenture, such services will be
provided without charge, other than any tax or other governmental charge
payable in connection therewith. Debt Securities in bearer form and the
coupons, if any, appertaining thereto will be transferable by delivery.
Debt Securities will bear interest at a fixed rate (a "Fixed Rate Security")
or a floating rate (a "Floating Rate Security"). Debt Securities bearing no
interest or interest at a rate that at the time of issuance is below the
prevailing market rate will be sold at a discount below their stated principal
amount. Special United States federal income tax considerations applicable to
any such discounted Debt Securities or to certain Debt Securities issued at
par which are treated as having been issued at a discount for United States
federal income tax purposes will be described in the relevant Prospectus
Supplement.
Debt Securities may be issued, from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on
any interest payment date, to be determined by reference to one or more
currency exchange rates, commodity prices, equity indices or other factors.
Holders of such Debt Securities may receive a principal amount on any
principal payment date, or a payment of interest on any interest payment date,
that is greater than or less than the amount of principal or interest
otherwise payable on such dates, depending upon the value on such dates of the
applicable currency, commodity, equity index or other factors. Information as
to the methods for determining the amount of principal or interest payable on
any date, the currencies, commodities, equity index, or other factors to which
the amount payable on such date is linked and certain additional tax
considerations will be set forth in the applicable Prospectus Supplement.
RANKING
The Debt Securities, when issued, will rank pari passu in right of payment
with all other unsecured and unsubordinated indebtedness of The ServiceMaster
Company (Section 2.03).
7
<PAGE>
The Debt Securities may, under certain circumstances, be equally and ratably
secured with other senior indebtedness of The ServiceMaster Company. See "--
Certain Covenants of the Company--Restrictions on Liens."
GLOBAL DEBT SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Debt Securities (a "Registered Global
Security") that will be deposited with a depository (a "Depositary") or with a
nominee for a Depositary identified in the Prospectus Supplement relating to
such series and registered in the name of the Depositary or a nominee thereof.
In such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Registered Global
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in debenture registered form, a Registered Global Security may not
be transferred except as a whole by the Depositary for such Registered Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such
series. The ServiceMaster Company anticipates that the following provisions
will apply to all depositary arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the
Depositary for such Registered Global Security will credit, on its book-entry
registration and transfer systems the participants' accounts with the
respective principal amounts of the Debt Securities represented by such
Registered Global Security beneficially owned by such participants. The
accounts to be credited will be designated by any dealers, underwriters or
agents participating in the distribution of such Debt Securities. Ownership of
beneficial interests in such Registered Global Security will be shown on, and
the transfer of such ownership interests will be effected only through,
records maintained by the Depositary for such Registered Global Security (with
respect to interests of participants) and on the records of participants (with
respect to interests of persons holding through participants). The laws of
some states may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to own, transfer or pledge beneficial interests in
registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the owner of record of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Debt Securities represented by such Registered Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the
Debt Securities represented by such Registered Global Security registered in
their names, and will not receive or be entitled to receive physical delivery
of such Debt Securities in definitive form and will not be considered the
owners or holders thereof under the Indenture. Accordingly, each person owning
a beneficial interest in a Registered Global Security must rely on the
procedures of the Depositary for such Registered Global Security and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest to exercise any rights of a holder of
record under the Indenture. The ServiceMaster Company understands that under
existing industry practices, if The ServiceMaster Company requests any action
of holders or if any owner of a beneficial interest in a Registered Global
Security desires to give or take any action which a holder is entitled to give
or take under the Indenture, the Depositary for such Registered Global
Security would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instruction of beneficial owners holding
through them.
8
<PAGE>
Payments of principal of, premium, if any, and any interest on Debt
Securities represented by a Registered Global Security registered in the name
of a Depositary or its nominee will be made to such Depositary or its nominee,
as the case may be, as the registered owner of such Registered Global
Security. None of The ServiceMaster Company, the Trustee or any other agent of
The ServiceMaster Company or agent of the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in such Registered Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The ServiceMaster Company expects that the Depositary for any Debt
Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium, if any, or interest in respect of such
Registered Global Security, will immediately credit participants' accounts
with payments in amounts proportionate to their respective beneficial
interests in such Registered Global Security as shown on the records of such
Depositary. The ServiceMaster Company also expects that payments by
participants to owners of beneficial interests in such Registered Global
Security held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Registered Global
Security notifies The ServiceMaster Company that it is at any time unwilling
or unable to continue as Depositary or ceases to be eligible under applicable
law, and a successor Depositary eligible under applicable law is not appointed
by The ServiceMaster Company within 90 days, The ServiceMaster Company will
issue such Debt Securities in definitive form in exchange for such Registered
Global Security. In addition, The ServiceMaster Company may at any time and in
its sole discretion determine not to have any of the Debt Securities of a
series represented by one or more Registered Global Securities and, in such
event, will issue Debt Securities of such series in definitive form in
exchange for all of the Registered Global Security or Registered Global
Securities representing such Debt Securities. Any Debt Securities issued in
definitive form in exchange for a Registered Global Security will be
registered in such name or names as the Depositary shall instruct the Trustee
(Section 2.07). It is expected that such instructions will be based upon
directions received by the Depositary from participants with respect to
ownership of beneficial interests in such Registered Global Security. The Debt
Securities of a series may also be issued in the form of one or more bearer
global Debt Securities (a "Bearer Global Security") that will be deposited
with a common depositary for Euroclear and CEDEL, or with a nominee for such
depositary identified in the Prospectus Supplement relating to such series.
The specific terms and procedures, including the specific terms of the
depositary arrangement, with respect to any portion of a series of Debt
Securities to be represented by a Bearer Global Security will be described in
the Prospectus Supplement relating to such series.
CERTAIN COVENANTS OF THE COMPANY
The following restrictions apply to each series of Debt Securities unless
the terms of such series of Debt Securities provide otherwise.
Restrictions on Liens. The Indenture provides that the ServiceMaster Company
and the Parent Partnership will not, and will not permit any Significant
Subsidiary to, create, incur or suffer to exist any lien on any Equity
Interests (as defined in the Indenture), indebtedness or other obligations of
a Significant Subsidiary held by the Parent Partnership, the Company or any
Subsidiary or any Principal Property of The ServiceMaster Company or a
Significant Subsidiary, whether such Equity Interests, indebtedness or other
obligations of a Significant Subsidiary or Principal Property are owned at the
date of this Indenture or hereafter acquired, unless The ServiceMaster Company
secures or causes such Significant Subsidiary to secure the outstanding Debt
Securities equally and ratably with all indebtedness secured by such Lien, so
long as such indebtedness shall be so secured; provided, however, that this
covenant shall not apply in the case of: (i) the creation of any Lien on any
Equity Interests, indebtedness or other obligations of a Significant
Subsidiary or any Principal Property hereafter acquired (including
acquisitions by way of merger or consolidation) by The ServiceMaster Company
or a Significant Subsidiary contemporaneously with such acquisition, or within
180 days thereafter, to secure or provide for the payment or financing of any
part of the purchase price thereof, or the assumption of any Lien
9
<PAGE>
upon any Equity Interests, indebtedness or other obligations of a Significant
Subsidiary or any Principal Property hereafter acquired (including acquisition
by way of merger or consolidation) existing at the time of such acquisition,
provided that every such Lien referred to in this clause (i) shall not attach
to the Equity Interests, indebtedness or other obligations of a Significant
Subsidiary or any Principal Property other than the Equity Interests,
indebtedness or other obligations of the Significant Subsidiary or any
Principal Property other than the Equity Interests, indebtedness or other
obligations of the Significant Subsidiary or any Principal Property so
acquired and fixed improvements thereon; (ii) any Lien on any Equity
Interests, indebtedness or other obligations of a Significant Subsidiary or
any Principal Property existing at the date of this Indenture; (iii) any Lien
on any Equity Interests, indebtedness or other obligations of a Significant
Subsidiary or any Principal Property in favor of The ServiceMaster Company or
any Significant Subsidiary; (iv) any Lien on any Principal Property being
constructed or improved securing loans to finance such construction or
improvements; (v) any Lien on Equity Interests, indebtedness or other
obligations of a Significant Subsidiary or any Principal Property incurred in
connection with the issuance of tax-exempt governmental obligations; (vi)
Liens on any Principal Property for taxes not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves, to the extent required by GAAP, have been made; (vii)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other
like Liens on any Principal Property arising in the ordinary course of
business and securing obligations that are not due and payable or which are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves, to the extent required by GAAP, have been made;
(viii) zoning restrictions, easements, rights-of-way, restrictions on use of
real property and other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of business of any of the Company, the Parent
Partnership or any Significant Subsidiary; (ix) any Lien on Equity Interests,
indebtedness or other obligations of a Non-U.S. Subsidiary held by a Non-U.S.
Subsidiary or any Principal Property of a Non-U.S. Subsidiary; provided that
at the time of the creation or incurrence of any such Lien the aggregate book
value of the total assets of the Non-U.S. Subsidiaries then subject to Liens
securing indebtedness for borrowed money (and after giving effect to the
proposed Lien), shall not exceed 25% of the Total Assets of the Parent
Partnership and its Subsidiaries; (x) any Lien on Equity Interests,
indebtedness or other obligations of a Securitization Subsidiary created,
incurred, assumed or suffered to exit in connection with Permitted Receivables
Financing; (xi) Liens arising by reason of any attachment, judgment, decree or
order of any court or other governmental authority, so long as any appropriate
legal proceedings which may have been initiated for review of such attachment,
judgment, decree or order shall not have been finally terminated or so long as
the period within which such proceedings may be initiated shall not have
expired; (xii) any Lien on Equity Interests, indebtedness or other obligations
of a Significant Subsidiary that was not a Significant Subsidiary at the time
such Lien was created or incurred; and (xiii) any renewal of or substitution
for any Lien permitted by any of the preceding clauses (i), (ii), (iv), (v),
(vi), (vii), (viii), (ix), (x), (xi) or (xii), provided, that the indebtedness
secured is not increased (except for increases in the amount of premiums or
fees payable in connection with such renewal or substitution) nor the Lien
extended to any additional assets (other than assets as to which the creation,
incurrence or existence of Liens is not governed by this clause). (Section
5.03(a))
Notwithstanding the foregoing, The ServiceMaster Company or any Significant
Subsidiary may create, incur, assume or suffer to exist Liens in addition to
those permitted above and renew, extend or replace such Liens, provided that
at the time of such creation, incurrence, assumption, renewal, extension or
replacement, and after giving effect thereto, the aggregate outstanding
principal or face amount of all indebtedness secured by Liens not permitted by
clauses (i) through (xiii) above does not exceed 10% of Consolidated Net
Worth. (Section 5.03(b))
Restrictions on Sale and Lease-Back Transactions. The Indenture provides
that The ServiceMaster Company will not, and will not permit any Significant
Subsidiary to, sell or transfer, directly or indirectly, except to The
ServiceMaster Company or a Significant Subsidiary, any Principal Property as
an entirety, or any substantial portion thereof, with the intention of taking
back a lease of such property, except a lease for a period of three years or
less at the end of which it is intended that the use of such property by the
lessee will be discontinued and any transaction for the sale and lease-back of
any property if such lease is entered into within
10
<PAGE>
180 days after the later of the acquisition, completion of construction or
commencement of operation of such property; provided that, notwithstanding the
foregoing, The ServiceMaster Company or any Significant Subsidiary may sell
any such Principal Property and lease it back for a period longer than three
years if The ServiceMaster Company or such Significant Subsidiary would be
entitled to create a Lien on the property to be leased securing indebtedness
in an amount equal to the Attributable Debt with respect to such sale and
lease-back transaction without equally and ratably securing the outstanding
Debt Securities or The ServiceMaster Company promptly informs the Trustee of
such transaction, the net proceeds of such transaction are at least equal to
the fair value (as determined by Board Resolution of The ServiceMaster
Company) of such property and The ServiceMaster Company causes an amount equal
to the net cash proceeds of the sale to be applied to the retirement, within
120 days after receipt of such proceeds, of Funded Debt incurred or assumed by
The ServiceMaster Company or a Significant Subsidiary (including the Debt
Securities); provided further that, in lieu of applying all of or any part of
such net cash proceeds to such retirement, The ServiceMaster Company may,
within 75 days after such sale, deliver or cause to be delivered to the
applicable trustee for cancellation either debentures or notes evidencing
Funded Debt of The ServiceMaster Company (which may include the Debt
Securities) or of a Significant Subsidiary previously authenticated and
delivered by the applicable trustee, and not theretofore tendered for sinking
fund purposes or called for a sinking fund or otherwise applied as a credit
against an obligation to redeem or retire such notes or debentures, and an
Officers' Certificate (which shall be delivered to the Trustee and which need
not contain the statements prescribed by Section 11.04) stating that The
ServiceMaster Company elects to deliver or cause to be delivered such
debentures or notes in lieu of retiring Funded Debt as hereinabove provided.
If The ServiceMaster Company shall so deliver debentures or notes to the
applicable trustee and the ServiceMaster Company shall duly deliver such
Officers' Certificate, the amount of cash which The ServiceMaster Company
shall be required to apply to the retirement of Funded Debt shall be reduced
by an amount equal to the aggregate of the then applicable optional redemption
prices (not including any optional sinking fund redemption prices) of such
debentures or notes, or, if there are no such redemption prices, the principal
amount of such debentures or notes; provided, that in the case of debentures
or notes which provide for an amount less than the principal amount thereof to
be due and payable upon a declaration of the maturity thereof, such amount of
cash shall be reduced by the amount of principal of such debentures or notes
that would be due and payable as of the date of such application upon a
declaration of acceleration of the maturity thereof pursuant to the terms of
the indenture pursuant to which such debentures or notes were issued. (Section
5.04)
CERTAIN DEFINITIONS
The term "Attributable Debt" as defined in the Indenture means when used in
connection with a sale and lease-back transaction referred to above under "--
Restrictions on Sale and Lease-Back Transactions," on any date as of which the
amount thereof is to be determined, the product of (a) the net proceeds from
such sale and lease-back transaction multiplied by (b) a fraction, the
numerator of which is the number of full years of the term of the lease
relating to the property involved in such sale and lease-back transaction
(without regard to any options to renew or extend such term) remaining on the
date of the making of such computation and the denominator of which is the
number of full years of the term of such lease measured from the first day of
such term.
The term "Consolidated Net Worth" as defined in the Indenture means, at any
date of determination, the consolidated stockholders' equity of the Parent
Partnership, as set forth on the then most recently available consolidated
balance sheet of the Parent Partnership and its consolidated Subsidiaries.
The term "Funded Debt" as defined in the Indenture involves all indebtedness
for money borrowed, including purchase money indebtedness, and indebtedness
pursuant to a mandatory sinking fund or prepayment provision or otherwise,
having a maturity of more than one year from the date of its creation or
having a maturity of less than one year but by its terms being renewable or
extendible, at the option of the obligor in respect thereof, beyond one year
from the date of its creation.
11
<PAGE>
The term "Holder" or "Securityholder" as defined in the Indenture means the
registered holder of any Security with respect to registered Debt Securities
and the bearer of any Unregistered Security or any coupon appertaining
thereto, as the case may be.
"Non-U.S. Subsidiary" as defined in the Indenture means any Subsidiary that
is not a corporation, partnership or other entity created or organized in or
under the laws of the United States of America or any state thereof.
"Original Issue Discount Security" as defined in the Indenture means any
Security that provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration of the maturity thereof.
"Permitted Receivables Financing" as defined in the Indenture means a
transaction or series of transactions (including amendments, supplements,
extensions, renewals, replacements, refinancings or modifications thereof)
pursuant to which a Securitization Subsidiary purchases Receivables and
Related Assets from the Company or any Subsidiary and finances such
Receivables and Related Assets through the issuance of Equity Interests or
indebtedness (either directly or through a trust) or through the sale of the
Receivables and Related Assets or a fractional undivided interest in the
Receivables and Related Assets; provided that (i) the Board of Directors of
the Company or the Parent Partnership, as the case may be, shall have
determined in good faith that such Permitted Receivables Financing is
economically fair and reasonable to the Company, (ii) all sales of Receivables
and Related Assets to the Securitization Subsidiary are made at fair market
value (as determined in good faith by the Board of Directors of the Company or
the Parent Partnership), (iii) the financing terms, covenants, termination
events and other provisions thereof shall be market terms (as determined in
good faith by the Board of Directors of the Company or the Parent
Partnership), (iv) no portion of the indebtedness of a Securitization
Subsidiary will be guaranteed by or will be recourse to the Company, the
Parent Partnership or any Significant Subsidiary (other than recourse for
customary representations, warranties, covenants and indemnities, none of
which shall relate to the collectibility (as opposed to the status) of the
Receivables and Related Assets) and (v) neither the Company, the Parent
Partnership nor any Subsidiary shall have any obligation to maintain or
preserve the Securitization Subsidiary's financial condition.
The term "Principal Property" as defined in the Indenture means The
ServiceMaster Company's principal office building and any manufacturing plant
or principal research facility of any of The ServiceMaster Company, the Parent
Partnership or any Significant Subsidiary which is located within the United
States of America, except any such principal office building, plant or
facility which the Board of Directors by resolution declares is not of
material importance to the total business conducted by The ServiceMaster
Company, the Parent Partnership and their respective Subsidiaries as an
entirety.
"Receivables and Related Assets" means accounts receivable and instruments,
chattel paper, obligations, general intangibles and other similar assets, in
each case, relating to such receivables, including interest in merchandise or
goods, the sale or lease of which gave rise to such receivables, related
contractual rights, guarantees, insurance proceeds, collections, other related
assets, and proceeds of all of the foregoing.
"Securitization Subsidiary" as defined in the Indenture means a Wholly Owned
Subsidiary which is established for the limited purpose of acquiring and
financing Receivables and Related Assets and engaging in activities ancillary
thereto.
The term "Significant Subsidiary", as defined in the Indenture means at any
time, any Subsidiary that would be a Significant Subsidiary at such time, as
such term is defined in Regulation S-X promulgated by the Commission, as in
effect on the date of the Indenture.
The term "Subsidiary" as defined in the Indenture means with respect to any
Person, any corporation, association or other business entity of which more
than 50% of the outstanding Voting Stock (as defined in the Indenture) or
other ownership interest is owned directly or indirectly, by such Person and
one or more other Subsidiaries of such Persons.
The term "Total Assets" as defined in the Indenture means, at any date of
determination, the total assets of the Parent Partnership and its Subsidiaries
on a consolidated basis as set forth on the then most recently available
consolidated balance sheet of the Parent Partnership and its consolidated
Subsidiaries.
"Wholly Owned Subsidiary" as defined in the Indenture means a Subsidiary all
of the Equity Interests of which (except directors' qualifying shares) is at
the time owned directly or indirectly by the Company.
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RESTRICTIONS ON MERGERS AND SALES OF ASSETS
Under the Indenture, The ServiceMaster Company shall not consolidate with,
merge with or into, or sell, convey, transfer, lease or otherwise dispose of
all or substantially all of its property and assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into The
ServiceMaster Company unless: (i) either (x) The ServiceMaster Company shall
be the continuing Person or (y) the Person (if other than The ServiceMaster
Company) formed by such consolidation or into which The ServiceMaster Company
is merged or that acquired or leased such property and assets of The
ServiceMaster Company shall be a corporation, partnership or limited liability
company organized and validly existing under the laws of the United States of
America or any jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of The ServiceMaster Company on all of the Debt Securities and
under this Indenture and, if the successor corporation or partnership is not
the Parent Partnership (unless such successor is also the successor to the
Parent Partnership under Section 6.04 of the Indenture), the Parent
Partnership shall unconditionally guarantee the successor corporation's or
partnership's obligations on all of the Debt Securities and under this
Indenture and The ServiceMaster Company shall have delivered to the Trustee an
Opinion of Counsel stating that such consolidation, merger or transfer and
such supplemental Indenture complies with this provision and that all
conditions precedent provided for herein relating to such transaction have
been complied with and that such supplemental indenture constitutes the legal,
valid and binding obligation of The ServiceMaster Company or such successor
enforceable against such entity in accordance with its terms, subject to
customary exceptions; and (ii) immediately after giving effect to such
transaction, no Default shall have occurred and be continuing.
The Indenture also provides that the Parent Partnership shall not
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as
an entirety or substantially as an entirety in one transaction or a series of
related transactions) to, any Person or permit any Person to merge with or
into the Parent Partnership unless: (i) either (x) the Parent Partnership
shall be the continuing Person or (y) the Person (if other than the Parent
Partnership) formed by such consolidation or into which the Parent Partnership
is merged or that acquired or leased such property and assets of the Parent
Partnership shall be a corporation, partnership or limited liability company
organized and validly existing under the laws of the United States of America
or any jurisdiction thereof and shall expressly assume, by a supplemental
Indenture, executed and delivered to the Trustee, the due and punctual
performance of the Guarantees, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture and the
Debt Securities and the Guarantee to be performed by the Parent Partnership;
and (ii) immediately after giving effect to such transaction, no Default shall
have occurred and be continuing. (Sections 6.01 and 6.03)
EVENTS OF DEFAULT
Events of Default defined in the Indenture with respect to the Debt
Securities of any series are: (a) The ServiceMaster Company defaults in the
payment of the principal of any Debt Securities of such series when the same
becomes due and payable at maturity, upon acceleration, redemption or
mandatory repurchase, including as a sinking fund installment, or otherwise;
(b) The ServiceMaster Company defaults in the payment of interest on any Debt
Securities of such series when the same becomes due and payable, and such
default continues for a period of 30 days; (c) The ServiceMaster Company or
the Parent Partnership defaults in the performance of or breaches any other
covenant or agreement of The ServiceMaster Company or the Parent Partnership
in the Indenture with respect to any Security of such series or in the Debt
Securities of such series and such default or breach continues for a period of
60 consecutive days after written notice to The ServiceMaster Company by the
Trustee or to The ServiceMaster Company and the Trustee by the Holders of 25%
or more in aggregate principal amount of the Debt Securities of all series
then outstanding affected thereby; (d) an involuntary case or other proceeding
shall be commenced against The ServiceMaster Company, the Parent Partnership
or any Significant Subsidiary with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect seeking
the appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of
60 days; or an order for relief shall be entered against The ServiceMaster
Company, the Parent Partnership or any Significant Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
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(e) The ServiceMaster Company, the Parent Partnership or any Significant
Subsidiary (i) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law, (ii)
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, Trustee, sequestrator or similar official of The
ServiceMaster Company, the Parent Partnership or any Significant Subsidiary or
for all or substantially all of the property and assets of The ServiceMaster
Company, the Parent Partnership or any Significant Subsidiary or (iii) effects
any general assignment for the benefit of creditors; or (f) any other Event of
Default established with respect to any series of Debt Securities issued
pursuant to the Indenture occurs. (Section 7.01)
The Indenture provides that if an Event of Default described in clauses (a)
or (b) of the immediately preceding paragraph with respect to the Debt
Securities of any series then outstanding occurs and is continuing, then, and
in each and every such case, except for any series of Debt Securities the
principal of which shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the Debt Securities of any such affected series then outstanding under the
Indenture (each such series treated as a separate class) by notice in writing
to The ServiceMaster Company or the Parent Partnership (and to the Trustee if
given by Securityholders), may declare the entire principal (or, if the Debt
Securities of any such series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of such
series established pursuant to the Indenture) of all Debt Securities of such
affected series, and the interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clauses (c)
or (f) of the immediately preceding paragraph with respect to the Debt
Securities of one or more but not all series then outstanding or with respect
to the Debt Securities of all series then outstanding occurs and is
continuing, then, and in each and every such case, except for any series of
Debt Securities the principal of which shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Debt Securities of all such affected series then
outstanding under the Indenture (treated as a single class) by notice in
writing to The ServiceMaster Company (and to the Trustee if given by
Securityholders), may declare the entire principal (or, if the Debt Securities
of any such series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of such series established
pursuant to the Indenture) of all Debt Securities of all such affected series,
and the interest accrued thereon, if any, to be due and payable immediately,
and upon any such declaration the same shall become immediately due and
payable. If an Event of Default described in clause (d) or (e) of the
immediately preceding paragraph occurs and is continuing, then the principal
amount (or, if any Debt Securities are Original Issue Discount Securities,
such portion of the principal as may be specified in the terms thereof
established pursuant to the Indenture) of all the Debt Securities then
outstanding and interest accrued thereon, if any, shall be and become
immediately due and payable, without any notice or other action by any Holder
or the Trustee to the full extent permitted by applicable law. Upon certain
conditions such declarations may be rescinded and annulled and past defaults
may be waived by the Holders of a majority in principal of the then
outstanding Debt Securities of all such series that have been accelerated
(voting as a single class). (Section 7.02)
The Indenture contains a provision under which, subject to the duty of the
Trustee during a default to act with the required standard of care, (i) the
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, officers' certificate, opinion of counsel
(or both), statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper person or persons and the Trustee need not investigate
any fact or matter stated in the document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as
it may see fit; (ii) before the Trustee acts or refrains from acting, it may
require an officers' certificate and/or an opinion of counsel, which shall
conform to the requirements of the Indenture and the Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion; subject to the terms of the Indenture, whenever
in the administration of the trusts of the Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action under the Indenture, such matter (unless
other evidence in respect thereof be specifically prescribed in the Indenture)
may, in the absence
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of wilful misconduct on the part of the Trustee, be deemed to be conclusively
proved and established by an officers' certificate delivered to the Trustee,
and such certificate, in the absence of wilful misconduct on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered
or omitted by it under the provisions of the Indenture upon the faith thereof;
(iii) the Trustee may act through its attorneys and agents not regularly in
its employ and shall not be responsible for the misconduct or negligence of
any agent or attorney appointed with due care; (iv) any request, direction,
order or demand of The ServiceMaster Company mentioned in the Indenture shall
be sufficiently evidenced by an officers' certificate (unless other evidence
in respect thereof be specifically prescribed in the Indenture); and any Board
Resolution may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of The ServiceMaster Company; (v) the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by the Indenture at the request, order or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might
be incurred by it in compliance with such request or direction; (vi) the
Trustee shall not be liable for any action it takes, or omits to take in good
faith that it believes to be authorized or within its rights or powers or for
any action it takes or omits to take in accordance with the direction of the
Holders in accordance with the Indenture relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under the Indenture;
(vii) the Trustee may consult with counsel and the written advice of such
counsel or any opinion of counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it under the
Indenture in good faith and in reliance thereon; (viii) prior to the
occurrence of an Event of Default under the Indenture and after the curing or
waiving of all Events of Default, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
officers' certificate, opinion of counsel, Board Resolution, statement,
instrument, opinion, report, notice, request, consent order, approval,
appraisal, bond, debenture, note, coupon, security, or other paper or document
unless requested in writing so to do by the Holders of not less than a
majority in aggregate principal amount of the Debt Securities of all series
affected then outstanding; provided that, if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of the Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; (ix) the
Trustee shall not be required to give any bond or surety in respect of the
performance of its powers and duties hereunder; (x) the Trustee shall not be
bound to ascertain or inquire as to the performance or observance of any
covenants, conditions or agreements on the part of the Company, except as
otherwise set forth herein, but the Trustee may require of the Company
reasonable information and advice as to the performance of the covenants,
conditions and agreements contained herein and shall be entitled in connection
herewith to examine the books, records and premises of the Company; (xi) the
permissive rights of the Trustee to do things enumerated in this Indenture
shall not be construed as a duty and the Trustee shall not be answerable for
other than its negligence or willful misconduct; (xii) except for any event of
which the Trustee has "actual knowledge" and which event, with the giving of
notice or the passage of time or both, would constitute an Event of Default
under this Indenture, the Trustee shall not be deemed to have notice of any
default or event unless specifically notified in writing of such event by the
Company or the Holders of not less than 25% of the Outstanding Securities; as
used herein, the term "actual knowledge" means the actual fact or statement of
knowing, without any duty to make any investigation with regard thereto.
(Section 8.02)
Subject to such provisions in the Indenture for the indemnification of the
Trustee and certain other limitations, the Holders of at least a majority in
aggregate principal amount (or, if any Debt Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof established pursuant to the Indenture) of the outstanding Debt
Securities of all series affected (voting as a single class) may direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on this Trustee with
respect to the Debt Securities of such series by the Indenture; provided, that
the Trustee may refuse to follow any direction that conflicts with law or the
Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders not joining in the giving of such direction, it being understood that
the Trustee shall have no duty to ascertain whether or not such actions or
forbearance are unduly prejudicial to
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such Holders and provided further, that the Trustee may take any other action
it deems proper that is not inconsistent with any directions received from
Holders of Debt Securities pursuant to this paragraph. (Section 7.05)
Subject to various provisions in the Indenture, the Holders of at least a
majority in principal amount (or, if the Debt Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof established pursuant to the Indenture) of the outstanding Debt
Securities of all series affected (voting as a single class), by notice to the
Trustee, may waive an existing Default or Event of Default with respect to the
Debt Securities of such series and its consequences, except a Default in the
payment of principal of or interest on any Security as specified in clauses
(a) or (b) of Section 6.1 of the Indenture or in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
consent of the Holder of each outstanding Security affected. Upon any such
waiver, such Default shall cease to exist, and any Event of Default with
respect to the Debt Securities of such series arising therefrom shall be
deemed to have been cured, for every purpose of the Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto. (Section 7.04)
The Indenture provides that no Holder of any Debt Securities of any series
may institute any proceeding, juridical or otherwise, with respect to the
Indenture or the Debt Securities of such series, or for the appointment of a
receiver or trustee, or for any other remedy under the Indenture, unless: (i)
such Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of such series; (ii) the
Holders of at least 25% in aggregate principal amount of outstanding Debt
Securities of all such series affected shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee under the Indenture; (iii) such Holder or Holders have
offered to The Trustee indemnity reasonably satisfactory to the Trustee
against any costs, liabilities or expenses to be incurred in compliance with
such request; (iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and (v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of all such affected
series have not given the Trustee a direction that is inconsistent with such
written request. A Holder may not use the Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
(Section 7.06)
The Indenture provides that each of The ServiceMaster Company and the Parent
Partnership will file with the Trustee, within 15 days after The ServiceMaster
Company is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports which The
ServiceMaster Company and the Parent Partnership, as the case may be, may be
required to file with the Commission pursuant to Section 13 or Section 15(d)
of the Exchange Act. (Sections 5.06 and 5.09)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides with respect to each series of Debt Securities that
The ServiceMaster Company may terminate its obligations under the Debt
Securities of a series and the Indenture with respect to Debt Securities of
such series if: (i) all Debt Securities of such series previously
authenticated and delivered, with certain exceptions, have been delivered to
the Trustee for cancellation and The ServiceMaster Company has paid all sums
payable by it under the Indenture; or (ii) (A) the Debt Securities of such
series mature within one year or all of them are to be called for redemption
within one year under arrangements satisfactory to the Trustee for giving the
notice of redemption, (B) The ServiceMaster Company irrevocably deposits in
trust with the Trustee, as trust funds solely for the benefit of the Holders
of such Debt Securities, for that purpose, money or U.S. Government
Obligations or a combination thereof sufficient (unless such funds consist
solely of money, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee), without consideration of any reinvestment, to pay principal of
and interest on the Debt Securities of such series to maturity or redemption,
as the case may be, and to pay all other sums payable by it under the
Indenture, and (C) The ServiceMaster Company delivers to the Trustee an
officers' certificate and an opinion of counsel in each case stating that all
conditions precedent provided for in The
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ServiceMaster Company's Indenture relating to the satisfaction and discharge
of the Indenture with respect to the Debt Securities of such series have been
complied with. With respect to the foregoing clause (i), only The
ServiceMaster Company 's obligations to compensate and indemnify the Trustee
under the Indenture shall survive. With respect to the foregoing clause (ii),
only The ServiceMaster Company's obligations to execute and deliver Debt
Securities of such series for authentication, to set the terms of the Debt
Securities of such series, to maintain an office or agency in respect of the
Debt Securities of such series, to have moneys held for payment in trust, to
register the transfer or exchange of Debt Securities of such series, to
deliver Debt Securities of such series for replacement or to be canceled, to
compensate and indemnify the Trustee and to appoint a successor trustee, and
its right to recover excess money held by the Trustee shall survive until such
Debt Securities are no longer outstanding. Thereafter, only The ServiceMaster
Company's obligations to compensate and indemnify the Trustee, and its right
to recover excess money held by the Trustee shall survive. (Section 9.01)
The Indenture provides that The ServiceMaster Company (i) will be deemed to
have paid and will be discharged from any and all obligations in respect of
the Debt Securities of any series, and the provisions of the Indenture will,
except as noted below, no longer be in effect with respect to the Debt
Securities of such series ("legal defeasance") and (ii) may omit to comply
with any term, provision or condition of the Indenture described above under
"--Certain Covenants" (or any other specific covenant relating to such series
provided for in a Board Resolution or supplemental indenture which may by its
terms be defeased pursuant to the Indenture), and such omission shall be
deemed not to be an Event of Default under clauses (c) or (f) of the first
paragraph of "--Events of Default" with respect to the outstanding Debt
Securities of a series ("covenant defeasance"); provided that the following
conditions shall have been satisfied: (A) The ServiceMaster Company has
irrevocably deposited in trust with the Trustee as trust funds solely for the
benefit of the Holders of the Debt Securities of such series, for payment of
the principal of and interest on the Debt Securities of such series, money or
U.S. Government Obligations or a combination thereof sufficient (unless such
funds consist solely of money, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee) without consideration of any reinvestment and after
payment of all federal, state and local taxes or other charges and assessments
in respect thereof payable by the Trustee, to pay and discharge the principal
of and accrued interest on the outstanding Debt Securities of such series to
maturity or earlier redemption (irrevocably provided for under arrangements
satisfactory to the Trustee), as the case may be; (B) such deposit will not
result in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which The
ServiceMaster Company is a party or by which it is bound; (C) no Default with
respect to such Debt Securities of such series shall have occurred and be
continuing on the date of such deposit; (D) The ServiceMaster Company shall
have delivered to the Trustee an opinion of counsel that (1) the Holders of
the Debt Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of The ServiceMaster Company's
exercise of its option under this provision of the Indenture and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit and defeasance had
not occurred and (2) the Holders of the Debt Securities of such series have a
valid security interest in the trust funds subject to no prior liens under the
Uniform Commercial Code; and (E) The ServiceMaster Company has delivered to
the Trustee an officers' certificate and an opinion of counsel, in each case
stating that all conditions precedent provided for in the Indenture relating
to the defeasance contemplated have been complied with. In the case of legal
defeasance under clause (i) above, the opinion of counsel referred to in
clause (D)(1) above may be replaced by a ruling directed to the Trustee
received from the Internal Revenue Service to the same effect. Subsequent to
legal defeasance under clause (i) above, The ServiceMaster Company's
obligations to execute and deliver Debt Securities of such series for
authentication, to set the terms of the Debt Securities of such series, to
maintain an office or agency in respect of the Debt Securities of such series,
to have moneys held for payment in trust, to register the transfer or exchange
of Debt Securities of such series, to deliver Debt Securities of such series
for replacement or to be canceled, to compensate and indemnify the Trustee and
to appoint a successor trustee, and its right to recover excess money held by
the Trustee shall survive until such Debt Securities are no longer
outstanding. After such Debt Securities are no longer outstanding, in the case
of legal defeasance under clause (i) above, only The ServiceMaster Company's
obligations to compensate and indemnify the Trustee and its right to recover
excess money held by the Trustee shall survive. (Sections 9.02 and 9.03)
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MODIFICATION OF THE INDENTURE
The Indenture provides that The ServiceMaster Company, the Parent
Partnership and the Trustee may amend or supplement the Indenture or the Debt
Securities of any series without notice to or the consent of any Holder: (1)
to cure any ambiguity, defect or inconsistency in the Indenture; provided that
such amendments or supplements shall not materially and adversely affect the
interests of the Holders; (2) to comply with Article 6 of the Indenture; (3)
to comply with any requirements of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act; (4) to evidence
and provide for the acceptance of appointments under the Indenture with
respect to the Debt Securities of any or all series by a successor Trustee;
(5) to establish the form or forms or terms of Debt Securities of any series
or of the coupons appertaining to such Debt Securities as permitted under the
Indenture or the Guarantees; (6) to provide for uncertificated or Unregistered
Securities and to make all appropriate changes for such purpose; and (7) to
make any change that does not materially and adversely affect the rights of
any Holder. (Section 10.01)
The Indenture also contains provisions whereby The ServiceMaster Company,
the Parent Partnership and the Trustee, subject to certain conditions, without
prior notice to any Holders, may amend the Indenture, the outstanding Debt
Securities of any series and the Guarantees with the written consent of the
Holders of a majority in principal amount of the Debt Securities then
outstanding of all series affected by such supplemental indenture (all such
series voting as one class), and the Holders of a majority in principal amount
of the outstanding Debt Securities of all series affected thereby (all such
series voting as one class) by written notice to the Trustee may waive future
compliance by The ServiceMaster Company with any provision of the Indenture or
the Debt Securities of such series. Notwithstanding the foregoing provisions,
without the consent of each Holder affected thereby, an amendment or waiver,
including a waiver pursuant to Section 7.04 of the Indenture, may not: (i)
extend the stated maturity of the principal of, or any sinking fund obligation
or any installment of interest on, such Holder's Security, or reduce the
principal amount thereof or the rate of interest thereon (including any amount
in respect of original issue discount), or any premium payable with respect
thereto, or adversely affect the rights of such Holder under any mandatory
redemption or repurchase provision or any right of redemption or repurchase at
the option of such Holder, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity thereof or the amount thereof provable in
bankruptcy, or change any place of payment where, or the currency in which,
any Security or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after
the due date therefor; (ii) reduce the percentage in principal amount of
outstanding Debt Securities of the relevant series the consent of whose
Holders is required for any such supplemental indenture, for any waiver of
compliance with certain provisions of the Indenture of certain Defaults and
their consequences provided for in the Indenture; (iii) waive a Default in the
payment of principal of or interest on any Security of such Holder; or (iv)
modify any of the provisions of this section of the Indenture, except to
increase any such percentage or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of the Holder
of each outstanding Security affected thereby. A supplemental indenture which
changes or eliminates any covenant or other provision of the Indenture which
has expressly been included solely for the benefit of one or more particular
series of Debt Securities, or which modifies the rights of Holders of Debt
Securities of such series with respect to such covenant or provision, shall be
deemed not to affect the rights under the Indenture of the Holders of Debt
Securities of any other series or of the coupons appertaining to such Debt
Securities. It shall not be necessary for the consent of any Holder under this
section of the Indenture to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof. After an amendment, supplement or waiver under
this section of the Indenture becomes effective, The ServiceMaster Company
shall give to the Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. The Company will mail supplemental indentures
to Holders upon request. Any failure of The ServiceMaster Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or waiver. (Section 10.02)
GUARANTEE
The Parent Partnership will irrevocably and unconditionally guarantee the
payment of all obligations of The ServiceMaster Company under the Debt
Securities. If The ServiceMaster Company defaults in the payment of
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the principal of, premium if any, or interest on such Debt Securities when and
as the same shall become due, whether upon maturity, acceleration, call for
redemption or otherwise, without the necessity of action by the Trustee or any
Holder of such Debt Securities, the Parent Partnership shall be required
promptly to make such payment. As explained in more detail under "The
Reincorporating Merger and The Partnership Liquidations" below, upon
consummation of the Partnership Liquidations, the Successor Parent Corporation
will assume the obligations of both The ServiceMaster Company and the Parent
Partnership on the Debt Securities and both The ServiceMaster Company and the
Parent Partnership will be merged or liquidated into the Successor Parent
Corporation.
The Parent Partnership conducts all of its business through The
ServiceMaster Company and Subsidiaries of The ServiceMaster Company and does
not own any material assets other than all of the limited partnership interest
of The ServiceMaster Company. The Parent Partnership's obligations under the
Guarantee are as a secondary obligor. The Parent Partnership is presently
dependent on the receipt of dividends or other payments from The ServiceMaster
Company to make payments on the Guarantee of the Debt Securities.
CONCERNING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture. The
Trustee performs services for ServiceMaster in the ordinary course of
business.
THE REINCORPORATING MERGER AND THE PARTNERSHIP LIQUIDATIONS
The Parent Partnership was organized as a limited partnership at the end of
1986 to enable the parent entity in the ServiceMaster enterprise to function
free of the federal corporate income tax. In 1987, the Internal Revenue Code
was amended to reimpose federal corporate income tax on publicly traded
partnerships like ServiceMaster beginning January 1, 1998.
On December 11, 1991, the Parent Partnership issued a proxy
statement/prospectus (the "Reincorporation Proxy Statement") in which the
board of directors of ServiceMaster's Managing General Partner recommended
that the holders of the outstanding partnership shares approve, among other
things, a merger (the "Reincorporating Merger") having the characteristics
described in the Reincorporation Proxy Statement. The limited partners
approved and authorized the Reincorporating Merger at a special meeting held
on January 13, 1992.
The purpose of the Reincorporating Merger is to substitute a corporation for
the Parent Partnership as the ultimate parent in the ServiceMaster enterprise
before the Parent Partnership becomes subject to federal corporate income tax.
The Reincorporating Merger is scheduled to be consummated on or before
December 31, 1997. ServiceMaster Incorporated of Delaware has been organized
to serve as the ultimate parent in the ServiceMaster enterprise after the
Reincorporating Merger and is herein called the "Successor Parent
Corporation." The Successor Parent Corporation is at present a wholly owned
subsidiary of the Parent Partnership.
The Reincorporating Merger will be accomplished by merging a subsidiary of
the Successor Parent Corporation (which subsidiary was organized to serve as
the vehicle for the merger) into the Parent Partnership. Upon consummation of
the Reincorporating Merger: (i) each share of limited partnership interest
issued prior to that time by the Parent Partnership will be converted into one
share of common stock issued by the Successor Parent Corporation and (ii) each
share of common stock issued by the disappearing subsidiary corporation will
be converted into a limited partnership interest in the Parent Partnership.
Upon consummation of the Reincorporating Merger, the Parent Partnership will
be a wholly owned subsidiary of the Successor Parent Corporation.
ServiceMaster expects that after the Reincorporating Merger, the Parent
Partnership and The ServiceMaster Company will be merged or liquidated into
the Successor Parent Corporation (such transactions are called the
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"Partnership Liquidations" in this Prospectus). Upon consummation of the
Partnership Liquidations, the Successor Parent Corporation will become the
successor to both the Parent Partnership and The ServiceMaster Company and
will own all businesses previously owned (directly or indirectly) by the
Parent Partnership and The ServiceMaster Company. ServiceMaster intends to
change the name of the Successor Parent Corporation to "The ServiceMaster
Company" not later than the time the Partnership Liquidations are completed.
Upon consummation of the Partnership Liquidations, the Successor Parent
Corporation will assume all obligations of The ServiceMaster Company Limited
Partnership and the Parent Partnership on the Debt Securities and will become
the primary obligor on the Debt Securities. The term "Reincorporation" is used
in this Prospectus to refer to the Reincorporating Merger and the Partnership
Liquidations and related actions.
The Board of Directors of the Successor Parent Corporation immediately after
the Reincorporation will be comprised of the same individuals who served as
members of the Board of Directors of the Managing General Partner of the
Parent Partnership immediately prior to the Reincorporation. Each of the terms
"Board" and "Board of Directors" is used in this Prospectus to mean (i) the
Board of Directors of ServiceMaster Management Corporation (i.e.,
ServiceMaster's Managing General Partner) when it refers to any time prior to
the consummation of the Reincorporating Merger and (ii) the Board of Directors
of the Successor Parent Corporation when it refers to any time after
consummation of the Reincorporation.
Each individual who held a management or other employment position with the
Parent Partnership or The ServiceMaster Company immediately prior to the
Reincorporation will hold the same position with the Successor Parent
Corporation immediately after the Reincorporation. No payment or equity
issuance will be made to the ServiceMaster Management Corporation in its
capacity as Managing General Partner of either the Parent Partnership or The
ServiceMaster Company in connection with Reincorporation except for the pay
out of any income allocated its capital account prior to Reincorporation.
The Board of Directors has the right to elect not to consummate the
Reincorporating Merger.
After Reincorporation, ServiceMaster's operations will become subject to
federal income tax. ServiceMaster's management currently estimates that the
effective tax rate reflected in ServiceMaster's income statement after
Reincorporation will be approximately 40 percent. Pro forma earnings per share
would have been $0.69 in 1996 (contrasted with $1.13 reported by
ServiceMaster), $0.59 in 1995 (contrasted with $0.96 reported by
ServiceMaster), and $0.49 in 1994 (contrasted with $0.80 reported by
ServiceMaster) if the Reincorporation had occurred at the beginning of each of
those periods. These estimates are necessarily subject to change based on
changes in circumstances, statutory tax rates, and other relevant factors.
PLAN OF DISTRIBUTION
ServiceMaster may sell the Debt Securities in or outside the United States
through underwriters or dealers, directly to one or more purchasers, or
through agents. The Prospectus Supplement with respect to the Debt Securities
will set forth the terms of the offering of the Debt Securities, including the
name or names of any underwriters, dealers or agents, the purchase price of
the Debt Securities and the proceeds to ServiceMaster from such sale, any
delayed delivery arrangements, any underwriting discounts and other items
constituting underwriters' compensation, the initial public offering price,
any discounts or concessions allowed or re-allowed or paid to dealers, and any
securities exchanges on which the Debt Securities may be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. The
Debt Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Debt Securities will be named
in the Prospectus Supplement relating to such offering,
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and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters or agents to purchase the Debt Securities will
be subject to conditions precedent, and the underwriters will be obligated to
purchase all the Debt Securities if any are purchased. The initial public
offering price and any discounts or concessions allowed or re-allowed or paid
to dealers may be changed from time to time.
If dealers are used in the sale of Debt Securities with respect to which
this Prospectus is delivered, ServiceMaster will sell such Debt Securities to
the dealers as principals. The dealers may then resell such Debt Securities to
the public at varying prices to be determined by such dealers at the time of
resale. The names of the dealers and the terms of the transaction will be set
forth in the Prospectus Supplement relating thereto.
Debt Securities may be sold directly by ServiceMaster or through agents
designated by ServiceMaster from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the Debt Securities with respect to which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its
appointment.
Debt Securities may be sold directly by ServiceMaster to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the Applicable Prospectus Supplement.
In connection with the sale of the Debt Securities, underwriters or agents
may receive compensation from ServiceMaster or from purchasers of Offered
Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters, agents and dealers participating in
the distribution of the Debt Securities may be deemed to be underwriters, and
any discounts or commissions received by them from The ServiceMaster Company
and any profit on the resale of the Debt Securities by them may be deemed to
be underwriting discounts or commissions under the Securities Act.
If so indicated in the Prospectus Supplement, ServiceMaster will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Debt Securities from ServiceMaster at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents, dealers and underwriters may be entitled under agreements entered
into with ServiceMaster to indemnification by ServiceMaster against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto. Agents, dealers,
and underwriters may be customers of, engage in transactions with or perform
services for ServiceMaster and its subsidiaries in the ordinary course of
business.
Some or all of the Debt Securities may be new issues of securities with no
established trading market. Any underwriters to whom Debt Securities are sold
by ServiceMaster for public offering and sale may make a market in such Debt
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or the trading markets for any Debt Securities.
Certain of the underwriters, dealers or agents and their affiliates may be
customers of, engage in transactions with and perform services for
ServiceMaster and its subsidiaries in the ordinary course of business.
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VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the
ServiceMaster Companies by Vernon T. Squires, Esq., Senior Vice President and
General Counsel of ServiceMaster. As of July 22, 1997, Vernon T. Squires owned
255,887 shares and options to acquire 54,000 shares of limited partnership
interests of the Parent Partnership.
EXPERTS
The financial statements and schedule of the Parent Partnership incorporated
by reference in this Prospectus and elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference in reliance upon the authority of said firm as experts in giving
said reports.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 6, 1997
PROSPECTUS
SERVICEMASTER LIMITED PARTNERSHIP
PARTNERSHIP SHARES
ServiceMaster Limited Partnership ("ServiceMaster") may offer from time to
time shares of limited partnership interest issued by ServiceMaster
("Partnership Shares"). ServiceMaster is a publicly traded limited partnership
and its Partnership Shares are listed on the New York Stock Exchange.
The Partnership Shares may be sold in one or more offerings. The terms for
each offering will be determined at the time the offering occurs. The
alternative means potentially available to ServiceMaster for sale of the
Partnership Shares in offerings effected with this Prospectus include: sales to
underwriters under firm commitment underwriting arrangements; sales through
agents, underwriters or dealers; and sales directly by ServiceMaster.
The terms of each offering of the Partnership Shares will be described in a
supplement to this Prospectus (a "Prospectus Supplement") including the initial
offering price and the net proceeds to ServiceMaster from the sale of the
Shares to be sold in that offering. If any agents for ServiceMaster,
underwriters or dealers are involved in the sale of any Partnership Shares in
respect of which this Prospectus is being delivered, the names of such agents,
underwriters or deals and any applicable commissions or discounts and the net
proceeds to ServiceMaster will be set forth in the applicable Prospectus
Supplement.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The Date of this Prospectus is
<PAGE>
AVAILABLE INFORMATION
ServiceMaster, The ServiceMaster Company Limited Partnership (in which
ServiceMaster owns directly the entire limited partnership interest ("The
ServiceMaster Company")), and ServiceMaster Incorporated of Delaware have
filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), for the
registration of, among other things, the Partnership Shares offered hereby and
Common Stock issuable by ServiceMaster Incorporated of Delaware. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits and schedules to, or
incorporated by reference in, the Registration Statement as permitted by the
rules and regulations of the Commission. For further information with respect
to ServiceMaster, The ServiceMaster Company, ServiceMaster Incorporated of
Delaware and the Partnership Shares and other securities offered hereby,
reference is made to the Registration Statement, including the exhibits
thereto, and financial statements and notes filed as a part thereof or
incorporated by reference therein. Statements made in this Prospectus
concerning the contents of any document referred to herein are not necessarily
complete. With respect to each such document filed with the Commission as an
exhibit to, or incorporated by reference in, the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
ServiceMaster is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, ServiceMaster files consolidated reports, proxy statements and
other information with the Commission. Upon consummation of the
Reincorporating Merger described in this Prospectus (which is scheduled to
occur on or before December 31, 1997), ServiceMaster Incorporated of Delaware
will become the successor to ServiceMaster and The ServiceMaster Company and
will become subject to the informational requirements identified in the
preceding sentence. Reports, proxy statements and other information filed by
ServiceMaster may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material may be obtained
by mail from the Public Reference Branch of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding ServiceMaster, The
ServiceMaster Company and ServiceMaster Incorporated of Delaware. In addition,
such material may also be inspected and copied at the offices of the New York
Stock Exchange. Partnership Shares issued by ServiceMaster are listed on the
New York Stock Exchange.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference in this Prospectus: (i) the Annual Report on Form
10-K of ServiceMaster (File No. 1-9378) for the year ended December 31, 1996
(the "1996 Form 10-K") and (ii) ServiceMaster's Quarterly Report on Form 10-Q
for the period ended March 31, 1997. All documents filed by ServiceMaster
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of the
Partnership Shares and other securities registered on the Registration
Statement shall be deemed to be incorporated herein by reference and to be a
part hereof from the respective dates of filing of such documents. As
indicated in this Prospectus, ServiceMaster, The ServiceMaster Company and
ServiceMaster Incorporated of Delaware are parties to a Merger and
Reorganization Agreement, which provides for a Reincorporating Merger and
other related transactions that are scheduled to occur on or before December
31, 1997. Upon consummation of the Reincorporating Merger, ServiceMaster
Incorporated of Delaware will become the successor to ServiceMaster as the
ultimate parent in the ServiceMaster enterprise. All documents filed by
ServiceMaster Incorporated of Delaware after the Reincorporating Merger
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of the
securities
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registered on the Registration Statement shall be deemed to be incorporated
herein by reference and to be a part hereof from the respective dates of
filing of such documents.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of the Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to
each such person, upon written or oral request. Requests should be directed to
ServiceMaster at One ServiceMaster Way, Downers Grove, Illinois 60515-9969,
Attention: Investor Relations (telephone number: (630) 271-1300).
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SERVICEMASTER, THE SERVICEMASTER
COMPANY OR SERVICEMASTER INCORPORATED OF DELAWARE. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE PARTNERSHIP SHARES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY
SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
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Unless otherwise indicated or the context otherwise requires, all references
herein to: (i) "ServiceMaster" refers to ServiceMaster Limited Partnership and
its subsidiaries and predecessors; and (ii) "The ServiceMaster Company" refers
to The ServiceMaster Company Limited Partnership. As described under "The
Reincorporating Merger and the Partnership Liquidations" below, the
shareholders of ServiceMaster have approved a Reincorporating Merger, which is
scheduled to occur on or before December 31, 1997. The Reincorporating Merger
will install a corporation as the ultimate parent in the ServiceMaster
enterprise and that corporation is called the "Successor Parent Corporation"
in this Prospectus. The term "ServiceMaster" as used in this Prospectus with
respect to periods at and after the Reincorporating Merger refers to
ServiceMaster Incorporated of Delaware and its subsidiaries.
SERVICEMASTER
ServiceMaster was formed in December 1986 as a limited partnership to
succeed to the business and assets of ServiceMaster Industries Inc., which
began its operation in 1947. ServiceMaster is a holding company whose
Partnership Shares are listed on the New York Stock Exchange and whose
principal asset consists of all of the common limited partner interest of The
ServiceMaster Company. The actual operations of the ServiceMaster enterprise
are conducted by The ServiceMaster Company and its subsidiaries.
ServiceMaster, through its subsidiaries, provides a range of services to
individual consumers, businesses and institutions in the United States and 30
other countries throughout the world. ServiceMaster is divided into three
operating units: Consumer Services, Management Services and International.
Consumer Services and Management Services are the principal operating units
ServiceMaster Consumer Services L.P. provides services to over 6,500,000
residential and commercial customers through seven market leading companies:
TruGreen L.P., which provides lawn care, tree and shrub services and indoor
plant maintenance under the "TruGreen," "ChemLawn," "TruGreen-ChemLawn" and
"Barefoot" service marks; The Terminix International Company, L.P., which
provides termite and pest control services under the "Terminix" service mark;
American Home Shield Corporation, which provides home system and appliance
warranty contracts and home inspection services under the "American Home
Shield" and "AmeriSpec" service marks; ServiceMaster Residential/Commercial
Services L.P., which provides residential and commercial cleaning and disaster
restoration services under the "ServiceMaster" service mark; Merry Maids L.P.,
which provides domestic housekeeping services under the "Merry Maids" service
mark; and Furniture Medic L.P., which provides in-home furniture repair and
restoration services under the "Furniture Medic" service mark. These services
are part of the "ServiceMaster Quality Network" and may be accessed by calling
a single toll-free telephone number: 1-800-WE SERVE.
ServiceMaster Management Services L.P. is organized into three discrete
operating units: ServiceMaster Healthcare Management Services, Education
Management Services and Business and Industry Management Services. Each of
these three units provides to their respective customers a variety of
supportive management services, including the management of housekeeping,
plant operations and maintenance, clinical equipment maintenance, laundry and
linen, grounds and landscaping, energy management services and food service.
In addition, Healthcare Management Services provides management and other
services to the long-term care, assisted living and home health care markets.
USE OF PROCEEDS
ServiceMaster intends to use the net proceeds from the sale of the
Partnership Shares for general business purposes, which may include, but are
not limited to, repayment, redemption or repurchase of outstanding
indebtedness; acquisitions, capital expenditures and working capital
requirements; and such other purposes as may be specified in the relevant
Prospectus Supplement. A description of any indebtedness to be refinanced with
the proceeds from the sale of the Partnership Shares will be set forth in the
applicable Prospectus Supplement.
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<PAGE>
DESCRIPTION OF PARTNERSHIP SHARES
ServiceMaster is a publicly traded limited partnership formed under the
Delaware Revised Uniform Limited Partnership Act.
ServiceMaster Management Corporation serves as ServiceMaster's Managing
General Partner. The Board of Directors of ServiceMaster Management
Corporation serves as the Board of Directors for the ServiceMaster enterprise.
ServiceMaster Management Corporation holds a 1% carried interest in both
ServiceMaster and its principal subsidiary partnership, and these two
interests together provide ServiceMaster Management Corporation with
approximately 2% of the income earned and distributions made by the
ServiceMaster enterprise. All other income and distributions attributable to
ServiceMaster are allocated to the holders of the outstanding Partnership
Shares. Each Partnership Share represents an ownership interest in
ServiceMaster equal to the interest represented by every other Partnership
Share. Distributions are made pro rata with the same amount distributed with
respect to each outstanding Partnership Share. Taxable income is allocated to
the owners of Partnership Shares based on the time at which the shares were
acquired and the price paid for the shares and other factors; various tax
consequences of investment in Partnership Shares are described in the 1996
Form 10-K, which is incorporated into this Prospectus by reference.
As of June 30, 1997, an aggregate of 182,784,000 Partnership Shares were
outstanding (before giving effect to any issuances of Partnership Shares which
may be sold in offerings made by means of this Prospectus).
Partnership Shares are listed on the New York Stock Exchange and are freely
transferable.
THE REINCORPORATING MERGER AND PARTNERSHIP LIQUIDATIONS
ServiceMaster was organized as a limited partnership at the end of 1986 to
enable the parent entity in the ServiceMaster enterprise to function free of
the federal corporate income tax. In 1987, the Internal Revenue Code was
amended to reimpose federal corporate income tax on publicly traded
partnerships like ServiceMaster beginning January 1, 1998.
On December 11, 1991, ServiceMaster issued a proxy statement/prospectus (the
"Reincorporation Proxy Statement") in which the board of directors of
ServiceMaster's Managing General Partner recommended that the holders of the
outstanding partnership shares approve, among other things, a merger (the
"Reincorporating Merger") having the characteristics described in the
Reincorporation Proxy Statement. The limited partners approved and authorized
the Reincorporating Merger at a special meeting held on January 13, 1992.
The purpose of the Reincorporating Merger is to substitute a corporation for
ServiceMaster as the ultimate parent in the ServiceMaster enterprise before
ServiceMaster becomes subject to federal corporate income tax. The
Reincorporating Merger is scheduled to be consummated on or before December
31, 1997. ServiceMaster Incorporated of Delaware has been organized to serve
as the ultimate parent in the ServiceMaster enterprise after the
Reincorporating Merger and is hereinafter called the "Successor Parent
Corporation." The Successor Parent Corporation is at present a wholly owned
subsidiary of ServiceMaster.
The Reincorporating Merger will be accomplished by merging a subsidiary of
the Successor Parent Corporation (which subsidiary was organized to serve as
the vehicle for the merger) into ServiceMaster. Upon consummation of the
Reincorporating Merger (i) each Partnership Share issued prior to that time by
ServiceMaster will be converted into one share of common stock issued by the
Successor Parent Corporation (a "Corporate Share") and (ii) ServiceMaster will
become a wholly owned subsidiary of the Successor Parent Corporation. Each of
the terms "ServiceMaster Shares" and "Shares" is used in this Prospectus to
mean (i) shares of limited partnership interest in ServiceMaster when it
refers to any time prior to the consummation of the Reincorporating Merger and
(ii) shares of common stock issued or issuable by the Successor Parent
Corporation when it refers to any time after consummation or the
Reincorporating Merger.
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No federal income tax will be imposed on ServiceMaster shareholders as a
result of the Reincorporating Merger.
ServiceMaster expects that after the Reincorporating Merger, ServiceMaster
and The ServiceMaster Company (which is the sole subsidiary of the
ServiceMaster) will be merged or liquidated into the Successor Parent
Corporation (such transactions are called the "Partnership Liquidations" in
this Prospectus). Upon consummation of the Partnership Liquidations, the
Successor Parent Corporation will become the successor to both ServiceMaster
and The ServiceMaster Company and will own all businesses previously owned
(directly or indirectly) by ServiceMaster or The ServiceMaster Company.
ServiceMaster intends to change the name of the Successor Parent Corporation
to "The ServiceMaster Company" not later than the time the Partnership
Liquidations are completed. The term "Reincorporation" is used in this
Prospectus to refer to the Reincorporating Merger and the Partnership
Liquidations and related actions.
The Board of Directors of the Successor Parent Corporation immediately after
the Reincorporation will be comprised of the same individuals who served as
members of the Board of Directors of the Managing General Partner of
ServiceMaster immediately prior to the Reincorporation. Each of the terms
"Board" and "Board of Directors" is used in this Prospectus to mean (i) the
Board of Directors of ServiceMaster Management Corporation (i.e.,
ServiceMaster's Managing General Partner) when it refers to any time prior to
the consummation of the Reincorporating Merger and (ii) the Board of Directors
of the Successor Parent Corporation when it refers to any time after
consummation of the Reincorporation.
Each individual who held a management or other employment position with
ServiceMaster or The ServiceMaster Company immediately prior to the
Reincorporation will hold the same position with the Successor Parent
Corporation immediately after the Reincorporation. No payment or equity
issuance will be made to the ServiceMaster Management Corporation in its
capacity as Managing General Partner of either ServiceMaster or The
ServiceMaster Company in connection with Reincorporation except for the pay
out of any income allocated its capital account prior to Reincorporation.
The Board of Directors has the right to elect not to consummate the
Reincorporating Merger.
After Reincorporation, ServiceMaster's operations will become subject to
federal income tax. ServiceMaster's management currently estimates that the
effective tax rate reflected in ServiceMaster's income statement after
Reincorporation will be approximately 40 percent. Pro forma earnings per share
would have been $0.69 in 1996 (contrasted with $1.13 reported by
ServiceMaster), $0.59 in 1995 (contrasted with $0.96 reported by
ServiceMaster), and $0.49 in 1994 (contrasted with $0.80 reported by
ServiceMaster) if the Reincorporation had occurred at the beginning of each of
those periods. These estimates are necessarily subject to change based on
changes in circumstances, statutory tax rates, and other relevant factors.
6
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SUMMARY COMPARISON OF PARTNERSHIP SHARES AND CORPORATE SHARES
As described in greater detail above, the holders of ServiceMaster's
Partnership Shares have approved a Reincorporating Merger which is scheduled to
occur on or before December 31, 1997. Upon consummation of the Reincorporating
Merger, (i) the Successor Parent Corporation will replace ServiceMaster as the
ultimate parent entity in the ServiceMaster enterprise and (ii) each
Partnership Share outstanding immediately prior to the Reincorporating Merger
will be converted into one share of common stock issuable by the Successor
Parent Corporation. The following summary compares various characteristics of
the Partnership Shares and the Corporate Shares. This summary is qualified in
its entirety by the more complete description of the tax and other
characteristics of investment in ServiceMaster contained in the 1996 Form 10-K,
by other information filed by ServiceMaster or the Successor Parent Corporation
with the Commission and incorporated into this Prospectus by reference and by
other information in and exhibits to the Registration Statement of which this
Prospectus is a part, including the Agreement of Limited Partnership for
ServiceMaster as Amended and Restated on January 31, 1992.
PARTNERSHIP SHARES CORPORATE SHARES
------------------ ----------------
TAXATION
Under the Internal Revenue Code of The Successor Parent Corporation
1986 as amended (the "Code"), will be obligated to pay federal
ServiceMaster is not currently ob- income tax on the taxable income
ligated to pay federal income tax. realized from its operations.
The Code was amended in 1987 to im-
pose federal corporate income tax Holders of Corporate Shares gener-
on operations of publicly traded ally will not be required to in-
partnerships like ServiceMaster be- clude their share of the Successor
ginning January 1, 1998. It does Parent Corporation's taxable income
not appear likely that any change in computing their own taxable in-
in the law will become effective come.
which would cause ServiceMaster not
to proceed with the Holders of Corporate Shares gener-
Reincorporation, which is scheduled ally will be required to include
to occur on or before December 31, any dividends received from the
1997. Successor Parent Corporation in
computing their own taxable income
Under the federal income law appli- except that stockholders which are
cable for the balance of 1997, each corporations generally will be al-
holder of Partnership Shares is al- lowed a dividend-received deduction
located a share of the taxable in- equal to 70% of the amount of divi-
come attributable to dends received from the Successor
ServiceMaster's operations; the Parent Corporation.
amount of the taxable income allo-
cable to each shareholder is vari- The earnings of, or any dividends
able and is dependent upon when the received from, the Successor Parent
shareholder acquired the shares in- Corporation generally will not con-
volved, the price paid for those stitute unrelated business taxable
shares and other factors. Partner- income to tax-exempt shareholders,
ship income allocable to Partner- except in cases where shareholder's
ship shareholders who are otherwise investment in the Corporate Shares
tax exempt organizations is gener- is debt-financed (within the mean-
ally treated as unrelated business ing of section 514 of the Code).
taxable income and accordingly may
be subject to federal income tax In the event of a sale of a Corpo-
despite the fact that such share- rate Share, the selling stockholder
holders are generally tax exempt. generally will recognize capital
However, ServiceMaster anticipates gain or loss equal to the amount of
that the depreciation and other de- the difference between the amount
ductions attributable to persons realized and the stockholder's ba-
who purchase Partnership Shares be- sis in the Corporate Share.
tween the date of this Prospectus
and the end of 1997 (whether or not
tax exempt) will exceed the income
allocable to those shares with the
result that no taxable income
should be realized in 1997 by rea-
son of such purchases.
7
<PAGE>
Cash distributions received from
ServiceMaster by a holder of its
shares are not taxable to that
holder except to the extent such
distributions exceed the holder's
adjusted tax basis in the holder's
shares. For purposes of computing
gain or loss on the sale of a Part-
nership Share, a shareholder's ini-
tial tax basis is increased by in-
come allocated to the holder and
decreased by losses and distribu-
tions allocated to the holder. Gen-
erally, any gain or loss realized
on the sale of a Partnership Share
is treated as a capital gain or
loss, but some ordinary income may
be realized (even if there is no
overall gain). No gain or loss will
be recognized by reason of the con-
version of Partnership Shares into
Corporate Shares in the Reincorpo-
rating Merger, and each holder's
basis in the holder's Partnership
Shares will carry over to the Cor-
porate Shares such holder receives
in exchange.
CASH DISTRIBUTIONS AND DIVIDENDS
ServiceMaster and its predecessors
have paid a cash distribution to It is the present intention of the
shareholders every year since 1962. ServiceMaster Board to continue to
ServiceMaster has increased the manage the quarterly distribution
amount of the distribution paid per process after Reincorporation with
share every year since 1970. essentially the same approach and
ServiceMaster's Board of Directors philosophy used to determine the
intends to continue to pay quar- amount of quarterly distributions
terly dividends to the extent prior to Reincorporation. The Board
ServiceMaster's operations in the expects that the Reincorporation by
future continue to generate avail- itself will not cause a diminution
able cash in a manner consistent in the amount of quarterly distri-
with past performance. There can of butions paid. The Board reserves
course be no guarantee as to what the right to change the approach to
the future results will actually be dividend distributions based on
or that the pattern of past distri- relevant criteria, including the
butions will be continued in the results of ServiceMaster's opera-
future. tions and the relative merits of
competing opportunities for employ-
ment of available cash which may
present themselves in the future.
ServiceMaster paid cash distribu-
tions for 1996 equal to $0.44 per
share and paid distributions at-
tributable to the first and second
quarters of 1997 in the amount of
$0.1133 per share per quarter which
were paid on January 31 and April
30 1997, respectively.
ServiceMaster's Board of Directors
expects to authorize cash distribu-
tions of $0.12 per share for each
of the two remaining calendar quar-
ters in 1997.
LIQUIDITY AND MARKETABILITY
The Partnership Shares are freely After the Reincorporation, the Cor-
transferrable and are listed on the porate Shares will be freely
New York Stock Exchange. After the transferrable. The Corporate Shares
Reincorporation, the Partnership have been approved for listing on
Shares will cease to be outstand- the New York Stock Exchange and
ing. will be listed on that Exchange
from the time of Reincorporation.
8
<PAGE>
MANAGEMENT; VOTING RIGHTS
ServiceMaster Management Corpora-
tion serves as the Managing General The Board of Directors of the Suc-
Partner for the ServiceMaster Part- cessor Parent Corporation is di-
nership and is authorized by the vided into three classes exactly
governing like the Board of ServiceMaster
Agreement of Limited Partnership to Management Corporation; one class
exercise all management powers over of directors comes up for election
the business and affairs of each year, and members of each
ServiceMaster and the businesses it class serve a three year term on
owns. the Board.
ServiceMaster Management Corpora- Immediately after the
tion is in turn governed by a Board Reincorporation, the individuals
of Directors. The Board appoints who served as directors of
officers of ServiceMaster and its ServiceMaster Management Corpora-
principal subsidiaries and invests tion immediately prior to the
those officers with the same au- Reincorporation will become members
thority and responsibility gener- of the Board of the Successor Par-
ally exercised by corporate offi- ent Corporation and will serve in
cers. the same class on that Board as the
class in which they last served on
the Partnership's Board. Each indi-
vidual who served as an officer of
ServiceMaster Partnership immedi-
ately prior to the Reincorporation
will be appointed by the Board to
the same officership position with
the Successor Parent Corporation
immediately after the
Reincorporation.
The Board's membership is divided
into three classes; one class of
directors comes up for election
each year, and members of each
class serve a three-year term on
the Board. The Board itself is re-
sponsible for determining the indi-
viduals to be elected to the Board
in each class every year subject to
a requirement in the Certificate of
Incorporation that a majority of
the positions on the Board are re-
served for independent directors as
defined in the Certificate.
After the Reincorporation, one of
the three classes of directors of
the Successor Parent Corporation
will come up for election each
year. The holders of Corporate
Shares will have the right to vote
on the Board candidates each year.
The candidates for whom the highest
number of shares are voted will be
elected. Each Corporate Share will
carry one vote, and each share-
holder will have the right to cast
a number of votes for each Board
position equal to the number of
Corporate Shares such shareholder
has the power to vote.
Holders of Partnership Shares do
not vote for members of the Board.
Those holders do however have the
right to replace ServiceMaster Man-
agement Corporation and thereby re-
place the entire Board if they de-
termine such action to be in their
best interests. Such replacement
would require the vote of two-
thirds of the outstanding Partner-
ship Shares and the satisfaction of
certain other requirements. If more
than 20% of the outstanding Part-
nership Shares were owned by a sin-
gle shareholder or group working in
concert, then removal would also
require the approval of two-thirds
of the outstanding Partnership
Shares that are not so held.
Corporate shareholders have the
right to remove directors of the
Successor Parent Corporation pro-
vided that such removal may only be
for cause and provided that a
supermajority vote is required for
such removal.
SPECIAL MEETINGS
Meetings of the holders of Partner- Special meetings of the holders of
ship Shares may be called by the the Corporate Shares may be called
Managing General Partner or by only by the Successor Parent Corpo-
Shareholders holding at least 20% ration's Chairman or chief execu-
of the outstanding shares, provid- tive officer or by a majority of
ed, however, that the right of the Corporation's Board of Direc-
Shareholders to call a meeting does tors.
not include the right to propose
amendments to the Partnership
Agreement governing ServiceMaster.
9
<PAGE>
REDEMPTION
The Partnership Shares are gener-
ally not subject to mandatory re- The Corporate Shares are not sub-
demption. ject to mandatory redemption.
LIQUIDATION RIGHTS
The holders of the Partnership The ServiceMaster Board has no in-
Shares are entitled to share rata- tention of liquidating the Succes-
bly in any assets distributable sor Parent Corporation. If such a
(after satisfaction of creditors liquidation were to occur, the
and the holders of any senior eq- holders of the Corporate Shares
uity securities that might hereaf- would be entitled to share ratably
ter be issued by the Partnership) in any assets remaining after sat-
in liquidation. Because the Part- isfaction of amounts owed creditors
nership Shares will be converted and on any preferred stock that the
into Corporate Shares prior to the Board of the Successor Parent Cor-
liquidation to be accomplished in poration might hereafter elect to
connection with the issue.
Reincorporation, the holders of the
Partnership Shares will not be en-
titled to any distribution by rea-
son of the liquidation of
ServiceMaster into the Successor
Parent Corporation as part of the
Reincorporation.
LIMITED LIABILITY
Holders of Partnership Shares gen-
erally do not have personal liabil- The Corporate Shares will be fully
ity for obligations of paid and nonassessable. Ownership
ServiceMaster. of Corporate Shares will not cause
the owner to have personal liabil-
ity for any obligations of the Suc-
cessor Parent Corporation.
CONTINUITY OF EXISTENCE
Section 1.5 of the Partnership The Successor Parent Corporation's
Agreement provides that the Part- Certificate of Incorporation pro-
nership shall continue in existence vides that the Corporation will
until December 31, 2036 provided have perpetual existence.
that such date can be changed if
the change is approved by the Man-
aging General Partner and the hold-
ers of a majority of the outstand-
ing Partnership Shares.
FEDERAL SECURITIES REPORTING
ServiceMaster is subject to the re-
porting requirements of the Ex- After the Reincorporation, the Suc-
change Act and files annual, quar- cessor Parent Corporation will be
terly and other reports thereunder. subject to the reporting require-
ServiceMaster also provides annual ments of the Exchange Act and will
reports to Partnership sharehold- file annual and quarterly reports
ers. thereunder and will also file other
reports when required or when it
otherwise decides additional re-
ports should be filed. The Succes-
sor Parent Corporation will also
issue to its shareholders an annual
proxy statement and an annual re-
port to shareholders.
10
<PAGE>
PLAN OF DISTRIBUTION
ServiceMaster may sell the ServiceMaster Shares in or outside the United
States through underwriters or dealers, directly to one or more purchasers, or
through agents. The Prospectus Supplement with respect to the ServiceMaster
Shares will set forth the terms of the offering of the ServiceMaster Shares,
including the name or names of any underwriters, dealers or agents, the
purchase price of the ServiceMaster Shares and the proceeds to ServiceMaster
from such sale, any delayed delivery arrangements, any underwriting discounts
and other items constituting underwriters' compensation, the initial public
offering price, and any discounts or concessions allowed or re-allowed or paid
to dealers.
If firm commitments arrangements with underwriters are used in the sale, the
ServiceMaster Shares will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The ServiceMaster Shares may be
offered to the public either through underwriting syndicates represented by
one or more managing underwriters or directly by one or more firms acting as
underwriters. The underwriter or underwriters with respect to a particular
underwritten offering of ServiceMaster Shares will be named in the Prospectus
Supplement relating to such offering, and, if an underwriting syndicate is
used, the managing underwriter or underwriters will be set forth on the cover
of such Prospectus Supplement. Unless otherwise set forth in the Prospectus
Supplement relating thereto, the obligations of the underwriters or agents to
purchase the ServiceMaster Shares will be subject to conditions precedent, and
the underwriters will be obligated to purchase all the ServiceMaster Shares if
any are purchased. The initial public offering price and any discounts or
concessions allowed or re-allowed or paid to dealers may be changed from time
to time.
If dealers are used in the sale of ServiceMaster Shares with respect to
which this Prospectus is delivered, ServiceMaster will sell such ServiceMaster
Shares to the dealers as principals. The dealers may then resell such
ServiceMaster Shares to the public at varying prices to be determined by such
dealers at the time of resale. The names of the dealers and the terms of the
transaction will be set forth in the Prospectus Supplement relating thereto.
ServiceMaster Shares may be sold directly by ServiceMaster or through agents
designated by ServiceMaster from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the ServiceMaster Shares with respect to
which this Prospectus is delivered will be named, and any commissions payable
by the Company to such agent will be set forth, in the Prospectus Supplement
relating thereto. Unless otherwise indicated in the Prospectus Supplement, any
such agent will be acting on a best efforts basis for the period of its
appointment.
ServiceMaster Shares may be sold directly by ServiceMaster to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the applicable Prospectus Supplement.
In connection with the sale of the ServiceMaster Shares, underwriters or
agents may receive compensation from ServiceMaster or from purchasers of
ServiceMaster Shares for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters, agents and dealers participating in
the distribution of the ServiceMaster Shares may be deemed to be underwriters,
and any discounts or commissions received by them from The ServiceMaster
Company and any profit on the resale of the ServiceMaster Shares by them may
be deemed to be underwriting discounts or commissions under the Securities
Act.
If so indicated in the Prospectus Supplement, ServiceMaster will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase ServiceMaster Shares from ServiceMaster at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
11
<PAGE>
Agents, dealers and underwriters may be entitled under agreements entered
into with ServiceMaster to indemnification by ServiceMaster against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto. Agents, dealers,
and underwriters may be customers of, engage in transactions with or perform
services for the ServiceMaster and its subsidiaries in the ordinary course of
business.
Certain of the underwriters, dealers or agents and their affiliates may be
customers of, engage in transactions with and perform services for the
ServiceMaster and/or its subsidiaries in the ordinary course of business.
VALIDITY OF SERVICEMASTER SHARES
The validity of the Partnership Shares and Corporate Shares issuable in the
offerings registered on the Registration Statement of which this Prospectus is
a part will be passed upon for ServiceMaster by Vernon T. Squires, Esq.,
Senior Vice President and General Counsel of ServiceMaster. As of July 22,
1997, Vernon T. Squires owned 255,887 shares and options to acquire 54,000
shares of limited partnership interests of ServiceMaster.
EXPERTS
The financial statements and schedule of the Parent Partnership incorporated
by reference in this Prospectus and elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and incorporated by reference
in reliance upon the authority of said firm as experts in giving said reports.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
S.E.C. Registration Fee........................................ $287,879*
Legal Fees and Expenses........................................ 100,000
Accounting Fees and Expenses................................... 30,000
Trustee's Fees and Expenses.................................... 10,000
Rating Agency Fees............................................. 300,000
Blue Sky Fees and Expenses..................................... 15,000
Printing and Engraving Fees.................................... 100,000
Miscellaneous.................................................. 17,121
--------
Total...................................................... $860,000
========
</TABLE>
- --------
*Actual. All other amounts are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ServiceMaster Management Corporation (the "Managing General Partner") and
ServiceMaster Incorporated of Delaware (the "Successor Parent Corporation")
are incorporated under the laws of the State of Delaware. Section 145 of the
DGCL, inter alia ("Section 145") provides that a Delaware corporation may
indemnify any persons who were, are or are threatened to be made, parties to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of such corporation), by reason of the fact that such person is
or was an officer, director, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the corporation's best interests and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe that his conduct was illegal. A Delaware corporation may indemnify any
persons who are, were or are threatened to be made, a party to any threatened,
pending or completed action or suit by or in the right of the corporation by
reason of the fact that such person was a director, officer, employee or agent
of such corporation, or is or was serving at the request of such corporation
as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit, provided such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests, provided that no indemnification is permitted
without judicial approval if the officer, director, employee or agent is
adjudged to be liable to the corporation. Where an officer, director, employee
or agent is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
that such officer or director has actually and reasonably incurred.
The Certificate of Incorporation for the Managing General Partner and the
Certificate of Incorporation for the Successor Parent Corporation each
provides that, to the fullest extent permitted by the DGCL as the same exists
or may hereafter be amended, a director of the Managing General Partner or the
Successor Parent Corporation shall not be liable to the Managing General
Partner or the Successor Parent Corporation or its stockholders for monetary
damages for a breach of fiduciary duty as a director.
II-1
<PAGE>
ServiceMaster Limited Partnership (the "Parent Partnership") and The
ServiceMaster Company Limited Partnership ("The ServiceMaster Company") are
limited partnerships formed under the laws of the State of Delaware. Section
108 of the Delaware Revised Uniform Limited Partnership Act provides that a
Delaware partnership may, subject to such standards and restrictions, if any,
as are set forth in its partnership agreement, may and shall have the power
to, indemnify and hold harmless any partner or other person from and against
any and all claims and demands whatsoever.
Article 7.9 of the ServiceMaster Limited Partnership Agreement of Limited
Partnership ("Article 7.9") obligates the Parent Partnership to indemnify to
the fullest extent allowable by law any person who at any time serves as a
director or executive officer of the Parent Partnership, The ServiceMaster
Company, ServiceMaster Management Services, Inc. or ServiceMaster Consumer
Services, Inc., against any claim which arises in connection with his or her
service with the Parent Partnership, including any subsidiary, any
ServiceMaster employee benefit plan, or in any other capacity in which he or
she is asked to serve by the Managing General Partner's Board of Directors or
Chief Executive Officer. The Board of Directors of the Managing General
Partner or its Chief Executive Officer may extend the indemnification
protections to any other person to the extent they deem appropriate. Article
7.9 is intended to allow indemnification in accordance with and subject to
Article 7.9 and to the fullest extent permitted by applicable law, including
but not limited to the Delaware Revised Uniform Limited Partnership Act.
Article 7.9(c) provides that, except to the extent that ServiceMaster
otherwise expressly agrees in writing, the Parent Partnership will not be
obligated to reimburse any person for or otherwise indemnify any person
against: (a) any obligation such person may have under any written contract
except to the extent such obligation arises by reason of any action taken by
such person to satisfy, settle or otherwise deal with any claim against which
such person is entitled to indemnification; (b) except as otherwise expressly
provided by a separate written agreement, any income taxes payable by reason
of salary, bonus or other income or gain actually realized by such person; (c)
any liability imposed by contract or applicable law resulting from such
person's competition against the ServiceMaster enterprise; and (d) any
obligation to pay an amount up to the value personally realized by such person
by stealing or by any other action which constitutes a criminal felony. With
certain exceptions, the Parent Partnership will not be obligated to indemnify
any person in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized by the Managing
General Partner's Board of Directors.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against him and incurred by him
in any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
Article 7.9(o) of the Parent Partnership's Partnership Agreement further
provides that ServiceMaster may purchase and maintain insurance on behalf of
any person who is or was a director or executive officer of the Parent
Partnership, The ServiceMaster Company, ServiceMaster Management Service, Inc.
or ServiceMaster Consumer Services, Inc. or is or was serving in any other
capacity with the Parent Partnership or any other corporation at the request
of the Managing General Partner's Board of Directors or Chief Executive
Officer against any expense, liability or loss, whether or not ServiceMaster
would have the power to indemnify such person against such liability under
Article 7.9.
All of the Managing General Partner's directors and the officers of the
Parent Partnership, The ServiceMaster Company, and the Successor Parent
Partnership are covered by insurance policies maintained and held in effect by
the Parent Partnership against certain liabilities for actions taken in such
capacities, including liabilities under the Securities Act of 1933.
The Certificate of Incorporation for the Successor Parent Corporation
contains indemnification provisions substantially identical to those in
Article 7.9 of the Parent Partnership's Partnership Agreement.
II-2
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<C> <S> <C>
*1.1 Form of Underwriting Agreement for the Debt Securities.
**4.1 Indenture, dated as of August 15, 1997, among The
ServiceMaster Company, as issuer, ServiceMaster, as guar-
antor, and Harris Trust and Savings Bank, as Trustee.
**4.2 Form of Debt Securities relating to Senior Debt Securities
(included in Exhibit 4.1).
**5.1 Opinion of Vernon T. Squires, Senior Vice President and
General Counsel of ServiceMaster.
**12.1 Statement and Computation of ratio of earnings to fixed
charges.
**23.1 Consent of Vernon T. Squires (included in Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
**24.1 Power of Attorney.
**25.1 Form T-1 Statement of Eligibility of the Trustee.
</TABLE>
- --------
*Filed herewith.
**Previously filed.
ITEM 17. UNDERTAKINGS.
(A) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement) shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
SERVICEMASTER COMPANY LIMITED PARTNERSHIP CERTIFIES THAT IT HAS REASONABLE
GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-
3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DOWNERS
GROVE, ILLINOIS, ON THE DAY OF AUGUST 6, 1997.
The ServiceMaster Company Limited
Partnership, As Registrant
By: ServiceMaster Management
Corporation
Its Managing General Partner
/s/ Vernon T. Squires
By: _________________________________
Vernon T. Squires
Senior Vice President and General
Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SERVICEMASTER
LIMITED PARTNERSHIP CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT
IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DOWNERS GROVE, ILLINOIS, ON
THE DAY OF AUGUST 6, 1997.
ServiceMaster Limited Partnership,
As Registrant
By: ServiceMaster Management
Corporation
Its Managing General Partner
/s/ Vernon T. Squires
By: _________________________________
Vernon T. Squires
Senior Vice President and General
Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON AUGUST 6, 1997 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of ServiceMaster Limited
___________________________________________ Partnership, The ServiceMaster Company
C. William Pollard Limited Partnership, and ServiceMaster
Management Corporation and Director of
ServiceMaster Management Corporation
* President and Chief Executive Officer of
___________________________________________ ServiceMaster Limited Partnership, The
Carlos H. Cantu ServiceMaster Company Limited
Partnership, and ServiceMaster Management
Corporation and Director of ServiceMaster
Management Corporation
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Vice Chairman of ServiceMaster Limited
___________________________________________ Partnership, The ServiceMaster Company
Charles W. Stair Limited Partnership, and ServiceMaster
Management Corporation and Director of
ServiceMaster Management Corporation
* Vice Chairman of ServiceMaster Limited
___________________________________________ Partnership, The ServiceMaster Company
Philip B. Rooney Limited Partnership, and ServiceMaster
Management Corporation and Director of
ServiceMaster Management Corporation
* Director of ServiceMaster Management
___________________________________________ Corporation
Paul W. Berezny, Jr.
* Director of ServiceMaster Management
___________________________________________ Corporation
Henry O. Boswell
* Director of ServiceMaster Management
___________________________________________ Corporation
Brian Griffiths
* Director of ServiceMaster Management
___________________________________________ Corporation
Sidney E. Harris
* Director of ServiceMaster Management
___________________________________________ Corporation
Herbert P. Hess
* Director of ServiceMaster Management
___________________________________________ Corporation
Michele M. Hunt
* Director of ServiceMaster Management
___________________________________________ Corporation
Gunther H. Knoedler
* Director of ServiceMaster Management
___________________________________________ Corporation
James D. McLennan
* Director of ServiceMaster Management
___________________________________________ Corporation
Vincent C. Nelson
* Director of ServiceMaster Management
___________________________________________ Corporation
Kay A. Orr
* Director of ServiceMaster Management
___________________________________________ Corporation
Dallen W. Peterson
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Director of ServiceMaster Management
___________________________________________ Corporation
Burton E. Sorensen
* Director of ServiceMaster Management
___________________________________________ Corporation
David K. Wessner
</TABLE>
*The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 1 to the Registration Statement pursuant to the Powers of
Attorney executed by the above-named officers and directors of
ServiceMaster Incorporated of Delaware and filed with the Securities and
Exchange Commission on behalf of such officers and directors.
/s/ Vernon T. Squires
_____________________________________
Vernon T. Squires
Attorney in fact
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SERVICEMASTER
INCORPORATED OF DELAWARE CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY
CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DOWNERS GROVE,
ILLINOIS, ON THE DAY OF AUGUST 6, 1997.
ServiceMaster Incorporated of
Delaware, As Registrant
/s/ Vernon T. Squires
By: _________________________________
Vernon T. Squires
Senior Vice President and
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON AUGUST 6, 1997 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<S> <C>
* Vice President, Treasurer and Director of
___________________________________________ ServiceMaster Incorporated of Delaware
Ernest J. Mrozek (Principal Executive Officer)
/s/ Vernon T. Squires Vice President and Director of
___________________________________________ ServiceMaster Incorporated of Delaware
Vernon T. Squires
* Vice President, Assistant Treasurer and
___________________________________________ Director of ServiceMaster Incorporated of
Bruce T. Duncan Delaware (Principal Financial and
Accounting Officer)
</TABLE>
*The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 1 to the Registration Statement pursuant to the Powers of
Attorney executed by the above-named officers and directors of
ServiceMaster Incorporated of Delaware and filed with the Securities and
Exchange Commission on behalf of such officers and directors.
/s/ Vernon T. Squires
_____________________________________
Vernon T. Squires
Attorney in fact
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ----------
<C> <S> <C>
*1.1 Form of Underwriting Agreement for the Debt Securities.
**4.1 Indenture, dated as of August 15, 1997, among The
ServiceMaster Company, as issuer, ServiceMaster, as
guarantor, and Harris Trust and Savings Bank, as Trust-
ee.
**4.2 Form of Debt Securities relating to Senior Debt Securi-
ties (included in Exhibit 4.1).
**5.1 Opinion of Vernon T. Squires, Senior Vice President and
General Counsel of ServiceMaster.
**12.1 Statement and Computation of ratio of earnings to fixed
charges.
**23.1 Consent of Vernon T. Squires (included in Exhibit 5.1).
*23.2 Consent of Arthur Andersen LLP.
**24.1 Power of Attorney.
**25.1 Form T-1 Statement of Eligibility of the Trustee.
</TABLE>
- --------
* Filed herewith.
** Previously filed.
<PAGE>
THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP
[DEBT SECURITIES]
Underwriting Agreement
[DATE]
To the Representatives named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
The ServiceMaster Company Limited Partnership, a Delaware limited
partnership (the "Company"), proposes to issue and sell to the underwriters
named in Schedule II hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), the principal amount of its debt
securities identified in Schedule I hereto (the "Securities"), to be issued
under the indenture specified in Schedule I hereto (the "Indenture") between the
Company, ServiceMaster Limited Partnership, a Delaware limited partnership (the
"Guarantor") and the Trustee identified in such Schedule (the "Trustee"). The
Securities are to be unconditionally guaranteed (the "Guarantees") as to payment
of principal, premium, if any, and interest by the Guarantor upon the basis and
on the terms specified in the Indenture. If the firm or firms listed in
Schedule II hereto include only the firm or firms listed in Schedule I hereto,
then the terms "Underwriters" and "Representatives", as used herein, shall each
be deemed to refer to such firm or firms.
The Company and the Guarantor have prepared and filed with the Securities
and Exchange Commission (the "Commission") in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement (the file number of which is set forth in Schedule I hereto) on Form
S-3, relating to certain debt securities (the "Shelf Securities") to be issued
from time to time by the Company. The Company and the Guarantor also have filed
with, or propose to file with, the Commission pursuant to Rule 424 under the
Securities Act a prospectus supplement specifically relating to the Securities.
The registration statement as amended to the date of this Agreement is
hereinafter referred to as the "Registration Statement" and the related
prospectus covering the Shelf Securities in the form first used to confirm sales
of the Securities is hereinafter referred to as the "Basic Prospectus". The
Basic Prospectus as supplemented by the prospectus supplement specifically
relating to the Securities in the form first used to confirm sales of the
Securities is hereinafter referred to as the "Prospectus". If the Company and
the Guarantor have filed an abbreviated registration statement pursuant to Rule
462(b) under the Securities Act (the "Rule 462 Registration Statement"), then
any reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462
<PAGE>
Registration Statement. Any reference in this Agreement to the Registration
Statement, the Basic Prospectus, any preliminary form of Prospectus (a
"preliminary prospectus") previously filed with the Commission pursuant to Rule
424 or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the date of this Agreement or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed under the Exchange Act after the date of this Agreement, or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be, which are deemed to be incorporated by reference therein.
The Company and the Guarantor hereby agree with the Underwriters as
follows:
1. The Company agrees to issue and sell the Securities to the several
Underwriters, and the Guarantor agrees to guarantee the Securities, as
hereinafter provided, and each Underwriter, on the basis of the representations
and warranties herein contained, but subject to the conditions hereinafter
stated agrees to purchase, severally and not jointly, from the Company the
respective principal amount of Securities set forth opposite such Underwriter's
name in Schedule II hereto at the purchase price set forth in Schedule I hereto
plus accrued interest, if any, from the date specified in Schedule I hereto to
the date of payment and delivery.
2. Each of the Company and the Guarantor understand that the several
Underwriters intend (i) to make a public offering of their respective portions
of the Securities and (ii) initially to offer the Securities upon the terms set
forth in the Prospectus.
3. Payment for the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives, no later than noon the Business Day (as defined below) prior to
the Closing Date (as defined below), on the date and at the time and place set
forth in Schedule I hereto (or at such other time and place on the same or such
other date, not later than the fifth Business Day (as defined below) thereafter,
as you and the Company may agree in writing). As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City. The time and date of such payment and
delivery with respect to the Securities are referred to herein as the "Closing
Date".
Payment for the Securities shall be made against delivery to the nominee of
The Depository Trust Company for the respective accounts of the several
Underwriters of the Securities of one or more global notes (the "Global Note")
representing the Securities, with any transfer taxes payable in connection with
the transfer to the Underwriters of the Securities duly paid by the Company.
The Global Note will be made available for inspection by the
Representatives at the office of_________________________________________
not later than 1:00 P.M., New York City time, on the Business Day prior to the
Closing Date.
2
<PAGE>
4. The Company and the Guarantor jointly and severally represent and
warrant to each Underwriter that:
(a) the Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the
Company and the Guarantor, threatened by the Commission; and the
Registration Statement and Prospectus (as amended or supplemented if the
Company or the Guarantor shall have furnished any amendments or supplements
thereto) comply, or will comply, as the case may be, in all material
respects with the Securities Act and the Trust Indenture Act of 1939, as
amended and the rules and regulations of the Commission thereunder
(collectively, the "Trust Indenture Act"), and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, and the Prospectus, as amended or
supplemented at the Closing Date, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
foregoing representations and warranties shall not apply to (i) that part
of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of
the Trustee, and (ii) statements or omissions in the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company and the Guarantor in
writing by such Underwriter through the Representatives expressly for use
therein;
(b) the documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such
documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated
by reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Securities Act or the Exchange Act, as applicable,
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(c) the financial statements, and the related notes thereto, included
or incorporated by reference in the Registration Statement and the
Prospectus present fairly the consolidated financial position of the
Guarantor and its consolidated subsidiaries as of
3
<PAGE>
the dates indicated and the results of their operations and the changes in
their consolidated cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein; and
the pro forma financial information, and the related notes thereto,
included or incorporated by reference in the Registration Statement and the
Prospectus has been prepared in accordance with the applicable requirements
of the Securities Act and the Exchange Act, as applicable and is based upon
good faith estimates and assumptions believed by the Company to be
reasonable;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in
any equity interest or long-term debt of the Guarantor or any of its
subsidiaries, or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general affairs,
business, prospects, management, financial position, shareholders' equity
or results of operations of the Guarantor and its subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Prospectus; and
except as set forth or contemplated in the Prospectus neither the Guarantor
nor any of its subsidiaries has entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the
Guarantor and its subsidiaries taken as a whole;
(e) each of the Company and the Guarantor has been duly organized and
is validly existing as a limited partnership in good standing under the
laws of the State of Delaware with power and authority to own its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign limited partnership for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect on the
Guarantor and its subsidiaries taken as a whole;
(f) each of the Guarantor's significant subsidiaries (as defined in the
Commission's Regulation S-X) has been duly organized and is validly
existing as a corporation or limited partnership under the laws of its
jurisdiction of organization with power and authority to own its properties
and conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation or limited partnership for the
transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts any business
so as to require such qualification, other than where the failure to be so
qualified or in good standing would
not have a material adverse effect on the Guarantor and its subsidiaries
taken as a whole; and all the outstanding partnership interests or shares
of capital stock, as the case may be, of each subsidiary of the Guarantor
is owned as indicated in Schedule III. The partner-ship interests that
are owned by the Guarantor, directly or indirectly, have been duly
authorized and validly issued, are fully-paid and non-assessable, and
(except as described
4
<PAGE>
in the Prospectus) are owned by the Guarantor, directly or indirectly, free
and clear of all liens, encumbrances, security interests and claims;
(g) this Agreement has been duly authorized, executed and delivered by
each of the Company and the Guarantor;
(h) the Securities have been duly authorized, and, when executed,
authenticated and issued under the Indenture and delivered to and paid for
in accordance with this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and binding
obligations of the Company entitled to the benefits provided by the
Indenture; the Guarantees have been duly authorized, and, upon due
execution, authentication and delivery of the Securities and the placement
of the Guarantees thereon, the Guarantees will have been duly executed,
issued and delivered and will constitute valid and binding obligations of
the Guarantor entitled to the benefits provided by the Indenture; the
Indenture has been duly authorized and upon effectiveness of the
Registration Statement will have been duly qualified under the Trust
Indenture Act and, when executed and delivered by the Company and the
Trustee, the Indenture will constitute a valid and binding instrument; and
the Securities, the Guarantees and the Indenture will conform to the
descriptions thereof in the Prospectus;
(i) neither the Guarantor nor any of its subsidiaries, is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under its charter or Certificate of Incorporation or By-Laws or
agreement of limited partnership, as the case may be, or any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Guarantor or any of its subsidiaries, is a party or by which it
or any of them or any of their respective properties is bound, except for
violations and defaults which individually and in the aggregate would not
reasonably be expected to have a material adverse effect on the Guarantor
and its subsidiaries, taken as a whole; the issue and sale of the
Securities and the Guarantees and the performance by each of the Company
and the Guarantor of all its obligations under the Securities, the
Guarantees, the Indenture and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Guarantor or any of its
subsidiaries is a party or by which the Guarantor or any of its
subsidiaries is bound or to which any of the property or assets of the
Guarantor or any of its subsidiaries, is subject that is material to the
Guarantor and its subsidiaries taken as a whole, nor will any such action
result in any violation of the provisions of the agreement of limited
partnership of the Company or the Guarantor or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Guarantor or any of its
subsidiaries, or any of their respective properties; and no consent,
approval, authorization, order, license, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities and the Guarantees or the consummation by
the Company or the Guarantor of the transactions contemplated by this
Agreement or the Indenture, except such consents,
5
<PAGE>
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act, the Trust
Indenture Act and as may be required under state securities or Blue Sky
Laws in connection with the purchase and distribution of the Securities and
the Guarantees by the Underwriters;
(j) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or proceedings
pending or, to the knowledge of the Company and the Guarantor, threatened
against or affecting the Guarantor or any of its subsidiaries, or any of
their respective properties or to which the Guarantor or any of its
subsidiaries, is or may be a party or to which any property of the
Guarantor or any of its subsidiaries, is or may be the subject which, if
determined adversely to the Guarantor or any of its subsidiaries, could
individually or in the aggregate have, or reasonably be expected to have, a
material adverse effect on the general affairs, business, prospects,
management, financial position, shareholders' equity or results of
operations of the Guarantor and its subsidiaries taken as a whole and, to
the best of the Company's and the Guarantor's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others; and there are no statutes, regulations, contracts or
other documents that are required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as required;
(k) immediately after any sale of Securities by the Company hereunder,
the aggregate amount of Securities which have been issued and sold by the
Company hereunder and of any securities of the Company (other than the
Securities) that shall have been issued and sold pursuant to the
Registration Statement will not exceed the amount of securities registered
under the Registration Statement;
(l) Arthur Andersen LLP, who have certified certain financial
statements of the Guarantor and its subsidiaries, are independent public
accountants as required by the Securities Act;
(m) the Guarantor and its subsidiaries, have good and marketable title
in fee simple to all items of real property and good and marketable title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described or referred to
in the Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made or proposed to be made of
such property by the Guarantor and its subsidiaries, and any real property
and buildings held under lease by the Guarantor and its subsidiaries, are
held by them under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Guarantor or its
subsidiaries;
(n) neither the Company nor the Guarantor is and, after giving effect
to the offering and sale of the Securities, neither the Company nor the
Guarantor will be an "investment company" or, to the Company's and the
Guarantor's knowledge, an entity
6
<PAGE>
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(o) each of the Company and the Guarantor has complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida) relating to doing business with the Government of Cuba or with any
person or affiliate located in Cuba;
(p) the Guarantor and its subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have
paid all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being
contested in good faith; and, except as disclosed in the Registration
Statement and the Prospectus, there is no tax deficiency which has been or
might reasonably be expected to be asserted or threatened against the
Guarantor or any subsidiary;
(q) each of the Guarantor and its subsidiaries, owns, possesses or has
obtained all licenses, permits, certificates, consents, orders, approvals
and other authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, and neither the Guarantor
nor any subsidiary has received any actual notice of any proceeding
relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except as
described in the Registration Statement and the Prospectus; and each of the
Guarantor and its subsidiaries, is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of the
date hereof;
(r) there are no existing or, to the best knowledge of the Company and
the Guarantor, threatened labor disputes with the employees of the
Guarantor or any of its subsidiaries, which would reasonably be expected to
have a material adverse effect on the Guarantor and its subsidiaries taken
as a whole;
(s) the Guarantor and its subsidiaries, (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, reasonably be expected to have a material adverse effect on
the Guarantor and its subsidiaries taken as a whole;
7
<PAGE>
(t) in the ordinary course of its business, the Guarantor conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Guarantor and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review and except as disclosed in the
Guarantor's Form 10-K for the year ended December 31, 1996, the Guarantor
has reasonably concluded that such associated costs and liabilities would
not, singly or in the aggregate, reasonably be expected to have a material
adverse effect on the Guarantor and subsidiaries taken as a whole;
(u) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, ("ERISA")
that is maintained, administered or contributed to by the Guarantor or any
of its affiliates for employees or former employees of the Guarantor and
its affiliates has been maintained in compliance with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986,
as amended ("Code"). No prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA no
"accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeded the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions.
(v) Each of the Guarantor and its subsidiaries owns or possesses, or
can acquire, or reasonably believes it can acquire, on reasonable terms,
rights adequate to the present operations of the businesses now operated by
it under the patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, the "Intellectual
Property") presently employed by it in connection with the businesses now
operated by it, except to the extent that the failure to own, possess or
acquire such rights would not, singly or in the aggregate, reasonably be
expected to have a material adverse effect on the Guarantor and its
subsidiaries taken as a whole, and, neither the Guarantor nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing.
5. Each of the Company and the Guarantor jointly and severally covenants
and agrees with each of the several Underwriters as follows:
8
<PAGE>
(a) to file the Prospectus in a form approved by you pursuant to Rule
424 under the Securities Act not later than the Commission's close of
business on the second Business Day following the date of determination of
the offering price of the Securities or, if applicable, such earlier time
as may be required by Rule 424(b);
(b) to furnish to each Representative and counsel for the Underwriters,
a signed copy of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits and documents
incorporated by reference therein and, during the period mentioned in
paragraph (e) below, to furnish each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) and
documents incorporated by reference therein as you may reasonably request;
(c) from the date hereof and prior to the Closing Date, to furnish to
you a copy of any proposed amendment or supplement to the Registration
Statement or the Prospectus, for your review, and not to file any such
proposed amendment or supplement to which you reasonably object;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company or the Guarantor
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities, and during such
same period, to advise you promptly, and to confirm such advice in writing,
(i) when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or the initiation or threatening of any proceeding for that purpose, and
(iv) of the receipt by the Company or the Guarantor of any notification
with respect to any suspension of the qualification of the Securities for
offer and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use its best efforts to prevent the
issuance of any such stop order or notification and, if issued, to obtain
as soon as possible the withdrawal thereof;
(e) if, during such period after the first date of the public offering
of the Securities as in the opinion of counsel for the Underwriters a
prospectus relating to the Securities is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall occur as
a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if it
is necessary to amend or supplement the Prospectus to comply with law,
forthwith to prepare and furnish to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which
Securities may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the
9
<PAGE>
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request and to continue such qualification in effect so long as reasonably
required for distribution of the Securities; provided that neither the
Company nor the Guarantor shall be required to file a general consent to
service of process in any jurisdiction;
(g) to make generally available to its security holders and to you as
soon as practicable an earnings statement which shall satisfy the
provisions of Section 11 (a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder covering a period of at least twelve
months beginning with the first fiscal quarter of the Guarantor and its
subsidiaries occurring after the "effective date" (as defined in Rule 158)
of the Registration Statement;
(h) so long as the Securities are outstanding, to furnish to you upon
request copies of all reports or other communications (financial or other)
furnished to holders of Securities, and copies of any reports and financial
statements furnished to or filed with the Commission or any national
securities exchange;
(i) during the period beginning on the date hereof and continuing to
and including the Business Day following the Closing Date, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of or
guaranteed by the Company or the Guarantor which are substantially similar
to the Securities or the Guarantees;
(j) to use the net proceeds received by the Company from the sale of
the Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(k) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities and the Guarantees, including
any expenses of the Trustee, (ii) incident to the preparation, printing and
filing under the Securities Act of the Registration Statement, the
Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Securities and the Guarantees under the laws of such
jurisdictions as the Underwriters may designate (including reasonable fees
of counsel for the Underwriters and their disbursements), (iv) related to
any filing with National Association of Securities Dealers, Inc., (v) in
connection with the printing (including word processing and duplication
costs) and delivery of this Agreement, the
10
<PAGE>
Indenture, the Preliminary and Supplemental Blue Sky Memoranda and any
Legal Investment Survey and the furnishing to Underwriters and dealers of a
reasonable number of copies of the Registration Statement and the
Prospectus, (vi) payable to rating agencies in connection with the rating
of the Securities and (vii) the cost and charges of any transfer agent.
6. The several obligations of the Underwriters hereunder shall be subject
to the following conditions:
(a) the representations and warranties of the Company and the Guarantor
contained herein are true and correct on and as of the Closing Date as if
made on and as of the Closing Date and each of the Company and the
Guarantor shall have complied with all agreements and all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date;
(b) the Prospectus shall have been filed with the Commission pursuant
to Rule 424 within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission, and all requests for additional information
on the part of the Commission shall have been complied with to your
satisfaction;
(c) subsequent to the execution and delivery of this Agreement, there
shall not have occurred any downgrading, nor shall any notice have been
given of (i) any downgrading, (ii) any intended or potential downgrading or
(iii) any review or possible change that does not indicate an improvement
in the rating accorded any securities of or guaranteed by the Company or
the Guarantor by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(d) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in any equity interest or
long-term debt of the Guarantor or any of its subsidiaries, or any material
adverse change, or any development involving a material adverse change, in
or affecting the general affairs, business, prospects, management,
financial position, shareholders' equity or results of operations of the
Guarantor and its subsidiaries taken as a whole, otherwise than as set
forth or contemplated in the Prospectus, the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities on the
terms and in the manner contemplated in the Prospectus; and neither the
Guarantor nor any of its subsidiaries, has sustained since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court
11
<PAGE>
or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus;
(e) the Representatives shall have received from each of the Company
and the Guarantor, on and as of the Closing Date, a certificate of an
authorized officer of the Company and the Guarantor, holding the office or
title equal or more senior in rank to that of vice president, with specific
knowledge about the financial matters of the Company and the Guarantor
satisfactory to you to the effect set forth in subsections (a) through (c)
(with respect to the respective representations, warranties, agreements and
conditions of the Company and the Guarantor) of this Section and to the
further effect that there has not occurred any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management, financial
position, shareholders' equity or results of operations of the Guarantor
and its subsidiaries, taken as a whole from that set forth or contemplated
in the Registration Statement.
(f) Vernon T. Squires, Esq., Senior Vice President and General Counsel
of the Company and the Guarantor, shall have furnished to you his written
opinion, dated the Closing Date, in form and substance satisfactory to you,
to the effect as set forth in Exhibit A hereto.
(g) Kirkland & Ellis, counsel for the Company and the Guarantor, shall
have furnished to you their written opinion, dated the Closing Date, in
form and substance satisfactory to you, to the effect as set forth in
Exhibit B hereto.
(h) on the date hereof and on the Closing Date, Arthur Andersen LLP
shall have furnished to you letters, dated such date, in form and substance
satisfactory to you, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus;
(i) you shall have received on and as of the Closing Date an opinion of
Davis Polk & Wardwell, counsel to the Underwriters, with respect to the
validity of the Indenture, the Securities, the Guarantees, the Registration
Statement, the Prospectus and other related matters as the Representatives
may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters; and
(j) on or prior to the Closing Date, the Company shall have furnished
to the Representatives such further certificates and documents as the
Representatives shall reasonably request.
7. The Company and the Guarantor will jointly and severally indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and
12
<PAGE>
against any and all losses, claims, damages and liabilities (including without
limitation the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company and/or
the Guarantor shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company or the
Guarantor in writing by such Underwriter through the Representatives expressly
for use therein; provided that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) from whom the person
asserting any such losses, claims, damages or liabilities purchased Securities
if such untrue statement or omission or alleged untrue statement or omission
made in such preliminary prospectus is eliminated or remedied in the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) and if a copy of the Prospectus (as so amended or
supplemented, but excluding the documents incorporated by reference therein), if
required by law to have been furnished to such person at or prior to the written
confirmation of the sale of such Securities to such person, shall not have been
so furnished.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Guarantor and the directors and officers of each who
sign the Registration Statement and each person who controls the Company or the
Guarantor within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company and the Guarantor to each Underwriter, but only with reference to
information relating to such Underwriter furnished to the Company or the
Guarantor in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the
13
<PAGE>
Indemnified Person and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters
and such control persons of Underwriters shall be designated in writing by the
first of the named Representatives on Schedule I hereto and any such separate
firm for the Company, the Guarantor and the directors and officers of each who
sign the Registration Statement and such control persons of the Company, the
Guarantor or authorized representatives shall be designated in writing by the
Company or the Guarantor. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there shall be a final judgment for the
plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for fees and expenses of counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement (or delivered a notice to such Indemnified Person
setting forth its good faith objection to such request's conformity to the
provisions of this Section. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Underwriters on the other hand from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantor on the one hand and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantor on the one hand and
the Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Securities (before
deducting expenses) received by the Company and the total underwriting discounts
and the commissions received by the Underwriters
14
<PAGE>
bear to the aggregate public offering price of the Securities. The relative
fault of the Company and the Guarantor on the one hand and the Underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantor or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Guarantor and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amount of the Securities set forth opposite their names in
Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company and the Guarantor set forth in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any other person controlling
the Company and (iii) acceptance of and payment for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given to
the Company or the Guarantor, if after the execution and delivery of this
Agreement (i) trading generally shall have been suspended or materially limited
on or by, as the case may be, any of the New York Stock Exchange, the American
Stock Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (ii) trading of any securities of or guaranteed by the Company
or the Guarantor shall have
15
<PAGE>
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus.
9. If, on the Closing Date, any one or more of the Underwriters shall fail
or refuse to purchase Securities which it or they have agreed to purchase under
this Agreement, and the aggregate principal amount of Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate principal amount of the Securities,
the other Underwriters shall be obligated severally in the proportions that the
principal amount of Securities set forth opposite their respective names in
Schedule I hereto bears to the aggregate principal amount of Securities set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as the Representatives may specify, to purchase the Securities
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase on such date; provided that in no event shall the principal amount
of Securities that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 9 by an amount in excess of one-tenth of
such principal amount of Securities without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Securities and the aggregate principal amount of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Securities to be purchased, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company or the Guarantor. In any such case either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or the
Guarantor to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or the Guarantor shall be unable to
perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, each of the Company and the
Guarantor jointly and severally agrees to reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
their counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering of Securities and the Guarantees. Notwithstanding the
foregoing, neither the Company nor the Guarantor shall be liable for the
expenses of the Underwriters if the Underwriters terminate this Agreement
pursuant to Section 8(i), 8(iii) or 8(iv).
16
<PAGE>
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Guarantor, the Underwriters, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by you jointly
or by the first of the named Representatives set forth in Schedule I hereto
alone on behalf of the Underwriters, and any such action taken by you jointly or
by the first of the named Representatives set forth in Schedule I hereto alone
shall be binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be given at the address set forth in Schedule II hereto.
Notices to the Company and/or the Guarantor shall be given to it at One
ServiceMaster Way, Downers Grove, Illinois 60515; Attention: Vernon T. Squires,
Esq., Senior Vice President and General Counsel and Attention: Eric R. Zarnikow,
Vice President and Treasurer.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
17
<PAGE>
14. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
provisions thereof.
Very truly yours,
The ServiceMaster Company Limited Partnership
By Service Master Management Corporation
its Managing General Partner
By:
-----------------------------------
Name:
Title:
ServiceMaster Limited Partnership
By Service Master Management Corporation
its Managing General Partner
By:
-----------------------------------
Name:
Title:
Accepted:________, 199__
[LEAD MANAGER]
[CO-MANAGER]
Acting severally on behalf of
[itself/themselves] and the
several Underwriters listed in
Schedule II hereto.
By: [LEAD MANAGER]
By:
-------------------
Name:
Title:
18
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
<S> <C>
Representatives:
Underwriting Agreement dated: _________, ____
Registration Statement No: [333- ]
Title of Securities: [__ %] [Floating Rate] [Zero Coupon] [Notes]
[Debentures] due __.
Aggregate principal amount: $
---------------------------------------------
Price to Public [__% of the principal amount of the Securities, plus
accrued interest, if any, from ______, 19__, to the
Closing Date.
Indenture: Indenture dated as of July __, 1997 between the
Company, ServiceMaster Limited Partnership, as
Guarantor, and __________ as Trustee.
Maturity:
-----------------------------------------------
Interest Rate: [__%] [Zero Coupon] [See Floating Rate Provisions]
Interest Payment Dates: [months and dates]
Optional Redemption Provisions: [No provisions for redemption]
[The Securities may be redeemed, otherwise than
through the sinking fund, in whole or in part at the
option of the Company, [in the amount of [$] or an
integral multiple thereof,] [on or after , at the
following redemption prices (expressed in
percentages of principal amount). If [redeemed on
or before , %, and if] redeemed during
the 12-month period beginning ,
Redemption
Year Price
---- -----------
</TABLE>
19
<PAGE>
and thereafter] at 100% of their
principal amount, together in each case
with accrued interest to the redemption
date] [on any interest payment date
falling in or after , , at the election
of the Company, at a redemption price
equal to the principal amount thereof,
plus accrued interest to the date of
redemption.] [Other possible redemption
provisions, such as mandatory
redemption upon occurrence of certain
events or redemption for changes in tax
law] [Restriction on refunding]
Sinking Fund Provisions: [No sinking fund provisions]
[The Securities are entitled to the
benefit of a sinking fund to retire [$]
principal amount of Securities on in
each of the years through at 100% of
their principal amount plus accrued
interest] [,together with [cumulative]
[noncumulative] redemptions at the
option of the Company to retire an
additional [$] principal amount of
Securities in the years through at 100%
of their principal amount plus accrued
interest].
Other Provisions: [For floating rate securities, initial
annual interest rate will be % through
[and thereafter will be adjusted
[monthly] [on each , , and ]
[to an annual rate of % above the
average rate for -year [month]
[securities] [certificates of deposit]
issued by and [insert names of
banks].] [and the annual interest
rate [thereafter] [from through ]
will be the interest yield equivalent
of the weekly average per annum market
discount rate for -month Treasury
bills plus % of Interest Differential
(the excess, if any, of (i) then
current weekly average per annum
secondary market yield for -month
certificates of deposit over (ii) then
current interest yield equivalent of
the weekly average per annum market
discount rate for -month Treasury
bills); [from and thereafter the
rate will be the then current interest
yield equivalent plus % of Interest
Differential].]
20
<PAGE>
Closing Date and Time of Delivery:
-----------------------------------------
Closing Location:
-----------------------------------------
Address for Notices to Underwriters:
21
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Principal Amount of Securities
To Be Purchased
------------------------------
<S> <C>
Underwriter
Total...................................... $
</TABLE>
22
<PAGE>
SCHEDULE III
Subsidiaries
- ------------
23
<PAGE>
EXHIBIT A
Form of ServiceMaster General Counsel Opinion
[Lead Manager]
[Co-Manager]
As Representatives of the
Underwriters named in Schedule II
c/o [Lead Manager]
[address]
Ladies/Gentlemen:
I am rendering this opinion in my capacity as Senior Vice President and
General Counsel of The ServiceMaster Company Limited Partnership (the "Company")
and ServiceMaster Limited Partnership (the "Guarantor") in response to the
requirement in Section 6(f) of the Underwriting Agreement dated August ___, 1997
(the "Underwriting Agreement") between the Company, the Guarantor and the
underwriters named in Schedule II thereto (the "Underwriters"). Every term
which is defined or given a special meaning in the Underwriting Agreement and
which is not given a different meaning in this letter has the same meaning
whenever it is used in this letter as the meaning it is given in the
Underwriting Agreement. Together, the Underwriting Agreement, the Indenture, the
Securities and the Guarantees are sometimes referred to herein as the
"Transaction Documents."
In connection with the preparation of this letter, I have, among other
things, read:
(a) the registration statement on Form S-3 (Registration No.
333-_____________) filed by the Company and the Guarantor with the
Securities and Exchange Commission (the "Commission") on July 28, 1997 for
the purpose of registering the offering of the shelf securities under the
Securities Act of 1933, as amended (the "Securities Act") (which
registration statement, as amended by pre-effective Amendment No. 1,
including the information incorporated therein by reference, and as
constituted at the time it became effective is herein called the
"Registration Statement");
(b) the Company's Prospectus Supplement dated
___________________, 1997 (the "Prospectus Supplement") to the Core
Prospectus for Debt Securities dated ______________________, 1997 (the
"Debt Core Prospectus") covering the offering of the Securities through the
Underwriters, in the form which includes the initial offering price and
related terms (which Debt Core Prospectus, as supplemented by the
Prospectus Supplement, including the information incorporated therein by
reference, is herein called the "Prospectus");
(c) an executed copy of the Underwriting Agreement;
<PAGE>
(d) an executed copy of the Indenture, the Securities and the
Guarantees to be delivered on the date hereof;
(e) A certified copy of resolutions (the "Board Resolutions")
adopted on May 9, 1997 by the Board of Directors of ServiceMaster
Management Corporation (the "ServiceMaster Board"), a certified copy of
resolutions adopted on August _____, 1997 by the Finance Committee of the
ServiceMaster Board, and a certified copy of an Implementing Authorization
executed by certain officers appointed in the Board Resolutions; and
(f) Copies of all certificates and other documents delivered
today at the closing of the purchase and sale of the Securities under the
Underwriting Agreement.
Subject to the assumptions, qualifications and limitations which are
identified in this letter, I advise you that:
1. Each of the Company and the Guarantor is a limited partnership duly
formed, existing and in good standing under the Delaware Revised Uniform Limited
Partnership Act (the "Delaware Partnership Act"). Each of the Company and the
Guarantor is qualified to do business and is in good standing in the State of
Illinois. The Guarantor is not required to qualify to do business under the laws
of any other jurisdiction other than where the failure to be so qualified would
not have a material adverse effect on the Guarantor.
2. Each of the significant subsidiaries of the Company (the "Subsidiaries") is
a limited partnership or corporation existing and in good standing under the
laws of its respective jurisdiction of organization. Each of the Company and
each Subsidiary is qualified to do business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business, so as to require such qualification, other than where the
failure to be so qualified would not have a material adverse effect on the
Company and its subsidiaries taken as a whole. The equity of each of the
Subsidiaries is owned as indicated in Schedule A attached hereto. The term
"significant subsidiaries" means the subsidiaries listed as significant
subsidiaries in Schedule B attached hereto. The Company's Treasurer has advised
me that he has determined that the subsidiaries listed on Schedule B are the
only subsidiaries of the Guarantor which constitute "significant subsidiaries"
of the Guarantor within the meaning of that term under the Commission's
Regulation S-X.
3. Each of the Company, the Guarantor and each of the Subsidiaries has
the power to own and lease its properties and to conduct its business as
described in the Prospectus.
4. The execution of the Transaction Documents by the Company and the
Guarantor has been duly authorized by all necessary actions by the ServiceMaster
Board, the Finance Committee of the ServiceMaster Board and by Authorized
Officers qualified to act under the resolutions relevant to the issuance and
sale of the Securities pursuant to the Underwriting Agreement. No other approval
is required under the Certificate of Limited Partnership or the
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<PAGE>
Amended and Restated Partnership Agreement of the Company or the Guarantor or
under the Delaware Partnership Act.
5. Neither the Guarantor nor any of its Subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, its charter or Certificate of Incorporation or By-Laws or
agreement of limited partnership, as the case may be. The execution and
delivery of the Underwriting Agreement by the Company and the Guarantor, the
performance of their respective obligations under the Underwriting Agreement,
the Indenture, the Securities and the Guarantees and the Company's sale of the
Securities to you in accordance with the Underwriting Agreement do not (i)
violate the applicable Certificate of Limited Partnership or Amended and
Restated Partnership Agreement of the Company or the Guarantor or (ii)
constitute a violation by the Company or the Guarantor of any applicable
provision of any law, statute, rule, regulation or court order (except that I
express no opinion in this paragraph as to (A) any prohibition against fraud or
misrepresentation or (B) whether performance of the indemnification or
contribution provisions in the Underwriting Agreement would be permitted or (C)
compliance with any disclosure requirement, but I refer you to the third
paragraph following clause (d) of numbered paragraph 9 hereof, or (iii) breach,
or result in a default under, any existing obligation of the Company or
Guarantor or any of its subsidiaries under any of the agreements with which I am
familiar.
6. After due inquiry, I have no knowledge about any legal or governmental
proceeding that is pending or threatened against the Company or the Guarantor or
any of its subsidiaries that has caused me to conclude that such proceeding is
required by Item 103 of Regulation S-K to be described in the Prospectus but
that is not so described. I have no knowledge of any contract, document, or
court order to which the Company or the Guarantor is a party or to which any of
their respective properties is subject that has caused me to conclude that such
contract, document or court order is required to be described in the Prospectus
or Registration Statement but is not so described or is required to be filed as
an exhibit to the Registration Statement but has not been so filed.
7. The Company or the Guarantor was not required to obtain any consent,
approval, authorization or order of governmental agency for the issuance,
delivery and sale of the Securities or Guarantees under the Underwriting
Agreement except for the order by the Commission declaring the Registration
Statement effective.
8. The statements under Item 3 in the Guarantor's Form 10-K Annual Report
for the fiscal year ended December 31, 1996 were correct in all material
respects on the date that the Annual Report was filed with the Commission.
Insofar as the statements constitute a summary of the legal matters, documents
or proceedings referred to therein, such statements adequately present the
information called for with respect to such legal matters, documents or
proceedings.
9. Nothing has come to my attention that has caused me to conclude that
any of the Guarantor or any of its subsidiaries:
A-3
<PAGE>
(a) does not own or have the rights under any license, permit,
certificate, consent, order, approval or other authorization from or has
not made any declaration or filing with, any federal, state, local or other
governmental authority (including foreign regulatory agencies) or any court
or tribunal, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof; or
(b) has received any actual notice of any proceeding relating to
revocation or modification of any license, permit, certificate, consent,
order, approval or other authorization cited in immediately preceding
clause (a); or
(c) does not have any material right required to use the
Intellectual Property employed by it in connection with the business
conducted by it as of the date hereof.
(d) is, or with the giving of notice or lapse of time or both
would be, in violation of or in default under any indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument known to
me to which the Guarantor or any of its subsidiaries, is a party or by
which it or any of them or any of them or any of their respective
subsidiaries is bound,
I make no representation that I have independently verified the accuracy,
completeness or fairness of the Prospectus or Registration Statement or that the
actions taken in connection with the preparation of the Registration Statement
or Prospectus (including the actions described in the next paragraph) were
sufficient to cause the Prospectus or Registration Statement to be accurate,
complete or fair. I am not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the Prospectus or the Registration
Statement except to the extent otherwise explicitly indicated in numbered
paragraph 8 above.
I can however confirm that I have participated in conferences with
representatives of the Company, representatives of the Underwriters, counsel for
the Underwriters and representatives of the independent accountants for the
Company during which disclosures in the Registration Statement and Prospectus
and related matters were discussed. In addition, I have reviewed certain
records maintained by the Company.
Based upon my participation in the conferences and my document review
identified in the preceding paragraph, my understanding of applicable law and
the experience I have gained in my practice thereunder, I can, however, advise
you that nothing has come to my attention that has caused me to conclude that
(i) the Registration Statement at its effective date contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Debt Core Prospectus on the date it bears or on the date of this letter
or the Prospectus Supplement on the date it bears or on the date of this letter
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (iii) the
Registration Statement or the Debt Core Prospectus, each as of the effective
date of the Registration Statement, or the Prospectus
A-4
<PAGE>
Supplement on the date it bears, did not comply in all material respects with
the form and the requirements of Form S-3 or the Trust Indenture Act, or that
Form S-3 is not the proper form for registration of the Securities under the
Securities Act (iv) any of the periodic reports incorporated by reference into
the Registration Statement as of the date of the filing of such report with the
Commission appeared on its face not to comply as to form in all material
respects with the Exchange Act, and the rules and regulations of the Commission
thereunder.
Except for the activities described in the immediately preceding section of
this letter, I have not undertaken any investigation to determine the facts upon
which the advice in this letter is based. I have not undertaken any
investigation or search of court records for purposes of this letter.
I have assumed for purposes of this letter; each document I have reviewed
for purposes of this letter is accurate and complete, each such document that is
an original is authentic, each such document that is a copy conforms to an
authentic original, and all signatures on each such document are genuine; that
the Underwriting Agreement and every other agreement I have examined for
purposes of this letter constitutes a valid and binding obligation of each party
to that document and that each such party has satisfied all legal requirements
that are applicable to such party to the extent necessary to entitle such party
to enforce such agreement (except that I make no such assumption with respect to
the Company); and that you have acted in good faith and without notice of any
fact which has caused you to reach any conclusion contrary to any of the
conclusions provided in this letter. I have also made other assumptions which I
believe to be appropriate for purposes of this letter.
In preparing this letter I have relied without independent verification
upon: (i) information contained in certificates obtained from governmental
authorities; (ii) factual information represented to be true in the Underwriting
Agreement and other documents specifically identified at the beginning of this
letter as having been read by me; (iii) factual information provided to me by
the other representatives of the Company; and (iv) factual information I have
obtained from such other sources as I have deemed reasonable. I have assumed
that the information upon which I have relied is accurate and does not omit
disclosures necessary to prevent such information from being misleading. For
purposes of numbered paragraphs 1 and 2 (other than the last sentence of
paragraph 2), I have relied exclusively upon certificates issued by governmental
authorities in the relevant jurisdictions and such opinion is not intended to
provide any conclusion or assurance beyond that conveyed by those certificates.
I confirm that I do not have knowledge that has caused me to conclude that
my reliance and assumptions cited in the two immediately preceding paragraphs
are unwarranted. Whenever this letter provides advice about (or based upon) my
knowledge of any particular information or about any information which has or
has not come to my attention such advice is based entirely on my conscious
awareness at the time this letter is delivered on the date it bears.
My advice on every legal issue addressed in this letter is based
exclusively on the internal law of Illinois, the Delaware Partnership Law, or
the federal law of the United States, and represents my opinion as to how that
issue would be resolved were it to be considered by the
A-5
<PAGE>
highest court in the jurisdiction which enacted such law. I express no opinion
with respect to any state securities (or "blue sky") laws or regulations or any
laws, statutes governmental rules or regulations which in my experience are not
applicable generally to transactions of the kind covered by the Underwriting
Agreement. None of the opinions or other advice contained in this letter
considers or covers (i) any financial statements or supporting schedules (or any
notes to any such statements or schedules) or other financial or statistical
information set forth or incorporated by reference in (or omitted from) the
Registration Statement or the Prospectus or (ii) any rules and regulations of
the National Association of Securities Dealers, Inc. relating to the
compensation of underwriters.
My advice on each legal issue addressed in this letter represents my
opinion as to how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law my opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances particular to the
case, and this letter is not intended to guarantee the outcome of any legal
dispute which may arise in the future.
This letter speaks as of the time of its delivery on the date it bears. I
do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which I did not have knowledge at that time,
by reason of any change subsequent to that time in any law other governmental
requirement or interpretation thereof covered by any of my opinions or advice,
or for any other reason.
This letter may be relied upon by the Underwriters only for the purpose
served by the provision in the Underwriting Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. Without my
written consent: (i) no person other than the Underwriters may rely on this
letter for any purpose; (ii) this letter may not be cited or quoted in any
financial statement, prospectus, private placement memorandum or other similar
document; (iii) this letter may not be cited or quoted in any other document or
communication which might encourage reliance upon this letter by any person or
for any purpose excluded by the restrictions in this paragraph; and (iv) copies
of this letter may not be furnished to anyone for purposes of encouraging such
reliance.
Sincerely,
Vernon T. Squires
Senior Vice
President
and General Counsel
A-6
<PAGE>
EXHIBIT B
Form of Kirkland & Ellis Opinion
[Lead Manager]
[Co-Manager]
As Representatives of the
Underwriters named in Schedule II
c/o [Lead Manager]
[address]
Ladies/Gentlemen:
We are issuing this letter in our capacity as special counsel for The
ServiceMaster Company Limited Partnership (the "Company") and ServiceMaster
Limited Partnership (the "Guarantor") in response to the requirement in Section
6(g) of the Underwriting Agreement dated August __, 1997 (the "Underwriting
Agreement") between the Company, the Guarantor and the underwriters named in
Schedule II thereto (the "Underwriters"). Every term which is defined or given
a special meaning in the Underwriting Agreement and which is not given a
different meaning in this letter has the same meaning whenever it is used in
this letter as the meaning it is given in the Underwriting Agreement. Together,
the Underwriting Agreement, the Indenture and the Securities are sometimes
referred to herein as the "Transaction Documents".
In connection with the preparation of this letter, we have, among other things,
read:
(a) the registration statement on Form S-3 (Registration No.
333-_______) filed by the Company and the Guarantor with the Securities and
Exchange Commission (the "Commission") on July 28, 1997 for the purpose of
registering the offering of the Shelf Securities under the Securities Act
of 1933, as amended (the "Securities Act") (which registration statement,
as amended by pre-effective Amendment No. 1, including the information
incorporated therein by reference, and as constituted at the time it became
effective is herein called the "Registration Statement");
(b) the Company's Prospectus Supplement dated _________, 1997
(the "Prospectus Supplement") to the Core Prospectus for Debt Securities
dated ______, 1997 (the "Debt Core Prospectus") covering the offering of
the Securities through the Underwriters, in the form which includes the
initial offering price and related terms (which Debt Core Prospectus, as
supplemented by the Prospectus Supplement, including the information
incorporated therein by reference is herein called the "Prospectus");
<PAGE>
(c) an executed copy of the Underwriting Agreement;
(d) an executed copy of the Indenture, the Securities and the
Guarantees to be delivered on the date hereof;
(e) A certified copy of resolutions adopted on May 9, 1997 by
the Board of Directors of ServiceMaster Management Corporation (the
"ServiceMaster Board"), a certified copy of resolutions adopted on August
__, 1997 by the Finance Committee of the ServiceMaster Board, and a
certified copy of an Implementing Authorization executed by certain
Authorized Officers appointed in those Board resolutions; and
(f) Copies of all certificates and other documents delivered
today at the closing of the purchase and sale of the Securities under the
Underwriting Agreement.
Subject to the assumptions, qualifications and limitations which are identified
in this letter, we advise you that:
1. Each of the Company and the Guarantor is a limited partnership duly
formed, existing and in good standing under the Delaware Revised Uniform Limited
Partnership Act (the "Delaware Partnership Act").
2. With respect to each of the Company and the Guarantor, the Delaware
Partnership Act and the Certificate of Partnership and the Amended and Restated
Partnership Agreement in effect for that partnership grants to that partnership
the power necessary to own and lease its properties and to conduct its business
as described in the Prospectus.
3. The Underwriting Agreement has been duly authorized, executed and
delivered on behalf of the Company and the Guarantor.
4. The Indenture has been duly executed and delivered on behalf of the
Company and the Guarantor. The Indenture is a valid and binding obligation of
the Company and the Guarantor, and (assuming the due authorization, execution
and delivery thereof by the other parties thereto) is enforceable against the
Company and the Guarantor in accordance with its terms.
5. The Securities have been duly executed and delivered by the Company
and, when paid for by the Underwriters in accordance with the terms of the
Underwriting Agreement (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication and delivery of the
Securities by the Trustee in accordance with the Indenture), will constitute
Securities under the terms of the Indenture, will constitute the valid and
binding obligations of the Company, and will be enforceable against the Company
in accordance with
B-2
<PAGE>
their terms; and the Guarantees have been duly executed and delivered by the
Guarantor and, when the Securities have been paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and due
authentication and delivery of the Securities by the Trustee in accordance with
the Indenture), will constitute Guarantees under the terms of the Indenture,
will constitute the valid and binding obligations of the Guarantor and will be
enforceable against the Guarantor in accordance with their terms.
6. The execution and delivery of the Underwriting Agreement on behalf of
the Company and the Guarantor, the performance of the respective obligations of
the Company and the Guarantor under the Underwriting Agreement, the Indenture,
the Securities and the Guarantees and the Company's sale of the Securities to
you in accordance with the Underwriting Agreement do not (i) violate the
applicable Certificate of Limited Partnership or Amended and Restated
Partnership Agreement of the Company or the Guarantor or (ii) constitute a
violation by the Company or the Guarantor of any applicable provision of any
law, statute, rule or regulation (except that we express no opinion in this
paragraph as to compliance with any disclosure requirement or any prohibition
against fraud or misrepresentation or as to whether performance of the
indemnification or contribution provisions in the Underwriting Agreement would
be permitted) or (iii) breach, or result in a default under, any existing
obligation of the Company or Guarantor or any of its subsidiaries under any of
the agreements set forth on Schedule A attached hereto which, representatives of
the Company have advised us, include all material debt agreements and
instruments of or binding on the Company or the Guarantor or any of the
Guarantor's subsidiaries.
7. We have no knowledge about any legal or governmental proceeding that
is pending or threatened against the Company or the Guarantor or any of its
subsidiaries that has caused us to conclude that such proceeding is required by
Item 103 of Regulation S-K to be described in the Prospectus but that is not so
described. We have no knowledge about any contract, document or court order to
which the Company or the Guarantor is a party or to which any of their
respective properties is subject that has caused us to conclude that such
contract, document or court order is required to be described in the Prospectus
or the Registration Statement but is not so described or is required to be filed
as an exhibit to the Registration Statement but has not been so filed.
8. Neither the Company nor the Guarantor is, or immediately after the
sale of the Securities to the Underwriters and application of the net proceeds
therefrom as described in the Prospectus Supplement under the caption "Use of
Proceeds") will be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
9. Neither the Company nor the Guarantor was required to obtain any
consent, approval, authorization or order of governmental agency for the
issuance, delivery and sale of the
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<PAGE>
Securities of Guarantees under the Underwriting Agreement except for the order
by the Commission declaring the Registration Statement effective.
10. The statements in the Prospectus and Registration Statement under the
heading "Description of Securities" and in the Registration Statement in Item
15, to the extent that such statements summarize legal matters, documents or
proceedings are correct in all material respects and adequately present the
information called for with respect to such legal matters, documents or
proceedings.
***
The purpose of our professional engagement was not to establish factual
matters, and preparation of the Registration Statement involved many
determinations of a wholly or partially nonlegal character. We make no
representations that we have independently verified the accuracy, completeness
or fairness of the Prospectus or Registration Statement or that the actions
taken in connection with the preparation of the Registration Statement or
Prospectus (including the actions described in the next paragraph) were
sufficient to cause the Prospectus or Registration Statement to be accurate,
complete or fair. We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the Prospectus or the Registration
Statement except to the extent otherwise explicitly indicated in numbered
paragraph 10 above.
We can however confirm that we have participated in conferences with
representatives of the Company, representatives of the Underwriters, counsel for
the Underwriters and representatives of the independent accountants for the
Company during which disclosures in the Registration Statement and Prospectus
and related matters were discussed. In addition, we have reviewed certain
corporate records furnished to us by the Company. We were not retained by the
Company to prepare the periodic reports, proxy statements, or other materials
incorporated in the Prospectus or Registration Statement, and our knowledge
about these materials is limited. We were not present at any meeting of the
ServiceMaster Board or its Finance Committee at which any resolution relevant to
this letter was discussed or adopted.
Based upon our participation in the conferences and our document review
identified in the preceding paragraph, our understanding of applicable law and
the experience we have gained in our practice thereunder and relying as to
materiality to a large extent upon the opinions and statements of officers of
the Company, we can, however, advise you that nothing has come to our attention
that has caused us to conclude that (i) the Registration Statement at its
effective date contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Debt Core Prospectus on the date
it bears or on the date of this letter contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (iii) the Registration
B-4
<PAGE>
Statement or the Debt Core Prospectus, each as of the effective date of the
Registration Statement, or the Prospectus Supplement on the date it bears did
not comply in all material respects with the form and the requirements of Form
S-3 or the Trust Indenture Act, or that Form S-3 is not the proper form for
registration of the Securities under the Securities Act.
Except for the activities described in the immediately preceding section of
this letter, we have not undertaken any investigation to determine the facts
upon which the advice in this letter is based. We have not undertaken any
investigation or search of court records for purposes of this letter.
We have assumed for purposes of this letter: each document we have reviewed
for purposes of this letter is accurate and complete, each such document that is
an original is authentic, each such document that is a copy conforms to an
authentic original, and all signatures on each such document are genuine; that
the Underwriting Agreement and every other agreement we have examined for
purposes of this letter constitutes a valid and binding obligation of each party
to that document and that each such party has satisfied all legal requirements
that are applicable to such party to the extent necessary to entitle such party
to enforce such agreement (except that we make no such assumption with respect
to the Company); and that you have acted in good faith and without notice of any
fact which has caused you to reach any conclusion contrary to any of the
conclusions provided in this letter. We have also made other assumptions which
we believe to be appropriate for purposes of this letter.
In preparing this letter we have relied without independent verification
upon: (i) information contained in certificates obtained from governmental
authorities dated on or after the day prior to the date of this letter; (ii)
factual information represented to be true in the Underwriting Agreement and
other documents specifically identified at the beginning of this letter as
having been read by us; (iii) factual information provided to us by the company
or its representatives as of the date of this letter; and (iv) factual
information we have obtained on or after the day prior to the date of this
letter from such other sources as we have deemed reasonable. We have assumed
that there has been no relevant change or development between the dates as of
which the information cited in the preceding sentence was given and the date of
this letter and that the information upon which we have relied is accurate and
does not omit disclosures necessary to prevent such information from being
misleading. For purposes of numbered paragraph 1, we have relied exclusively
upon certificates issued by governmental authorities in the relevant
jurisdictions and such opinion is not intended to provide any conclusion or
assurance beyond that conveyed by those certificates.
We confirm that nothing has come to our attention that has caused us to
conclude that our reliance and assumptions cited in the two immediately
preceding paragraphs are unwarranted. Whenever this letter provides advice about
(or based upon) our knowledge of any particular information or about any
information which has or has not come to our attention such advice is based
entirely on the conscious awareness at the time this letter is delivered on the
date it bears
B-5
<PAGE>
by the lawyers with Kirkland & Ellis at that time who spent substantial time
representing the Company in connection with the offering effected pursuant to
the Prospectus.
Each opinion in this letter that any particular agreement is a valid and
binding obligation or is enforceable in accordance with its terms is subject to:
(i) the effect of bankruptcy, insolvency, fraudulent conveyance and other
similar laws and judicially developed doctrines in this area such as substantive
consolidation and equitable subordination; (ii) the effect of general principles
of equity; and (iii) other commonly recognized statutory and judicial
constraints on enforceability including statutes of limitations. "General
principles of equity" include but are not limited to: principles limiting the
availability of specific performance and injunctive relief; principles which
limit the availability of specific performance and injunctive relief; principles
which limit the availability of a remedy under certain circumstances where
another remedy has been elected; principles requiring reasonableness, good faith
and fair dealing in the performance and enforcement of an agreement by the party
seeking enforcement; principles which may permit a party to cure a material
failure to perform its obligations; and principles affording equitable defenses
such as waiver, laches and estoppel.
Our advice on every legal issue addressed in this letter is based
exclusively on the internal law of New York, the Delaware Partnership Act, or
the federal law of the United States, and represents our opinion as to how that
issue would be resolved were it to be considered by the highest court in the
jurisdiction which enacted such law. We express no opinion with respect to any
state securities (or "blue sky") laws or regulations or any laws, statutes
governmental rules or regulations which in our experience are not applicable
generally to transactions of the kind covered by the Underwriting Agreement.
None of the opinions or other advice contained in this letter considers or
covers (i) any financial statements or supporting schedules (or any notes to any
such statements or schedules) or other financial or statistical information set
forth or incorporated by reference in (or omitted from) the Registration
Statement or the Prospectus or (ii) any rules and regulation of the National
Association of Securities Dealers, Inc. relating to the compensation or
underwriters.
Our advice on each legal issue addressed in this letter represents our
opinion as to how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law our opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances particular to the
case, and this letter is not intended to guarantee the outcome of any legal
dispute which may arise in the future. It is possible that some terms of the
Transaction Documents may not prove enforceable for reasons other than those
cited in this letter should an actual enforcement action be brought, but
(subject to all the exceptions, qualifications, exclusions and other limitations
contained in this letter) such unenforceability would not in our opinion prevent
you from realizing the principal benefits purported to be provided by the those
terms.
B-6
<PAGE>
This letter speaks as of the time of its delivery on the date it bears. We
do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which we did not have knowledge at that time,
by reason of any change subsequent to that time in any law other governmental
requirement or interpretation thereof covered by any of our opinions or advice,
or for any other reason.
This letter may be relied upon by the Underwriters only for the purpose
served by the provision in the Underwriting Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. Without
our written consent: (i) no person other than the Underwriters may rely on this
letter for any purpose; (ii) this letter may not be cited or quoted in any
financial statement, prospectus, private placement memorandum or other similar
document;
KIRKLAND & ELLIS
B-7
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Amendment No. 1 to the Registration Statement
333-32167 of our report dated January 22, 1997 (February 24, 1997 as to the
pending transaction with WMX Technologies, Inc. and the acquisition of Barefoot,
Inc., which are discussed in the footnotes in the financial statements)
incorporated by reference in the ServiceMaster Limited Partnership's Form 10-K
for the year ended December 31, 1996 and to all references to our firm included
in this registration statement.
/s/ ARTHUR ANDERSEN LLP
August 6, 1997
