SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20547
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December
18, 1997
SERVICEMASTER LIMITED PARTNERSHIP
(Exact name of registrant as specified in its certificate)
Commission File Number: 1-9378
Delaware One ServiceMaster Way 36-3497008
Downers Grove, IL 60515
(State or other jurisdiction (Address of (I.R.S. Employer
of incorporation or organization) principal executive office)Identification No.)
Registrant's telephone number, including area code: (630) 271-1300
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Item 5. Other Events
Information in Connection with the Reincorporation of the
Registrant
In furtherance of the plan previously announced by the Registrant to convert the
parent entity in the ServiceMaster enterprise from partnership form to corporate
form at the end of 1997, (i) The ServiceMaster Company, the entity which will
succeed the Registrant as such parent entity, has adopted and filed with the
Delaware Secretary of State an Amended and Restated Certificate of Incorporation
and has adopted Bylaws, a Shareholder Rights Plan and an Agreement of Merger and
Reorganization as amended and restated as of October 3, 1997; and (ii) the
Registrant has filed with the Secretary of State of Delaware a Certificate of
Merger under which a transactional subsidiary of The ServiceMaster Company will
merge with and into the Registrant. This merger will convert the Registrant's
limited partner shares to common stock of The ServiceMaster Company (the
"Merger"). The Certificate of Merger provides that the Merger is to occur on
December 26, 1997 at 11:59 P.M., Eastern Standard Time (the "Effective Time").
Upon the consummation of the Merger, at the Effective Time the holders of
limited partner units of ServiceMaster Limited Partnership will become holders
of the same number of shares of common stock of the Corporation by operation of
law. Certificates for limited partner units of the partnership may be exchanged
for certificates for shares of common stock of the Corporation, but the
certificates for partnership units are deemed to represent the same number of
corporate shares and there will be no requirement for any exchange of
certificates.
The Board of Directors of The ServiceMaster Company has declared a first quarter
cash dividend of $0.12 per share payable on January 30, 1998 to shareholders of
record on January 16, 1998. The Company has also announced its 1998 cash
dividend policy, which provides for an increase in total annual dividends to
ServiceMaster shareholders to $0.49 per share. Anticipated payments for the
second and third quarters are $0.12 per share and $0.13 per share for the fourth
quarter.
Item 7. Financial Statements and Exhibits
Financial Statements:
None
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Exhibits:
1. Amended and Restated Certificate of Incorporation of The
ServiceMaster Company as filed with the Secretary of State, State
of Delaware, on November 6, 1997.
2. Bylaws of The ServiceMaster Company as adopted on November 3,
1997.
3. Shareholder Rights Agreement between The ServiceMaster Company
and the Harris Trust and Savings Bank as adopted on December 12,
1997.
4. The ServiceMaster Company: Certificate of
Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A
(Exhibit A to Shareholder Rights Agreement)
5. Merger and Reorganization Agreement as amended and restated on
October 3, 1997.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SERVICEMASTER LIMITED PARTNERSHIP
(Registrant)
By: ServiceMaster Management Corporation
(general partner)
By: /s/ Vernon T. Squires
Sr. Vice President and General Counsel
Dated: December 18, 1997
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Exhibit 1 to Form 8-K submitted on December 19, 1997
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE SERVICEMASTER COMPANY
ARTICLE ONE
NAME
1.1 The name of the corporation is:
The ServiceMaster Company
The corporation was originally incorporated under the name "ServiceMaster
Incorporated of Delaware" by means of a Certificate of Incorporation filed on
September 11, 1991.
ARTICLE TWO
REGISTERED OFFICE AND REGISTERED AGENT
2.1 The address of the corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The name of its
registered agent at such address is Corporation Trust Company. The corporation's
books, records, documents and other papers may be maintained outside the State
of Delaware.
ARTICLE THREE
CORPORATE OBJECTIVES
3.1 The following objectives of the corporation are fundamental to the
management of the business of the corporation:
To honor God in all we do
To help people develop
To pursue excellence
To grow profitably
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ARTICLE FOUR
PURPOSE
4.1 The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE FIVE
AUTHORIZED SHARES
5.1 Authorized Shares. The total number of shares of capital stock which
the corporation has authority to issue is 1,011,000,000 shares, consisting of:
(1) 11,000,000 shares of Preferred Stock, par value $.01 per
share (the
"Preferred Stock"); and
(2) 1,000,000,000 shares of Common Stock, par value $0.01 per share
(the "Common Stock").
5.2 Preferred Stock. Shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors of the corporation is hereby
authorized to determine and alter all rights, preferences and privileges and
qualifications, limitations and restrictions thereof (including, without
limitation, voting rights and the limitation and exclusion thereof) granted to
or imposed upon any wholly unissued series of Preferred Stock and the number of
shares constituting any such series and the designation thereof, to determine
whether fractional shares can be issued in any particular series and, if so, the
nature of the fractional interests which can be issued in that series, and to
increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series then outstanding. In case the number of shares of any
series is so decreased, the shares constituting such reduction shall resume the
status which such shares had prior to the adoption of the resolution originally
fixing the number of shares of such series.
5.3 Common Stock. Shares of Common Stock may be issued from time to time in
accordance with the provisions of this Section 5.3.
5.3.1 Voting Rights. Except as otherwise required by applicable law,
holders of Common Stock shall be entitled to one vote per share on all
matters to be voted on by the stockholders of the corporation.
5.3.2 Dividends. Subject to the provisions of the Preferred Stock, as
and when dividends are declared or paid thereon, whether in cash, property
or securities of the
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corporation, the holders of Common Stock shall be
entitled to participate in such dividends ratably on a per share basis.
5.3.3 Liquidation. Subject to the provisions of the Preferred Stock,
the holders of the Common Stock shall be entitled to participate ratably on
a per share basis in all distributions to the holders of Common Stock in
any liquidation, dissolution or winding up of the corporation.
5.4 Definition of Voting Class and Common Voting Class. If only one class
of stock is entitled to be voted on any particular issue on which a stockholder
vote is taken at any particular meeting of the stockholders, the term "voting
class" as used in this Certificate refers to that class when it is applied to
that particular issue. If shares in two or more classes are to be voted together
without separate class votes on any particular issue at any particular meeting
of the stockholders, then all of those classes shall be deemed to constitute a
single "voting class" for purposes of that issue. The voting class which
consists of or includes the Common Stock shall be deemed the "common voting
class."
ARTICLE SIX
EXISTENCE
6.1 The corporation shall have perpetual existence.
ARTICLE SEVEN
DIRECTORS
7.1 Total Number of Directors. The number of directors of this corporation
shall be determined in the manner prescribed in the Bylaws of the corporation,
except that such number shall not be less than three.
7.2 Classification. The directors of this corporation shall be divided into
three classes having terms so that (i) each class shall come up for election by
stockholders every three years, (ii) one class of directors shall come up for
election in every calendar year beginning with calendar year 1998, and (iii) not
more than one class of directors shall come up for election in any calendar
year. Each of the three classes of directors established by this Article Seven
shall be designated at any given time by the calendar year in which such class
next comes up for election after the given time. The term "triennial election"
when applied to any particular class of directors means the election by
stockholders of persons to fill all directorship positions in that class
existing at the time of such election which shall occur in a calendar year in
which positions in that class come up for election provided that if for any
reason no election by stockholders of persons to fill all directorship
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positions
in that class existing at the time of such election shall occur in a calendar
year in which positions in such class come up for election, then (i) the
stockholders shall be entitled to act once at any time after the conclusion of
that year and prior to the year in which that class next comes up for election
to elect persons to fill all directorship positions in that class existing at
the time of such election and (ii) any election which shall occur in accordance
with clause (i) shall be deemed to be a "triennial election "for that particular
class.
7.3 Term. Each person elected to the Board shall be deemed elected for a
period (which shall be deemed a "term") beginning at the time of such election
and ending after the earliest of (i) the next triennial election of directors in
the class to which the director shall have been elected which first occurs after
such director's election, (ii) the resignation of such person from the Board or
from a position on the Board in the class to which he shall have been elected in
such election, (iii) the death of such person, or (iv) the removal of such
person from the Board in accordance with this Certificate of Incorporation and
applicable law. A person elected to the Board shall cease to be a director at
the end of the term to which he or she has been elected (the "old term") unless
such person shall have been separately elected to a new term beginning at the
end of the old term. A person shall be deemed to be a "sitting director" at all
times during each term during which he or she shall serve on the Board (and
without limiting by implication the provisions in the first sentence of this
Section 7.3, a person shall be deemed to cease to be a "sitting director" at the
earliest time after any election of such person to the Board at which an event
described in clauses (i)-(iv) in the first sentence in this Section 7.3 shall
occur unless the person shall have been elected prior to the time to a new term
beginning not later than that time and continuing after that time).
7.4 Number of Positions in Each Class. The number of positions in each
class of directors shall be determined as prescribed in the Bylaws of the
corporation. If the number of positions in any class of directors shall be
reduced at any time which does not coincide with triennial election for that
class, then any person who was elected as a director in the class which has been
reduced may, by the affirmative vote of a majority of the sitting directors, be
removed from his or her position as a director, with such removal being
effective on the date on which such majority takes such action. The removal of a
director pursuant to the preceding sentence shall not create a vacancy on the
Board. If the number of positions in any class of directors shall be reduced at
any time which does not coincide with triennial election for that class and a
majority of the sitting directors does not take the action described in the
preceding provisions of this Section 7.4, then: (i) such action shall not
shorten the term of any incumbent member of such class; (ii) the effectiveness
of the reduction in the number of positions in such class shall be delayed to
the extent necessary to enable each director service in such class to complete
the term such director shall be serving at the time of such reduction; (iii)
accordingly such reduction shall become fully effective not later than the next
triennial election of directors in that class which shall occur after such
reduction; and (iv) the persons elected in that triennial election to fill such
reduced number of positions shall be deemed to be the successors to all persons
who shall have previously held positions in such class.
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7.5 Independent Director Requirement.
7.5.1. Independent Majority Requirement. Subject to Section 7.5.6, no
person shall be elected to any given term on the Board unless either (i)
such person would be an "independent director" during that term under the
standard prescribed in Section 7.5.2 or (ii) immediately after giving
effect to such election, a majority of the sitting directors would be
independent directors under the standard prescribed in Section 7.5.2.
7.5.2. Independent Director. A person shall be an "independent
director" during the entirety of any term of service on the Board if he or
she satisfies all of the following conditions: (i) he or she shall affirm
that at the time of his or her election for that term that he or she is
independent under the standard prescribed in Section 7.5.3, (ii) he or she
shall agree to serve only in the capacity of independent director for that
term and (iii) prior to such person's election for that term no conclusion
shall have been reached by an Independent Board Majority under clause (iv)
of Section 7.5.3 which precludes that person from being independent, under
the standards set forth in Section 7.5.3, at the time of such election.
7.5.3. Independence Standard. A person shall be deemed "independent"
at any given time if: (i) such person shall not have been employed by any
ServiceMaster Unit (as defined in Section 7.5.5) within one year prior to
the given time; (ii) such person shall not be a "Related Person" (as
hereinafter defined) at the given time and shall not have been employed by
a Related Person within one year prior to the given time; (iii) such person
shall not be a party at the given time to any agreement, requirement or
arrangement under which such person may be obligated to act in his or her
capacity as a director in accordance with instructions provided by any
person who is not independent at the given time (including, but not limited
to, a Related Person); and (iv) an Independent Board Majority (as defined
in Section 7.5.5) shall not have concluded at or prior to the given time
that such person is subject to any relationship, arrangement or
circumstance (including any relationship with a Related Person) which, in
the judgment of such Independent Board Majority, it is reasonably possible
will interfere to an extent deemed unacceptable by such Independent Board
Majority with such person's exercise of independent judgment as a director.
7.5.4. Removal Right.
7.5.4.1 If an Independent Board Majority (determined as
prescribed in Section 7.5.5) shall in their sole discretion determine
that any person serving as an independent director either did not meet
the standards for independence specified in Section 7.5.3 at the time
such person was elected to the particular term in which that person
shall be serving at the time such determination shall be made or is
not independent under the standards prescribed in Section 7.5.3
(whether by reason of any finding made pursuant to clause (iv) in the
first sentence in Section 7.5.3 after
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such person's election or for
any other reason), then the Independent Board Majority shall have the
right to remove such person from the Board at any time during the
particular term.
7.5.4.2 The removal of a director pursuant to Section 7.5.4.1
shall be effective upon the delivery to Chief Executive Officer of
this corporation of a written document signed by all of the members of
the Independent Board Majority in which such persons (i) make the
determination required for removal by the preceding sentence and (ii)
elect to remove the director.
7.5.4.3 In no event shall an Independent Board Majority or anyone
else have the right or power under or by reason of this Section 7.5.4
to remove any particular person from the Board unless that particular
person shall have agreed in writing to serve in the capacity of
independent director for the term during which such removal would
occur.
7.5.5. Definitions. Each of the terms defined in this Section 7.5.5
has the meaning set forth in this Section 7.5.5 whenever such term is used
in this Certificate of Incorporation.
Related Person. The term "Related Person" has the meaning set forth in
Section 8.2, the provisions of which are incorporated in this Article Seven
by reference. A person shall be deemed a "Related Person" for purposes of
this Article Seven if such person constitutes a Related Person at the time
as of which the term shall be applied under the terms of the Certificate of
Incorporation governing this corporation as constituted at that time.
Beneficially Owns. The term "Beneficially Owns has the
meaning set forth in Section 8.2
Independent Board Majority. The term "Independent Board Majority"
means a majority of the group comprised of all individuals who are
independent sitting directors at the time at which the term shall be
applied.
ServiceMaster Unit. Each of the following shall be deemed to be a
"ServiceMaster Unit" for the purpose of this Certificate of Incorporation:
this corporation and any corporation, partnership (limited or general),
limited liability company or other entity which this corporation shall have
the power to control, either directly or indirectly.
7.5.6 Inapplicability of Section 7.5.1 in Certain Cases. Anything in
this Section 7.5 to the contrary notwithstanding, the provisions of Section
7.5.1 shall not apply to the election of a person as a director of the
Corporation if, at the time of such election, a
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Related Person Beneficially
Owns at least eighty percent (80%) of the shares of Common Stock which were
outstanding at the time at which the vote on such person shall occur.
7.6 Vacancies. Any vacancy in any position in any class which shall occur
between triennial elections of directors in that class for any reason
(including, but not limited to, any reason specified in clauses (ii)-(iv) in the
first sentence in Section 7.3 or any increase in the number of positions in that
class made pursuant to this corporation's Bylaws) may be filled by a person
elected by the affirmative vote of a majority of the sitting directors at the
time of such election.
7.7 Termination of Directorship in the Case of Persons Who Cease to be
Officers. If a person is elected as a director at a time when he or she is an
officer of the Corporation and if, during the term of such person as a director
he or she ceases to hold any of the officership positions with the Corporation,
such person's term and position as a director shall automatically end when such
person ceases to be an officer of the Corporation. The Board may, in its
discretion, fill such vacancy by electing the person who was removed pursuant to
the preceding provisions of this Section 7.7.
7.8 Removal: General Limitations. Except as otherwise provided in Section
7.4, Section 7.5.4 and Section 7.7, no person may be removed from the Board
prior to the time such person's term would end but for such removal unless (i)
such removal shall be for cause and (ii) such removal shall be approved by the
record holders of the shares representing sixty-seven percent (67%) of the votes
attributable to shares in the common voting class outstanding at the record date
used to determine the stockholders entitled to vote on such matter.
7.9 Stockholder Election Requirements. Each election of directors by
stockholders shall be by plurality vote except that an individual shall not be
elected to the Board if such election is prohibited by Section 7.5.1 or the
individual does not meet the qualifications which may be required by this
Corporation's Bylaws as constituted at the time of such election. The Board
shall have the right to adopt Bylaw provisions to implement and apply the
provisions in the preceding sentence and to achieve the outcome prescribed in
the preceding sentence. Election of Directors need not be by written ballot
unless the Bylaws of this Corporation shall so provide.
ARTICLE EIGHT
CERTAIN BUSINESS COMBINATIONS
8. Stockholder Vote Required for Approval of Certain
Business Combinations
8.1 80% Requirement. The affirmative vote of the holders of not less
than eighty percent (80%) of the outstanding shares of the Common Stock
held by stockholders other than a "Related Person" (as hereinafter defined)
shall be required for the approval or authorization of any "Business
Combination" (as hereinafter defined) of the corporation
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with any Related
Person; provided, that the foregoing 80% voting requirement shall not be
applicable if an Independent Board Majority (as defined in Section 7.5.5)
either (a) has expressly approved in advance the acquisition of the
outstanding shares of Common Stock that caused such Related Person to
became a Related Person or (b) has expressly approved such Business
Combination either in advance of or subsequent to such Related Person's
having become a Related Person.
8.2 Definitions. Each of the terms defined in this Section 8.2 has the
meaning set forth in this Section 8.2 whenever such term is used in this
Certificate of Incorporation:
Business Combination. The term "Business Combination" shall mean
(a) any merger or consolidation of this corporation or a subsidiary of
this corporation with or into a Related Person; (b) any sale, lease,
exchange, transfer or other disposition of all or any Substantial Part
(hereinafter defined) of the assets either of the corporation
(including without limitation any voting securities of a subsidiary)
or of a subsidiary of the corporation to a Related Person; (c) any
merger or consolidation of a Related Person with or into this
corporation or a subsidiary of this corporation; (d) any sale, lease,
exchange, transfer or other disposition of all or any Substantial Part
of the assets of a Related Person to this corporation or a subsidiary
of this corporation; (e) the issuance of any securities of this
corporation or a subsidiary of this corporation to a Related Person;
(f) any recapitalization that would have the effect of increasing the
voting power of a Related Person; and (g) any agreement, contract or
other arrangement providing for any of the transactions described in
this definition of a Business Combination.
Exchange Act. The term "Exchange Act" means the
Securities Exchange Act of 1934 as in effect on the
Filing Date or at any time thereafter.
Filing Date. The term "Filing Date" has the
meaning set forth in Section 10.1.
Beneficially Owns. The term "Beneficially Owns" has the meaning
set forth in Rule 13d-3 of the General Rules and Regulations as
promulgated under the Exchange Act and as in effect on the Filing
Date.
Affiliates and Associates. The terms "Affiliates" and
"Associates" have the meaning set forth in Rule 12b-2 of the General
Rules and Regulations as promulgated under the Exchange Act and as in
effect on the Filing Date.
Related Person. The term "Related Person" shall mean and include
(i) any individual, corporation, partnership or other person or entity
which, together with its Affiliates and Associates, Beneficially Owns
in the aggregate fifteen percent (15%) or more of the outstanding
Common Stock, and (ii) any Affiliate or Associate of any
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such
individual, corporation, partner or other person or entity.
Substantial Part. The term "Substantial Part" shall mean more
than twenty percent (20%) of the fair market value as determined by
the Independent Board Majority of the total consolidated assets of
this corporation and its subsidiaries taken as a whole as of the end
of its most recent fiscal year ended prior to the time that such
determination is being made.
8.3 Beneficial Ownership of Common Stock. Without limitation, any share of
Common Stock that any Related Person has the right to acquire at any time
(notwithstanding that Rule 13d-3 deems such shares to be beneficially owned only
if such right may be exercised within 60 days) pursuant to any agreement, or
upon the exercise of conversion rights, warrants or options or otherwise, shall
be deemed to be Beneficially Owned by the Related Person and to be outstanding
for purposes of the definition of "Related Person."
ARTICLE NINE
BYLAWS
9.1 Scope of Bylaws. The Bylaws of this corporation shall govern the
management and affairs of this corporation, the rights and powers of the
directors, officers, employees and stockholders of this corporation in
accordance with their terms and shall govern the rights of all persons concerned
relating in any way to this corporation except that if any provision in the
Bylaws shall be irreconcilably inconsistent with any provision in this
Certificate of Incorporation, the provision in this Certificate of Incorporation
shall control. Without limiting by implication the generality of the preceding
provisions: (i) meetings of the holders of the Common Stock may be called by the
persons and in the manner provided from time to time in the corporation's
Bylaws, and may not be called by the holders of the outstanding Common Stock of
the corporation except to the extent (if any) expressly permitted by the Bylaws
of the corporation; (ii) holders of the Common Stock or any other class or
series of stock the corporation may not take action by consent in lieu of a
meeting of stockholders except to the extent (if any) expressly permitted by the
Bylaws of the corporation; (iii) the Bylaws may prescribe qualifications which
must be met for an individual to qualify for election to the Board (including
but not limited to a requirement that the individual's candidacy and information
about the individual be provided to the Board prior to a deadline established by
the Bylaws); (iv) the Bylaws may prescribe requirements which must be satisfied
in order to entitle any person to obtain a vote on any proposal at any meeting
of the stockholders which is not endorsed by the Board (including but not
limited to a requirement that the proposal and information about the proposal be
provided to the Board prior to a deadline established by the Bylaws) and may
prohibit a vote at any special meeting of the stockholders upon any proposal not
endorsed by the Board and (v) the Bylaws may identify special issues which shall
not be deemed to have been approved unless they receive a higher vote by the
Board and/or by
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stockholders than would otherwise be required and may prescribe
the vote required for approval of the issues so identified.
9.2 Power to Amend or Replace the Bylaws. The directors of the corporation
shall have the power to amend or replace the Bylaws of the corporation. The
holders of the Common Stock of the corporation shall not have the power to amend
or replace the Bylaws of this corporation unless such amendment or replacement
shall be approved by the record holders of eighty percent (80%) of the votes
attributable to shares in the common voting class outstanding at the record date
used to determine the stockholders entitled to vote on such amendment or
replacement.
ARTICLE TEN
LIMITATION ON DIRECTORS' AND OFFICERS' PERSONAL LIABILITY
10.1 Basic Standard. No person shall have any liability of any kind by
reason of Relevant Loss (defined below) caused in whole or in part by any act or
failure to act which shall have occurred while such person shall have been an
officer or director of the corporation except: (i) obligations arising under the
express terms of any written contract to which such person is a party; (ii) the
obligation to return to the corporation an amount up to the value actually
realized by such person by stealing or by any other action which constitutes a
criminal felony; (iii) any liability imposed by contract or applicable law which
is founded on, arises from or is related to activities by such person (or such
person's agents or affiliates) which are in competition with any business of the
corporation or any of its Affiliates; and (iv) any other liability from which it
shall not be possible to exempt such person under applicable law either as
constituted on the date on which this Amended and Restated Certificate of
Incorporation is filed with the Secretary of State of Delaware (the "Filing
Date") or at any time thereafter. The term "Relevant Loss" designates and
includes any loss, damage or expense of any kind (i) experienced for any reason
by the corporation or by any entity controlled by the corporation (ii) which any
person may experience by reason of any purchase (or failure to purchase),
maintenance of an interest in, sale (or failure to sell) or failure to obtain
payment of any amount due on any note, debenture, preferred stock, common stock
or other security issued or issuable by the corporation or (iii) which shall
otherwise be caused in whole or in part by or arise in connection with (or would
not have occurred but for) such person's service as a director or officer of the
corporation. Without limiting by implication the generality of the preceding
provisions in this Section 10.1, every director of the corporation shall be
exempt (except to the extent expressly set forth below) from any personal
liability to the corporation or any of the corporation's stockholders for
monetary damages for breach of fiduciary duty as a director to the fullest
extent permitted by (i) Section 102(b)(7) of the General Corporation Law of the
State of Delaware as constituted on the Filing Date or (ii) any provision of the
law of the State of Delaware as constituted at any time after the December 11,
1991.
10.2 Amount of Liability. The maximum liability to which any person shall
be obligated to pay with respect to any liability which such person shall have
under clauses (ii) or (iv) in the first
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sentence in Section 10.1 shall be an
amount equal to the value of the personal benefit wrongfully realized by such
person by means of the act or failure to act giving rise to such liability.
10.3 Effect of Change in Law. In the event there shall after December 11,
1991 be any change in any law relevant to the extent to which a person may be
exempted from liability by reason of any act or failure to act which occurs
while such person shall be an officer or director of the corporation, then (i)
if such change permits a broader exemption than permitted prior to such change,
the exemption provided by this Article Ten shall automatically be increased to
the fullest extent which is permitted by such change and is not precluded by any
of the express provisions in clauses (i), (ii), (iii) or (iv) of the first
sentence of Section 10.1 and (ii) if such change reduces the amount of the
exemption from liability it is possible to grant or provide to a director or
officer, this Article Ten shall be construed to eliminate or minimize as much as
possible the extent to which such change shall reduce the protection provided by
this Article Ten. Whenever possible, each provision in this Article Ten shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Article Ten shall be held to be prohibited by or
invalid under applicable law, then (i) such provision shall be applied to
accomplish the objectives of the provision as originally written to the fullest
extent permitted by law and (ii) all other provisions in this Article Ten shall
remain in full force and effect.
10.4 Amendment of this Article Ten. The terms in this Article Ten are
expressly intended to constitute a contract between the corporation and each
person who shall at any time serve as an officer or director of the corporation.
Each person who shall at any time serve as an officer or director of the
corporation shall be entitled to rely (and shall be conclusively presumed to
have relied) upon the protection provided by this Article Ten. No amendment or
repeal of this Article Ten or of any other provision in this Certificate of
Incorporation, no merger of the corporation into any other corporation, no
liquidation or dissolution of the corporation or any other development of any
kind shall diminish in any way the extent of the protection provided by this
Article Ten with respect to any act or failure to act which shall have occurred
prior to such amendment, repeal, merger, liquidation, dissolution or other
development.
ARTICLE ELEVEN
INDEMNIFICATION
11.1 Covered Service.
11.1.1 Basic Scope. The term "Covered Service" designates and
includes: (a) service as a director or officer of the corporation; (b)
service by a person while he or she is an officer or director of the
corporation (i) as an agent or representative of the corporation, (ii) in
any other capacity with the corporation, (iii) as a director, officer,
employee, agent or representative of, or in any other capacity with, any
Affiliate, (iv) in any capacity with any Employee Plan, and (v) in any
other capacity in which such person shall have been asked to serve by the
corporation's Board of Directors or Chief Executive Officer; (c) any
services
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which constituted "Covered Service" under the Amended and Restated
Agreement of Limited Partnership for ServiceMaster Limited Partnership; and
(d) any other service of any kind by any person with any organization or
entity of any kind (whether or not affiliated with the corporation) which
shall be designated in writing as Covered Service by a majority of the
members of the corporation's Board of Directors or by the corporation's
Chief Executive Officer. Service shall be deemed to constitute "Covered
Service" if it is so designated by the terms in the preceding sentence
regardless of whether it shall have been performed prior to, at, or after
the time this Article Eleven shall have become part of the corporation's
Certificate of Incorporation. Any person shall be entitled to rely upon any
written confirmation provided by the Corporation's Chief Executive Officer
or by the Corporation's Board of Directors that service by such person in
any capacity specified in such confirmation will constitute Covered Service
and to rely upon the protection afforded by this Article Eleven in
connection with such service. In no event shall the failure to obtain any
written confirmation that any service is covered by this Article Eleven
take away or in any way impair the right of the person providing such
service to receive any payment under this Article Eleven if such person is
entitled to receive such payment in connection with such service under the
provisions in this Article Eleven.
11.1.2 Officer. Service in any of the following capacities shall be
deemed to be service as an officer of the corporation: Chairman of the
Board of Directors; Vice Chairman of the Board of Directors; President;
Chief Executive Officer; Chief Operating Officer; Executive Vice President;
Senior Vice President; Vice President; Chief Financial Officer; Chief
Accounting Officer; General Counsel or Chief Legal Officer; Secretary,
Treasurer; or Controller; or President or Chief Operating Officer of any
Affiliate.
11.1.3 Affiliate. Any corporation or other entity shall be deemed to
be an "Affiliate" for purposes of this Article Eleven if the corporation or
other entity shall (i) be a subsidiary of the corporation or otherwise be
controlled directly or indirectly by the corporation, (ii) have the right
or power to control the corporation, or (iii) be controlled by the same
corporation, entity or group which controls the corporation.
11.1.4 Employee Plan. The term "Employee Plan" whenever it is used in
this Article Eleven designates and includes: (i) any pension plan, employee
stock ownership plan, profit sharing plan, option plan or other plan or
program established to benefit any employees of the corporation, any
Affiliate, or any predecessor of the corporation or any Affiliate and (ii)
any trust or other entity which shall hold any assets for any Employee
Plan.
11.2 General Indemnification Right. Except as otherwise provided in Section
11.3, the corporation shall indemnify any person against, and shall reimburse
such person for any amount which such person shall pay to satisfy, settle or
otherwise deal with, any attempt to impose any liability or obligation of any
kind upon such person if such attempt or such liability or obligation or
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both
shall arise in connection with or by reason of, or would not have arisen but
for, Covered Service by such person (or any agreement by such person to serve as
a director or officer of the corporation or to provide other Covered Service)
including, but not limited to: (i) any claim resulting from any loss, injury,
damage, harm or other disadvantage which the corporation, any Affiliate, any
Employee Plan or any person who acquires, holds, or disposes of any interest in
any security issued by the corporation suffers or is alleged to have suffered;
(ii) any claim resulting from any act or failure to act by any person which is
(or is alleged to be) beyond the scope of his or her authority, contrary to
instructions or orders or contrary to his or her duties or applicable law; and
(iii) any attempt by any governmental authority or other person to impose any
fine or penalty or to obtain any other recovery by reason of any actual or
alleged breach of any law or other governmental requirement.
11.3 Express Coverage Exclusions. Except to the extent the corporation
shall otherwise expressly agree in writing, the corporation shall not be
obligated under this Article Eleven to reimburse any person for or otherwise
indemnify any person against: (a) any obligation the 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 from the corporation
under this Article Eleven or otherwise; (b) any income taxes payable by reason
of salary, bonus or other income or gain actually realized by such person in
connection with any Covered Service; (c) any liability imposed by contract or
applicable law which is founded on, arises from or is related to activities by
such person (or such person's agents or affiliates) which are in competition
with any business of the corporation or any of its Affiliates; 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. Except
as provided in Section 11.8 or Section 11.9, the corporation shall not be
obligated under this Article Eleven 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 Board of Directors of the corporation.
11.4 Applicable Law.
11.4.1 "Delaware Law" Defined. The term "Delaware Law" whenever it is
used in this Article Eleven means the law of the State of Delaware
(including, but not limited to, the General Corporation Law of the State of
Delaware) as constituted after giving effect to all changes therein to
which effect is to be given for purposes of this Article Eleven under the
provisions in Section 11.4.4
11.4.2 Full Delaware Indemnification. Without limiting by implication
any other provision in this Article Eleven, each person who was or is made
a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of the corporation, agreed to serve as a director or officer of the
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corporation or is or was providing any other Covered Service, whether the
basis of such proceeding is alleged action in an official capacity as a
director or officer of the corporation or in any other Covered Service
position, shall, except as otherwise provided in Section 11.3, be
indemnified and held harmless by the corporation to the fullest extent
authorized by Delaware Law against all expense, liability and loss
(including attorneys' fees, judgments, fine, excise taxes or penalties
arising under the Employee Retirement Income Security Act as amended from
time to time and amounts paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director or officer of
the corporation or to provide any other Covered Service and shall inure to
the heirs, executors and administrators of such person.
11.4.3 Compliance With Applicable Law. This Article Eleven is
expressly intended to entitle each Covered Person to obtain indemnification
and payments in accordance with and subject to the provisions of this
Article Eleven to the fullest extent permitted by applicable law and to
waive or render inapplicable to the fullest extent permitted by applicable
law any provision in applicable law which would impose any condition or
limitation upon, or otherwise impair or prohibit the enforcement of, any
provision in this Article Eleven. Every provision in this Article Eleven is
subject to the qualifications that if after giving effect to the provisions
in the preceding sentence: (i) applicable law prohibits the corporation
from making any payment or providing any indemnification otherwise required
by the express terms of this Article Eleven unless any condition is
satisfied, then the condition mandated by applicable law must be satisfied
before such payment or indemnification may be provided; (ii) applicable law
limits the amount of any payment or indemnification which the corporation
may provide, then the corporation shall comply with such limitation; or
(iii) applicable law otherwise precludes enforcement of any provision in
this Article Eleven, then such provision shall be applied to accomplish the
objective of the provision as originally written to the fullest extent
permitted by applicable law. In no event shall any condition, limitation,
or other restriction imposed upon any provision in this Article Eleven by
applicable law be deemed to limit, impair or eliminate any other provision
in this Article Eleven.
11.4.4 Effect of Changes in Applicable Law. In the event that after
December 11, 1991 there shall be any change in any law or other
governmental requirement relevant to any provision in this Article Eleven,
then: (a) to the extent that such change shall increase the amount of any
payment, indemnification or other benefit provided by Section 11.4.2 or any
other provision in this Article Eleven or shall reduce or eliminate any
condition, limitation or prohibition imposed prior to such change by
applicable law (but not also by Section 11.3) upon the enforcement of any
provision in this Article Eleven, (i) such change shall apply to this
Article Eleven, (ii) shall apply retroactively to the extent possible and
(iii) any condition to, limitation upon or prohibition upon the enforcement
of any provision in this Article Eleven imposed by applicable law prior to
such change but eliminated by such change shall cease to apply after such
change to claims for indemnification or payment
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under this Article Eleven
based in whole or in part on any act or failure to act which occurred prior
to or after such change and (b) to the extent that such change shall reduce
the amount of any payment, indemnification or benefit provided by Section
11.4.2 or any other provision in this Article Eleven or shall increase or
impose any condition to, limitation upon, or prohibition against the
enforcement of any right available to a Covered Person under this Article
Eleven, (i) this Article Eleven shall be construed to be subject to such
change to the least extent possible (such as for example by qualifying
under any "grandfather" provision in such change and/or by evidencing the
intent by the corporation, its Board of Directors and its stockholders that
the corporation not be subject to such change) and (ii) such change shall
to the extent possible not apply to impair rights arising in whole or in
part by reason of any act or failure to act which occurred before such
change became effective.
11.5 Covered Claim. The term "Covered Claim" whenever it is used in this
Article Eleven designates and includes: (i) any action, suit, or proceeding
(whether civil, criminal, administrative or investigative) in connection with
which any person shall be entitled to any payment or indemnification under or by
reason of this Article Eleven and (ii) any other attempt to impose any liability
or obligation upon any person in connection with which the corporation shall be
obligated to provide any payment or indemnification under or by reason of this
Article Eleven.
11.6 Covered Person. Each of the following shall be deemed a "Covered
Person" for purposes of this Article Eleven: (a) any person who served or shall
serve at any time as a director or officer of the corporation and (b) any other
person who provided or shall provide Covered Service at any time. In the event
any particular Covered Person shall become incapacitated or die, then (a) the
corporation shall become obligated to provide indemnification and payments to
each person to whom responsibility for any Covered Claim shall pass by reason of
such incapacity or death to the same extent the corporation would have been
obligated to provide indemnification and payments to the Covered Person if such
incapacity or death had not occurred and (b) each person to whom the Covered
Person's rights shall pass by reason of such incapacity or death (i) shall be
entitled to enforce all rights arising under or by reason of this Article Eleven
to the same extent to which the Covered Person could have enforced such rights
if such incapacity or death had not occurred and (ii) shall also be deemed to be
a "Covered Person" for purposes of this Article Eleven.
11.7 Defense Arrangements.
11.7.1 Common Defense. If any Covered Claim shall be asserted against
both the corporation and any Covered Person then the corporation shall
assume responsibility for investigating, defending against and dealing with
such Covered Claim on behalf of both the corporation and such Covered
Person if and to the extent the corporation shall be requested to do so by
such Covered Person and to the extent the corporation can do so without
conflict of interest.
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11.7.2 Separate Defense. Each Covered Person shall be entitled to
defend against and deal with any Covered Claim which shall be asserted
against such Covered Person in such manner as such Covered Person
reasonably deems to be in such Person's best interests, including retention
of counsel to investigate and deal with such claim, payment of the full
amount claimed, settlement of such claim or defense against such claim to
ultimate resolution.
11.7.3 Reimbursement of Defense Costs. The corporation shall reimburse
any Covered Person for any payment made by such person for any legal fees
or other expenses reasonably incurred by such person in order to
investigate, evaluate, defend against, pay in full, settle or otherwise
deal with (i) any Covered Claim or (ii) any development or state of facts
which could give rise to a Covered Claim.
11.8 Payment Procedure.
11.8.1 Payment Request. The person who is entitled under or by reason
of this Article Eleven to receive any payment (or to cause such payment to
be made directly to an ultimate recipient pursuant to Section 11.11 of this
Article Eleven) shall be entitled to deliver to the corporation a written
document which: (i) shall request payment from the corporation in an amount
specified in the document; (ii) shall contain a succinct explanation which
the person requesting such payment in good faith believes to be adequate to
demonstrate that the corporation is obliged to make such payment under or
by reason of this Article Eleven; (iii) shall contain a commitment to repay
the corporation any amount which the corporation shall pay in response to
such request but which a Final Court Determination shall hold the
corporation was not obligated to pay; (iv) shall specify the place within
the United States to which any payment or communication made by the
corporation in response to such request shall be sent; and (v) shall be
signed by or on behalf of the person (who is herein called the "Requestor"
in relationship to such document) entitled to receive the amount requested
or to require the corporation to pay the amount requested under the
provision in Section 11.11. Any document having the characteristics
described in the preceding sentence shall be deemed a "Payment Request" for
purposes of this Article Eleven, and the date upon which such document
shall be received by the corporation shall be deemed the "Request Date" for
that Payment Request and any amount requested therein. Each of the
following shall be deemed to be an "amount requested" in any Payment
Request: (a) the amount which the corporation shall be requested to pay in
such Payment Request (which shall also be deemed the "Full Amount
Requested" for purposes of this Article Eleven); (b) any amount which the
corporation shall pay in response to such Payment Request or the
circumstance giving rise to such Payment Request (whether voluntarily, in
settlement of a Contested Issue, as a result of a Final Court Determination
or otherwise); and (c) any amount which the corporation shall be held in a
Final Court Determination to be obligated to pay in response to such
Payment Request or by reason of circumstances giving rise to such Payment
Request. Without limiting by implication the generality of the preceding
provisions, any Covered Person shall be entitled to submit any
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number of
Payment Requests in connection with any Covered Claim, each covering a
portion of the total amount owed by the corporation in connection with such
Covered Claim. A Covered Person shall for example be entitled to submit a
separate Payment Request covering each bill for legal services for which
such Covered Person shall be entitled to reimbursement when such bill is
received.
11.8.2 Position Report. The term "Position Report" when applied with
respect to any Payment Request means a written statement signed on behalf
of the corporation by its Chief Executive Officer, Chief Financial Officer
or General Counsel (a) affirming that the corporation has made such
investigation as is necessary in order to enable the corporation to provide
the Position Report on an informed basis, (b) identifying (i) any condition
which the corporation believes must be satisfied before the corporation
will be obligated to pay all or any part of the Full Amount Requested, (ii)
any other action which the corporation believes must be taken by the
corporation, the Requestor or any other person before the corporation will
become obligated to pay any amount requested, (iii) any other reason the
corporation believes it is not obligated to pay all or any part of the Full
Amount Requested, and (iv) the actions the corporation has taken or intends
to take in response to the requirements in Section 11.8.4 and the status of
such actions.
11.8.3 Initial Response. The "Initial Response Deadline" for any
Payment Request shall be the tenth day immediately following the Request
Date. Payment by the corporation of the Full Amount Requested in any
Payment Request shall be due on the Initial Response Deadline unless the
corporation shall on or before the Initial Response Deadline deliver to the
place prescribed in the Payment Request a Position Report among other
things explaining why the corporation believes it is not obligated to pay
the Full Amount Requested on or before the Initial Response Deadline. Not
later than the Initial Response Deadline for any Payment Request, the
corporation shall deliver to the place specified in a Payment Request
either (a) payment of the Full Amount Requested or (b) all of the
following: (i) a Position Report prepared in accordance with Section 11.8.2
in response to such Payment Request and (ii) payment for any portion of the
Full Amount Requested for which the corporation shall not have provided in
its Position Report any good reason to believe the corporation is not
obligated to make such payment on the Initial Response Deadline. Without
limiting by implication the generality of the preceding provisions, the
corporation shall become irrevocably and unconditionally obligated to pay
on the Initial Response Deadline relating to any Payment Request any
portion of the Full Amount Requested for which the corporation shall not
supply in a Position Report or shall not supply any Position Report
delivered in accordance with the requirements in this Section 11.8.3 a good
reason to believe the corporation is not obligated to pay such portion on
the Initial Response Deadline, and the corporation shall not thereafter
have the right to contest its obligation to pay such portion.
11.8.4 Conditions Clearance. The Final Response deadline for any
Payment Request shall be the 30th day after the Request Date for that
Payment Request. If the
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corporation shall conclude that any determination
by its Board of Directors shall be required to enable the corporation to
determine whether or not it will be able to pay any amount requested, then
the corporation shall obtain such determination not later than the Final
Response Deadline, and if the corporation shall not have obtained on or
before the Final Response Date a determination by its Board of Directors on
any given issue relevant to any Payment Request, the corporation shall be
deemed to have waived the right to obtain the determination from its Board
and the relative rights and obligations of the corporation and the
Requestor shall on the Final Response Deadline become what they would have
been if the Board had resolved such issue in favor of the Requestor. The
Corporation shall promptly advise the Requestor of any other information
from the Requestor which the Requestor believes necessary (i) to enable the
corporation to pay the Full Amount Requested or (ii) to cause the
corporation to become obligated to pay all or any part of the Full Amount
Requested. The corporation shall in addition at its expense use its best
efforts to take or cause to be taken promptly such other actions as shall
be necessary (i) to determine whether it is required to make all or any
part of the Full Amount Requested and (ii) to cause any amount requested
which the Corporation is obligated to pay to be paid as soon as possible
after the conditions to such payment are satisfied. If the corporation
shall not have paid the Full Amount Requested on or before the Final
Response Deadline, the corporation shall provide the Requestor a Position
Report on the Final Response Deadline and shall provide the Requestor with
subsequent Position Reports thereafter as often as the Requestor shall
reasonably request (which if the Requestor shall request shall not in any
event be supplied less frequently than at 30-day intervals) until the
corporation shall have completed all actions the corporation is obligated
to take on under or by reason of this Section 11.8.4.
11.8.5 Freedom for Action. Neither the corporation, any member of its
Board of Directors nor any other person shall have any liability by reason
of any decision to pay any amount requested or any payment of any amount
requested unless (i) the decision to make such payment shall have been made
in bad faith, (ii) there shall be a Final Court Determination concluding
that the corporation was prohibited by this Article Eleven or by applicable
law from making such payment, (iii) such person's action constitutes gross
negligence or willful misconduct, and (iv) all other requirements necessary
to hold such person liable by reason of such payment (after giving effect
among other things to all other provisions in this Certificate of
Incorporation, the corporation's Bylaws and applicable law) are satisfied.
11.8.6 Resolution of Contested Issues by Designated
Counsel.
11.8.6.1 Designation. If the corporation and any Requestor who
shall have delivered any Payment Request shall agree in writing that
any lawyer or law firm shall serve as Designated Counsel, the such
lawyer or law firm shall be Designated Counsel to the extent
prescribed in such agreement. Without limiting by implication the
generality of the preceding sentence, if the corporation and any
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Covered Person shall enter into a written agreement under which they
shall agree that any law firm designated in (or in a manner prescribed
in) such agreement shall serve as Designated Counsel for purposes of
any issue relevant to whether the corporation is obligated or entitled
to make any payment requested by the Covered Person (whether pursuant
to this Article Eleven or otherwise and including, but not limited to,
issues which have not arisen or are unknown at the time such agreement
shall be made), then such law firm shall serve as Designated Counsel
for the purpose of issues involving the corporation and that Covered
Person to the extent prescribed by that agreement.
11.8.6.2 Designated Counsel's Opinion. If the corporation shall
not have paid the Full Amount Requested in any Payment Request on or
prior to the Initial Response Deadline for that Payment Request, and
if a Designated Counsel shall have been appointed pursuant to Section
11.8.6.1 with authority to determine whether and to what extent the
corporation shall be obligated to pay the Full Amount Requested, then
the corporation shall use its best efforts to cause the Designated
Counsel to issue on the Final Response Deadline or as soon thereafter
as reasonably possible a letter addressed to the corporation and the
Requestor in which the Designated Counsel shall render an opinion as
to what the final outcome would be if all issues upon which the
corporation and the Requestor disagree relevant to determining whether
and to what extent the corporation is required to pay the Full Amount
Requested were determined by a Final Court Determination. In rendering
such opinion, such counsel shall have the right to render any
determination under Section 145(d) of the Corporation Law relevant to
such request (and shall do so if either the corporation or the
Requestor requests it to do so), and if such counsel shall make any
such determination which differs from the determination by the
corporation's Board of Directors or stockholders, such counsel's
determination shall supersede the determination by the Board and/or
the stockholders and shall control. Within 5 days after the Designated
Counsel's opinion is issued, (i) the corporation shall pay to the
Requestor such amount as in the opinion of the Designated Counsel the
corporation would be obligated to pay if all issues relevant to the
Payment Request involved were resolved by a Final Court Determination
and (ii) the corporation shall not thereafter have the right to
contest its obligation to make such payment. For purposes of this
Article Eleven, the term "Section 145(d) of the Delaware Corporation
Law" means the provisions in Section 145(d) of the General Corporation
Law of the State of Delaware as constituted after giving effect to all
changes in that section which shall have occurred between December 11,
1991 and the time at which such section shall be applied; provided
that if Section 145(d) shall be replaced by any other statute, then
the term shall be construed to refer to the replacement statute as
constituted at the time as of which the term shall be applied.
11.8.6.3 Designated Counsel Not Guarantor. No lawyer or law firm
which shall be designated as Designated Counsel under this Article
Eleven shall have any
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liability to the corporation, any Covered Person
or anyone else (i) by reason of the fact that the Final Court
Determination of any issue covered by such opinion shall for any
reason be different from the outcome predicted in any opinion by such
counsel or (ii) for any other act or failure to act under or in
connection with this Article Eleven.
11.8.6.4 Designated Counsel Fees. The corporation shall pay all
charges made by any Designated Counsel for services performed in
connection with this Article Eleven. If the corporation shall fail to
promptly make any payment required by the preceding sentence, then any
Covered Person interested in any issue decided by such counsel may
elect to make such payment, and if any Covered Person does so, (i)
such Covered Person shall be entitled to immediate reimbursement from
the corporation for such payment and (ii) such payment shall be deemed
a Collection Cost.
11.8.7 Court Contest.
11.8.7.1 Basic Contest Right. If for any reason the corporation
shall not pay the Full Amount Requested in any Payment Request on or
before the Final Response Deadline, then the Requestor shall be
entitled to obtain a determination from the court designated in
Section 11.8.7.2 on any issue (herein called a "Contested Issue")
relevant to whether the corporation is obligated to pay any amount
requested in any Payment Request on or prior to the Final Response
Deadline. The Requestor's right to obtain a final Court Determination
shall not be impaired to any extent by any determination by the
corporation's Board of Directors, stockholders or Designated Counsel,
but rather the court shall not be bound or affected by any
determination by the Board, stockholders or Designated Counsel which
shall be adverse to the Requestor and shall be entitled to decide each
Contested Issue as if no such adverse determination had been made. The
corporation shall not however be entitled to contest any determination
by its Board, stockholders or Designated Counsel in favor of the
Requestor.
11.8.7.2 Court.
(a) Delaware State Courts. If the Requestor shall request
that any Contested Issue be determined by the Delaware state
courts and shall submit to the jurisdiction of such courts, then
the corporation shall be subject to the jurisdiction of such
courts for purposes of resolving the Contested Issue, and such
issue shall be decided by the Delaware Court of Chancery (or such
other Delaware state court which shall have jurisdiction over the
subject matter involved), provided that if either party shall
make an appropriate appeal from a decision by the state court in
Delaware by which such issue shall first be decided, the
Contested Issue shall be resolved by the highest
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court which
shall have decided such issue after all appeal rights shall have
been exercised or shall have expired.
(b) Delaware Federal Court. If the Requestor shall request
that any Contested Issue be determined by the United States
District Court in the State of Delaware and shall submit to the
jurisdiction of such court, then the corporation shall be subject
to the jurisdiction of such court for purposes of resolving the
Contested Issue, and such issue shall be decided by the United
States District Court in the State of Delaware, provided that if
either party shall make an appropriate appeal from a decision by
the United States District Court in the State of Delaware by
which such issue shall first be decided, then the Contested Issue
shall be resolved by the highest court which shall have decided
such issue after all appeal rights have been exercised or shall
have expired.
(c) Other Court. If the Requestor shall not request that any
Contested Issue be resolved in the courts specified in paragraph
(a) or (b) in this Section 11.8.7.2, then the Contested Issue may
be resolved by any court having jurisdiction over the Requestor,
the corporation and the Contested Issue (including, but not
limited to, any court specified in paragraph (a) or (b) of this
Section 11.8.7.2 which has such jurisdiction).
11.8.7.3 Burden of Proof. The burden of proof on each Contested
Issue shall rest with the corporation. Each court shall decide each
Contested Issue in favor of the Requestor unless the corporation is
able to establish in a clear and convincing manner that on the basis
of the facts and the law involved such issue must be resolved in favor
of the corporation.
11.8.7.4 Final Court Determination. For purposes of this Article
Eleven, the term "Final Court Determination" as applied to any issue
between the corporation and any other person means the decision
rendered by the highest court having jurisdiction over such issue, the
corporation and such other person which shall have decided such issue
after all appeal rights shall have been exhausted or shall have
expired.
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11.8.8 Alternative Methods to Obtain Payment. The purpose of this
Section 11.8 is to prescribe one clear procedure which any Covered Person
shall be entitled to use to seek to obtain any amount which may be due to
such person from the corporation under or by reason of this Article Eleven.
It is not intended however that this Section 11.8 preclude any Covered
Person from pursuing any other procedure, or method or right which may be
available to such Covered Person to obtain any payment which may be owed to
such person by the corporation.
11.9 Collection Costs. If the corporation shall fail to pay any amount
requested in a Payment Request submitted by a Covered Person within ten days
after the Request Date, then the Covered Person who shall have sought payment of
the amount requested shall be entitled to receive from the corporation at the
earlier of the time at which a Final Court Determination shall be rendered
finding that the corporation is obligated to pay the amount requested or the
time at which the amount requested shall be made all attorneys' fees and other
expenses reasonably incurred by any Covered Person to seek to obtain the amount
requested.
11.11 Interest.
11.11.1 Basic Requirement. The corporation shall pay interest on each
amount owed by the corporation under this Article Eleven at the time, to
the person, and at the rate prescribed by this Section 11.11.
11.11.2 Accrual Period.
11.11.2.1 Indemnification Payments. Interest shall start to
accrue on any amount the corporation shall pay or shall be required to
pay under this Article Eleven other than a Collection Cost or interest
on the eleventh day after the Request Date for such amount. Without
limiting by implication the generality of the preceding sentence, if
the amount the corporation shall ultimately pay or be required to pay
as a result of any Payment Request shall be less than the Full Amount
Requested in such Payment Request (whether by reason of settlement,
Final Court Determination or otherwise), then interest shall accrue on
the amount the corporation shall ultimately pay or be required to pay
beginning on the eleventh day after the receipt by the corporation of
the Payment Request.
11.11.2.2 Collection Costs. Interest shall begin to accrue on any
Collection Cost at the time such Collection Cost shall have been paid
by the person by whom it was incurred.
11.11.2.3 Compounding. Interest accrued under this Article Eleven
shall compound at the beginning of each calendar quarter, i.e., on
each January 1, April 1, July 1, and October 1. Interest shall begin
to accrue at the rate prescribed by Section 11.11.5 on all interest
which shall have accrued prior to such date under this Article Eleven
but which shall not have been paid prior to such date.
11.11.2.4 End of Accrual Period. Interest shall cease to accrue
on any amount owed under this Article Eleven when such amount shall be
paid. Unless the recipient of any payment made under this Article
Eleven shall otherwise agree in writing, such payment shall be applied
first to satisfy interest owed to such recipient and the balance,
after all accrued interest owed to such recipient shall have been
paid, shall be applied to principal.
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11.11.3 Due Date. Interest accrued under this Section 11.11 shall be due
and payable at the same time at which the amount on which it has accrued
shall be due and payable.
11.11.4 Recipient. The person entitled to receive payment from the
corporation for any amount owed under this Article Eleven shall also be
entitled to receive interest which shall accrue on such amount.
11.11.5 Accrual Rate. Interest shall accrue during any given calendar
quarter at a rate exactly four percent per annum higher than the yield to
maturity on treasury bills with a 13-week maturity sold by the United
States government on the first day of such quarter (or if no treasury bills
shall be sold on the first day of such quarter, on such treasury bills sold
on the latest date on which treasury bills with a 13-week maturity shall
have been sold by the United States Government prior to the first day in
such quarter). In the event for any reason the United States Government
shall not sell treasury bills with a 13-week maturity within one month
prior to the beginning of any calendar quarter, then interest shall accrue
under this Section 11.11. for that quarter at a rate equivalent to the rate
intended by this Section 11.11.5.
11.11.6 Secondary Interest. In the event any Covered Person shall
obtain a loan to provide funds to pay any amount for which such Covered
Person shall be reimbursed by the corporation or be held in a Final Court
Determination to be entitled to be reimbursed by the corporation or shall
otherwise obtain credit in connection with such amount (such as
arrangements under which charges for legal services for which the
corporation shall pay or be obligated to pay under or by reason of this
Article Eleven are deferred by the lawyers providing those services in
exchange for an interest charge running from the time the services
generating the charges were rendered to the time at which payment for those
charges is received), then the corporation shall be obligated to pay all
interest which shall accrue on such loan or credit.
11.11 Direct Payments. In any case in which a Covered Person would be
entitled to receive reimbursement under this Article Eleven for any amount if
such amount were paid by such Covered Person to the person (herein called the
"ultimate recipient") to whom it shall be owed by the Covered Person, then the
Covered Person may elect to direct the corporation to make the payment directly
to the ultimate recipient, and if the Covered Person so directs, the corporation
shall make such payment directly to the ultimate recipient in accordance with
such direction.
11.12 Coverage Scope. Every person who shall at any time serve as a
director or officer of the corporation or who shall otherwise constitute a
Covered Person under the definition provided in Section 11.6 shall be entitled
to rely (and shall be conclusively presumed to have relied) upon the protection
afforded by this Article Eleven. This Article Eleven is expressly intended among
other things to induce persons to serve the corporation or to continue to serve
the corporation. This Article Eleven is expressly intended to constitute a
contract between the corporation and every
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person who shall at any time serve as
a director or officer of the corporation or who shall otherwise constitute a
Covered Person under the definition provided in Section 11.6. This Article
Eleven is expressly intended to provide protection on both a "claims incurred"
basis and a "claims made" basis, and therefore (without limiting by implication
the scope of the preceding provisions in this Article Eleven): (i) no repeal or
modification of any provision in this Article Eleven or any right arising under
this Article Eleven shall be effective to take away or in any way impair any
right which any person would have had under this Article Eleven in the absence
of such repeal or modification with respect to any liability or expense which
such person would not have incurred but for any act or failure to act which
shall have occurred prior to such repeal or modification or which shall
otherwise arise out of such act or failure to act; (ii) the termination of a
person's service as a director or officer of the corporation or the termination
of any other Covered Service by any person shall not take away or in any way
impair such person's right to receive payments under this Article Eleven; (iii)
a person shall be entitled to receive compensation to which such person is
entitled under the provisions of this Article Eleven even if the act or failure
to act giving rise to the claim for such compensation shall have occurred prior
to the time this Article Eleven became part of the corporation's Certificate of
Incorporation; and (iv) if the corporation shall merge into any corporation or
other entity, the successor corporation or other successor entity shall after
such merger have all obligations which the corporation would have had under or
by reason of this Article Eleven if it had remained in effect and been assumed
by the successor.
11.13 Separate Indemnification Contract. Any officer of the corporation or
any member of its Board of Directors shall have the right and power to execute
on behalf of the corporation any written contract with any other person
providing indemnification or other protection to such other person in connection
with service by such other person as a director or officer of the corporation or
in connection with any other Covered Service by such person, and any such
contract shall be legal, valid and binding upon the corporation and shall be
enforceable against the corporation in accordance with its terms to the maximum
extent permitted by this Article Eleven or by applicable law, if it shall be
approved by a majority of the members of the corporation's Board of Directors
exclusive of the person to whom indemnification is provided by such contract.
The rights of any person under any particular contract made in accordance with
the provisions of the preceding sentence shall not be impaired or eliminated (i)
by reason of the fact that all or any one or more of the members of the Board
who approved such contracts shall be parties to contracts affording them similar
protection (regardless of when those other contracts shall have been approved or
signed) or shall otherwise have been provided with protection similar to that
provided in the particular contract or shall be subject to the same claims
against which the particular contract is intended to protect or (ii) for any
other reason whatsoever. It is expressly intended that each person with whom the
corporation shall enter into a written contract to provide indemnification or
other protection in connection with such person's service as an officer or
director of the corporation or in connection with other Covered Service by such
person shall be entitled to rely upon (and shall conclusively be presumed to
have relied upon) the rights which such contract purports to provide to such
person. No separate written contract shall however be necessary in order for any
person to obtain any indemnification or payment to which this Article Eleven
purports to entitle such person, and any Covered Person who has no separate
contact of any kind with the corporation shall be
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entitled to receive all
indemnification, payments and other benefits which the provisions in this
Article Eleven other than this Section 11.13 purport to provide to such Covered
Person.
11.14 Indemnification Hereunder Not Exclusive. The rights to
indemnification and payment provided by this Article Eleven shall not be deemed
exclusive of any other right of any kind which any person may have or at any
time acquire under or by reason of any other provision in this Certificate of
Incorporation, the corporation's Bylaws, any agreement, any law or other action
by any governmental authority, or otherwise.
11.15Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the
corporation, or is or was serving in any other capacity with the
corporation, any Employee Plan or any other organization against any
expense, liability or loss whether or not the corporation would have
the power to indemnify such person against such expense, liability or
loss under the provisions of this Article Eleven, under applicable law
or otherwise.
ARTICLE TWELVE
AMENDMENTS
12.1 Reservation of Right to Amend. The corporation reserves the right to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed herein and by the
General Corporation Law of the State of Delaware, and all rights conferred upon
stockholders, directors and officers herein are granted subject to this
reservation.
12.2 Requirement of Board of Director Approval. No change in this
Certificate of Incorporation shall be made unless it shall have been approved by
at least 80% of this corporation's sitting directors and shall have received
such other approvals as may be required by this corporation's Bylaws or by
applicable law.
ooOoo
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Exhibit 2 to Form 8-K submitted on December 19, 1997
THE SERVICEMASTER COMPANY
BYLAWS
ARTICLE ONE
The Company
Section 1.1 Scope of these Bylaws. These Bylaws govern The ServiceMaster
Company, a Delaware corporation (the "Company"), its stockholders and its Board
of Directors (the "Board of Directors" or the "Board") and the committees of the
Board.
Section 1.2 Organization. The Company was originally incorporated in
Delaware on September 10, 1991 with the name "ServiceMaster Incorporated of
Delaware." The Company's Certificate of Incorporation was restated on [Insert
Date] in order among other things to change the Company's name to "The
ServiceMaster Company."
Section 1.3 Corporate Objectives: The objectives of
the Company are:
To honor God in all we do
To help people develop
To pursue excellence
To grow profitably
ARTICLE TWO
Offices
Section 2.1 Registered Office; Registered Agent. The registered office of
the Company in the State of Delaware shall be at 306 South State Street, Dover,
Delaware. The name of the Company's registered agent at such address shall be
Corporation Trust Company.
Section 2.2 Principal Executive Offices. The headquarters and principal
executive office of the Company shall be located at One ServiceMaster Way,
Downers Grove, Illinois 60515.
<PAGE>
Section 2.3 Other Offices. The Company may have offices at such other
places, both within and without the State of Delaware or Illinois, as the Board
of Directors may from time to time determine or as the business of the Company
may require.
ARTICLE THREE
Meetings of Stockholders
Section 3.1 Annual Meeting. An annual meeting of the stockholders shall be
held once each calendar year for the purpose of electing directors and
conducting such other business as may properly come before the meeting. The
date, time and place of the annual meeting shall be determined by resolution of
the Board of Directors.
Section 3.2 Special Meetings. Special meetings of stockholders may be
called only by the Company's Board of Directors. The Board shall have the right
to determine the business to be transacted at any special meeting and no issue
or matter may be acted upon by any stockholders at any special meeting unless
such issue or matter has been approved by the Board for vote by stockholders at
that meeting.
Section 3.3 Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting of the stockholders called in
accordance with these Bylaws. If no designation is made, or if a special meeting
is otherwise called, the place of meeting shall be the Company's principal
executive office.
Section 3.4 Governing Rules for Meetings.
(a) Presiding Officer. The Chairman shall preside at every meeting of the
stockholders. If the Chairman shall be unwilling or unable to preside at any
particular meeting of the stockholders, the Chief Executive Officer shall
preside at that meeting. If neither the Chairman nor the Chief Executive Officer
shall be willing and able to preside at any particular meeting of the
stockholders, then an individual designated by the Board of Directors shall
preside at that meeting. The individual authorized to preside at any particular
stockholders meeting under or pursuant to the provisions in this paragraph (a)
shall be the "Presiding Officer" for that meeting for purposes of these Bylaws
and for all other relevant purposes.
(b) Rules and Decisions. The Presiding Officer shall have the power to make
rules and decisions with respect to the conduct of every meeting of the
stockholders, including (but not limited to) rules and decisions which:
(i) govern the order and conduct of business
at the meeting;
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(ii) determine whether any particular person
is a qualified candidate for election to the Board
at that meeting under the standards prescribed in this Bylaws and such
other standards as the Presiding Officer shall determine to be applicable;
(iii) determine whether the proponent of any other proposal is
entitled to obtain a vote by stockholders on that proposal at that meeting
under the standards prescribed in these Bylaws and such other standards as
the Presiding Officer shall determine to be applicable;
(iv) govern discussion of the issues to be voted upon at the meeting
including the time limits which shall apply for purposes of discussion;
(v) determine whether and to what extent
discussion will be allowed at the meeting
on matters on which voting will not occur
at that meeting;
(vi) determine the validity and effect of proxies present at the
meeting;
(vii) govern taking and counting votes at
such meeting;
(viii) otherwise govern the conduct of such meeting and
(ix) resolve any other questions which ray be raised at such meeting.
All such rules and decisions adopted by the Presiding Officer shall be binding
upon all persons concerned and shall apply for purposes of the stockholder
meeting involved. The Presiding Officer shall have the right to delegate any of
the powers contemplated by this Section 3.4 to such other person or persons as
the Presiding Officer deems desirable.
(c) Appointment and Responsibilities of Inspectors.
The Presiding Officer or the Board shall have the power to appoint an
organization or persons as inspector for purposes of all or any one or more of
the votes be to taken at that meeting. The inspector shall be responsible for
tallying and certifying the vote taken on any matter at such meeting for which
they are responsible. The Presiding Officer or the Board may also delegate to
the inspector the right to decide all questions touching upon the qualification
of voters, the validity of proxies and ballots and the acceptance or rejection
of votes, and other similar issues.
(d) Authority over Issues. The Presiding Officer shall be entitled at his
or her discretion to consult the Board of Directors on any issue over which the
Presiding Officer
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is granted authority in this Section. The Board on its own
initiative may assume responsibility for any issue over which authority is
delegated to the Presiding Officer and if it does so, the decision by the Board
shall control such issue. Until and unless the Board elects at its own
initiative to assume responsibility for any issue delegated to the Presiding
Officer, the Presiding Officer shall have the full authority over that issue
delegated by these Bylaws. In no event shall the stockholders present at any
particular meeting or anyone else be entitled to require the Presiding Officer
to submit any issue, over which he or she has decision making authority, for
decision by the Board or to override any decision by the Presiding Officer.
Section 3.5 Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each record stockholder entitled to vote at such meeting not
less than 10 days before the date of the meeting. All such notices shall be
delivered, either personally or by mail or by other means reasonably selected by
or at the direction of the Board of Directors or any Executive Officer,
including but not limited to (i) first class or express class United States
mail, (ii) Federal Express or other private courier service, (iii) telecopy
transmission, and (iv) electronic mail. Such notice shall be deemed to be given
when it is mailed, when placed into the hands of a courier service, or when
transmission of the notice is otherwise initiated by any means permitted by the
preceding sentence. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
Section 3.6 Record Stockholders.
(a) Record Dates for Meetings. In order that the Company may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date. The
record date as so fixed shall not precede the date on which the resolution
fixing the record date is adopted by the Board of Directors and shall not be
more than sixty nor less than ten days before the date of such meeting. If no
record date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be the close of business on the next day preceding the day on which notice is
given, or if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.
(b) Record Dates For Other Purposes. In order that the Company may determine
the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the Board of Directors
may fix a record date. The record date as so fixed shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If no record date
is
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fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. The person in whose name shares shall be
registered on the record date shall be entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action for which the record
date shall be established regardless of whether the shares shall have been sold
or transferred to someone else after the record date and regardless of any other
fact or circumstance.
(c) Close of Business. Each reference to a record date in these Bylaws or
in other materials relating to any meeting or action for which such record date
is relevant shall mean the close of business on the date involved.
(d) Stockholder Lists. The Company shall cause to be created before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at that meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder
(the "stockholder list"). The stockholder list shall be open to the examination
of any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting, at the
Company's principal executive office or at such other place within the United
States as shall be approved by any Executive Officer. The stockholder list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present. The
Company shall also make the stockholder list available for such period, in such
place, and at such times as may be required by applicable law.
(e) Voting Class. If the only one class of stock is
entitled to be voted on any particular issue on which a stockholder vote shall
be taken at any particular stockholders meeting, then the term "voting class" as
used in these Bylaws refers to that class when it is applied to that particular
issue. If shares in two or more classes are to be voted together without
separate class votes on any particular issue at any particular stockholders
meeting, then all of those classes shall be deemed to constitute a single
"voting class" for purposes of that issue under these Bylaws. The voting class
which consists of or includes the common stock shall be deemed the "common
voting class."
(d) Definition of the Term "Record Shares". The "record shares" for
purposes of any issue upon which a vote shall be taken at any stockholders
meeting shall be the shares in every voting class entitled to vote on that issue
which were outstanding on the record date for that meeting.
(f) Record Holders. Each stockholder shall be entitled to vote, on each
issue on which stockholder votes shall be taken at any particular stockholders
meeting, the record shares in the voting class or classes for that issue which
were registered in the name of that stockholder on the record date for that
meeting and which are entitled to vote on
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that issue, and such stockholder shall
be deemed to be the "record holder" of those shares for purposes of the meeting.
(g) Proxies. A record holder shall have the right to authorize another
person to vote such holder's record shares at any meeting, provided (i) such
record holder shall execute a written proxy authorizing such person to vote
those record shares and (ii) such written proxy shall be delivered to the
officer or agent designated by the Company for the collection of proxies and
shall comply with such rules as the Presiding Officer or the Board or the
inspector shall impose governing proxies.
Section 3.6 Quorum Requirements.
(a) Need to Establish a Quorum. A quorum must be
established for a stockholders meeting before valid stockholder votes can be
taken at that meeting for election of members to the Board of Directors or on
any routine issue (as defined in section 3.7(a)).
(b) Establishment of a Quorum. A quorum shall be deemed established for any
meeting if record shares in the common voting class representing a majority of
the votes attributable to the record shares in the common voting class are
represented in person or by proxy at that meeting. The determination by the
Presiding Officer that a quorum has been established for any particular meeting
shall be binding and conclusive on all persons concerned unless (i) an objection
shall be made in writing at that meeting by a stockholder entitled to vote at
that meeting and (ii) the person so objecting shall be able to prove by clear
and convincing evidence that a quorum has not been established for that meeting.
(c) Maintenance of a Quorum. Once a quorum shall be
established at any stockholders meeting, such quorum shall be deemed to be
established for purposes of that meeting (including any resumption of that
meeting convened after adjournment) regardless of whether the holders of shares
shall thereafter leave the meeting (or not be present at any resumption of that
meeting) in sufficient number that the number of shares remaining at such
meeting shall be lower than the number which would have been originally required
to establish a quorum for that meeting.
Section 3.7 Voting Requirements for Routine Issues.
(a) Definition. For purposes of these Bylaws, any
issue upon which a stockholder vote shall be taken at any stockholders meeting
shall be deemed a "routine issue" if it does not involve the election of
directors and if no special voting requirements (identified as prescribed in
Section 3.9) apply to that issue.
(b) Vote Required. Every routine issue shall be deemed to have been
approved at any particular stockholders meeting if a majority of the votes cast
at that meeting with respect to that issue are cast in favor of that issue.
Shares specifically voted to abstain on
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any particular issue shall be counted in
determining the number of votes cast with respect to that issue and shall
accordingly have the same effect as if cast against that issue. Shares not voted
for, against or to abstain with respect to any issue shall not be deemed to have
been cast with respect to that issue (regardless of whether such shares are
otherwise deemed be represented or present at that meeting) and accordingly
shall not be counted in determining the number of votes required to adopt or
approve such issue.
Section 3.8 Voting Requirements for Election of Directors ( Reference to
Section 4.5). Reference is made to Section 4.5 of these Bylaws for the voting
requirements for the election of directors.
Section 3.9 Voting Requirements For Special Issues.
(a) General Definition. For purposes of these Bylaws, each of the following
matters shall be deemed a "special issue": (i) every matter designated in the
Delaware Corporation Law, in the Certificate of Incorporation of the Company, or
in these Bylaws as requiring a vote higher than that specified in the Section
3.7 with respect to any particular issue; and (ii) every matter which is the
subject of a requirement which is imposed by any agreement to which the Company
may become subject or which the Board otherwise determines to be applicable to a
particular issue upon which a vote is to be taken at any particular stockholders
meeting and which requires a vote higher than that specified in Section 3.7 with
respect to that particular issue.
(b) Other Matters Constituting Special Issues. In addition to the special
issues identified in paragraph (a), the Board at its discretion may choose to
establish a vote requirement as the minimum required to take any particular
action at a particular stockholders meeting, and if the Board shall elect to do
so, the action shall not be deemed to have been taken unless the vote
requirement established by the Board for that issue shall be achieved. Any issue
with respect to which such requirement applies shall also be deemed to be a
"special issue" for purposes of these Bylaws.
(c) Approval of Special Issues. Every issue governed by a special voting
requirement shall deemed approved at any particular stockholders meeting if it
receives the stockholder votes required by every special voting requirement
applicable to that particular issue and shall be deemed defeated if it does not
receive at least that number of stockholder votes.
(d) Inapplicability of Section 3.6. The quorum requirements in Section 3.6
shall not apply to voting on any issue subject to special voting requirements.
Section 3.10 Meeting Adjournment.
(a) Authority of the Presiding Officer. The Presiding Officer shall have
the authority to adjourn any stockholders meeting at any time (whether or not a
quorum is present), to determine whether the meeting will resume or whether the
adjournment
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is final, and if the meeting is to resume, to determine the time and
place at which the meeting will resume.
(b) Stockholder Votes. No stockholder vote or other
business shall occur after a stockholders meeting has been adjourned unless and
until the meeting shall be resumed pursuant to the direction of the Presiding
Officer. If the Presiding Officer shall determine to resume an adjourned meeting
any stockholder vote or other business may be transacted at the resumed meeting
that could have been transacted at the original meeting if the requisite number
of shares had been present at the original meeting.
(c) Adjourned Meetings. When a meeting is adjourned
to another time and place, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. The requirement that the record date for any particular meeting shall
not be more than sixty days before the date of such meeting shall be satisfied
if the initial meeting shall be convened within that sixty day period and if
that initial meeting shall be adjourned, the same record date may be used to
determine the stockholders entitled to vote at any resumption of that meeting
even if that resumption occurs more than sixty days after that record date.
Section 3.11 No Action by Consent. A holder of common stock or any other
class of stock at any time issued by the Company shall not have the right to
take action by written consent. Rather, stockholders shall only have the right
to act with respect to any particular issue at a meeting of stockholders at
which that issue is properly up for a vote by stockholders.
Section 3.12 Stockholder Proposals.
(a) Right to Make Proposals; Qualified Stockholder Proposals. Stockholders
shall be entitled make proposals to be voted upon by stockholders at an annual
meeting provided that they comply with the procedures required by this Section
3.12. Only those proposals which satisfy all requirements specified in this
Section 3.12 shall be deemed "qualified stockholder proposals."
(b) Requirements For Qualified Stockholder Proposals. In order for a
proposal to constitute a "qualified stockholder proposal," all of the following
requirements must be satisfied:
(1) The proposal must be made for
submission at
an annual meeting of stockholders;
(2) The proposal must be a proper
subject for stockholder action. The Board shall be entitled to
determine that any proposal which the stockholder is not entitled to
have included in the Company's proxy statement for the meeting under
the Securities Exchange Act of 1934 and the regulations issued by the
Securities and Exchange Commission (which are collectively
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herein
called the "SEC Proxy Rules") is not a proper subject for stockholder
action;
(3) The proposal must be made by a
stockholder who shall be the record holder on the record date
for that meeting and at that meeting of shares entitled to be voted
for the proposal (a "proposing stockholder");
(4) The proposing stockholder must deliver a written notice identifying
such proposal to the office of the Company's General Counsel at the
Company's headquarters which provides the information required by
these Bylaws which is timely under the standards given in these Bylaws
for shareholder nominations of director candidates;
(5) Such stockholder's proposal notice shall: (i) contain a description of
the proposal, the reasons for the proposal and any material interest
in such proposal by the proposing stockholder or the beneficial owner
of the stockholder's record shares; (ii) contain an affirmation by the
proposing stockholder that the stockholder satisfies the requirements
specified in this section for presentation of such proposal; and (iii)
as to the stockholder making the proposal and the beneficial owner, if
any, on whose behalf the proposal is made (x) the name and address of
such stockholder , as they appear on the Corporation's books, and of
such beneficial owner and the telephone number at which each may be
reached during normal business hours through the time for which the
meeting is scheduled and (y) the class and number of shares of the
Company which are owned beneficially and of record by such stockholder
and such beneficial owner; and
(6) The proposing stockholder and the beneficial owner shall provide such
other information as any Executive Officer shall reasonably deem
relevant within such time limits as any Executive Officer shall
reasonably impose for such information.
(c) Conformity with SEC Proxy Rules. Nothing in these Bylaws shall be
deemed to prohibit a stockholder from including any proposals in the Company's
proxy statement to the extent such inclusion shall be required by the SEC Proxy
Rules or to lessen any obligation by any stockholder to comply with the SEC
Proxy Rules. Conversely, neither the fact that a stockholder's nominee qualifies
as a qualified candidate nor the fact that a stockholder's proposal qualifies as
a qualified proposal under these Bylaws shall obligate the Company to endorse
that candidate or proposal or (except to the extent required by the SEC Proxy
Rules) to provide a means to vote on that proposal on proxy cards solicited by
the Company or to include information about that proposal in the Company's proxy
statement.
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ARTICLE FOUR
Directors
Section 4.1 General Powers. The business and affairs of the Company shall
be managed by or under the direction of the Board of Directors. In addition to
the powers and authorities expressly conferred upon it by these Bylaws, the
Board of Directors may exercise all such powers of the Company and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these Bylaws directed or required to be exercised or done
exclusively by the stockholders.
Section 4.2 Number of Directors. Until otherwise determined by the Board of
Directors acting pursuant to Section 4.4, the number of positions on the Board
of Directors shall be three (3). Section 4.3 Division of the Board into Classes.
(a) Number Within a Class and Designation of Classes. The Board of
Directors shall be divided into three classes in accordance with the Company's
Certificate of Incorporation. The positions within each class shall be the same
in number as reasonably practicable. Directors within a given class shall be
designated as the "Class of [Year], with the entry for Year being the year in
which the directors were elected to that Class.
(b) Classes of 1998, 1999 and 2000. Unless otherwise determined by the
Board of Directors pursuant to Section 4.4, the number of positions within the
Classes of 1998, 1999 and 2000 shall be: Class of 1998 - five; Class of 1999 -
six; and Class of 2000 - six. The identity of the directors within each of these
classes shall be determined by the Board of Directors by not later than the date
on which the Company first solicits proxies for the annual meeting for the year
1998.
Section 4.4 Board's Power to Alter the Number of Directors and the Size of
Classes. The Board of Directors shall have the power (within the limitations
prescribed by the Certificate of Incorporation) by a resolution adopted by not
less than a majority of all sitting directors at the time of such adoption to
alter at any time and from time to time (i) the total number of directorship
positions on the Board and (ii) the number of directorship positions in any of
the three classes of directors established by the
Company's Certificate of Incorporation. Except as otherwise expressly provided
in the Certificate of Incorporation, from the adoption of any particular
resolution in the manner provided in the preceding sentence until the adoption
in the manner prescribed by the preceding sentence of any subsequent resolution
altering the results of the particular resolution, (i) the total number of
directorship positions on the Board of Directors shall be equal to the number
specified in the particular resolution and (ii) the number of directorship
positions in each of the three classes of directors established by the
Certificate of Incorporation shall be the number established in the particular
resolution.
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Section 4.5 Election of Directors by
Stockholders.
(a) Election by Plurality Vote. Qualified candidates
(as hereinafter defined) for election as directors at any meeting of the
stockholders of the Company shall be elected by plurality vote. Accordingly, if
votes are cast for more individuals than the number of positions to be filled at
that meeting, then a qualified candidate shall be deemed elected to one of those
positions if the number of qualified candidates who received more votes than
that individual are less than the number of positions on the Board which are to
be filled at that meeting. (For example, if five positions on the Board were up
for election at any particular stockholders meeting, then the five qualified
candidates who receive more votes than any other qualified candidates shall be
deemed elected at that meeting). Without limiting by implication the generality
of the preceding provision, it shall not be necessary for election to the Board
that a candidate receive a majority of the votes comprising the quorum for the
meeting so long as the individual receives a number of votes sufficient for
election under the terms of this paragraph (a).
(b) Number of Votes Cast by a Stockholder. Each stockholder shall be
entitled to cast with respect to each position on the Board to be elected by
stockholders at that meeting a number of votes attributable to the record shares
in the common voting class held of record by that stockholder at the relevant
record date and such stockholder may distribute those votes among qualified
candidates for election to that position in such manner as such stockholder may
wish.
(c) No Cumulative Voting. Voting for directors shall not be cumulative.
Accordingly, the maximum number of votes a stockholder shall be entitled to cast
for any particular qualified candidate shall not exceed the number of votes
attributable to the record shares in the common voting class held of record by
that stockholder at the relevant record date.
(d) Effective Voting Limited to Qualified Candidates. Only qualified
candidates may be elected to the Board at any particular stockholders meeting.
Votes cast in favor of an individual who is not a qualified candidate shall not
be effective to elect that individual to the Board regardless of whether (i)
that individual receives a greater number of votes than qualified candidates who
are elected to the Board under the preceding provisions of this section or (ii)
no other individual receives any votes at that meeting (which might be the case
if an individual were proposed for election to a vacant position on the Board at
a special meeting which was not called by the Board for the purpose of electing
directors or for which no qualified candidate was nominated).
(e) Identification of Qualified Candidates. An individual shall be deemed a
qualified candidate for election to the Board at any particular stockholders
meeting if that individual (i) is younger than age 70 at the date he or she is
to be elected and (ii) shall have been nominated for election by the Board or
shall have been nominated for election in a manner which satisfies all of the
requirements specified in paragraph (g) of this Section 4.5.
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(f) Status of Non-Independent Candidates. As used in this paragraph (f),
the term "non- independent candidate" as applied to any particular election of
directors means an individual who satisfies the conditions of clauses (i) and
(iii) of paragraph (e) above but who is not an "independent director" under the
standard prescribed in Section 7.5.2 of the Company's Certificate of
Incorporation. In the event that in any particular election of directors Section
7.5.1 of the Company's Certificate of Incorporation would permit some but not
all of the non-independent candidates for director at that election to be
elected to the Board, then paragraph (d) of this Section 4.5 shall be applied to
fill positions on the Board as if all of the non-independent candidates were
qualified candidates until all positions available for non-independent
candidates at that election under Section 7.5.1 of the Company's Certificate of
Incorporation are filled. The remaining non- independent candidates shall, in
accordance paragraph (d) of this Section 4.5, be deemed to be not qualified
candidates.
(g) Candidates Not Nominated by the Board. In order for an individual not
nominated by the Board of Directors to be a "qualified candidate" for election
to the Board at any particular meeting of stockholders, all of the following
requirements must be satisfied:
(1) The nomination must be made for an election to be held at an annual
meeting of stockholders or a special meeting of stockholders in which
the Board of Directors has determined that candidates will be elected
by the common voting class to one or more positions on the Board.
(2) The individual must be nominated by a stockholder who shall be the
record owner on the record date for that meeting and at that meeting
of shares entitled to be voted at that meeting for the election of
directors (a "nominating stockholder").
(3) The nominating stockholder must deliver a timely written nomination
notice to the office of the Company's General Counsel at the Company's
headquarters which provides the information required by these Bylaws.
(4) To be timely for an annual meeting, a stockholder's notice must be
actually delivered to the General Counsel's office not later than the
close of business on the 60th day nor earlier than the close of
business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that:
(i) if the date of the annual meeting is more than 30 days before or
more than 60 days
after such anniversary date, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on the
90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior
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to such annual meeting or
the 10th day following the day on which public announcement of the
date of such meeting is first made by the Company, and
(ii) if the number of directors to be elected to the Board of Directors is
increased and there in no public announcement by the Company naming
all of the nominees for director or specifying the size of the
increased Board of Directors at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a stockholder's
nominating notice required by this Bylaw shall also be considered
timely, but only with respect to nominees for any new positions
created by such increase, if (x) the stockholder shall have nominated
candidates in accordance with the requirements in these Bylaws for all
Board positions not covered by such increase and (y) the nomination
notice for candidates to fill the expanded positions shall be actually
delivered to the General Counsel at the Company's headquarters not
later than the close of business on the 10th day following the day on
which such public announcement is first made by Company.
(5) if the election is to be held at a special stockholders meeting, a
stockholder's nominating notice required by this By-Law shall be considered
timely for that meeting if it shall be actually delivered to the General
Counsel's office at the Company's headquarters not later than the close of
business on the 10th day following the day on which the Company shall first
publicly announce the date of the special meeting and that a vote by
stockholders will be taken at that meeting to elect a director or
directors.
(6) In no event shall the public announcement of an adjournment of an annual
meeting commence a new time period for the giving of a stockholder's notice
as described above. For purposes of these Bylaws, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the Company with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(7) Such stockholder's nomination notice shall --
(i) set forth as to each person whom the
stockholder proposes to nominate for election or re-election as a
director all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors in
an election contest,or is otherwise required, in each case pursuant to
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Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 14a-11
thereunder;
(ii) be accompanied by each nominee's written consent to being named
in the proxy statement as a nominee and to serving as a director
if elected;
(iii)set forth the name and address of the stockholder giving the
notice and the beneficial owner of the shares owned of record by
the beneficial owner, and the telephone number at which the
Company will be able to reach the stockholder, the beneficial
owner and each nominee during usual business hours during the
period through the meeting at which the nomination is to take
place; and
(iv) set forth the class and number of shares of the Company which are
owned beneficially and of record by such stockholder and such
beneficial owner.
(8) The nominating stockholder, the beneficial owner and each nominee
shall provide such other information as any Executive Officer shall
reasonably deem relevant within such time limits as any Executive
Officer shall reasonably impose for such information.
Section 4.6 Vacancies. Neither the provisions of the preceding section nor
anything else shall diminish the right granted to the sitting directors to elect
individuals to fill any vacancy which shall occur for any reason.
Section 4.7 Annual Meetings. An annual meeting of the Board of Directors
shall be held each year for the appointment of officers of the Company and such
other matters as shall come before the meeting. The annual meeting of the Board
of Directors shall be held without other notice than this Bylaw either
immediately before or immediately after, and in either case at the same place
as, the annual meeting of stockholders.
Section 4.8 Other Meetings. Regular meetings, other than the annual
meeting, of the Board of Directors may be held without notice at such time and
at such place as shall from time to time be determined by resolution of the
Board. Special meetings of the Board of Directors may be called by or at the
request of the Chairman, the Chief Executive Officer or a majority of the
sitting directors. The person or persons who call any special meeting of the
Board of Directors may fix the time and place at which the meeting shall be
held.
Section 4.9 Notice.
(a) General Rule. Except as provided in the immediately following
subsection (b), notice of any special meeting shall be given at least one day
prior thereto if notice is
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given by telephone, by fax or by other means
reasonably calculated to reach the director on the date it is transmitted, two
days prior to the meeting if it is given by Federal Express or other comparable
courier reasonably calculated to reach the director's usual address the date
after it is delivered to the courier, or five days prior to the meeting if it is
transmitted solely by mail. Notice shall be effective if it shall be sent to the
director's usual address or to any other address which any Executive Officer
reasonably believes has a better chance to actually reach the director. Neither
the business to be transacted at, nor the purpose of, any annual, regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
(b) Emergency Meetings. In the event that the Company's Chairman or Chief
Executive Officer determines that the Board should consider an issue sooner than
would be permitted under the notice provisions in the immediately preceding
subsection (a), then notice shall be given by any means which are sufficient to
obtain the attendance of at least a majority of the sitting directors at the
meeting and which in the judgment of the Chairman or the Chief Executive Officer
are the most sensible means to attempting to contact every director whom he or
she believes it is possible to contract before the meeting. The Company shall
advise any director not in attendance at that meeting of the occurrence of that
meeting and actions taken at it as promptly as it is reasonably able to
communicate such information to such director.
4.10 Quorum, Required Vote and Adjournment.
(a) General Rules. Except as otherwise provided in paragraph (b)
immediately below, a quorum for the transaction of business with respect to any
given matter at any meeting of the Board shall consist of a majority of the
number of sitting directors and the vote of a majority of directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
(b) Special Cases. If an express provision in the Company's Certificate of
Incorporation or Bylaws permits or requires action to be taken by the Board by
vote of a number of directors different from the number prescribed in paragraph
(a) immediately above, then the number so prescribed in such provision shall
constitute the number required for a quorum with respect to, and for approval
of, the action specified in such express provision.
(c) Adjournments. If a quorum is not present at any meeting of the Board of
Directors, the directors who are present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
(d) "Absolute Majority" Defined. The term "Absolute Board Majority" means a
majority of the sitting directors on the Board at the time as of which the term
shall be applied.
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Section 4.11 Participation by Telephone. Members of the Board of Directors
or any Committee thereof may participate in and act at any meeting of the Board
or Committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 4.12 Waiver of Notice and Presumption of Assent. Any member of the
Board of Directors or any Committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his dissent shall be entered in the minutes of the
meeting or unless his written dissent to such action shall be filed with the
person acting as the secretary of the meeting before the adjournment thereof or
shall be forwarded by registered mail to the secretary of the Company
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to any member who voted in favor of such action. No failure to provide
notice to all or any one or more of the directors shall impair the due
authorization or validity of any action (i) approved by a majority of the
sitting directors at any meeting of the Board or (ii) approved by the majority
of the members of any Board Committee at any meeting of that Committee.
Section 4.13 Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any Committee thereof,
may be taken without a meeting if all members of the Board or Committee, as the
case may be, consent thereto in writing. In the event one or more positions on
the Board or any Committee shall be vacant at the time of execution of any such
consent, such consent shall nevertheless be effective if it shall be signed by
all sitting directors serving as members of the Board or such Committee at such
time and if the persons signing the consent would be able to take the action
called for by the consent at a properly constituted meeting of the Board or such
Committee.
Section 4.14 Senior Management Advisors. The Board shall have the power to
appoint any person having management responsibility with the Company or any of
its subsidiaries to the position of senior management advisor. Each person who
shall be appointed to the position of senior management advisor may participate
in meetings of the Board (except to the extent the Board otherwise directs) and
provide such advice to the Board or any Board Committee as the Board or such
Committee requests. The election of a person to the position of senior
management advisor shall not make such person a director of the Company or
entitle such person to vote on any matter on which the Board or any Board
Committee shall act. Each person who shall be appointed as senior management
advisor shall serve in that capacity until the earliest of (i) the next annual
meeting of the Board following such person's appointment, (ii) such person's
resignation from that position, (iii) such person's death, and (iv) the removal
of such
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person from the position of senior management advisor by the Board. No
one shall be entitled to receive any additional compensation by reason of
service as a senior management advisor.
Section 4.15 Compensation. A director who is an employee of the Company or
any of its subsidiaries shall not receive any stated salary or fee for his
service as director. A director who is not an employee may receive such
compensation for his services as a director as is fixed by resolution of the
Board. Members of any Board Committee or any other committee established by the
Board may receive such compensation for their duties as Committee members as is
fixed by resolution of the Board of Directors. All directors and senior
management advisors shall be reimbursed for their expenses incurred to attend
meetings of the Board and Board Committees.
Section 4.16 Stakeholder Interests. The Board shall have the authority to
make its decisions based on a long term perspective and in doing so shall be
entitled to make decisions which may produce short term outcomes less favorable
than alternatives which may be available to the Company or its stockholders. The
Board in making its decisions shall be entitled to consider the interests of
stakeholders in the Company other than stockholders, including employees, areas
in which the Company maintains operations, creditors, and other persons who in
the Board's sole judgment have a legitimate stake in the Board's decision. The
Board shall have discretion to determine how to balance any interests the
interests of stockholders and other stakeholders in arriving at any decision.
ARTICLE FIVE
Board Committees
Part 1: General Provisions
Section 5.1 Board Committees. The term "Board Committee" as used in these
Bylaws means any Committee comprised exclusively of directors of the Company
which is identified as a "Board Committee" either in these Bylaws or in any
resolution adopted by the Board.
Section 5.2 Standing Committees. The following
committees (the "Standing Committees") are established by
these Bylaws:
Executive Committee
Audit Committee
Nominating Committee
Compensation Committee
Finance Committee
Contributions Committee
Employee Benefit Plan Oversight Committee.
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Each Standing Committee shall have such powers and responsibilities as are
established for such Committee in Part 2 of this Article Five and such other
powers and responsibilities as may be delegated to such Committee by the Board
of Directors. Each Standing Committee shall be a Board Committee.
Section 5.3 Other Committees. The Board shall have the power to establish
committees in addition to the Standing Committees and to delegate to any such
Committee any power exercisable by the Board of Directors, provided that each
such Committee shall consist solely of directors. Unless otherwise specified in
the resolution which creates a Committee pursuant to this Section 5.3, such
Committee shall be a Board Committee.
Section 5.4 Names of Board Committees; Minutes. Each Board Committee shall
have such name or names as may be prescribed in these Bylaws or by Board
resolution. Each Committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
Section 5.5 Membership.
(a) Number of Members on Committees. The Board shall have the power to
establish the number of membership positions on each Board Committee from time
to time and to change the number of membership positions on such Committee from
time to time. Unless the Board shall otherwise expressly direct, the number of
positions on any Board Committee at any given time shall be exactly equal to the
number of sitting directors who are members of that Committee at the given time
(b) Appointments and Removals. The Chairman of the Board shall have the
power, subject to the approval of the Board, to: (i) appoint any director to
membership on any Board Committee who shall be willing to serve on such
Committee and (ii) remove any person from membership on any Board Committee
without cause. The Chairman of the Board, subject to the approval of the Board,
shall reappoint the membership of the Board Committee at each annual meeting of
the Board and any person's membership on any Board Committee shall automatically
terminate at each annual meeting of the Board unless such person shall be
reappointed to such membership at such annual meeting. A person's membership on
any Board Committee shall automatically terminate when such person ceases to be
a director of the Company.
Section 5.6 Committee Rules. Each Committee of the Board of Directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution adopted by the Board
of Directors. Unless otherwise provided in such a resolution, the presence of at
least a majority of the members of the Committee shall be necessary to
constitute a quorum. In the event that a member is absent or is otherwise unable
or unwilling to act and no designated alternate member is available and willing
and able to act, the member or members thereof present
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at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of any such absent or disqualified member.
Section 5.7 Powers. Except as otherwise provided in Section 5.8 hereof,
each Board Committee shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Company to the extent (but only to the extent) such powers shall be expressly
delegated to it by the Board or by these Bylaws.
Section 5.8 Reserved Powers. No Board Committee or any other committee
shall have the right or power (i) to amend, alter or repeal any resolution
adopted by the Board which by its terms precludes such action by such Committee
or to take any action which has the same substantive effect or (ii) to take any
action which is not permitted under the Delaware General Corporation Law to be
taken by committees of boards of directors.
Section 5.9 Vote Required. The members holding at least a majority of the
positions on any Board Committee shall constitute a quorum for purposes of any
meeting of such Committee. The affirmative vote of members holding at least a
majority of the positions on any Board Committee shall be necessary and
sufficient to approve any action within the Committee's power, and any action so
approved by such a majority shall be deemed to have been taken by the Committee
and to be the act of such Committee.
Section 5.10 Governance. The Chairman, with the consent of the Board, may
designate the person who is to serve as chairman of any Board Committee. In the
absence of any such designation by the Board, the members of the Committee may
either designate one member of the Committee as its chairman or elect to operate
without a chairman. Each Board Committee may appoint a secretary who need not be
a member of the Committee or a member of the Board (provided that any secretary
who is not a member of the Committee shall not have the right to vote on any
matter or count for purposes of determining whether a quorum exists for purposes
of action by such Committee). Each Board Committee shall have the right to
establish such rules and procedures governing its meetings and operations as
such Committee shall deem desirable provided such rules and procedures shall not
be inconsistent with the Certificate of Incorporation, these Bylaws, or any
direction to the Committee issued by the Board.
Part 2: The Standing Committees
Section 5.11 Executive Committee.
(a) Authority and Responsibilities. The Executive Committee shall have the
right and power to grant any authorization or approval and take any other action
which the Board could take (including but not limited to any function expressly
delegated to the Board of Directors in these Bylaws) except for (i) any action
which Board Committee are
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expressly prohibited from taking under the provisions
of Section 5.8 or (ii) any action establishing the compensation for any member
of the Executive Committee.
(b) Membership. The Chairman of the Company shall serve as the Chairman and
a member of the Executive Committee and the Chief Executive Officer shall be a
member of the Executive Committee. All other members of the Executive Committee
shall be independent directors. Subject to the preceding two sentences, the
membership of the Executive Committee shall be determined as provided in Section
5.5
Section 5.12 Audit Committee.
(a) Authority and Responsibilities. The Audit Committee shall: (i)
recommend to the Board of Directors annually a firm of independent public
accountants to act as auditors for the Company and the subsidiaries to be
included in the Company's consolidated financial statements; (ii) review with
the auditors in advance the scope of their annual audit for the Company; (iii)
review with the auditors and the management from time to time, the accounting
principles, policies, and practices of the Company and its reporting policies
and practices for the Company; (iv) review with the auditors annually the
results of their audit for the Company; (v) review from time to time with the
auditors and the internal financial personnel the adequacy of the accounting,
financial and operating controls for the Company; and (vi) exercise such other
authority which shall from time to time be delegated to the Committee by the
Board or which the Committee shall deem reasonably related to any authority
expressly delegated to the Committee in or pursuant to this Section. 5.
(b) Membership. The members of the Audit Committee shall be determined by
the Chairman, subject to the approval of the Board, as provided in Section 5.5,
provided that no person may serve as a member of the Audit Committee unless he
or she is and independent director.
Section 5.13 Nominating Committee.
(a) Authority and Responsibilities. The Nominating
Committee shall recommend to the full Board (i) persons to be nominated by the
Board for election to the Board by stockholders at each annual meeting of
stockholders and (ii) the persons to be elected to any vacancy on the Board
which shall occur for any reason. The Nominating Committee shall accept
nomination of candidates to fill the Board from the stockholders of the Company
if such nominations are submitted within the time limits and in the manner
prescribed in Section 4.5(f).
(b) Membership. The members of the Nominating Committee shall be determined
by the Chairman, subject to the approval of the Board, as provided in Section
5.5.
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Section 5.14 Compensation Committee.
(a) Authority and Responsibilities. The Compensation Committee shall: (i)
periodically review the compensation of the members of senior management of the
Company, including base compensation and long-term compensation arrangements,
and shall make recommendations to the Board of Directors and (ii) perform such
other duties as shall from time to time be delegated to the Compensation
Committee by the Board. The Compensation Committee shall make one of the reviews
referred to in clause (i) of the preceding sentence each year in the month of
December.
(b) The members of the Compensation Committee shall be determined by the
Chairman, subject to the approval of the Board, as provided in Section 5.5.
Section 5.14 Finance Committee
(a) Authority and Responsibilities. The Finance Committee shall serve as a
committee of special expertise on financial matters affecting the ServiceMaster
enterprise or any segment thereof. The Finance Committee shall review financial
reports and analyses and shall make recommendations on financial matters to the
Board of Directors or the Executive Committee. Unless otherwise empowered by the
Board, the Finance Committee shall not have the authority to approve or
authorize any action taken or to be taken by the Company.
(b) The members of the Finance Committee shall be determined by the
Chairman, subject to the approval of the Board, as provided in Section 5.5.
Section 5.15 Contributions Committee
(a) Authority and Responsibilities. The Contributions Committee shall
periodically review the Company's charitable contribution program and make
proposals and recommendations to the Board or the Executive Committee for
contributions. The Contributions Committee may approve the expenditure of funds
for contributions only if authorized to do so by the Board and, if so
authorized, only within the dollar limitations established by the Board.
(b) The members of the Contributions Committee shall be determined by the
Chairman, subject to the approval of the Board, as provided in Section 5.5.
Section 5.16 Employee Benefit Plan Oversight Committee
(a) Authority and Responsibilities. The Employee Benefit Plan Oversight
Committee shall periodically review the scope, investment policies and
administration of the Company's various employee benefit plans for the purpose
of ascertaining whether such plans fully comply with legal requirements and
whether such plans are functioning consistently with the objectives for the
plans as established by the Board. The Employee
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Benefit Plan Oversight Committee
shall periodically report its findings and recommendations to the Board or
whenever the Board requests a report.
(b) The members of the Employee Benefit Plan Oversight Committee shall be
determined by the Chairman, subject to the approval of the Board, as provided in
Section 5.5.
ARTICLE SIX
Officers
Section 6.1 Executive Officers. The Company shall have the following
Executive Officers: one Chairman, one or more Vice Chairmen (the exact number to
be determined by the Board), one President and Chief Executive Officer
(hereinafter referred to as the "Chief Executive Officer"), one Chief Financial
Officer, one or more Vice Presidents, one General Counsel, one Secretary, one
Controller, and one Treasurer. The term "Executive Officer" whenever used in
these Bylaws means only the officers identified in the preceding sentence. The
Chairman and each Vice Chairman must be a member of the Board of Directors, but
no other officer need be a member of the Board. Any number of Executive Officer
positions may be held by the same person. In its discretion, the Board of
Directors may choose not to fill any Executive Officer position for any period
as it may deem advisable, except that the offices of Chief Executive Officer and
Secretary shall be filled as expeditiously as possible.
Section 6.2 Appointment and Term of Office. The Executive Officers of the
Company shall be appointed annually by the Board of Directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the Board of Directors. Each Executive Officer shall hold
office until a successor is duly appointed or until his earlier death,
resignation or removal as hereinafter provided. In case of the absence of any
officer of the Company, or for any other reason that the Board may deem
sufficient, the Board may delegate, for the time being, the powers or duties, or
any of them, of such officer to any other officer, or to any director. The Board
shall have the right to authorize the Company to enter into employment contracts
providing for the employment of any officer for a term longer than one year, but
no such contract shall preclude the Board from removing any person from any
position with the Company whenever in the Board's judgment the best interests of
the Company would be served thereby.
Section 6.3 Other Management Positions. The Board or the Chief Executive
Officer shall have the right to create other management positions in addition to
those designated as Executive Officer positions in these Bylaws, to determine
the title associated with each such management position, and to determine the
scope of responsibility and authority attributable to each position so created.
Unless the Board
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shall in its discretion take the initiative in any case, the
Chief Executive Officer shall (i) be responsible for the selection and
appointment of the individual who shall fill any management position created
pursuant to this Section 6.3 and for determining the compensation and other
employment terms for such individual and (ii) shall have the power to remove any
individual from any such management position on his or her own initiative.
Section 6.4 Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Company would be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. If the Chief Executive Officer shall
conclude that any other Executive Officer should be removed from office, the
Chief Executive Officer shall have the power to suspend that other Executive
Officer until the Board shall be able to act on the Chief Executive Officer's
recommendation to remove that other Executive Officer.
Section 6.5 Vacancies. Any vacancy occurring in any Executive Officer
position because of death, resignation, removal, disqualification or otherwise,
may be filled by the Board of Directors at any time.
Section 6.6 Compensation. Compensation of all Executive Officers shall be
fixed by the Board of Directors after receiving the advice of the Compensation
Committee. No Executive Officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the Company.
Section 6.7 Signature Authority. Whenever any resolution adopted by the
Company's stockholders, Board of Directors or Board Committee shall authorize
the "proper officers," "officers," "management," or other similar management
group to execute any note, contract or other document or to take any other
action or shall generally authorize any action without specifying the officer or
officers authorized to take such action, any Executive Officer acting alone and
without countersignatures may take such action on behalf of the Company. Any
Executive Officer may on behalf of the Company sign any contract, report to any
governmental agency, or other instrument, except where the signing and execution
thereof shall be expressly delegated by the Board of Directors exclusively to
some other officer or agent of the Company or shall be required by law to be
otherwise signed or executed and except that the Board shall have the power by
resolution to limit the authority of any officer.
Section 6.8 Chairman. The Chairman shall, when present, preside at all
meetings of (i) the stockholders of the Company and (ii) the Board of Directors
of the Company. The Chairman shall be an ex officio member of every Board
Committee. The Chairman shall participate in formulating the policies of the
Company and shall carry out other duties which, from time to time, are assigned
by the Board of Directors.
Section 6.9 Vice Chairman. Each Vice Chairman shall have such
responsibilities and perform such duties as any be assigned to him by the Board
of Directors , the
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Chairman or the Chief Executive Officer. Each Vice Chairman
shall be chosen from among the members of the Board of Directors.
Section 6.10 President and Chief Executive Officer. The President and Chief
Executive Officer shall be the chief executive officer subject to the control of
the Board of Directors, shall have general charge of the business, affairs and
property of the Company, and control over its officers, agents and employees;
and shall see that all orders and resolutions of the Board of Directors are
carried into effect, and shall have all authority implicit in the position of
chief executive officer. The Chief Executive Officer shall have the authority to
act on behalf of the Company in any manner and any agreement or commitment made
by the Chief Executive Officer on behalf of the Company shall be a valid and
binding obligation of the Company. The Chief Executive Officer shall have such
other powers and perform such other duties as may be prescribed by the Board of
Directors or as may be provided in these Bylaws.
Section 6.11 Chief Financial Officer. The Chief Financial Officer shall be
the Company's chief financial officer and (subject to the direction of the Board
and the Chief Executive Officer) shall be generally responsible for the
supervision and control of the financial affairs of the Company. The Chief
Financial Officer shall be responsible for supervision of the Company's
Controller and at any time at which the office of Controller shall be vacant
shall (i) perform the duties of the Controller and (ii) be the Company's chief
accounting officer. The Chief Financial Officer shall be responsible for
supervision of the Company's Treasurer and, at any time at which the office of
Treasurer shall be vacant, shall perform the duties of the treasurer.
Section 6.12 General Counsel. The General Counsel shall be the Company's
chief legal officer and (subject to the direction of the Board and the Chief
Executive Officer) shall be generally responsible for the supervision and
control of the legal affairs of the Company.
Section 6.13 Vice-Presidents. Each Vice President shall have such
responsibility and authority as the Board of Directors, the Chief Executive
Officer or these Bylaws may, from time to time, prescribe. The Board of
Directors may designate any Vice President as being senior in rank, degree or
responsibility and may accord such a Vice President an appropriate title
designating his or her senior rank such as "Executive Vice President" or "Senior
Vice President" or "Group Vice President." The Board of Directors or President
may assign a certain Vice President responsibility for a designated group,
division or function of the Company's business and add an appropriate
descriptive designation to his title.
Section 6.14 Secretary. The Secretary shall (subject to the control of the
Board and the Chief Executive Officer): (i) keep the minutes of the stockholders
and the Board of Directors meetings in one or more books provided for that
purpose; (ii) see that all notices to the Company's directors and stockholders
are duly given in accordance with the provisions of these Bylaws or as required
by law; (iii) be custodian of the records and of
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the seal of the Company and
shall have the nonexclusive authority (which shall be shared with every other
Executive Officer) to affix the Company's corporate seal to any contract,
instrument or other document executed on behalf of the Company; (iv) keep or
cause to be kept a register of the address of each stockholder as provided by
that stockholders in accordance with procedures established by or with the
approval of the Secretary or any other Executive Officer; (v) have general
responsibility for the Company's stock transfer records; (vi) supply in such
circumstances as the Secretary deems appropriate to any governmental agency or
other person a copy of any resolution adopted by the Company's stockholders or
Board of Directors or by any Board Committee, any corporate record or document,
or other information concerning the Company or any of its officers and certify
on behalf of the Company as to the accuracy and completeness of the resolution,
record, document or information supplied; and (vii) such other duties and have
such other powers as the Board of Directors or the Chief Executive Officer may
from time to time prescribe.
Section 6.15 Assistant Secretary. Each Assistant Secretary shall (subject
to the direction of the Board of Directors, Chief Executive Officer and the
Secretary) assist the Secretary in the performance of the Secretary's duties and
be entitled to exercise the powers of the Secretary. Any person dealing with the
Company shall have the right to presume (in the absence of actual notice to the
contrary) that each Assistant Secretary is entitled to exercise the powers of
the Secretary.
Section 6.16 The Controller. The Controller shall be the Company's chief
accounting officer. The Controller, subject to supervision by the Chief
Financial Officer, shall have general charge of and responsibility for: the
accounting and auditing affairs of the Company; keeping of the general and cost
accounting books and records, general and supporting ledgers and other documents
and papers necessary to properly reflect the business and corporate transactions
upon the books of the Company; the clerical and office procedures of the
corporate offices; the preparation of the operating budget for the Company; the
preparation, compilation and filing of reports, statements, statistics and other
data that may be required by law or that may be prescribed by the Chairman, the
Chief Executive Officer or the Chief Financial Officer; and the performance of
such other duties and responsibilities as may be assigned to the Controller by
the Chief Executive Officer or the Chief Financial Officer. The Controller shall
supply such reports and information directly to the Board's Audit Committee as
the Audit Committee shall request.
Section 6.17 Treasurer. The Treasurer shall (subject to the supervision of
the Chief Financial Officer) have charge and custody of and be responsible for
all funds and securities of the Company; receive and give receipts for monies
due and payable to the Company from any source whatsoever, and deposit all such
monies in the name of the Company in such banks, trust companies or other
depositories as shall be selected by or under authority of the Board of
Directors, the Chairman, the Chief Executive Officer, or the Chief Financial
Officer; keep or cause to be kept accurate and complete records showing any
receipts and disbursement of money or securities by the Company and showing the
amount of cash and cash equivalent investments held in any account at any
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given
time on behalf of the Company; and, in general, perform all of the duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the Chief Executive Officer or the Chief Financial
Officer. The Treasurer shall give a bond if required by the Board of Directors
for the faithful discharge of his duties in a sum and with one or more sureties
satisfactory to the Board.
Section 6.18 Assistant Treasurer. Each Assistant Treasurer shall (subject
to the direction of the Chief Executive Officer, Chief Financial Officer and
Treasurer) assist the Treasurer in the performance of the Treasurer's duties and
be entitled to exercise the powers of the Treasurer. Each person dealing with
the Company shall have the right to presume (in the absence of actual notice to
the contrary) that each Assistant Treasurer is entitled to exercise the powers
of the Treasurer.
Section 6.19 Implicit Authority. In addition to the authority expressly
delegated by these Bylaws, by the Board, or by any officer pursuant to authority
granted in these Bylaws or by the Board, each Executive Officer and every other
person appointed to a management position created in or pursuant to these Bylaws
shall have all power implicit in the office and title assigned to such person.
ARTICLE SEVEN
Capital Stock
Section 7.1 Stock Records; Transfer Agent. The Company shall appoint one or
more transfer agents and registrars under arrangements pursuant to which the
persons appointed will maintain appropriate records showing as of any given time
the name of each person in whose name any shares of the Company's capital stock
are registered, the number of shares registered in such person's name, and such
person's address.
Section 7.2 Stock Certificates. Certificates representing shares of any
class of stock issued by the Company shall be in such form as shall be
determined by the Board of Directors. Every holder of stock in the Company shall
be entitled to have a certificate, signed by, or in the name of the Company by
the Chairman or Chief Executive Officer and the Secretary or an Assistant
Secretary certifying the number of shares in each class of owned by such holder
in the Company. If such a certificate is countersigned (1) by a transfer agent
or an assistant transfer agent other than the Company or its employee or (2) by
a registrar, other than the Company or its employee, the signature of the
Chairman, Chief Executive Officer, Secretary, or Assistant Secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Company whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the Company, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
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used thereon had not ceased to be such officer or officers of the Company. Each
certificates for shares shall bear a distinct identifier capable of
distinguishing it from all other certificates and relating it to the records
maintained to show shares issued by the Company.
Section 7.3 Transfers of Record Ownership. Record ownership of stock of the
Company shall only be transferred on the stockholder records upon surrender to
the Company's appointed transfer agent of the certificate or certificates for
such stock endorsed by the appropriate person or persons, with such evidence of
the authenticity of such endorsement, transfer, authorization, and other matters
as the Company may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the Company to cause the
issuance of a new certificate to the person entitled thereto, cancellation the
old certificate or certificates, and recordation of the transaction on stock
records.
Section 7.4 Lost Certificates. The Company may authorize issuance of a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Company alleged to have been lost, stolen,
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Company may, in
its discretion and as a condition precedent to the issuance thereof, require the
record owner of such lost, stolen, or destroyed certificate or certificates, or
his or her legal representative, to give the Company a bond sufficient to
indemnify the Company against any claim that may be made against the Company on
account of the loss, theft or destruction of any such certificate or the
issuance of such new certificate.
Section 7.5 Registered Stockholders. Prior to the surrender to the Company
of the certificate or certificates for a share or shares of stock with a request
to record the transfer of such share or shares, the Company may treat the
registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of an
owner. The Company shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof.
ARTICLE EIGHT
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Company shall be begin on
the first day of January and end on the last day of December in each year.
Section 8.2 Corporate Seal. The Board of Directors may provide a corporate
seal which, if provided, shall be in the form of a circle and shall have
inscribed thereon the
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name of the Company and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 8.3 Voting Securities Issued by Another Company. Voting securities
in any other Company held by the Company shall be voted by any Executive Officer
or by any person authorized to vote such securities by the Board or any
Executive Officer. Any person authorized to vote securities shall have the power
to appoint proxies, with general power of substitution.
Section 8.4 Headings. Section headings in these Bylaws are for convenience
of reference only and shall not be given any substantive effect in limiting or
otherwise construing any provision herein.
Section 8.5 Inconsistent Provisions. The Board of
Directors shall have the authority to interpret these Bylaws
and to resolve any question or issue which may arise under
these Bylaws. Whenever possible, each provision of this
Bylaws shall be interpreted in such manner as to be valid and
enforceable under applicable law and the provisions of the
Company's Certificate of Incorporation, but if any provision
of these Bylaws shall be held to be prohibited by or
unenforceable under or to be in irreconcilable conflict with
applicable law or the Company's Certificate of Incorporation,
(i) such provision shall be applied to accomplish the
objectives of the provision as originally written to the
fullest extent permitted by law and (ii) all other provisions
of these Bylaws shall remain in full force and effect.
ARTICLE NINE
Amendments of the Bylaws
Section 9.1 Board Amendments. The Board shall have the power to amend these
Bylaws in any manner the Board may decide provided that any such amendment shall
require the approval of 80% of the sitting directors in office at the time such
amendment is approved.
Section 9.2 Stockholder Approval. The holders of the Company's Common Stock
shall not have the power to amend or replace these Bylaws in whole or in part
unless such amendment or replacement shall be approved by the record holders of
shares representing eighty percent (80%) of the votes attributable to shares in
the common voting class outstanding at the record date used to determine the
stockholders entitled to vote on such amendment or replacement.
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<PAGE>
Exhibit 3 to Form 8-K submitted on December 19, 1997
The ServiceMaster Company
and
Harris Trust and Savings Bank
Rights Agent
Rights Agreement
Dated as of December 15, 1997
<PAGE>
Table of Contents
Page
Recitals Recitals 1
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issuance of Rights Certificates 7
Section 4. Form of Rights Certificates 9
Section 5. Execution, Countersignature and Registration 9
Section 6. Transfer, Division, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights 10
Section 8. Cancellation and Destruction of Rights Certificates 12
Section 9. Reservation and Availability of Preferred Stock 13
Section 10. Preferred Stock Record Date 14
Section 11. Adjustments to Purchase Price, Number of Shares or
Number of Rights 14
Section 12. Certification of Adjustments 24
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 24
Section 14. Fractional Rights and Fractional Shares 27
Section 15. Rights of Action 27
Section 16. Agreement of Rights Holders Concerning Transfer
and Ownership of Rights 28
Section 17. Rights Holder Not Deemed a Stockholder 28
Section 18. Concerning the Rights Agent 28
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Section 19. Merger or Consolidation or Change of Name of
Rights Agent 29
Section 20. Duties of Rights Agent 29
Section 21. Change of Rights Agent 31
Section 22. Issuance of New Rights Certificates 32
Section 23. Redemption and Termination 32
Section 24. Notice of Certain Events 33
Section 25. Notices 34
Section 26. Supplements and Amendments 34
Section 27. Successors 35
Section 28. Benefits of this Agreement 35
Section 29. Severability 35
Section 30. Governing Law 35
Section 31. Counterparts 36
Section 32. Descriptive Headings 36
Section 33. Grammatical Construction 36
Exhibit A Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
Exhibit B Form of Rights Certificate
Exhibit C Form of Summary of Rights
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<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 15, 1997, between The
ServiceMaster Company, a Delaware corporation (the "Company"), and Harris Trust
and Savings Bank, an Illinois Banking Corporation (the "Rights Agent").
RECITALS
The Company has entered into a Merger and Reorganization Agreement
which was amended and restated as of October 3, 1997 and which provides among
other things for the merger (the AReincorporating Merger@) of a subsidiary of
the Company into ServiceMaster Limited Partnership, a Delaware limited
partnership (ASMLP@), under terms upon which among other things: (i) every
limited partnership share issued by SMLP and outstanding immediately prior to
the Reincorporating Merger will be converted into one share of the Common Stock
(as defined in Section 1) of the Company and (ii) the Company will become the
ultimate parent in the ServiceMaster enterprise. The Board of Directors of the
Company has authorized issuance of one preferred share purchase right (a
"Right") for each share of Common Stock (as defined in Section 1) of the Company
into which the limited partnership shares in SMLP are converted in the
Reincorporating Merger (the AReincorporation Shares@) simultaneous with the
issuance of the Reincorporation Shares and has authorized the issuance of one
Right for each share of Common Stock of the Company other than any
Reincorporation Share issued after the Reincorporating Merger and before the
earliest of Distribution Date, the Redemption Date and the Final Expiration Date
(as such terms are defined in Section 1) and in certain cases following the
Distribution Date. Immediately after the Reincorporating Merger, each Right
issued in connection with that Merger will represent the right to purchase one
one-thousandth of one share of Preferred Stock (as defined in Section 1) upon
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, is (or has previously been, at any
time after the Reincorporation, whether or not such Person(s) continues to be)
the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
Notwithstanding the foregoing, a Person shall not become an "Acquiring
Person" solely as the result of (i) an acquisition of Common Stock by the
Company or any Subsidiary which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially
<PAGE>
owned by such Person
to 15% more of the Common Stock then outstanding as determined above, or (ii)
such Person becoming the Beneficial Owner of 15% or more of the Common Stock
then outstanding as determined above solely as a result of an Exempt Event;
provided, however, that if a Person becomes the Beneficial Owner of 15% or more
of the Common Stock then outstanding as determined above solely by reason of
such a share acquisition by the Company or the occurrence of such an Exempt
Event and such Person shall, after becoming the Beneficial Owner of such Common
Stock, become the Beneficial Owner of any additional shares of Common Stock by
any means whatsoever (other than as a result of the subsequent occurrence of an
Exempt Event, a stock dividend or a subdivision of the Common Stock into a
larger number of shares or a similar transaction), then such Person shall be
deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person", as defined pursuant to the foregoing provisions
of this paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement. The determination of whether such
Person's becoming an Acquiring Person shall have been inadvertent and the
determination of whether the divestment of sufficient shares shall have been
made as promptly as practicable shall be made by a majority of the Board of
Directors of the Company.
"Affiliate" has the meaning given to such term in Rule 12b- 2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
"Associate" has the meaning given to such term in Rule 12b- 2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement; provided that, for purposes of this Agreement, the term
"Associate" shall not include any Person that is an Exempt Person.
Except as provided below, a Person shall be deemed to be the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether
or not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
provided, however, that a Person will not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf
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<PAGE>
of such Person or any
Affiliate or Associate of such Person until such tendered securities
are accepted for purchase or exchange; and provided further, that
prior to the occurrence of a Triggering Event, a Person will not be
deemed the Beneficial Owner of, or to beneficially own, securities
obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange
Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor
item) of Schedule 13D under the Exchange Act (or any comparable or
successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or
any successor provision; or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with
whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (iii) of this Section
1(d)) or disposing of any securities of the Company.
Nothing in the preceding sentence shall cause a Person engaged in business
as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for purposes of
this Agreement, no Person shall be treated as the "Beneficial Owner" of, or to
be deemed to "beneficially own," any securities solely by reason of the
ownership of those securities by any other Person that is an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding", when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially under the preceding provisions in this definition.
"Business Combination" has the meaning set forth in
Section 13 of this Agreement.
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<PAGE>
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York or Illinois are authorized
or obligated by law or executive order to close.
"Close of Business" on any given date means 5:00 p.m., Chicago time, on
such date; provided, however, that if such date is not a Business Day it shall
mean 5:00 p.m. Chicago time, on the next succeeding Business Day.
"Common Stock" when used with reference to the Company means the Common
Stock, par value $.01 per share, of the Company (as the same may be changed by
reason of any combination, subdivision or reclassification of the Common Stock).
"Common Stock" when used with reference to any Person (other than the Company
prior to a Business Combination) means shares of capital stock of such Person
(if such Person is a corporation) of any class or series, or units of equity
interests in such Person (if such Person is not a corporation) of any class or
series, the terms of which shares or units do not limit (as a fixed amount and
not merely in proportional terms) the amount of dividends or income payable or
distributable on such shares or units or the amount of assets distributable on
such shares or units upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person and do not provide that such shares or units are
subject to redemption at the option of such Person, or any shares of capital
stock or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that if at any time there are more
than one such class or series of capital stock of or equity interests in such
Person, "Common Stock" of such Person will include all such classes and series
substantially in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.
"Current Market Price" per share of Common Stock, Common Equivalent Share
or any other security on any date is the average of the daily closing prices per
share of such Common Stock, Common Equivalent Share or any other security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date for the purpose of any computation under this
Agreement except computations made pursuant to Section 11(c)(3), and for the
Trading Day immediately prior to such date for the purpose of any computation
under Section 11(c)(3); provided, however, that in the event that the Current
Market Price per share of Common Stock, Common Equivalent Share or any other
security is determined during a period following the announcement by the issuer
of such Common Stock, Common Equivalent Share or any other security of (i) a
dividend or distribution on such Common Stock, Common Equivalent Share or any
other security other than a regular quarterly cash dividend, or (ii) any
subdivision, combination or reclassification of such Common Stock, Common
Equivalent Share or any other security, and prior to the expiration of 30
Trading Days after the "exdividend" date for such dividend or distribution or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "Current Market Price" must be appropriately adjusted to
take into account such dividend, distribution, subdivision, combination or
reclassification. The closing price for each Trading Day shall be the last sale
price, regular way, on such day, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange ("NYSE") or, if the Common Stock, Common Equivalent Share or any
other security are not listed or admitted to trading on the NYSE, as reported in
the
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<PAGE>
principal consolidated transaction reporting system with respect to
securities listed on the principal United States national securities exchange on
which the Common Stock, Common Equivalent Share or any other security are listed
or admitted to trading or, if the Common Stock, Common Equivalent Share or any
other security or, if the Common Stock, Common Equivalent Share or any other
security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the Common
Stock, Common Equivalent Share or any other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. If no such market maker is making a market, the
fair market value of such shares on such day as determined in good faith by a
majority of the Board of Directors of the Company or the Board of Directors of
the issuer of such Common Stock, Common Equivalent Share or any other security
shall be used, which determination shall be described in a statement filed with
the Rights Agent and shall be binding and conclusive for all purposes. The term
"Trading Day" means a day on which the principal United States national
securities exchange on which the Common Stock, Common Equivalent Share or any
other security are listed or admitted to trading is open for the transaction of
business or, if the Common Stock, Common Equivalent Share or any other security
is not listed or admitted to trading on any United States national securities
exchange, but is traded in the over-the-counter market, then any day for which
the high bid and low asked prices in the over-thecounter market are reported, or
if the Common Stock, Common Equivalent Share or any other security is not traded
in the overthe-counter market, then a Business Day. If the Preferred Shares are
not publicly traded, the "current per share market price" of the Preferred
Shares shall be conclusively deemed to be the current per share market price of
the Common Shares as determined pursuant to this paragraph (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by the Adjustment Number
(calculated as prescribed in the terms governing the Preferred Stock).
"Distribution Date" means the earlier of (i) the day after the Company's
right to redeem the Rights pursuant to Section 23(a)(i) expires and (ii) the
tenth Business Day after commencement or public disclosure of an intention to
commence (including, without limitation, any such commencement or public
disclosure which occurs before or after the Reincorporation and prior to the
issuance of the Rights) a tender offer or exchange offer by a Person if, after
acquiring the maximum number of securities sought pursuant to such offer, such
Person, or any Affiliate or Associate of such Person, would be an Acquiring
Person. A majority of the Board of Directors of the Company may defer the date
set forth in clause (ii) of the preceding sentence to a specified later date or
to an unspecified later date to be determined by a subsequent action or event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor statute.
"Exchange Date" means the time at which Rights are exchanged pursuant to
Section 11(c)(3).
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"Exempt Event" means with respect to any Person, the acquisition by such
Person of Beneficial Ownership of Common Stock solely as a result of the
occurrence of a Triggering Event and the effect of such Triggering Event on the
last proviso of clause (ii) of the definition of Beneficial Owner, other than a
Triggering Event in which such Person becomes an Acquiring Person.
"Exempt Person" means (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any Person holding Common Stock for any such employee benefit plan
or for employees of the Company or of any Subsidiary of the Company pursuant to
the terms of any such employee benefit plan and (v) any Person who, prior to the
Stock Acquisition Date with respect to such Person, is determined in good faith
by the Board of Directors of the Company to be an Exempt Person.
"Exercise Amount" means the amount payable by the holder as a condition to
the exercise of one Right. Until and unless it shall be adjusted in accordance
with this Agreement, the Exercise Amount shall be $130.
"Expiration Date" means the Close of Business on December 11, 2007,
provided that if a Triggering Event shall have occurred prior to December 11,
2007, then the Expiration Date shall be ten years after the Trigger Date.
"Person" means any individual, firm, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity, and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act (or any successor provision).
"Preferred Stock" means the Company's Junior Participating Preferred Stock,
Series A, par value $.01 per share, having the rights and preferences set forth
in the Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, attached
hereto as Exhibit A.
"Principal Party" means (i) in the case of any Business Combination
described in clause (i), (ii) or (iii) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted or for which they are exchanged in such
Business Combination or, if there is more than one such issuer, the issuer of
the Common Stock which has the greatest aggregate market value or (B) if no
securities are so issued, the Person that survives or results from the Business
Combination or, if there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value, and (ii) in the case of
any Business Combination described in clause (iv) of the first sentence in
Section 13(a), the Person that receives the greatest portion of the assets or
earning power transferred pursuant to such Business Combination or, if each
Person that is a party to such Business Combination receives the same portion of
the assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot reasonably be determined,
whichever of such Persons is the issuer of the Common Stock which has the
greatest aggregate market value; provided, however, that in any such case, if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act
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and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
"Purchase Price:" Until the Trigger Date, the term Purchase Price means the
price at which one-one thousandth of a share of Preferred Stock shall be
purchasable with the Rights. The Purchase Price shall be $130 per one
one-thousandth of a share of Preferred Stock until and unless it shall be
adjusted pursuant to this Agreement. Immediately after the Trigger Date, the
term APurchase Price@ shall mean the price per Common Share for which Common
Shares shall be purchasable with the Rights. Thereafter the term "Purchase
Price" as applied with respect to each kind of stock or other property
purchasable with the Rights as a result of adjustments prescribed by this
Agreement shall mean the price at which each share of such stock or the smallest
available unit of such other property is purchasable with the Rights.
"Redemption Date" means the time at which the Rights are scheduled to be
redeemed as provided in Section 23.
"Redemption Price" has the meaning given to such term in
Section 23.
"Reincorporation" means the time at which the limited partner interests of
SMLP are converted into Common Stock of the Company in connection with the
Reincorporating Merger.
"Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
"Stock Acquisition Date" means the first date of public disclosure by the
Company, an Acquiring Person or otherwise that an Acquiring Person has become
such.
"Subsidiary" has the meaning given to such term in Rule 12b2 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement.
"Trigger Date" means the first date after the Reincorporation upon which a
Person becomes an Acquiring Person.
"Triggering Event" shall mean a Person becoming an
Acquiring Person.
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Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights
shall be issued in respect of and shall be evidenced by the certificates
representing the shares of Common Stock issued in connection with the
Reincorporating Merger and shares of Common Stock other than any Reincorporating
Shares issued after the Reincorporation and prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date or the Expiration Date
(which certificates for Common Stock shall be deemed to also be certificates
evidencing the Rights), and not by separate certificates; (ii) the registered
holders of such shares of Common Stock shall also be the registered holders of
the Rights associated with such shares; and (iii) the Rights shall be
transferable only in connection with the transfer of shares of Common Stock, and
the surrender for transfer of any certificate for such shares of Common Stock
shall also constitute the surrender for transfer of the Rights associated with
such shares. As soon as practicable after the Company has notified the Rights
Agent of the occurrence of the Distribution Date, the Rights Agent shall, at the
expense of the Company, (except as otherwise provided in Section 7(e)) mail, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Distribution Date, as shown by the
records of the Company, at the address of such holder shown on such records, one
or more certificates evidencing the Rights ("Rights Certificates"), in
substantially the form of Exhibit B hereto, evidencing one Right (as adjusted
from time to time pursuant to this Agreement) for each share of Common Stock so
held. From and after the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
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(b) Rights shall be issued in respect of all shares of Common Stock which
are issued or sold by the Company after the Reincorporation but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold (i) pursuant to
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued, if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued in connection with the
Reincorporating Merger representing shares of Common Stock and shares of Common
Stock issued after the Reincorporation but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between The
ServiceMaster Company and Harris Trust and Savings Bank, as Rights
Agent, dated as of December 15, 1997 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of The
ServiceMaster Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
ServiceMaster Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, Rights that were, are
or become beneficially owned by Acquiring Persons or their Associates
or Affiliates (as such terms are defined in the Rights Agreement) may
become null and void and the holder of any of such Rights (including
any subsequent holder) shall not have any right to exercise such
Rights.
Section 4. Form of Rights Certificates. The Rights Certificates (and the
form of election to purchase shares and form of assignment to be printed on the
reverse thereof) shall be in substantially the form of Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from time
to time be listed, or to conform
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to usage. Subject to the provisions of this
Agreement, the Rights Certificates, whenever issued, shall be dated as of the
Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of shares of Preferred Stock as shall be set forth therein
at the Purchase Price set forth therein, but the number of such securities and
the Purchase Price shall be subject to adjustment as provided in this Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the Company
by the Company's Chief Executive Officer, President, Chief Financial Officer,
Treasurer or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a Rights
Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Notwithstanding any other provision of this Agreement, neither
the Company, the Rights Agent nor anyone else shall have any obligation to issue
any Rights Certificate to an Acquiring Person or to anyone else in whose hands
the Rights nominally represented by such Certificate shall be null and void
either initially or in connection with a request to register a transfer of
Rights represented by a certificate previously issued. In the event that at the
Distribution Date or any other date upon which Rights Certificates would
otherwise be issuable, the Company shall not be obligated to issue Rights
Certificates to any person making a tender offer which if consummated could
render such person an Acquiring Person or to any Affiliate or Associate of such
person until and unless the Tender Offer is withdrawn and the person shall have
established to the Company=s reasonable satisfaction that such person does not
intend to become an Acquiring Person. The Company shall be entitled to require
any person claiming the right to receive a Rights Certificate such evidence as
the Company shall require in good faith to establish to the Company's
satisfaction that the Rights represented by that Certificate have not become
null and void under the provisions in Section 7(e) or that the Company is not
entitled to withhold such certificate under the provisions of the preceding
sentence.
(c) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
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Section 6. Transfer, Division, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 5(b) and Section 14, at any
time after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
(b) The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided in this Agreement) in whole or
in part (except that no fraction
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of a Right may be exercised) at any time after
the Distribution Date and prior to the earliest of the Expiration Date, the
Exchange Date and the Redemption Date, by surrendering the Rights Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal corporate trust office of the Rights Agent,
together with payment of the Exercise Amount for each Right exercised.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Exercise Amount for each Right exercised and an amount equal to any
applicable transfer tax required to be paid by the surrendering holder pursuant
to Section 9(d), the Rights Agent shall, subject to the provisions of this
Agreement, thereupon promptly (i)(A) requisition from any transfer agent for the
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the Preferred Stock (or other securities, as
the case may be) to be purchased (and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests), or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock (or
other securities, as the case may be) issuable upon exercise of the Rights with
a depositary agent, requisition from the depositary agent depositary receipts
representing such Preferred Stock (or other securities, as the case may be) as
are to be purchased (in which case certificates for the Preferred Stock (or
other securities, as the case may be) represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company shall
direct the depositary agent to comply with such request; (ii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder; and (iii) if
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 of this Agreement
and, promptly after receipt thereof, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue other securities (including shares of Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
this Agreement, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 5(b) and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date or the Stock Acquisition Date by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such, or (iii) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
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(A) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a direct or indirect transfer which a
majority of the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall, immediately upon the occurrence of a
Triggering Event and without any further action, be null and void and no holder
of such Rights shall have any rights whatsoever with respect to such Rights
whether under this Agreement or otherwise, provided, however, that, in the case
of transferees under clause (ii) or clause (iii) above, any Rights beneficially
owned by such transferee shall be null and void only if and to the extent such
Rights were formerly beneficially owned by a Person who was, at the time such
Person beneficially owned such Rights, or who later became, an Acquiring Person
or an Affiliate or Associate of such Acquiring Person. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of a
Rights Certificate or to any other Person as a result of the Company's failure
to make, or any delay in making (including any such failure or delay by the
Board of Directors of the Company) any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other securities held in
its treasury) free from preemptive rights or any right of first refusal, a
sufficient number of shares of Preferred Stock (and, following the occurrence of
a Triggering Event, shares of Common Stock and/or other securities) to permit
the exercise in full of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event, shares of Common
Stock and/or other securities) issuable upon the exercise of Rights may be
listed on any United States national securities exchange or quoted on any
automated quotation system, to use its best efforts to cause, from and after the
time that the Rights become exercisable, all such shares and/or other securities
reserved for such issuance to be listed on such exchange or quoted on such
automated quotation system upon official notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
(e) The Company shall (i) as soon as practicable following a
Triggering Event, (or such earlier time the Distribution Date as may be required
by law) prepare and file a registration statement on an appropriate form under
the Securities Act with respect to the securities purchasable upon exercise of
the Rights, (ii) cause such registration statement to become effective as soon
as
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practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
shall also take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event, the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of securities, cash and other
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) Adjustments Prior to Trigger Date:
(1) In the event the Company shall at any time after
the Reincorporation and prior to the Trigger Date (i) pay a dividend or make
a distribution on the Common Stock payable in shares of Common Stock, (ii)
subdivide (by a stock split or otherwise) the outstanding Common Stock into
a larger number of shares, (iii) combine (by a reverse stock split or
otherwise) the outstanding Common Stock into a smaller number of shares (and
any of the actions described in clauses (i), (ii) or (iii) are herein called
a "stock split") then:
(A) The number of Rights outstanding shall be
adjusted so that after giving effect to such stock split the number of
Rights outstanding shall be exactly equal to the number of shares of
Common Stock outstanding (and so that prior to the Distribution Date
one Right shall be associated
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with every share of Common Stock
outstanding after such Stock Split);
(B) The Exercise Amount shall be adjusted by
multiplying the Exercise Amount in effect
immediately prior to such stock split by a
fraction, the numerator of which shall be the
number of shares of Common Stock outstanding
immediately prior to such stock split and the
denominator of which shall be the number of
shares of Common Stock outstanding immediately
after to such stock split;
(C) The Purchase Price for each one-one thousandth of a share of Preferred
Stock shall not change; and
(D) The fraction of a share of Preferred Stock purchasable with each Right
immediately after to such stock split shall be equal to the product
derived by multiplying the fraction of a Preferred Share purchasable
with each Right immediately prior to such stock split times the
fraction cited in clause (B) above.
The following example illustrates the intended operation of the preceding
provisions. Assume that initially, each Right would (when and if it became
exercisable) entitle its holder to purchase one one-thousandth share of
Preferred Stock for $130 (and accordingly the initial Exercise Amount and
the initial Purchase Price per one onethousandth share of Preferred Stock
are each $130). Assume further that prior to the Distribution Date, the
Company splits its Common Stock two for one (thereby doubling the number of
shares of Common Stock outstanding). The intended operation of the preceding
adjustment provisions is that: (i) the number of Rights outstanding would
also double; (ii) one Right would be associated with each share of Common
Stock outstanding after the stock split; (iii) each Right would have an
Exercise Amount equal to $65; (iv) each Right will entitle its holder (when
and if the Right becomes exercisable) to purchase one two-thousandth of one
share of Preferred Stock; and (v) the Purchase Price for each one one-
thousandth share of Preferred Stock would remain $130 so that the
price for each one twothousandths of a share of Preferred Stock
purchasable with each Right would be $65.
(2) Adjustment in Rights Certificates: In the event the Distribution
Date shall occur and the Company shall issue separate
certificates to represent the Rights, the following provisions
shall thereafter apply:
(A) In the event the number of Rights outstanding are increased
pursuant to Section 11(a)(1), the Company shall as promptly
as reasonably possible distribute to the record holders of
the Rights on the record date for the stock split giving
rise to the increase in the number of
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Rights certificates
representing the additional Rights issuable by reason of
such stock split.
(B) In the event the number of Rights outstanding
are reduced pursuant to Section 11(a) by
reason of the occurrence of a reverse stock
split or its functional equivalent, then each
Rights certificate outstanding prior to such
reverse stock split shall thereafter the
reduced number of Rights into which the Rights
represented by such certificate immediately
prior to such reverse stock split shall have
been converted by reason of the occurrence of
that reverse stock split.
(b) Basic Triggering Event Adjustments: Upon the first occurrence of a
Triggering Event (except as otherwise provided in this Agreement) each Right
shall be changed so that immediately after the Triggering Event:
(1) it shall no longer be exercisable for Preferred Shares but rather
shall be exercisable for Common Stock;
(2) the number of shares of Common Stock which may be acquired upon
exercise of each Right shall be equal to the result obtained by
dividing (x) 50% of the Current Market Price per share of Common
Stock on the date of the occurrence of the Triggering Event into
(y) the Exercise Amount in effect immediately prior to the
Triggering Event; and
(3) the Purchase Price per Common Share purchasable with each Right
shall be equal to 50% of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering
Event.
(c) Other Post Triggering Event Adjustments.
(1) At any time after the occurrence of a Triggering Event, the Board
of Directors of the Company shall have the right to reduce the
Exercise Amount by such amount as the Board shall desire provided
that (i) the Exercise Amount shall not be reduced to less than
$1, (ii) the reduction shall not result in a Purchase Price lower
than the par
value per share of the shares purchasable with the Rights, and (iii) the
Board shall determine that such reduction is not contrary to the interests
of holders of Rights (other than any Acquiring Person or any other person
in whose hands the Rights are void). The term "Reduction Amount" means the
amount of the reduction in the Exercise Amount which shall be made in
accordance with the preceding sentence. In the event any reduction shall
actually be made in accordance with this paragraph, then the number of
Common Shares purchasable with each Right shall be reduced to an amount
having a Current Value equal to the remainder derived by subtracting the
Reduction Amount from the Current Value as of the date of such adjustment
of the number of Common Shares
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purchasable with each Right immediately
prior to such adjustment. For purposes of the preceding sentence, (i) the
"Current Value" of a particular number of Common Shares shall be equal to
the product derived by multiplying that particular number times the greater
of (i) the Current Market Price (calculated as prescribed in Section 1) or
(ii) the closing price per share (calculated as prescribed in Section 1)
for the Common Shares on the Trading Day immediately prior to the day on
which the adjustment shall be made and (ii) Athe number of Common Shares
purchasable with each Right immediately prior to such adjustment@ shall be
the number after giving effect to the adjustment to be made on the Trigger
Date pursuant to Section 11(b) and any other adjustments which shall have
been prescribed by this Agreement for the period from the Trigger Date to
the date upon which the adjustment shall be made under this Section
11(c)(1). Upon making each adjustment under this Section 11(c)(1), the
Purchase Price for each of the Common Shares purchasable after making such
adjustment shall be reduced to the quotient derived by dividing the
Exercise Amount in effect after such reduction by the number of Common
Shares purchasable with each Right after giving effect to the reduction
prescribed by this Section 11(c)(1).
(2) Use of Common Equivalent Shares: In the event that the number of shares of
Common Stock which are authorized by the Company's certificate of
incorporation, but which are not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights (AAvailable Common Stock@)
is not sufficient to permit the exercise in full of the Rights after the
adjustment made in accordance with Section 11(b), then:
(A) the Company shall first reduce the Exercise
Amount pursuant to Section 11(c)(1) by a Reduction Amount equal to the
lesser of (i) the amount which shall be sufficient to reduce the
amount of Common Stock purchasable with the Rights (after giving
effect to the adjustment prescribed by Section 11(c)(1)) to an number
of shares not in excess of the Available Common Stock or (ii) the
maximum amount permitted by Section 11(c)(1).
(B)If the amount of the adjustment required by the preceding sentence shall
not be sufficient to reduce the amount of Common Stock purchasable with the
Rights to an number of shares not in excess of the Available Common Stock,
then (i) the Available Common Stock shall be allocated among the
outstanding Rights so that each Right shall entitle its holder to purchase
the same quantity of Available Common Stock and (ii) a fraction of a share
of Preferred Stock which when multiplied times the Adjustment Number then
in effect under the terms of the Preferred Stock produces a product equal
to the remainder derived by subtracting the number of shares of Common
Stock purchasable with each Right after the allocation specified in
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clause
(i) from the number of shares of Common Stock which would have been
purchasable with such Right if the Corporation had had a sufficient number
of shares of Common Stock to permit the Right to be exercisable entirely
for Common Stock.
(C) The fraction of a Preferred Share equal to the
reciprocal of the Adjustment Number in effect
at the time the term shall be applied shall be
deemed to be a ACommon Equivalent Share@ for
purposes of this Agreement. The Company shall
take all actions reasonably necessary so that
as nearly as possible each Common Equivalent
Share represents substantially the same
interest in the Company, has the same dividend
rate, and has other characteristics as similar
as possible to one share of Common Stock. The
term ACommon Share@ whenever it is used in
this Agreement means both a share of Common
Stock and a Common Equivalent Share.
(D) If circumstances after the Initial Trigger
Date require the use of Common Equivalent
Shares, the Company shall use its best efforts
to obtain authorization to issue a sufficient
quantity of Common Stock to permit Common
Stock to be issued upon exercise of the Rights
and/or any exercise of the exchange right
under the following section. Each time the
Company=s authorized Common Stock shall be
increased, the adjustment required under the
preceding paragraphs shall be redone to
maximize the amount of Common Stock issuable
upon exercise of the Rights. To the extent
excess authorized Common Stock remains after
the readjustment required by the preceding
sentence, the holder of any outstanding Common
Equivalent Share shall have the right at any
time to require the Company to exchange that
share for a share of Common Stock.
(E) In no event however shall the Company be obligated to reserve any Common
Stock for issuance under the Rights until and unless a Triggering Event
actually occurs.
(F) In no event shall the Company issue any Preferred Stock except upon for
issuances caused by exercise of the Rights and except for issuances
required by Section 11(c) or Section 11(d)(6).
(3) Exchange Option:
(A) Except as otherwise provided in Section 11(a)(iv)(B), a majority of the
Board of Directors of the Company may, at their option, at any time and
from time to time cause the Company to exchange for all or part of the
then-outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of
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<PAGE>
Section 7(e) hereof),
shares of Common Stock. The number of shares of Common Stock issuable for
each Right in any such exchange (the AExchange Shares@) shall be a number
of shares of Common Stock equal to the greater of (i) the quotient derived
by dividing the Adjustment Number under the Preferred Stock as of the
record date set by the Board for such exchange by the Adjustment Number
immediately prior to the Trigger Date or (ii) a number of shares of Common
Stock having a Current Market Price measured as of the record date set by
the Board for such exchange equal to the higher of (i) the Current Market
Price per Right measured as of such date or (ii) the remainder derived by
subtracting the Exercise Amount from the Current Market Price at such date
of the Common Shares for which each Right would be exercisable were it not
for the Board=s election to exercise its exchange right under this
paragraph. Any partial exchange shall be effected on a pro rata basis
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(B) Immediately upon the action of a majority of the Board of Directors of the
Company ordering the exchange of any particular Rights pursuant to this
Section 11(c)(3) and without any further action and without any notice,
the right to exercise those particular Rights shall terminate and the only
right a holder shall have thereafter with respect to any of those
particular Rights shall be to receive the number of shares of Common Stock
issuable in exchange under the terms of the preceding paragraph. The
Company shall promptly give public notice of any such exchange and in
addition, the Company shall promptly mail a notice of any such exchange to
all of the holders of such Rights in accordance with Section 25 of this
Agreement; provided, however, that the failure to give, any delay in
giving or any defect in, such notice shall not affect the validity of such
exchange. Each such notice of exchange will state the method by which
the exchange of the Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares
of Common Stock, the Company shall pay to the registered holders of
the Rights Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to
the product derived by multiplying (x) the subject fraction, by (y)
the last sale price of the Company's Common Stock on the fifth Trading
Day following the public announcement of the exchange by the Company,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, in either case
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<PAGE>
on a when
issued basis (taking into account the exchange), as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE (or, if the
Company's Common Stock is not so listed or traded, then as determined
in the manner provided under the definition of "Current Market Price,"
adjusted to take into account the exchange). In determining whether
any particular holder shall be obligated to receive cash in lieu of a
fractional share, the holder shall be entitled to have all Rights
beneficially owned by such holder aggregated so that only one
fractional share shall be attributable to all the Rights so
beneficially owned.
(d) Antidilution Adjustments After the Trigger Date:
(1) In the event the Company shall at any time after the Trigger Date
effect any stock split with respect to its Common Stock, then the
Purchase Price to be in effect after such stock split shall be
determined by multiplying the Purchase Price in effect immediately
prior to such action by a fraction, the numerator of which shall be
the number of Common Shares outstanding immediately prior to such
stock split and the denominator of which shall be the number of Common
Shares outstanding immediately after such stock split.
(2) In case the Company shall at any time after the Trigger Date fix a
record date for the making of a distribution to holders of Common
Stock (including any such distribution made in connection with a
reclassification of the Common Stock or a consolidation or merger in
which the Company is the surviving corpor ation) of securities (other
than Common Stock and rights, options or warrants referred to in
Section 11(d)(3)), cash (other than a regular periodic cash dividend
at an annual rate not in excess of (x) 125% of the annual
rate of the regular cash dividend paid on the Common Stock during the
immediately preceding fiscal year or (y) in the event that a regular cash
dividend was not paid on the Common Stock during such preceding fiscal
year, 5% of the Current Market Price of the Common Stock on the date such
regular cash dividend was first declared), property, evidences of
indebtedness or assets, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Common Stock on such record
date, less the fair market value (as determined in good faith by a majority
of the Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent) of such securities,
cash, property, evidences of indebtedness or assets to be so distributed in
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respect of one share of Common Stock, and the denominator of which shall be
such Current Market Price per share of Common Stock on such record date.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not made following such
adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(3) If the Company shall at any time after the Trigger Date fix a record date
for the issuance of rights, options or warrants to holders of Common Shares
entitling them to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per Common Share (or, in the
case of a convertible security, having a conversion price per Common Share)
less than the Current Market Price per share of Common Stock on such record
date and requiring that the conversion or purchase right be exercised
within 45 calendar days after such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Common
Shares outstanding on such record date, plus the number of Common Shares
which the aggregate exercise and/or conversion price for the total number
of Common Shares which are obtainable upon exercise and/or conversion of
such rights, options, warrants or convertible securities would purchase at
such Current Market Price, and the denominator of which shall be the number
of shares of Common Shares outstanding on such record date, plus the number
of additional Common Shares which may be obtained upon exercise and/or
conversion of such rights, options, warrants or convertible securities. In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by a majority of the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent. Common Shares owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not issued following such adjustment, the Purchase
Price shall be readjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(4) Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase
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Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any combination or subdivision of the Common
Stock, issuance wholly for cash of any Common Stock at less than the
Current Market Price, issuance wholly for cash of Common Stock or
securities which by their terms are convertible into or exchangeable or
exercisable for Common Shares, stock dividends or issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Common Shares, shall not be taxable to such
stockholders.
(5) After each adjustment of the Purchase Price pursuant to any of subsections
(1) - (4) immediately above, the number of Common Shares purchasable with
each Right shall be adjusted to the quotient derived by dividing the
Purchase Price as constituted after giving effect to such adjustment into
the Exercise Amount.
(6) The Company shall not take any of the actions described in any of
subsections (1) - (3) above at a time when any Common Equivalent Shares are
outstanding unless the Company shall take substantively identical actions
with respect to the outstanding Common Stock and outstanding Common
Equivalent Shares. Conversely, the Company shall not take any actions with
respect to outstanding Common Equivalent Shares analogous to those
described in any of subsections (1) - (3) above unless the Company shall
take substantively identical actions with respect to the outstanding Common
Stock and outstanding Common Equivalent Shares.
(e) Recapitalizations.
(1) In the event that after the Trigger Date, the Company shall issue
any securities in a reclassification of the Common Stock or in any
other recapitalization (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), then in each such event:
(A) the property purchasable with each Right shall be adjusted to be
whatever the owner of that Right would have owned by reason of both
(i) the exercise of that Right immediately prior to such
recapitalization or reclassification and (ii) the effect of that
recapitalization or reclassification on the property assumed to have
been received in such exercise.
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(B) The Exercise Amount shall be allocated among the shares of
stock and/or other units property for which the Right shall
be exercisable after giving effect to the adjustment cited
in clause (A) based on the fair market value of such
property to determine the Purchase Price for each such share
and/or unit.
(2) To illustrate the intended operation of this provision, assume
that: (i) immediately prior to a reclassification, each Right
were exercisable for 10 Common Shares and the Exercise Amount
were $130 (resulting in a purchase price of $13 per Common
Share); (ii) as a result of the Reclassification, each
outstanding Common Share is reclassified into two New Common
Shares and one Series B Share; and (iii) immediately after the
reclassification, the market value of each New Common Share was
$30 and the market value of each Series B share was $15.
Immediately after the assumed reclassification, each Right would
be exercisable for 20 New Common Shares at a purchase price of
$5.20 per share and ten Series B Shares at a purchase price of
$2.60 per share.
(f) In the event a Triggering Event shall occur, or in the event there
shall be a recapitalization or reclassification pursuant to Section 11(e), or in
the event there shall be any merger or other action which shall cause a change
in the property purchasable with the Rights under Section 13, or in the event
there shall be any other occurrence or development which shall cause the
property purchasable with the Rights to consist in whole or in part of anything
other than Preferred Stock, then and in any such event:
(1) The certificates representing the Rights shall automatically be
deemed to represent the adjusted terms of the Rights without the
need to replace such certificates. The Company shall thereafter
make arrangements for the production of certificates representing
the revised terms of the Rights resulting from such adjustment
and shall use such certificates to represent Rights for which new
certificates shall be issuable by reason of a transfer of record
ownership or by reason of a request by the existing record owner
for a replacement certificate representing the revised terms of
the Rights.
(2) The principles underlying the adjustment provisions in this
Section 11 and elsewhere in this Agreement shall be applied to
fairly and proportionately adjust the shares or other property
purchasable with the Rights and the purchase price for each share
or other property unit purchasable with the Rights after giving
effect to the adjustments required by reason of such event to
reflect any subsequent capital changes or other events. Without
limiting by implication the generality of the preceding sentence,
the provisions of Sections 7, 9, 10, 12, 13, 14 and 24 of this
Agreement which related to the Preferred Stock shall after the
occurrence of any such event apply in a substantively identical
manner to the shares or other property purchasable with the
Rights after giving effect to such event.
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(g) Before taking any action that would cause an adjustment reducing the
Purchase Price per share at which shares are purchasable with the Rights below
the par value of those shares, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares at such adjusted
Purchase Price.
(h) In any case in which this Section 11 shall require that an adjustment
be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuance to the holder of
any Right exercised after such record date the shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
over and above the shares of Common Stock and other securities, cash or property
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or other securities, cash or property upon the occurrence of the
event requiring such adjustment.
(i) The Company covenants and agrees that on and after the Trigger Date
neither it nor any combination of it and its subsidiaries shall (i) consolidate
with any other Person, or (ii) merge with or into any other Person or (iii)
directly or indirectly sell, lease, or otherwise transfer or dispose of (in one
transaction or a series of related transactions) assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole to any other Person if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer, or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer, or disposition the stockholders (or equity holders) of
the Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation, merger,
sale, lease, transfer, or disposition unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(i).
(j) The Company covenants and agrees that, after the Trigger Date it will
not, except as permitted by Section 11(c)(3) of this Agreement, take (or permit
any Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will, directly or indirectly, diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certification of Adjustments. Whenever an adjustment is made as
provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the stock then purchasable with the Rights a copy
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of such certificate and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if no Rights Certificates
have been issued, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the
Company to give such notice shall not affect the validity of or
the force or effect of or the requirement for such adjustment.
Any adjustment to be made pursuant to Sections 11 and 13 of this
Agreement shall be effective as of the date of the event giving
rise to such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained and shall not be obligated or
responsible for calculating any adjustment nor shall it be deemed
to have knowledge of such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) A "Business Combination" shall be deemed to occur in the event that,
in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(i) and Section 11(j) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i) and Section 11(j) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of any other
Person, cash or any other property) or (iv) the Company shall, directly or
indirectly, sell, lease, exchange, mortgage, pledge or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall directly or indirectly
sell, lease, exchange, mortgage, pledge or otherwise transfer or dispose of), in
one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
any of its Subsidiaries in one or more transactions each and all of which comply
with Section 11(i) and Section 11(j) of this Agreement).
In the event of a Business Combination, proper provision shall be made so
that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise of each Right such
number of shares of Common Stock of the Principal Party as shall be equal to the
result obtained by dividing the Exercise Amount in effect prior to the Business
Combination by 50% of the Current Market Price per share of the Common Stock of
such Principal Party immediately prior to the consummation of such Business
Combination. All shares of Common Stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 13(a) shall, when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof of
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any kind or nature whatsoever. The Purchase
Price per share for such Common Stock immediately after such Business
Combination shall be equal to 50% of the Current Market Price per share of the
Common Stock of such Principal Party immediately prior to the consummation of
such Business Combination.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination unless prior
thereto (i) the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
(other than shares reserved for issuance pursuant to this Agreement to the
holders of Rights) to permit the exercise in full of the Rights in accordance
with this Section 13, (ii) the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the fulfillment of the Principal Party's obligations and the terms as set
forth in paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable on or after the date of such Business Combination, the
Principal Party, at its own expense, shall (A) prepare and file, if necessary, a
registration statement on an appropriate form under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights, (B) use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, (C) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 (or any successor
form) under the Exchange Act, (D) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights under the
state securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate, (E) use its best efforts to list the Rights and the securities
purchasable upon exercise of the Rights on a United States national securities
exchange and (F) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights, (iii) the Company and the Principal Party
shall have furnished to the Rights Agent an opinion of independent counsel
stating that such supplemental agreement is a legal, valid and binding agreement
of the Principal Party enforceable against the Principal Party in accordance
with its terms, and (iv) the Company and the Principal Party shall have filed
with the Rights Agent a certificate of a nationally recognized firm of
independent accountants setting forth the number of shares of Common Stock of
such issuer which may be purchased upon the exercise of each Right after the
consummation of such Business Combination.
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(d) The provisions of this Section 13 shall similarly apply to successive
Business Combinations. In the event a Business Combination shall be consummated
at any time after the occurrence of a Triggering Event, the Rights which have
not theretofore been exercised shall thereafter be exercisable for the
consideration and in the manner described in Section 13(a). The provisions of
Section 11(b) of this Agreement shall be applicable to events which occur after
a Business Combination.
(e) Notwithstanding any other provision of this Agreement, no adjustment
to the number or kind of shares (or fractions of a share), cash or other
property for which a Right is exercisable or the number of Rights outstanding or
associated with each share of Common Stock or any similar or other adjustment
shall be made or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Sections 11 and 13, unless the terms of this Agreement are amended so as to
preserve such benefits, provided that this paragraph shall not prevent any
change prior to the Stock Acquisition Date permitted by Section 26(a) and
provided that this Section 13(e) shall not be deemed to limit or impair the
right to engage in an exchange pursuant to Section 11(c)(3).
(f) The Company covenants and agrees that it shall not effect any Business
Combination if at the time of, or immediately after such Business Combination,
there are any rights, options, warrants or other instruments outstanding which
would diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
(g) Without limiting the generality of this Section 13, in the event the
nature of the organization of any Principal Party shall preclude or limit the
acquisition of Common Stock of such Principal Party upon exercise of the Rights
as required by Section 13(a) as a result of a Business Combination, it shall be
a condition to such Business Combination that such Principal Party shall take
such steps (including, but not limited to, a reorganization) as may be necessary
to ensure that the benefits intended to be derived under this Section 13 upon
the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional
Rights or to distribute Rights Certificates which evidence fractional Rights.
(b) The Company shall permit the issuance and trading of Preferred
Stock in fractional shares such that the smallest fractional share tradeable at
any particular time shall equal the reciprocal of the Adjustment Number in
effect at that particular time. The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of the reciprocal of the Adjustment Number) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of the
reciprocal of the Adjustment Number). Fractions of shares of Preferred Stock
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such
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agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Stock. In lieu
of fractional shares of Preferred Stock that are not integral multiples of the
reciprocal of the Adjustment Number, the Company may at its option (i) issue
scrip or warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive the reciprocal of the Adjustment Number of one
share of Preferred Stock upon the surrender of such scrip or warrants
aggregating the reciprocal of the Adjustment Number of one share of Preferred
Stock, or (ii) pay to the registered holders of Rights Certificates at the time
such Rights Certificates are exercised as provided in this Agreement an amount
in cash equal to the same fraction of the relevant closing price of a share of
Preferred Stock. For purposes of this Section 14(b), the relevant closing price
of a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Equivalent Shares or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the closing price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by his acceptance thereof expressly waives any
right to receive any fractional Rights or any fractional shares upon exercise of
a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all rights of
action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his rights pursuant to this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights. Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
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(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the stock
purchasable with such Right or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such, of
any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), (iv) to receive dividends, distributions or
subscription rights, (v) to institute, as a holder of Preferred Stock or other
securities issuable on exercise of the Rights represented by any Rights
Certificate, any derivative action on behalf of the Company, or otherwise, until
and only to the extent that the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions of this
Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence, bad faith, willful misconduct or breach of this Agreement on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. The costs and expenses of enforcing this right of indemnification
shall also be paid by the Company. The indemnification provided for hereunder
shall survive the expiration of the Rights and the termination of this
Agreement.
The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its
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administration of this Agreement in
reliance upon any Rights Certificate or certificate for Preferred Stock or
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons. Notwithstanding anything in this
Agreement to the contrary, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent):
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
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(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, the
General Counsel, the Treasurer, any Vice President or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change or
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23 or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice of any change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock, Common Stock or
other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, the General Counsel, the Treasurer, any Vice President or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken
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by it or lack of action in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with the proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or specifying the
action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or contract with or lend money to the Company or
otherwise act as fully and freely as though the Rights Agent were not serving as
such under this Agreement. Nothing in this Agreement shall become pecuniarily
interested in any transaction in which the Company may be interested, or
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents. The Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(l) The Rights Agent shall not be required to take notice or be deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
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(m) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon notice of 30 days in writing mailed to the Company and to each transfer
agent of the Common Stock or Preferred Stock by registered or certified mail
and, at the expense of the Company, to the holders of the Rights Certificates by
either (i) first-class mail or (ii) by disclosure in a periodic report of the
Company required to be filed under the Exchange Act, any permitted report under
the Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. The Company may remove the
Rights Agent or any successor Rights Agent upon notice of 30 days in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by either (i)
first-class mail or (ii) by disclosure in a periodic report of the Company
required to be filed under the Exchange Act, any permitted report under the
Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to conduct
a banking, corporate trust or stock transfer business in the State of New York)
in good standing, which is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock; the Company
shall also either (i) mail a notice thereof in writing to the registered holders
of the Rights Certificates or (ii) make a disclosure with respect thereto in a
periodic report of the Company required to be filed under the Exchange Act, any
permitted report under the Exchange Act, a press release of the Company or in
any proxy or other communication of the Company with its
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stockholders. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by a majority of the Board of Directors of the
Company to reflect any adjustment or change in the Purchase Price per share and
the number or kind or class of securities, cash or other property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the Trigger Date and (ii) the Expiration
Date, redeem all but not less than all of the then-outstanding Rights at a
redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the Reincorporation. The Company may, at its option, pay the
Redemption Price in cash, shares (including fractional shares) of Common Stock
(based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors. The redemption of the Rights by the Board of Directors of the
Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors of the Company in its sole discretion may
establish.
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(b) At the time and date of effectiveness set forth in any resolution of
the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price; provided, however, that such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. The Company shall promptly give public notice of
any such redemption; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such redemption. The
Company shall also give notice of such redemption to the Rights Agent. The
Company may elect to give notice of such redemption to the holders of the
then-outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the issuance of Rights Certificates, on the registry books of the transfer
agent for the Common Stock. Any notice which is mailed in the manner provided in
this Agreement shall be deemed given, whether or not the holder receives the
notice. In connection with any redemption permitted under this Section 23, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the issuance of the Rights Certificates,
on the registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or after the
Distribution Date, shall propose to (a) pay any dividend payable in stock of any
class to the holders of its Common Shares or to make any other distribution to
the holders of its Common Shares (other than a regular periodic cash dividend at
an annual rate not in excess of 125% of the annualized rate of the cash dividend
paid on the Common Shares during the immediately preceding fiscal year), or (b)
offer to the holders of its Common Shares rights, options or warrants to
subscribe for or to purchase any additional shares of Common Shares or shares of
stock of any class or any other securities, rights or options, or (c) effect any
reclassification of the Common Shares (other than a reclassification involving
only the subdivision of outstanding shares of Common Shares, a change in the par
value of such Common Shares or a change from par value to no par value), or (d)
directly or indirectly effect any consolidation or merger into or with, or
effect any sale, lease, exchange, or other transfer or disposition (or to permit
one or more of its Subsidiaries to effect any sale, lease, exchange or other
transfer or disposition), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, or (e) effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right, in accordance with Section 25,
a notice of such proposed action, which shall specify any record date for the
purposes of such stock dividend or distribution of rights, or the date on which
such reclassification, consolidation, merger, sale, lease,
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exchange, transfer,
disposition, liquidation, dissolution or winding up is to take place and if such
holders will or may participate therein, the date of participation therein by
the holders of Common Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (a) or (b) above
at least 20 days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein, if any, by the holders of Common Shares,
whichever shall be the earlier. The failure to give notice as required by this
Section 24 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 25, notice of the
occurrence of such Triggering Event or Business Combination, which shall specify
the Triggering Event or Business Combination and include a description of the
consequences of such event to holders of Rights under Section 11 or 13.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The ServiceMaster Company
One ServiceMaster Way
Downers Grove, Illinois 60515-9969
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by certified or registered mail, and shall be deemed given upon receipt,
addressed (until another address is filed in writing with the Company) to
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
-37-
<PAGE>
Section 26. Supplements and Amendments.
(a) At any time prior to the Trigger Date, a majority of
the Board of Directors of the Company may, and the Rights Agent shall, if so
directed, supplement or amend any provision of this Agreement, including,
without limitation, the Beneficial Ownership percent as set forth in Section 1
at which a Person becomes an Acquiring Person and the definition of Exempt
Person as set forth in Section 1 to include any Person in addition to the
Persons described therein, without the approval of any holders of Rights.
(b) Except as otherwise provided in Section 26(c):
(1) The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board of Directors of the
Company or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem
or not redeem the Rights, to exchange or not exchange the Rights for
Common Stock or other securities of the Company, or to amend or
supplement this Agreement).
(2) All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing)
which are done or made by the Board of Directors of the Company in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other Persons, and (y) not subject the Board of
Directors of the Company to any liability to the holders of the Rights.
(c) From and after the Trigger Date: (1) No amendment or other change shall
be made in
this Agreement or the terms of the Rights which is prohibited by
Section 11(j) or Section 13(f) or which would otherwise adversely
affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or any other person in whose hands the Rights are
void under the provisions of Section 7(e)).
(2) The Board shall not be entitled to exercise the powers specified in
Section 26(a) or 26(b) after the Trigger Date unless the Board can
establish by clear and convincing evidence that its action satisfies
the requirement in Section 23(c)(1).
(d) Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the
Rights Agent under this Agreement will be effective against the Rights
Agent without the execution of such supplement or amendment by the
Rights Agent.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns
hereunder.
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<PAGE>
Section 28. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of Rights any legal or equitable right, remedy or claim under
this Agreement; and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights. Each
provision in this Agreement shall be a valid and binding obligation of each
party to this Agreement and shall be enforceable against that party in
accordance with its terms.
Section 29. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or unenforceable under applicable law, (i) such provision shall be
applied to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this
Agreement shall remain in full force and effect. No rule of strict construction,
rule resolving ambiguities against the person who drafted the provision giving
rise to such ambiguities, or other such rule of interpretation shall be applied
against any party with respect to this Agreement.
Section 30. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the internal laws of Delaware applicable to contracts to be made
and performed entirely within Delaware.
Section 31. Counterparts. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and both such counterparts shall together constitute but one and the
same instrument.
Section 32. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the
provisions of this Agreement.
Section 33. Grammatical Construction. Throughout this Agreement, where such
meanings would be appropriate, (a) any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms (e.g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which") and (b) the plural form of nouns and pronouns shall include the
singular and vice-versa.
* * * * *
-39-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE SERVICEMASTER COMPANY
By: /s/ Carlos H. Cantu
President and Chief
Executive Officer
Harris Trust and Savings Bank,
as Rights Agent
By: /s/ Dennis Sneyers
Vice President
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<PAGE>
EXHIBIT A
The ServiceMaster Company
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Vernon T. Squires, the Senior Vice President and General Counsel of
The ServiceMaster Company, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on December 12, 1997, adopted the following resolution creating a series of
1,000,000 shares of Preferred Stock designated as Series A Junior Participating
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation of the Corporation and out of the
Preferred Stock authorized therein, the Board hereby authorizes that a series of
Preferred Stock of the Corporation be, and it hereby is, created and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock," par value $.01
per share (the "Series A Preferred Stock") and the number of shares constituting
such series shall be 1,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
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<PAGE>
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of
Common Stock and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day of March, June, September and December in each year (each
such date, a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $25.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount
of all cash dividends, and the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series A Preferred Stock. The "Adjustment Number" shall
initially be 1000. In the event the Corporation shall at any time after
December 31, 1997 (i) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock into
a greater number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$25.00 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date. The Board shall
have the right to authorize payment of each dividend declared on the Series
A Preferred Stock by reason of the declaration of a dividend or
distribution on the Common Stock at the same time as the dividend or
distribution on the Common Stock shall occur, and if the Board does so, the
amount of the dividend or distribution otherwise payable on the Series A
Preferred Stock on the next following Quarterly Dividend Payment Date shall
be reduced by the amount of the dividends paid on the Series A Preferred
Stock pursuant to the authority granted in
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<PAGE>
this sentence from but not
including the Quarterly Dividend Payment Date immediately preceding such
Quarter Dividend Payment Date and end on such Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date, provided that if at the time of issuance of such shares of
Series A Preferred Stock dividends shall be in arrears on the shares of
Series A Preferred Stock then outstanding, dividends shall begin to accrue
on such shares of Series A Preferred Stock from the date from which the
dividends then in arrears shall have begun to accrue and the amount of
accrued dividend owed on each newly issued share shall be the same as the
accrued dividend per share then in arrears on the previously issued shares
then outstanding. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted
from time to time pursuant to Section 2(A) hereof) on all matters submitted
to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such
A-3
<PAGE>
contingency shall mark the beginning of a period (a
"default period") that shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and for the
current quarterly period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, (1) the number of Directors shall be increased
by two, effective as of the time of election of such Directors as herein
provided, and (2) the holders of Series A Preferred Stock and the holders
of other Preferred Stock upon which these or like voting rights have been
conferred and are exercisable (the "Voting Preferred Stock") with dividends
in arrears equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such four Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the holders
of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by the holders
of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, a Vice President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Voting Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Voting Preferred Stock by mailing a copy
of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier
than 10 days and not later than 60 days after such order or request or, in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred
Stock shall continue in office until the earlier of the time at
A-4
<PAGE>
which their
successors shall have been elected by such holders or the expiration of the
default period, and (y) any vacancy in the Board of Directors may be filled
by vote of the remaining Director theretofore elected by the holders of the
class or classes of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class or classes of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause
(y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders
of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Certificate of
Incorporation or Bylaws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate of Incorporation or Bylaws).
(D) Except as set forth herein or as otherwise required by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or
A-5
<PAGE>
winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (A)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received the greater of (i) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, and (ii) an aggregate amount per share, equal to the Adjustment
Number (as adjusted from time to time pursuant to Section 2(A) hereof) times the
aggregate amount to be distributed per share to holders of Common Stock, or (B)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock
A-6
<PAGE>
are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock issued at any time.
Section 10. Fractional Shares. The Series A Preferred Stock shall be
issuable in fractional shares such that the smallest fraction of a share to
which a shareholder shall be entitled at any particular time shall be equal to
the reciprocal of the Adjustment Number in effect at that particular time.
Section 11. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
of the outstanding shares of Series A Preferred Stock, voting together as a
single class.
IN WITNESS WHEREOF, this Certificate of Designations has been executed
on behalf of the Corporation by its Senior Vice President and General Counsel
and attested by its Assistant Secretary this 18th day of December, 1997.
By _________________________
Sr. Vice President and General Counsel
Attest:
- -----------------------------
Secretary
A-7
<PAGE>
`
Exhibit B
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER _____________ __, 200__ OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT
TO REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
The ServiceMaster Company
This certifies that _______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of December 15, 1997 (the "Rights Agreement"),
between The ServiceMaster Company, a Delaware corporation (the "Company"), and
Harris Trust and Savings Bank, an Illinois banking corporation (the "Agent"),
unless notice of redemption shall have been previously given by the Company, to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (Chicago time) on
__________ __, 200__ at the principal corporate trust office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-thousandth of
a fully paid nonassessable share of the Junior Participating Preferred Stock,
Series A, par value $.01 per share, of the Company (the "Preferred Stock") at a
purchase price of $130 per one onethousandth share, upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase duly
executed. The Purchase Price may be paid in cash or by certified bank check or
bank draft payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities, cash or other property which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person or (ii) a direct or indirect transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person), such
Rights may become null and void, in which event the holder of any such Right
(including any subsequent holder) shall not have any right with respect to such
Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full
B-1
<PAGE>
description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the abovementioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.01 per Right subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as the
Board of Directors may determine, at any time prior to the earlier of (i) the
Trigger Date and (ii) the Expiration Date, or (b) may be exchanged after the
Trigger Date by the Board of Directors of the Company at its option in whole or
in part for shares of the Company's Common Stock.
The Company shall not be obligated to issue by reason of the exercise
of any Right evidenced hereby a fractional share of Preferred Stock smaller than
the reciprocal of the Adjustment Number in effect at that particular time under
the terms governing the Preferred Stock but shall be obligated to pay cash in
lieu of any such smaller fractional share in the amount established by the
Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or of any other securities, cash or property which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company, including,
without limitation, any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
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<PAGE>
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
* * * * *
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of _______ __, ____.
THE SERVICEMASTER COMPANY
By: _____________________________
Title:
Countersigned:
Harris Trust and Savings Bank
By: ________________________
Authorized Officer
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<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED the undersigned___________________________________
hereby sells, assigns and transfers unto _____________________________
__________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of The
ServiceMaster Company, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
________________________________________________________________
(Please print name and address)
________________________________________________________________
B-4
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate or any Rights evidenced hereby G are G are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned G did G did not acquire any of the
Rights evidenced by this Rights Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _____________________ ____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association or any successor organization thereto.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and until
and unless the Company is provided with such evidence as it may require to
establish that the beneficial owner of the Rights evidenced by this Right
Certificate is not an Acquiring Person or an Affiliate or Associate thereof and
did not receive its interests in such Rights in any transfer chain passing
through any such Acquiring Person or an Affiliate or Associate thereof, the
Company shall have the right not to release this certificate or to issue any
replacement therefor.
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: The ServiceMaster Company
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock or other securities, cash or other property
issuable upon the exercise of such Rights and requests that certificates for
such shares or other securities be issued in the name of, and such cash or other
property be paid to:
Please insert Social Security
or other identifying number of purchaser:________________________
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned): Please insert Social Security or other identifying
number: ________________________
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
B-6
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate G are G are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned G did G did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _______________________ __________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association or any successor organization thereto.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and until
and unless the Company is provided with such evidence as it may require to
establish that the beneficial owner of the Rights evidenced by this Right
Certificate is not an Acquiring Person or an Affiliate or Associate thereof and
did not receive its interests in such Rights in any transfer chain passing
through any such Acquiring Person or an Affiliate or Associate thereof, the
Company shall have the right (i) not to issue any securities or other property
which might otherwise be issuable by reason of the attempted exercise of any
Rights evidenced hereby and (ii) not to release this certificate or to issue any
replacement therefor.
B-7
<PAGE>
Exhibit 4 to Form 8-K submitted on December 19, 1997
The ServiceMaster Company
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Vernon T. Squires, the Senior Vice President and General Counsel of
The ServiceMaster Company, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on December 12, 1997, adopted the following resolution creating a series of
1,000,000 shares of Preferred Stock designated as Series A Junior Participating
Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation of the Corporation and out of the
Preferred Stock authorized therein, the Board hereby authorizes that a series of
Preferred Stock of the Corporation be, and it hereby is, created and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock," par value $.01
per share (the "Series A Preferred Stock") and the number of shares constituting
such series shall be 1,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
<PAGE>
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of
Common Stock and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day of March, June, September and December in each year (each
such date, a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $25.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount
of all cash dividends, and the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of Series A Preferred Stock. The "Adjustment Number" shall
initially be 1000. In the event the Corporation shall at any time after
December 31, 1997 (i) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock into
a greater number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$25.00 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date. The Board shall
have the right to authorize payment of each dividend declared on the Series
A Preferred Stock by reason of the declaration of a dividend or
distribution on the Common Stock at the same time as the dividend or
distribution on the Common Stock shall occur, and if the Board does so, the
amount of the dividend or distribution otherwise payable on the Series A
Preferred Stock on the next following Quarterly Dividend Payment Date shall
be reduced by the amount of the dividends paid on the Series A Preferred
Stock pursuant to the authority granted in
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<PAGE>
this sentence from but not
including the Quarterly Dividend Payment Date immediately preceding such
Quarter Dividend Payment Date and end on such Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date, provided that if at the time of issuance of such shares of
Series A Preferred Stock dividends shall be in arrears on the shares of
Series A Preferred Stock then outstanding, dividends shall begin to accrue
on such shares of Series A Preferred Stock from the date from which the
dividends then in arrears shall have begun to accrue and the amount of
accrued dividend owed on each newly issued share shall be the same as the
accrued dividend per share then in arrears on the previously issued shares
then outstanding. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted
from time to time pursuant to Section 2(A) hereof) on all matters submitted
to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such
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<PAGE>
contingency shall mark the beginning of a period (a
"default period") that shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and for the
current quarterly period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment.
During each default period, (1) the number of Directors shall be increased
by two, effective as of the time of election of such Directors as herein
provided, and (2) the holders of Series A Preferred Stock and the holders
of other Preferred Stock upon which these or like voting rights have been
conferred and are exercisable (the "Voting Preferred Stock") with dividends
in arrears equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect such four Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the holders
of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by the holders
of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, a Vice President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Voting Preferred
Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Voting Preferred Stock by mailing a copy
of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier
than 10 days and not later than 60 days after such order or request or, in
default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred
Stock shall continue in office until the earlier of the time at
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<PAGE>
which their
successors shall have been elected by such holders or the expiration of the
default period, and (y) any vacancy in the Board of Directors may be filled
by vote of the remaining Director theretofore elected by the holders of the
class or classes of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class or classes of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause
(y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders
of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Certificate of
Incorporation or Bylaws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate of Incorporation or Bylaws).
(D) Except as set forth herein or as otherwise required by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or
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<PAGE>
winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (A)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received the greater of (i) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, and (ii) an aggregate amount per share, equal to the Adjustment
Number (as adjusted from time to time pursuant to Section 2(A) hereof) times the
aggregate amount to be distributed per share to holders of Common Stock, or (B)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock
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<PAGE>
are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock issued at any time.
Section 10. Fractional Shares. The Series A Preferred Stock shall be
issuable in fractional shares such that the smallest fraction of a share to
which a shareholder shall be entitled at any particular time shall be equal to
the reciprocal of the Adjustment Number in effect at that particular time.
Section 11. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
of the outstanding shares of Series A Preferred Stock, voting together as a
single class.
IN WITNESS WHEREOF, this Certificate of Designations has been executed
on behalf of the Corporation by its Senior Vice President and General Counsel
and attested by its Assistant Secretary this 18th day of December, 1997.
By /s/ Vernon T. Squires
Sr. Vice President and General Counsel
Attest:
- -----------------------------
Secretary
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<PAGE>
Exhibit 5 to Form 8-K submitted on December 19, 1997
MERGER AND REORGANIZATION AGREEMENT
As Amended and Restated on October 3, 1997
This Merger and Reorganization Agreement has been amended and restated as
of October 3, 1997 (the "Restatement Date") by: ServiceMaster Incorporated of
Delaware (which is incorporated in Delaware, will be renamed "The ServiceMaster
Company" on or before the Reorganization Date as defined herein and is herein
called the "Successor Parent Corporation"); ServiceMaster Limited Partnership, a
Delaware limited partnership (the "Public Partnership"); The ServiceMaster
Company Limited Partnership, a Delaware limited partnership (the "Principal
Subsidiary Partnership"); ServiceMaster Management Corporation, a Delaware
corporation (the "Management Corporation"); ServiceMaster Corporation, a
Delaware corporation and a special general partner of the Public Partnership and
NewSub B, Inc., a Delaware corporation and wholly-owned subsidiary of Parent
("NewSub B").
WHEREAS: The limited partnership interest in the Public Partnership is
currently represented by limited partner shares (the "Partnership Shares"). The
Partnership Shares are publicly traded on the New York Stock Exchange. The
Management Corporation serves as the managing general partner of the Public
Partnership and the Principal Subsidiary Partnership and holds a 1% carried
interest in each Partnership.
WHEREAS: Each of the parties hereto (collectively, the "parties") desire to
consummate on or about December 26, 1997 the merger specified in Part 1 of this
Agreement (the "Reincorporating Merger"). The Reincorporating Merger will cause
the Parent to take the place of the Public Partnership as the vehicle through
which the public invests in businesses now owned directly or indirectly by the
Public Partnership.
WHEREAS: From its inception until the Restatement Date (i) Parent has been
a wholly owned subsidiary of the Public Partnership and (ii) New Sub B has been
a wholly owned subsidiary of the Parent and these relationships will continue
until the consummation of the Reincorporating Merger.
WHEREAS: ServiceMaster Corporation has never issued any of its common stock
and accordingly does not own any equity interest in the Public Partnership. The
only Voting Stock issued by ServiceMaster Corporation is the voting common stock
which was issued to the Management Corporation for nominal consideration, and
accordingly, ServiceMaster Corporation has always been a dormant wholly owned
subsidiary of the Management Corporation.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
<PAGE>
Part 1.
The Reincorporating Merger
1.1 Entity Effect.
(a) The Merger. At the Reincorporation Time (determined as
prescribed in Section 1.3), in accordance with this
Agreement and the provisions of the Delaware General
Corporation Law (the "Delaware Corporation Law") and
the Delaware Revised Uniform Limited Partnership Act
(the "Delaware Partnership Act"), NewSub B shall merge
with and into the Public Partnership, the separate
existence of NewSub B shall cease and the Public
Partnership shall survive the Merger.
(b) General Partners. The Reincorporating Merger shall not cause any
change in the Agreement of Limited Partnership governing the Public
Partnership, in the identity of its general partners or in the nature
of the interest of either the Management Corporation as the managing
general partner or ServiceMaster Corporation as a special general
partner.
(c) Officers. No change shall be made by reason of the Reincorporating
Merger in the officers of the Public Partnership. Accordingly, every
person who was serving as an officer of the Public Partnership prior
to the Consolidating Merger shall after the Consolidating Merger
continue to hold the same officership position as he or she held prior
to the Consolidating Merger.
(d) Rights and Obligations. From and after the
Reincorporation Time, the Public Partnership shall have
and possess all rights and property of any kind which
were had or possessed prior to the Reincorporation Time
by any of the Public Partnership and NewSub B
(collectively, the "Reincorporation Constituents") and,
the Public Partnership shall be subject to all
commitments, debts, duties and other contracts and
obligations of any kind to which any of the
Reincorporation Constituents were subject prior to the
Reincorporation Time.
1.2 Consummation of the Merger.
(a) The parties shall cause the Reincorporating Merger to become effective
on December 26, 1997 (which, unless it shall be changed as prescribed
in Section 3.2, is herein called the "Reincorporation Date").
(b) Not later than the Reincorporation Date, the Parent, the Public
Partnership and NewSub B shall file a Certificate of Merger (the
"Merger Certificate") with the Secretary of State of the State of
Delaware in such form as required by, and executed in accordance with,
the relevant provisions of the Delaware Corporation
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<PAGE>
Law and the
Delaware Partnership Act. The Reincorporating Merger shall be
effective on the Merger Date at such time as is set forth in the
Certificate of Merger relating thereto; provided that if no earlier
time shall be established pursuant to the preceding provisions in this
Section 1.2, the Reincorporating Merger shall become effective at
12:01 AM Delaware time on the Reincorporation Date. The time at which
the Reincorporating Merger shall actually become effective and be
consummated in Delaware is herein called the "Reincorporation Time."
1.3 Conversion of Securities. Upon consummation of the Reincorporation
Merger:
(a) All of NewSub B's common stock issued and outstanding immediately
prior to the Reincorporation Time shall automatically be converted
into and become a number of Partnership Shares issued by the Public
Partnership to the Successor Parent Corporation equal to the number of
Partnership Shares outstanding immediately prior to the
Reincorporation Time.
(b) Every Partnership Share issued by the Public
Partnership and outstanding immediately prior to the
Reincorporation Time shall at the Reincorporation Time
automatically be converted into and become one share of
common stock issued by the Successor Parent
Corporation. The term "Successor Parent Corporation
Share" whenever it is used in this Agreement means a
share of common stock issued or issuable by the
Successor Parent Corporation.
(c) Every Partnership Share issued by the Public
Partnership but which is not outstanding immediately
prior to the Reincorporating Time (i.e., treasury
shares of the Public Partnership) shall at the
Reincorporation Time automatically be converted into
and become one share of common stock issued by the
Successor Parent Corporation which is not outstanding
(i.e., treasury shares of the Successor Parent
Corporation).
(d) Every option or other right to acquire Partnership
Shares from the Public Partnership shall at the
Reincorporation Time automatically be converted into
the right to acquire the same number of Successor
Parent Corporation Shares from the Successor Parent
Corporation at the same price per share and subject to
the same terms and conditions as previously governed
the right to acquire Partnership Shares.
(e) Each Parent Share issued in the Reincorporation Merger shall have
associated with it one Right issued under The ServiceMaster Company
Shareholders' Rights Plan in effect at the Reincorporation Time.
(f) No change shall be made by reason of the Reincorporating Merger in
either the Special General Partner interest in the Public Partnership
(which shall continue to be held after the Reincorporating Merger by
ServiceMaster Corporation).
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<PAGE>
(g) No change shall be made by reason of the Reincorporating Merger in
Management Corporation's 1% carried interest in the Public
Partnership.
(h) As a result of the preceding actions, it is intended that immediately
after the Reincorporating Merger:
(1) The Successor Parent Corporation will own all Partnership Shares
issued by the Public Partnership (representing 99% of the
ownership interest in the Public Partnership) and the Management
Corporation will own a 1% carried interest in the Public
Partnership; and
(2) The Successor Parent Corporation will be owned by the same
shareholders who owned the Public Partnership prior to the
Reincorporating Merger and each such shareholder shall
immediately after the Merger own the same number of Successor
Parent Corporation Shares as the number of Partnership Shares
owned by that shareholder immediately prior to the
Reincorporating Merger.
1.4 Share Records. The share records maintained prior to the
Reincorporation Time with respect to the Partnership Shares shall become the
basis for the share records maintained for the Successor Parent Corporation
Shares from and after the Reincorporation Time. Accordingly, each person who
immediately prior to the Reincorporation Time shall have been a record holder of
Partnership Shares shall at and after the Reincorporation Time automatically be
deemed the record holder of the Successor Parent Corporation Shares into which
those Partnership Shares shall have been converted in the Reincorporating
Merger.
1.5 Exchange of Share Certificates. Each certificate which prior to the
Reincorporation Time represented Partnership Shares (an "Old Partnership
Certificate") shall after the Reincorporation Time be deemed to represent the
Successor Parent Corporation Shares into which those Partnership Shares were
converted in the Reincorporating Merger. Upon each presentation of an Old
Partnership Certificate to the transfer agent, whether or not presented for
transfer, the transfer agent shall replace such certificate with a new
certificate representing the Successor Parent Corporation Shares into which the
Partnership Shares formerly represented by the Old Partnership Certificate were
converted in the Reincorporating Merger. A shareholder shall be entitled to
obtain this exchange of certificates upon request and it shall not be necessary
to transfer the shares to a new record owner in order to have an Old Partnership
Certificate replaced with a certificate which explicitly represents the
Successor Parent corporation shares into which the Partnership Shares originally
represented by the certificate shall have been concerned. If a Successor Parent
Corporation Share certificate is to be issued in the name of a person other than
the person in whose name the relevant Old Partnership Certificate was
registered, it shall be a condition of the exchange that the person requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of such Successor Parent Corporation Shares in the name of a
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person
other than the registered owner of the Old Partnership Certificate surrendered,
or shall establish to the satisfaction of the transfer agent that such tax has
been paid or is not applicable. Notwithstanding the foregoing, neither the
transfer agent nor any of the parties shall be liable to a holder of any Old
Partnership Certificate for anything paid or surrendered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Parent
shall make available to its exchange agent certificates to be used to represent
Successor Parent Corporation Shares in sufficient quantities to accomplish the
replacement of the Old Partnership Certificates as contemplated by this Section
1.5.
Part 2.
The Consolidating Mergers
2.1 Entity Effect. At the Consolidating Time (determined as prescribed in
Section 2.2), in accordance with this Agreement and the provisions of the
Delaware Corporation Law and the Delaware Partnership Act the following two
mergers (the "Consolidating Mergers") shall occur simultaneously:
(1) the Public Partnership shall merge with and into the Successor
Parent Corporation, the separate existence of the Public
Partnership shall cease and the Successor Parent Corporation
shall survive the merger, and
(2) the Principal Subsidiary Partnership shall merge with and into
the Successor Parent Corporation, the separate existence of the
Principal Subsidiary Partnership shall cease and the Successor
Parent Corporation shall survive the merger.
2.2 Consummation of the Consolidating Mergers. Prior to the Consolidation
Time, the Successor Parent Corporation, the Public Partnership and the Principal
Subsidiary Partnership shall file a Certificate of Merger (the "Consolidation
Certificate") with the Secretary of State of the State of Delaware, in such form
as required by and executed in accordance with, the relevant provisions of the
Delaware Corporation Law and the Delaware Partnership Act. The Consolidating
Merger shall be effective at such time as is set forth in the Consolidation
Certificate; provided that if no earlier time shall be established pursuant the
preceding provisions in this Section 2.2, then the Consolidating Mergers shall
become effective at 12:01 AM Delaware time on January 1, 1998. The time at which
the Consolidating Mergers actually become effective and consummate in Delaware
is herein called the "Consolidation Time."
2.3 Transfer of Rights and Property. From and after the Consolidation Time,
the Successor Parent Corporation shall have and possess all rights and property
of any kind which were had or possessed prior to the Consolidation Time by any
of the Successor Parent Corporation, the Public Partnership, and the Principal
Subsidiary Partnership (collectively, the "Consolidation
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Constituents")
including but not limited to: ownership of partnership interests and stock in
subsidiaries; real property; rights in the capacity of lessee; the rights to use
the name "ServiceMaster" and all other trademarks, service marks and all other
intellectual property rights; all personal property; all rights under existing
contracts and commitments, arrangements and understandings of any kind; every
claim of any kind which any of the Consolidation Constituents may have against
any person or property whether or not known to anyone (including claims which
arise in the future based in part on occurrences prior to any of the Mergers and
in part on occurrences thereafter; claims or rights arising under tax laws or
regulations or rulings; and all other rights or property which under the
operation of the Delaware Corporation Law or the Delaware Partnership Act or
other applicable statute, or regulation, or case law, or other governmental law,
principal or requirement would pass to the Parent by reason of the Consolidating
Mergers.
2.4 Assumption of Obligations. From and after the Consolidation Time, the
Successor Parent Corporation shall be subject to all commitments, debts, duties,
liabilities and other contracts and obligations of any kind to which any of the
Consolidation Constituents were subject prior to the Consolidation Time. Without
limiting in any way by implication the generality of the preceding provisions,
at the Consolidation Time:
(a) The Successor Parent Corporation shall assume all
outstanding 2007 and 2027 Notes outstanding under the
Indenture dated as of August 15, 1997 and the First
Supplemental Indenture to that Indenture also dated as
of August 15, 1997 and shall assume all obligations of
the Public Partnership and the Principal Subsidiary
Partnership with respect to the 2007 Notes, the 2027
Notes, the First Supplemental Indenture and the
Indenture.
(b) The Successor Parent Corporation shall assume all obligations of the
Principal Subsidiary Partnership under the private loan agreements
listed in Exhibit A to this Agreement.
2.5 Directors, Officers, Employees and Employee Benefit Plans
(a) No change shall be made by reason of the Consolidating
Mergers in the directors or officers of the Successor
Parent Corporation. Accordingly:
(1) Every person who was serving as a director of the Successor
Parent Corporation prior to the Consolidating Merger shall after
the Consolidating Merger continue to hold the same directorship
position in the same class as he or she held prior to the
Consolidating Merger and
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(2) Every person who held an officership position with any of the
Consolidating Constituents prior to the Reincorporation shall
after the Reincorporation hold the same officership position with
the Successor Parent Corporation on exactly the same terms as
applied to his or her officership position with the Consolidating
Constituents prior to the Consolidation Time.
(b) Every person who held an employment position with any of the
Consolidating Constituents prior to the Reincorporation shall after
the Reincorporation hold the same employment position with the
Successor Parent Corporation on exactly the same terms as applied to
his or her employment position with the Constituent prior to the
Consolidation Time.
(c) Neither the Reincorporating Merger, the Consolidating Mergers nor any
other actions taken under or by reason of this Agreement or any of
those Mergers shall be deemed to be a Compensable Takeover for
purposes of the ServiceMaster Plan for Continuity of Employment.
(d) The ServiceMaster Plan for Continuity of Employment shall terminate
upon consummation of the Reincorporating Merger and no one shall have
any rights or liabilities under or by reason of that Plan after the
Reincorporation Time.
(e) Upon consummation of the Reincorporating Merger, the
Successor Parent Corporation shall have and be entitled
to exercise all rights (herein called Call Rights") to
purchase shares of any kind issued or issuable under
programs provided to employees or directors of any
present or former unit of the ServiceMaster enterprise
including but not limited to: (i) call agreements made
in connection with Stock Subscription and Purchase
Agreements with various employees; (ii) call agreements
made in connection with the issuance of Convertible
Subordinated Debentures; (iii) first refusal rights and
call rights existing under option agreements. The
Successor Parent Corporation and the Public Partnership
hereby agree and determine that the terms of each of
the Call Rights shall be changed at the Reincorporation
Time so that such Call Rights immediately after the
Reincorporation Time shall entitle the Successor Parent
Corporation to purchase a number of Successor Parent
Corporation Shares equal to the number of Partnership
Shares purchasable by the Public Partnership under such
Call Rights immediately prior to the Reincorporation
Time at a price per share equal to the price per share
at which the Partnership Shares were purchasable with
such Call Rights immediately prior to the
Reincorporation Time.
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2.6 Elimination of Partnership Interests in the Public
Partnership
At the Consolidation Time,--
(1) the entire limited partnership interest in the Public Partnership
(all of which shall have been owned by the Successor Parent
Corporation immediately prior to the Consolidation Time) shall be
terminated in exchange for the acquisition by the Successor
Parent Corporation in the Consolidating Mergers of all assets and
liabilities of the Public Partnership;
(2) the 1% general partner interest in the Public Partnership held by
the Management Corporation shall be terminated without right of
any person to receive anything in exchange therefor except as
provided in Section 2.8; and
(3) all interest and rights held by ServiceMaster Corporation in the
Public Partnership (including the rights and interest arising out
of its interest as Special General Partner) shall terminate and
no consideration shall be payable to ServiceMaster Corporation or
anyone else by reason of the Consolidating Merger or by reason of
any interest or involvement which ServiceMaster Corporation had
with respect to the Public Partnership prior to the Consolidating
Mergers.
2.7 Elimination of Partnership Interests in the Principal
Subsidiary Partnership
At the Consolidation Time, --
(1) the entire limited partnership interest in the Principal
Subsidiary Partnership (all of which shall have been owned by the
Public Partnership immediately prior to the Consolidation Time)
shall be terminated in exchange for the acquisition by the
Successor Parent Corporation in the Consolidating Mergers of all
assets and liabilities of the Principal Subsidiary Partnership
(including all assets distributable to the successor Parent
Corporation in its capacity as sole Residual Beneficiary of the
ServiceMaster A Trust (as hereinafter defined));
(2) the 1% general partner interest in the Principal Subsidiary
Partnership held by the Management Corporation shall be
terminated without right of any person to receive anything in
exchange therefor except as provided in section 2.8; and
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(3) the special general partner interest in the Principal Subsidiary
Partnership held by the ServiceMaster A Trust (as hereinafter
defined) shall be terminated without right of any person to
receive anything in exchange therefor except as
provided in section 2.9.
2.8 Successor Parent Corporation Assumption of Obligations in respect of
the 1% General Partner Interests in each of the Public Partnership and the
Principal Subsidiary Partnership.
(a) The parties acknowledge that the partnership agreement
for the Public Partnership provides that for any period
in which the Public Partnership has Net Income (as
defined in the partnership agreement), there shall be
allocated to the Management Corporation's capital
account, in respect of the 1% carried interest owned by
the Management Corporation in the Public Partnership,
the greater of (i) 1% of the Net Income for the period
or (ii) 1% of the Public Partnership's GAAP Income for
the period. The parties further acknowledge that the
partnership agreement for the Principal Subsidiary
Partnership contains a comparable provision in respect
of the 1% carried interest owned by the Management
Corporation in that partnership.
(b) The parties agree that when the Net Income of the
Public Partnership for the year 1997 has been
determined and the audit of the Public Partnership's
financial statements for 1997 has been completed an
allocation of such Net Income as required by the
provisions identified in paragraph (a) above shall be
made to the Management Corporation and the allocation
of the Principal Subsidiary Partnership's Net Income
required by the provisions identified in paragraph (a)
above shall be made to the Management Corporation.
(c) The Successor Parent Corporation hereby agrees to make
a cash payment to the Management Corporation on the
same date that the Successor Parent Corporation makes
its first dividend payment in the year 1998 to its
stockholders. The amount of such cash payment shall be
equal to the difference between (i) the total amount of
income of the Public Partnership and the Principal
Subsidiary Partnership allocable to the Management
Corporation in respect of the year 1997 pursuant to
the provisions identified in paragraph (a) above and
(ii) the total amount of the cash distributions made to
the Management Corporation by the Public Partnership
and the Principal Subsidiary Partnership during the
year 1997 excluding the amount of the cash
distributions made on January 31, 1997. Such payment
by the Successor Parent Corporation is intended to be,
and shall be deemed to be, a payment made for and on
behalf of the Public Partnership and the Principal
Subsidiary Partnership, respectively, as a discharge of
their obligation to distribute the amount of the income
allocable to the Management Corporation's capital
accounts for the year 1997 which shall not have been
distributed prior to the consummation of the
Consolidating Mergers. In no event shall such cash
payment by the Successor
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Parent Corporation be
considered as a dividend payment by the Successor
Parent Corporation.
2.9 Successor Parent Corporation Assumption of Obligations
in respect of the ServiceMaster A Trust
(a) The parties acknowledge that a Class T special general partner
interest in the Principal Subsidiary Partnership is held by the
trustee of the trust created by an Agreement of Trust dated January 1,
1993 and which is identified in that Agreement and in this Merger
Agreement as the "ServiceMaster A Trust."
(b) The parties agree that the Principal Subsidiary Partnership shall
allocate to the ServiceMaster A Trust the amount of the Principal
Subsidiary Partnership's Net Income for the year 1997 in the amount
required by the Partnership Agreement governing the Principal
Subsidiary Partnership.
(c) The Successor Parent Corporation shall assume the obligation
of the Principal Subsidiary Partnership to make a distribution to
the trustee of the ServiceMaster A Trust in the amount required
to enable the trustee to timely pay all federal and state income
taxes of the A Trust for the year 1997. In lieu of making such a
distribution, the Successor Parent Corporation make pay such
taxes itself, for and on behalf of, and as agent for, the
ServiceMaster A Trust. In any and all events, the Successor
Parent Corporation shall assume all of the obligations of the
Principal Subsidiary Partnership under the January 1, 1993 Trust
Agreement to indemnifying the trustee of the ServiceMaster A
Trust from liability for taxes and from all other claims
specified in that Agreement.
(d) The Public Partnership hereby assigns to the Successor
Parent Corporation the Public Partnership's rights as Remainder
Beneficiary of the ServiceMaster A Trust. This assignment shall
become effective immediately prior to the consummation of the
Consolidating Mergers. The parties acknowledge that when this
assignment becomes effective, the Successor Parent Corporation
will be the sole remaining Remainder Beneficiary of the
ServiceMaster A Trust and will be entitled to all distributions
and rights prescribed for the Remainder Beneficiary in the
applicable Agreement of Trust.
(e) In light of the position of the Successor Parent Corporation as the
sole remainder beneficiary of the ServiceMaster A Trust after the
consummation of the Consolidating Mergers, nothing shall be
distributable to the ServiceMaster A Trust by reason of the
Consolidating Mergers or for any reason after the Consolidation Time.
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2.10No Special Write Up of Management Corporation's Capital Accounts. For
purposes of determining Management Corporation's capital account balances under
Sections 2.6 and 2.7, no adjustment in the capital account balances shall be
made by reason of the Reincorporating Merger or the Consolidating Mergers, but
rather such balances shall be determined in the same manner used to determine
such balances the ordinary course as if none of those Mergers had occurred.
2.11Quit Claim Assignments. Each of Management Corporation and
ServiceMaster Corporation acknowledges (i) that it does not have any interest in
or claim against either the Successor Parent Corporation or any entity in which
the Successor Parent Corporation shall have a direct or indirect ownership
interest immediately after the Consolidating Mergers and (ii) hereby assigns to
the Successor Parent Corporation effective immediately prior to the consummation
of the Consolidating Mergers any such claim or interest which may exist.
2.12Indemnification.
(a) The parties expressly intend that the Successor Parent
Corporation shall after the Consolidation Time assume
all liabilities of any kind for which the Management
Corporation, ServiceMaster Corporation or the
ServiceMaster A Trust or any other person who may have
served at any time as a general partner of the Public
Partnership or the Principal Subsidiary Partnership may
have been (or may be) responsible by reason of their
general partnership interests in the Public Partnership
or the Principal Subsidiary Partnership or by reason of
any action or failure to act with respect to either
such Partnership and shall indemnify the Management
Corporation, ServiceMaster Corporation, the
ServiceMaster A Trust, and each former general partner
completely against any claim alleging any such
liability which may be asserted or arise after the
Consolidation Time.
(b) The parties agree that all rights to indemnification
and expense reimbursement ("indemnification rights")
now existing in favor of the present or former
directors, officers or employees of ServiceMaster
Corporation or either of the Partnerships as provided
in the certificate of corporation, partnership
agreements or similar documents of any of the foregoing
as in effect on the date hereof or at any time
hereafter with respect to any act or failure to act
occurring prior to the Reincorporation Time shall
survive the Mergers and shall continue in full force
and effect with respect to any claim now pending or
which shall be asserted at any time before or after the
Reincorporation Time or the Consolidate Time which
shall be covered by the indemnification rights and from
and after the Reincorporation Time the Successor Parent
Corporation shall assume full liability and
responsibility for such indemnification rights and
shall indemnify such individuals to the full extent
they would have been entitled to indemnification from
the entity which originally granted such
indemnification rights.
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(c) Service by any individual as a director of Management
Corporation or ServiceMaster Corporation or as an
officer of Management Corporation, ServiceMaster
Corporation, the Public Partnership or the Principal
Subsidiary Partnership shall entitle such individual to
indemnification under the indemnification provisions in
the Successor Parent Corporation's Certificate of
Incorporation to the same extent as if such individual
had held the director or officership position with the
Successor Parent Corporation the times at which the
acts or failures to act occurred which shall give rise
to the indemnification claim.
Part 3.
Amendment and Restatement Process
3.1 Original Version. The parties acknowledge that:
(1) The original version of this Agreement (the "Original Version")
was entered into as of December 10, 1991.
(2) The Original Version was approved by the Board of Directors of
Management Corporation, ServiceMaster Corporation and NewSub B
prior to the execution of the Original Version.
(3) The record holders of more than a majority of the Partnership
Shares issued by the Public Partnership and outstanding on the
relevant record date authorized the Reincorporating Merger at a
meeting duly called and held on January 13, 1992 (the "1992
Shareholder Approval Meeting").
3.2 Reincorporation Date. The parties acknowledge and
affirm that:
(1) The Original Version scheduled the Reincorporating Merger for
December 31, 1997. In connection with the rescheduling of the
Reincorporating Merger in this Amended and Restated Merger and
Reorganization Agreement for December 26, 1997, the Board
determined that the advantages to the Public Partnership and the
holders of a majority of its outstanding Partnership Shares of
rescheduling the Reincorporating Merger for December 26, 1997
outweigh the disadvantages to those same persons.
(2) This amendment and restatement has been authorized by the Board
of Directors of the Managing General Partner of the Public
Partnership and the Board of Directors of ServiceMaster
Corporation. In connection with its authorization, each of those
boards determined that: (i) this amendment and restatement is not
materially disadvantageous to the holders of at least a
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majority
of the outstanding Partnership Shares; (ii) since no common stock
has been issued by ServiceMaster Corporation, this amendment and
restatement is not materially disadvantageous to any holders of
common stock issued by ServiceMaster Corporation; and (iii) no
approval is required by the holders of the outstanding
Partnership Shares is required to authorize the Public
Partnership to execute this amended and restated agreement or to
make this amended and restated agreement valid, binding and
enforceable against the parties hereto in accordance with its
terms.
(3) This amendment and restatement has been duly authorized by the
Board of Directors of the Successor Parent Corporation and by the
Board of Directors of NewSub B.
(4) This amendment and restatement is hereby approved by the Public
Partnership in its capacity as sole shareholder of Parent, by the
Successor Parent Corporation in its capacity as sole shareholder
of NewSub B, and by Management Corporation in its capacity as the
holder of all Voting Stock issued by ServiceMaster Corporation.
(5) This amendment and restatement has been duly executed and
delivered by each of the parties hereto and constitutes the valid
and binding agreement of each such party which is enforceable
against such party in accordance with its terms.
3.3 No Other Shareholder Vote Required. It is the express intention of the
parties to this Agreement that no vote by the holders of Partnership Shares
shall be required in connection with the Mergers and related transactions to be
undertaken under or by reason of this Agreement (collectively the "Merger
Transactions") other than the vote by the holders of the Partnership Shares to
approve the Reincorporating Merger which occurred on January 13, 1992. No
subsequent vote by the holders of any capital stock which may hereafter be
issued by the Successor Parent Corporation shall be required as a condition,
precedent to any of the Mergers authorized by this Agreement and holders of
Partnership Shares or any capital stock which may at any time hereafter be
issued by the Successor Parent Corporation shall not have any appraisal or
similar rights in connection with any of the Merger Transactions. All of the
following issued after the record date for the 1992 Shareholder Approval Meeting
shall be issued subject to the terms prescribed in the preceding provisions of
this Section 3.3 and shall be deemed to be inherent terms of all of the
following: all Partnership Shares and other securities of any kind issued by the
Public Partnership and all capital stock issued by the Successor Parent
Corporation.
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Part 4.
Amendment
4. Basic Requirement. This Agreement may be amended in any respect without
any consent or approval of any of the holders of Partnership Shares or any other
securities at any time issued by any of the parties to this Agreement, provided
that (i) the Board of Directors of the Public Partnership's Managing General
Partner determines in its sole discretion that the amendment would not be
materially disadvantageous to the holders of a majority of the Partnership
Shares then outstanding and (ii) if the amendment incorporates an acceleration
of the Reincorporation Date to earlier than December 26, the Board shall make
the additional findings required by Section 4.2.
4.2 Acceleration of the Reincorporation Date. The Board of Directors of the
Public Partnership's Managing General Partner shall have the right to accelerate
the Reincorporation Date to a date determined by the Board earlier than December
26, 1997, if either (i) changes in the tax law or other developments cause more
than 51% of ServiceMaster's income to become subject to Federal corporate income
tax prior to 1998 (provided that the Reincorporation Date may only be
accelerated under this clause (i) to a time not earlier than 30 days prior to
the year in which such condition would arise) or (ii) the Board in its sole
discretion shall determine that the advantages to the Public Partnership and the
holders of a majority of the then outstanding Partnership Shares of accelerating
the Reincorporation Date to the date determined by the Board outweigh the
disadvantages to those same persons.
4.3 Abandonment. This Agreement may be terminated and all or any one or
more of the Merger Transactions may be abandoned for any reason by a resolution
adopted by the Board of Directors of the Managing General Partner of the Public
Partnership at any time prior to the consummation of the Reincorporating Merger
notwithstanding the approval of the Reincorporating Merger by the holders of
Partnership Shares.
4.4 Transfer of Responsibility to the Parent Board. After the
Reincorporation Time, the Board of Directors of the Successor Parent Corporation
shall have the authority assigned under this Agreement to the Board of Directors
of the Managing General Partner of the Public Partnership.
4.5 No Liability For Changes. In no event shall any of the parties, any of
their directors or officers, any of their existing or former partners, or any
other person be liable by reason of any of the following which the Board of
Directors of the Managing General Partner of the Public Partnership of the Board
of Directors of the Successor Parent Corporation shall in good faith determine
to be authorized by this Agreement: (i) any acceleration of the Reincorporation
Date; (ii) any amendment, abandonment or termination of this Agreement; or (iii)
any failure to amend, terminate or abandon this Agreement.
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Part 5.
Miscellaneous
5.1 Follow Through Actions. If, at any time after the Consolidation Time,
any further action is necessary or desirable to carry out any purpose of this
Agreement or to vest the Successor Parent Corporation with full right, title and
possession to all assets, property, rights, privileges, immunities, powers and
franchises of either of the Partnerships or the ServiceMaster A Trust, any of
the officers of the Successor Parent Corporation are fully authorized in the
name of any or all of the parties or otherwise to take any such action as such
officer deems necessary or desirable.
5.2 Entire Agreement. This Agreement constitutes the entire agreement among
the parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter thereof. Without limiting by implication the
generality of the preceding sentence, this amended and restated version of this
Agreement supersedes and replaces the Original Version of this Agreement.
5.3 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and assigns.
5.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
5.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
5.6 Severability. Whenever possible, each provision of this agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this agreement.
5.7 Notices. All notices and other communications to be given or made
hereunder by any party shall be delivered by first class mail, or by personal
delivery, postage or fees prepaid, to the other party c/o ServiceMaster Limited
Partnership (prior to the Reincorporating Merger) or Successor Parent
Corporation (after the Reincorporating Merger) at One ServiceMaster Way, Downers
Grove, Illinois 60515, Attention: General Counsel.
5.8 Expenses. Except as may otherwise be provided herein, the Public
Partnership will bear all of the costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
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The parties have executed this agreement at the place provided below to
evidence their agreement to be bound by all of its terms.
SERVICEMASTER LIMITED PARTNERSHIP
By ServiceMaster Management Corporation
(general partner)
By: /s/ Carlos H. Cantu
Its: President and Chief Executive Officer
THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP
By ServiceMaster Management Corporation
(general partner
By: /s/ Carlos H. Cantu
Its: President and Chief Executive Officer
SERVICEMASTER INCORPORATED OF DELAWARE
(to be renamed "The ServiceMaster Company"
prior to the Reincorporating Merger)
By: /s/ Vernon T. Squires
Its: Vice President
SERVICEMASTER MANAGEMENT
CORPORATION
By: /s/ Carlos H. Cantu
Its: President and Chief Executive Officer
SERVICEMASTER CORPORATION
By: /s/ Vernon T. Squires
Its: Vice President
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NEWSUB B, INC.
By: /s/ Vernon T. Squires
Its: Vice President
Consent by NewSub A
NewSub A, Inc. (a Delaware Corporation) hereby: acknowledge that it is a
party to the Original Version of this Agreement; that the amendment and
restatement of this Agreement have eliminated the role contemplated for NewSub A
by the Original Version; approves this Amended and Restated Agreement; and
waives and releases any rights it may have had under or by reason of the
Original Version and any other rights it may have against any of the parties.
NEWSUB A, INC.
By: /s/ Vernon T. Squires
Its: Vice President
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EXHIBIT A
Specified Assumed Loan Agreements
1. $750 million Five-Year Credit Agreement dated as of April 1, 1997 among the
Company, the Lenders party thereto, The First National Bank of Chicago as
Administrative Agent and Morgan Guaranty Trust Company of New York as
Documentation Agent.
2. $250 million 364-Day Credit Agreement dated as of April 1, 1997 among the
Company, the Lenders party thereto, The First National Bank of Chicago as
Administrative Agent and Morgan Guaranty Trust Company of New York as
Documentation Agent.
3. Note Agreements dated as of September 15, 1988, as amended through Third
Amendments thereto dated as of July 15, 1996 (relating to the Company's $45
million, 10.57% Senior Notes, Series A, due October 1, 2000).
4. Exchange Agreements dated as of August 1, 1990, as amended through Third
Amendments thereto dated as of July 15, 1996, and related Guaranty Agreements
dated as of August 1, 1990, as amended through Third Amendments thereto dated as
of July 15, 1996 (relating to the $55 million, 10.8125% Senior Notes, due
October 1, 2002, of American Home Shield Corporation (as successor by merger to
SVM Holding Corp.) and guaranteed by the Company).
5. Note Agreements dated as of April 1, 1992, as amended through Second
Amendments thereto dated as of July 15, 1996 (relating to the Company's $50
million, 8.38% Senior Notes, due July 15, 2001).
6. Note Agreements dated as of October 1, 1992, as amended through First
Amendments thereto dated as of July 15, 1996 (relating to the Company's $75
million, 7.47% Senior Notes, due October 9, 1997).
7. Note Agreements dated as of January 15, 1994, as amended through First
Amendments thereto dated as of July 15, 1996 (relating to the Company's $70
million, 6.65% Senior Notes, due January 31, 2004).
8. Note Agreements dated as of July 16, 1996, as amended through First
Amendments thereto dated as of March 1, 1997 (relating to the Company's $100
million, 7.40% Senior Notes, Series A, due July 16, 2006, and the Company's $25
million, 7.40% Senior Notes, Series B, due September 26, 2006).
A-1
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