UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

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): January  17, 2014 (January 14, 2014)

 

THE SERVICEMASTER COMPANY, LLC

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-14762

 

90-1036521

(State or other Jurisdiction

 

(Commission File Number)

 

(I.R.S Employer

of Incorporation)

 

 

 

Identification Number)

 

860 Ridge Lake Boulevard, Memphis, Tennessee

 

38120

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (901) 597-1400

 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 1.01                                            Entry into a Material Definitive Agreement.

 

On January 14, 2014, ServiceMaster Global Holdings, Inc. (“Holdings”), the indirect parent corporation of The ServiceMaster Company, LLC, a Delaware limited liability company (“ServiceMaster,” “we” or the “registrant”), completed the previously announced separation transaction (the “Transaction”) resulting in the spin-off of the assets and certain liabilities of the business that comprises the lawn, tree and shrub care services previously conducted by ServiceMaster primarily under the TruGreen brand name (collectively, the “TruGreen Business”) through a tax-free, pro rata dividend to the stockholders of Holdings.  As a result of the completion of the Transaction, TruGreen Holding Corporation (“New TruGreen”) will operate the TruGreen Business as a private independent company.  In connection with the Transaction, on January 14, 2014, Holdings, the company formerly known as The ServiceMaster Company (“Old ServiceMaster”), ServiceMaster, New TruGreen and TruGreen Limited Partnership, an indirect wholly-owned subsidiary of New TruGreen (“TGLP”), as applicable, entered into a separation and distribution agreement, an employee matters agreement, a tax matters agreement and a transition services agreement.

 

Pursuant to an agreement and plan of merger entered into by ServiceMaster and Old ServiceMaster in connection with the Transaction, on January 14, 2014, Old ServiceMaster was merged with and into ServiceMaster, with ServiceMaster continuing as the surviving entity in such merger (the “Merger”).  As a result of the Merger, ServiceMaster became the successor issuer to Old ServiceMaster pursuant to Rule 15d-5 of the Exchange Act of 1934, as amended.  Pursuant to the terms of the merger agreement, all of the capital stock of Old ServiceMaster issued and outstanding immediately prior to the effective time of the Merger was cancelled, and the sole stockholder of Old ServiceMaster immediately prior to the effective time of the Merger (CDRSVM Holding, Inc., now known as CDRSVM Holding, LLC) was admitted as the sole member of ServiceMaster. The foregoing description of the agreement and plan of merger is qualified in its entirety by reference to the complete terms and conditions of such agreement, filed as Exhibit 2.1 hereto and incorporated herein by reference.

 

Separation and Distribution Agreement

 

The separation and distribution agreement contains the key provisions relating to the separation of the TruGreen Business from ServiceMaster and the distribution of New TruGreen common stock to holders of Holdings common stock.  The separation and distribution agreement contains provisions relating to insurance coverage, legal matters, the exchange of information, the cooperation of the parties in preparing financial information, non-competition, non-solicitation, indemnification and other matters.

 

Employee Matters Agreement

 

In connection with the Transaction, Holdings and ServiceMaster entered into an employee matters agreement with New TruGreen and TGLP that governs the parties’ obligations with respect to employment, equity compensation, benefits and other related matters for the parties’ current and former employees.  The employee matters agreement allocates liabilities and responsibilities relating to employee benefit plans and programs and other related matters in connection with the Transaction, including without limitation, the treatment of outstanding Holdings equity awards, certain outstanding annual incentive awards, existing deferred compensation obligations, and certain retirement and welfare benefit obligations.

 

Tax Matters Agreement

 

In connection with the Transaction, Holdings, ServiceMaster, New TruGreen and TGLP entered into a tax matters agreement that governs the parties’ respective rights, responsibilities and obligations with respect to taxes, the preparation and filing of tax returns, the control of audits and other tax proceedings and assistance and cooperation in respect of tax matters.  In general, liabilities for income taxes attributable to New TruGreen and its subsidiaries allocable to a tax period (or portion thereof) ending on or before the January 14, 2014 will be allocable to Holdings, and liabilities for income taxes attributable to New TruGreen and its subsidiaries allocable to a tax period (or portion thereof) beginning after January 14, 2014 and liabilities for non-income taxes will be allocable to New TruGreen and its subsidiaries.  Taxes relating to or arising out of the failure of certain of the transactions described in Holdings’ private letter ruling request to the Internal Revenue Service confirming the tax-free nature of the Transaction and the opinion of tax counsel to qualify as a tax-free transaction (including as a result of Section

 

2



 

355(e) of the of the Internal Revenue Code of 1986, as amended) for U.S. federal income tax purposes will be borne by either Holdings or New TruGreen pursuant to the terms of the tax matters agreement.

 

Transition Services Agreement

 

In connection with the Transaction, ServiceMaster entered into a transition services agreement with TGLP, pursuant to which ServiceMaster and its subsidiaries will provide TGLP with specified communications, public relations, finance and accounting, tax, treasury, internal audit, human resources operations and benefits, risk management and insurance, supply management, real estate management, marketing, facilities, information technology and other support services. The charges for the transition services allow ServiceMaster to fully recover the allocated direct costs of providing the services, plus specified margins and any out-of-pocket costs and expenses.  The services provided under the transition services agreement will terminate at various specified times, and in no event later than two years after the completion of the Transaction (except certain information technology services, which TGLP expects ServiceMaster to provide to TGLP beyond the two-year period).  TGLP may terminate the transition services agreement (or certain services under the transition services agreement) for convenience upon 90-days written notice, in which case TGLP will be required to reimburse ServiceMaster for early termination costs.

 

The foregoing descriptions of the separation and distribution agreement, the employee matters agreement,  the tax matters agreement and the transition services agreement are qualified in their entirety by reference to the complete terms and conditions of such agreements filed as Exhibit 2.2, Exhibit 2.3, Exhibit 2.4 and Exhibit 2.5 hereto, respectively, and incorporated herein by reference.

 

Credit Agreement Joinder Agreements and Assumption Agreements

 

Pursuant to (a) a term loan credit agreement joinder agreement among Old ServiceMaster, ServiceMaster, Citibank, N.A., as administrative agent, and the other parties thereto and (b) a revolving credit agreement joinder agreement among Old ServiceMaster, ServiceMaster, Citibank, N.A., as administrative agent, and the other parties thereto, each of which was entered into in connection with the Merger, ServiceMaster assumed Old ServiceMaster’s obligations under the term loan Credit Agreement, dated as of July 24, 2007 (as amended prior to the date hereof), and the Revolving Credit Agreement, dated as of July 24, 2007 (as amended prior to the date hereof), respectively.  In addition, certain subsidiaries of ServiceMaster entered into (a) a term loan assumption agreement and (b) a revolving credit agreement assumption agreement, pursuant to which such subsidiaries became guarantors under ServiceMaster’s term loan and revolving credit agreements, and granted liens on the assets to secure such guarantees. The foregoing descriptions of the term loan credit agreement joinder agreement, the revolving credit agreement joinder agreement, the term loan assumption agreement and the revolving credit agreement assumption agreement are qualified in their entirety by reference to the complete terms and conditions of such agreements filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and incorporated herein by reference.

 

Item 2.01                                            Completion of Acquisition or Disposition of Assets.

 

The Transaction was completed on January 14, 2014 pursuant to the separation and distribution agreement. New TruGreen is now a private independent company operating the TruGreen Business.  On January 14, 2014, Holdings’ stockholders received one share of New TruGreen common stock for each share of Holdings common stock held by them.

 

The information in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.03                                            Material Modification to Rights of Security Holders.

 

In connection with the Merger, on January 14, 2014, ServiceMaster entered into (a) a fourth supplemental indenture (the “Fourth Supplemental Indenture”), to the Indenture, dated as of February 13, 2012, as amended and supplemented (the “2020 Notes Indenture”), among Old ServiceMaster, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee, which governs ServiceMaster’s outstanding 7% Senior Notes due 2020 (the “7% Notes”) and 8% Senior Notes due 2020 (the “8% Senior Notes” and, together with the 7% Notes, the “2020 Notes”) and (b) a fifth supplemental indenture (the “Continuing Notes Fifth Supplemental Indenture”), to the Indenture, dated as of August 15, 1997, as amended and supplemented, among Old ServiceMaster and The Bank

 

3



 

of New York Mellon Trust Company, N.A. (as successor to Harris Trust and Savings Bank), as trustee, which governs ServiceMaster’s outstanding 7.45% Senior Notes due 2027 (the “2027 Notes”),  7.10% Senior Notes due 2018 (the “2018 Notes”) and 7.25% Senior Notes 2038 (the “2038 Notes” and, together with the 2027 Notes and the 2018 Notes, the “Continuing Notes”).  In connection with the Merger, ServiceMaster expressly assumed all of Old ServiceMaster’s obligations in respect of the 2020 Notes and the Continuing Notes.

 

In addition, ServiceMaster and certain subsidiaries of ServiceMaster entered into a fifth supplemental indenture (the “Fifth Supplemental Indenture”) to the 2020 Notes Indenture.  Pursuant to the Fifth Supplemental Indenture, those subsidiaries of ServiceMaster became guarantors of the 2020 Notes.

 

The foregoing descriptions of the Fourth Supplemental Indenture, the Fifth Supplemental Indenture and the Continuing Notes Fifth Supplemental Indenture are qualified in their entirety by reference to the complete terms and conditions of such agreements filed as Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively, and incorporated herein by reference.

 

Item 5.02.                                         Departure of Certain Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On January 14, 2014, as a result of the Merger, Sarah Kim became a director of the registrant, succeeding Kenneth A. Giuriceo who will not continue as a director of the registrant (in order to serve as a director of New TruGreen).  Ms. Kim is a principal of Clayton, Dubilier & Rice (“CD&R”). David H. Wasserman, a director of ServiceMaster and a partner of CD&R, will continue as a director of the registrant.

 

ServiceMaster is a party to certain agreements and transactions with its equity sponsors, including CD&R, pursuant to which Ms. Kim may have a direct or indirect material interest requiring disclosure under Item 404(a) of Regulation S-K.  Such disclosure is included under “Item 13.  Certain Relationships and Related Transactions, and Director Independence” on page 164 of ServiceMaster’s Annual Report on Form 10-K for the year ended December 31, 2012 and is herein incorporated by reference.

 

Item 5.03                                            Amendment to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

 

As disclosed under Item 1.01 above, on January 14, 2014, in connection with the Transaction, Old ServiceMaster was merged with and into ServiceMaster, with ServiceMaster being the surviving entity.  As a result of the Merger, the Certificate of Formation and the Limited Liability Company Agreement of ServiceMaster will govern the registrant.  The Limited Liability Company Agreement of ServiceMaster, among other things, provides that the affairs and business of ServiceMaster shall be managed by or under the direction of a Board of Directors of ServiceMaster.  The foregoing descriptions of ServiceMaster’s Certificate of Formation and Limited Liability Company Agreement are qualified in their entirety by reference to the complete terms and conditions of such documents filed as Exhibit 3.1 and Exhibit 3.2, respectively, and incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(b)                                  Pro Forma Financial Information

 

The unaudited pro forma consolidated statements of operations of The ServiceMaster Company for the nine months ended September 30, 2013 and the years ended December 31, 2012, 2011 and 2011 and the unaudited pro forma consolidated statement of financial position of The ServiceMaster Company as of September 30, 2013 are included as Exhibit 99.1 hereto and are incorporated herein by reference.

 

(d)                                  Exhibits

 

Exhibit No.

 

Description

 

 

 

2.1

 

Agreement and Plan of Merger, dated as of December 31, 2013, by and between The

 

4



 

 

 

ServiceMaster Company and The ServiceMaster Company, LLC.

 

 

 

2.2

 

Separation and Distribution Agreement, dated as of January 14, 2014, by and among ServiceMaster Global Holdings, Inc., The ServiceMaster Company, TruGreen Holding Corporation and TruGreen Limited Partnership.

 

 

 

2.3

 

Employee Matters Agreement, dated as of January 14, 2014, by and among ServiceMaster Global Holdings, Inc., The ServiceMaster Company, LLC, TruGreen Limited Partnership and TruGreen Holding Corporation.

 

 

 

2.4

 

Tax Matters Agreement, dated as of January 14, 2014, by and among ServiceMaster Global Holdings, Inc., The ServiceMaster Company, LLC, TruGreen Holding Corporation and TruGreen Limited Partnership.

 

 

 

2.5

 

Transition Services Agreement, dated as of January 14, 2014, by and between The ServiceMaster Company, LLC and TruGreen Limited Partnership.

 

 

 

3.1

 

Certificate of Formation of The ServiceMaster Company, LLC, dated as of December 13, 2013.

 

 

 

3.2

 

Limited Liability Company Agreement of The ServiceMaster Company, LLC, dated as of December 19, 2013.

 

 

 

4.1

 

Fourth Supplemental Indenture, dated as January 14, 2014, among The ServiceMaster Company, LLC, the Subsidiary Guarantors named therein, and Wilmington Trust, National Association, as Trustee.

 

 

 

4.2

 

Fifth Supplemental Indenture, dated as January 14, 2014, among The ServiceMaster Company, LLC, the Subsidiary Guarantors named therein, and Wilmington Trust, National Association, as Trustee.

 

 

 

4.3

 

Fifth Supplemental Indenture, dated as of January 14, 2014, among The ServiceMaster Company, LLC and The Bank of New York Mellon Trust Company, N.A. (as successor to Harris Trust and Savings Bank), as Trustee.

 

 

 

10.1

 

Term Loan Credit Agreement Joinder Agreement, dated as of January 14, 2013, among The ServiceMaster Company, The ServiceMaster Company, LLC, Citibank, N.A., as administrative agent, and the other parties thereto.

 

 

 

10.2

 

Revolving Credit Agreement Joinder Agreement, dated as of January 14, 2013, among The ServiceMaster Company, The ServiceMaster Company, LLC, Citibank, N.A., as administrative agent, and the other parties thereto.

 

5



 

10.3

 

Assumption Agreement, dated as of January 14, 2014, by SMCS Holdco, Inc. and SMCS Holdco II, Inc., in favor of Citibank, N.A., as administrative agent and collateral agent for the banks and other financial institutions from time to time parties to the Credit Agreement referred to therein and the other Secured Parties (as defined therein).

 

 

 

10.4

 

Assumption Agreement, dated as of January 14, 2014, by SMCS Holdco, Inc. and SMCS Holdco II, Inc., in favor of Citibank, N.A., as administrative agent and collateral agent for the banks and other financial institutions from time to time parties to the Revolving Credit Agreement referred to therein and the other Secured Parties (as defined therein).

 

 

 

99.1

 

Unaudited pro forma consolidated financial statements of The ServiceMaster Company.

 

6



 

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.

 

Date: January 17, 2014

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Alan J. M. Haughie

 

 

Senior Vice President and Chief Financial Officer

 

7


Exhibit 2.1

 

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER, dated as of December 31, 2013 (this “ Agreement ”), by and between The ServiceMaster Company, a Delaware corporation (the “ Corporation ”), and The ServiceMaster Company, LLC, a Delaware limited liability company (the “ LLC ”, and together with the Corporation, the “ Parties ”).

 

W I T N E S S E T H :

 

WHEREAS, the LLC desires to acquire the properties and other assets, and to assume all of the liabilities and obligations, of the Corporation by means of a merger of the Corporation with and into the LLC;

 

WHEREAS, Section 18-209 of the Delaware Limited Liability Company Act, 6 Del.C. §18-101, et seq. (the “ DLLCA ”) and Section 264 of the General Corporation Law of the State of Delaware, 8 Del.C. §101, et seq . (the “ DGCL ”), authorize the merger of a Delaware corporation with and into a Delaware limited liability company;

 

WHEREAS, the LLC is a direct, wholly owned subsidiary of the Corporation;

 

WHEREAS, the Corporation and the LLC now desire to merge (the “ Merger ”), following which the LLC shall be the surviving entity (the “ Surviving LLC ”);

 

WHEREAS, the Corporation’s Certificate of Incorporation and By-Laws permit, and resolutions adopted by the Corporation’s Board of Directors has authorized and approved, this Agreement and the consummation of the Merger;

 

WHEREAS, the Board of Directors of the LLC has adopted resolutions authorizing and approving this Agreement and the consummation of the Merger; and

 

WHEREAS, by execution of this Agreement, the Corporation, in its capacity as the sole member of the LLC, is hereby approving this Agreement and the consummation of the Merger.

 

NOW THEREFORE, the Parties hereby agree as follows:

 

1.                                       THE MERGER .

 

1.1                    After satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, including the effectiveness of the transactions contemplated to be completed prior to the Merger in the Steps Memorandum circulated among the Parties (the “ Steps Memorandum ”), as the Corporation and the LLC shall determine and evidenced by the filing of the Certificate of Merger (as defined herein), the LLC, which shall be the surviving entity, shall merge with the Corporation and shall file a

 



 

certificate of merger, substantially as set forth in the form attached hereto as Exhibit A (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware law in connection with the Merger.  Maribeth LeHoux is hereby designated as an “authorized person” of the LLC within the meaning of the DLLCA and is hereby authorized, for and on behalf of the LLC, to execute, deliver and cause the filing of the Certificate of Merger with the Secretary of State of the State of Delaware to effectuate the Merger in accordance with the order of (and at the time set forth for the Merger) in the Steps Memorandum.  The Merger shall become effective at such time as is specified in the Certificate of Merger (the “ Effective Time ”)

 

1.2                    At the Effective Time, the Corporation shall be merged with and into the LLC, whereupon the separate existence of the Corporation shall cease, and the LLC shall be the Surviving LLC of the Merger and shall continue its limited liability company existence under the laws of the State of Delaware in accordance with Section 18-209 of the DLLCA and Section 264 of the DGCL.

 

1.3                    The name of the Surviving LLC shall be The ServiceMaster Company, LLC.  At the Effective Time, the LLC shall continue in existence as the Surviving LLC and, without further transfer, shall succeed to and possess all of the rights, privileges and powers of the Corporation, and all of the assets and property of whatever kind and character of the Corporation shall vest in the Surviving LLC without further act or deed; thereafter, the Surviving LLC shall be liable for all of the liabilities and obligations of the Corporation, and any claim or judgment against the Corporation may be enforced against the Surviving LLC in accordance with Section 18-209 of the Delaware Act and Section 264 of the DGCL.

 

2.                                       EFFECT ON INTERESTS .

 

2.1                    All of the capital stock of the Corporation issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into all of the limited liability company interests of the Surviving LLC.

 

2.2                    Each limited liability company interest in the LLC outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and no consideration shall be issued in respect thereof.

 

2.3                    Pursuant to Sections 18-301(b)(3) and 18-101(7) of the DLLCA and simultaneous with the Effective Time, notwithstanding any provision of the limited liability company agreement of the LLC, as in effect immediately prior to the Effective Time, the sole stockholder of the Corporation immediately prior to the Effective Time

 



 

(such stockholder being CDRSVM Holding, Inc., a Delaware corporation) shall, automatically and without any further action of any person or entity being required, be admitted to the Surviving LLC as the sole member of the Surviving LLC, own all of the limited liability company interests in the Surviving LLC and shall be bound by the terms of the Surviving LLC Agreement (as defined herein), and the Surviving LLC shall continue without dissolution.

 

3.                                       CERTIFICATE OF FORMATION; LIMITED LIABILITY AGREEMENT .

 

3.1                    The certificate of formation of the LLC, as in effect immediately prior to the Effective Time, shall be the certificate of formation of the Surviving LLC from and after the Effective Time, and thereafter may be amended as provided therein or by applicable law (the “ Surviving LLC Certificate ”).

 

3.2                    The limited liability company agreement of the LLC, as in effect immediately prior to the Effective Time, shall be the limited liability company agreement of the Surviving LLC from and after the Effective Time, and thereafter may be amended as provided therein or by applicable law (the “ Surviving LLC Agreement ”).

 

4.                                       DIRECTORS; OFFICERS .

 

4.1                    The directors serving on the Board of Directors of the LLC immediately prior to the Effective Time shall be the directors on the Surviving LLC’s Board of Directors immediately following the Effective Time, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal in accordance with the Surviving LLC Agreement.

 

4.2                    The officers of the LLC immediately prior to the Effective Time shall be the officers of the Surviving LLC until their respective successors are duly appointed and qualified or their earlier death, resignation or removal in accordance with the Surviving LLC Agreement.

 

5.                                       COUNTERPARTS; EFFECTIVENESS .

 

5.1                    This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each Party shall have received the counterpart hereof signed by the other Party.

 



 

6.                                       MISCELLANEOUS .

 

6.1                    The representations and warranties and agreements contained in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement.

 

6.2                    To the fullest extent permitted by law, no failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

6.3                    All prior or contemporaneous agreements, contracts, promises, representations, and statements, if any, between the Corporation and the LLC, or their representatives, are merged into this Agreement, and this Agreement together with the Steps Memorandum shall constitute the entire understanding between the Corporation and the LLC with respect to the subject matter hereof.

 

6.4                    The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns; provided that no Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other Party.

 

6.5                    Each provision of this Agreement shall be considered severable, and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Agreement that are valid, enforceable and legal.

 

6.6                    This Agreement shall be governed by and construed in accordance the laws of the State of Delaware, without regard to principles of conflict of laws.

 

6.7                    If at any time the LLC shall consider or be advised that any further assignment, conveyance or assurance is necessary or advisable to vest, perfect or confirm of record in the Surviving LLC the title to any property or right of the Corporation, or otherwise to carry out the provisions hereof, the proper representatives of the Corporation as of the Effective Time shall execute and deliver any and all proper deeds, assignments and assurances and do all things necessary or proper to vest, perfect or convey title to such property or right in the Surviving LLC, and otherwise to carry out the provisions hereof.

 



 

6.8                    Amendment .  Any provision of this Agreement may, subject to applicable law, be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed by the LLC and by the Corporation.

 

6.9                    Termination .  Notwithstanding adoption and approval of this Agreement by the sole stockholder of the Corporation or the sole member of the LLC, the Parties may, by mutual written consent, terminate this Agreement and abandon the Merger at any time prior to the Effective Time.  If this Agreement is terminated pursuant to this Section 6.9, this Agreement shall become void and of no effect with no liability on the part of either party hereto.

 

[Signature Page Follows]

 



 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized representatives as of December 23, 2013.

 

 

THE SERVICEMASTER COMPANY, a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

THE SERVICEMASTER COMPANY, LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President and Chief Financial Officer

 

[ Signature Page to Agreement and Plan of Merger ]

 



 

Exhibit A

 

Certificate of Merger

 



 

CERTIFICATE OF MERGER

OF

THE SERVICEMASTER COMPANY

(a Delaware corporation)

into

THE SERVICEMASTER COMPANY, LLC

(a Delaware limited liability company)

 

dated: January 13, 2014

 

The undersigned limited liability company formed and existing under the laws of the State of Delaware,

 

DOES HEREBY CERTIFY:

 

FIRST:  The name, jurisdiction of formation or organization and type of entity of each of the constituent entities which is to merge are as follows:

 

Name

 

Jurisdiction of 
Formation or
Organization

 

Type of Entity

The ServiceMaster Company

 

Delaware

 

Corporation

 

 

 

 

 

The ServiceMaster Company, LLC

 

Delaware

 

Limited Liability Company

 

SECOND:  An Agreement and Plan of Merger (“ Agreement of Merger ”) has been approved and executed by (i) The ServiceMaster Company, a Delaware corporation (the “ Non-Surviving Corporation ”) and (ii) The ServiceMaster Company, LLC, a Delaware limited liability company (the “ Surviving LLC ”).

 

THIRD:  The name of the surviving domestic limited liability company is The ServiceMaster Company, LLC.

 

FOURTH: The merger of the Non-Surviving Corporation into the Surviving LLC shall be effective on January 14, 2014, at 11:00 a.m. Eastern Standard Time.

 

FIFTH:  The executed Agreement of Merger is on file at a place of business of the Surviving LLC.  The address of such place of business of the Surviving LLC is 860 Ridge Lake Blvd, Memphis, TN, 38120.

 

SIXTH:  A copy of the Agreement of Merger will be furnished by the Surviving LLC, on request and without cost, to any member of the Surviving LLC or any stockholder of or person holding an interest in the Non-Surviving Corporation.

 



 

IN WITNESS WHEREOF, The ServiceMaster Company, LLC, a Delaware limited liability company, has caused this Certificate of Merger to be duly executed as of the date first-above written.

 

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

By:

 

 

Name:

 

Title:

 

[Signature Page to Certificate of Merger – The ServiceMaster Company and The ServiceMaster Company, LLC]

 


Exhibit 2.2

 

EXECUTION VERSION

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

by and among

 

SERVICEMASTER GLOBAL HOLDINGS, INC.,

 

THE SERVICEMASTER COMPANY,

 

TRUGREEN HOLDING CORPORATION

 

and

 

TRUGREEN LIMITED PARTNERSHIP

 

Dated as of January 14, 2014

 



 

TABLE OF CONTENTS

 

 

 

Page

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1

Certain Defined Terms

2

 

ARTICLE II

 

THE BUSINESS SEPARATION

 

Section 2.1

Business Separation

15

Section 2.2

Intercompany Agreements

17

Section 2.3

Bank Accounts; Cash Balances

17

Section 2.4

Resignation

17

 

 

 

ARTICLE III

 

CONDITIONS TO DISTRIBUTION

 

Section 3.1

Sole Discretion of Distributing

18

Section 3.2

Conditions to Distribution

18

 

 

 

ARTICLE IV

 

DISTRIBUTION

 

Section 4.1

Distribution

20

 

 

 

ARTICLE V

 

GENERAL PROVISIONS

 

Section 5.1

Implementation Documents

21

Section 5.2

Unreleased Liabilities

21

Section 5.3

Deferred Transfers

21

Section 5.4

Transfers of Assets or Liabilities Following the Distribution

23

Section 5.5

Corporate Names; Trademarks

24

Section 5.6

Domain Names

24

Section 5.7

Certain Matters Governed Exclusively by Ancillary Agreements

25

Section 5.8

Disclaimer of Representations and Warranties

25

 

i



 

ARTICLE VI

 

CONFIDENTIALITY; EXCHANGE OF INFORMATION; NON-SOLICITATION

 

Section 6.1

Agreement for Exchange of Information; Archives

26

Section 6.2

Ownership of Information

27

Section 6.3

Record Retention

27

Section 6.4

Production of Witnesses; Records; Cooperation

28

Section 6.5

Confidential Information

29

Section 6.6

Protective Arrangement

30

Section 6.7

Other Agreements Providing for Exchange of Information

30

Section 6.8

Privileged Matters

30

Section 6.9

Non-Solicitation ; Non-Competition

33

 

 

 

ARTICLE VII

 

FINANCIAL AND OTHER INFORMATION

 

Section 7.1

Financial and Other Information

35

Section 7.2

Sarbanes-Oxley Section 404 Compliance

37

 

 

 

ARTICLE VIII

 

INSURANCE

 

Section 8.1

Insurance Matters

38

Section 8.2

Director and Officer Liability

41

Section 8.3

Miscellaneous

41

 

 

 

ARTICLE IX

 

LEGAL MATTERS

 

Section 9.1

Control of Legal Matters

41

Section 9.2

Notice to Third Parties; Service of Process; Cooperation

42

 

 

 

ARTICLE X

 

INDEMNIFICATION

 

Section 10.1

Release of Pre-Separation Claims

43

Section 10.2

Indemnification by Controlled and TG LP

45

Section 10.3

Indemnification by Distributing and SVMC

45

Section 10.4

Indemnification with respect to Unreleased Liabilities

46

 

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Section 10.5

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

46

Section 10.6

Contribution

47

Section 10.7

Procedures for Indemnification of Direct Claims

48

Section 10.8

Procedures for Indemnification of Third Party Claims

48

Section 10.9

Remedies Cumulative

50

Section 10.10

Tax Matters

50

Section 10.11

Survival of Indemnities

50

 

 

 

ARTICLE XI

 

DISPUTE RESOLUTION

 

Section 11.1

Disputes

50

Section 11.2

Dispute Resolution

50

Section 11.3

Continuity of Service and Performance

52

 

 

 

ARTICLE XII

 

FURTHER ASSURANCES

 

Section 12.1

Further Assurances

52

 

 

 

ARTICLE XIII

 

AMENDMENT AND TERMINATION

 

Section 13.1

Amendment and Termination

53

Section 13.2

Effect of Termination

53

 

 

 

ARTICLE XIV

 

MISCELLANEOUS

 

Section 14.1

Limitation of Liability

53

Section 14.2

Expenses

54

Section 14.3

Counterparts

54

Section 14.4

Notices

54

Section 14.5

Public Announcements

55

Section 14.6

Severability

56

Section 14.7

Entire Agreement

56

Section 14.8

Assignment

56

Section 14.9

Third-Party Beneficiaries

56

Section 14.10

Governing Law

56

 

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Section 14.11

Headings

57

Section 14.12

Interpretation

57

Section 14.13

Specific Performance

57

Section 14.14

Payment Terms

57

Section 14.15

Survival of Covenants

58

Section 14.16

Waiver

58

Section 14.17

Counterparts; Facsimile Signatures

58

 

 

 

Schedules

 

 

 

 

 

Schedule 1.1(a)

Co-Locations

 

Schedule 1.1(b)

SVM Assumed Liabilities - Actions

 

Schedule 1.1(c)

TruGreen Locations

 

 

 

 

Exhibits

 

 

 

 

 

Exhibit A

Employee Matters Agreement

 

Exhibit B

Tax Matters Agreement

 

Exhibit C

Transition Services Agreement

 

 

iv



 

SEPARATION AND DISTRIBUTION AGREEMENT

 

This SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), is made as of January 14, 2014, by and among ServiceMaster Global Holdings, Inc., a Delaware corporation (“ Distributing ”), The ServiceMaster Company, a Delaware corporation, TruGreen Holding Corporation, a Delaware corporation (“ Controlled ”), and TruGreen Limited Partnership (“ TG LP ” and, together with Distributing, SVMC and Controlled, collectively, the “ Parties ,” and each a “ Party ”).  Capitalized terms used, but not otherwise defined herein have the meanings ascribed to them in Section 1.1.

 

WHEREAS, Distributing and SVMC, through certain of their Subsidiaries, is currently engaged in the TG Business and the Other Businesses;

 

WHEREAS, the Distributing Board and the SVMC Board have determined that it is in the best interests of Distributing and SVMC, respectively, and their respective stockholders to separate from Distributing the TG Business, which shall be owned, operated and conducted, directly or indirectly, by Controlled;

 

WHEREAS, in furtherance of the foregoing, the Distributing Board and the SVMC Board have determined that it is in the best interests of Distributing and SVMC, respectively, and their respective stockholders for Distributing, SVMC and certain of their Subsidiaries to enter into a series of transactions in the manner provided in this Agreement and the Ancillary Agreements whereby

 

(i)                                      ( x ) Distributing and SVMC will, directly or indirectly through their Subsidiaries, own all of the SVM Business Assets and assume (or retain) all of the SVM Liabilities, and ( y ) Controlled will, directly or indirectly through its wholly-owned Subsidiaries, own all of the TG Business Assets and assume (or retain) all of the TG Liabilities; and

 

(ii)                                   Holders of the Distributing Common Stock will receive (without consideration being paid by such holders), on a pro rata basis, all of the outstanding shares of Controlled Common Stock;

 

WHEREAS, Distributing expects, as soon as practicable following the distribution of the Controlled Common Stock, consistent with the performance of the Other Businesses, the condition of the capital markets and applicable regulatory review processes, and no later than one year following the Distribution Date, to sell newly issued Distributing Common Stock to the public in a primary offering; and

 

WHEREAS, Distributing and Controlled intend that, for federal income Tax purposes, the TG Operating Entities Contribution and the Distribution contemplated by this Agreement shall qualify as a tax-free reorganization pursuant to Section 368(a)(1)(D) of the Code.

 



 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1                                     Certain Defined Terms .  For purposes of this Agreement:

 

Action ” means any demand, claim, counterclaim, action, suit, arbitration, inquiry, proceeding or investigation, in each case brought by or pending before any Governmental Authority or any federal, state, local, foreign or international arbitration or mediation tribunal .

 

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided , that except where the context indicates otherwise, for purposes of this Agreement, ( i ) no member of the SVM Group shall be deemed to be an Affiliate of any member of the TG Group, and ( ii ) no member of the TG Group shall be deemed to be an Affiliate of any member of the SVM Group.

 

After Acquired Business ” has the meaning set forth in Section 6.9(e).

 

After Acquired Company ” has the meaning set forth in Section 6.9(e).

 

Agreement ” has the meaning set forth in the Recitals.

 

Ancillary Agreements ” means

 

(i)                                      the Transition Services Agreement;

 

(ii)                                   the Tax Matters Agreement;

 

(iii)                                the Employee Matters Agreement;

 

(iv)                               the Intellectual Property Agreements; and

 

(v)                                  the Co-Location Agreements.

 

Assets ” means, with respect to any Person, the assets, properties, claims and rights (including, goodwill) of any kinds, of such Person, wherever located (including in the possession of vendors or other Persons or elsewhere), whether tangible or intangible, real, personal or mixed, or accrued or contingent, in each case whether or not recorded or

 

2



 

reflected or required to be recorded or reflected on the books and records or financial statements of such Person.

 

Arbitrator ” has the meaning set forth in Section 11.2(c).

 

Business ” means either the SVM Business or the TG Business, as the context requires.

 

Business Day ” means any day that is not a Saturday, a Sunday, or any other day on which banks are required or authorized by Law to be closed in the City of New York.

 

Business Separation ” has the meaning set forth in Section 2.1.

 

Code ” means the Internal Revenue Code of 1986, as amended from time to time, together with the rules and regulations promulgated thereunder.

 

Co-Location Agreements ” means the agreements in which a member of one Group conveys to a member of the other Group a leasehold or other interest in, real property owned or leased by a member of the Group conveying such interest, as set forth in Schedule 1.1(a) for the period and monthly rental payments set forth in such Schedule.

 

Confidential Information ” has the meaning set forth in Section 6.5(a).

 

Consents ” means any consents, waivers or approvals from, or notification requirements to, any Person other than a Governmental Authority or a member of either Group.

 

Contract ” means each contract, agreement, lease, commitment, license, consensual obligation, promise or undertaking (whether written or oral and whether express or implied) that is legally binding on any Person or any part of its property under applicable Law, including all claims or rights against any Person, choses in action and similar rights, whether accrued or contingent with respect to any such contract, agreement, lease, purchase and/or commitment, license, consensual obligation, promise or undertaking.

 

Control ” (including the terms “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract or credit arrangement or otherwise.

 

Controlled ” has the meaning set forth in the preamble.

 

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Controlled Common Stock ” means the common stock of Controlled, par value $0.01 per share.

 

Controlled Stockholders Agreement ” means the Stockholders Agreement of Controlled, effective as of the Distribution Date, among Controlled and the stockholders of Controlled party thereto.

 

Covered Person ” has the meaning set forth in Section 8.2.

 

Customer Information ” means, with respect to any business, all information relating to customers of such business, including, names, addresses and transaction data (including merchandise or service purchased, purchase price paid,  purchase location (such as particular store or online), date and time of day of purchase, associated returns, exchanges, adjustments, and related information, and means of payment).

 

Deductibles ” has the meaning set forth in Section 8.1(d).

 

Deferred Transfer Asset ” has the meaning set forth in Section 5.3(a).

 

Deferred Transfer Liability ” has the meaning set forth in Section 5.3(a).

 

Dispute ” has the meaning set forth in Section 11.1.

 

Distributing ” has the meaning set forth in the preamble.

 

Distributing Board ” means the board of directors of Distributing.

 

Distributing Common Stock ” means the common stock of Distributing, par value $0.01 per share.

 

Distribution ” has the meaning set forth in Section 4.1.

 

Distribution Date ” means the date on which the Distribution occurs, which date shall be determined in the sole and absolute discretion of the Distributing Board.

 

Distribution Effective Time ” means 11:59 p.m. Eastern Standard Time on the Distribution Date or at such other time as the Parties may agree.

 

Distributing Record Holders ” has the meaning set forth in Section 3.2.

 

Employee Matters Agreement ” means the Employee Matters Agreement, effective as of the Distribution Date, by and among Distributing, SVMC, Controlled and TG LP, in the form attached hereto as Exhibit A .

 

4



 

Encumbrance ” means any security interest, pledge, hypothecation, mortgage, lien or encumbrance, whether or not filed, recorded or otherwise perfected under applicable Law .

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, together with the rules and regulations promulgated thereunder.

 

Executive Committee ” has the meaning set forth in Section 11.2(a).

 

Existing Distributing Stockholders Agreement ” means the Stockholders Agreement of Distributing, dated as of July 24, 2007, and amended on December 22, 2011, among Distributing and the stockholders of Distributing party thereto.

 

Governmental Approvals ” means any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, licenses, permits or authorizations to be obtained from, any Governmental Authority.

 

Governmental Authority ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or other government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal or judicial or arbitral body.

 

Group ” means the SVM Group or the TG Group, as the context requires, provided that ( i ) references to undertakings by SVMC on behalf of or with respect to “its Group” or “the SVM Group” shall be construed as references to undertakings on behalf of or with respect to the SVM Group members consisting of SVMC and its Subsidiaries, and ( ii ) references to undertakings by TG LP on behalf of or with respect to “its Group” or “the TG Group” shall be construed as references to undertakings on behalf of or with respect to the TG Group members consisting of TG LP and its Subsidiaries.

 

Holding ” means, prior to the Holding Conversion, CDRSVM Holding, Inc., a Delaware corporation, and following the Holding Conversion, CDRSVM Holding, LLC, a Delaware limited liability company.

 

Holding Conversion ” means the conversion of CDRSVM Holding, Inc., a Delaware corporation, into a Delaware limited liability company.

 

Implementation Documents ” has the meaning set forth in Section 5.1.

 

Indemnified Party ” has the meaning set forth in Section 10.5(a).

 

Indemnifying Party ” has the meaning set forth in Section 10.5(a).

 

Indemnity Payment ” has the meaning set forth in Section 10.5(a).

 

5



 

Information ” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including, studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, artwork, design, research and development files, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, Customer Information, cost information, sales and pricing data, customer prospect lists, supplier records and vendor data, correspondence and lists, product literature, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

 

Initial Reorganization ” means the transactions noted as part of the Initial Reorganization in the Steps Memorandum.

 

Insurance Claims ” has the meaning set forth in Section 8.1(d).

 

Insurance Proceeds ” means those monies ( i ) received by an insured or reinsured from an insurer or reinsurer, ( ii ) paid by an insurer or reinsurer on behalf of the insured or reinsured or ( iii ) received (including by way of set-off) from any Third Party in the nature of insurance, contribution or indemnification in respect of any Liability; in any such case net of any applicable premium adjustments (including, retrospectively rated premium adjustments) and net of any self-insured retention, deductible or other form of self-insurance (except to the extent such self-insured retention, deductible or other form of self-insurance is payable by any other insurer or reinsurer, in which case amounts payable by such insurer or reinsurer shall not be so net against Insurance Proceeds) and net of any Third Party costs or expenses incurred in the collection thereof.

 

Intellectual Property ” means, in any and all jurisdictions throughout the world, any ( i ) trademarks, service marks, trade names, trade dress, Internet domain names and the goodwill associated with any and all of the foregoing and symbolized thereby, ( ii ) copyrights, ( iii ) rights in Software and Internet websites, ( iv ) all registrations and applications to register or renew the registration of any of the foregoing, ( v ) patents and patent applications, including all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, ( vi ) Trade Secrets and any rights therein and thereto and ( vii ) all other intellectual property rights.

 

Intellectual Property Agreements ” means the Intellectual Property License Agreement between SVMC and Controlled, the Domain Name Assignment between SVMC and TG LP, the Software Assignment Agreement between SVMC and TG LP, the TruGreen Trademark License Agreement between TG LP, ServiceMaster Limited and SVMC, the Illinois ServiceMaster Trademark License Agreement between ServiceMaster

 

6



 

Brands, LLC, and TG LP, and the Canadian ServiceMaster Trademark License Agreement between SVMC and TG LP, each effective as of the Distribution Date.

 

Intercompany Accounts ” means all accounts receivable and accounts payable between one or more members of the TG Group, on the one hand, and one or more members of the SVM Group, on the other hand.

 

Intercompany Agreements ” means the Ancillary Agreements and the other agreements, arrangements, commitments or understandings, whether or not in writing, between one or more members of the TG Group, on the one hand, and one or more members of the SVM Group, on the other hand.

 

Internal Control Audit and Management Assessments ” has the meaning set forth in Section 7.2.

 

Investment Holding ” means, prior to the Investment Holding Conversion, CDRSVM Investment Holding, Inc., a Delaware corporation, and following the Investment Holding Conversion, CDRSVM Investment Holding, LLC, a Delaware limited liability company.

 

Investment Holding Conversion ” means the conversion of CDRSVM Investment Holding, Inc., a Delaware corporation, into a Delaware limited liability company.

 

JAMS Comprehensive Rules ” has the meaning set forth in Section 11.2(c).

 

JAMS Streamlined Rules ” has the meaning set forth in Section 11.2(c).

 

Joint Litigation Matters ” means any and all Actions in respect of any Shared Transaction Liabilities.

 

LandCare Business ” means the business conducted by TruGreen LandCare, LLC, a Delaware limited liability company, and TruGreen LandCare, a California general partnership (together with TruGreen LandCare, LLC, the “ LandCare Companies ”), under the name “TruGreen LandCare”, ( i ) marketing, selling and providing to customers (other than purchasers of services for single family homes) ( x ) landscaping, design, landscape or lawn maintenance, fertilizing, irrigation and property maintenance, gardening, tree and plant removal, planting and maintenance, irrigation and installation and maintenance of irrigation systems, exterior pest and weed control services, ( y ) snow and ice removal services and ( z ) any other services performed, marketed, promoted, offered for sale, sold, rendered or otherwise commercialized by any of the LandCare Companies prior to the sale thereof by TruGreen Companies L.L.C, and ( ii ) operating two wholesale nurseries in the areas of San Diego, California and Lake Forest, California.

 

7



 

Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement (including, common law), in each case, enacted, promulgated, issued or entered by a Governmental Authority.

 

Liabilities ” or “ Liability ” means with respect to any Person, any and all claims, debts, demands, actions, causes of action, suits, damages, costs, obligations, accruals, accounts payable, reckonings, bonds, indemnities and similar obligations, agreements, promises, guarantees, make whole agreements and similar obligations, and other liabilities and requirements of such Person, including all contractual obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, liquidated or unliquidated, reserved or unreserved, known or unknown, or determined or determinable, whenever arising and including those arising under any law, rule, regulation, Action, threatened or contemplated Action, order or consent decree of any Governmental Authority or any award of any arbitrator or mediator of any kind, and those arising under any Contract, including those arising under this Agreement, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person. For the avoidance of doubt, Liabilities shall include attorneys’ fees, the costs and expenses of all demands, assessments, judgments, settlements and compromises, and any and all other costs and expenses whatsoever reasonably incurred in connection with anything contemplated by the preceding sentence.

 

Marks ” has the meaning set forth in Section 5.5.

 

Materials ” has the meaning set forth in Section 5.5.

 

Notice of Dispute ” has the meaning set forth in Section 11.2(b).

 

Other Businesses ” means termite and pest control services primarily under the Terminix brand name, home service contracts and preventative maintenance contracts primarily under the American Home Shield brand name, residential and commercial disaster restoration, janitorial and cleaning services through franchises primarily under the ServiceMaster and ServiceMaster Clean brand names, on-site wood furniture repair and restoration services primarily under the Furniture Medic brand name, home inspections services primarily under the AmeriSpec brand name, home cleaning services primarily under the Merry Maids brand name and financing services to franchisees.

 

Overlapping Fiscal Year ” has the meaning set forth in Section 7.1(a).

 

Party ” or “ Parties ” has the meaning set forth in the preamble.

 

Person ” means any individual, partnership, firm, corporation, limited liability company, association, trust, joint venture, unincorporated organization, other entity or

 

8



 

Governmental Authority, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

 

PLR ” has the meaning set forth in Section 3.2(a)(iii).

 

Policies ” has the meaning set forth in Section 8.1(d).

 

Rating Agency ” means Moody’s Investors Service, Inc., Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., Fitch, Inc., any of their successors, or any nationally recognized statistical rating organizations registered with the SEC.

 

Record Date ” means 6:00 p.m. Eastern Standard Time on January     , 2014.

 

Records ” means documents, files and other books and records, including, books and records relating to financial reporting, internal audit, employee benefits, past acquisition or disposition transactions, Actions, and email files and backup tapes regarding any of the foregoing.

 

Representatives ” means directors, officers, employees, agents, consultants, accountants, attorneys and any other advisors, including, representatives of the foregoing.

 

Restricted Employee ” has the meaning set forth in Section 6.9(a).

 

SEC ” means the Securities and Exchange Commission.

 

Securities Act ” means the Securities Act of 1933, as amended from time to time, together with the rules and regulations promulgated thereunder.

 

Shared Privileges ” has the meaning set forth in Section 6.8(d).

 

Shared Transaction Liabilities ” means the Transaction Liabilities other than the SVM Transaction Liabilities and TG Transaction Liabilities.

 

Software ” means any and all ( i ) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, ( ii ) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons and ( iii ) all documentation including user manuals and other training documentation relating to any of the foregoing.

 

Steps Memorandum ” means the steps memorandum, dated January 10, 2014, previously circulated among the Parties.

 

9



 

Subsidiary ” means, with respect to any Person, any entity of which securities or other ownership interests ( i ) having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions or ( ii ) representing at least fifty percent of such securities or ownership interests are at the time directly or indirectly owned by such Person.

 

SVM Accounts ” has the meaning set forth in Section 2.3.

 

SVM Assumed Liabilities ” means, without duplication,

 

(i)                                      any and all Liabilities of members of the TG Group as and to the extent relating to, arising out of, or resulting from ( A ) the SVM Business or ( B ) any SVM Business Assets and any former Assets of any member of the SVM Group or any of its predecessors (other than Liabilities expressly allocated to the TG Group pursuant to the Ancillary Agreements);

 

(ii)                                   any and all Liabilities of members of the TG Group as and to the extent relating to, arising out of, or resulting from the LandCare Business as operated prior to April 29, 2011;

 

(iii)                                any and all Liabilities of members of the TG Group relating solely to Actions listed on Schedule 1.1(b) and related to the TG Business Assets, the TG Liabilities or the TG Business; and

 

(iv)                               SVM Assumed Transaction Liabilities.

 

SVM Assumed Transaction Liabilities ” means

 

(i)                                      SVM Transaction Liabilities; and

 

(ii)                                   50% of Shared Transaction Liabilities.

 

SVM Business ” means ( i ) the businesses and operations of any member of the SVM Group and ( ii ) any terminated, divested or discontinued businesses and operations of any member of the SVM Group or any of its predecessors, in each case, other than the TG Business .

 

SVM Business Assets ” means, without duplication, any and all Assets of the SVM Group and the TG Group, other than the TG Business Assets.

 

SVM Group ” means, collectively, Distributing and all of its Subsidiaries other than members of the TG Group.

 

SVM Indemnified Party ” has the meaning set forth in Section 10.2.

 

10



 

SVM Liabilities ” means, without duplication,

 

(i)                                      all and all Liabilities of members of the SVM Group, after giving effect to the Ancillary Agreements (other than any TG Assumed Liabilities); and

 

(ii)                                   the SVM Assumed Liabilities.

 

SVM Litigation Matters ” means any and all Actions that are primarily related to the SVM Business Assets, the SVM Liabilities or the SVM Business, but excluding any Joint Litigation Matters.

 

SVM Public Filings ” has the meaning set forth in Section 7.1(c).

 

SVM Services ” has the meaning set forth in Section 6.9(b).

 

SVM Transaction Liabilities ” means 100% of Transaction Liabilities arising from, relating to, or derivative of any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case relating to the SVM Group contained in ( x ) the TG Information Statement, ( y ) other disclosure made to the stockholders of Distributing, or ( z ) any filings made with the SEC in connection with the Transactions.

 

SVM Transferred Assets ” means any and all Assets of the TG Group that are SVM Business Assets.

 

SVMC ” means, prior to the SVMC Conversion, The ServiceMaster Company, a Delaware corporation, and following the SVMC Conversion, means The ServiceMaster Company, LLC, a Delaware limited liability company.

 

SVMC Board ” means the board of directors of SVMC.

 

SVMC Conversion ” means the merger of SVMC with and into The ServiceMaster Company, LLC, a wholly-owned Delaware limited liability company, with The ServiceMaster Company, LLC surviving.

 

Tax ” or “ Taxes ” has the meaning set forth in the Tax Matters Agreement.

 

Tax Matters Agreement ” means the Tax Matters Agreement, effective as of the Distribution Date, by and between Distributing, SVMC, Controlled and TG LP, in the form attached hereto as Exhibit B .

 

TG Accounts ” has the meaning set forth in Section 2.3.

 

TG Assumed Liabilities ” means, without duplication,

 

11



 

(i)                                      any and all Liabilities of members of the SVM Group as and to the extent relating to, arising out of, or resulting from ( A ) the TG Business, or ( B ) any TG Business Assets and any former Assets of any member of the TG Group or any of its predecessors, in each case, other than the SVM Assumed Liabilities; and

 

(i)                                      the TG Assumed Transaction Liabilities.

 

TG Assumed Transaction Liabilities ” means

 

( i )                                      TG Transaction Liabilities; and

 

( ii )                                   50% of the Shared Transaction Liabilities.

 

TG Business ” means the lawn, tree and shrub care services primarily under the TruGreen brand name, but excluding the LandCare Business.

 

TG Business Assets ” means, without duplication,

 

(ii)                                   all of the issued and outstanding capital stock or other equity interests of members of the TG Group, other than Controlled;

 

(iii)                                any and all Assets of the TG Group after giving effect to Ancillary Agreements; and

 

(iv)                               TG Transferred Assets.

 

TG Consulting Agreement ” means the consulting agreement, effective as of the Distribution Date, by and among Clayton, Dubilier & Rice, LLC, Controlled and TG LP.

 

TG Financial Statements ” has the meaning set forth in Section 7.1(b).

 

TG Group ” means, collectively, Controlled, the TG Operating Entities and all other Subsidiaries of Controlled.

 

TG Indemnified Party ” has the meaning set forth in Section 10.3.

 

TG Information Statement ” means the Information Statement, dated December 20, 2013, of Distributing and Controlled, relating to the Transactions.

 

TG Indemnification Agreement ” means the Indemnification Agreement, effective as of the Distribution Date, by and among Clayton, Dubilier & Rice, LLC, certain investment funds managed by Clayton, Dubilier & Rice, LLC that are stockholders of Distributing, Controlled and TG LP.

 

12



 

TG Liabilities ” means, without duplication,

 

(i)                                      any and all Liabilities of members of the TG Group after giving effect to the Ancillary Agreements, other than the SVM Assumed Liabilities; and

 

(ii)                                   the TG Assumed Liabilities.

 

TG Litigation Matters ” means any and all Actions primarily related to the TG Business Assets, the TG Liabilities or the TG Business, but excluding any Joint Litigation Matters.

 

TG LP ” has the meaning set forth in the preamble.

 

TG Operating Entities ” means ( i ) TruGreen, Inc., a Delaware corporation, ( ii ) TruGreen Companies, L.L.C., a Delaware limited liability company, ( iii ) TG LP, ( iv ) GreenLawn, Ltd., a Canadian limited company and ( v ) GreenLawn International Holdings, LLC, a Delaware limited liability company.

 

TG Operating Entities Contribution ” has the meaning set forth in Section 2.1(b).

 

TG Pro Forma Balance Sheet ” means the pro forma combined balance sheet of the TG Group, including the notes thereto, as of September 30, 2013, included in the TG Information Statement.

 

TG Registration Rights Agreement ” means the Registration Rights Agreement, effective as of the Distribution Date, by and among Controlled and certain stockholders of Controlled party thereto.

 

TG Services ” means any ( i ) landscape maintenance services (including mowing and trimming, mulching, edging, pruning, leaf removal and planting), but excluding sales and services relating to irrigation management systems involving “UgMO” or similar or analogous technologies, ( ii ) landscape enhancement, design and build (e.g. construction) and hardscaping services and ( iii ) snow and ice removal services (including sanding and salting services, but excluding providing ice melt products or services).

 

TG Transaction Liabilities ” means 100% of Transaction Liabilities arising from, relating to, or derivative of any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be state therein or necessary to make the statements therein not misleading, in each case relating to the TG Group contained in ( x ) the TG Information Statement, ( y ) other disclosure made to the stockholders of Distributing, or ( z ) any filings made with the SEC in connection with the Transactions.

 

TG Transferred Assets ” means, without duplication,

 

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(i)                                      any and all tangible personal property of the SVM Group located at the locations set forth in Schedule 1.1(c) and used primarily by the TG Business;

 

(ii)                                   any and all TG Transferred Intellectual Property Assets;

 

(iii)                                any and all Assets of the SVM Group with respect to Information primarily relating to the TG Business;

 

(iv)                               any and all Assets of either Group with respect to the TG Litigation Matters;

 

(v)                                  subject to Section 5.3, any and all Contracts of the SVM Group necessary to operate and manage the TG Business and used primarily by the TG Business; and

 

(vi)                               any and all other Assets of the SVM Group as of the Distribution Effective Time ( A ) reflected on the TG Pro Forma Balance Sheet, or ( B ) if acquired by either Group after the date of the TG Pro Forma Balance Sheet, are of a nature or type that would have been reflected on the combined balance sheet of Controlled if such balance sheet were prepared as of the time of the Business Separation using the same principles and accounting policies under which the TG Pro Forma Balance Sheet was prepared, to the extent used primarily in the operation of the TG Business (it being understood that ( x ) the TG Pro Forma Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of TG Business Assets pursuant to this subclause (ii); and ( y ) the amounts set forth on the TG Pro Forma Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amounts of such Assets that shall be included in the definition of TG Business Assets pursuant to this subclause (vi)).

 

TG Transferred Intellectual Property Assets ” means all Intellectual Property owned by the SVM Group, including rights and remedies in respect of infringements, that are primarily used or practiced, or primarily held for use or held for practice, in connection with the TG Business, together with all Intellectual Property rights included in clauses (i) and (iii)-(iv) of the definition of the TG Transferred Assets, and all license agreements primarily for the benefit of the TG Business (including licenses from or to Third Parties in respect of Intellectual Property).

 

Third Party ” means any Person that is not a Party or an Affiliate of any Party.

 

Third Party Claim ” has the meaning set forth in Section 10.8(a).

 

Third Party Proceeds ” has the meaning set forth in Section 10.5(a).

 

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Trade Secrets ” means all inventions, processes, designs, formulae, models, tools, algorithms, trade secrets, know-how, ideas, research and development, data, databases and confidential information.

 

Transaction Liabilities ” means any and all Liabilities arising from, relating to, or derivative of any Action, whether commenced prior to, on or subsequent to the Distribution Effective Time, with respect to the Transactions, made or brought by any Person against any member of either Group, including, any and all Liabilities under applicable Laws (including, federal and state securities Laws) arising from, relating to, or derivative of any Action relating to any public disclosure or disclosure to the holders of Distributing Common Stock (or absence of such disclosure) at or prior to the Distribution Effective Time by any member of either Group in connection with the Transactions.

 

Transactions ” means, collectively, the Business Separation and the Distribution and any other transactions contemplated by this Agreement and the Ancillary Agreements.

 

Transfer Impediment ” has the meaning set forth in Section 5.3(a).

 

Transition Services Agreement ” means the Transition Services Agreement, effective as of the Distribution Date, by and between SVMC and TG LP, in the form attached hereto as Exhibit C .

 

Unreleased Liability ” has the meaning set forth in Section 5.2.

 

Unreleased Person ” has the meaning set forth in Section 5.2.

 

ARTICLE II

 

THE BUSINESS SEPARATION

 

Section 2.1                                     Business Separation .  On the terms and subject to the conditions set forth in this Agreement, prior to the Distribution (but subject to Section 5.2 with respect to Unreleased Liabilities and Section 5.3 with respect to Deferred Transfer Assets and Deferred Transferred Liabilities), the transactions set forth in this Section 2.1 (collectively, the “ Business Separation ”) shall take place in the order provided below:

 

(a)                                  Initial Reorganization .  Distributing and SVMC shall cause the Initial Reorganization to be consummated pursuant to and in accordance with the order set forth in the Steps Memorandum.

 

(b)                                  Transfer of Assets and Assumption of Liabilities . Immediately following the transactions set forth in Section 2.1(a), to the extent not previously effected pursuant to the Initial Reorganization,

 

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(i)                                      The applicable members of the SVM Group shall assign, transfer, convey and deliver to SVMC, and SVMC shall assign, transfer, convey and deliver to the applicable members of the TG Group, the SVM Group’s right, title and interest in and to all of the TG Transferred Assets, and Controlled (or other applicable members of the TG Group) shall accept, assume and agree to perform, discharge and fulfill all TG Assumed Liabilities in accordance with their respective terms; and

 

(ii)                                   Each member of the TG Group shall assign, transfer, convey and deliver, indirectly or directly, to SVMC all of such member’s right, title and interest in and to the SVM Transferred Assets, and SVMC (or other applicable members of the SVM Group) shall accept, assume and agree to perform, discharge and fulfill all the SVM Assumed Liabilities in accordance with their respective terms.

 

(c)                                   TG Operating Entities Contribution .  Immediately following the transactions set forth in Sections 2.1(a) and (b), SVMC shall contribute all of its right, title and interest in and to all of the issued and outstanding equity interests of the TG Operating Entities to Controlled in exchange for Controlled Common Stock (together with any other contribution to Controlled contemplated by this Agreement, the “ TG Operating Entities Contribution ”).

 

(d)                                  Internal Spin .  Immediately following the transactions set forth in Sections 2.1(a), (b) and (c), ( i ) SVMC shall distribute all the issued and outstanding Controlled Common Stock to Holding, ( ii ) upon receipt of the foregoing distribution, Holding shall distribute all Controlled Common Stock to Investment Holding, and ( iii ) upon receipt of the foregoing distribution, Investment Holding shall distribute all Controlled Common Stock to Distributing; provided that in each case, the Board of such Person shall have given its final approval of such distribution by such Person and all related transactions (and such approval shall not have been withdrawn, whether before or after declaration of such distribution), and such Board shall have declared such distribution by such Person, in each case, in its sole and absolute discretion.

 

Each Person required pursuant to this Section 2.1 to assume any Liability shall accept, assume, perform, discharge and fulfill such Liability in accordance with its terms, regardless of ( i ) when or where such Liabilities arose or arise, ( ii ) whether the facts upon which they are based occurred prior to, on or subsequent to the Distribution, ( iii ) where or against whom such Liabilities are asserted or determined and ( iv ) whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the SVM Group or the TG Group, as the case may be, or any of their past or present respective directors, officers, employees, agents, Subsidiaries or Affiliates.

 

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Section 2.2                                     Intercompany Agreements .

 

(a)                                  Contemporaneously with the transactions set forth in Section 2.1(b)(i), to the extent not previously effected pursuant to the Initial Reorganization , except as set forth in Section 2.2 (b), in furtherance of the releases and other provisions of Section 10.1, each of Controlled and TG LP, on behalf of itself and each other member of its Group, on the one hand, and each of Distributing and SVMC, on behalf of itself and each other member of its Group, on the other hand, shall terminate, effective as of the Distribution Effective Time, any and all Intercompany Agreements in effect as of the Distribution Date and shall settle, or cause to be settled, all Intercompany Accounts on or prior to the Distribution Effective Time.  No such terminated Intercompany Agreements (including any provision thereof that purports to survive termination) shall be of any further force or effect after the Distribution Effective Time. Each Party shall, at the reasonable request of any Party of the other Group, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

 

(b)                                  The provisions of Section 2.2 (a) shall not apply to any of the following Intercompany Agreements (or to any of the provisions thereof) or Intercompany Accounts: ( i ) this Agreement and the Ancillary Agreements (and each other Intercompany Agreement or Intercompany Account expressly contemplated to survive hereby or thereby, including the Implementation Documents), ( ii ) any outstanding Intercompany Agreements between Steward Insurance Company and any member of the TG Group and ( iii ) any outstanding intercompany trade receivables or payables incurred in the ordinary course of business that are reflected in the books and records of the Parties or otherwise documented in writing in accordance with past practices.

 

Section 2.3                                     Bank Accounts; Cash Balances .  On or prior to the Distribution Effective Time,

 

(a)                                  Each Party agrees to take, or cause members of its Group to take, all actions necessary to amend all contracts or agreements governing each bank and brokerage account owned by any member of the TG Group (collectively, the “ TG Accounts ”) so that such TG Accounts, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account owned by any member of the SVM Group (collectively, the “ SVM Accounts ”), are de-linked from the SVM Accounts.

 

(b)                                  Each Party agrees to take, or cause members of its Group to take, all actions necessary to amend all agreements governing the SVM Accounts so that such SVM Accounts, if currently linked to a TG Account, are de-linked from such TG Account.

 

Section 2.4                                     Resignation .   On or prior to the Distribution Effective Time,

 

(a)                                  Distributing shall deliver to Controlled the resignation or evidence of removal, effective as of the Distribution Effective Time, of ( i ) each Person who is an

 

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officer or a director of any member of the TG Group immediately prior to the Distribution Effective Time and who will be an employee or officer of any member of the SVM Group immediately after the Distribution Effective Time and ( ii ) Kenneth A. Giuriceo as director of Distributing.

 

(b)                                  Controlled shall deliver to Distributing the resignation or evidence of removal, effective as of the Distribution Effective Time, of each Person who is an officer or a director of any member of the SVM Group immediately prior to the Distribution Effective Time and who will be an employee or officer of any member of the TG Group immediately after the Distribution Effective Time.

 

ARTICLE III

 

CONDITIONS TO DISTRIBUTION

 

Section 3.1                                     Sole Discretion of Distributing .  Notwithstanding anything to the contrary set forth in this Agreement or in any Ancillary Agreement, until the Distribution Effective Time,

 

(a)                                  Distributing shall have the sole discretion to determine the Record Date, the Distribution Date and any and all terms of the Distribution, including the form, structure and terms of any transaction(s) or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution; and

 

(b)                                  Distributing, in its sole and absolute discretion, may at any time and from time to time, decide to abandon the Distribution, or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of the Distribution.

 

Section 3.2                                     Conditions to Distribution .

 

(a)                                  The Conditions .  The obligation of Distributing to consummate the Distribution is subject to the prior or simultaneous satisfaction, or waiver by Distributing, in its sole and absolute discretion, of each of the following conditions:

 

(i)                                The Distributing Board shall have given its final approval of the Distribution and all related transactions (and such approval shall not have been withdrawn, whether before or after declaration of the Distribution), and the Distributing Board shall have declared the Distribution, in each case, in its sole and absolute discretion;

 

(ii)                             the Business Separation and the other transactions contemplated by Article II shall have been consummated in accordance with this Agreement and the Implementation Documents;

 

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(iii)                          Distributing shall have received a private letter ruling from the Internal Revenue Service which, together with all supplements (the “ PLR ”), is in a form satisfactory to Distributing in its sole and absolute discretion, to the effect that, among other things, the TG Operating Entities Contribution and Distribution will qualify for non-recognition of gain or loss to Distributing and its stockholders under Sections 368(a)(1)(D) and 355 of the Code, and such PLR, as so supplemented, shall not have been revoked or materially amended;

 

(iv)                         Distributing shall have received an opinion from Debevoise & Plimpton LLP, in form and substance satisfactory to Distributing in its sole and absolute discretion, that, subject to the accuracy of and compliance with certain representations, assumptions and covenants, the TG Operating Entities Contribution and the Distribution will qualify for non-recognition of gain or loss to Distributing and its stockholders pursuant to Sections 368(a)(1)(D) and 355 of the Code;

 

(v)                            the Ancillary Agreements shall have been duly executed and delivered and such agreements shall be in full force and effect and the parties thereto shall have performed or complied with all of their respective covenants, obligations and agreements contained herein and therein and as required to be performed or complied with prior to the Distribution;

 

(vi)                         the TG Information Statement shall have been delivered to the Persons who are holders of Distributing Common Stock as of the close of business on the Record Date (the “ Distributing Record Holders ”), which for purposes of this Section 3.2(vi) includes electronic delivery where not prohibited by Law;

 

(vii)                      the actions and filings necessary or appropriate under applicable federal and state securities laws and state blue sky laws of the U.S. (and any comparable Laws under any foreign jurisdictions) in connection with the Distribution (including, if applicable, any actions and filings relating to the Information Statement) shall have been taken, and, where applicable, have become effective or been accepted, each as the case may be;

 

(viii)                   the certificate of incorporation and the by-laws of Controlled shall be amended and restated to, among other things, include certain transfer restrictions;

 

(ix)                         the Existing Distributing Stockholders Agreement shall be amended and restated to, among other things, include certain transfer restrictions contemplated by the PLR;

 

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(x)                            the Controlled Stockholders Agreement, the TG Consulting Agreement, the TG Registration Rights Agreement and the TG Indemnification Agreement shall have been duly executed and delivered and shall be in full force and effect;

 

(xi)                         the Parties shall take, or cause to be taken, all necessary actions so that, as of the Distribution Date, the officers and directors of Controlled will be as set forth in the TG Information Statement;

 

(xii)                      no order, injunction or decree issued by any Governmental Authority or other legal restraint or prohibition, which, if in effect, would prevent the consummation of the Transactions, materially limit the benefits of the Transactions for Distributing and its stockholders, or otherwise make the consummation of the Transactions inadvisable as determined by the Distributing Board, shall have been threatened or be in effect; and

 

(xiii)                   no other events or developments shall have occurred, or failed to occur, subsequent to the date of this Agreement that, in the judgment of the Distributing Board, would prevent the consummation of the Transactions, materially limit the benefits of the Transactions for Distributing and its stockholders, or otherwise make the consummation of the Transactions inadvisable as determined by the Distributing Board.

 

(b)                                  Conditions for the Sole Benefit of Distributing .  Each of the foregoing conditions is for the sole benefit of Distributing and not for the benefit of any other Person and shall not give rise to or create any duty on the part of Distributing or the Distributing Board to waive or not waive any such condition or in any way limit Distributing’s right to terminate this Agreement as set forth in Article XIII or alter the consequences of any such termination from those specified in Article XIII.  Distributing may, in its sole and absolute discretion, determine whether to waive any such condition. Any determination made by Distributing, in its sole and absolute discretion, prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.2 shall be conclusive and binding on the Parties.

 

ARTICLE IV

 

DISTRIBUTION

 

Section 4.1                                     Distribution .  Upon the terms and subject to the conditions of this Agreement, on the Distribution Date, Distributing shall distribute to each Distributing Record Holder, one share of Controlled Common Stock for each share of Distributing Common Stock held by such Distributing Record Holder on the Record Date (the “ Distribution ”).

 

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ARTICLE V

 

GENERAL PROVISIONS

 

Section 5.1                                     Implementation Documents .  In order to effectuate the transactions contemplated in this Agreement, each of SVMC and Controlled and the applicable members of their respective Groups shall execute and deliver, or cause to be executed and delivered, such deeds, bills of sale, instruments of assumption, instruments of assignment, stock powers, certificates of title and other instruments of assignment, transfer, contribution, assumption, license and conveyance (collectively, the “ Implementation Documents ”) as and to the extent necessary to effect such transactions.

 

Section 5.2                                     Unreleased Liabilities .   If at any time after the Distribution Effective Time, any member of the SVM Group shall remain obligated to any Third Party in respect of any TG Liability or any member of the TG Group shall remain obligated to any Third Party in respect of any SVM Liability, in each case, as guarantor, assignor, original tenant, primary obligor or otherwise, the following provisions shall apply.  Any Liability referred to in this Section 5.2 is hereinafter referred to as an “ Unreleased Liability ” and any Person remaining obligated for such Liability is hereinafter referred to as an “ Unreleased Person ”.

 

(a)                                  Nothing in this Agreement shall release any Unreleased Person with respect to any obligation to any applicable Third Party for such Unreleased Liability to the extent provided in the relevant Contract, applicable Law or other source of such Unreleased Liability; provided , that such Unreleased Person shall be entitled to indemnification pursuant to Section 10.4.

 

(b)                                  The Parties shall continue on and after the Distribution Effective Time to use reasonable efforts to cause each Unreleased Person to be released from each of its Unreleased Liabilities.

 

(c)                                   If, as and when it becomes possible to delegate, novate or extinguish any Unreleased Liability in favor of an Unreleased Person, the relevant Party shall, promptly execute and deliver, or cause to be promptly executed and delivered, all such documents and perform all such other acts, as may be necessary or desirable to give effect to such delegation, novation, extinction or other release without payment of any further consideration by the Unreleased Person.

 

Section 5.3                                     Deferred Transfers .

 

(a)                                  If and to the extent that the transfer, assignment or novation to the TG Group of any TG Business Assets or TG Liabilities, or to the SVM Group of any SVM Business Assets or SVM Liabilities, would be a violation of applicable Law or require any Consent or Governmental Approval or the fulfillment of any condition that cannot be

 

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fulfilled by the applicable member of the TG Group or the SVM Group (the “ Transfer Impediments ,” which for the avoidance of doubt, shall not include purely monetary condition to the extent the necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the applicable transferee), then the transfer, assignment or novation to the transferee or assignee of such TG Business Assets or TG Liabilities or SVM Business Assets or SVM Liabilities shall be automatically deemed deferred and any such purported transfer or assignment shall be null and void until such time as all Transfer Impediments have been removed.  Any such Liability shall be deemed a “ Deferred Transfer Liability ” and any such Asset shall be deemed a “ Deferred Transfer Asset .”

 

(b)                                  If the transfer or assignment of any Deferred Transfer Asset or assumption of any Deferred Transfer Liability is not consummated prior to or at the Distribution Effective Time, whether as a result of the provisions of Section 5.3(a) or for any other reason, then, insofar as reasonably possible, ( i ) the Person retaining such Deferred Transfer Asset shall thereafter hold such Deferred Transfer Asset for the use and benefit of the Person entitled thereto (at the expense of the Person entitled thereto) and ( ii ) the Person intended to assume such Deferred Transfer Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Person retaining such Deferred Transfer Liability for all amounts paid or incurred in connection with the retention of such Deferred Transfer Liability.  In addition, the Person retaining such Deferred Transfer Asset shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Asset in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the Person to which such Deferred Transfer Asset is to be transferred in order to place such Person, insofar as reasonably possible, in the same position as if such Deferred Transfer Asset had been transferred as contemplated hereby and so that all the benefits and burdens relating to such Deferred Transfer Asset, including, possession, use, risk of loss, potential for gain, and dominion, control and command over such Deferred Transfer Asset, are to inure from and after the Distribution Effective Time to the member or members of the TG Group or the SVM Group entitled to the receipt of such Deferred Transfer Asset.

 

(c)                                   If and when all Transfer Impediments, which caused the deferral of transfer of any Deferred Transfer Asset or Deferred Transfer Liability pursuant to Section 5.3(a), are removed, the transfer, assignment or novation of the applicable Deferred Transfer Asset or Deferred Transfer Liability shall be effected promptly in accordance with and subject to the terms of this Agreement and any applicable Ancillary Agreement or Implementation Document.

 

(d)                                  The Person retaining any Deferred Transfer Asset or Deferred Transfer Liability due to the deferral of the transfer or assignment of such Deferred Transfer Asset or the deferral of the assumption of such Deferred Transfer Liability pursuant to Section 5.3(a) or otherwise shall continue on and after the Distribution Effective Time to use commercially reasonable efforts to remove all Transfer Impediments; provided , that such

 

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Person shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the Person entitled to such Deferred Transfer Asset or the Person intended to be subject to such Deferred Transfer Liability.

 

(e)                                   Any Deferred Transfer Asset shall be deemed to have been contributed, distributed, assigned, transferred, conveyed, licensed or delivered pursuant to this Section 5.3 at the time such transfer should have occurred pursuant to Section 2.1(b) in the absence of the Transfer Impediments upon its actual contribution, distribution, assignment, transfer, conveyance, license or delivery to the applicable Group as contemplated in Section 5.3.  Any Deferred Transfer Liability shall be deemed to have been accepted or assumed pursuant to this Section 5.3 at the time such assumption should have occurred pursuant to Section 2.1 in the absence of the Transfer Impediments upon its actual acceptance or assumption by the applicable Group as contemplated in Section 5.3.

 

(f)                                    Any Deferred Transfer Asset or Deferred Transfer Liability shall be treated, for all Tax purposes, as ( i ) owned by the Person to which such Asset was intended to be transferred or by the Person which was intended to assume such Liability, as the case may be, from and after the Distribution Effective Time, ( ii ) having not been owned by the Person retaining such Asset or Liability, as the case may be, at any time from and after the Distribution Effective Time and ( iii ) having been held by the Party retaining such Asset or Liability, as the case may be, only as agent or nominee on behalf of the other Person from and after the Distribution Effective Time until the date such Asset or Liability, as the case may be, is transferred to or assumed by such other Person. The Parties shall not, and shall cause members of their respective Groups not to, take any position inconsistent with the foregoing unless otherwise required by applicable Law (in which case, such Parties shall provide indemnification for any Taxes attributable to the Asset or Liability during the period beginning on the Distribution Date and ending on the date of the actual transfer).

 

Section 5.4                                     Transfers of Assets or Liabilities Following the Distribution .  Subject to Section 5.3, if at any time on or after the Distribution Effective Time, any member of the SVM Group or the TG Group shall receive or otherwise possess any Asset or incur any Liability that is allocated to a member of the other Group pursuant to this Agreement or an Ancillary Agreement, such Person shall, in accordance with the terms hereof, promptly transfer, or cause to be transferred, such Asset or Liability to the Person so entitled thereto or responsible therefor, and such other Person shall accept or assume, or cause to be accepted or assumed, such Asset or Liability (for no further consideration other than that set forth in this Agreement or such Ancillary Agreement).  Prior to such transfer, such Asset or Liability shall be held in the same manner as Deferred Transfer Assets or Deferred Transfer Liabilities shall be held in accordance with Section 5.3.

 

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Section 5.5                                     Corporate Names; Trademarks .  Except as specifically provided in the Ancillary Agreements, after the Distribution Effective Time, no member of one Group may use any trademark, service mark, trade dress, Internet domain name, logo or other source identifier (collectively, the “ Marks ”) owned by any member of the other Group, except as permitted under applicable Law or subsequent agreement in writing between the applicable parties.  Notwithstanding the foregoing sentence, any member of one Group may utilize existing stationery, business cards, signage, websites, advertising materials, inventory, packaging, product, service and training literature, and other similar materials bearing the Marks of the other Group member (“ Materials ”) following the Distribution Effective Time in the conduct of the Business as currently conducted until the existing supply of such items is depleted or until 180 days following the Distribution Effective Time, whichever occurs first.  Subject to the foregoing sentence, on or prior to the date that is 180 days following the Distribution Effective Time, the other Group member shall destroy all Materials in its possession and send a written statement to the other Group member confirming that such Group member has exhausted or destroyed all such Materials.  Notwithstanding the foregoing, nothing in this Section 5.5 shall preclude such Group member from making any reference to the Marks of the other Group member in internal historical, tax, employment or similar records or for purposes of prospectus and similar disclosures as are reasonably necessary and appropriate to describe the historical relationship of the Parties.  The foregoing permitted uses are subject to ( x ) compliance by the applicable Group member with the reasonable quality control requirements and guidelines in effect for the Marks of the other Group member as of the Distribution Effective Time and ( y ) to the extent reasonably practicable, the placement of a reasonably appropriate disclaimer on such Materials identifying in a readily observable manner that the Group members are no longer Affiliates of each other.  Notwithstanding the foregoing nor anything in the Ancillary agreements to the contrary, no member of one Group shall be required to take any action to remove any reference to any Mark of a member of the other Group from ( a ) products bearing the Marks of the other Group Member that have already been placed on the market as of the Distribution Effective Time or ( b ) Materials already in the rightful possession of customers or other Third Parties prior to the depletion of such Materials or as of the date that is 180 days following the Distribution Effective Time, whichever comes first.  If, after the date that is 180 days following the Distribution Effective Time, a member of any Group discovers the use of any Marks of another Group on its website, such Group members shall notify the other Group members and shall remove all use of such Mark of the other Group member within seven days.

 

Section 5.6                                     Domain Names .   If a member of one Group, following the Distribution Effective Time, becomes aware of any domain name registration owned by a member of another Group that includes or incorporates any Marks owned by such other Group, the member of such Group shall promptly notify the other Group member of the existence of such domain name registration and, upon such Group member’s request,

 

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shall assign and transfer all right, title and interest in or to such domain name registration to such Group member.

 

Section 5.7                                     Certain Matters Governed Exclusively by Ancillary Agreements .

 

(a)                                  Effective on the Distribution Date, the Parties shall, and shall cause applicable members of their respective Groups to, execute and deliver the Ancillary Agreements.

 

(b)                                  Each Party agrees on behalf of itself and members of its Group that, except as otherwise expressly provided for in this Agreement or any Ancillary Agreement, ( i the Tax Matters Agreement shall exclusively govern all matters relating to Taxes between such parties , ( ii ) the Employee Matters Agreement shall exclusively govern all matters relating to the separation of employees and other employee-related matters identified therein between such parties and ( iii ) the other Ancillary Agreements shall exclusively govern those matters subject to such agreements.

 

Section 5.8                                     Disclaimer of Representations and Warranties .

 

(a)                                  Each of Distributing and SVMC (on behalf of itself and each member of its Group) understands and agrees that, except as expressly set forth in any Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement, any Ancillary Agreement or otherwise, is representing or warranting in any way as to the SVM Business Assets or SVM Liabilities transferred, assumed or retained as contemplated hereby or thereby, as to any Consents or Governmental Approvals required in connection therewith, as to the value or freedom from any Encumbrances of, or any other matter concerning, any SVM Business Asset or SVM Liability, or as to the absence of any defense or right of setoff or freedom from counterclaim with respect to any claim or other SVM Business Asset, including, any accounts receivable of any party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any SVM Business Asset or thing of value upon the execution, delivery and filing hereof or thereof.

 

(b)                                  Each of Controlled and TG LP (on behalf of itself and each member of its Group) understands and agrees that, except as expressly set forth in any Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement, any Ancillary Agreement or otherwise, is representing or warranting in any way as to the TG Business Assets or TG Liabilities transferred, assumed or retained as contemplated hereby or thereby, as to any Consents or Governmental Approvals required in connection therewith, as to the value or freedom from any Encumbrances of, or any other matter concerning, any TG Business Asset or TG Liability, or as to the absence of any defense or right of setoff or freedom from counterclaim with respect to any claim or other TG Business Asset, including, any accounts receivable of any party, or as to the legal sufficiency of any assignment,

 

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document or instrument delivered hereunder or thereunder to convey title to any TG Business Asset or thing of value upon the execution, delivery and filing hereof or thereof.

 

(c)                                   EXCEPT AS MAY EXPRESSLY BE SET FORTH IN ANY ANCILLARY AGREEMENT, EACH PARTY (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF ITS GROUP) UNDERSTANDS AND AGREES THAT ALL ASSETS TRANSFERRED PURSUANT TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT ARE BEING TRANSFERRED “AS IS, WHERE IS.”  EXCEPT AS MAY EXPRESSLY BE SET FORTH IN ANY ANCILLARY AGREEMENT, NONE OF THE PARTIES OR ANY OF THEIR AFFILIATES MAKE ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND EACH PARTY (ON BEHALF OF ITSELF AND ITS AFFILIATES) HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO ANY ASSET TRANSFERRED PURSUANT TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, INCLUDING, ANY WARRANTY OF CONDITION, MERCHANTABILITY, ACCURACY, SATISFACTORY QUALITY, NONINFRINGEMENT, OR FITNESS FOR ANY PARTICULAR PURPOSE.

 

ARTICLE VI

 

CONFIDENTIALITY; EXCHANGE OF INFORMATION; NON-SOLICITATION

 

Section 6.1                                     Agreement for Exchange of Information; Archives .

 

(a)                                  Except in the case of an Action or threatened Action by any Person in one Group against any Person in the other Group, and subject to Section 6.1(b), each Party of one Group shall provide, or cause to be provided, to each Party of the other Group or any member of such other Group, at any time before or after the Distribution Effective Time, as soon as reasonably practicable after written request therefor, all Information in the possession or under the control of its Group (and access to employees of its Group during normal business hours and upon reasonable notice in connection with the discussion and explanation of such Information), which any member of such other Group reasonably requests and is necessary ( i ) to comply with reporting, disclosure, filing or other requirements under applicable Law or imposed by any national securities exchange or any Governmental Authority having jurisdiction over such Person, ( ii ) for use in any other Action or in order to satisfy audit, accounting, regulatory, litigation or other similar requirements or ( iii ) to comply with its obligations under this Agreement or any Ancillary Agreement. The receiving Party shall use any Information received pursuant to this Section 6.1(a) solely to the extent reasonably necessary to satisfy the applicable obligations or requirements described in clause (i), (ii) or (iii) of the immediately preceding sentence.

 

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(b)                                  Subject to the last sentence of this Section 6.1(b), in the event that any Party, as applicable, reasonably determines that the exchange of any Information pursuant to Section 6.1 (a) could be commercially detrimental, violate any Law or agreement or waive or jeopardize any attorney-client privilege or attorney work product protection, such Party shall not be required to provide access to or furnish such Information to any other Party or any member of such other Party’s Group; provided , that the Parties shall take all commercially reasonable measures to permit the compliance with Section 6.1(a) in a manner that avoids any such harm or consequence. The Parties intend that any provision of access to or the furnishing of Information pursuant to this Section 6.1 that would otherwise be within the ambit of any legal privilege shall not operate as waiver of such privilege.

 

(c)                                   Except as otherwise provided in the Ancillary Agreements, any Person in one Group will only process Information about individual customers and/or employees, including, names, addresses, telephone numbers, account numbers, customer lists, and demographic, financial and transaction information, in each case provided by the other Group pursuant to this Section 6.1, in accordance with the privacy policies of Distributing existing as of the Distribution Effective Time and all applicable privacy and data protection law obligations and will implement and maintain at all times appropriate technical and organizational measures to protect such personal data against unauthorized or unlawful processing and accidental loss, destruction, damage, alteration and disclosure. In addition, each Party agrees to provide reasonable assistance to any other Party’s Group in respect of any obligations under privacy and data protection Law affecting the disclosure of such personal data to such other Party’s Group and will not knowingly process such personal data in such a way to cause the other Party’s Group to violate any of its obligations under any applicable Law.

 

(d)                                  Any Party requesting Information from another Party shall reimburse such other Party for the reasonable out of pocket costs and expenses, if any, in complying with a request for Information pursuant to this Article VI.

 

Section 6.2                                     Ownership of Information .  Except as otherwise provided in the Ancillary Agreements, all Information owned by one Group that is provided to the other Group hereunder shall be deemed to remain the property of the providing party and nothing herein shall be construed as granting or conferring rights of license or otherwise in any such Information.

 

Section 6.3                                     Record Retention .

 

(a)                                  To facilitate the possible exchange of Information pursuant to this Article VI and other provisions of this Agreement, except as otherwise expressly provided in any Ancillary Agreement, ( i each Party shall, and shall cause the members of its Group to, use commercially reasonable efforts to retain all Information in accordance with their respective record retention policies and procedures as in effect as

 

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of the Distribution Effective Time and ( ii ) no Party shall destroy, or permit any member of its Group to destroy, any Information which any member of the other Group may have the right to obtain pursuant to this Agreement prior to the earlier of the period in the retention policy of Distributing or the seventh anniversary of the Distribution Date without first notifying the Parties of the other Group of the proposed destruction and giving such other Parties the opportunity to take possession of such Information prior to such destruction.

 

(b)                                  Each of the Parties shall, and shall cause members of its respective Group to, use reasonable efforts to deliver to each Party of the other Group ( i ) on or prior to the Distribution Effective Time, any and all original corporate organizational books that such Party or any member of its Group has in its possession primarily relating to such other Party’s Business, ( ii ) on or prior to the Distribution Effective Time, originals of any and all Records that any member of its Group knowingly has in its possession or control, whether in paper or electronic format, in each case relating primarily to such other Party’s Business, and ( iii ) as soon as reasonably practicable following their discovery, originals of any materials described in (i) and (ii) above which it or any member of its Group discovers are in its possession or control following the Distribution Effective Time; provided , that with respect to clauses (i), (ii) and (iii) of this Section 6.3(b), the Party providing such Records may retain copies of any such Records that relate to its Business, including, corporate minute books and risk management files.

 

Section 6.4                                     Production of Witnesses; Records; Cooperation .

 

(a)                                  After the Distribution Effective Time, but only with respect to a Third Party Claim, each Party shall, and shall cause the other members of its Group to, use commercially reasonable efforts, at its own expense, to, make available, upon written request, their former, current and future directors, officers, employees, other personnel and agents (whether as witnesses or otherwise) and any books, records or other documents within their control or that they otherwise have the ability to make available, to the extent that each such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action or threatened or contemplated Action (including preparation for such Action) in which any Party, as applicable, may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder.

 

(b)                                  The Parties shall use their commercially reasonable efforts to cooperate and consult to the extent reasonably necessary with respect to any Actions or threatened or contemplated Actions involving the other Group, other than an Action against the other Group.

 

(c)                                   The obligation of the Parties to make available former, current and future directors, officers, employees and other personnel and agents or provide witnesses and

 

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experts pursuant to this Section 6.4 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to make available employees and other officers without regard to whether such individual or the employer of such individual could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 6.4(a)). Without limiting the foregoing, each Party agrees that neither it nor any Person or Persons in its respective Group will take any adverse action against any Person of its Group based on such Person’s provision of assistance or information to the other Group pursuant to this Section 6.4 and in accordance with applicable law and Third Party confidentiality obligations .

 

(d)                                  Upon the reasonable request of another Party, each Party shall, and shall cause all other relevant members of its respective Group to, enter into a mutually acceptable common interest agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any member of either Group.

 

Section 6.5                                     Confidential Information .

 

(a)                                  Subject to Section 6.6, each Party shall hold, and shall cause each Person in its respective Group and each of its and their respective Representatives to hold, in strict confidence and not release or disclose, with at least the same degree of care that it applies to Distributing’s own confidential and proprietary information pursuant to policies in effect as of the Distribution Effective Time (but in no event less than a reasonable degree of care), all Information concerning the other Group that is either in its possession (including Information in its possession prior to the Distribution) or furnished by the other Group or its respective Representatives at any time pursuant to this Agreement or any Ancillary Agreement or the transactions contemplated hereby and thereby (any such Information referred to herein as “ Confidential Information ), and shall not use any such Confidential Information other than for such purposes as shall be expressly permitted hereunder or thereunder.  Notwithstanding the foregoing, Confidential Information shall not include Information that is ( i ) in the public domain through no fault of any member of the SVM Group or the TG Group, as applicable, or any of its respective Representatives, ( ii ) later lawfully acquired by any member of the SVM Group or the TG Group, as applicable, or any of its respective Representatives, from other sources not bound by a confidentiality obligation or ( iii ) independently developed by any member of the SVM Group or the TG Group, as applicable, or any of its respective Representatives, without reference to any Confidential Information of the SVM Group or the TG Group, as applicable.  Notwithstanding the foregoing, ( A ) each Party may release or disclose, or permit to be released or disclosed, any such Confidential Information concerning the other Group to their Representatives who need to know such Confidential Information (who shall be advised of the obligations hereunder with respect to such Confidential Information); provided , that the Parties shall be responsible for any breach of this Article  VI by the Representatives of their respective Groups and ( B )

 

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members of either Group may disclose Confidential Information to the extent required to fulfill their SEC filing obligations and shall not be required to comply with the procedures set forth in Section 6.6 with respect to such disclosure.

 

(b)                                  Each Party shall maintain and develop, and shall cause members of its respective Group to maintain and develop, such policies and procedures, necessary or appropriate, to ensure compliance with Section 6.5(a).

 

(c)                                   Without limiting the foregoing, when any Confidential Information concerning the other Group or its business is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, each Party will, and will cause each member of its Group to, promptly after request of another Party of the other Group, either return all Confidential Information in tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the requesting Party, that it has destroyed such Confidential Information (other than electronic copies residing in automatic backup systems or one copy retained to the extent required by law, regulation or a bona fide document retention policy).

 

Section 6.6                                     Protective Arrangement .  If any Party or any member of its Group either determines on the advice of its counsel that it is required to disclose any Confidential Information pursuant to applicable Law or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of any Party of the other Group (or any member of such other Group), such Party required to disclose such Confidential Information shall give such other Party prompt, to the extent legally permitted and reasonably practicable, prior notice of such disclosure and an opportunity to contest such disclosure and shall use commercially reasonable efforts to cooperate, at the expense of the requesting Person, in seeking any reasonable protective arrangements requested by such Person. In the event that such appropriate protective order or other remedy is not obtained, the Person that is required to disclose such Information may furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such Information.

 

Section 6.7                                     Other Agreements Providing for Exchange of Information .  The rights and obligations granted or created under this Article VI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any Ancillary Agreement.

 

Section 6.8                                     Privileged Matters .  To allocate the interests of each Party in the Information as to which any Party is entitled to assert a privilege in connection with professional services that have been provided prior to the Distribution Effective Time for the collective benefit of each of the members of the SVM Group and the members of the TG Group, whether or not such a privilege exists or the existence of which is in dispute, the Parties agree as follows:

 

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(a)                      Distributing and SVMC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates to the SVM Business and, subject to Section 6.8(c), not to the TG Business, whether or not the privileged Information is in the possession of or under the control of members of the SVM Group or the TG Group.  Distributing and SVMC also shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates to any pending or future Action that is, or which Distributing or SVMC reasonably anticipates may become, an SVM Liability and that is not also, or that Distributing or SVMC reasonably anticipates will not become, an TG Liability, whether or not the privileged Information is in the possession of or under the control of members of the SVM Group or the TG Group.

 

(b)                      Subject to Section 6.8(c), Controlled and TG LP shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates to the TG Business and not to the SVM Business, whether or not the privileged Information is in the possession of or under the control of members of the SVM Group or the TG Group.  Controlled and TG LP also shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates to any pending or future Action that is, or which Controlled or TG LP reasonably anticipates may become, an TG Liability and that is not also, or that Controlled or TG LP reasonably anticipates will not become, an SVM Liability, whether or not the privileged Information is in the possession of or under the control of members of the SVM Group or the TG Group.

 

(c)                       Distributing and SVMC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates to the Transactions, it being understood and agreed that the expectation and intention as between the SVM Group and the TG Group with respect to any communications between advisors either Group occurring up to and including the Distribution Date in connection with the Transactions are that the privilege and the expectation of client confidence belong exclusively to Distributing and SVMC.

 

(d)                      Subject to the restrictions in this Section 6.8, the Parties agree that Distributing and SVMC, on behalf of the SVM Group, and Controlled and TG LP, on behalf of the TG Group, shall have equal right to assert all privileges (“ Shared Privileges ”) not allocated pursuant to the terms of Section 6.8(a), (b) or (c) with respect to Information as to which the members of both the SVM Group and the TG Group may assert a privilege.

 

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(e)                       Each Party shall ensure that no member of its Group may waive any Shared Privilege, without the written consent of Parties of the other Group which shall not be unreasonably withheld or delayed.

 

(f)                        In the event of an Action between one or more members of the TG Group, on the one hand, and one or more members of the SVM Group, on the other hand, each such party shall have the right to use any Information that may be subject to a Shared Privilege, without obtaining the consent of any other party, it being understood and agreed that the use of Information with respect to the Action or other dispute between the members of the TG Group, on the one hand, and the members of the SVM Group, on the other hand, shall not operate as or be used by either party as a basis for asserting a waiver of such Shared Privilege with respect to Third Parties.

 

(g)                       If a dispute arises between any member of the TG Group, on the one hand, and any member of the SVM Group, on the other hand, regarding whether a Shared Privilege should be waived to protect or advance the interest of either party, each Party agrees that it shall negotiate in good faith and endeavor to minimize any prejudice to the rights of each Party of the other Group, and shall not unreasonably withhold consent to any request for waiver by any other party.  Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

 

(h)                      Upon receipt by any Party or by any member of its Group of any subpoena, discovery or other request which arguably calls for the production or disclosure of Information subject to a Shared Privilege or as to which any other Party of the other Group or a member of such other Group has the sole right hereunder to assert a privilege, or if any Party obtains knowledge that any of its Group’s current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably call for the production or disclosure of such privileged Information, such Party shall promptly notify each Party of the other Group of the existence of the request and shall provide each such Party a reasonable opportunity to review the Information and to assert any rights it or any member of its Group may have under this Section 6.8 or otherwise to prevent the production or disclosure of such privileged Information. Each Party shall bear its own expenses in connection with any such request.

 

(i)                          The transfer of all Records and other Information and each Party’s retention of Records and other Information which may include privileged Information of the other pursuant to this Agreement is made in reliance on the agreement of the Parties, as set forth in this Article VI, to maintain the confidentiality of the Information and to assert and maintain all applicable privileges.  The access to Information being granted and the agreement to

 

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provide witnesses herein, the furnishing of notices and documents and other cooperative efforts contemplated hereby, and the transfer of privileged Information between and among the Parties and members of their respective Groups pursuant hereto shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

 

Section 6.9                                     Non -Solicitation  ; Non -Competition .

 

(a)                                  Subject to Section 9.2 of the Employee Matters Agreement, the Parties each covenant and agree that, from and after the date hereof and continuing until the third anniversary of the date hereof, no Party will, and each Party will cause its respective Subsidiaries not to, directly or indirectly, recruit or solicit for employment or interfere with the employment of any employee of the Parties of the other Group (“ Restricted Employees ”); provided that the foregoing restrictions shall not apply to ( i ) placing general advertisements (including via electronic delivery or internet access) that are not specifically targeted toward the Restricted Employees or conducting any other form of general solicitation that is not specifically targeted toward the Restricted Employees, including the use of an independent employment agency or search firm whose efforts are not specifically directed at Restricted Employees, ( ii ) any Restricted Employee whose employment was involuntarily terminated by the applicable Party or its Affiliates, ( iii ) any Restricted Employee who has not been employed by the applicable Party or any of its subsidiaries for at least six months and ( iv ) any Restricted Employee whose prospective employment is agreed to in writing by SVMC and TG LP.

 

(b)                                  Each of Controlled and TG LP covenants and agree that, from and after the date hereof and continuing until the third anniversary of the date hereof, it will not and will cause its Subsidiaries and other controlled Affiliates not to, directly or indirectly, perform any termite and pest control (other than pest control restricted to lawn or shrub care), home warranties and preventative maintenance contracts, janitorial, cleaning and disaster restoration, house cleaning, wood furniture repair, home inspection, wildlife abatement and mosquito treatment and abatement services (such services collectively, the “ SVM Services ”) or own, manage, operate, control or participate in any respect in the ownership, management, operation or control of, or be a stockholder in (except as a holder of equity securities that are publicly traded on a securities exchange or a recognized over-the-counter market, and then only to the extent of owning not more than 5% of the issued and outstanding equity securities of the relevant issuer), or provide material financing outside the ordinary course of business to, any person or business or other enterprise that performs any of the SVM Services, in each case anywhere in the United States.

 

(c)                                   Notwithstanding the foregoing, the restrictions in Section 6.03(b) shall not apply to ( i ) Controlled or TG LP or its respective Affiliates subcontracting with third persons (that are not Affiliates of any Party) to have such person perform any services (including TG Services or SVM Services) as part of a facilities management,

 

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maintenance or similar services agreement pursuant to which the applicable Party or its Affiliates are providing at least one other service; provided that in connection with any new customer account of the type referred to in this clause (i) the Party providing such service will provide Distributing with at least two business days’ notice and the opportunity to submit a proposal to act as subcontractor to provide any relevant SVM Services for such customer account, ( ii ) Controlled or TG LP or any of its respective Affiliates performing any services (including SVM Services) that are de minimis in quantity or scope or are offered as an accommodation to a customer as part of a broader offering of TG Services by Controlled or its Affiliates, ( iii ) any Affiliate of any Party which is not controlled, directly or indirectly, by such Party, ( iv ) any Affiliate of Clayton, Dubilier & Rice, LLC other than Controlled and its controlled Affiliates or ( v ) any activities of franchisees of the TG Group or any of its Affiliates; provided , that each member of the TG Group will not, and will cause its respective Affiliates not to, ( A ) modify or amend any franchise agreement with its franchisees or enter into any new agreement with its franchisees granting the right to engage in or provide SVM Services or ( B ) actively encourage or support the provision of SVM Services by its franchisees.

 

(d)                                  In the event of any dispute regarding the interpretation of, or compliance with, any of the provisions of this Section 6.9 or as to whether an actual or prospective violation of this Section 6.9 has occurred or may occur, the Parties agree to first comply with the conflict resolution process set forth in Article XI.  If in a final judgment of a court of competent jurisdiction it is determined that any term or provision of this Section 6.9 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closer to expressing the intention of the invalid or unenforceable term or provision and this Agreement shall be enforceable as so modified.

 

(e)                                   This Section 6.9 shall not apply to any entity that purchases assets, operations or a business or group of businesses from Distributing, Controlled or any of their Affiliates if such Person is not an Affiliate of Distributing or Controlled after such transaction is consummated.  Nothing in this Agreement shall preclude, prohibit or restrict either Controlled or any of its Affiliates from engaging in any manner in any business activity that would otherwise violate Section 6.9(a) that is acquired (an “ After-Acquired Business ”) or is carried on by any entity that is acquired by or combined with Controlled or any of its Affiliates after the date hereof (an “ After-Acquired Company ”); provided , that in the event the aggregate revenues of any such After-Acquired Business or After-Acquired Company attributable to SVM Services at any time during the period such Party is restricted by this Section 6.9 is more than $20 million annually, then within 18 months after the earlier of ( i ) the consummation of the purchase or other acquisition of the After-Acquired Business or the After-Acquired Company and ( ii ) the date such revenues exceed $20 million, Controlled or its relevant Affiliate, as applicable, shall

 

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dispose of the relevant portion of the business or securities of the After-Acquired Business or the After-Acquired Company or shall otherwise cause the After-Acquired Business or the After-Acquired Company to comply with this Section 6.9.

 

ARTICLE VII

 

FINANCIAL AND OTHER INFORMATION

 

Section 7.1                                     Financial and Other Information .

 

(a)                                  For a reasonable period of time after the end of the first full fiscal year following the Distribution Date as required for any member of either Group to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs (the “ Overlapping Fiscal Year ”), each Party shall use its commercially reasonable efforts to cooperate with any requests from any member of the other Group, in each case to enable the requesting party to meet its timetable for dissemination of its earnings releases and financial statements and to enable such requesting party’s auditors to timely complete their audit of the annual financial statements.

 

(b)                                  As soon as practicable, and in any event no later than 45 days before SVMC is required to file with the SEC its annual financial statements for the Overlapping Fiscal Year, Controlled shall deliver to SVMC the substantially final draft of the audited consolidated financial statements of Controlled for the Overlapping Fiscal Year (the “ TG Financial Statements ”) certified by the chief financial officer of Controlled as presenting fairly, in all material respects, the financial condition and results of operations of the TG Group.  Following such delivery, ( i ) Controlled and SVMC shall actively consult with each other regarding any changes (whether or not substantive) which Controlled may consider making to the TG Financial Statements, with particular focus on any changes which would have any effect upon SVMC’s financial statements or related disclosures and ( ii ) Controlled shall deliver all material revisions to such drafts as soon as any such revisions are prepared or made.

 

(c)                                   With respect to SVM Public Filings (as defined below), Controlled shall cooperate with SVMC and Distributing and shall cause its accountants to cooperate fully, to the extent requested by SVMC or Distributing, in the preparation of SVMC’s or Distributing’s public earnings release, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other proxy, information and registration statements, reports, notices, prospectuses and filings made with the SEC or any national securities exchange or otherwise made publicly available (collectively, the “ SVM Public Filings ”).  Controlled agrees to provide to SVMC and Distributing all Information that SVMC or Distributing reasonably requests in connection with any SVM Public Filings or

 

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that, in SVMC’s or Distributing’s judgment, is required to be disclosed or incorporated by reference therein under any Law.  Such Information shall be provided by Controlled in a timely manner to enable SVMC and Distributing to prepare, print and release all SVM Public Filings on such dates as SVMC or Distributing shall determine.  Controlled shall use its reasonable best efforts to cause its auditors to consent to any reference to them as experts in any SVM Public Filings required under any Law.  If and to the extent requested by SVMC or Distributing, Controlled shall diligently and promptly review all drafts of such SVM Public Filings.

 

(d)                                  To the extent it relates to a pre-Distribution Effective Time period, Controlled shall authorize its auditors to make available to SVMC’s and Distributing’s auditors both the personnel who performed or are performing the annual audit of Controlled and work papers related to the annual audit of Controlled, in all cases within a reasonable time prior to the opinion date of SVMC’s and Distributing’s auditors, so that SVMC’s and Distributing’s auditors are able to perform the procedures they consider necessary to take responsibility for the work of Controlled’s auditors as it relates to the SVMC’s and Distributing’s auditors’ report on SVMC’s and Distributing’s annual financial statements, all within sufficient time to enable SVMC and Distributing to meet its timetable for the printing, filing and public dissemination of SVMC’s and Distributing’s audited annual financial statements.

 

(e)                                   To the extent it relates to a pre-Distribution Effective Time period, Controlled shall provide SVMC’s and Distributing’s auditors and management access to personnel and Records of members of its Group so that SVMC and Distributing may conduct reasonable audits relating to the financial statements provided by Controlled pursuant to the provisions of this Section 7.1.

 

(f)                                    To the extent it relates to a pre-Distribution Effective Time period, ( i ) each of the Parties of one Group shall give each Party of the other Group as much prior notice as is reasonably practicable of any changes in, or proposed determination of, its accounting estimates or accounting principles from those in effect as of immediately prior to the Distribution Effective Time or of any other action with regard to its accounting estimates or accounting principles or previously reported financial results which may affect the other Party’s financial results, ( ii ) each of the Parties of one Group will consult with each Party of the other Group and, if requested by the Party contemplating such changes, with such Party’s auditors and ( iii ) unless required by generally accepted accounting principles, Law or a Governmental Authority, Controlled shall not make such determination or changes which would affect SVMC’s previously reported financial results without SVMC’s prior written consent, which shall not be unreasonably withheld.  Further, Controlled will give SVMC prompt notice of any amendments or restatements of accounting statements with respect to pre-Distribution Effective Time period, and will provide SVMC with access as provided in Article VII as promptly as possible such that SVMC will be able to satisfy its financial reporting requirements.

 

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(g)                                   Until the end of the Overlapping Fiscal Year , Controlled shall, and shall cause each member of its Group to, maintain a fiscal year that commences and ends on the same calendar days as SVMC’s fiscal year commences and ends, and to maintain monthly accounting periods that commence and end on the same calendar days as SVMC’s monthly accounting periods commence and end.

 

(h)                                  Within 10 days after the end of each quarter following the Distribution Effective Time during which Distributing and Controlled are Affiliates, each of Distributing and Controlled shall ( i ) provide the other Party with all related party Information required to be disclosed under the applicable law with respect to such quarter and ( ii ) cooperate to provide consistent disclosure with regard to such Information in any SVM Public Filings.

 

(i)                                      Subject to Section 6.5(a), Information provided pursuant to this Section 7.1, other than information required to be included in the SVM Public Filings, shall be deemed Confidential Information for purposes of this Agreement.

 

(j)                                     Each Party agrees and acknowledges, on behalf of itself and members of its Group, that it is aware and will advise its Representatives who receive information provided hereunder and are otherwise not aware, that ( i ) the information provided hereunder may contain material, non-public information concerning the other Parties and ( ii ) United States securities laws prohibit any person who has material non-public information concerning a publicly traded Person from purchasing or selling securities of such Person, or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.

 

Section 7.2                                     Sarbanes-Oxley Section 404 Compliance .  Following the Distribution, Controlled shall continue to provide access to the applicable members of the SVM Group on a timely basis all Information reasonably required to meet each such member’s schedule for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K and, to the extent applicable to such party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder (such assessments and audit being referred to as the “ Internal Control Audit and Management Assessments ”).  Without limiting the generality of the foregoing, Controlled will provide all required financial and other Information with respect to itself and members of its Group (including access to personnel and Records) to the auditors and management of the applicable members of the SVM Group in a sufficient and reasonable time and in sufficient detail to permit such auditors and management to complete the Internal Control Audit and Management Assessments.

 

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ARTICLE VIII

 

INSURANCE

 

Section 8.1                                     Insurance Matters .

 

(a)                                  Controlled does hereby, for itself and each other member of the TG Group, agree that no member of the SVM Group or any SVM Indemnified Party shall have any liability whatsoever as a result of the insurance policies and practices of the SVM Group as in effect at any time prior to the Distribution Effective Time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise, any professional or other advice with respect to the initial policies for Controlled, any handling of claims for Controlled, or any oversight or advice with respect to risk management or other insurance-related issues; provided , that this Section 8.1(a) shall not negate Distributing’s agreement under Section 8.1(b).

 

(b)                                  Except as otherwise expressly provided in this Article VIII, Controlled shall have sole responsibility for obtaining insurance coverage for its respective operations effective as of the Closing.  To the extent that after the Closing any Party requires any information regarding claim data, payroll or other information in order to make filings with insurance carriers or self-insurance regulators from another Party hereto, the Parties of the other Group will promptly supply such information.

 

(c)                                   Distributing agrees to use its commercially reasonable efforts to cause the interests and rights of Controlled and the other members of the TG Group as of the Distribution Effective Time as insureds or beneficiaries or in any other capacity under occurrence-based insurance policies and programs issued by any insurer or reinsurer which is not controlled by any member of the SVM Group (and under claims-made policies and programs to the extent a claim has been properly submitted prior to the Distribution Effective Time) in respect of the period prior to the Distribution Effective Time to survive the Distribution Effective Time for the period for which such interests and rights would have survived without regard to the transactions contemplated hereby to the extent permitted by such policies; provided , that the interests and rights of Controlled and the other members of the TG Group shall be subject to the terms and conditions of such insurance policies and programs, including any limits on coverage or scope, any deductibles and other fees and expenses and Distributing’s allocation of the cost of claims to its business units, including Controlled, according to its allocation program in effect as of the Distribution Effective Time .

 

(d)                                  With respect to claims, acts, omissions, events, or circumstances occurring prior to January 1, 2014 that Controlled in good faith believes are covered by Distributing’s occurrence-based insurance policies (including general liability,

 

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automobile liability, or workers’ compensation insurance policies) (collectively, the “ Policies ,”), Controlled may make claims under such policies subject to the terms and conditions of such policies and this Agreement (“ Insurance Claims ”).  To the extent that deductibles under the general liability, automobile liability, or workers’ compensation policies (the “ Deductibles ”) apply to claims under the Policies, Distributing shall facilitate the administration and processing of such Insurance Claims in a manner that makes available to Controlled the benefit of the deductible reimbursement policies issued by Steward Insurance Company to TruGreen prior to January 1, 2014.  In addition, Distributing will process and pay all Deductibles with respect to Insurance Claims under the Policies, and reimbursement, if any, by Steward Insurance Company with respect to any such Insurance Claims shall be paid to Distributing.  In connection with any Insurance Claim,

 

(i)                                Controlled shall report in writing, on behalf of itself and other members of the TG Group, as promptly as practicable Insurance Claims, in reasonable detail of the nature and circumstances surrounding such Insurance Claim, in accordance with the SVM Group’s claim reporting procedures in effect immediately prior to the Distribution Effective Time (or in accordance with any modifications to such procedures after the Distribution Effective Time communicated by Distributing to Controlled in writing);

 

(ii)                             Controlled, TG LP and the other members of the TG Group shall indemnify, hold harmless and reimburse Distributing and the other members of the SVM Group for any premiums, retrospectively rated premiums, defense costs, indemnity payments, deductibles, retentions , claim expenses and claim handling fees or other charges allocated to members of the TG Group pursuant to the allocation program maintained by the SVM Group in effect as of the Distribution Effective Time, in each case subject to any insurance or indemnity coverage provided for such amounts under insurance policies or indemnities provided Steward Insurance Company to any member of the TG Group ;

 

(iii)                          Controlled shall, and shall cause other members of the TG Group, at its and their own expense, to, cooperate and assist with Distributing and other members of the SVM Group and share such information as is reasonably necessary in order to permit Distributing and members of the SVM Group to manage and conduct the insurance matters contemplated by this Article VIII, including, without limitation, the production of witnesses and documents in accordance with Section 6.4;

 

(iv)                         Controlled shall exclusively bear (and Distributing shall have no obligation to repay or reimburse Controlled for) the amount of all uninsured, unrecovered, unavailable or uncollectible amounts in respect of such Insurance Claim, except to the extent Controlled is entitled to be indemnified in connection with such Insurance Claim pursuant to this Agreement; and

 

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(v)                            Distributing and the other members of the SVM Group shall be relieved of their obligations under Section 8.1(c) and this Section 8.1(d) insofar as any member of the TG Group fails to comply with the reasonable requests of any member of the SVM Group or its insurers or reinsurers.

 

(e)                                   Subject to Section 8.1(c), Distributing and other members of the SVM Group shall retain the exclusive right to control their insurance policies and programs, including the right to defend, exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of their insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any TG Liabilities and/or claims Controlled has made or could make in the future, and no member of the TG Group shall, without the prior written consent of Distributing, erode, exhaust, settle, release, commute, buy-back or otherwise resolve disputes with insurers of Distributing or other members of the SVM Group with respect to any of the insurance policies and programs of the SVM Group, or amend, modify or waive any rights under any such insurance policies and programs. Neither Distributing nor any other members of the SVM Group shall have any obligation to secure extended reporting for any claims under any of the insurance policies and programs of Distributing or other members of the SVM Group for any acts or omissions by any member of the TG Group incurred prior to the Distribution Effective Time.

 

(f)                                    This Agreement is not intended as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the TG Group in respect of any insurance policy or any other contract or policy of insurance.

 

(g)                                   Nothing in this Agreement shall be deemed to restrict any member of the TG Group from acquiring at its own expense any insurance policy in respect of any Liabilities or covering any period.

 

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Section 8.2                                     Director and Officer Liability .  For six years after the Distribution Date, Distributing and SVMC shall ( i ) indemnify and hold harmless the present and former officers and directors of Controlled and each of its Subsidiaries (including former Subsidiaries of Controlled merged into Controlled or any of its Subsidiaries) (each a “ Covered Person ”) in respect of acts or omissions occurring at or prior to the Distribution Effective Time to the same extent as Distributing provides indemnification or hold harmless protection to Distributing’s then-current officers and directors pursuant to Distributing’s certificate of incorporation and by-laws or indemnification agreements, ( ii ) provide officers’ and directors’ liability insurance in respect of acts or omissions occurring at or prior to the Distribution Effective Time covering each such Covered Person currently covered by Distributing’s officers’ and directors’ liability insurance policies on terms with respect to coverage and amount no less favorable than those of such policies as are then in effect with respect to Distributing’s then-current officers and directors, and ( iii ) provide written notice to Controlled at least 20 days in advance of any changes in the terms with respect to coverage and amount in Distributing’s officers’ and directors’ liability insurance policies which are materially less favorable than the coverage and amount of such insurance policies as of the date hereof.

 

Section 8.3                                     Miscellaneous .  Each of the Parties intends by this Agreement that a Third Party, including a third-party insurer or reinsurer, or other Third Party that, in the absence of the Agreement would otherwise be obligated to pay any claim or satisfy any indemnity or other obligation, shall not be relieved of the responsibility with respect thereto and shall not be entitled to a “windfall” ( i.e. , avoidance of the obligation that such Person would have in the absence of this Agreement).  To the extent that any such Person would receive such a windfall, the Parties shall negotiate in good faith concerning an amendment of this Agreement to avoid such a windfall.

 

ARTICLE IX

 

LEGAL MATTERS

 

Section 9.1                                     Control of Legal Matters .

 

(a)                                  At all times from and after the Distribution Effective Time, Controlled shall assume (or, as applicable, retain) control of each of the TG Litigation Matters, and Controlled shall use its reasonable best efforts to cause any member of the SVM Group named as a defendant in any such TG Litigation Matter to be removed and dismissed from such TG Litigation Matter; provided , that Controlled shall not be required to make any such effort if the removal of any member of the SVM Group would jeopardize insurance coverage or rights to indemnification from Third Parties applicable to such TG Litigation Matter.

 

(b)                                  At all times from and after the Distribution Effective Time, Distributing or SVMC shall assume (or, as applicable, retain) control of each of the SVM Litigation

 

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Matters, and Distributing or SVMC shall use its reasonable best efforts to cause any member of the TG Group named as a defendant in any such SVM Litigation Matter to be removed and dismissed from such SVM Litigation Matter; provided , that Distributing or SVMC shall not be required to make any such effort if the removal of any member of the TG Group would jeopardize insurance coverage or rights to indemnification from Third Parties applicable to such SVM Litigation Matter.

 

(c)                                   To the extent a Party is unable to cause a member of the other Group to be removed and dismissed pursuant to Section 9.1(a) or (b), the Parties agree to cooperate in defending against such Action and, subject to Section 6.8, to provide each other with access to all Information relating to such Action except to the extent that providing such access and such Information would prejudice an indemnification claim available to such Party as contemplated in Article X.

 

(d)                                  At all times from and after the Distribution Effective Time, the Parties shall jointly control any Joint Litigation Matter and shall cooperate in defending against such Action; provided , that no member of either Group may settle a Joint Litigation Matter without the prior written consent of the members of the other Group named or involved in such Joint Litigation Matter, which consent shall not be unreasonably withheld or delayed; and provided , further , that any Party may settle a Joint Litigation Matter if such settlement is for monetary relief only and provides a full release from, or indemnity for, any liability under such Joint Litigation Matter for the Parties of the other Group and, as applicable, the members of the other Group and their respective Representatives.

 

Section 9.2                                     Notice to Third Parties; Service of Process; Cooperation .

 

(a)                                  The Parties shall cause the members of their respective Groups to promptly notify their respective agents for service of process and all other necessary parties, including plaintiffs and courts, of the Distribution and shall provide instructions for proper service of legal process and other documents.

 

(b)                                  The Parties shall, and shall cause the members of their respective Groups to, use their reasonable best efforts to deliver to each other any legal process or other documents incorrectly served upon them or their agents as soon as possible following receipt.

 

(c)                                   If any Party or any members of its Group receives notice or otherwise learns of the assertion of a Joint Litigation Matter, such Party or member of its Group shall give the Parties of the other Group written notice of such Joint Litigation Matter in reasonable detail. The failure to give notice under this subsection shall not relieve any Party (or any member of its Group) of its Liability for any Joint Litigation Matter as provided hereunder or under any Ancillary Agreement, except to the extent such Party is

 

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actually prejudiced by the failure to give such notice.  The Parties shall be deemed to be on notice of any Joint Litigation Matter pending prior to the Distribution Effective Time.

 

ARTICLE X

 

INDEMNIFICATION

 

Section 10.1                              Release of Pre-Separation Claims .

 

(a)                                  Except as provided in Section 10.1(c), effective as of the Distribution Effective Time, each of Controlled and TG LP does hereby, for itself and each other member of its Group, remise, release and forever discharge each SVM Indemnified Party, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Effective Time, including in connection with the transactions and all other activities to implement the Transactions.

 

(b)                                  Except as provided in Section 10.1(c), effective as of the Distribution Effective Time, each of Distributing and SVMC does hereby, for itself and each other member of its Group, remise, release and forever discharge each TG Indemnified Party, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Effective Time, including in connection with the transactions and all other activities to implement the Transactions.

 

(c)                                   Nothing contained in Section 10.1(a) or (b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any other Intercompany Agreements or Intercompany Accounts that are specified in Section 2.2(b) as not to terminate as of the Distribution Effective Time, in each case in accordance with its terms.  For the avoidance of doubt, nothing contained in Section 10.1(a) or (b) shall release any Person from:

 

(i)                                any Liability provided in or resulting from any agreement among any members of the SVM Group or the TG Group that is specified in Section 2.2(b) as not to terminate as of the Distribution Effective Time, or any other Liability specified in such Section 2.2(b) as not to terminate as of the Distribution Effective Time;

 

(ii)                             any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in

 

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accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

 

(iii)                          any Liability provided in or resulting from any other agreement or understanding that is entered into on or after the Distribution Date between any Party (or a member of such Party’s Group), on the one hand, and any Party of the other Group (or a member of such other Group), on the other hand;

 

(iv)                         any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or any Ancillary Agreement;

 

(v)                            any Liability the release of which would result in the release of any Person other than a SVM Indemnified Party or a TG Indemnified Party intended to be released pursuant to this Section 10.1; provided , that the Parties agree not to bring suit, or permit any other member of their respective Groups to bring suit, against such SVM Indemnified Party or TG Indemnified Party with respect to any such Liability that shall otherwise be released pursuant to this Section 10.1 in the absence of this subsection (v); or

 

(vi)                         any obligation existing prior to the Distribution Effective Time of any member of a Group to indemnify any Person who has been a Representative of any member of the Group at any time on or prior to the Distribution Effective Time.

 

(d)                                  Controlled and TG LP shall not make, and shall not permit any other member of the TG Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Distributing or any other member of the SVM Group, or any other Person released pursuant to Section 10.1(a), with respect to any Liabilities released pursuant to Section 10.1(a). Distributing and SVMC shall not make, and shall not permit any other member of the SVM Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against Controlled or any other member of the TG Group, or any other Person released pursuant to Section 10.1(b), with respect to any Liabilities released pursuant to Section 10.1(b).

 

(e)                                   It is the intent of each Party, by virtue of the provisions of this Section 10.1, to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Effective Time, between or among any member of the TG Group, on the one hand, and any member of the SVM Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among

 

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any such members on or before the Distribution Effective Time), except as otherwise set forth in Section 10.1(c). At any time, at the request of any Party of the other Group, each Party shall, no later than the fifth day following the receipt of such request, cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

 

Section 10.2                              Indemnification by Controlled and TG LP .  Following the Distribution Effective Time and subject to Section 14.1, Each of Controlled and TG LP shall, and shall cause the other members of its Group to, indemnify, defend and hold harmless each member of the SVM Group and its Affiliates, and each of their respective current or former stockholders, directors, officers, employees, agents, and each of the heirs, executors, administrators, successors and assigns of any of the foregoing, in each case, in their respective capacities as such (each, a “ SVM Indemnified Party ”), from and against all Liabilities actually incurred or suffered by the SVM Indemnified Parties relating to, arising out of or resulting from one or more of the following:

 

(a)                      each TG Liability, including arising out of the failure of any member of the TG Group or any other Person to pay, perform or otherwise promptly discharge any such TG Liability;

 

(b)                      each breach by any member of the TG Group of this Agreement; and

 

(c)                       each breach by any member of the TG Group of an Ancillary Agreement, subject to any specific limitation on liability contained in such Ancillary Agreement and without duplication taking into account the performance by each member of the TG Group of its indemnification obligations in such Ancillary Agreement.

 

Section 10.3                              Indemnification by Distributing and SVMC .  Following the Distribution Effective Time and subject to Section 14.1, each of Distributing and SVMC shall, and shall cause the other members of its Group to, indemnify, defend and hold harmless each member of the TG Group and its Affiliates, and each of their respective current or former stockholders, directors, officers, employees, agents, and each of the heirs, executors, administrators, successors and assigns of any of the foregoing, in each case, in their respective capacities as such (each, a “ TG Indemnified Party ”), from and against any and all Liabilities arising out of or resulting from any of the following items:

 

(a)                      each SVM Liability, including arising out of the failure of any member of the SVM Group or any other Person to pay, perform or otherwise promptly discharge any such SVM Liability;

 

(b)                      each breach by any member of the SVM Group of this Agreement; and

 

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(c)                       each breach by any member of the SVM Group of an Ancillary Agreement, subject to any specific limitation on liability contained in the Ancillary Agreement and without duplication taking into account the performance by each member of the SVM Group of its indemnification obligations in the Ancillary Agreement.

 

Section 10.4                              Indemnification with respect to Unreleased Liabilities Without limiting the generality of Sections 10.2 and 10.3, each of Distributing and SVMC shall indemnify, defend and hold harmless each TG Indemnified Party that is an Unreleased Person against any Liabilities arising in respect of each Unreleased Liability of such Person, and each of Controlled and TG LP shall indemnify, defend and hold harmless each SVM Indemnified Party that is an Unreleased Person against any Liabilities arising in respect of each Unreleased Liability of such Person. Each Party of one Group shall take, and shall cause the members of its Group to take, such other actions as may be reasonably requested by any Party of the other Group in accordance with the provisions of this Agreement in order to place the Parties (and any relevant member of their respective Groups), insofar as reasonably possible, in the same position as they would be in if such Unreleased Liability had been fully contributed, assigned, transferred, conveyed, and delivered to, and accepted and assumed or retained, as applicable, by such other Party (or any relevant member of its Group) with effect as of the Distribution Effective Time and so that all the benefits and burdens relating to such Unreleased Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Unreleased Liability, are to inure from and after the Distribution Effective Time to the member or members of the SVM Group or the TG Group, as the case may be.

 

Section 10.5                              Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

 

(a)                                  The Parties intend that each Liability subject to indemnification, contribution or reimbursement pursuant hereto will be net of ( i ) all Insurance Proceeds, and ( ii ) all recoveries, judgments, settlements, contribution, indemnities and other amounts received (including by way of set-off) from all Third Parties, in each case that actually reduce the amount of, or are paid to the applicable indemnitee in respect of, such Liability (“ Third Party Proceeds ”).  Accordingly, the amount that the indemnifying Parties (Distributing and SVMC together, or Controlled and TG LP together, an “ Indemnifying Party ”) is required to pay to each Person entitled to indemnification hereunder (each an “ Indemnified Party ”) shall be reduced by all Insurance Proceeds and Third Party Proceeds received by or on behalf of the Indemnified Party in respect of the relevant Liability; provided , that all amounts described in Section 10.2 or Section 10.3 which are incurred by an Indemnified Party shall be paid promptly by the Indemnifying Party and shall not be delayed pending any determination as to the availability of Insurance Proceeds or Third Party Proceeds; and provided , further , that upon such

 

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payment by or on behalf of an Indemnifying Party to an Indemnified Party in connection with a Third Party Claim, to the extent permitted by applicable Laws such Indemnified Party shall assign its rights to recover all Insurance Proceeds and Third Party Proceeds to the Indemnifying Party and such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnified Party as to all events and circumstances in respect of which such Indemnified Party may have with respect to all rights, defenses, and claims relating to such Third Party Claim.  If, notwithstanding the second proviso in the preceding sentence, an Indemnified Party receives a payment required to be made under this Article X (an “ Indemnity Payment ”) from an Indemnifying Party in respect of a Liability and subsequently receives Insurance Proceeds or Third Party Proceeds in respect of such Liability, then the Indemnified Party shall pay to the Indemnifying Party an amount equal to the excess of the amount paid by the Indemnifying Party over the amount that would have been due if such Insurance Proceeds and Third Party Proceeds had been received before the Indemnity Payment was made. Each member of the SVM Group and each member of the TG Group shall use commercially reasonable efforts to seek to collect or recover all Insurance Proceeds and all Third Party Proceeds to which such Person is entitled in respect of a Liability for which such Person seeks indemnification pursuant to this Article X; provided , that such Person’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds shall not limit the Indemnifying Party’s obligations hereunder unless such inability is a result of such Person’s failure to exercise commercially reasonable efforts to so collect and recover any such Insurance Proceeds or Third Party Proceeds.

 

(b)                                  An insurer that would otherwise be obligated to pay a claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or other third party shall be entitled to a “windfall” ( i.e. , a benefit it would not be entitled to receive in the absence of the indemnification provisions hereof) by virtue of the indemnification provisions hereof. Without limiting the generality of the foregoing and for the avoidance of doubt, insofar as any insurer is only obligated to pay a claim after the prior exhaustion of any other rights of indemnification, the indemnification provided under this Article X shall not be available to the extent, but only to the extent, that such indemnification would otherwise relieve such insurer of its payment obligation.

 

Section 10.6                              Contribution .  If the indemnification provided for in this Article X is unavailable to, or insufficient to hold harmless, an Indemnified Party in respect of a Liability for which indemnification is provided for herein then each Indemnifying Party shall, in lieu of indemnifying such Indemnified Party, contribute to the amount paid or payable by such Indemnified Party as a result of such Liability, in such proportion as shall be sufficient to place the Indemnified Party in the same position as if such Indemnified Party were indemnified hereunder.  If the contribution provided for in the previous sentence shall, for any reason, be unavailable or insufficient to put the

 

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Indemnified Party in the same position as if it were indemnified under Section 10.2 or Section 10.3, as the case may be, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liability, in such proportion as shall be appropriate to reflect the relative benefits received by and the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other hand with respect to the matter giving rise to the Liability.

 

Section 10.7                              Procedures for Indemnification of Direct Claims .  Each claim for indemnification made directly by the Indemnified Party against the Indemnifying Party that does not result from a Third Party Claim shall be asserted by written notice from the Indemnified Party to the Indemnifying Party specifically claiming indemnification hereunder, which notice shall state the amount claimed, if known, and method of computation thereof, and shall contain a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnified Party. Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 30 day period, such Indemnifying Party shall be deemed to have accepted responsibility for the indemnification sought and shall have no further right to contest the validity of such claim. If such Indemnifying Party does respond within such 30 day period and rejects such claim in whole or in part, such Indemnified Party shall be free to pursue resolution as provided in Article XI.

 

Section 10.8                              Procedures for Indemnification of Third Party Claims .

 

(a)                                  If an Indemnified Party shall receive notice of the assertion of a claim, or commencement of an Action, by a Third Party against it (each, a “ Third Party Claim ”) that may give rise to a claim for indemnification pursuant to this Agreement, within 30 days of the receipt of such notice, the Indemnified Party shall give the Indemnifying Party notice of such Third Party Claim, which notice shall describe such Third Party Claim in reasonable detail; provided , that the failure to provide such notice as provided in this Section 10.8 shall not release the Indemnifying Party from any of its obligations under this Article X except to the extent such Indemnifying Party is actually prejudiced by such failure to give notice.

 

(b)                                  Each Indemnifying Party shall be entitled (but shall not be required) to assume and control the defense of each Third Party Claim at its expense and through counsel of its choice that is reasonably acceptable to the Indemnified Party if it gives notice of its intention to do so to the Indemnified Party within 30 days of the receipt of notice from the Indemnified Party in accordance with Section 10.8(a); provided , that the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, settle, compromise or offer to settle or compromise such Third Party Claim; and provided , further , that such Indemnified Party shall not withhold such consent if the settlement or compromise ( i ) contains no finding or admission of a violation of Law or a violation of the rights of a Person by the Indemnified Party or any of its Affiliates, ( ii )

 

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contains no finding or admission that would have an adverse effect on the Indemnified Party or any of its Affiliates as determined by the Indemnified Party in good faith, ( iii ) involves only monetary relief which the Indemnifying Party has agreed to pay and does not contain an injunction or other non-monetary relief affecting the Indemnified Party or any of its Affiliates, and ( iv ) includes a full, irrevocable unconditional release of the Indemnified Party from such Third Party Claim.

 

(c)                                   If the Indemnifying Party elects to undertake the defense against a Third Party Claim as provided by Section 10.8(b), the Indemnified Party shall cooperate with the Indemnifying Party with respect to such defense and shall have the right, but not the obligation, to participate in such defense and to employ separate counsel of its choosing at its own expense; provided , that such expense shall be the responsibility of the Indemnifying Party if ( i ) the Indemnifying Party and the Indemnified Party are both named parties to the proceedings and the Indemnified Party shall have reasonably concluded that representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest (in which case the Indemnifying Party shall not be responsible for expenses in respect of more than one counsel for the Indemnified Party in any single jurisdiction), or ( ii ) the Indemnified Party assumes the defense of the Third Party Claim after the Indemnifying Party has failed, in the reasonable judgment of the Indemnified Party, to diligently defend the Third Party Claim after having elected to assume its defense.

 

(d)                                  If the Indemnifying Party ( i ) does not elect to assume the defense in accordance with Section 10.8(b), or ( ii ) after assuming the defense of a Third Party Claim, fails to take reasonable steps necessary to defend diligently such Third Party Claim within ten days after receiving written notice from the Indemnified Party to the effect that the Indemnifying Party has so failed, the Indemnified Party shall have the right but not the obligation to assume its own defense; provided , that the Indemnified Party shall not settle or compromise such Third Party Claim without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld.  For the avoidance of doubt, the Indemnified Party’s right to indemnification for a Third Party Claim shall not be adversely affected by assuming the defense of such Third Party Claim.

 

(e)                                   Subject to Article VI, the Indemnified Party and the Indemnifying Party shall cooperate in the defense of a Third Party Claim including by ( i ) expeditiously making available all witnesses, all pertinent records, all materials, and all information in each other’s possession or under each other’s control relating to the Third Party Claim, ( ii ) assisting with litigation defense strategy, investigations, discovery preparation, trial preparation, and similar activities with respect to the Third Party Claim, and ( iii ) using commercially reasonable efforts to avoid taking any action, or omitting to take any action, that would materially and adversely prejudice each other’s defense of, or actual or potential rights of recovery with respect to, the Third Party Claim.  The Indemnifying Party shall have no obligation in accordance with this Article X to an Indemnified Party

 

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for any Third Party Claim to the extent such Indemnified Party fails to comply with this Section 10.8(e) with respect to the Third Party Claim and such failure shall have materially and adversely prejudiced the Indemnifying Party.

 

Section 10.9                              Remedies Cumulative .  The remedies provided in this Article X shall be cumulative and, subject to the provisions of Article XI, shall not preclude assertion by any Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

 

Section 10.10                       Tax Matters .  All indemnity payments pursuant to this Article X shall be treated as relating to periods ending on or prior to the Distribution Effective Time and shall be treated for all tax purposes as ( i ) an adjustment to the amount of cash contributed to Controlled pursuant to Section 2.1 and ( ii ) to the extent the aggregate net indemnity payments to the SVM Group and its Affiliates would exceed the amount of such contributed cash, a distribution with respect to stock of Controlled.    Notwithstanding anything to the contrary set forth herein, indemnification for all matters relating to taxes shall be governed by terms, provisions and procedures of the Tax Sharing Agreement and not this Article X.

 

Section 10.11                       Survival of Indemnities .  The rights and obligations of the Indemnified Parties under this Article X shall survive the distribution, sale or other transfer by any Party or members of its respective Group of any Assets or the assignment by it of any Liabilities.

 

ARTICLE XI

 

DISPUTE RESOLUTION

 

Section 11.1                              Disputes .  Except as otherwise specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and mediation set forth in this Article XI shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of, relate to, arise under or in connection with, this Agreement or any Ancillary Agreement, or the transactions contemplated hereby or thereby (including, all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the Distribution Effective Time), between or among any member of the SVM Group and the TG Group (collectively, “ Disputes ”); provided , that if any Ancillary Agreement provides for  different dispute resolution procedures for Disputes thereunder, such dispute resolution procedures shall apply with respect to such Dispute.

 

Section 11.2                              Dispute Resolution .

 

(a)                                  On the Distribution Effective Time, Distributing and Controlled shall form a committee (the “ Executive Committee ”).  The Executive Committee shall consist of

 

50



 

two representatives designated by each of Distributing and Controlled and shall initially consist of the Chief Financial Officer and the General Counsel (or other chief legal officer) of each of Distributing and Controlled.  Each of Distributing and Controlled may replace one or more of its representatives at any time upon notice to the other Party.

 

(b)           Any Dispute shall be submitted to the Executive Committee, and the Executive Committee shall seek to resolve such Dispute through informal good faith negotiation.  In the event the Executive Committee fail to meet or, if they meet, fail to resolve the Dispute within 10 Business Days, then the claiming Party will provide the other Parties with a written “ Notice of Dispute ,” describing ( i ) the issues in dispute and such Party’s position thereon, ( ii ) a summary of the evidence and arguments supporting such Party’s positions, ( iii ) a summary of the negotiations that have taken place to date and ( iv ) the name and title of the senior executives or their respective designees who will represent each Party.  The senior executives or their respective designees designated in such Notice of Dispute shall meet in person or by telephone as often as reasonably necessary to resolve the Dispute and shall confer in a good faith effort to resolve the Dispute.  If such senior executives or their respective designees decline to meet within the allotted time, or if they meet, fail to resolve the Dispute within 20 Business Days after receipt of the Notice of Dispute, then any Party may pursue the remedy set forth in Section 11.2(c).

 

(c)           If the procedures set forth in Section 11.2(b) have been followed with respect to a Dispute and such Dispute remains unresolved, any Party may promptly submit the relevant Notice of Dispute to a neutral arbitrator (the “ Arbitrator ”) unless Distributing and Controlled agree otherwise.  Distributing and Controlled agree to seek to reach agreement on the identity of the arbitrator within 20 Business Days after the initiation of arbitration.  If Distributing and Controlled are unable to reach agreement on the identity of the arbitrator within such time, then the appointment of the arbitrator shall be made in accordance with the process set forth in JAMS Comprehensive Rule 15.  The arbitration shall be administered by JAMS.  If the disputed claim or counterclaim exceeds $250,000, not including interest or attorneys’ fees, the JAMS Comprehensive Arbitration Rules and Procedures (“ JAMS Comprehensive Rules ”) in effect at the time of the arbitration shall govern the arbitration, except as they may be modified herein or by mutual written agreement of the Parties.  If no disputed claim or counterclaim exceeds $250,000, not including interest or attorneys’ fees, the JAMS Streamlined Arbitration Rules and Procedures (“ JAMS Streamlined Rules ”) in effect at the time of the arbitration shall govern the arbitration, except as they may be modified herein or by mutual written agreement of the Parties.  The seat of the arbitration shall be New York, New York.  The Parties submit to jurisdiction in the state and federal courts of the State of New York for the limited purpose of enforcing this agreement to arbitrate.  The applicable Party from each Group shall submit its position in writing to the Arbitrator within 10 Business Days of the appointment of the Arbitrator.  Within 20 Business Days after receipt of such submissions, the Arbitrator shall make a final written determination, and such

 

51



 

determination and award shall be final and binding upon the Parties hereto, and may be entered and enforced in any court having jurisdiction.  The arbitrator may, in the award, allocate all or part of the costs of the arbitration, including the fees of the arbitrator and the attorneys’ fees of the prevailing Party.  The Parties agree that the arbitration shall be kept confidential and that  the existence of the proceeding and any element of it (including but not limited to any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, and any awards) shall not be disclosed beyond the tribunal, JAMS, the Parties, their counsel, accountants and auditors, insurers and re-insurers, and any person necessary to the conduct of the proceeding.  The confidentiality obligations shall not apply ( i ) if disclosure is required by law, or in judicial or administrative proceedings, or ( ii ) as far as disclosure is necessary to enforce the rights arising out of the award.  Notwithstanding applicable state law, the arbitration and this agreement to arbitrate shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq.

 

(d)           A Party’s failure to comply with Sections 11.2(b) and (c) shall constitute cause for dismissal without prejudice of any legal proceeding.

 

Section 11.3          Continuity of Service and Performance .  Unless otherwise agreed in writing, the Parties shall continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article XI with respect to all matters not subject to such Dispute.

 

ARTICLE XII

 

FURTHER ASSURANCES

 

Section 12.1          Further Assurances .

 

(a)           The Parties shall use all reasonable efforts to take, or cause to be taken, all appropriate action, to do or cause to be done all things necessary, proper or advisable under applicable Law, and to execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and any Ancillary Agreement and to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements, whether before or after the Distribution Effective Time.

 

(b)           Without limiting the foregoing, prior to, on and after the Distribution Effective Time, each Party shall cooperate with the other Parties, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its reasonable efforts to cause to be executed and delivered, all instruments, including, instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all necessary Consents and Governmental Approvals, including, under any permit,

 

52



 

license, agreement, indenture or other instrument, and to take all such other actions as such Party may reasonably be requested to take by any other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby.

 

(c)           Each Party will cause to be performed and hereby guarantees the performance of all actions, agreements and obligations set forth herein to be performed by any member of its Group .

 

ARTICLE XIII

 

AMENDMENT AND TERMINATION

 

Section 13.1          Amendment and Termination .

 

(a)           Prior to the Distribution Effective Time, this Agreement may be amended, supplemented, terminated and the transactions contemplated hereby may be modified or abandoned at any time by Distributing, in its sole and absolute discretion .

 

(b)           After the Distribution Effective Time, this Agreement may not be amended, supplemented or terminated except by an agreement in writing signed by the Parties.

 

Section 13.2          Effect of Termination .  In the event of a termination in accordance herewith, this Agreement shall forthwith become void and there shall be no Liability on the part of either Party; provided , that such termination shall have no effect on any transactions effected prior to such termination.

 

ARTICLE XIV

 

MISCELLANEOUS

 

Section 14.1          LIMITATION OF LIABILITY .

 

(a)           IN NO EVENT SHALL ANY MEMBER OF ONE GROUP BE LIABLE TO ANY MEMBER OF THE OTHER GROUP, FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING, NEGLIGENCE OR STRICT LIABILITY) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE OR SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED , THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT AN INDEMNIFYING PARTY’S INDEMNIFICATION

 

53



 

OBLIGATIONS HEREUNDER WITH RESPECT TO ANY LIABILITY ANY INDEMNIFIED PARTY MAY HAVE TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, EXCEPT AS OTHERWISE PROVIDED IN THE ANCILLARY AGREEMENTS.

 

(b)           No Party nor any member of its Group shall have any Liability to the other Party’s Group ( i ) if any Information exchanged or provided pursuant to this Agreement, whether such Information is historical or forward looking, is found to be inaccurate, in the absence of gross negligence or willful misconduct by the providing Person, or ( ii ) if any Information is lost or destroyed after commercially reasonable efforts by the Person from whom Information is requested pursuant to this Agreement, to comply with the provisions of Section 6.3.  Notwithstanding the foregoing, nothing contained in this Section 14.1(b)  shall affect or impair ( x ) the assumption and acceptance by the applicable members of the SVM Group of the SVM Transaction Liabilities and ( y ) the assumption and acceptance by the applicable members of the TG Group of the TG Transaction Liabilities.

 

Section 14.2          Expenses .  Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, all costs and expenses incurred and directly related to the Transactions shall: ( i ) to the extent incurred and payable on or prior to the Distribution Effective Time, be paid by SVMC; and ( ii ) to the extent arising and payable following the Distribution Effective Time, be paid by the Party incurring such cost or expense.

 

Section 14.3          Counterparts .  This Agreement may be executed and delivered (including by facsimile transmission) in counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

 

Section 14.4          Notices .  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile or email (with written confirmation of receipt), or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 14.4):

 

If to Distributing, to:

 

ServiceMaster Global Holdings, Inc.

860 Ridge Lake Blvd.

Memphis, TN 38120

 

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Attn.:  General Counsel

Facsimile:  901-597-8025

Email: James.Lucke@servicemaster.com

 

If to SVMC, to:

 

The ServiceMaster Company

860 Ridge Lake Blvd.

Memphis, TN 38120

Attn.:  General Counsel

Facsimile:  901-597-8025

Email: James.Lucke@servicemaster.com

 

If to Controlled, to:

 

TruGreen Holding Corporation

c/o TruGreen Limited Partnership

860 Ridge Lake Blvd.

Memphis, TN 38120

Attn.:  Chief Legal Officer

Facsimile:  901-597-9578

Email: KevinMann@trugreenmail.com

 

If to TG LP, to:

 

TruGreen Limited Partnership

860 Ridge Lake Blvd.

Memphis, TN 38120

Attn.:  Chief Legal Officer

Facsimile:  901-597-9578

Email:  KevinMann@trugreenmail.com

 

Section 14.5          Public Announcements .  Following the Distribution Effective Time, the Parties shall be permitted to make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated by this Agreement or otherwise communicate with any news media unless otherwise prohibited by Law or any Ancillary Agreement; provided , that the Parties shall consult with each other prior to issuing, and shall, subject to the requirements of Section 6.5, provide the other Parties the opportunity to review and comment upon, press releases and other public statements in connection with any Transaction and prior to making any filings with any Governmental Authority with respect thereto.

 

55



 

Section 14.6          Severability .  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.

 

Section 14.7          Entire Agreement .  This Agreement and the Ancillary Agreements, including the exhibits and schedules thereto and together with all the agreements contemplated hereby and thereby (including the Implementation Documents), constitute the entire agreement of the Parties with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, between the Parties with respect to the subject matter hereof and thereof.

 

Section 14.8          Assignment .  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  Except as otherwise provided for in this Agreement, this Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Parties, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void. Notwithstanding the foregoing, a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided , that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a party hereto. The provisions of this Section 14.8 shall not apply to any Ancillary Agreement, the assignment of which shall be subject to the terms of such Ancillary Agreement.

 

Section 14.9          Third-Party Beneficiaries .  Except for the rights for release and indemnification under this Agreement of any SVM Indemnified Party or TG Indemnified Party in their respective capacities as such, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

 

Section 14.10       Governing Law .    This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflicts of law principles thereof insofar as such laws would otherwise result in the application of the laws of another state.  This Agreement will not be subject to any of the provisions of the United Nations Convention on Contracts for the International Sale of Goods.

 

56



 

Section 14.11       Headings .  The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 14.12       Interpretation .  Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires.  The terms “hereof”, “herein” and “hereunder” and words of similar import, unless otherwise stated, shall be construed to refer to this Agreement as a whole (including all of the schedules, exhibits and appendices hereto) and not to any particular provision of this Agreement.  References to Articles, Sections, Schedules and Exhibits are to Articles, Sections, Schedules and Exhibits of this Agreement unless otherwise specified.  All Schedules and Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized term used in any Schedule or Exhibit but not otherwise defined therein shall have the meaning given to such term in this Agreement.  References to any agreement or contract are to that agreement or contract as amended, supplemented or modified from time to time in accordance with the terms hereof and thereof.  The word “including” and words of similar import shall mean “including, without limitation”.  “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any Person include the successors and permitted assigns of that Person.  Any reference to “days” means calendar days unless Business Days are expressly specified.  The word “or” shall not be exclusive.

 

Section 14.13       Specific Performance .  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the affected Party shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The other Parties shall not oppose the granting of such relief.  The Parties agree that the remedies at law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived.

 

Section 14.14       Payment Terms Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount to be paid or reimbursed by one Party to another under this Agreement shall be paid or reimbursed hereunder within ten days after presentation of an invoice or a written demand therefor and setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

 

57



 

Section 14.15       Survival of Covenants .  Except as expressly set forth in this Agreement, the covenants, representations and warranties contained in this Agreement, and the Liabilities for the breach of any obligations contained herein, shall survive the Distribution Effective Time and shall remain in full force and effect.

 

Section 14.16       Waiver .  Any Party to this Agreement may ( i ) extend the time for the performance of any of the obligations or other acts of any Party of the other Group and ( ii ) waive compliance with any of the agreements of the other Party or conditions to such Party’s obligations contained herein.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party against whom it is sought to enforce such extension or waiver.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.  The failure of any Party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.

 

Section 14.17       Counterparts; Facsimile Signatures .  This Agreement and any amendment hereto may be executed in multiple counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by email delivery of scanned pages (e.g., “.pdf” format data files) shall be effective as delivery of a manually executed counterpart to this Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

 

 

SERVICEMASTER GLOBAL HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Chief Financial Officer

 

 

 

 

 

THE SERVICEMASTER COMPANY

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President and Chief

 

 

 

Financial Officer

 

 

 

 

 

TRUGREEN HOLDING CORPORATION

 

 

 

 

 

By:

/s/ David W. Martin

 

 

Name:

David W. Martin

 

 

Title:

Senior Vice President and Chief

 

 

 

Financial Officer

 

 

 

 

 

TRUGREEN LIMITED PARTNERSHIP

 

 

 

 

 

By: TruGreen, Inc., its general partner

 

 

 

 

 

By:

/s/ David W. Martin

 

 

Name:

David W. Martin

 

 

Title:

Senior Vice President and Chief

 

 

 

Financial Officer

 

[Signature Page to Separation and Distribution Agreement]

 



 

List of Omitted Schedules and Exhibits

 

The following schedules and exhibits to the Separation and Distribution Agreement, dated as of January 14, 2014, by and among ServiceMaster Global Holdings, Inc., The ServiceMaster Company, TruGreen Holding Corporation and TruGreen Limited Partnership have not been provided herein:

 

Schedule 1.1(a)

 

Co-Locations

 

 

 

Schedule 1.1(b)

 

SVM Assumed Liabilities - Actions

 

 

 

Schedule 1.1(c)

 

TruGreen Locations

 

Exhibit A

 

Employee Matters Agreement (See Exhibit 2.3 to the Registrant’s Current Report on Form 8-K, filed on January 17, 2014 (the “8-K”))

 

 

 

Exhibit B

 

Tax Matters Agreement (See Exhibit 2.4 to the 8-K)

 

 

 

Exhibit C

 

Transition Services Agreement (See Exhibit 2.5 to the 8-K)

 

The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

 


Exhibit 2.3

 

EXECUTION VERSION

 

EMPLOYEE MATTERS AGREEMENT

 

by and among

 

SERVICEMASTER GLOBAL HOLDINGS, INC.,

 

THE SERVICEMASTER COMPANY, LLC,

 

TRUGREEN LIMITED PARTNERSHIP

 

and

 

TRUGREEN HOLDING CORPORATION

 

dated as of January 14, 2014

 



 

Table of Contents

 

ARTICLE I. DEFINITIONS

2

 

 

 

Section 1.1.

Certain Definitions

2

 

 

 

ARTICLE II. EMPLOYEES AND GENERAL PRINCIPLES

5

 

 

 

Section 2.1.

Employing Entity

5

 

 

 

Section 2.2.

Employee Liabilities Generally

5

 

 

 

Section 2.3.

TruGreen Employee Participation in ServiceMaster Plans

6

 

 

 

Section 2.4.

General Principles

6

 

 

 

Section 2.5.

Reimbursement

7

 

 

 

Section 2.6.

Payroll and Related Taxes

8

 

 

 

ARTICLE III. TRUGREEN PLANS GENERALLY

9

 

 

 

Section 3.1.

Establishment of TruGreen Mirror Plans

9

 

 

 

Section 3.2.

Terms of Participation by TruGreen Employees

9

 

 

 

Section 3.3.

Time Off Benefits

10

 

 

 

Section 3.4.

We Listen Dispute Resolution Plan

10

 

 

 

ARTICLE IV. HEALTH AND WELFARE

11

 

 

 

Section 4.1.

Assumption of Health and Welfare Plans

11

 

 

 

Section 4.2.

Adoption of Health and Welfare Plans

11

 

 

 

ARTICLE V. 401(K) PLANS

13

 

 

 

Section 5.1.

Establishment of the TruGreen 401(k) Plan

13

 

 

 

Section 5.2.

Assumption of Liabilities and Transfer of Assets

13

 

 

 

ARTICLE VI. EQUITY BASED AND OTHER LONG-TERM INCENTIVE AWARDS

14

 

 

 

Section 6.1.

General Treatment of Outstanding Awards; Adoption of New Stock Incentive Plan

14

 

 

 

ARTICLE VII. SHORT TERM INCENTIVES

18

 

 

 

ARTICLE VIII. DEFERRED COMPENSATION PLANS

18

 

 

 

Section 8.1.

Establishment of the TruGreen DCP

18

 

 

 

Section 8.2.

Liabilities Under the ServiceMaster DCP

19

 

 

 

Section 8.3.

Asset Transfer

19

 

 

 

ARTICLE IX

19

 

 

 

Section 9.1.

Transition Employees

19

 

 

 

Section 9.2.

Non-Solicitation; Offer of Employment with the TG Group

20

 



 

Section 9.3.

Severance

20

 

 

 

Section 9.4.

Rollover of Account Balances for Transition Employees

20

 

 

 

Section 9.5.

Equity

20

 

 

 

Section 9.6.

ServiceMaster DCP

21

 

 

 

ARTICLE X. GENERAL AND ADMINISTRATIVE

21

 

 

 

Section 10.1.

Sharing of Information

21

 

 

 

Section 10.2.

Employee Records

21

 

 

 

Section 10.3.

Cooperation

21

 

 

 

Section 10.4.

Survival

22

 

 

 

Section 10.5.

Interpretation

22

 

 

 

Section 10.6.

No Third Party Beneficiaries

22

 

 

 

Section 10.7.

Notices

22

 

 

 

Section 10.8.

Governing Law; Jurisdiction

22

 

 

 

Section 10.9.

Specific Performance

22

 

 

 

Section 10.10.

Dispute Article XI of the Separation and Distribution Agreement is incorporated herein by reference

22

 

 

 

Section 10.11.

No Assignment; No Amendment; Counterparts

23

 

ii



 

Employee Matters Agreement

 

This Employee Matters Agreement (this “ Agreement ”) is dated as of January 14, 2014, and is made and entered into by and among The ServiceMaster Company, LLC, a Delaware limited partnership (“ ServiceMaster ”), TruGreen Limited Partnership, a Delaware limited partnership (“ TruGreen ”), solely for purposes of Section 2.2(ii) and Article VI, ServiceMaster Global Holdings, Inc., a Delaware corporation (“ Holdings ”) and, solely for purposes of Section 2.2(iii) and Article VI, TruGreen Holding Corporation, a Delaware corporation (“ Controlled ”) (each a “ Party ” and together, the “ Parties ”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Separation and Distribution Agreement (as defined below).

 

Recitals

 

WHEREAS, the Parties are parties to that certain Separation and Distribution Agreement, dated as of the date hereof (the “ Separation and Distribution Agreement ”);

 

WHEREAS, pursuant to the Separation and Distribution Agreement, the Parties agreed to separate the TG Business from ServiceMaster, and following such separation, the TG Business will be owned, operated and conducted, directly or indirectly, by TruGreen; and

 

WHEREAS, in connection with the transactions contemplated by the Separation and Distribution Agreement, the Parties have agreed to enter into this Agreement for the purposes of (i) addressing the treatment of TruGreen Employees and their participation in employee benefit programs of ServiceMaster following the Business Separation; (ii) addressing the treatment of TruGreen Employees and their participation in employee benefit plans and programs that will be implemented at TruGreen or its Subsidiaries in connection with the Business Separation for the benefit of such employees and (iii) allocating assets, liabilities, rights and responsibilities with respect to employee compensation and benefits and certain other employment matters as a result of separation of the TG Business from ServiceMaster pursuant to the terms of the Separation and Distribution Agreement, including, without limitation, liabilities, rights and responsibilities with respect to ServiceMaster Awards and TruGreen Awards held by ServiceMaster Employees and TruGreen Employees following the Distribution.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and in the Separation and Distribution Agreement, the Parties agree as follows:

 



 

ARTICLE I.

 

DEFINITIONS

 

Section 1.1.                                  Certain Definitions

 

Agreement ” means this Employee Matters Agreement, and all exhibits, schedules, appendices and annexes hereto.

 

Annual Bonus Plan ” means the ServiceMaster Annual Bonus Plan for 2013, as the plan is amended from time to time.

 

COBRA ” has the meaning ascribed to it in Section 4.2.

 

Combined Group Employee ” means any employee of ServiceMaster and its Subsidiaries, including TruGreen, immediately prior to the completion of the Business Separation.

 

FICA ” has the meaning ascribed to it in Section 2.6.

 

FUTA ” has the meaning ascribed to it in Section 2.6.

 

Individual Agreement ” means an individual employment contract or other similar agreement that specifically pertains to any TruGreen Employee.

 

Plan ” means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy or other agreement or funding vehicle, whether written or unwritten, providing compensation or benefits to employees, or former employees of TruGreen or ServiceMaster, as the case may be, in respect to their services for ServiceMaster and its Subsidiaries or TruGreen and its Subsidiaries.

 

ServiceMaster 401(k) Plan ” means the ServiceMaster Profit Sharing and Retirement Plan, as in effect or as it may be amended from time to time.

 

ServiceMaster Awards ” means awards of ServiceMaster Common Stock, ServiceMaster DSUs, ServiceMaster RSUs and ServiceMaster Options, in each case awarded to Combined Group Employees under the ServiceMaster MSIP prior to the Distribution Date.

 

ServiceMaster Common Stock ” means the common stock of Holdings, par value $0.01 per share.

 

ServiceMaster Conversion Ratio ” means the fair market value (as determined by the Board of Holdings in connection with the transactions contemplated by the Separation and Distribution Agreement) of a share of ServiceMaster Common Stock

 

2



 

immediately after the Distribution Effective Time divided by the fair market value (as determined by the Board of Holdings in connection with the transactions contemplated by the Separation and Distribution Agreement) of a share of ServiceMaster Common Stock immediately before the Distribution Effective Time.

 

ServiceMaster DCP ” means the ServiceMaster Deferred Compensation Plan, as in effect or as it may be amended from time to time.

 

ServiceMaster DSU ” means a deferred share unit, granted under the ServiceMaster MSIP, representing the right to receive one share of ServiceMaster Common Stock.

 

ServiceMaster Employee ” means any individual who, prior to the Business Separation, is employed by ServiceMaster or its Subsidiaries (other than TruGreen and its Subsidiaries), who is not a TruGreen Employee and whose name does not appear on Schedule A .  Following the Business Separation, ServiceMaster Employees shall be employed by ServiceMaster and its Subsidiaries.  For the avoidance of doubt, a Transition Employee shall be treated as a ServiceMaster Employee until his or her Transfer Date.

 

ServiceMaster MSIP ” shall mean the Amended and Restated ServiceMaster Global Holdings, Inc. Stock Incentive Plan, as in effect or as it may be amended from time to time.

 

ServiceMaster Option ” means an option, granted under the ServiceMaster MSIP, to purchase shares of ServiceMaster Common Stock.

 

ServiceMaster Plan ” means any Plan maintained or sponsored by ServiceMaster or its Subsidiaries at any time on or prior to the Business Separation.

 

ServiceMaster RSU ” means a restricted stock unit or performance restricted stock unit, in either case granted under the ServiceMaster MSIP, representing the right to receive one share of ServiceMaster Common Stock.

 

ServiceMaster Welfare Plans ” has the meaning ascribed to it in Section 4.1.

 

Transfer Date ” has the meaning ascribed to it in Section 9.1.

 

Transition Employees ” has the meaning ascribed to it in Section 9.1.

 

Transition Services Agreement ” means the Transition Services Agreement entered into by ServiceMaster and TruGreen on the date hereof.

 

TruGreen 401(k) Plan ” has the meaning ascribed to it in Section 5.1.

 

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TruGreen Awards ” means awards of TruGreen Common Stock, TruGreen DSUs, TruGreen RSUs and TruGreen Options, in each case granted to Combined Group Employees in connection with the Distribution and subject to the terms set forth in the documentation evidencing such TruGreen Award.

 

TruGreen Common Stock ” means the common stock of Controlled, par value $0.01 per share.

 

TruGreen Conversion Ratio ” means the fair market value (as determined by the Board of Holdings in connection with the transactions contemplated by the Separation and Distribution Agreement) of a share of TruGreen Common Stock immediately after the Distribution Effective Time divided by the fair market value (as determined by the Board of Holdings in connection with the transactions contemplated by the Separation and Distribution Agreement) of a share of ServiceMaster Common Stock immediately before the Distribution Effective Time

 

TruGreen DCP ” has the meaning ascribed to it in Section 8.1.

 

TruGreen DSU ” means a deferred share unit, issued in connection with the Distribution and subject to the terms set forth in the documentation evidencing such TruGreen DSUs, representing the right to receive one share of TruGreen Common Stock.

 

TruGreen Employee ” means, immediately prior to the Business Separation, (i) any individual who is employed by TruGreen, the TG Operating Entities or any of their respective Subsidiaries and (ii) any individual who is listed on Schedule A hereto.  Following the Business Separation, and subject to the terms of this Agreement, TruGreen Employees shall be employed by TruGreen or its Subsidiaries.

 

TruGreen Mirror Plans ” means the TruGreen Welfare Plans, the TruGreen 401(k) Plan and the TruGreen DCP which plans have or will be established and adopted by TruGreen in connection with the Business Separation pursuant to the terms provided for in this Agreement.

 

TruGreen Option ” means an option, issued in connection with the Distribution and subject to the terms set forth in the documentation evidencing such TruGreen Option, to purchase shares of TruGreen Common Stock.

 

TruGreen Plan ” means any Plan maintained or sponsored by TruGreen or any of its Subsidiaries for the benefit of any TruGreen Employee.

 

TruGreen RSU ” means a restricted stock unit or performance restricted stock unit, in either case issued in connection with the Distribution and subject to the terms set forth in the documentation evidencing such TruGreen RSU, representing the right to receive one share of TruGreen Common Stock.

 

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TruGreen SIP ” means the TruGreen Stock Incentive Plan, which will be adopted by Controlled on or before the Distribution Date.

 

TruGreen Welfare Plans ” has the meaning ascribed to it in Section 4.2(a).

 

ARTICLE II.

 

EMPLOYEES AND GENERAL PRINCIPLES

 

Section 2.1.                                  Employing Entity .  On or prior to the completion of the Business Separation, ServiceMaster and TruGreen shall take or cause to be taken all actions necessary to cause the ServiceMaster Employees to be employed by the SVM Group as of the completion of the Business Separation and the TruGreen Employees to be employed by the TG Group as of the completion of the Business Separation.

 

Section 2.2.                                  Employee Liabilities Generally .

 

Except as provided in this Agreement, the SVM Group shall be responsible for the Liabilities arising in connection with the employment by the SVM Group or the TG Group of the ServiceMaster Employees before, on and after the completion of the Business Separation and, as of the completion of the Business Separation, the SVM Group shall assume and agree to pay, perform, fulfill and discharge, in accordance with their respective terms all such Liabilities.  Except as provided in this Agreement, the TG Group shall be responsible for the Liabilities arising in connection with the employment by the SVM Group or the TG Group of the TruGreen Employees before, on and after the completion of the Business Separation and, as of the completion of the TG Operating Entities Contribution, TruGreen and Controlled shall assume and agree to pay, perform, fulfill and discharge, in accordance with their respective terms all such Liabilities.

 

Notwithstanding the foregoing, to the extent that

 

(i)                                      any benefit is provided to any Combined Group Employee under or through an employee benefit plan intended to be qualified under Section 401(a) of the Code, the Liabilities for such benefits shall first be payable from such plan and, to the extent the assets of such plan or any underlying trust or other funding vehicle are not sufficient to satisfy such Liabilities, as determined in accordance with applicable law;

 

(ii)                                   subject to Article VI, compensation is payable to any such Combined Group Employee in the form of an equity interest in the common stock of Holdings (and not under an employee benefit plan described in subclause (i)), such compensation shall be provided by Holdings;

 

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(iii)                                subject to Article VI, compensation is payable to any such Combined Group Employee in the form of an equity interest in the common stock of Controlled (and not under an employee benefit plan described in subclause (i)), such compensation shall be provided by Controlled;

 

(iv)                               any liability is listed on Schedule B , the SVM Group shall be responsible for such Liabilities; and

 

(v)                                  any benefit or compensation (including any benefit or compensation otherwise described in either subclause (i), (ii) or (iii)) payable to, or any other Liability in respect of, any such Combined Group Employee that is expressly allocated to a Party pursuant to the terms of this Agreement, such specific allocation shall control.

 

Except to the extent otherwise expressly provided under this Agreement, neither the Business Separation nor the Distribution will affect the allocation of any Liabilities with respect to any Combined Group Employee by and between the Parties.

 

Section 2.3.                                  TruGreen Employee Participation in ServiceMaster Plans .

 

Except as provided in this Agreement or in the Transition Services Agreement, TruGreen Employees shall cease to participate in the ServiceMaster Plans as of the completion of the Business Separation.

 

Section 2.4.                                  General Principles .

 

(a)                                  Non-Termination of Employment or Benefits .  Except as provided in this Agreement or as otherwise required by applicable law or Individual Agreement, no provision of this Agreement or the Separation and Distribution Agreement shall be construed to accelerate any vesting of or create any right or entitlement to any compensation or benefit whatsoever on the part of any Combined Group Employee.  Without limiting the generality of the foregoing, except as may be provided in an Individual Agreement, neither the Business Separation nor the Distribution shall cause any Combined Group Employee to be deemed to have incurred a termination of employment or shall have created any entitlement to any severance benefits or the commencement of any other benefits under any ServiceMaster Plan or any Individual Agreement.

 

(b)                                  No Right to Continued Employment .  Nothing contained in this Agreement shall confer any right to continued employment on any Combined Group Employee.  Except as provided in this Agreement, this Agreement shall not limit the ability of the SVM Group or the TG Group to change the position, compensation or benefits of any of its employees for performance-related, business, or any other reason or require any such entity to continue the employment of any such employee for any

 

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particular period of time; provided that the TG Group shall bear all Liability associated with any such termination of employment or modification of terms and conditions of employment with respect to any TruGreen Employee and, subject to Article IX of this Agreement, the SVM Group shall bear all Liability associated with any such termination of employment or modification of terms and conditions of employment with respect to any ServiceMaster Employee.

 

Section 2.5.                                  Reimbursement .

 

(a)                                  By TruGreen and Controlled .  From time to time after the completion of the Business Separation, TruGreen and Controlled shall promptly reimburse ServiceMaster and Holdings for the cost of any obligations or Liabilities that ServiceMaster and Holdings elect to, or are compelled to, pay or otherwise satisfy, that are or that pursuant to this Agreement have become, the responsibility of the TG Group.  ServiceMaster and Holdings shall invoice TruGreen and Controlled after the end of each fiscal month for all such costs (if any) in such fiscal month.  TruGreen and Controlled shall pay any amounts due by TruGreen and Controlled hereunder in immediately available funds within 30 days of TruGreen’s and Controlled’s receipt of each invoice therefor.  Any amount not paid within 30 days after the date when payable shall bear interest at the Applicable Rate (as defined in the Transition Services Agreement) from the date such amount is due.  TruGreen and Controlled shall not deduct, set off, counterclaim or otherwise withhold any amount owed by it to ServiceMaster and Holdings (on account of any obligation owed by ServiceMaster and Holdings, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing) against the amounts payable pursuant to this Agreement; provided , that in the event TruGreen and Contolled dispute any amount on an invoice, TruGreen and Controlled shall notify ServiceMaster and Holdings in writing within 20 days after TruGreen’s and Controlled’s receipt of such invoice and shall describe in detail the reason for disputing such amount, provide any documents or other materials supporting its dispute, and will be entitled to withhold only the amount in dispute during the pendency of the dispute.  TruGreen and Controlled shall cause the timely payment of the undisputed portion of each invoice in the manner set forth in this Agreement and shall be subject to late charges at the Applicable Rate and any other costs incurred by ServiceMaster and Holdings pursuant to this Section 2.5(a) on any amount that is unsuccessfully disputed.

 

(b)                                  By ServiceMaster and Holdings .  From time to time after the completion of the Business Separation, ServiceMaster and Holdings shall promptly reimburse TruGreen and Controlled for the cost of any obligations or Liabilities that TruGreen and Controlled elect to, or are compelled to, pay or otherwise satisfy, that are or that pursuant to this Agreement have become, the responsibility of the SVM Group.  TruGreen and Controlled shall invoice ServiceMaster and Holdings after the end of each fiscal month for all such costs (if any) in such fiscal month.  ServiceMaster and Holdings shall pay any amounts due by ServiceMaster and Holdings hereunder in immediately available funds

 

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within 30 days of ServiceMaster’s and Holdings’s receipt of each invoice therefor.  Any amount not paid within 30 days after the date when payable shall bear interest at the Applicable Rate (as defined in the Transition Services Agreement) from the date such amount is due.  ServiceMaster and Holdings shall not deduct, set off, counterclaim or otherwise withhold any amount owed by it to TruGreen and Controlled (on account of any obligation owed by the TG Group, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing) against the amounts payable pursuant to this Agreement; provided , that in the event ServiceMaster and Holdings dispute any amount on an invoice, ServiceMaster and Holdings shall notify TruGreen and Controlled in writing within 20 days after ServiceMaster’s and Holdings’s receipt of such invoice and shall describe in detail the reason for disputing such amount, provide any documents or other materials supporting its dispute, and will be entitled to withhold only the amount in dispute during the pendency of the dispute.  ServiceMaster and Holdings shall cause the timely payment of the undisputed portion of each invoice in the manner set forth in this Agreement and shall be subject to late charges at the Applicable Rate and any other costs incurred by TruGreen and Controlled pursuant to this Section 2.5(b) on any amount that is unsuccessfully disputed.

 

Section 2.6.                                  Payroll and Related Taxes .  Subject to the services to be performed by ServiceMaster pursuant to the Transition Services Agreement, with respect to the portion of the tax year ending on and including the Business Separation, ServiceMaster will (i) be responsible for all payroll obligations, tax withholding and reporting obligations regarding, and (ii) furnish a Form W-2 or similar earnings statement to, all TruGreen Employees who were employed by the SVM Group or the TG Group during such period.  Subject to the services to be performed by ServiceMaster pursuant to the Transition Services Agreement, with respect to the remaining portion of the tax year, the TG Group will (i) be responsible for all payroll obligations, tax withholding and reporting obligations regarding, all TruGreen Employees, and (ii) furnish a W-2 or similar earning statement to, all TruGreen Employees.  With respect to each affected TruGreen Employee, the SVM Group and the TG Group shall, and shall cause their respective Affiliates to (to the extent practicable and to the extent permitted by applicable Law) (i) treat TruGreen (or the applicable member of the TG Group) as a “successor employer” and treat ServiceMaster (or the applicable member of the SVM Group) as a “predecessor” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, to the extent appropriate, for purposes of taxes imposed under the United States Federal Insurance Contributions Act, as amended (“ FICA ”), or the United States Federal Unemployment Tax Act, as amended (“ FUTA ”), (ii) cooperate with each other to avoid, to the extent possible, the restart of FICA and FUTA upon or following the Business Separation with respect to each such TG Employee for the tax year during which the Business Separation occurs, and (iii) file tax returns, exchange wage payment information and report wage payments made by the respective predecessor and successor employer on separate IRS Forms W-2 or similar earnings statements to each such TG

 

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Employee for the tax year in which the Business Separation occurs, in a manner provided in Section 4.02(1) of Revenue Procedure 2004-53.

 

ARTICLE III.

 

TRUGREEN PLANS GENERALLY

 

Section 3.1.                                  Establishment of TruGreen Mirror Plans .

 

(a)                                  Mirror Plans .  TruGreen shall have adopted, or shall have caused to be adopted, the following TruGreen Mirror Plans, effective as of the completion of the Business Separation: the TruGreen Welfare Plans, the TruGreen 401(k) Plan, and the TruGreen Deferred Compensation Plan.  TruGreen or its Subsidiaries shall become the plan sponsor of, and from and after the date of adoption of each Plan, shall have sole responsibility for each TruGreen Mirror Plan.  Except as provided in this Agreement, each TruGreen Mirror Plan shall be substantially similar in all material respects to the corresponding ServiceMaster Plan as in effect immediately prior to the adoption of such TruGreen Mirror Plan (including, without limitation, the right of the sponsor and/or the participating employers to modify, amend, alter or terminate any such Plan).

 

(b)                                  Stand Alone TruGreen Plans .  To the extent that, at the completion of the Business Separation, TruGreen or its Subsidiaries maintain any Plans and programs for its employees that are separate and distinct from the ServiceMaster Plans, TruGreen and its Subsidiaries shall continue to maintain, operate and contribute to the separate Plans and programs in accordance with their terms.

 

Section 3.2.                                  Terms of Participation by TruGreen Employees

 

(a)                                  Right and Entitlements .  Subject to the express terms and conditions of this Agreement and the Transition Services Agreement, each of the TruGreen Mirror Plans shall be, with respect to TruGreen Employees who are participants in such Plan, the successors in interest to and shall recognize rights and entitlements under the corresponding ServiceMaster Plans in effect as of the completion of the Business Separation in which such TruGreen Employees participated prior to the completion of the Business Separation.  The Parties agree that TruGreen Employees are not entitled to receive duplicative benefits for the same periods of service from the ServiceMaster Plans and the TruGreen Plans.  Notwithstanding anything in this Section 3.2(a) to the contrary (but subject to the provisions of Section 3.2(b)), if in the reasonable determination of ServiceMaster requiring any TruGreen Mirror Plan to replicate each right or entitlement under the corresponding ServiceMaster Plan ( i ) would result in an unreasonable administrative burden on, or in an unreasonable expense for, TruGreen and its Subsidiaries, or ( ii ) conflict with any provision of applicable law, the applicable TruGreen Mirror Plan may provide the eligible TruGreen Employees with rights and

 

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entitlements that are substantially comparable in the aggregate to those previously in effect under the corresponding ServiceMaster Plan.

 

(b)                                  Service and Other Factors Determining Benefits .  With respect to TruGreen Employees, each TruGreen Mirror Plan shall provide that all service, all compensation, and all other factors affecting benefit determinations that, as of the completion of the Business Separation, were recognized under the corresponding ServiceMaster Plan (for periods immediately before the completion of the Business Separation) shall receive full recognition, credit, and validity and be taken into account under such TruGreen Mirror Plan to the same extent as though arising under such TruGreen Mirror Plan, except to the extent that duplication of benefits would result.  Notwithstanding the immediately preceding sentence, in no event shall the crediting of service or any other action taken pursuant to the immediately preceding sentence result in the duplication of benefits for any Combined Group Employee under any ServiceMaster Plan and any TruGreen Plan.  All beneficiary designations made by TruGreen Employees under the corresponding ServiceMaster Plan shall be transferred to and be in full force and effect under the corresponding TruGreen Mirror Plans until such beneficiary designations are replaced or revoked by the TruGreen Employees who made the beneficiary designation.

 

(c)                                   Power to Amend .  Notwithstanding the foregoing provisions of this Section 3.2, nothing in this Agreement other than those provisions specifically set forth herein to the contrary shall preclude TruGreen or its Subsidiaries from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any TruGreen Plan, any benefit under any Plan or any trust, insurance policy or funding vehicle related to any TruGreen Plan.

 

Section 3.3.                                  Time Off Benefits .  As of the completion of the Business Separation, TruGreen or its Subsidiaries shall credit (or shall continue to credit) each TruGreen Employee with the amount of accrued but unused vacation time, paid time off and other time off benefits as such TruGreen Employee had with the SVM Group and the TG Group immediately prior to the completion of the Business Separation.  (For the avoidance of doubt, none of the transactions contemplated in this Agreement or the Separation and Distribution Agreement shall entitle any TruGreen Employee to a payment in respect of accrued but unused vacation time, paid time off, or other time off benefits.)  Following the completion of the Business Separation, TruGreen Employees shall be subject to vacation and paid time off policies of TruGreen or its Subsidiary employing the TruGreen Employee.

 

Section 3.4.                                  We Listen Dispute Resolution Plan .  Commencing on January 1, 2009, ServiceMaster, on behalf of itself and its Subsidiaries and Affiliates, entered into agreements with all employees to use the We Listen Dispute Resolution Plan (“ We Listen ”) as the sole and exclusive program to resolve disputes through several resolution steps and finally by binding arbitration.  The We Listen program includes the original

 

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2009 program, as well as amendments in 2012 and 2013.  As of the completion of the Business Separation, ServiceMaster assigns its rights under We Listen to TruGreen, and TruGreen assumes the obligations of ServiceMaster under We Listen as to all TruGreen Employees and applicants for employment with TruGreen, as well as for all Transition Employees for claims arising after their employment by the TG Group or its subsidiaries.

 

ARTICLE IV.

 

HEALTH AND WELFARE

 

Section 4.1.                                  Assumption of Health and Welfare Plans .

 

(a)                                  Cessation of Coverage in ServiceMaster Plans .  ServiceMaster maintains health and welfare plans for the benefit of eligible Combined Group Employees (the “ ServiceMaster Welfare Plans ”).  Subject to the services, if any, to be performed by ServiceMaster pursuant to the Transition Services Agreement, on the completion of the Business Separation, each person who is a TruGreen Employee on such date shall cease to be covered under the ServiceMaster Welfare Plans.

 

(b)                                  Claims Arising Prior to Completion of the Business Separation .  On or after the completion of the Business Separation, ServiceMaster or the ServiceMaster Welfare Plans shall remain responsible for all Liabilities in respect of or relating to TruGreen Employees relating to claims or expenses incurred under the ServiceMaster Welfare Plans on or prior to the completion of the Business Separation.  For purposes of the foregoing sentence, to the extent that an eligible beneficiary under any such ServiceMaster Welfare Plan commences a hospital confinement on or prior to the completion of the Business Separation that continues after the completion of the Business Separation, all expenses related to such hospitalization (including any related services that are incurred during the period of the same continuous hospital confinement) shall be considered part of the claim incurred on or prior to the completion of the Business Separation.  All other claims shall be deemed incurred on the date the actual expense is incurred.

 

(c)                                   No Transfer of Assets Pertaining to Welfare Plans .  Nothing in this Agreement shall require ServiceMaster or any ServiceMaster Welfare Plan to transfer assets or reserves with respect to the ServiceMaster Welfare Plans to TruGreen or the TruGreen Welfare Plans.

 

Section 4.2.                                  Adoption of Health and Welfare Plans .

 

(a)                                  Comparable Terms .  Effective as of the completion of the Business Separation, TruGreen shall adopt or shall cause to be adopted for the benefit of eligible TruGreen Employees, health and welfare plans, including, but not limited to, plans providing (i) executive long-term disability insurance and (ii) health, dental and life

 

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insurance benefits (the “ TruGreen Welfare Plans ”) that are substantially the same as the benefits provided under the corresponding ServiceMaster Welfare Plan in which such individuals were participating immediately prior to the completion of the Business Separation.  Notwithstanding the immediately preceding sentence, TruGreen or its Subsidiaries may alter the terms and conditions of the TruGreen Welfare Benefit Plans relative to the terms and conditions of the ServiceMaster Welfare Benefit Plans to the extent that TruGreen or its Subsidiaries reasonably determines in good faith that it can not provide substantially the same benefits at a commercially reasonable cost because (i) the number of persons who will be participants in the TruGreen Welfare Plans is significantly smaller than the number of participants in the ServiceMaster Welfare Plans immediately prior to the completion of the Business Separation, (ii) the TruGreen Welfare Plan will be funded through an insured arrangement, while the corresponding ServiceMaster Welfare Plan was funded under a self-insured arrangement or (iii) of the inability of the TruGreen Benefit Plans to procure on commercially reasonable terms contracts with the same third party vendors who assisted in administering the ServiceMaster Welfare Plans.  For purposes of the immediately preceding sentence, an amount up to or equal to 105% of the costs incurred by TruGreen or its Subsidiaries in respect of the TruGreen Welfare Plans, as determined on a per capita basis, immediately prior to the completion of the Business Separation shall be deemed to be commercially reasonable.  In addition, TruGreen and its Subsidiaries shall retain the right to modify, amend, alter or terminate the terms of any TruGreen Welfare Plan to the same extent that the SVM Group had such rights under the corresponding ServiceMaster Welfare Plan.

 

(b)                                  Terms of Participation in TruGreen Welfare Plans .  TruGreen shall cause the TruGreen Welfare Plans to waive all limitations as to preexisting conditions, exclusions, service conditions and waiting period limitations, and any evidence of insurability requirements applicable to any TruGreen Employees and Transition Employees other than such limitations, exclusions, and conditions that were in effect with respect to TruGreen Employees as of the completion of the Business Separation, in each case under the corresponding ServiceMaster Welfare Plan.

 

(c)                                   COBRA .  As of the Distribution Date, TruGreen or its Subsidiaries shall be responsible for administering compliance with the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), with respect to TruGreen Employees and any of their dependents having rights derived from such TruGreen Employees for the period after the Distribution Date.  TruGreen or its Subsidiaries shall assume any Liabilities of ServiceMaster and the ServiceMaster Plans to provide COBRA coverage to any TruGreen Employee, any former TruGreen Employee, and any of their dependents who incurred a qualifying event under COBRA on or prior to the Distribution Date and who is still eligible to receive such continuing coverage after the Distribution Date.

 

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(d)                                  Workers’ Compensation Claims .  Effective on the completion of the Business Separation, TruGreen or its Subsidiaries shall be responsible for all Liabilities for TruGreen Employees related to any and all workers’ compensation claims and coverage, whether arising under any law of any state, territory, or possession of the U.S. or the District of Columbia and that arise on or after the completion of the Business Separation.  Notwithstanding the preceding sentence, after the completion of the Business Separation, TruGreen may seek indemnification with respect to any workers’ compensation claims arising entirely from occurrences prior to the completion of the Business Separation pursuant to Article VIII of the Separation and Distribution Agreement.  With respect to any claim for worker’s compensation or similar benefits by a TruGreen Employee made after the completion of the Business Separation, TruGreen or its Subsidiaries shall be solely responsible for such claim and for complying with all applicable laws with respect thereto.

 

ARTICLE V.

 

401(K) PLANS

 

Section 5.1.                                  Establishment of the TruGreen 401(k) Plan .  Prior to the completion of the Business Separation, TruGreen shall take any and all steps necessary or appropriate to establish, or cause one or more of its Subsidiaries to establish, a defined contribution plan and trust to be effective as of the completion of the Business Separation for the benefit of hourly and salaried TruGreen Employees (the “ TruGreen 401(k) Plan ”).  The TruGreen 401(k) Plans shall have terms substantially similar in all material respects to the ServiceMaster 401(k) Plan.  TruGreen or its Subsidiaries shall be responsible for taking or causing to be taken all necessary, reasonable, and appropriate action to establish, maintain, and administer the TruGreen 401(k) Plan so that it qualifies under Section 401(a) of the Code and the related trust thereunder is exempted from Federal income taxation under Section 501(a)(1) of the Code.  For the avoidance of doubt, nothing in this Section 5.1 shall be construed to require TruGreen or its Subsidiaries to maintain any investment option which the fiduciaries (as such term is defined in Section 3(21) of ERISA) of the TruGreen 401(k) Plan deem to be imprudent or inappropriate for the TruGreen 401(k) Plan or which cannot be maintained without commercially unreasonable cost or administrative burden for the TruGreen 401(k) Plan and its administrator.

 

Section 5.2.                                  Assumption of Liabilities and Transfer of Assets .

 

(a)                                  Transfer of Liabilities .  Effective as of the completion of the Business Separation, but subject to the asset transfer specified in Section 5.2(b) below, the TruGreen 401(k) Plan shall assume and be solely responsible for all Liabilities for or relating to TruGreen Employees under the ServiceMaster 401(k) Plan.  TruGreen or its Subsidiaries shall be responsible for all ongoing rights of or relating to TruGreen

 

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Employees for future participation (including the right to make contributions through payroll deductions) in the TruGreen 401(k) Plans.

 

(b)                                  Trust to Trust Transfer .  Effective as of the completion of the Business Separation (or such other date as may be agreed between the Parties), ServiceMaster shall cause the account balances (including any outstanding loan balances) in the ServiceMaster 401(k) Plan attributable to TruGreen Employees to be transferred in cash and in-kind (including, but not limited to, participant loans), to the TruGreen 401(k) Plan, and TruGreen or its Subsidiaries shall cause the TruGreen 401(k) Plan to accept such transfer or accounts and underlying assets and, effective as of the date of such transfer, to assume and to fully perform pay or discharge, all obligations of the ServiceMaster 401(k) Plans relating to the accounts of TruGreen Employees (to the extent those assets related to those accounts are actually transferred from the ServiceMaster 401(k) Plan).  The transfer shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(l)-1, and Section 208 of ERISA.  Subject to the generally applicable requirements of this Section 5.2(b), the named fiduciaries (as such term is defined in ERISA) of the TruGreen 401(k) Plans and the ServiceMaster 401(k) Plans shall cooperate in good faith to effect the transfers contemplated by this Section 5.2(b) in an efficient and effective manner and in the best interests of participants and beneficiaries, including, but not limited to, determining whether and to what extent any investments held under the ServiceMaster 401(k) Plan (other than participant loans) shall be liquidated prior to the transfer date to enable the value of such investments to be transferred to the TruGreen 401(k) Plan in cash or cash equivalents.

 

ARTICLE VI.

 

EQUITY BASED AND OTHER LONG-TERM INCENTIVE AWARDS

 

Section 6.1.                                  General Treatment of Outstanding Awards; Adoption of New Stock Incentive Plan .

 

(a)                                  Distribution of Shares .  Each Combined Group Employee shall continue to hold his or her shares of ServiceMaster Common Stock subject to the terms and conditions of the ServiceMaster MSIP and the applicable subscription agreement pursuant to which such shares were acquired.  Subject to and pursuant to the terms and conditions set forth in the Separation and Distribution Agreement, on the Distribution Date, Holdings shall distribute to each Combined Group Employee holding shares of ServiceMaster Common Stock as of the Record Date, one share of TruGreen Common Stock for each share of ServiceMaster Common Stock held by such Combined Group Employee on the Record Date.

 

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(b)                                  Crediting of RSUs and DSUs .  Each Combined Group Employee shall continue to hold his or her ServiceMaster RSUs and ServiceMaster DSUs subject to the terms and conditions of the ServiceMaster MSIP and the applicable agreements evidencing such ServiceMaster RSUs and ServiceMaster DSUs.  Under the terms of the Common Group Employees’ agreements evidencing the ServiceMaster RSUs and ServiceMaster DSUs, if Holdings makes any distribution of ServiceMaster Common Stock or other securities (such as the distribution of TruGreen Common Stock to ServiceMaster Common Stock holders), Holdings is required to credit the Common Group Employees’ account with that number of additional shares of other securities that would have been distributed with respect to that number of shares of ServiceMaster Common Stock underlying the Common Group Employee’s ServiceMaster RSUs and ServiceMaster DSUs as of the record date of the distribution.  Accordingly, in connection with and subject to the occurrence of the Distribution as set forth in the Separation and Distribution Agreement, on the Distribution Date; ( i ) each Combined Group Employee holding ServiceMaster RSUs as of the Record Date shall be credited with one TruGreen RSU for each ServiceMaster RSU held by such Combined Group Employee on the Record Date; and ( ii ) each Combined Group Employee holding ServiceMaster DSUs as of the Record Date shall be credited with one TruGreen DSU for each ServiceMaster DSU held by such Combined Group Employee on the Record Date.

 

(c)                                   Conversion of Options .  Under Section 3.3 of the ServiceMaster MSIP, if and to the extent necessary or appropriate to reflect any extraordinary dividend or other similar transaction affecting the ServiceMaster Common Stock (such as the distribution of TruGreen Common Stock to ServiceMaster Common Stock holders), the Board of Directors of Holdings (the “ Board ”) is authorized to proportionately adjust the number, class, exercise price or other terms of any outstanding ServiceMaster Awards, including ServiceMaster Options.  On or before the date hereof, the Board has approved, and Holdings shall take or cause to be taken all actions necessary to cause, the following adjustments to be made to ServiceMaster Option as of the Distribution Date but subject to the occurrence of the Distribution as set forth in the Separation and Distribution Agreement: ( i ) each ServiceMaster Option held by a ServiceMaster Employee as of the Record Date shall be adjusted by dividing the number of shares of ServiceMaster Common Stock underlying such Option by the ServiceMaster Conversion Ratio and multiplying the per share exercise price of such ServiceMaster Option by the ServiceMaster Conversion Ratio, and ( ii ) each ServiceMaster Option held by a TruGreen Employee as of the Record Date shall be converted to a TruGreen Option, with the number of shares of TruGreen Common Stock underlying such TruGreen Option to be determined by dividing the number of shares of ServiceMaster Common Stock underlying the ServiceMaster Option by the TruGreen Conversion Ratio, and the per share exercise price of such TruGreen Option to be determined by multiplying the per share exercise price of the ServiceMaster Option by the TruGreen Conversion Ratio.

 

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(d)                                  Terms of ServiceMaster Awards and TruGreen Awards .  Under Section 3.3 of the ServiceMaster MSIP, the Board is authorized to make such provisions with respect to the holders of outstanding ServiceMaster Awards as the Board determines necessary or appropriate to reflect any extraordinary dividend or other similar transaction affecting the ServiceMaster Common Stock (such as the distribution of TruGreen Common Stock to ServiceMaster Common Stock holders).  On or before the date hereof, the Board has approved, and Holdings shall take or cause to be taken all actions necessary to cause, TruGreen Awards issued pursuant to Sections 6.2(a), 6.2(b) and 6.2(c) hereof to have terms and conditions substantially similar to the corresponding terms and conditions of the corresponding ServiceMaster Awards, with such modifications as the Board deems necessary or appropriate to reflect the employment of ServiceMaster Employees with the SVM Group following the Distribution and the employment of TruGreen Employees with the TG Group following the Distribution.  In addition, on or prior to the Distribution Date, the Board shall take such actions as it deems necessary to modify ServiceMaster Awards as it deems necessary or appropriate to reflect the employment of ServiceMaster Employees with the SVM Group following the Distribution and the employment of TruGreen Employees with the TG Group following the Distribution.  The terms and conditions of ServiceMaster Awards and TruGreen Awards, as so modified by the Board, shall be set forth in the documentation evidencing the ServiceMaster Awards and TruGreen Awards, which documentation shall be distributed to ServiceMaster Employees and TruGreen Employees on or about the Distribution Date.

 

(e)                                   Assumption of Liability; Settlement of TruGreen Awards .  Subject to any applicable Law and/or the terms and conditions of any guaranty, financing or security agreement or document entered into by the TG Group, Controlled hereby assumes all Liabilities with respect to TruGreen Awards issued to TruGreen Employees and ServiceMaster Employees in connection with the Distribution and agrees that ( i ) Controlled shall honor the TruGreen RSUs, TruGreen DSUs and TruGreen Options, and ( ii ) Controlled shall issue the number of shares of TruGreen Common Stock underlying such TruGreen DSUs, TruGreen RSUs or TruGreen Options according to the terms and conditions set forth in the documentation evidencing such TruGreen Awards.

 

(f)                                    Cooperation .  Subject to applicable Law and taking into consideration the terms and conditions of any guaranty, financing or security document entered into by the SVM Group or the TG Group, the Parties agree to cooperate in good faith and consider administering ServiceMaster Awards and TruGreen Awards consistently upon termination of employment of a TruGreen Employee or a ServiceMaster Employee.  Without limiting the generality of the foregoing,

 

(i)                                      Controlled shall notify Holdings of a separation from service of a TruGreen Employee holding ServiceMaster Awards, and identify the reason for such separation from service as soon as reasonably practicable before such

 

16



 

separation from service but in any event not later than ten (10) business days following such separation from service,

 

(ii)                                   Holdings shall notify Controlled of a separation from service of a ServiceMaster Employee holding TruGreen Awards, and identify the reason for such separation from service as soon as reasonably practicable before such separation from service but in any event not later than ten (10) business days following such separation from service,

 

(iii)                                to the extent the employee holds shares of TruGreen Common Stock, Controlled shall notify Holdings within ten (10) business days prior to exercising its right to repurchase all or a portion of a TruGreen Employee’s or a ServiceMaster Employee’s shares of TruGreen Common Stock, and to the extent the employee holds shares of ServiceMaster Common Stock, for the one year period following the Distribution Date, subject to applicable Law and taking into consideration the terms and conditions of any guaranty, financing or security document entered into by the SVM Group and such other factors that Holdings deems necessary or appropriate, Holdings shall, upon such notice, use reasonably practicable efforts under the circumstances to repurchase the same portion of such TruGreen Employee’s or ServiceMaster Employee’s shares of ServiceMaster Common Stock, and

 

(iv)                               to the extent the employee holds shares of ServiceMaster Common Stock, Holdings shall notify Controlled within ten (10) business days prior to exercising its right to repurchase all or a portion of a ServiceMaster Employee’s or a TruGreen Employee’s shares of ServiceMaster Common Stock, and to the extent the employee holds shares of TruGreen Common Stock, for the one year period following the Distribution Date, subject to applicable Law and taking into consideration the terms and conditions of any guaranty, financing or security document entered into by the TG Group and such other factors that Controlled deems necessary and appropriate, Controlled shall, upon such notice, use reasonably practicable efforts under the circumstances to repurchase the same portion of such ServiceMaster Employee’s or TruGreen Employee’s shares of TruGreen Common Stock.

 

Each Party agrees to coordinate with the other Party to provide each other with the necessary information to enable each Party to fulfill its obligation pursuant to this Article VI.

 

(g)                                   Tax Reporting and Withholding for Equity-Based Awards .  The SVM Group will be responsible for (i) all income, payroll, or other tax reporting related to income of TruGreen Employees from ServiceMaster Awards, and (ii) remitting applicable tax withholdings for such income to each applicable taxing authority; it being understood that in taking such actions the SVM Group shall be acting as the agent for the

 

17



 

TG Group.  The TG Group will be responsible for (i) all income, payroll, or other tax reporting related to income of ServiceMaster Employees from TruGreen Awards, and (ii) remitting applicable tax withholdings for such income to each applicable taxing authority; it being understood that in taking such actions the TG Group shall be acting as the agent for the SVM Group.  The SVM Group and the TG Group acknowledge and agree that the Parties shall cooperate with each other and with third-party providers to effectuate withholding and remittance of taxes, as well as required tax reporting, in a timely, efficient, and appropriate manner.

 

(h)                                  Adoption of TruGreen Stock Incentive Plan .  As of the Distribution Date, Controlled shall adopt the TruGreen SIP for purposes of awarding TruGreen employees, officers and non-employee directors equity-based compensation on the terms and conditions set forth in the TruGreen SIP.  The TruGreen SIP shall have substantially the same terms and conditions as the ServiceMaster MSIP; provided that Controlled shall retain the right to modify, amend, alter or terminate the terms of the TruGreen SIP to the same extent that ServiceMaster had such rights under the ServiceMaster MSIP.

 

ARTICLE VII.

 

SHORT TERM INCENTIVES

 

Section 7.1.                                  Incentive Plans .  The TG Group shall pay, or shall cause to be paid, to TruGreen Employees short-term incentive awards under the Annual Bonus Plan with respect to the year 2013, subject to the terms and conditions of the Annual Bonus Plan; provided, that, a TruGreen Employee who is employed by the TG Group as of the payment date under the Annual Bonus Plan shall be deemed to be employed for purposes of determining eligibility for payment under the Annual Bonus Plan.  ServiceMaster shall reimburse the TG Group for the amount of such short-term incentive awards and any associated FICA incurred by the TG Group.  The SVM Group and the TG Group acknowledge and agree that the Parties shall cooperate with each other and with third-party providers to effectuate withholding and remittance of taxes, as well as required tax reporting, in a timely, efficient, and appropriate manner.

 

ARTICLE VIII.

 

DEFERRED COMPENSATION PLANS

 

Section 8.1.                                  Establishment of the TruGreen DCP .  Prior to the completion of the Business Separation, Controlled or its Subsidiaries shall take steps to establish a nonqualified deferred compensation plan to be effective as of the completion of the Business Separation for the benefit of TruGreen Employees (the “ TruGreen DCP ”) that is substantially similar to the ServiceMaster DCP.  Controlled or its Subsidiaries shall be responsible for taking or causing to be taken all necessary, reasonable, and appropriate action to establish, maintain, and administer the TruGreen DCP in a manner consistent

 

18



 

with the provisions of Section 409A of the Code and the regulations promulgated thereunder.

 

Section 8.2.                                  Liabilities Under the ServiceMaster DCP .  All Liabilities, other than in respect of ServiceMaster DSUs, accrued under the ServiceMaster DCP related to TruGreen Employees and TruGreen DSUs (whether such TruGreen DSUs are held by TruGreen Employees or ServiceMaster Employees) shall be assumed by and, be the sole responsibility of, Controlled or its Subsidiaries.  For the avoidance of doubt, all Liabilities in respect of ServiceMaster DSUs (whether such ServiceMaster DSUs are held by TruGreen Employees or ServiceMaster Employees) shall be retained by and, be the sole responsibility of, Holdings or its Subsidiaries.

 

Section 8.3.                                  Asset Transfer .  Immediately after the completion of the Business Separation, Holdings, its Subsidiaries or the funding vehicle established by Holdings or its Subsidiaries to assist in satisfying the liabilities under the ServiceMaster DCP shall transfer to Controlled, its Subsidiaries or a funding vehicle established by Controlled or its Subsidiaries to assist in satisfying the liabilities under the TruGreen DCP, assets in such form as Holdings or its Subsidiaries shall reasonably determine equal to the product of ( i ) the value as of the completion of the Business Separation of any reserves established by Holdings or its Subsidiaries to assist in satisfying the liabilities under the ServiceMaster DCP multiplied by ( ii ) a fraction, the numerator of which is the estimated liabilities under the ServiceMaster DCP in respect of TruGreen Employees and the denominator of which is the estimated aggregate liabilities to all participants under the ServiceMaster DCP; provided , however, that liabilities related to ServiceMaster DSUs and TruGreen DSUs shall be excluded for purposes of the forgoing calculation.  Any TruGreen Common Shares distributed in the Distribution to the funding vehicle established by Holdings or its Subsidiaries to assist it in satisfying the liabilities in respect of the ServiceMaster DSUs shall, on the Distribution Date, be transferred to the funding vehicle established by Controlled or its Subsidiaries to assist in satisfying the liabilities in respect of TruGreen DSUs.  All valuations or estimations necessary or appropriate to determine the asset transfer described in this Section 8.3 shall be made by Holdings or its Subsidiaries in good faith.

 

ARTICLE IX.

 

TRANSITION EMPLOYEES

 

Section 9.1.                                  Transition Employees .  The Parties agree that the individuals providing services under the Transition Services Agreement (the “ Transition Employees ”) shall be employed by the SVM Group during a transition period beginning on the Business Separation and ending on a date to be agreed upon between ServiceMaster and TruGreen (for each such Transition Employee, the “ Transfer Date ”).  Except as provided in this Agreement, the Transition Employees will be treated as ServiceMaster Employees for purposes of this Agreement.

 

19



 

Section 9.2.                                  Non-Solicitation; Offer of Employment with the TG Group .  The Parties hereby acknowledge and agree that, except for offers of employment by TruGreen or a member of the TG Group as provided in Article IX of this Agreement, the Non-Solicitation provision agreed to by the Parties in the Separation and Distribution Agreement shall apply in respect of the Transition Employees.  On or before the Transfer Date, TruGreen may, or may cause a member of the TG Group, to offer employment to the Transition Employee as of the Transfer Date, with such terms and conditions of employment as TruGreen or such member of the TG Group shall deem appropriate.  The employment of each Transition Employee who accepts TruGreen’s offer of employment shall be transferred to the TG Group as of the Transfer Date.  As of the applicable Transfer Date, the applicable member of the TG Group shall credit each Transition Employee with the amount of accrued but unused vacation time, paid time off and other time off benefits as such Transition Employee had with the SVM Group immediately prior to such Transfer Date under the vacation policies then in effect.  With respect to each Transition Employee who accepts TruGreen’s or the TG Group member’s offer of employment, each TruGreen Mirror Plan shall provide that all service, all compensation, and all other factors affecting benefit determinations that, as of the completion of the Transfer Date, were recognized under the corresponding ServiceMaster Plan (for periods immediately before the Transfer Date) shall receive full recognition, credit, and validity and be taken into account under such TruGreen Mirror Plan to the same extent as though arising under such TruGreen Mirror Plan, except to the extent that duplication of benefits would result.  Notwithstanding the immediately preceding sentence, in no event shall the crediting of service or any other action taken pursuant to the immediately preceding sentence result in the duplication of benefits for any Transition Employee under any ServiceMaster Plan and any TruGreen Plan.

 

Section 9.3.                                  Severance .  For the avoidance of doubt, the Parties acknowledge that ServiceMaster may, in its sole discretion, amend or modify its severance guidelines to the extent ServiceMaster deems appropriate, so that any Transition Employee accepting TruGreen’s offer of employment shall not be eligible to receive severance under such guidelines as a result of the transfer of the Transition Employee’s employment from the SVM Group to the TG Group.

 

Section 9.4.                                  Rollover of Account Balances for Transition Employees .  TruGreen shall cause the TruGreen 401(k) accept a direct rollover of the ServiceMaster 401(k) account balances of any Transition Employee that elects to make a direct rollover as of such Transition Employee’s Transfer Date.

 

Section 9.5.                                  Equity .  Except as otherwise determined by the Parties (in a manner consistent with Section 409A of the Code), each Transition Employee who commences employment with the TG Group shall be deemed to have experienced a termination of employment for purposes of the terms and conditions of such Transition Employee’s ServiceMaster Awards and TruGreen Awards as of the Transfer Date.

 

20



 

Section 9.6.                                  ServiceMaster DCP .  For the avoidance of doubt, the Parties acknowledge that, for purposes of the ServiceMaster DCP, each Transition Employee who commences employment with the TG Group shall experience a termination of employment as of the Transfer Date.

 

ARTICLE X.

 

GENERAL AND ADMINISTRATIVE

 

Section 10.1.                           Sharing of Information .  Subject to any consents required or any other restrictions imposed by any applicable Law, each Party shall each provide to the other Party and its agents and vendors all information that such other Party may reasonably request to enable the requesting Party to administer efficiently and accurately each of its Plans and the ServiceMaster Awards and TruGreen Awards and to determine the scope of, and to fulfill, its obligations under this Agreement.  Any information shared or exchanged pursuant to this Agreement shall be kept confidential by the Parties and used only for and to the extent necessary to establish, maintain and administer the plans, programs and agreements as contemplated by this Agreement.

 

Section 10.2.                           Employee Records .  Subject to any consents required or any other restrictions imposed by any applicable Law, ServiceMaster shall provide to TruGreen copies of any and all employment records and information (including, but not limited to, any personnel files, Form I-9, Form W-2 or other IRS forms) with respect to TruGreen Employees (and, on the applicable Transfer Dates, with respect to Transition Employees).  Such provision of records and information generally shall occur as soon as administratively practicable on or after the Business Separation (or, with respect to Transition Employees, on or after the applicable Transfer Date).

 

Section 10.3.                           Cooperation .

 

(a)                                  General Corporation .  Each of the Parties hereto will use its commercially reasonable efforts to promptly take, or cause to be taken, any and all actions and to do, or cause to be done, any and all things necessary, proper and advisable (including, without limitation, any actions required under applicable laws and regulations) to fulfill their respective duties obligations contemplated by this Agreement.  The actions described in the immediately preceding sentence shall include, without limitation, adopting plans or plan amendments and the payment of compensation due to any ServiceMaster Employee, any TruGreen Employee.  Each of the Parties hereto shall cooperate fully on any issue relating to the duties and obligations contemplated by this Agreement for which the other

 

21



 

Party seeks a determination letter or any other filing, consent, or approval with respect to governmental authorities.

 

(b)                                  Consent of Third Parties .  If any provision of this Agreement is dependent on the consent of any third party (such as a vendor) and such consent is withheld, the Parties shall use their commercially reasonable efforts to implement the applicable provisions of this Agreement to the full extent practicable.  If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties shall negotiate in good faith to implement the provision in a mutually satisfactory manner.

 

Section 10.4.                           Survival .  This Agreement shall survive the Distribution Date.

 

Section 10.5.                           Interpretation .  Section 14.12 of the Separation and Distribution Agreement is incorporated herein by reference.

 

Section 10.6.                           No Third Party Beneficiaries .

 

(a)                                  Nothing in this Agreement shall confer upon any person (nor any beneficiary thereof) any rights under or with respect to any plan, program or arrangement described in or contemplated by this Agreement and each person (and any beneficiary thereof) shall be entitled to look only to the express terms of any such plan, program or arrangement for his or her rights thereunder.

 

(b)                                  Nothing in this Agreement shall create any right of any Person to object or to refuse to assent to TruGreen’s assumption of, succession to or creation of any Individual Agreement, or other agreement or plan, program or arrangement relating to employment, employment separation, severance or employee benefits, nor shall this Agreement be construed as recognizing that any such rights exist.

 

(c)                                   Nothing in this Agreement shall amend or shall be construed to amend any plan, program or arrangement described in or contemplated by this Agreement.

 

Section 10.7.                           Notices .  All notices, claims, certificates, requests, demands and other communications hereunder shall be made or given in accordance with the provisions of Section 14.4 of the Separation and Distribution Agreement.

 

Section 10.8.                           Governing Law; Jurisdiction .  Section 14.10 of the Separation and Distribution Agreement is incorporated herein by reference.

 

Section 10.9.                           Specific Performance .  Section 14.13 of the Separation and Distribution Agreement is incorporated herein by reference.

 

Section 10.10.                    Dispute   Article XI of the Separation and Distribution Agreement is incorporated herein by reference.

 

22



 

Section 10.11.                    No Assignment; No Amendment; Counterparts .  This Agreement may not be assigned by either Party (except by operation of law) without the written consent of the other, and shall bind and inure to the benefit of the Parties hereto and their respective successors and permitted assignees.  This Agreement may not be amended or supplemented except by an agreement in writing signed by ServiceMaster and TruGreen.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

 

[Signature page follows]

 

23



 

IN WITNESS WHEREOF, each Party has caused its duly authorized officer to execute this Agreement, as of the date first written above.

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President and Chief

 

 

Financial Officer

 

 

 

 

 

SERVICEMASTER GLOBAL HOLDINGS, INC. (solely for purposes of Section 2.2(ii) and Article VI)

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Chief Financial Officer

 

 

 

 

 

TRUGREEN LIMITED PARTNERSHIP

 

 

 

By:

TruGreen, Inc., its general partner

 

 

 

 

 

By:

/s/ David W. Martin

 

 

Name:

David W. Martin

 

 

Title:

Senior Vice President and Chief

 

 

Financial Officer

 

 

 

 

 

TRUGREEN HOLDING CORPORATION solely for purposes of Section 2.2(iii) and Article VI)

 

 

 

 

 

By:

/s/ David W. Martin

 

 

Name:

David W. Martin

 

 

Title:

Senior Vice President and Chief

 

 

Financial Officer

 

[Signature Page to Employee Matters Agreement]

 



 

List of Omitted Schedules

 

The following schedules to the Employee Matters Agreement, dated as of January 14, 2014, by and among ServiceMaster Global Holdings, Inc., The ServiceMaster Company, LLC, TruGreen Limited Partnership and TruGreen Holding Corporation have not been provided herein:

 

Schedule A                                    Employees

 

Schedule B                                    Liabilities

 

The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

 


Exhibit 2.4

 

EXECUTION VERSION

 

TAX MATTERS AGREEMENT

 

by and among

 

ServiceMaster Global Holdings, Inc.,

 

The ServiceMaster Company, LLC,

 

TruGreen Holding Corporation

 

and

 

TruGreen Limited Partnership

 

Dated as of January 14, 2014

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

 

DEFINITIONS

 

 

 

Section 1.01

General

2

Section 1.02

Additional Definitions

8

 

 

 

ARTICLE II

 

 

 

ALLOCATION, PAYMENT AND INDEMNIFICATION

 

 

 

Section 2.01

Responsibility for Taxes; Indemnification

9

Section 2.02

Preparation of Tax Returns

10

Section 2.03

Payment of Sales, Use or Similar Taxes

10

Section 2.04

Audits and Proceedings

10

Section 2.05

Carrybacks

11

Section 2.06

Refunds

11

Section 2.07

Earnings and Profits Allocation

11

 

 

 

ARTICLE III

 

 

 

TAX-FREE STATUS OF THE DISTRIBUTION

 

 

 

Section 3.01

Restrictions Relating to the Distribution

12

Section 3.02

Procedures Regarding Opinions and Rulings

13

 

 

 

ARTICLE IV

 

 

 

COOPERATION

 

 

 

Section 4.01

General Cooperation

14

Section 4.02

Retention of Records

15

 

 

 

ARTICLE V

 

 

 

MISCELLANEOUS

 

 

 

Section 5.01

Dispute Resolution

15

Section 5.02

Tax Sharing Agreements

16

Section 5.03

Survival of Covenants

16

Section 5.04

Entire Agreement

17

 

i



 

Section 5.05

No Third-Party Beneficiaries

17

Section 5.06

Coordination with the Employee Matters Agreement

17

Section 5.07

Miscellaneous

17

 

ii



 

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT (this “ Agreement ”), dated as of January 14, 2014, is by and among ServiceMaster Global Holdings, Inc., a Delaware corporation (“ Distributing ”), The ServiceMaster Company, LLC, a Delaware limited liability company (“ SVM LLC ”), TruGreen Holding Corporation, a Delaware corporation (“ Controlled ”) and TruGreen Limited Partnership, a Delaware limited partnership (“ TG LP ”).  Each of Distributing, SVM LLC and Controlled is sometimes referred to herein as a “ Party ” and, collectively, as the “ Parties .”  Capitalized terms used and not otherwise defined herein are used as defined in Section 1.01.

 

WHEREAS, Distributing, through SVM LLC and certain of its other Subsidiaries, is currently engaged in the TG Business and the SVM Business;

 

WHEREAS, the Distributing Board of Directors has determined that it is in the best interests of Distributing, its stockholders and SVM LLC to separate the TG Business from Distributing and SVM LLC, which shall be owned, operated and conducted, directly or indirectly (including through TG LP), by Controlled;

 

WHEREAS, the parties have entered into the Separation and Distribution Agreement, pursuant to which ( i ) Distributing and its subsidiaries will undertake certain internal restructuring transactions, ( ii ) a wholly-owned indirect subsidiary of Distributing will contribute certain entities conducting the TG Business to Controlled and ( iii ) the common stock of Controlled will be distributed by Distributing’s subsidiaries to Distributing, and by Distributing to its stockholders on a pro rata basis;

 

WHEREAS, prior to consummation of the Distribution, Distributing was the common parent corporation of an affiliated group of corporations within the meaning of Section 1504 of the Code of which Controlled was a member;

 

WHEREAS, the Parties intend that, for federal income Tax purposes, the TG Operating Entities Contribution and the Distribution shall qualify as a reorganization pursuant to Section 368(a)(1)(D) of the Code that is tax-free to Distributing, Controlled and Distributing’s stockholders pursuant to Sections 355 and 361 and related provisions of the Code; and

 

WHEREAS, the Parties wish to ( i ) provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes, and ( ii ) set forth certain covenants and indemnities relating to the preservation of the tax-free status of the the TG Operating Entities Contribution and the Distribution.

 



 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties covenants and agrees as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                              General .  As used in this Agreement, the following terms shall have the following meanings:

 

Accounting Firm ” has the meaning set forth in Section 5.01.

 

Affiliate ” has the meaning set forth in the Separation and Distribution Agreement.

 

Agreement ” has the meaning set forth in the preamble to this Agreement.

 

Ancillary Agreements ” has the meaning set forth in the Separation and Distribution Agreement.

 

Business Day ” means any day that is not a Saturday, a Sunday, or any other day on which banks are required or authorized by Law to be closed in the City of New York.

 

Closing Date ” means the date on which the Distribution occurs.

 

Code ” means the Internal Revenue Code of 1986, as amended from time to time.

 

Controlled ” has the meaning set forth in the preamble to this Agreement.

 

Conversions ” has the meaning set forth in the Separation and Distribution Agreement.

 

Counsel ” means Debevoise & Plimpton LLP.

 

Distributing ” has the meaning set forth in the preamble to this Agreement.

 

Distributing Consolidated Return ” shall mean any federal, state or local consolidated, combined or unitary Tax Return filed by any member of the SVM Group that includes any member of the TG Group.

 

Distributing Disqualifying Action ” means ( i ) any action (or the failure to take any action) within its control by Distributing or any member of the SVM Group (including entering into any agreement, understanding or arrangement or any negotiations within the meaning of Section 355(e) of the Code and Treasury Regulation Section

 

2



 

1.355-7, or any other regulations promulgated thereunder, with respect to any transaction or series of transactions) that, ( ii ) any event (or series of events) involving the capital stock of Distributing, any assets of Distributing or any assets of any member of the SVM Group that, ( iii ) any breach by Distributing or any member of the SVM Group of any representation or covenant made by them in this Agreement or the Existing Distributing Stockholders Agreement (as defined in the Separation and Distribution Agreement) as amended and restated in the manner contemplated by Section 3.2(a)(ix) of the Separation and Distribution Agreement that, or ( iv ) any action (or the failure to take any action) within its control by Distributing or any member of the SVM Group that would, or could reasonably be expected to, cause to be untrue any statement, information, covenant or representation in any of the Tax Materials and that, in each case, would adversely affect the Tax-Free Status of the Transactions; provided , however , the term Distributing Disqualifying Action shall not include any action (or non-action) described in the Separation and Distribution Agreement or any Ancillary Agreement or that is undertaken pursuant to the Internal Reorganization, the TG Operating Entities Contribution or the Distribution.

 

Distribution ” has the meaning set forth in the Separation and Distribution Agreement.

 

Distribution Effective Time ” has the meaning set forth in the Separation and Distribution Agreement.

 

Due Date ” means ( i ) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and ( ii ) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.

 

Employee Matters Agreement ” means the Employee Matters Agreement by and among the Parties dated as of date hereof.

 

Executive Committee ” has the meaning set forth in the Separation and Distribution Agreement.

 

Extraordinary Transaction ” shall mean any action that is not in the Ordinary Course of Business, but shall not include any action that is undertaken pursuant to the Internal Reorganization, the TG Operating Entities Contribution, or the Distribution.

 

Fifty-Percent or Greater Interest ” has the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

Final Determination ” means the final resolution of liability for any Tax for any taxable period, by or as a result of ( i ) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; ( ii ) a final settlement

 

3



 

with the IRS, a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, that resolves the entire Tax liability for any taxable period; ( iii ) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax; or ( iv ) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.

 

Income Taxes ” means any Tax measured by reference to net income or profit; provided , however , that Income Taxes shall not include any Transaction Taxes.

 

Indemnifying Party ” means a Party from which another Party is entitled to seek indemnification pursuant to the provisions of Section 2.01.

 

Indemnified Party ” means a Party that is entitled to seek indemnification from another Party pursuant to the provisions of Section 2.01.

 

Information ” has the meaning set forth in Section 4.01.

 

Information Request ” has the meaning set forth in Section 4.01.

 

Internal Reorganization ” has the meaning set forth in the Separation and Distribution Agreement.

 

IRS ” means the U.S. Internal Revenue Service or any successor thereto, including its agents, representatives and attorneys.

 

IRS Ruling ” means the federal income tax ruling, and any supplements thereto, issued to Distributing by the IRS in connection with the Internal Reorganization, the TG Operating Entities Contribution, and the Distribution.

 

Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).

 

Opinion ” means the opinion of Counsel with respect to certain Tax aspects of the TG Operating Entities Contribution and the Distribution.

 

Ordinary Course of Business ” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person.

 

Party ” has the meaning set forth in the preamble to this Agreement.

 

Person ” has the meaning set forth in the Separation and Distribution Agreement.

 

4



 

Post-Closing Period ” means any taxable period (or portion thereof) beginning after the Closing Date.

 

Pre-Closing Period ” means any taxable period (or portion thereof) ending on or before the Closing Date.

 

Proposed Acquisition Transaction ” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by the management or stockholders of Controlled, is a hostile acquisition, or otherwise, as a result of which Controlled would merge or consolidate with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from Controlled and/or one or more holders of outstanding shares of Controlled capital stock, as the case may be, a number of shares of Controlled capital stock that would, when combined with any other changes in ownership of Controlled capital stock pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of ( i ) the value of all outstanding shares of stock of Controlled as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or ( ii ) the total combined voting power of all outstanding shares of voting stock of Controlled as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series.  Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include ( A ) the adoption by Controlled of a stockholder rights plan, ( B ) issuances by Controlled of Controlled capital stock that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d) or ( C ) to the extent described in the IRS Ruling, any issuance by Controlled of Controlled capital stock to stockholders so long as stockholders that owned more than 50% of all outstanding shares of stock of Controlled immediately after the Distribution receive more than 50% of such issuance on a pro rata basis.  For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging stockholders.  This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly.  Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

 

Reportable Acquisition Transaction ” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.

 

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Restriction Period ” has the meaning set forth in Section 3.01(b).

 

SAG ” has the meaning ascribed to the term “separate affiliated group” in Section 355(b)(3)(B) of the Code.

 

Separation and Distribution Agreement ” means the Separation and Distribution Agreement by and between the Parties dated as of January     , 2014.

 

Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

 

SVM Business ” has the meaning set forth in the Separation and Distribution Agreement.

 

SVM Group ” has the meaning set forth in the Separation and Distribution Agreement.

 

SVM LLC ” has the meaning set forth in the preamble to this Agreement.

 

SVM Parties ” means Distributing and SVM LLC.

 

Tax ” means ( i ) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any Taxing Authority, including income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social security, value added and other taxes of any kind whatsoever, ( ii ) any interest, penalties or additions attributable thereto and ( iii ) all liabilities in respect of any items described in clause (i) or (ii) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).

 

Tax Detriment ” shall mean an increase in the Tax liability (or reduction in refund or credit or item of deduction or expense) of a taxpayer for any taxable period.

 

Tax-Free Status of the Transactions ” means the tax-free treatment accorded to the TG Operating Entities Contribution and the Distribution as set forth in the IRS Ruling and the Opinion.

 

Taxing Authority ” means any U.S. federal, state or local or foreign governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

 

Tax Item ” shall mean any item of income, gain, loss, deduction, expense or credit, or other attribute that may have the effect of increasing or decreasing any Tax.

 

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Tax Materials ” means ( i ) the IRS Ruling, ( ii ) the Opinion, ( iii ) each submission to the IRS in connection with the IRS Ruling, ( iv ) the representation letter from Distributing addressed to Counsel supporting the Opinion, ( v ) the representation letter from Controlled addressed to Counsel supporting the Opinion and ( vi ) any other materials delivered or deliverable by Distributing or Controlled in connection with the rendering by Counsel of the Opinion and the issuance by the IRS of the IRS Ruling.

 

Tax Matter ” has the meaning set forth in Section 4.01.

 

Tax Retu rn” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) supplied or required to be supplied to, or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for refund.

 

Tax Notice ” has the meaning set forth in Section 2.04.

 

TG Business ” has the meaning set forth in the Separation and Distribution Agreement.

 

TG Disqualifying Action ” means ( i ) any action (or the failure to take any action) within its control by Controlled or any member of the TG Group (including entering into any agreement, understanding or arrangement or any negotiations within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, with respect to any transaction or series of transactions) that, ( ii ) any event (or series of events) involving the capital stock of Controlled, any assets of Controlled or any assets of any member of the TG Group that, ( iii ) any breach by Controlled or any member of the TG Group of any representation or covenant made by them in this Agreement or the Controlled Stockholders Agreement (as defined in the Separation and Distribution Agreement) that, or ( iv ) any action (or the failure to take any action) within its control by Controlled or any member of the TG Group that would, or could reasonably be expected to, cause to be untrue any statement, information, covenant or representation in any of the Tax Materials and that, in each case, would adversely affect the Tax-Free Status of the Transactions; provided , however , the term TG Disqualifying Action shall not include ( A ) any Distributing Disqualifying Action, ( B ) any action (or non-action) described in the Separation and Distribution Agreement or any Ancillary Agreement or that is undertaken pursuant to the Internal Reorganization, the TG Operating Entities Contribution or the Distribution or ( C ) to the extent described in the IRS Ruling, any issuance by Controlled of Controlled capital stock to stockholders so long as stockholders that owned more than 50% of all outstanding shares of stock of Controlled immediately after the Distribution receive more than 50% of such issuance on a pro rata basis.

 

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TG Group ” has the meaning set forth in the Separation and Distribution Agreement.

 

TG LP ” has the meaning set forth in the preamble to this Agreement.

 

TG Operating Entities Contribution ” has the meaning set forth in the Separation and Distribution Agreement.

 

TG Parties ” means Controlled and TG LP.

 

Transaction Taxes ” shall mean ( i ) any Tax or Tax Detriment resulting from any income or gain recognized by Distributing, Controlled or their Affiliates as a result of the TG Operating Entities Contribution or the Distribution failing to qualify for tax-free treatment under Sections 355 and 368 and related provisions of the Code or corresponding provisions of other applicable Tax Laws and ( ii ) any Tax resulting from any income or gain recognized by Distributing or its Affiliates under Treasury Regulation Section 1.1502-13 or 1.1502-19 (or any corresponding provisions of other applicable Tax Laws) as a result of the TG Operating Entities Contribution, or the Distribution.

 

Transfer Taxes ” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed on the Internal Reorganization, the TG Operating Entities Contribution or the Distribution.

 

Treasury Regulations ” means the final and temporary (but not proposed) income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

Unqualified Tax Opinion ” means a “will” opinion, without substantive qualifications, of a nationally-recognized law firm to the effect that a transaction will not affect the Tax-Free Status of the Transactions.  For the avoidance of doubt, Counsel is a nationally-recognized law firm.

 

U.S. ” means the United States of America.

 

Section 1.02                              Additional Definitions .  Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Separation and Distribution Agreement.

 

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ARTICLE II

 

ALLOCATION, PAYMENT AND INDEMNIFICATION

 

Section 2.01                              Responsibility for Taxes; Indemnification .

 

(a)                                  The SVM Parties shall indemnify and hold harmless the TG Group for all Tax Detriments (and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, incurred in connection therewith) attributable to ( i ) any Income Taxes of Distributing or any member of the SVM Group for which the TG Group is liable by reason of the TG Group being severally liable for such Taxes pursuant to Treasury Regulation Section 1.1502-6 or any analogous provision of state or local Law; ( ii ) all Transaction Taxes, except as otherwise specifically provided in Section 2.01(b)(iii); ( iii ) any Transfer Taxes in accordance with Section 2.03; ( iv ) any Taxes of the TG Group resulting from the breach of any obligation or covenant of Distributing under this Agreement; ( v ) any Income Taxes of the SVM Group or the TG Group for any Pre-Closing Period reflected or required to be reflected on a Distributing Consolidated Return and ( vi ) any Taxes of the SVM Group for any Post-Closing Period.

 

(b)                                  The TG Parties shall indemnify and hold harmless the SVM Group for all Tax Detriments (and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, incurred in connection therewith) attributable to ( i ) any Taxes of the TG Group or attributable to the TG Business other than Taxes described in Section 2.01(a); ( ii ) any Taxes of the SVM Group resulting from the breach of any obligation or covenant of Controlled under this Agreement and ( iii ) Transaction Taxes or Transfer Taxes, but only to the extent such Transaction Taxes or Transfer Taxes arise from ( x ) a breach by Controlled or any of its Affiliates of the covenants under Article III or ( y ) a TG Disqualifying Action.

 

(c)                                   For purposes of this Article II, any liability for Taxes attributable to a taxable period that begins before and ends after the Closing Date shall be apportioned between the portion of such period ending on the Closing Date and the portion beginning on the day after the Closing Date ( i ) in the case of real and personal property Taxes, by apportioning such Taxes on a per diem basis and ( ii ) in the case of all other Taxes, on the basis of a closing of the books as of the close of business on the Closing Date.

 

(d)                                  If an Indemnifying Party is required to indemnify an Indemnified Party pursuant to this Section 2.01, the Indemnified Party shall submit its calculations of the amount required to be paid pursuant to this Section 2.01, showing such calculations in sufficient detail so as to permit the Indemnifying Party to understand the calculations. Subject to the following sentence, the Indemnifying Party shall pay to the Indemnified Party, no later than ten (10) Business Days after the Indemnifying Party receives the Indemnified Party’s calculations, the amount that the Indemnifying Party is required to pay the Indemnified Party under this Section 2.01.  If the Indemnifying Party disagrees with such calculations, it must notify the Indemnified Party of its disagreement in writing within ten (10) Business Days of receiving such calculations, in which case no payment shall be made until the disagreement is resolved in accordance with the provisions of this Agreement.

 

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(e)                                   All indemnity payments pursuant to this Section 2.01 shall be treated as relating to periods ending on or prior to the Distribution Effective Time and shall be treated for all tax purposes as ( i ) an adjustment to the amount of cash contributed to Controlled pursuant to Section 2.1 of the Separation and Distribution Agreement and ( ii ) to the extent the aggregate net indemnity payments to the SVM Group and its Affiliates would exceed the amount of such contributed cash, as a distribution with respect to stock of Controlled.

 

Section 2.02                              Preparation of Tax Returns .

 

(a)                                  Distributing shall prepare and timely file (taking into account applicable extensions) all Distributing Consolidated Returns, and shall pay all Taxes (subject to any indemnification rights it may have against Controlled) and shall be entitled to all refunds shown to be due and payable on such Tax Returns.

 

(b)                                  Unless otherwise required by a Taxing Authority, the Parties agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with this Agreement.

 

(c)                                   Notwithstanding anything to the contrary in this Agreement, for all Tax purposes, the parties shall report any Extraordinary Transactions that are caused or permitted by Controlled or any of its Subsidiaries on the Closing Date after the completion of the Distribution as occurring on the day after the Closing Date pursuant to Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) or any similar or analogous provision of state, local or foreign Law.  Distributing shall not make a ratable allocation election pursuant to Treasury Regulation Section 1.1502-76(b)(2)(ii)(D) or any similar or analogous provision of Law.

 

Section 2.03                              Payment of Sales, Use or Similar Taxes .  Subject to Section 2.01(b), all Transfer Taxes shall be borne solely by the SVM Parties.  Notwithstanding anything in this Section 2.03 to the contrary, the Party required by applicable Law shall remit payment for any Transfer Taxes and duly and timely file such Tax Returns, subject to any indemnification rights it may have against the other Parties, which shall be paid in accordance with Section 2.01(d).  Controlled, Distributing, SVM LLC and their respective Affiliates shall cooperate in ( i ) determining the amount of such Taxes, ( ii ) providing all requisite exemption certificates and ( iii ) preparing and timely filing any and all required Tax Returns for or with respect to such Taxes with any and all appropriate Taxing Authorities.

 

Section 2.04                              Audits and Proceedings . Notwithstanding any other provision hereof, if after the Closing Date, an Indemnified Party or any of its Affiliates receives any notice, letter, correspondence, claim or decree from any Taxing Authority (a “ Tax Notice ”) and, upon receipt of such Tax Notice, believes it has suffered or potentially could suffer any Tax liability for which it is indemnified pursuant to Section 2.01, the

 

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Indemnified Party shall promptly deliver such Tax Notice to the applicable Indemnifying Party; provided , however , that the failure of the Indemnified Party to provide the Tax Notice to the Indemnifying Party shall not affect the indemnification rights of the Indemnified Party pursuant to Section 2.01, except to the extent that the Indemnifying Party is actually prejudiced by the Indemnified Party’s failure to deliver such Tax Notice.  The Indemnifying Party shall have the right to handle, defend, conduct and control, at its own expense, any Tax audit or other proceeding that relates to such Tax Notice; provided , however , that, in all events, Distributing shall have the right to handle, defend, conduct and control, at its own expense, any Tax audit or proceeding relating to Transaction Taxes and Transfer Taxes.  Neither the SVM Parties nor the TG Parties shall compromise or settle any such Tax audit or other proceeding that it has the authority to control pursuant to the preceding sentence without the consent of the other Parties, which consent shall not be unreasonably withheld.  If the SVM Parties or the TG Parties have the authority to control and fail within a reasonable time after notice to defend any such Tax Notice or the resulting audit or proceeding as provided herein, such Parties shall be bound by the results obtained by the other Parties in connection therewith.  The Indemnifying Party shall pay to the Indemnified Party the amount of any Tax liability within fifteen (15) days after a Final Determination of such Tax liability.

 

Section 2.05                              Carrybacks, etc .  To the extent permitted by applicable Law, neither Controlled nor any of its Affiliates shall carry back any federal income Tax Item to a Pre-Closing Period.  Controlled will not, and will not permit its subsidiaries to, take any action with respect to any Pre-Closing Period of any Subsidiary that is treated as a partnership for income tax purposes that would increase the Income Taxes for which the SVM Parties are responsible under Section 2.01 without the prior written consent of Distributing and SVM LLC.

 

Section 2.06                              Refunds .  Any refund or credit of Income Tax received from a Taxing Authority by any member of the SVM Group or the TG Group reflected or required to be reflected on a Distributing Consolidated Return shall be the property of the SVM Group, regardless of whether all or any portion of such refund or credit is attributable to the TG Business.

 

Section 2.07                              Earnings and Profits Allocation .  Distributing will advise Controlled in writing of the decrease in Distributing earnings and profits attributable to the Distribution under Section 312(h) of the Code on or before the first anniversary of the Distribution.

 

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ARTICLE III

 

TAX-FREE STATUS OF THE DISTRIBUTION

 

Section 3.01                              Restrictions Relating to the Distribution .

 

(a)                                  General .  Controlled shall not, and shall not permit any member of the TG Group, to take or fail to take any action that constitutes a TG Disqualifying Action.

 

(b)                                  Restrictions .  Prior to the first day following the second anniversary of the Distribution (the “ Restriction Period ”), Controlled:

 

(i)                                      shall continue and cause to be continued the active conduct of the TG Business, in each case taking into account Section 355(b)(3) of the Code, in all cases as conducted immediately prior to the Distribution.

 

(ii)                                   shall not voluntarily dissolve or liquidate (including any action that is a liquidation for federal income Tax purposes).

 

(iii)                                shall not ( A ) enter into any Proposed Acquisition Transaction or, to the extent Controlled has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur, ( B ) redeem or otherwise repurchase (directly or through an Affiliate) any stock, or rights to acquire stock, ( C ) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the relative voting rights of its capital stock (including through the conversion of any capital stock into another class of capital stock), ( D ) merge or consolidate with and into any other Person or ( E ) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Tax Materials) that in the aggregate (and taking into account any other transactions described in this Section 3.01(b)(iii)) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in Controlled or otherwise jeopardize the Tax-Free Status of the Transactions.

 

(iv)                               shall not, and shall not permit any member of its SAG to, sell, transfer, or otherwise dispose of or agree to sell, transfer or otherwise dispose (including in any transaction treated for federal income tax purposes as a sale, transfer or disposition) of assets (including any shares of capital stock of a Subsidiary) that, in the aggregate, constitute more than 30% of the consolidated gross assets of Controlled and members of its SAG.  The foregoing sentence shall not apply to ( A ) sales, transfers, or dispositions of assets in the Ordinary Course of Business, ( B ) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, ( C ) any assets transferred to a Person that is disregarded as an entity separate from the transferor for U.S. federal income tax purposes or to Controlled or another member of its SAG or ( D ) any mandatory or optional repayment (or pre-payment) of any indebtedness of Controlled (or any member of its SAG).  The percentage of consolidated gross assets of Controlled and its SAG sold, transferred, or otherwise disposed of, shall be based on the fair market value

 

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of the gross assets of Controlled and the members of its SAG as of the Closing Date.  For purposes of this Section 3.01(b)(iv), a merger or consolidation of Controlled (or a member of its SAG) with and into any Person shall constitute a disposition of all of the assets of Controlled or such member.

 

(c)           Notwithstanding the restrictions imposed by Section 3.01(b), during the Restriction Period, Controlled may proceed with any of the actions or transactions described therein, if ( x ) Controlled first obtains (at its expense) an Unqualified Tax Opinion reasonably acceptable to Distributing and SVM LLC to the effect that such action or transaction will not affect the Tax-Free Status of the Transactions or ( y ) at Controlled’s request, Distributing (at the expense of Controlled) obtains a supplemental ruling from the IRS, that such action or transaction will not affect the Tax-Free Status of the Transactions, unless Distributing and SVM LLC shall have waived in writing the requirement to obtain such ruling or opinion.  In no event shall Distributing be required to file any such ruling request unless Controlled represents that ( i ) it has read such ruling request, and ( ii ) all information and representations, if any, relating to any member of the TG Group contained in such ruling request documents are (subject to any qualifications therein) true, correct and complete.  During the Restriction Period, Controlled shall provide all information reasonably requested by Distributing relating to any transaction involving an acquisition (directly or indirectly) of Controlled stock within the meaning of Section 355(e) of the Code.

 

(d)           Certain Issuances of Capital Stock .  If Controlled proposes to enter into any Reportable Acquisition Transaction or, to the extent Controlled has the right to prohibit any Reportable Acquisition Transaction, proposes to permit any Reportable Acquisition Transaction to occur, in each case, during the Restriction Period, Controlled shall provide Distributing, no later than ten (10) days following the signing of any written agreement with respect to any Reportable Acquisition Transaction, with a written description of such transaction (including the type and amount of capital stock to be issued in such transaction).

 

(e)           Tax Reporting .  Each of Distributing, SVM LLC, Controlled and TG LP covenants and agrees that it will not take, and will cause its respective Affiliates to refrain from taking, any position on any income or franchise Tax Return that is inconsistent with the Tax-Free Status of the Transactions.

 

Section 3.02  Procedures Regarding Opinions and Rulings .

 

(a)           Distributing shall have the right to obtain a supplemental ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion.  If Distributing determines to obtain such ruling or opinion, Controlled shall (and shall cause each member of the TG Group to) cooperate with Distributing and take any and all actions reasonably requested by Distributing in connection with obtaining such ruling or opinion (including by making any representation or reasonable covenant or providing any

 

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materials requested by the IRS or the law firm issuing such opinion); provided , however , that Controlled shall not be required to make (or cause any member of the TG Group to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control.  In connection with obtaining such ruling, Distributing shall apply for such ruling and shall have sole and exclusive control over the process of obtaining such ruling.  Distributing and Controlled shall each bear its own costs and expenses in obtaining a ruling or Unqualified Tax Opinion requested by Distributing.

 

(b)           Except as provided in Sections 3.01(c) and 3.02(a), neither Controlled nor any member of the TG Group shall seek any guidance from the IRS or any other Taxing Authority (whether written, verbal or otherwise) at any time concerning the Internal Reorganization, the TG Operating Entities Contribution or Distribution (including the impact of any transaction on the Internal Reorganization, the TG Operating Entities Contribution or Distribution).

 

ARTICLE IV

 

COOPERATION

 

Section 4.01          General Cooperation .  The Parties shall each cooperate fully (and each shall cause their respective Subsidiaries to cooperate fully) with all reasonable requests in writing (“ Information Request ”) from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for Tax refunds, Tax proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required in connection with any financial reporting (a “ Tax Matter ”).  Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“ Information ”) and shall include, at each Party’s own cost:

 

(a)           the provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

 

(b)           the execution of any document (including any power of attorney) in connection with any Tax proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Tax refund claim of the Parties or any of their respective Subsidiaries;

 

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(c)           the use of the Party’s commercially reasonable efforts to obtain any documentation in connection with a Tax Matter; and

 

(d)           the use of the Party’s commercially reasonable efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries.

 

Each Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters.

 

Section 4.02          Retention of Records .  Each Party shall retain or cause to be retained all Tax Returns, schedules and workpapers, and all material records or other documents relating thereto in their possession that have not previously been provided to the other Party or Parties, until sixty (60) days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records or documents.  A Party intending to destroy any material records or documents shall provide the other Parties with reasonable advance notice and the opportunity to copy or take possession of such records and documents.  The Parties hereto will notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.

 

ARTICLE V

 

MISCELLANEOUS

 

Section 5.01          Dispute Resolution .

 

(a)           Any dispute as to matters covered by this Agreement shall be submitted to the Executive Committee, and the Executive Committee shall seek to resolve such dispute through informal good faith negotiation.  In the event the Executive Committee fail to meet or, if they meet, fail to resolve the dispute within 10 Business Days, then the claiming Party will provide the other Parties with a written “ Notice of Dispute ,” describing ( i ) the issues in dispute and such Party’s position thereon, ( ii ) a summary of the evidence and arguments supporting such Party’s positions, ( iii ) a summary of the negotiations that have taken place to date and ( iv ) the name and title of the senior executives or their respective designees who will represent each Party.  The senior executives or their respective designees designated in such Notice of Dispute shall meet in person or by telephone as often as reasonably necessary to resolve the dispute and shall confer in a good faith effort to resolve the dispute.  If such senior executives or their

 

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respective designees decline to meet within the allotted time, or if they meet, fail to resolve the dispute within 20 Business Days after receipt of the Notice of Dispute, then any Party may pursue the remedy set forth in Section 5.01(b).

 

(b)           If the procedures set forth in Section 5.01(a) have been followed with respect to a dispute and such dispute remains unresolved, t he Parties shall appoint PricewaterhouseCoopers LLP to resolve any dispute as to matters covered by this Agreement (the “ Accounting Firm ”); provided however , that if PricewaterhouseCoopers LLP cannot to be so appointed, Distributing shall select another nationally recognized accounting firm to act as the Accounting Firm, subject to the consent of Controlled, not to be unreasonable withheld.   In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by the Parties and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor only of either the SVM Parties or the TG Parties.  The Parties shall require the Accounting Firm to resolve all disputes no later than thirty (30) days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final, conclusive and binding on the Parties.  The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the past practices prior to the Distribution Effective Date of Distributing and its Subsidiaries, except as otherwise required by applicable Law.  Unless otherwise agreed by the Parties, the Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination.  The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Parties.

 

Section 5.02          Tax Sharing Agreements .  All Tax sharing, indemnification and similar agreements, written or unwritten, as between Distributing, SVM LLC or another member of the SVM Group, on the one hand, and Controlled, TG LP or another member of the TG Group, on the other (other than this Agreement, the Separation and Distribution Agreement and any other Ancillary Agreement), shall be or shall have been terminated no later than the Distribution Effective Time and, after the Distribution Effective Time, none of Distributing, SVM LLC or another member of the SVM Group, or Controlled, TG LP or another member of the TG Group shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement.

 

Section 5.03          Survival of Covenants .  Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Effective Time and remain in full force and effect in accordance with their applicable terms; provided , however , that all indemnification for Taxes shall survive until sixty (60) days following the expiration of the applicable statute of

 

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limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification; provided , further , that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

 

Section 5.04          Entire Agreement .  Except as otherwise expressly provided in this Agreement, this Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, between or on behalf of the Parties hereto with respect to the subject matter of this Agreement.  In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the Separation and Distribution Agreement, the provisions of this Agreement shall govern and control.

 

Section 5.05          No Third-Party Beneficiaries .  Except as provided in Article II with respect to indemnified Parties, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

 

Section 5.06          Coordination with the Employee Matters Agreement .  To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes or Tax Items relating to the compensation of employees are set forth in the Employee Matters Agreement, such Taxes or Tax Items shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.

 

Section 5.07          Miscellaneous .  Section 13.1 (Amendment and Termination), Section 13.2 (Effect of Termination), Section 14.3 (Counterparts), Section 14.4 (Notices), Section 14.6 (Severability), Section 14.8 (Assignment), Section 14.10 (Governing Law), Section 14.11 (Headings), Section 14.12 (Interpretation), Section 14.13 (Specific Performance), Section 14.16 (Waiver) and Section 14.17 (Counterparts; Facsimile Signatures) of the Separation Agreement are incorporated by reference herein, mutatis mutandis .

 

[The remainder of this page is intentionally left blank.]

 

17



 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

 

SERVICEMASTER GLOBAL HOLDINGS, INC.

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title: 

Chief Financial Officer

 

 

 

 

 

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President and Chief
Financial Officer

 

 

 

 

 

 

 

TRUGREEN HOLDING CORPORATION

 

 

 

 

 

 

 

By:

/s/ David W. Martin

 

 

Name:

David W. Martin

 

 

Title:

Senior Vice President and Chief
Financial Officer

 

[Signature Page to Tax Matters Agreement]

 


Exhibit 2.5

 

EXECUTION COPY

 

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

THE SERVICEMASTER COMPANY, LLC

 

and

 

TRUGREEN LIMITED PARTNERSHIP

 

Dated as of January 14, 2014

 

 



 

TABLE OF CONTENTS

 

ARTICLE I

 

 

 

DEFINITIONS

 

 

 

SECTION 1.01.

Certain Defined Terms

1

SECTION 1.02.

Other Defined Terms

3

 

 

 

ARTICLE II

 

 

TRANSITION SERVICES

 

 

SECTION 2.01.

Provision of Transition Services

4

SECTION 2.02.

Contract Manager

4

SECTION 2.03.

Change in Service

4

SECTION 2.04.

Service Levels

5

SECTION 2.05.

Limitation on Transition Services

5

SECTION 2.06.

Intellectual Property

6

SECTION 2.07.

Services Migration

6

SECTION 2.08.

SVM Group Letters of Credit

7

 

 

 

ARTICLE III

 

SERVICE CHARGES

 

 

SECTION 3.01.

Service Fees

8

SECTION 3.02.

Invoices and Payment Terms

8

SECTION 3.03.

Documentation; Audit

9

SECTION 3.04.

Taxes

10

 

 

 

ARTICLE IV

 

DISCLAIMER OF REPRESENTATIONS AND WARRANTIES; LIMITATIONS OF LIABILITY; INDEMNIFICATION

 

 

SECTION 4.01.

Disclaimer of Representations and Warranties

10

SECTION 4.02.

Limitations of Liability

10

SECTION 4.03.

Indemnity

11

 

ii



 

TABLE OF CONTENTS

(cont’d)

 

 

 

Page

 

 

 

ARTICLE V

 

 

TERM AND TERMINATION

 

 

 

SECTION 5.01.

Term

11

SECTION 5.02.

Termination

11

SECTION 5.03.

Early Termination Charges

12

SECTION 5.04.

Effect of Termination

13

 

 

 

ARTICLE VI

 

COVENANTS

 

 

 

SECTION 6.01.

Confidentiality

13

SECTION 6.02.

Access to Computer Systems

13

 

 

 

ARTICLE VII

 

 

GENERAL PROVISIONS

 

 

 

SECTION 7.01.

Force Majeure Event

14

SECTION 7.02.

Dispute Resolution

14

SECTION 7.03.

Independent Contractor

15

SECTION 7.04.

Third-Party Beneficiaries

16

SECTION 7.05.

Amendment

16

SECTION 7.06.

Miscellaneous

16

 

 

 

EXHIBIT A

TRANSITION SERVICE SCHEDULES

 

 

 

 

SCHEDULE 2.08

SVM GROUP LETTERS OF CREDIT

 

 

iii



 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “ Agreement ”), is made as of January 14, 2014, by and between The ServiceMaster Company, LLC, a Delaware limited liability company (“ SVM ”), and TruGreen Limited Partnership, a Delaware limited partnership (“ TG ”) (each a “ Party ” and together, the “ Parties ”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Separation Agreement (as defined below).

 

WHEREAS, SVM and TG are parties to that certain Separation and Distribution Agreement, dated as of date hereof (the “ Separation Agreement ”);

 

WHEREAS, pursuant to the Separation Agreement, the parties thereto agreed to separate from SVM, the TG Business, which will be owned, operated and conducted, directly or indirectly, by TG; and

 

WHEREAS, in connection with the transactions contemplated by the Separation Agreement, SVM desires to provide (or cause to be provided) certain services on a transitional basis to TG and its Affiliates that conduct the TG Business (collectively, the “ Recipients ” and individually, a “ Recipient ”), in accordance with the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.                                              Certain Defined Terms .  As used herein, the following terms shall have the following meanings:

 

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

 

Applicable Payment Period ” has the meaning set forth in Section 3.02.

 

Applicable Rate ” means the prime lending rate per annum announced by JPMorgan Chase, N.A. from time to time, plus 5.5%.

 

Business Day ” means any day that is not a Saturday, a Sunday, or any other day on which banks are required or authorized by Law to be closed in the City of New York.

 

Force Majeure Event ” means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), including acts of God, storms, floods, fires,

 



 

earthquakes, civil disturbances, strikes, lockouts or other labor and industrial disputes and disturbances, embargo, fuel or energy shortage, acts of any government, acts of war (declared or undeclared), riots, insurrection and terrorism.

 

Information Technology ” means all hardware, computers, software, servers, workstations, routers, hubs, switches, data, databases, data communications lines, network and telecommunications equipment, Internet-related information technology infrastructure and other information technology equipment.

 

Providers ” means SVM and its Affiliates who provide services hereunder to the Recipients, either directly or indirectly through Third Party Contractors.

 

TG Change in Control ” means the first to occur of the following events after the Distribution Date:

 

(i)                                      the acquisition by any person, entity or “group” (as defined in Section 13(d) of the Exchange Act) of beneficial ownership of 50% or more of the combined voting power of TG’s then outstanding voting securities, other than any such acquisition by TG, any of its Subsidiaries, any employee benefit plan of TG or any of its Subsidiaries, or by the stockholders of TG party to the TG Registration Rights Agreement as of the date hereof (the “ Existing Investors ”), or any Affiliates of any of the foregoing;

 

(ii)                                   the merger, consolidation or other similar transaction involving TG, as a result of which persons who were stockholders of TG immediately prior to such merger, consolidation, or other similar transaction do not, immediately thereafter, own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the merged or consolidated company;

 

(iii)                                within any 24-month period, the persons who were directors of TG at the beginning of such period (the “ Incumbent Directors ”) shall cease to constitute at least a majority of the directors of TG; provided, that any director elected or nominated for election to the TG board of directors by any Existing Investor or its Affiliates or a majority of the Incumbent Directors then still in office shall be deemed to be an Incumbent Director for purposes of this clause (iii); or

 

(iv)                               the sale, transfer or other disposition of all or substantially all of the assets of TG and its Subsidiaries to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, Affiliates of TG.

 

Notwithstanding the foregoing, a registered public offering shall of TG Common Stock shall not constitute a TG Change in Control.

 

Transition Services ” means the services set forth in the Transition Service Schedules, including any tasks inherent in or necessary for the accomplishment of such services.

 

2



 

Transition Service Schedules ” means the schedules attached hereto as Exhibit A , including ( i ) the Transition Services Agreement — Non-IT Scope of Services and related pricing schedule, ( ii ) the Transition Services Agreements — IT — Three Year Scope of Services and related pricing schedule and ( iii ) the Transition Services Agreements — IT — Two Year Scope of Services and related pricing schedule, in each case as any of the foregoing may be amended by the Parties from time to time in accordance with Section 7.05 .

 

SECTION 1.02.                                              Other Defined Terms .  The following terms have the meanings defined for such terms in the Sections set forth below:

 

Term

 

Section

Additional Services

 

Section 2.01(b)

Agreement

 

Preamble

Arbitrator

 

Section 7.02(c)

Baseline Assumptions

 

Section 3.01(b)

Baseline Prices

 

Section 3.01(b)

Consents

 

Section 2.05(a)

Contract Manager

 

Section 2.02

Dispute

 

Section 7.02(b)

Executive Committee

 

Section 7.02(a)

IT Pricing Schedule

 

Section 3.01(b)

IT Schedules

 

Section 3.01(b)

JAMS Comprehensive Rules

 

Section 7.02(c)

JAMS Streamlined Rules

 

Section 7.02(c)

Migration Services

 

Section 2.07

Notice of Dispute

 

Section 7.02(b)

Party or Parties

 

Preamble

Protected Interests

 

Section 2.07

Recipients

 

Recitals

Separation Agreement

 

Recitals

Significant Service Shortfall

 

Section 2.04(b)

Stranded Costs

 

Section 2.07

SVM

 

Preamble

SVM Group LOCs

 

Section 2.08

Taxes

 

Section 3.04

Term

 

Section 5.01(b)

TG

 

Preamble

Third Party Contractors

 

Section 2.01(a)

Three Year IT Schedule

 

Section 3.01(b)

TSA Documents

 

Section 3.03

Two Year IT Schedule

 

Section 3.01(b)

 

3



 

ARTICLE II

 

TRANSITION SERVICES

 

SECTION 2.01.                                              Provision of Transition Services .

 

(a)                                                          Subject to the terms and conditions set forth herein, SVM and its Affiliates shall provide, directly or indirectly through Third Party contractors, subcontractors, vendors or other Third Party service providers (collectively, “ Third Party Contractors ”), to TG, or at TG’s direction, to other Recipients, the Transition Services during their respective Terms; provided , that SVM shall remain responsible for the performance of the services in accordance herewith.

 

(b)                                                          In the event that Recipients desire to have SVM or its Affiliates provide additional services that are not Transition Services (“ Additional Services ”), SVM or its Affiliates, in their sole discretion, may agree to provide, directly or indirectly through Third Party Contractors, such Additional Services.  Any request for an Additional Service shall be in writing and shall specify, as applicable ( i ) the type and the scope of the requested service, ( ii ) who shall perform the requested service, ( iii ) where and to whom the requested service is to be provided, ( iv ) the proposed term for the requested service and ( v ) the proposed fees to be paid by the Recipients for the requested service.  In the event that SVM and its Affiliates are to provide any Additional Service, the Parties shall enter into an amendment to this Agreement amending the Transition Service Schedules to reflect such Additional Service and such Additional Service shall be deemed to be part of this Agreement and the Transition Services from and after the date of such amendment.

 

SECTION 2.02.                                              Contract Manager .  Each Party shall appoint an individual to act as its primary point of operational contact for the administration and operation of this Agreement (each, a “ Contract Manager ”) who shall have overall responsibility for coordinating all activities undertaken by such Party hereunder, for acting as a day-to-day contact with the other Party, and for making available to the other Party the data, facilities, resources and other support services required for the performance of the services in accordance with the terms of this Agreement; provided , that for each Transition Service, the Contract Manager shall be permitted to delegate the foregoing responsibilities for such Transition Service to an individual identified on the Transition Service Schedule, and such representative shall be deemed to be the Contract Manager with respect to such Transition Service.  The initial Contract Managers for the Parties are set forth in the applicable Transition Service Schedules.  The Parties may change their respective Contract Managers from time to time upon notice to the other Party in accordance herewith.

 

SECTION 2.03.                                              Change in Service .  Any request for a change to a Transition Service shall be submitted in writing by the requesting Party to the other Party describing the proposed change in reasonable detail.  The Party receiving such request shall respond to the request as soon as practicable and the Parties shall use commercially reasonably efforts to negotiate reasonably practicable terms for implementing such change, including any changes in fees, if applicable; provided , that neither SVM nor its Affiliates shall have any obligation to

 

4



 

agree to such request if the change requested would adversely impact the cost, liability, or risk associated with providing or receiving the applicable Transition Service, or cause any other disruption or adverse impact on the business or operations of SVM or its Affiliates.  Each agreed upon change shall be documented by an amendment in writing to the applicable Transition Service Schedule.

 

SECTION 2.04.                                              Service Levels .

 

(a)                                                          The Transition Services shall be provided in a commercially reasonable manner and at a level substantially consistent with the level at which such Transition Services were provided (if applicable) to the Recipients within the 12 months prior to the Distribution Date.

 

(b)                                                          Subject to Sections 2.05 and 7.01 , if the quality or performance of any Transition Service provided hereunder falls materially below the standard required by Section 2.04(a) , such substandard quality or performance shall be managed through the dispute resolution process set forth in Section 7.02 .  In addition to any other rights TG may have pursuant to this Agreement, if SVM fails to rectify or cause to be rectified a Significant Service Shortfall as to which TG has provided SVM with prior written notice, TG may obtain replacement services from a Third Party and SVM shall pay the reasonable cost of any such replacement services, except as otherwise provided in the last sentence of this Section 2.04(b) , and subject in any case, to Section 4.02(b) , less the amount TG would have paid pursuant to this Agreement for such Transition Services. For purposes of this Section 2.04(b) , a “ Significant Service Shortfall ” shall be deemed to have occurred if the quality or performance of the Transition Services provided by a Provider hereunder falls materially below the standards required by Section 2.04(a) .  Notwithstanding the foregoing, if any Significant Service Shortfall was caused, in whole or in part, by the action or failure to act by TG or any Recipient, TG shall be responsible for all costs incurred by SVM in rectifying, or TG in replacing the services that are the subject of, such Significant Service Shortfall.

 

SECTION 2.05.                                              Limitation on Transition Services .

 

(a)                                                          A Provider shall not be required to provide Transition Services hereunder to the extent the provision of such services would require the Provider to violate any applicable Law or any Contract to which the Provider is a party; provided , that such Provider shall use commercially reasonable efforts to obtain, at the sole expense of TG, any waivers, permits, consents, orders or authorizations that may be required for the provisions of the Transition Services (the “ Consents ”); and provided , further , that to the extent such Provider is unable to obtain a Consent necessary to provide a Transition Service, the Provider shall, at TG’s request, use commercially reasonable efforts, at the sole expense of TG, to cooperate with the Recipients to obtain as promptly as practicable alternative arrangements for the provision of the applicable Transition Service.

 

(b)                                                          TG and other Recipients shall cooperate with SVM or other Providers to the extent necessary or appropriate to facilitate the performance of the Transition Services in

 

5



 

accordance herewith.  TG and other Recipients shall make available on a timely basis to SVM and the other Providers all information and materials requested by SVM or such other Providers to the extent reasonably necessary for the purposes of providing and receiving the Transition Services in accordance with this Agreement.  TG and other Recipients shall, upon reasonable notice, give SVM and the other Providers reasonable access, during regular business hours and at such other times as are reasonably required, to the relevant premises and personnel to the extent reasonably necessary for the purposes of providing and receiving Transition Services.  Without limiting the generality of the foregoing, the obligations of the Providers to provide the Transition Services hereunder are conditioned upon such Providers (and the Third Party Contractors engaged by them) being provided with reasonable access to, and all necessary rights to utilize, the Recipients’ information, facilities, personnel, assets, systems and technologies to the extent reasonably requested by the relevant Providers as reasonably necessary for the performance of the Transition Services.

 

(c)                                                           Except as specifically provided in the Transition Service Schedule for a specific Transition Service, in providing the Transition Services, neither SVM nor any of its Affiliates shall be obligated to ( i ) hire any additional employees, ( ii ) maintain the employment of any specific employees or ( iii ) purchase, lease or license any additional facilities, equipment or software.

 

SECTION 2.06.                                              Intellectual Property .  Except as provided herein, in the Separation Agreement or other Ancillary Agreements, each Party shall retain all right, title and interest in and to all of its Intellectual Property and nothing in this Agreement shall be deemed to grant to the other Party any such rights; provided , that to the extent permitted by applicable Law and existing contractual arrangements (subject to Section 2.05 ), each Party hereby grants (or shall cause its applicable Affiliates to grant) to the other Party and its applicable Affiliates a nonexclusive, revocable, nontransferable, world-wide, royalty-free right and license to such Intellectual Property, solely to the extent and for the duration necessary for the receipt or provision of the Transition Services in accordance with this Agreement (it being understood that each such license shall terminate immediately upon the termination of the relevant Transition Services); and provided , further , that unless the Parties agree otherwise, all Intellectual Property ( i ) created by SVM or any of its Affiliates in connection with a Transition Service during the Term of such Transition Service at the request and solely for the benefit of a Recipient and ( ii ) paid for by a Recipient shall be the property of such Recipient, and, to the extent title to any such Intellectual Property vests in SVM or any of its Affiliates by operation of Law, SVM hereby assigns (and shall cause any such Affiliate to assign) to the relevant Recipient all of its right, title and interest in and to such Intellectual Property, and SVM and its Affiliates shall provide such assistance and execute such documents as TG may reasonably request to assign to the relevant Recipient all of its right, title and interest in and to such Intellectual Property.

 

SECTION 2.07.                                              Services Migration .  SVM and its Affiliates shall, and shall use commercially reasonable efforts to cause the applicable Third Party Contractors to, assist the Recipients in connection with the transition from the performance of Transition Services by the Providers to the performance of such services by the Recipients or other Third Parties engaged by the Recipients, which may include assistance with the transfer of records, segregation and

 

6



 

migration of historical data, the transition to non-Provider systems and cooperation with and assistance to any Third Party consultants engaged by the Recipients in connection with such transition (“ Migration Services ”), taking into account ( i ) the need to minimize the cost of such transition and the disruption to the ongoing business activities of the Parties and their Affiliates and ( ii ) the rights and interests of protecting Confidential Information and privilege in accordance with Article VI of the Separation Agreement (the “ Protected Interests ”).  Promptly after the Distribution Date, and in any event within 60 days thereafter, SVM and TG shall each designate representatives to develop a mutually agreed upon plan that will describe the scope and other terms (including the service charges) of the Migration Services.  Any agreed-upon Migration Services shall be documented by an amendment in writing to the applicable Transition Service Schedule, and such Migration Services shall be deemed to be part of this Agreement and the Transition Services from and after the date of such amendment.  The Parties acknowledge and agree that ( x ) all Migration Services shall be at the sole expense of TG and ( y ) insofar as the provision of any Migration Services reduces the scope or duration or any Transition Services otherwise provided for in the Transition Service Schedules, SVM shall be entitled to recover all of its stranded costs (as reasonably determined by SVM) associated with the reduced scope or duration of Transition Services to be provided under the Transition Service Schedules as so amended (“ Stranded Costs ”).

 

SECTION 2.08.                                              SVM Group Letters of Credit .  TG shall use commercially reasonable efforts to cause itself, or any other member of the TG Group, to be substituted in all respects for each member of the SVM Group, and for the members of the SVM Group to be released, effective as of the date hereof, in respect of all obligations of any member of the Seller Group under each of the letters of credits of such Persons related to the TG Business (collectively, the “ SVM Group LOCs ”).  For any SVM Group LOC for which any member of the TG Group is not substituted in all respects for the applicable member of the SVM Group (and for which such member of the SVM Group is not released) as of the date hereof, including but not limited to those set forth on attached Schedule 2.08 , TG shall ( i ) continue to use commercially reasonable efforts and shall cause the other members of the TG Group to use commercially reasonable efforts to effect such substitution and release after the date hereof, and ( ii ) reimburse SVM for and fees or other costs incurred by any member of the SVM Group in maintaining any SVM Group LOC outstanding.  Without limiting the generality of the foregoing, from and after the date hereof, TG, shall forever indemnify, defend and hold harmless each member of the SVM Group against any damages, judgments, awards, liabilities, losses, obligations, claims of any kind or nature, fines and costs and expenses (including reasonable fees and expenses of attorneys, auditors, consultants and other agents) that any member of the SVM Group suffers, incurs or is liable for by reason of or arising out of or in consequence of: ( i ) any member of the SVM Group issuing, making payment under, being required to pay or reimburse the issuer of, any SVM Group LOC as the result of any circumstance occurring after the date hereof; ( ii ) any claim or demand for payment made on any member of the SVM Group with respect to any of the SVM Group LOC as the result of any circumstance occurring after the date hereof; or ( iii ) any Action by any Person who is or claims to be entitled to the benefit of or claims to be entitled to payment, reimbursement or indemnity with respect to any SVM Group LOC as the result of any circumstance occurring after the date hereof.

 

7



 

ARTICLE III

 

Service Charges

 

SECTION 3.01.                                              Service Fees .

 

(a)                                                          Except as otherwise provided in Section 3.01(b), TG shall pay, or cause to be paid to, SVM the fees for the Transition Services received by the Recipients as set forth in the Transition Service Schedules, and without duplication, all other costs incurred by the Providers as set forth in this Agreement.

 

(b)                                                          In the case of Transition Services to be provided pursuant to the Transition Service Schedules labeled “Transition Services Schedule — IT — Two Year” (the “ Two Year IT Schedule ”) and “Transition Services Schedule — IT — Three Year” (the “ Three Year IT Schedule ” and, together with the Three Year IT Schedule, the “ IT Schedules ”), the Parties have developed the good faith estimate of the pricing of such Transition Services over the term they are to be provided included in the IT Schedules and labeled IT TSS Pricing Sheet (the “ IT Pricing Schedule ”), based upon factors including ( i ) charges by Third Party Contractors expected to provide or support such Transition Services under agreements applicable to SVM and its Affiliates, ( ii ) assumed levels of usage of support service personnel of SVM and its Affiliates to perform such Transition Services, and ( iii ) hourly costs rates applicable to such personnel, based upon their respective job grade or classification, applicable benefits and taxes (collectively, the “ Baseline Assumptions ”).  The monthly fees for the Transition Services pursuant to the IT Schedules for each of the three months ending March 31, 2014 shall be as set forth in the IT Pricing Schedule (the “ Baseline Prices ”), to be invoiced monthly (in one or more invoices) in accordance with Section 3.02 .  In the event of variations between the Baseline Assumptions and the actual level of support services utilized by TG or the costs incurred by SVM to provide such Transition Services in any subsequent fiscal month, SVM shall adjust its monthly fees for the applicable Transition Services to reflect such variations, which adjustments shall apply to the subsequent term of such Transition Services, subject to further adjustment based upon subsequent further variations from the Baseline Assumptions; provided that no such monthly fee adjustment shall be made with respect to any Transition Service provided pursuant to the IT Schedules unless the aggregate amount of such adjustment would exceeds 5% of the monthly fee for such Transition Service as in effect prior to giving effect to such adjustment; and provided , further , that, if requested by TG, SVM shall engage in commercially reasonable discussions with TG as to ways in which monthly fees adjustments can be reduced, it being understood that SVM shall not be obligated to modify the scope or character of any Transition Services to be delivered pursuant to the IT Schedules and TG’s sole remedy in response to any monthly fee adjustment shall be its early terminations right with respect to such Transition Services pursuant to Sections 5.02(a)  and 5.03 .

 

SECTION 3.02.                                              Invoices and Payment Terms .  SVM shall invoice (in one or more invoices) TG after the end of each fiscal month for all charges (if any) for all Transition Services

 

8



 

provided to the Recipients in such fiscal month pursuant to this Agreement.  Payment of any amounts due by TG hereunder shall be made in immediately available funds within 30 days of TG’s receipt of each invoice therefor, or within such shorter period of time as designated accounting representatives of each of the Parties may otherwise agree (the “ Applicable Payment Period ”).  Any amount not paid within the Applicable Payment Period shall bear interest at the Applicable Rate from the date such amount is due. TG shall not deduct, set off, counterclaim or otherwise withhold any amount owed by it to the Providers (on account of any obligation owed by the Providers, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing) against the amounts payable pursuant to this Agreement; provided , that in the event TG disputes any amount on an invoice, TG shall notify SVM in writing within 20 days after TG’s receipt of such invoice (or such shorter period of time as designated accounting representatives of each of the Parties may otherwise agree) and shall describe in detail the reason for disputing such amount, provide any documents or other materials supporting its dispute, and will be entitled to withhold only the amount in dispute during the pendency of the dispute.  TG shall timely pay the undisputed portion of each invoice in the manner set forth in this Agreement and shall be subject to late charges at the Applicable Rate and any other costs incurred by SVM or any Provider pursuant to this Section 3.02 on any amount that is unsuccessfully disputed.  A Provider may suspend performance of the Transition Services in the event that TG fails to timely pay undisputed amounts and all applicable late changes payable pursuant to this Section 3.02 within 15 days after written notice of non-payment from SVM and Provider shall not be required to resume Transition Services until all such amounts and associated late fees have been paid.

 

SECTION 3.03.                                              Documentation; Audit .  SVM and its Affiliates shall maintain accurate records of all receipts, invoices, reports and other documents relating to the Transition Services rendered hereunder (collectively, the “ TSA Documents ”) in accordance with ( i ) each such Person’s standard accounting practices and procedures, consistently applied, which practices and procedures are employed by each such Person in its provision of services for itself and its own Subsidiaries and ( ii ) applicable Law (including data protection and privacy Law).  Without limiting the generality of the foregoing, each such Person’s accounting records shall be maintained in sufficient detail to enable an auditor to verify the accuracy, completeness and appropriateness of all charges hereunder.  Upon reasonable prior notice, during SVM’s regular office hours, TG or its authorized representative shall have the right to inspect and (at TG’s expense) copy the TSA Documents, subject to the preservation of the Protected Interests.  SVM and its Affiliates shall retain the TSA Documents (at TG’s expense) and subject to the preservation of the Protected Interests, make them available to TG, its authorized representative, and applicable Governmental Authorities for a period of six years from the close of each fiscal year of TG during which Transition Services are provided; provided , that SVM may, at its sole discretion, discharge its records preservation obligations with respect to the TSA Documents under this Section 3.03 at any time by delivering copies of such TSA Documents to TG.  If an audit conducted by TG or an authorized representative reveals an overbilling by SVM and overpayment by TG, and ( x ) if SVM agrees with the results of the audit, SVM shall pay to TG within 30 days such amount as may be agreed to by SVM and TG or ( y ) if SVM disagrees with the results of the audit, such disagreement shall be managed through the dispute resolution process set forth in Section 7.02 .

 

9



 

SECTION 3.04.                                              Taxes .  All sales tax, value-added tax, goods and services tax or similar tax (“ Taxes ”) (but excluding any Tax based upon the net income of a Provider, which shall be paid by such Provider) associated with the provision of any Transition Services will be separately stated on the relevant invoice and shall be paid by TG in accordance with Section 3.02 The Providers shall be responsible for paying any such Taxes to the appropriate tax authorities.

 

ARTICLE IV

 

DISCLAIMER OF REPRESENTATIONS AND WARRANTIES; LIMITATIONS OF LIABILITY; INDEMNIFICATION

 

SECTION 4.01.                                              DISCLAIMER OF REPRESENTATIONS AND WARRANTIES . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE SERVICES TO BE PROVIDED HEREUNDER ARE FURNISHED ON AN AS-IS AND WHERE-IS BASIS.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY NOR ANY OF THEIR AFFILIATES MAKE ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND EACH PARTY (ON BEHALF OF ITSELF AND ITS AFFILIATES) HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER, INCLUDING, ANY WARRANTY OF CONDITION, MERCHANTABILITY, ACCURACY, SATISFACTORY QUALITY, NON-INFRINGEMENT, OR FITNESS FOR ANY PARTICULAR PURPOSE.

 

SECTION 4.02.                                              Limitations of Liability .

 

(a)                                                          Except for the indemnification claim provided under Section 4.03 , in no event shall any Party or any of its Affiliate have any Liability to the other Party or any of its Affiliates arising out of or in connection with this Agreement.

 

(b)                                                          Notwithstanding anything to the contrary, the aggregate Liability of SVM and its Affiliates to the Recipients arising out of or in connection with this Agreement shall not exceed the aggregate amount of the service fees (excluding any fees charged by SVM for reimbursement of Third Party fees) paid or to be paid by the Recipients over the previous 12 months or since the date of this Agreement if prior to the first Anniversary of this Agreement hereunder with respect to the services giving rise to such Liability.  TG hereby waives and shall not assert, and shall cause the other Recipients to waive and not assert, claims for any such Liability in excess of such aggregate amount.

 

(c)                                                           IN NO EVENT SHALL ANY PARTY OR ANY OF ITS AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES, FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING, NEGLIGENCE OR STRICT LIABILITY), ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE OR SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED ,

 

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THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT AN INDEMNIFYING PARTY’S INDEMNIFICATION OBLIGATIONS HEREUNDER WITH RESPECT TO ANY LIABILITY ANY INDEMNIFIED PARTY MAY HAVE TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS.

 

SECTION 4.03.                                              Indemnity .

 

(a)                                                          Subject to the limitations on liability provided in Sections 4.01 and 4.02 , each Party agrees to indemnify, defend and hold harmless the other Party, its Affiliates and its and their respective directors, officers, employees, agents and representatives, and each of the successors and assigns of any of the foregoing from and against any and all claims, actions, demands, judgments, losses, costs, expenses, damages and liabilities (including reasonable attorneys’ fees and other expenses of litigation) arising out of or resulting from the gross negligence, willful misconduct, bad faith, breach of confidentiality, violation of Law or infringement of a third party’s Intellectual Property, of (or by) it or its Affiliates, and its and their respective directors, officers, employees, agents and representatives, and each of the successors and assigns of any of the foregoing, in connection with this Agreement.

 

(b)                                                          Sections 10.5 through 10.8 of the Separation Agreement shall apply mutatis mutandis with respect to the indemnification provided hereunder.

 

ARTICLE V

 

TERM AND TERMINATION

 

SECTION 5.01.                                              Term .

 

(a)                                  This Agreement shall become effective on the Distribution Date and, unless terminated earlier pursuant to Section 5.02 , shall remain in full force and effect until all Transition Services are terminated in accordance herewith.

 

(b)                                  The term (the “ Term ”) for each Transition Service shall be deemed to have commenced as of January 1, 2014, and, unless terminated earlier pursuant to Section 5.02 below, shall continue for the period specified in the applicable Transition Service Schedule.

 

SECTION 5.02.                                              Termination .  A Transition Service may only be terminated prior to the conclusion of its Term as follows:

 

(a)                                                          by TG for convenience upon 90 days prior written notice to SVM, provided , that TG shall pay the applicable early termination charges pursuant to Section 5.03 ;

 

(b)                                                          by the mutual written agreement of TG and SVM;

 

(c)                                                           by either SVM or TG for a material breach of this Agreement by the other Party (or, in the case of TG, any other Recipient and, in the case of SVM, any other Provider)

 

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with respect to such Transition Service, provided , that if such breach is capable of being cured, only if such breach is not cured within 30 days after written notice from the terminating Party;

 

(d)                                                          by SVM for any default by TG or any of the Recipients of their payment obligations under this Agreement or any Transition Service Schedule, which default is not cured within 30 days after the date when such amounts are payable;

 

(e)                                                           by SVM if there is a TG Change in Control;

 

(f)                                                            by either SVM or TG if the other Party commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar Law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors or shall take any corporate action to authorize any of the foregoing; or

 

(g)                                                           by either SVM or TG if any involuntary case or other proceeding is commenced against the other Party seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar Law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding remains undismissed and unstayed for a period of 60 day, or an order for relief shall have been entered against the other Party.

 

SECTION 5.03.                                              Early Termination Charges .  Upon early termination of any Transition Service pursuant to Section 5.02 , TG shall pay to SVM early termination charges equal to the amount of the expenses incurred by SVM or its Affiliates in order to discontinue earlier than originally anticipated the provision of such Transition Service, including Stranded Costs, wind-down costs, breakage fees, early termination fees or charges, minimum volume make-up charges, other start-up or wind-down costs incurred by SVM or its Affiliates that SVM had anticipated would be paid for by TG over the course of the originally contemplated term (or not incurred but for TG’s early termination) or other amounts payable to Third Parties or incurred by SVM or its Affiliates. SVM and its Affiliates shall use commercially reasonable efforts to minimize the existence and amount of such early termination charges; provided , that the foregoing obligations shall not alter or diminish TG’s obligation to pay such early termination charges as reasonably incurred by SVM or its Affiliates in accordance with the terms hereof.  All such termination charges shall be due and payable to SVM in immediately available funds within 30 days of TG’s receipt of any invoice therefor. Any amount not so paid within 30 days after the date when payable shall bear interest at the Applicable Rate from the date such amount is due and shall give rise to a termination right pursuant to Section 5.02(d).

 

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SECTION 5.04.                                              Effect of Termination .

 

(a)                                  Upon termination of any Transition Service in accordance with this Agreement and subject to Sections 5.03 and 5.04 , SVM and any other Provider will have no further obligation to provide such terminated Transition Service, and TG and any other Recipients shall have no obligation to pay any service charges or other amounts relating to such Transition Service; provided , that TG shall remain obligated to SVM and any other Providers for any service charges or other amounts owed and payable in respect of such terminated Transition Service provided prior to the effective date of the termination.

 

(b)                                  In connection with the termination of any Transition Service, the provisions of this Agreement not relating solely to such terminated Transition Service shall survive any such termination.  Without limiting the generality of the forgoing, the provisions of Article I (Definitions) , Article III (Service Charges) , Article IV (Disclaimer of Representations and Warranties; Limitations of Liability; Indemnification) , Article VI (Covenants) , and Article VII (General Provisions) and Section 2.06 (Intellectual Property) , Section 2.07 (Services Migration) , Section 5.03 (Early Termination Charges) , and this Section 5.04 (Effect of Termination) shall survive the termination of any Transition Service or the termination of this Agreement.

 

ARTICLE VI

 

COVENANTS

 

SECTION 6.01.                                              Confidentiality .  Sections 6.5 and 6.6 of the Separation Agreement shall be incorporated by reference herein, mutatis mutandis .

 

SECTION 6.02.                                              Access to Computer Systems .  If a Party to this Agreement (or, with respect to SVM, any other Provider and with respect to TG, any other Recipient) has access (either on-site or remotely) to the other Party’s or its Affiliates’ Information Technology in relation to the Transition Services, such Party shall limit such access solely to the use of such Information Technology for purposes of the Transition Services and shall not access or attempt to access the other Party’s or its Affiliates’ Information Technology other than those required for the Transition Services.  Such Party shall limit such access to those of its and its Affiliates’ employees, agents or contractors with a bona fide need to have such access in connection with the Transition Services, and shall follow all of the relevant Party’s security rules and procedures for restricting access to its or its Affiliates’ Information Technology made available by the relevant Party.  All user identification numbers and passwords disclosed to such Party or its Affiliates and any information obtained by such Party or its Affiliates as a result of such Party’s or its Affiliates’ access to and use of the other Party’s or its Affiliates’ computer systems shall be deemed to be, and treated as, Confidential Information hereunder.  Each Party shall, and shall cause its Affiliates to, cooperate with the other Party in the investigation of any apparent unauthorized access to a Party’s or its Affiliates’ computer system or information stores.

 

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ARTICLE VII

 

GENERAL PROVISIONS

 

SECTION 7.01.                                              Force Majeure Event .  No Party shall have any liability or responsibility for any interruption, delay or other failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of a Force Majeure Event; provided , that such Party (or such Person) shall have exercised commercially reasonable efforts to minimize the effect of a Force Majeure Event on its obligations.  In the event of an occurrence of a Force Majeure Event, the Party whose performance is affected thereby shall give notice (orally or in writing) of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable upon the cessation of such Force Majeure Event and its effects.

 

SECTION 7.02.                                              Dispute Resolution .

 

(a)                                  Promptly after the date hereof, the Parties shall form a committee (the “ Executive Committee ”).  The Executive Committee shall consist of two representatives designated by each Party and shall initially consist of the Chief Financial Officer and the General Counsel (or other chief legal officer) of each Party.  Each Party may replace one or more of its representatives at any time upon notice to the other Party.

 

(b)                                  Any dispute, controversy or claim arising out of, relating to or in connection with the Transition Services or this Agreement, or the breach, termination, or validity thereof (a “ Dispute ”), shall be resolved by submitting such Dispute first to the relevant Contract Manager of each Party, and the Contract Managers shall seek to resolve such Dispute through informal good faith negotiation.  In the event the Contract Managers fail to meet or, if they meet, fail to resolve the Dispute within 10 Business Days, then the Contract Managers shall escalate the dispute to the Executive Committee for resolution.  In the event the Executive Committee fail to meet or, if they meet, fail to resolve the Dispute within an additional 10 Business Days, then the claiming Party will provide the other Party with a written “ Notice of Dispute ,” describing ( i ) the issues in dispute and such Party’s position thereon, ( ii ) a summary of the evidence and arguments supporting such Party’s positions, ( iii ) a summary of the negotiations that have taken place to date and ( iv ) the name and title of the senior executives or their respective designees who will represent each Party.  The senior executives or their respective designees designated in such Notice of Dispute shall meet in person or by telephone as often as reasonably necessary to resolve the Dispute and shall confer in a good faith effort to resolve the Dispute.  If such senior executives or their respective designees decline to meet within the allotted time, or if they meet, fail to resolve the Dispute within 20 Business Days after receipt of the Notice of Dispute, then either Party may pursue the remedy set forth in Section 7.02(c) .

 

(a)                                  If the procedures set forth in Section 7.02(b)  have been followed with respect to a Dispute and such Dispute remains unresolved, either Party may promptly submit the relevant

 

14



 

Notice of Dispute to a neutral arbitrator (the “ Arbitrator ”) unless the Parties agree otherwise.  The Parties agree to seek to reach agreement on the identity of the arbitrator within 20 Business Days after the initiation of arbitration.  If the Parties are unable to reach agreement on the identity of the arbitrator within such time, then the appointment of the arbitrator shall be made in accordance with the process set forth in JAMS Comprehensive Rule 15.  The arbitration shall be administered by JAMS.  If the disputed claim or counterclaim exceeds $250,000, not including interest or attorneys’ fees, the JAMS Comprehensive Arbitration Rules and Procedures (“ JAMS Comprehensive Rules ”) in effect at the time of the arbitration shall govern the arbitration, except as they may be modified herein or by mutual written agreement of the parties.  If no disputed claim or counterclaim exceeds $250,000, not including interest or attorneys’ fees, the JAMS Streamlined Arbitration Rules and Procedures (“ JAMS Streamlined Rules ”) in effect at the time of the arbitration shall govern the arbitration, except as they may be modified herein or by mutual written agreement of the parties.  The seat of the arbitration shall be New York, New York.  The parties submit to jurisdiction in the state and federal courts of the State of New York for the limited purpose of enforcing this agreement to arbitrate.  Each Party shall submit its position in writing to the Arbitrator within 10 Business Days of the appointment of the Arbitrator.  Within 20 Business Days after receipt of such submissions, the Arbitrator shall make a final written determination, and such determination and award shall be final and binding upon the Parties hereto, and may be entered and enforced in any court having jurisdiction.  The arbitrator may, in the award, allocate all or part of the costs of the arbitration, including the fees of the arbitrator and the attorneys’ fees of the prevailing Party.  The Parties agree that the arbitration shall be kept confidential and that the existence of the proceeding and any element of it (including but not limited to any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, and any awards) shall not be disclosed beyond the tribunal, JAMS, the parties, their counsel, accountants and auditors, insurers and re-insurers, and any person necessary to the conduct of the proceeding.  The confidentiality obligations shall not apply ( i ) if disclosure is required by law, or in judicial or administrative proceedings, or ( ii ) as far as disclosure is necessary to enforce the rights arising out of the award.  Notwithstanding applicable state law, the arbitration and this agreement to arbitrate shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq.

 

(c)                                   A party’s failure to comply with Sections 7.02(b)  and ( c ) shall constitute cause for dismissal without prejudice of any legal proceeding.

 

SECTION 7.03.                                              Independent Contractor .  Nothing contained in this Agreement will be deemed or construed as creating a fiduciary relationship or relationship of trust, joint venture or partnership between the Parties hereto.  No Party is by virtue of this Agreement authorized as an agent, employee or legal representative of the other Party, and the status of the Parties with respect to each other shall at all times continue to be that of independent contractors.  No Party will have any power or authority to bind or commit the other Party.  No Party will hold itself out as having any authority or relationship in contravention of this Section 7.03 .  All employees and representatives providing the Transition Services shall be under the direction, control and supervision of SVM and its Affiliates, and SVM and its Affiliates shall have the sole rights to exercise all authority with respect to such employees and representatives and in no event shall such employees and representatives be deemed to be employees or agents of the Recipients.

 

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SECTION 7.04.                                              Third-Party Beneficiaries .  Except as provided under Section 4.03 , no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

 

SECTION 7.05.                                              Amendment .  This Agreement and the Transition Service Schedules may not be amended, supplemented or terminated except by an agreement in writing signed by the Parties.

 

SECTION 7.06.                                              Miscellaneous .  Section 14.3 (Counterparts), Section 14.4 (Notices), Section 14.6 (Severability), Section 14.7 (Entire Agreement), Section 14.8 (Assignment), Section 14.10 (Governing Law), Section 14.11 (Headings), Section 14.12 (Interpretation), Section 14.13 (Specific Performance), Section 14.16 (Waiver) and Section 14.17 (Counterparts; Facsimile Signatures) of the Separation Agreement are incorporated by reference herein, mutatis mutandis .

 

[Signature page follows]

 

16



 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first above written.

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name: Alan J. M. Haughie

 

 

Title: Senior Vice President and Chief
Financial Officer

 

 

 

 

 

 

 

TRUGREEN LIMITED PARTNERSHIP

 

 

 

 

By:

TruGreen, Inc., its general partner

 

 

 

 

 

 

 

By:

/s/ David W. Martin

 

 

Name: David W. Martin

 

 

Title: Senior Vice President and Chief
Financial Officer

 

[ Signature Page – Transition Services Agreement ]

 



 

List of Omitted Schedules and Exhibits

 

The following schedules and exhibits to the Transition Services Agreement, dated as of January 14, 2014, by and between The ServiceMaster Company, LLC and TruGreen Limited Partnership have not been provided herein:

 

Exhibit A                                                                      Transition Service Schedules

 

Schedule 2.08                                             SVM Group Letters of Credit

 

The Registrant hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

 


Exhibit 3.1

 

CERTIFICATE OF FORMATION

 

OF

 

THE SERVICEMASTER COMPANY, LLC

 

This Certificate of Formation of The ServiceMaster Company, LLC (the “ Company ”), dated on the 13th day of December, 2013, is being duly executed and filed by Maribeth LeHoux, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. §18-101, et seq .).

 

FIRST .  The name of the limited liability company is The ServiceMaster Company, LLC.

 

SECOND .  The address of the registered office of the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801.

 

THIRD .  The name and address of the registered agent for service of process on the Company in the State of Delaware are The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801.

 

[ Remainder of the page intentionally left blank ]

 



 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first above written.

 

 

 

/s/ Maribeth LeHoux

 

Name: Maribeth LeHoux

 

Title:  Authorized Person

 


Exhibit 3.2

 

EXECUTION VERSION

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

THE SERVICEMASTER COMPANY, LLC

 

December 19, 2013

 



 

Table of Contents

 

 

 

Page

 

 

 

ARTICLE I NAME, PURPOSE, ETC.

1

 

 

 

Section 1.1

Name; Member

1

Section 1.2

Purpose

1

Section 1.3

Powers of the Company

1

Section 1.4

Term

1

Section 1.5

Registered Office

1

Section 1.6

Registered Agent

2

Section 1.7

Qualification in Other Jurisdictions

2

Section 1.8

Fiscal Year

2

Section 1.9

Taxation

2

Section 1.10

Certain Ratified Actions

2

Section 1.11

Interests

2

 

 

 

ARTICLE II BOARD OF DIRECTORS

3

 

 

 

Section 2.1

General Powers

3

Section 2.2

Number and Term of Office

3

Section 2.3

Election of Board

3

Section 2.4

Meetings of the Board

3

Section 2.5

Quorum; Voting

4

Section 2.6

Adjournment

4

Section 2.7

Action Without a Meeting

4

Section 2.8

Regulations; Manner of Acting

4

Section 2.9

Action by Telephonic Communications

4

Section 2.10

Resignation

4

Section 2.11

Removal of Directors

4

Section 2.12

Vacancies and Newly Created Directorships

5

Section 2.13

Director Fees and Expenses

5

Section 2.14

Reliance on Accounts and Reports, etc.

5

 

 

 

ARTICLE III COMMITTEES

5

 

 

 

Section 3.1

How Constituted

5

Section 3.2

Powers

5

Section 3.3

Proceedings

6

Section 3.4

Quorum and Manner of Acting

6

Section 3.5

Action by Telephonic Communications

6

Section 3.6

Resignations

6

Section 3.7

Removal

7

Section 3.8

Vacancies

7

Section 3.9

Transaction Committees

7

 

i



 

ARTICLE IV OFFICERS

7

 

 

 

Section 4.1

Number

7

Section 4.2

Salaries

8

Section 4.3

Removal and Resignation; Vacancies

8

Section 4.4

Authority and Duties of Officers

8

Section 4.5

Chief Executive Officer

8

Section 4.6

President

9

Section 4.7

Vice President

9

Section 4.8

The Secretary

9

Section 4.9

Chief Financial Officer

10

Section 4.10

Treasurer

10

Section 4.11

Additional Officers

10

Section 4.12

Security

11

 

 

 

ARTICLE V CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS

11

 

 

 

Section 5.1

Additional Capital Contributions

11

Section 5.2

Distributions

11

 

 

 

ARTICLE VI DISSOLUTION, ASSIGNMENT, TRANSFER

11

 

 

 

Section 6.1

Dissolution

11

Section 6.2

Assignments

12

Section 6.3

Resignation

12

Section 6.4

Additional Members

12

 

 

 

ARTICLE VII LIABILITY, EXCULPATION, INDEMNIFICATION

12

 

 

 

Section 7.1

Limited Liability; Exculpation

12

Section 7.2

Fiduciary Duty

13

Section 7.3

Indemnification

13

Section 7.4

Expenses

13

 

 

 

ARTICLE VIII MISCELLANEOUS

14

 

 

 

Section 8.1

Seal

14

Section 8.2

Books and Records; Inspection

14

Section 8.3

Electronic Transmission

14

Section 8.4

Amendment, Waiver, Etc.

14

Section 8.5

Binding Effect

14

Section 8.6

Severability

14

Section 8.7

Integration

14

Section 8.8

No Third-Party Beneficiaries

14

Section 8.9

Governing Law

15

Section 8.10

Counterparts

15

Section 8.11

Effectiveness

15

Section 8.12

Permitted Merger

15

Section 8.13

Authorization

16

 

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LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

THE SERVICEMASTER COMPANY, LLC

 

This Limited Liability Company Agreement (as amended from time to time, this “ Agreement ”) of The ServiceMaster Company, LLC, dated as of December 19, 2013, is entered into by The ServiceMaster Company, a Delaware corporation, as the sole member (the “ Member ”).

 

The Member hereby forms a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del.C. § 18-101, et seq .), as amended from time to time (the “ Act ”), and by execution of this Agreement, hereby agrees as follows:

 

ARTICLE I
NAME, PURPOSE, ETC.

 

Section 1.1                                     Name; Member .  The name of the limited liability company hereby formed is The ServiceMaster Company, LLC (the “ Company ”). The Company may do business under that name and, as permitted by applicable law, under any other name determined from time to time by the Member.  The Member was admitted to the Company as a member of the Company upon its execution of a counterpart signature page to this Agreement.

 

Section 1.2                                     Purpose .  The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary or incidental to the foregoing.

 

Section 1.3                                     Powers of the Company .  Subject to any limitations set forth in this Agreement, the Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purposes set forth in Section 1.2.

 

Section 1.4                                     Term .  The term of the Company commences on the date the Certificate of Formation of the Company is filed in the office of the Secretary of State of the State of Delaware and shall continue until the Company is dissolved pursuant to the provisions of Section 6.1 of this Agreement.  The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation of the Company as provided in the Act.

 

Section 1.5                                     Registered Office .  The address of the registered office of the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

 

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The Company may also have offices at such other places within or without the State of Delaware as the Member may from time to time designate or the business of the Company may require.

 

Section 1.6                                     Registered Agent .  The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

 

Section 1.7                                     Qualification in Other Jurisdictions .  Any Authorized Person (as defined below) of the Company shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business and any documents otherwise required in order for the Company to conduct business.

 

Section 1.8                                     Fiscal Year .  The fiscal year of the Company (the “ Fiscal Year ”) shall commence on the first day of January of each year (except for the Company’s first fiscal year which shall commence on the date of formation) and shall terminate in each case on December 31.

 

Section 1.9                                     Taxation .  The Company shall not, and the Board (as defined below) shall not permit the Company to, elect to be treated as an association taxable as a corporation for U.S. federal, state or local income tax purposes.

 

Section 1.10                              Certain Ratified Actions .  Without in any way limiting the generality of the foregoing or anything else contained in this Agreement or in any other document, each of the Directors (as defined below), officers of the Company, and Maribeth LeHoux are hereby designated as an “authorized person” of the Company within the meaning of the Act (the “ Authorized Persons ”, and each an “ Authorized Person ”), and is authorized to execute, deliver and file all certificates (and any amendments and/or restatements thereof) required or permitted by the Act to be filed in the office of the Secretary of State of the State of Delaware.  The Member hereby approves, ratifies and confirms the execution, delivery and filing by Maribeth LeHoux, as a person who is authorized by the Act to execute the Certificate of Formation of the Company (as amended from time to time, the “ Certificate of Formation ”).  Immediately following the filing of such Certificate of Formation, all such authorization and power of Maribeth LeHoux to execute and file certificates, or to otherwise serve as an Authorized Person, shall hereby terminate.

 

Section 1.11                              Interests .  The limited liability company interests of the Company shall not be represented by certificates; provided that, the Board may provide by resolution or resolutions that the limited liability company interests of the Company shall be certificated interests.  The certificates for limited liability company interests, if any, shall be in such form as the Board may from time to time prescribe.  To the extent limited liability company interests are represented by a certificate, the certificate of limited liability company interests shall be signed by such officer or officers of the Company as may be permitted by law to sign (which signatures may be facsimiles), and shall be

 

2



 

countersigned and registered in such manner, all as the Board may be resolution prescribe.  In case any officer or officers who shall have signed or whose facsimile signature or signatures has been placed on a certificate shall cease to be such officer or officers of the Company, whether because of death, resignation, removal or otherwise, before such certificate or certificates shall have been issued 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 shall have been used thereon, had not ceased to be such officer or officers of the Company.

 

ARTICLE II
BOARD OF DIRECTORS

 

Section 2.1                                     General Powers .  Except as may otherwise be provided by law, by the Certificate of Formation or by this Agreement, the property, affairs and business of the Company shall be managed by or under the direction of a Board of Directors of the Company (the “ Board ”) consisting of one or more natural persons designated as Directors (the “ Directors ”) as provided below.  The Board shall have discretion to manage and control the business and affairs of the Company, to make decisions affecting the business and affairs of the Company, and to take actions as it deems necessary or appropriate to accomplish the purposes of the Company and to exercise all of the power and authority that limited liability companies may take under the Act.  Each Director shall sign a management agreement in substantially the form attached hereto as Annex B acknowledging and agreeing to their respective duties and obligations under this Agreement.

 

Section 2.2                                     Number and Term of Office. The number of Directors constituting the entire Board shall be two, which number may be increased or decreased from time to time by resolution of the Board, but in no event shall the number of Directors be less than one.  Each Director (whenever elected) shall hold office until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.

 

Section 2.3                                     Election of Board .  Except as provided in Section 2.12 of this Agreement, the Directors shall be chosen by the Member.  The initial Directors of the Company designated by the Member are David H. Wasserman and Sarah Kim.  Each Director is hereby designated as a “manager” (within the meaning of the Act) of the Company and notwithstanding the last sentence of § 18-402 of the Act, except as provided in this Agreement or in a resolution of the Board, no single Director shall have the power to bind the Company and the Board shall have the power to act only collectively as the Board in the manner specified herein.

 

Section 2.4                                     Meetings of the Board .  The Board shall meet from time to time to discuss the business of the Company.  The Board may hold meetings either within or without the State of Delaware.  Meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.  Any Director may call a meeting of the Board on 24 hours’ notice to each other Director,

 

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either personally, by telephone, by facsimile or by any other similarly timely means of communication.

 

Section 2.5                                     Quorum; Voting .  At all meetings of the Board, the presence of a majority of the Directors shall constitute a quorum for the transaction of business.  Except as otherwise required by law or this Agreement, the vote of a majority of Directors present at any meeting at which a quorum is present shall be the act of the Board.

 

Section 2.6                                     Adjournment .  A majority of Directors present, whether or not a quorum is present, may adjourn any meeting of the Board to another time or place, provided such adjourned meeting is no earlier than 24 hours after written notice (in accordance with this Agreement) of such adjournment has been given to Directors (or such notice is waived in accordance with this Agreement), and, at any such adjourned meeting, quorum shall consist of a majority of the total authorized membership of the Board.

 

Section 2.7                                     Action Without a Meeting .  Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all members of the Board consent thereto in writing or by facsimile or any form of electronic transmission previously approved by a Director, which approval has not been revoked (“ Approved Electronic Transmission ”), and such writing or writings or Approved Electronic Transmissions are filed with the minutes of proceedings of the Board.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 2.8                                     Regulations; Manner of Acting .  To the extent consistent with applicable law, the Certificate of Formation and this Agreement, the Board may adopt such rules and regulations for the conduct of meetings of the Board and for the management of the property, affairs and business of the Company as the Board may deem appropriate, including the election of a chairperson and one or more vice chairpersons or lead Directors.

 

Section 2.9                                     Action by Telephonic Communications .  Members of the Board may participate in a meeting of the Board by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

 

Section 2.10                              Resignation .  Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chief Executive Officer or the Secretary.  Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specified event.

 

Section 2.11                              Removal of Directors .  If at any time the Member desires to remove any Director, with or without cause, the Member shall have the power to take all

 

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such actions promptly as shall be necessary or desirable to cause the removal of such Director.  Any vacancy caused by any such removal may be filled in accordance with Section 2.12.

 

Section 2.12                              Vacancies and Newly Created Directorships .  Except as otherwise provided by law, any vacancy in the Board that results from an increase in the number of directors or the death, disability, resignation or removal of any Director or from any other cause may be filled by sole remaining Director, or if the Board then consists of more than two Directors, a majority of Directors then in office.  A Director elected to fill a vacancy or newly created Directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.  Any such vacancy or newly created directorship may also be filled at any time by the Member.

 

Section 2.13                              Director Fees and Expenses .  The amount, if any, which each Director shall be entitled to receive as compensation for his or her services shall be fixed from time to time by the Board.  The Company will cause each non-employee Director serving on the Board to be reimbursed for all reasonable out-of-pocket costs and expenses incurred by him or her in connection with such service.

 

Section 2.14                              Reliance on Accounts and Reports, etc .  A Director, or a member of any Committee designated by the Board shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Company and upon information, opinions, reports or statements presented to the Company by any of the Company’s officers or employees, or Committees designated by the Board, or by any other person as to the matters the Director or member of any Committee reasonably believes are within such other person’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the Member might properly be paid.

 

ARTICLE III
COMMITTEES

 

Section 3.1                                     How Constituted .  The Board may designate one or more committees (a “ Committee ”).  Each Committee shall consist of such number of Directors (or other such other persons as designated by the Board in connection with Section 3.9 or otherwise) as from time to time may be fixed by a majority of the total authorized membership of the Board.  Subject to this Section 3.1, any Committee may be abolished or re-designated from time to time by the Board.  Each member of any Committee (whether designated at an annual meeting of the Board or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director (unless he or she was not a Director when first designated as a member of such Committee), or until his or her earlier death, resignation or removal.

 

Section 3.2                                     Powers .  Each Committee shall have such powers, authority and responsibilities as the Board may from time to time authorize.  Each Committee, except as otherwise provided in this Section 3.2, shall have and may exercise such powers of the

 

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Board as may be provided herein or by resolution or resolutions of the Board.  Except as provided in Section 3.9, no Committee shall have the power or authority:

 

(a)                                  to amend the Certificate of Formation;

 

(b)                                  to adopt an agreement of merger or consolidation, a certificate of merger or a certificate of ownership and merger;

 

(c)                                   to recommend to the Member the sale, lease or exchange of all or substantially all of the Company’s property and assets; or

 

(d)                                  to recommend to the Member a dissolution of the Company or a revocation of a dissolution.

 

Any Committee may be granted by the Board, power to authorize the seal of the Company to be affixed to any or all papers which may require it.

 

Section 3.3                                     Proceedings .  Each Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time; provided , that the Board may adopt other rules and regulations for the governance of any Committee not inconsistent with the provisions of this Agreement.  Each Committee shall keep minutes of its proceedings and shall report such proceedings to the Board at the meeting of the Board next following any such proceedings.

 

Section 3.4                                     Quorum and Manner of Acting .  Except as may be otherwise provided in the resolution creating a Committee, at all meetings of any Committee the presence of members constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business.  The act of the majority of the members of a Committee present at any meeting at which a quorum is present shall be the act of such Committee.  Any action required or permitted to be taken at any meeting of any Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.  The members of any Committee shall act only as a Committee, and other than Committees with membership of one person, the individual members of such Committee shall have no power as such.

 

Section 3.5                                     Action by Telephonic Communications .  Members of any Committee designated by the Board may participate in a meeting of such Committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

 

Section 3.6                                     Resignations .  Any member of any Committee may resign at any time by submitting an electronic transmission or by delivering a written notice of

 

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resignation to the Chief Executive Officer or the Secretary.  Unless otherwise specified therein, such resignation shall take effect upon delivery.

 

Section 3.7                                     Removal .  Any member of any Committee may be removed from his or her position as a member of such Committee at any time, either for or without cause, by resolution adopted by a majority of the votes of Directors then in office.

 

Section 3.8                                     Vacancies .  If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members shall continue to act, and any such vacancy may be filled by the Board subject to Section 3.1 of this Agreement.

 

Section 3.9                                     Transaction Committees .  The following initial Committees are hereby established:

 

(a)                                  A transaction committee (“ Transaction Committee I ”) consisting of David H. Wasserman.  Notwithstanding any provision of this Agreement, Transaction Committee I, acting alone, shall have and may exercise all of the powers and authority of the Board, including, without limitation, the authority to bind the Company.

 

(b)                                  A transaction committee (“ Transaction Committee II ”) consisting of Sarah Kim.  Notwithstanding any provision of this Agreement, Transaction Committee II, acting alone, shall have and may exercise all of the powers and authority of the Board, including, without limitation, the authority to bind the Company.

 

(c)                                   A transaction committee (“ Transaction Committee III”) consisting of Alan J.M. Haughie.  Notwithstanding, any provision of this Agreement, Transaction Committee III, acting alone, shall have and may exercise all of the powers and authority of the Board, including, without limitation, the authority to bind the Company.

 

ARTICLE IV
OFFICERS

 

Section 4.1                                     Number .  The day to day functions of the Company may be performed by a person or persons appointed as an officer of the Company in accordance with this Agreement.  Except for the initial officers of the Company which shall be designated by the Member, the officers of the Company shall be chosen by the Board and may include the Chief Executive Officer, the Chief Financial Officer, one or more Presidents, one or more Vice Presidents, a Secretary and a Treasurer and any other officers appointed by the Board.  The initial officers of the Company designated by the Member are set forth on Annex A hereto. The Board also may elect and the Chief Executive Officer may appoint one or more Assistant Secretaries and Assistant Treasurers in such numbers as the Board or the Chief Executive Officer may determine, who shall have such authority, exercise such powers and perform such duties as may be specified in this Agreement or determined by the Board.  Any number of offices may be

 

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held by the same person, except that one person may not concurrently hold both the office of Chief Executive Officer and Secretary.  No officer need be a Director of the Company. Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

 

Section 4.2                                     Salaries .  The salaries of all officers and agents of the Company shall be fixed by, or in the manner established by, the Board.

 

Section 4.3                                     Removal and Resignation; Vacancies .  Any officer may be removed for or without cause at any time by the Board or, if the Chief Executive Officer has such authority pursuant to Section 4.10, by the Chief Executive Officer.  Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Chief Executive Officer or the Secretary.  Unless otherwise specified therein, such resignation shall take effect upon delivery.  Any vacancy occurring in any office of the Company by death, resignation, removal or otherwise, shall be filled by the Board or, if the Chief Executive Officer has authority pursuant to Section 4.10 to fill such office then by the Chief Executive Officer pursuant to Section 4.10 or by the Board.

 

Section 4.4                                     Authority and Duties of Officers .  The officers of the Company shall have such authority and shall exercise such powers and perform such duties as may be specified in this Agreement or in a resolution of the Board, and to the extent the title of an officer is one commonly used for officers of a business corporation formed under the DGCL, unless otherwise provided hereunder or by the Board, the officer assigned such title shall have the authorities and duties that are commonly associated with such title for a business corporation formed under the General Corporation Law of the State of Delaware (the “ DGCL ”).

 

Section 4.5                                     Chief Executive Officer .  The Chief Executive Officer, subject to the direction of the Board, shall have general control and supervision of the policies and operations of the Company and shall see that all orders and resolutions of the Board are carried into effect.  He or she shall manage and administer the Company’s business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer, president or a chief operating officer of a corporation, including without limitation under the DGCL.  He or she shall have the authority to sign, in the name and on behalf of the Company, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Company, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Company may need to be affixed.  Except as otherwise determined by the Board, he or she shall have the authority to cause the employment or appointment of such employees (other than the Chief Executive Officer) and agents of the Company as the conduct of the business of the Company may require, to fix their compensation subject to Section 4.2 of this Agreement, and to remove or suspend any such employee or agent elected or appointed by the Chief Executive Officer or the Board.

 

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Section 4.6                                     President .  Except as otherwise determined by the Board and the Chief Executive Officer, each President shall perform such duties and exercise such powers as may be assigned to him or her from time to time by the Chief Executive Officer.  Each President shall report to the Chief Executive Officer.  Except as otherwise determined by the Board of Directors, in the absence of the Chief Executive Officer, the duties of the Chief Executive Officer shall be performed and his or her powers may be exercised by such President as shall be designated by the Chief Executive Officer, or failing such designation, such duties shall be performed and such powers may be exercised by each President in the order of their earliest election to that office, subject in any case to review and superseding action by the Chief Executive Officer. Each President shall have the authority to sign, in the name and on behalf of the Company, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Company, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation may need to be affixed.

 

Section 4.7                                     Vice President .  Except as otherwise determined by the Board, each Vice President shall perform such duties and exercise such powers as may be assigned to him or her from time to time by the Chief Executive Officer.  Except as otherwise determined by the Board, in the absence of the Chief Executive Officer, the duties of the Chief Executive Officer shall be performed and his or her powers may be exercised by such Vice President as shall be designated by the Chief Executive Officer, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office, subject in any case to review and superseding action by the Chief Executive Officer.

 

Section 4.8                                     The Secretary .  Except as otherwise determined by the Board, the Secretary shall have the following powers and duties:

 

(a)                                  He or she shall keep or cause to be kept a record of all the proceedings of the meetings of the Member and of the Board and all Committees of which a secretary has not been appointed in books provided for that purpose.

 

(b)                                  He or she shall cause all notices to be duly given in accordance with the provisions of this Agreement and as required by law.

 

(c)                                   Whenever any Committee shall be appointed pursuant to a resolution of the Board, he or she shall furnish a copy of such resolution to the members of such Committee.

 

(d)                                  He or she shall be the custodian of the records and of the seal of the Company and cause such seal (or a facsimile thereof) to be affixed to all certificates, if any, representing limited liability company interests of the Company prior to the issuance thereof and to all instruments the execution of which on behalf of the Company under its seal shall have been duly authorized in accordance with this Agreement, and when so affixed he or she may attest the same.

 

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(e)                                   He or she shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Formation or this Agreement.

 

(f)                                    He or she shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in this Agreement or as may be assigned to him or her from time to time by the Board or the Chief Executive Officer.

 

Section 4.9                                     Chief Financial Officer .  Except as otherwise determined by the Board, the Chief Financial Officer shall be the chief financial officer of the Company and shall have the following powers and duties:

 

(a)                                  He or she shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Company, and shall keep or cause to be kept full and accurate records of all receipts of the Company.

 

(b)                                  He or she shall render to the Board, whenever requested, a statement of the financial condition of the Company and of all his or her transactions as Chief Financial Officer, and render a full financial report at the annual meeting of the Member, if any, if called upon to do so.

 

(c)                                   He or she shall be empowered from time to time to require from all officers or agents of the Company reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Company.

 

(d)                                  He or she shall perform, in general, all duties incident to the office of chief financial officer and such other duties as may be specified in this Agreement or as may be assigned to him or her from time to time by the Board or the Chief Executive Officer.

 

Section 4.10                              Treasurer . Except as otherwise determined by the Board of Directors, the Treasurer shall have the following powers and duties:

 

(a)                                  He or she shall perform, in general, all duties incident of the office of treasurer and such other duties as may be specified in this Agreement or as may be assigned to him or her from time to time by the Board of Directors, the Chief Executive Officer or the Chief Financial Officer.

 

Section 4.11                              Additional Officers .  The Board may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board.  The Board from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties.  Any such officer

 

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or agent may remove any such subordinate officer or agent appointed by him or her at any time, for or without cause.

 

Section 4.12                              Security .  The Board may require any officer, agent or employee of the Company to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board.

 

ARTICLE V
CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS

 

Section 5.1                                     Additional Capital Contributions .  The Member shall have the right, but not the obligation, to make capital contributions to the Company in the form of cash, services or otherwise, at the times and in the amounts determined by the Member.

 

Section 5.2                                     Distributions .  Distributions may be made to the Member at the times and in the aggregate amounts determined by the Board (or any applicable Committee (including, without limitation, Transaction Committee I, Transaction Committee II and Transaction Committee III)).  Notwithstanding anything to the contrary contained herein, the Company, and the Board (or any Committee) on behalf of the Company, shall not make a distribution to the Member on account of the interest of the Member in the Company if such distribution would violate § 18-607 of the Act or any other applicable law.

 

ARTICLE VI
DISSOLUTION, ASSIGNMENT, TRANSFER

 

Section 6.1                                     Dissolution .

 

(a)                                  The Company shall be dissolved and its affairs wound up upon the earliest to occur of any of the following:  ( i ) the decision of the Member in writing to dissolve the Company, ( ii ) the entry of a decree of judicial dissolution of the Company under § 18-802 of the Act, or ( iii ) at any time there are no members of the Company unless the Company is continued without dissolution in accordance with the Act.

 

(b)                                  The bankruptcy (as defined at Sections 18-101(1) and 18-304 of the Act) of the Member shall not cause the Member to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue without dissolution.

 

(c)                                   In the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act.

 

(d)                                  The Company shall terminate when (i) all of the assets of the Company, after payment of or due provision for all debts, liabilities and

 

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obligations of the Company shall have been distributed to the Member in the manner provided for in this Agreement and (ii) the Certificate of Formation of the Company shall have been canceled in the manner required by the Act.

 

Section 6.2                                     Assignments .  The Member may at any time assign in whole or in part its limited liability company interest in the Company.  The transferee of a limited liability company interest in the Company shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement.  If the Member transfers all of its limited liability company interest in the Company pursuant to this Section 6.2, such admission shall be deemed effective immediately prior to the transfer, and, immediately following such admission, the transferor Member shall cease to be a member of the Company.

 

Section 6.3                                     Resignation .  The Member may at any time resign from the Company.  If the Member resigns pursuant to this Section 6.3, a person or entity may be admitted to the Company as an additional member of the Company upon the approval by the Board and such person’s or entity’s execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement.  If a person or entity is admitted to the Company as an additional member of the Company in connection with the resignation of the Member pursuant to this Section 6.3, such admission shall be deemed effective immediately prior to the resignation, and, immediately following such admission, the resigning Member shall cease to be a member of the Company.

 

Section 6.4                                     Additional Members .  In the sole discretion of the Board and without the consent of the Member, the Company may admit any person or entity as an additional member of the Company.  A person or entity shall be admitted to the Company as an additional member of the Company upon the approval of the Board and such person’s or entity’s execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement.

 

ARTICLE VII
LIABILITY, EXCULPATION, INDEMNIFICATION

 

Section 7.1                                     Limited Liability; Exculpation .

 

(a)                                  Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and neither the Member nor any Director shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or Director of the Company.

 

(b)                                  To the fullest extent permitted by law, neither the Member nor any of its or the Company’s Directors, officers, employees, shareholders, agents or

 

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representatives (each, a “ Covered Person ”), shall be liable to the Company or any other person or entity that is bound by this Agreement for any loss, liability, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company, except that a Covered Person shall be liable for any loss, liability, damage or claim incurred by reason of such Covered Person’s gross negligence or willful misconduct.

 

Section 7.2                                     Fiduciary Duty .

 

(a)                                  To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or any other person or entity that is bound by this Agreement, a Covered Person acting under this Agreement shall not be liable to the Company or any other person or entity that is bound by this Agreement for such Covered Person’s good faith reliance on the provisions of this Agreement.  The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of a Covered Person to the Company or its Members otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person.  Whenever in this Agreement a Covered Person is permitted or required to make decisions in good faith, the Covered Person shall act under such standard and shall not be subject to any other or different standard imposed by this Agreement or any relevant provisions of law or in equity or otherwise.

 

(b)                                  A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any person or entity as to matters the Covered Person reasonably believes are within such person’s or entity’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the Member might properly be paid.

 

Section 7.3                                     Indemnification .  To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of such Covered Person’s gross negligence or willful misconduct with respect to such acts or omissions; provided, that any indemnity under this Section 7.3 shall be provided out of and to the extent of Company assets only, and no Covered Person shall have any personal liability on account thereof.

 

Section 7.4                                     Expenses .  To the fullest extent permitted by applicable law, expenses (including reasonable attorneys’ fees, disbursements, fines and amounts paid in settlement) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding relating to or arising out of their performance of their duties on behalf of the

 

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Company may, from time to time and at the discretion of the Board, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall ultimately be determined that the Covered Person is not entitled to be indemnified as authorized in Section 7.3.

 

ARTICLE VIII
MISCELLANEOUS

 

Section 8.1                                     Seal .  The seal of the Company shall be circular in form and shall contain the name of the Company, the year of its formation and the words “Company Seal” and “Delaware”.  The form of such seal shall be subject to approval and alteration by the Board.  The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

 

Section 8.2                                     Books and Records; Inspection .  Except to the extent otherwise required by law, the books and records of the Company shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board.

 

Section 8.3                                     Electronic Transmission .  “Electronic transmission”, as used in this Agreement, means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

Section 8.4                                     Amendment, Waiver, Etc .  This Agreement may not be amended or supplemented, and no waiver of or consent to departures from the provisions hereof shall be effective, unless set forth in a writing signed by the Member.

 

Section 8.5                                     Binding Effect .  This Agreement shall be binding upon and inure to the benefit of all parties hereto and their successors and permitted assigns.

 

Section 8.6                                     Severability .  The invalidity, unenforceability or illegality of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid, unenforceable or illegal provision was omitted.

 

Section 8.7                                     Integration .  This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

 

Section 8.8                                     No Third-Party Beneficiaries .  Except as provided in Article VII with respect to the exculpation and indemnification of Covered Persons, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their successors and permitted assigns.

 

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Section 8.9                                     Governing Law .  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF TO THE EXTENT THE SAME ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD PERMIT OR REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

Section 8.10                              Counterparts .  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement and all of which together shall constitute one and the same instrument.

 

Section 8.11                              Effectiveness .  Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the Office of the Delaware Secretary of State on December 13, 2013.

 

Section 8.12                              Permitted Merger .

 

(a)                                  Notwithstanding any other provision of this Agreement and without the need for any further act, vote or approval of the Board, the Member, any Director any officer of the Company or any other person or entity, ( i ) the Company is hereby authorized to merge with the Member pursuant to Section 18-209 of the Act, with the Company continuing as the surviving entity in such merger (the “ Permitted Merger ”) and ( ii ) the Company is hereby authorized to execute, deliver and perform, and the Member, any Director, any officer of the Company or any member of any Committee (including Transaction Committee I, Transaction Committee II and Transaction Committee III), acting alone, on behalf of the Company, is hereby authorized to negotiate the terms of, cause the Company to enter into and perform, and execute, deliver and file (if necessary or desirable), all documents, agreements and certificates that the Member or such Director, officer or Committee member determines are necessary, appropriate, proper, advisable, incidental or convenient to consummate the Permitted Merger (including, without limitation, an agreement of merger and any certificate of merger (as an authorized person of the Company within the meaning of the Act)), and all other documents, agreements, exhibits or certificates contemplated thereby or related thereto with respect to the Permitted Merger (all with such terms and conditions as the Member or such Director, officer or Committee member shall approve; its approval to be conclusively, but not exclusively, evidenced by its execution of any such documents, agreements or certificates).  The foregoing authorization shall not be deemed a restriction on the powers of the Member, any Director, any officer of the Company or any Committee member to enter into other agreements on behalf of the Company.

 

(b)                                  Notwithstanding any provision in this Agreement and without the need for any further act, vote or approval of the Board, the Member, any Director, any officer of the Company or any other person or entity, ( i ) effective as of the time of the Permitted Merger, ( a ) CDRSVM Holding, Inc., a Delaware corporation, shall automatically be admitted to the Company as the sole equity

 

15



 

member of the Company (such admission effective simultaneously with the effectiveness of the Permitted Merger) and own all of the limited liability company interests in the Company, ( b ) all references in this Agreement to the Member shall automatically be deemed amended to refer to CDRSVM Holding, Inc., ( c ) for all purposes of this Agreement, CDRSVM Holding, Inc. shall be deemed to be the “Member” hereunder, ( d ) The ServiceMaster Company shall cease to be a member of the Company and ( e ) the Company shall continue without dissolution; and ( ii ) the consummation of the Permitted Merger and any transactions contemplated thereby shall not be considered a violation of any provision of this Agreement.  Notwithstanding any provision of this Agreement and without the need for any further act, vote or approval of the Board, the Member, any Director, any officer of the Company or any other person or entity, (i) effective as of the time of the conversion of CDRSVM Holding, Inc. to CDRSVM Holding, LLC, a Delaware limited liability company, (a) CDRSVM Holding, LLC shall continue as the sole equity member of the Company and own all of the limited liability company interests in the Company, (b) all references in this Agreement to the Member shall automatically be deemed amended to refer to CDRSVM Holding, LLC, (c) for all purposes of this Agreement, CDRSVM Holding, LLC shall be deemed to be the “Member” hereunder, and (d) the Company shall continue without dissolution; and (ii) the consummation of such conversion and any transactions contemplated thereby shall not be considered a violation of any provision of this Agreement.

 

Section 8.13                              Authorization .  The Company is hereby authorized to execute, deliver and perform, and the Member or any Director, officer of the Company or member of any Committee (including Transaction Committee I, Transaction Committee II and Transaction Committee III), acting alone, on behalf of the Company, is hereby authorized to negotiate the terms of, cause the Company to enter into and perform, and execute, deliver and file (if necessary or desirable), ( i ) the documents listed on Annex C (each as amended from time to time), and ( ii ) any document, agreement or other instrument contemplated by or related to any of the foregoing and any amendments thereto, all without any further act, vote or approval of the Board or any Member, Director, officer, Committee member or any other person or entity, notwithstanding any other provision of this Agreement, each in such form and with such changes or amendments to the terms, conditions or other provisions thereof as the Member, Director, officer or Committee member executing the same may approve, the execution and delivery of each of which shall be conclusive evidence of proper authorization and approval thereof as contemplated hereby.  The foregoing authorization shall not be deemed a restriction on the powers of the Member or any Director, officer or Committee member to enter into other agreements on behalf of the Company.  Notwithstanding any provision of this Agreement (including Section 8.4), the Board (and any applicable Committee (including Transaction Committee I, Transaction Committee II and Transaction Committee III)) without the approval of the Member or any other person or entity, may amend Annex C to this Agreement.

 

16



 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Agreement as of the date first above written.

 

 

MEMBER:

 

 

 

The ServiceMaster Company

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

Name:

Alan J. M. Haughie

 

Title:

SVP & CFO

 

17



 

COUNTERPART SIGNATURE PAGE
TO THE
LIMITED LIABILITY COMPANY AGREEMENT
OF
THE SERVICEMASTER COMPANY, LLC

 

IN WITNESS WHEREOF, the undersigned hereby executes this Counterpart Signature Page to the Limited Liability Company Agreement of The ServiceMaster Company, LLC, a Delaware limited liability company (the “ Company ”), dated as of December 9, 2013 (the “ LLC Agreement ”), and hereby accepts and agrees to be bound by all the terms and provisions of the LLC Agreement as a member of the Company.

 

 

MEMBER :

 

 

 

CDRSVM Holding, LLC

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name: Alan J. M. Haughie

 

 

Title:   Vice President and Chief Financial Officer

 

[Counterpart Signature Page to the SVM LLCA]

 



 

Annex A

 

Name

 

Title

 

 

 

Jason Bailey

 

Vice President

 

 

 

Dominic Bardos

 

Vice President

 

 

 

Mark J. Barry

 

President and Chief Operating Officer, American Home Shield

 

 

 

Thomas L. Campbell

 

Vice President & Deputy General Counsel

 

 

 

Stephanie Caron

 

Vice President

 

 

 

Thomas J. Coba

 

President, ServiceMaster Clean & Merry Maids and President & COO, Furniture Medic & AmeriSpec

 

 

 

Bradford E. Crandell

 

Vice President

 

 

 

William J. Derwin

 

President, Terminix

 

 

 

Vicki L. Fahy

 

Vice President

 

 

 

Laura L. Freeman

 

Vice President

 

 

 

Dirk R. Gardner

 

Interim Associate General Counsel — Corporate & Assistant Secretary

 

 

 

Robert J. Gillette

 

Chief Executive Officer

 

 

 

Chad E. Grisham

 

Vice President

 

 

 

Rob L. Hallam

 

Vice President

 

 

 

Alan J.M. Haughie

 

Senior Vice President & Chief Financial Officer

 

 

 

Timothy M. Haynes

 

Senior Vice President & Chief Information Officer

 

 

 

Andrea L. Hough

 

Vice President

 

 

 

Dana C. Lee

 

Interim Assistant Treasurer

 

 

 

James T. Lucke

 

Senior Vice President, General Counsel & Secretary

 

 

 

Lawrence L. Mariano III

 

Vice President

 

 

 

Daniel J. Marks

 

Vice President

 

18



 

Thomas J. McAloon

 

Vice President

 

 

 

Bisher F. Mufti, Sr.

 

Vice President - SVM Clean International

 

 

 

John P. Mullen

 

Vice President, Chief Accounting Officer & Controller

 

 

 

Jed L. Norden

 

Senior Vice President, Human Resources

 

 

 

Mark M. Petzinger

 

Vice President & Associate General Counsel

 

 

 

Mary Kay Runyan

 

Senior Vice President, Sourcing & Fleet

 

 

 

Irshad Shafique

 

Vice President

 

 

 

James E. Shields

 

Vice President & Treasurer

 

 

 

D. Shannon Sparks

 

Vice President

 

 

 

Peter L. Tosches

 

Senior Vice President

 

 

 

Brian K. Turcotte

 

Vice President

 

 

 

Deborah Van de Walker

 

Assistant Vice President

 

 

 

Warren G. Vaughn, Jr.

 

Vice President

 

 

 

Kenneth J. Young

 

Vice President

 

19



 

Annex B

 

MANAGEMENT AGREEMENT

 

                                                 , 20

 

The ServiceMaster Company, LLC

[Address]

 

Re:  Management Agreement —The ServiceMaster Company, LLC

 

Ladies and Gentlemen:

 

For good and valuable consideration, each of the undersigned persons, who have been designated as Directors of The ServiceMaster Company, LLC, a Delaware limited liability company (the “Company”), in accordance with the Limited Liability Company Agreement of the Company, dated as of                                    , 20    , as it may be amended or restated from time to time (the “ LLC Agreement ”), hereby agree as follows:

 

1.                                       Each of the undersigned accepts such person’s rights and authority as a Director under the LLC Agreement and agrees to perform and discharge such person’s duties and obligations as a Director under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such person’s successor as a Director is designated or until such person’s resignation or removal as a Director in accordance with the LLC Agreement.  Each of the undersigned agrees and acknowledges that it has been designated as a “manager” of the Company within the meaning of the Delaware Limited Liability Company Act.

 

2.                                       THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

Initially capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.

 

This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

20



 

IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

 

 

 

 

Name:

 

 

 

 

 

Name:

 

21



 

Annex C

 

Authorized Documents

 

1.               Separation and Distribution Agreement to be entered into among the Company, TruGreen Holding Corporation, TruGreen Limited Partnership, ServiceMaster Global Holdings, Inc. and any other parties thereto;

 

2.               Employee Matters Agreement, to be entered into among the Company, TruGreen Holding Corporation, TruGreen Limited Partnership, ServiceMaster Global Holdings, Inc. and any other parties thereto;

 

3.               Tax Matters Agreement, to be entered into among the Company, TruGreen Holding Corporation, TruGreen Limited Partnership, ServiceMaster Global Holdings, Inc. and any other parties thereto;

 

4.               Contribution, Repayment and Assumption Agreement to be entered into among the Company, TruGreen Companies L.L.C. and any other parties thereto relating to certain loans of TruGreen Companies L.L.C.;

 

5.               Contribution and Assumption Agreement to be entered into among the Company, TruGreen Holding Corporation, and any other parties thereto relating to the transfer of interests in certain entities and other assets, including cash;

 

6.               Contribution and Assumption Agreement to be entered into among the Company and GreenLawn International Holdings, LLC and any other parties thereto;

 

7.               Intellectual Property License Agreement to be entered into among the Company, TruGreen Holding Corporation and any other parties thereto;

 

8.              Software Assignment Agreement to be entered into among the Company, TruGreen Limited Partnership and any other parties thereto;

 

9.               Domain Name Assignment Agreement to be entered into among the Company, TruGreen Limited Partnership and any other parties thereto;

 

10.        TruGreen Trademark License Agreement to be entered into among the Company, TruGreen Limited Partnership, ServiceMaster Limited and any other parties thereto;

 

11.        Canadian ServiceMaster Trademark License Agreement to be entered into among the Company, TruGreen Limited Partnership and any other parties thereto;

 

12.        Indenture, dated as of February 13, 2012, among The ServiceMaster Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee, as amended or supplemented prior to the date hereof by the First Supplemental Indenture, dated as of February 13, 2012, the Second Supplemental Indenture, dated as of February 16, 2012 and the Third Supplemental Indenture, dated as of August 21, 2012, and to be further supplemented by the Fourth Supplemental

 

22



 

Indenture, to be entered into among the Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee;

 

13.        Transition Services Agreement, to be entered into among the Company, TruGreen Limited Partnership, and any other parties thereto;

 

14.        Term Loan Credit Agreement Joinder Agreement among the Member and the Company and consented to by Citibank, N.A., as administrative agent, and the other parties thereto, relating to the assumption by the Company of the Member’s obligations under the Term Loan Credit Agreement, dated as of July 24, 2007 (as amended prior to the date hereof);

 

15.        Revolving Credit Agreement Joinder Agreement among the Member and the Company and consented to by Citibank, N.A., as administrative agent, and the other parties thereto, relating to the assumption by the Company of the Member’s obligations under the Revolving Credit Agreement, dated as of July 24, 2007 (as amended prior to the date hereof); and

 

16.        Indenture, dated as of August 15, 1997 (as amended by the First Supplemental Indenture, dated as of August 15, 1997, the Second Supplemental Indenture, dated as of January 1, 1998, the Third Supplemental Indenture, dated as of March 2, 1998, and the Fourth Supplemental Indenture, dated as of August 10, 1999, the “ Indenture ”), among The ServiceMaster Company and The Bank of New York Mellon Trust Company, N.A. (as successor to Harris Trust and Savings Bank), as Trustee (in such capacity, the “ Trustee ”), and to be further supplemented by the Fifth Supplemental Indenture, to be entered into between the Company and the Trustee.

 

23


Exhibit 4.1

 

Fourth Supplemental Indenture

 

FOURTH SUPPLEMENTAL INDENTURE, dated as of January 14, 2014 (this “ Supplemental Indenture ”), among The ServiceMaster Company, LLC, a Delaware limited liability company (the “ Successor Company ”), the Subsidiary Guarantors under the Indenture referred to below (the “ Subsidiary Guarantors ”) and Wilmington Trust, National Association, as Trustee under the Indenture referred to below.

 

W I T N E S S E T H:

 

WHEREAS, The ServiceMaster Company, a Delaware corporation (the “ Company ”), the Subsidiary Guarantors and the Trustee have heretofore become parties to an Indenture, dated as of February 13, 2012 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance from time to time by the Company of Notes;

 

WHEREAS, pursuant to the Agreement and Plan of Merger, dated January 14, 2014, the Company has merged (the “ Merger ”) with and into the Successor Company, with the Successor Company being the surviving entity;

 

WHEREAS, Section 501(a)(i) of the Indenture contemplates that the Successor Company shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Successor Company shall expressly assume all the obligations of the Company under the Notes and the Indenture;

 

WHEREAS, Section 501(a)(iv) of the Indenture contemplates that each Subsidiary Guarantor shall execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary Guarantor shall confirm its Subsidiary Guarantee;

 

WHEREAS, the Successor Company and the Subsidiary Guarantors desire to enter into this Supplemental Indenture for good and valuable consideration; and

 

WHEREAS, pursuant to Section 901(2) of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Successor Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows:

 

1.                                       Defined Terms .  As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined.  The words “herein,” “hereof” and “hereby” and other words of similar import

 



 

used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

 

2.                                       Assumption .  The Successor Company hereby expressly assumes and agrees to pay, perform and discharge when due each and every debt, obligation, covenant and agreement incurred, made or to be paid, performed or discharged by the Company under the Indenture and the Notes.  The Successor Company hereby agrees to be bound by all the terms, provisions and conditions of the Indenture and the Notes and agrees that it shall be the Successor Company (as defined in the Indenture) and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes.

 

3.                                       Affirmation of Guarantee .  Each Subsidiary Guarantor hereby confirms its guarantee of the Subsidiary Guaranteed Obligations under the Indenture and the Notes on the terms and subject to the conditions set forth in Article XIII of the Indenture.

 

4.                                       Governing Law .  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  THE TRUSTEE, THE SUCCESSOR COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.

 

5.                                       Ratification of Indenture; Supplemental Indentures Part of Indenture .  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture.

 

6.                                       Counterparts .  The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

 

7.                                       Headings .  The section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

 

2



 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

 

 

MERRY MAIDS LIMITED PARTNERSHIP, as Subsidiary Guarantor By: MM MAIDS L.L.C., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

MM MAIDS L.L.C., as Subsidiary Guarantor

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

 

 

SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP, as Subsidiary Guarantor

 

By: SERVICEMASTER CONSUMER SERVICES, INC., its general partner

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

[Signature Page to Fourth Supplemental Indenture]

 



 

 

SERVICEMASTER MANAGEMENT CORPORATION, as Subsidiary Guarantor

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

 

 

SERVICEMASTER RESIDENTIAL/COMMERCIAL SERVICES LIMITED PARTNERSHIP, as Subsidiary Guarantor

 

By:

SM CLEAN L.L.C., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

[Signature Page to Fourth Supplemental Indenture]

 



 

 

SM CLEAN L.L.C., as Subsidiary Guarantor

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

 

 

TERMINIX INTERNATIONAL, INC., as Subsidiary Guarantor

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

 

 

T HE TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP, as Subsidiary Guarantor

 

By: TERMINIX INTERNATIONAL, INC., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

[Signature Page to Fourth Supplemental Indenture]

 



 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

 

 

By:

/s/ Joseph P. O’Donnell

 

 

Name:

Joseph P. O’Donnell

 

 

Title:

Vice President

 

[Signature Page to Fourth Supplemental Indenture]

 


Exhibit 4.2

 

Fifth Supplemental Indenture

 

FIFTH SUPPLEMENTAL INDENTURE, dated as of January 14, 2014 (this “ Supplemental Indenture ”), among SMCS Holdco, Inc., a Delaware corporation, and SMCS Holdco II, Inc., a Delaware corporation (each a “ Subsidiary Guarantor ” and together, the “ Subsidiary Guarantors ”), and The ServiceMaster Company, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (and its successors and assigns, the “ Company ”), and each other then existing Subsidiary Guarantor under the Indenture referred to below (the “ Existing Guarantors ”), and Wilmington Trust, National Association, as Trustee under the Indenture referred to below.

 

W I T N E S S E T H:

 

WHEREAS, the Company, any Existing Guarantors and the Trustee have heretofore become parties to an Indenture, dated as of February 13, 2012 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of Notes in series;

 

WHEREAS, Section 1308 of the Indenture provides that the Company is required to cause the Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the Subsidiary Guarantors shall guarantee the Company’s Subsidiary Guaranteed Obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein and in Article XIII of the Indenture;

 

WHEREAS, each Subsidiary Guarantor desires to enter into such supplemental indenture for good and valuable consideration, including substantial economic benefit in that the financial performance and condition of such Subsidiary Guarantor is dependent on the financial performance and condition of the Company, the obligations hereunder of which such Subsidiary Guarantor has guaranteed, and on such Subsidiary Guarantor’s access to working capital through the Company’s access to revolving credit borrowings under the Senior Revolving Credit Agreement; and

 

WHEREAS, pursuant to Section 901 of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Subsidiary Guarantors, the Company, the Existing Guarantors and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows:

 



 

1.  Defined Terms .  As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined.  The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

 

2.  Agreement to Guarantee .  Each Subsidiary Guarantor hereby agrees, jointly and severally with any other Subsidiary Guarantors and fully and unconditionally, to guarantee the Subsidiary Guaranteed Obligations under the Indenture and the Notes on the terms and subject to the conditions set forth in Article XIII of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture as a Subsidiary Guarantor.

 

3.  Termination, Release and Discharge .  Each Subsidiary Guarantor’s Subsidiary Guarantee shall terminate and be of no further force or effect, and each Subsidiary Guarantor shall be released and discharged from all obligations in respect of such Subsidiary Guarantee, as and when provided in Section 1303 of the Indenture.

 

4.  Parties .  Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of each Subsidiary Guarantor’s Subsidiary Guarantee or any provision contained herein or in Article XIII of the Indenture.

 

5.  Governing Law .  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  THE TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.

 

6.  Ratification of Indenture; Supplemental Indentures Part of Indenture .  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture.

 

2



 

7.  Counterparts .  The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

 

8.  Headings .  The Section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

 

[ remainder of page intentionally left blank ]

 

3



 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

 

 

SMCS HOLDCO, INC. as Subsidiary Guarantor

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

SMCS HOLDCO II, INC. as Subsidiary Guarantor

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee

 

 

 

 

 

 

 

 

 

By:

/s/ Joseph P O’Donnell

 

 

Name:

Joseph P O’Donnell

 

 

Title:

Vice President

 

[Supplemental Indenture re SMCS I and II]

 



 

 

THE TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP

 

By: TERMINIX INTERNATIONAL, INC., its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name :

Alan J. M. Haughie

 

 

Title:

Senior Vice President  & Chief Financial Officer

 

 

 

 

 

 

 

 

 

MERRY MAIDS LIMITED PARTNERSHIP By: MM MAIDS L.L.C., its general partner

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

MM MAIDS L.L.C.

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP

 

By: SMCS HOLDCO, INC., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

[Supplemental Indenture re SMCS I and II]

 



 

 

SERVICEMASTER MANAGEMENT CORPORATION

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

SERVICEMASTER RESIDENTIAL/COMMERCIAL SERVICES LIMITED PARTNERSHIP

 

By: SM CLEAN L.L.C., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

SM CLEAN L.L.C.

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

TERMINIX INTERNATIONAL, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

[Supplemental Indenture re SMCS I and II]

 


Exhibit 4.3

 

Fifth Supplemental Indenture

 

FIFTH SUPPLEMENTAL INDENTURE, dated as of January 14, 2014 (this “ Supplemental Indenture ”), among The ServiceMaster Company, LLC, a Delaware limited liability company (the “ Successor Company ”), and The Bank of New York Mellon Trust Company, N.A. (as successor to Harris Trust and Savings Bank), as Trustee under the Indenture referred to below.

 

W I T N E S S E T H:

 

WHEREAS, The ServiceMaster Company, a Delaware corporation (the “ Company ”), and the Trustee have heretofore become parties to an Indenture, dated as of August 15, 1997 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance from time to time by the Company of Securities;

 

WHEREAS, pursuant to the Agreement and Plan of Merger, dated January 14, 2014, the Company has merged (the “ Merger ”) with and into the Successor Company, with the Successor Company being the surviving entity;

 

WHEREAS, Section 6.01(i) of the Indenture contemplates that the Successor Company shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Successor Company shall expressly assume all the obligations of the Company on all of the Securities and under the Indenture;

 

WHEREAS, the Successor Company desires to enter into this Supplemental Indenture for good and valuable consideration; and

 

WHEREAS, pursuant to Section 10.01(2) of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Successor Company and the Trustee mutually covenant and agree for the benefit of the Holders of the Securities as follows:

 

1.                                       Defined Terms .  As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined.  The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

 

2.                                       Assumption .  The Successor Company hereby expressly assumes and agrees to pay, perform and discharge when due each and every debt, obligation,

 



 

covenant and agreement incurred, made or to be paid, performed or discharged by the Company under the Indenture and the Securities.  The Successor Company hereby agrees to be bound by all the terms, provisions and conditions of the Indenture and the Securities and agrees that it shall be the Successor Company (as defined in the Indenture) and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Securities.

 

4.                                       Governing Law .  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  THE TRUSTEE, THE SUCCESSOR COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE SECURITIES AND (BY THEIR ACCEPTANCE OF THE SECURITIES) THE HOLDERS AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.

 

5.                                       Ratification of Indenture; Supplemental Indentures Part of Indenture .  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture.

 

6.                                       Counterparts .  The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

 

7.                                       Headings .  The section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

 

2



 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

 

 

 

 

 

 

 

 

 

By:

/s/ Michael Countryman

 

 

Name:

Michael Countryman

 

 

Title:

VICE PRESIDENT

 

[Signature Page to Fifth Supplemental Indenture – Pre-LBO]

 


Exhibit 10.1

 

Execution Version

 

JOINDER AGREEMENT

 

CREDIT AGREEMENT JOINDER AGREEMENT, dated as of January 14, 2014 (this “ Agreement ”), among The ServiceMaster Company, a Delaware corporation (the “ Borrower ”), The ServiceMaster Company, LLC, a Delaware limited liability company (the “ Successor Company ”), each of the other Loan Parties (as defined in the Credit Agreement) and CITIBANK, N.A., as administrative agent (the “ Administrative Agent ”) and collateral agent (the “ Collateral Agent ”) and LC Facility Issuing Bank (as defined in the Credit Agreement), in each case for the banks and other financial institutions (the “ Lenders ”) from time to time parties to the Credit Agreement (as hereinafter defined).

 

W   I   T   N   E   S   S   E   T   H :

 

WHEREAS, the Borrower and the Administrative Agent are parties to the Credit Agreement, dated as of July 24, 2007 (as amended by Amendment No. 1, dated as of August 22, 2012 and by Amendment No. 2, dated as of February 22, 2013, the “ Credit Agreement ”), among the Borrower, the Lenders, the Administrative Agent and the other parties thereto;

 

WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of January 14, 2014, between the Borrower and the Successor Company and attached as Exhibit A hereto, the Borrower is merging with and into the Successor Company, with the Successor Company as the surviving corporation (the “ Merger ”);

 

WHEREAS, subsection 7.3(a) of the Credit Agreement expressly permits the Merger, subject to the terms and conditions set forth therein;

 

WHEREAS, pursuant to subsection 7.3(a)(i) of the Credit Agreement, in connection with the Merger, the Successor Company is required to expressly assume all the obligations of the Borrower under the Credit Agreement and the Loan Documents to which the Borrower is a party;

 

WHEREAS, pursuant to subsection 7.3(a)(iv) of the Credit Agreement, in connection with the Merger, each Subsidiary Guarantor is required to expressly confirm all of its obligations under its Subsidiary Guarantee;

 

WHEREAS, pursuant to subsection 7.3(c) of the Credit Agreement, concurrently with the Merger, the Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Borrower under the Loan Documents, and the Borrower shall thereupon be relieved of all obligations and covenants under the Credit Agreement and the other Loan Documents; and

 



 

WHEREAS, pursuant to subsections 7.3(d) and 7.3(a)(vi)(y) of the Credit Agreement, clauses (ii) and (iii) of subsection 7.3(a) do not apply to, and no legal opinion need be delivered in connection with, the Merger;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       Defined Terms .  Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

2.                                       Assumption and Joinder of Agreements and Obligations .  Effective as of the Effective Date (as defined below), the Successor Company hereby becomes a party to the Credit Agreement, the Guarantee and Collateral Agreement and each other Security Document to which the Borrower is a party and expressly assumes, confirms and agrees to perform and observe all of the indebtedness, obligations (including, without limitation, all obligations in respect of the Loans and the LC Facility), covenants, agreements, terms, conditions, duties and liabilities of the “Borrower” thereunder and with respect thereto and under or with respect to, any Term Loan Notes, any LC Facility Letters of Credit and any of the other Loan Documents to which the Borrower is a party in its capacity as “Borrower” as fully as if the Successor Company were originally a signatory in the capacity of the “Borrower” thereto (it being understood that the Successor Company is no longer an Immaterial Subsidiary).  At all times after the effectiveness of such joinder, all references to the “Borrower” in the Credit Agreement, any Term Loan Notes, any LC Facility Letter of Credit or any of the other Loan Documents and any and all certificates and other documents executed by the Borrower in connection therewith shall be deemed to refer to the Successor Company, as more fully described in the Credit Agreement.

 

3.                                       Representations and Warranties .  The Successor Company represents and warrants to each of the Lenders that as of the Effective Date:

 

a)                   the execution, delivery and performance by the Successor Company of this Agreement, the Credit Agreement and each other Loan Document to which it is a party are within the Successor Company’s organizational powers, have been duly authorized by all necessary corporate or other organizational action, and will not (i) violate any Requirement of Law or Contractual Obligation of the Successor Company in any respect that would reasonably be expected to have a Material Adverse Effect or (ii) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) on any of the Successor Company’s properties or revenues pursuant to any such Requirement of Law or Contractual Obligation;

 

2



 

b)                   this Agreement, the Credit Agreement and each other Loan Document to which it is a party constitutes a legal, valid and binding obligation of the Successor Company, enforceable against the Successor Company in accordance with its terms, except as enforceability may be limited by applicable domestic or foreign bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law); and

 

c)                    after giving effect to the Merger and this Agreement, to the extent required to be Collateral pursuant to the terms of the Security Documents and the Credit Agreement, the Collateral owned by the Successor Company will (a) continue to constitute Collateral under the Security Documents and (b) be subject to a Lien in favor of the Collateral Agent.

 

4.                                       Effectiveness .  This Agreement shall become effective on the date (such date, if any, the “ Effective Date ”) that the following conditions have been satisfied:

 

a)                   the Administrative Agent shall have received (i) a counterpart of this Agreement executed by the Borrower, the Successor Company and each of the other Loan Parties and (ii) a counterpart of the Assumption Agreement to the Guarantee and Collateral Agreement, executed by the Successor Company;

 

b)                   the Merger shall have occurred; and

 

c)                    the Administrative Agent shall have received a certificate signed by a Responsible Officer of the Borrower to the effect that the Merger complies with the applicable provisions described in subsection 7.3(a) of the Credit Agreement.

 

5.                                       Amendment to Credit Agreement.   Effective as of the Effective Date, the Credit Agreement is hereby deemed to be amended to the extent, but only to the extent, necessary to effect the joinder provided for hereby.  Except as expressly set forth herein, (i) this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders, the Administrative Agent, the Collateral Agent or the other Secured Parties under the Credit Agreement or any other Loan Document and (ii) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement or any other Loan Document.

 

6.                                       Affirmation of Loan Documents .  Each and every term, condition, obligation, covenant and agreement contained in the Credit Agreement or any other Loan

 

3



 

Document is hereby ratified and re-affirmed by the Successor Company in all respects and shall continue in full force and effect, except as expressly modified hereby.  Each of the other Loan Parties hereby consents to this Agreement and reaffirms its obligations under the Loan Documents to which it is party, including its Subsidiary Guarantee. Each other Loan Party hereby confirms that each Loan Document to which it is a party and all of its Collateral encumbered thereby will continue to guarantee or secure, as the case may be, as and to the extent provided therein, the payment and performance of all “Obligations” under each of the Loan Documents to which is a party (in each case as such terms are defined in the applicable Loan Document).  This Agreement shall constitute a Loan Document for purposes of the Credit Agreement and from and after the Effective Date, all references to the Credit Agreement in any Loan Document and all references in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, shall, unless expressly provided otherwise, refer to the Credit Agreement as modified by this Agreement.

 

7.                                       Intercreditor Agreement .  The Successor Company hereby acknowledges that it has received a copy of the Intercreditor Agreement and consents thereto, agrees to recognize all rights granted thereby to the Term Loan Agent, the Term Loan Creditors, the Revolving Credit Agent, the Revolving Creditors, any Additional Agent and any Additional Creditors (as each such term is defined in the Intercreditor Agreement), and will not do any act or perform any obligation which is not in accordance with the agreements set forth in the Intercreditor Agreement. The Successor Company further acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under the Intercreditor Agreement, except as expressly provided in Section 7.10 of the Intercreditor Agreement.

 

8.                                       GOVERNING LAW .  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

9.                                       Counterparts .  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed

 

4



 

counterpart hereof.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Successor Company and the Administrative Agent.

 

10.                                Section Headings .  The section headings in this Agreement are for convenience of reference only and are not to affect the construction hereof or to be taken into consideration in the interpretation hereof.

 

11.                                Severability .  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

12.                                Successors and Assigns .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

13.                                WAIVERS OF JURY TRIAL .  EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TERM LOAN NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[ The Remainder of This Page is Left Intentionally Blank ]

 

5



 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the date first set forth above.

 

 

 

THE SERVICEMASTER COMPANY

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

[Signature Page — Credit Agreement Joinder]

 



 

 

Acknowledged and Accepted:

 

 

 

 

 

CITIBANK, N.A., as Administrative Agent and Collateral Agent

 

 

 

 

 

By:

/s/ Brian J. Rolli

 

 

Name:

Brian J. Rolli

 

 

Title:

Vice President

 

[Term Loan Joinder]

 



 

 

Consented and agreed (for purposes of Section 6 only):

 

 

 

 

 

CDRSVM HOLDING, LLC (formerly CDRSVM Holding, Inc.)

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

[Signature Page — Credit Agreement Joinder]

 



 

 

THE TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP

 

By: TERMINIX INTERNATIONAL, INC., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

MERRY MAIDS LIMITED PARTNERSHIP By: MM MAIDS L.L.C., its general partner

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

MM MAIDS L.L.C.

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP

 

By: SMCS HOLDCO, INC., its general partner

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

[Signature Page  Credit Agreement Joinder]

 



 

 

SERVICEMASTER MANAGEMENT CORPORATION

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

SERVICEMASTER RESIDENTIAL/COMMERCIAL SERVICES LIMITED PARTNERSHIP

 

By: SM CLEAN L.L.C., its general partner

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

SM CLEAN L.L.C.

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

TERMINIX INTERNATIONAL, INC.

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

[Signature Page  Credit Agreement Joinder]

 



 

 

SMCS HOLDCO, INC.

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

 

 

 

 

 

 

SMCS HOLDCO II, INC.

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

[Signature Page  Credit Agreement Joinder]

 


Exhibit 10.2
Execution Version

 

JOINDER AGREEMENT

 

REVOLVING CREDIT AGREEMENT JOINDER AGREEMENT, dated as of January 14, 2014 (this “ Agreement ”), among The ServiceMaster Company, a Delaware corporation (the “ Parent Borrower ”), The ServiceMaster Company, LLC, a Delaware limited liability company (the “ Successor Company ”), each of the other Loan Parties (as defined in the Revolving Credit Agreement) and CITIBANK, N.A., as administrative agent (the “ Administrative Agent ”) and collateral agent (the “ Revolving Collateral Agent ”) and Issuing Bank (as defined in the Revolving Credit Agreement), in each case for the banks and other financial institutions (the “ Lenders ”) from time to time parties to the Revolving Credit Agreement (as hereinafter defined).

 

W   I   T   N   E   S   S   E   T   H :

 

WHEREAS, the Parent Borrower and the Administrative Agent are parties to the Revolving Credit Agreement, dated as of July 24, 2007 (as amended by Amendment No. 1, dated as of February 2, 2011, by Extension Amendment No. 1, dated as of January 30, 2012 and by Amendment No. 3, dated November 27, 2013, the “ Revolving Credit Agreement ”), among the Parent Borrower, the Lenders, the Administrative Agent and the other parties thereto;

 

WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of January 14, 2014, between the Parent Borrower and the Successor Company and attached as Exhibit A hereto, the Parent Borrower is merging with and into the Successor Company, with the Successor Company as the surviving corporation (the “ Merger ”);

 

WHEREAS, subsection 7.3(a) of the Revolving Credit Agreement expressly permits the Merger, subject to the terms and conditions set forth therein;

 

WHEREAS, pursuant to subsection 7.3(a)(i) of the Revolving Credit Agreement, in connection with the Merger, the Successor Company is required to expressly assume all the obligations of the Parent Borrower under the Revolving Credit Agreement and the Loan Documents to which the Parent Borrower is a party;

 

WHEREAS, pursuant to subsection 7.3(a)(iv) of the Revolving Credit Agreement, in connection with the Merger, each Subsidiary Guarantor is required to expressly confirm all of its obligations under its Subsidiary Guarantee;

 

WHEREAS, pursuant to subsection 7.3(c) of the Revolving Credit Agreement, concurrently with the Merger, the Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Parent Borrower under the Loan Documents, and the Parent Borrower shall thereupon be relieved of all obligations and covenants under the Revolving Credit Agreement and the other Loan Documents; and

 



 

WHEREAS, pursuant to subsections 7.3(d) and 7.3(a)(vi)(y) of the Revolving Credit Agreement, clauses (ii) and (iii) of subsection 7.3(a) do not apply to, and no legal opinion need be delivered in connection with, the Merger;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       Defined Terms .  Unless otherwise defined herein, terms defined in the Revolving Credit Agreement and used herein shall have the meanings given to them in the Revolving Credit Agreement.

 

2.                                       Assumption and Joinder of Agreements and Obligations .  Effective as of the Effective Date (as defined below), the Successor Company hereby becomes a party to the Revolving Credit Agreement, the Guarantee and Collateral Agreement and each other Security Document to which the Parent Borrower is a party and expressly assumes, confirms and agrees to perform and observe all of the indebtedness, obligations (including, without limitation, all obligations in respect of the Loans and the Letters of Credit), covenants, agreements, terms, conditions, duties and liabilities of the “Parent Borrower” thereunder and with respect thereto and under or with respect to, any Loan Notes, any Letters of Credit and any of the other Loan Documents to which the Parent Borrower is a party in its capacity as “Parent Borrower” as fully as if the Successor Company were originally a signatory in the capacity of the “Parent Borrower” thereto (it being understood that the Successor Company is no longer an Immaterial Subsidiary).  At all times after the effectiveness of such joinder, all references to the “Parent Borrower” in the Revolving Credit Agreement, any Loan Notes, any Letter of Credit or any of the other Loan Documents and any and all certificates and other documents executed by the Parent Borrower in connection therewith shall be deemed to refer to the Successor Company, as more fully described in the Revolving Credit Agreement.

 

3.                                       Representations and Warranties .  The Successor Company represents and warrants to each of the Lenders that as of the Effective Date:

 

a)                   the execution, delivery and performance by the Successor Company of this Agreement, the Revolving Credit Agreement and each other Loan Document to which it is a party are within the Successor Company’s organizational powers, have been duly authorized by all necessary corporate or other organizational action, and will not (i) violate any Requirement of Law or Contractual Obligation of the Successor Company in any respect that would reasonably be expected to have a Material Adverse Effect or (ii) result in, or require, the creation or imposition of any Lien (other than Permitted Liens)

 

2



 

on any of the Successor Company’s properties or revenues pursuant to any such Requirement of Law or Contractual Obligation;

 

b)                   this Agreement, the Revolving Credit Agreement and each other Loan Document to which it is a party constitutes a legal, valid and binding obligation of the Successor Company, enforceable against the Successor Company in accordance with its terms, except as enforceability may be limited by applicable domestic or foreign bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law); and

 

c)                    after giving effect to the Merger and this Agreement, to the extent required to be Collateral pursuant to the terms of the Security Documents and the Revolving Credit Agreement, the Collateral owned by the Successor Company will (a) continue to constitute Collateral under the Security Documents and (b) be subject to a Lien in favor of the Collateral Agent.

 

4.                                       Effectiveness .  This Agreement shall become effective on the date (such date, if any, the “ Effective Date ”) that the following conditions have been satisfied:

 

a)                   the Administrative Agent shall have received (i) a counterpart of this Agreement executed by the Parent Borrower, the Successor Company and each of the other Loan Parties and (ii) a counterpart of the Assumption Agreement to the Guarantee and Collateral Agreement, executed by the Successor Company;

 

b)                   the Merger shall have occurred; and

 

c)                    the Administrative Agent shall have received a certificate signed by a Responsible Officer of the Parent Borrower to the effect that the Merger complies with the applicable provisions described in subsection 7.3(a) of the Revolving Credit Agreement.

 

5.                                       Amendment to Revolving Credit Agreement.   Effective as of the Effective Date, the Revolving Credit Agreement is hereby deemed to be amended to the extent, but only to the extent, necessary to effect the joinder provided for hereby.  Except as expressly set forth herein, (i) this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders, the Administrative Agent, the Revolving Collateral Agent or the other Secured Parties under the Revolving Credit Agreement or any other Loan Document and (ii) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in

 

3



 

the Revolving Credit Agreement or any other provision of the Revolving Credit Agreement or any other Loan Document.

 

6.                                       Affirmation of Loan Documents .  Each and every term, condition, obligation, covenant and agreement contained in the Revolving Credit Agreement or any other Loan Document is hereby ratified and re-affirmed by the Successor Company in all respects and shall continue in full force and effect, except as expressly modified hereby.  Each of the other Loan Parties hereby consents to this Agreement and reaffirms its obligations under the Loan Documents to which it is party, including its Subsidiary Guarantee. Each other Loan Party hereby confirms that each Loan Document to which it is a party and all of its Collateral encumbered thereby will continue to guarantee or secure, as the case may be, as and to the extent provided therein, the payment and performance of all “Obligations” under each of the Loan Documents to which is a party (in each case as such terms are defined in the applicable Loan Document).  This Agreement shall constitute a Loan Document for purposes of the Revolving Credit Agreement and from and after the Effective Date, all references to the Revolving Credit Agreement in any Loan Document and all references in the Revolving Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Revolving Credit Agreement, shall, unless expressly provided otherwise, refer to the Revolving Credit Agreement as modified by this Agreement.

 

7.                                       Intercreditor Agreement .  The Successor Company hereby acknowledges that it has received a copy of the Intercreditor Agreement and consents thereto, agrees to recognize all rights granted thereby to the Term Loan Agent, the Term Loan Creditors, the Revolving Credit Agent, the Revolving Creditors, any Additional Agent and any Additional Creditors (as each such term is defined in the Intercreditor Agreement), and will not do any act or perform any obligation which is not in accordance with the agreements set forth in the Intercreditor Agreement. The Successor Company further acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under the Intercreditor Agreement, except as expressly provided in Section 7.10 of the Intercreditor Agreement.

 

8.                                       GOVERNING LAW .  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES ARE NOT MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

4



 

9.                                       Counterparts .  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.  A set of the copies of this Agreement signed by all the parties shall be lodged with the Successor Company and the Administrative Agent.

 

10.                                Section Headings .  The section headings in this Agreement are for convenience of reference only and are not to affect the construction hereof or to be taken into consideration in the interpretation hereof.

 

11.                                Severability .  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

12.                                Successors and Assigns .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

13.                                WAIVERS OF JURY TRIAL .  EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[ The Remainder of This Page is Left Intentionally Blank ]

 

5



 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the date first set forth above.

 

 

 

THE SERVICEMASTER COMPANY

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

THE SERVICEMASTER COMPANY, LLC

 

 

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief Financial Officer

 

[Signature Page — Revolving Credit Agreement Joinder]

 



 

 

Acknowledged and Accepted:

 

 

 

 

 

 

 

CITIBANK, N.A., as Administrative Agent and Revolving Collateral Agent

 

 

 

 

 

 

 

By:

/s/ Brian J. Roth

 

 

Name:

Brian J. Roth

 

 

Title:

Vice President

 

[Revolving Credit Joinder]

 



 

 

Consented and agreed (for purposes of Section 4 only):

 

 

 

 

 

 

CDRSVM HOLDING, LLC (formerly CDRSVM Holding, Inc.)

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

[Signature Page – Revolving Credit Agreement Joinder]

 



 

 

THE TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP
By: TERMINIX INTERNATIONAL, INC., its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

MERRY MAIDS LIMITED PARTNERSHIP

 

By: MM MAIDS L.L.C., its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

MM MAIDS L.L.C.

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP

 

By: SMCS HOLDCO, INC., its general partner

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

President & Chief

 

 

 

Financial Officer

 

[Signature Page – Revolving Credit Agreement Joinder]

 



 

 

SERVICEMASTER MANAGEMENT CORPORATION

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

SERVICEMASTER RESIDENTIAL/COMMERCIAL SERVICES LIMITED PARTNERSHIP

 

By: SM CLEAN L.L.C., its general partner

 

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

SM CLEAN L.L.C.

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

 

 

 

 

 

 

TERMINIX INTERNATIONAL, INC.

 

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

Senior Vice President & Chief

 

 

 

Financial Officer

 

[Signature Page – Revolving Credit Agreement Joinder]

 



 

 

SMCS HOLDCO, INC.

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

President & Chief Financial

 

 

 

Officer

 

 

 

 

 

 

 

SMCS HOLDCO II, INC.

 

 

 

 

 

 

 

By:

/s/ Alan J.M. Haughie

 

 

Name:

Alan J.M. Haughie

 

 

Title:

President & Chief Financial

 

 

 

Officer

 

[Signature Page — Revolving Credit Agreement Joinder]

 


Exhibit 10.3

 

EXECUTION COPY

 

ASSUMPTION AGREEMENT

 

ASSUMPTION AGREEMENT, dated as of January 14, 2014, made by SMCS Holdco, Inc., a Delaware corporation, and SMCS Holdco II, Inc., a Delaware corporation (each an “ Additional Granting Party ” and together, the “ Additional Granting Parties ”), in favor of CITIBANK, N.A., as administrative agent and collateral agent (in such capacity, the “ Collateral Agent ”) for the banks and other financial institutions (the “ Lenders ”) from time to time parties to the Credit Agreement referred to below and the other Secured Parties (as defined below).  All capitalized terms not defined herein shall have the meaning ascribed to them in such the Guarantee and Collateral Agreement referred to below, or if not defined therein, in the Credit Agreement.

 

W I T N E S S E T H :

 

WHEREAS, The ServiceMaster Company, a Delaware corporation (to be merged with and into The ServiceMaster Company, LLC, a Delaware limited liability company, on the date hereof) (the “ Borrower ”), Citibank, N.A., as administrative agent and collateral agent, JPMorgan Chase Bank, N.A., as syndication agent and the Lenders are parties to a Credit Agreement, dated as of July 24, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “ Credit Agreement ”);

 

WHEREAS, the Borrower, CDRSVM Holding, Inc., a Delaware corporation (to be converted into CDRSVM Holding, LLC, a Delaware limited liability company, on the date hereof) (“ Holding ”) and the Subsidiary Guarantors are, or are to become, parties to the Guarantee and Collateral Agreement, dated as of July 24, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “ Guarantee and Collateral Agreement ”), in favor of the Collateral Agent, for the ratable benefit of the Secured Parties (as defined in the Guarantee and Collateral Agreement);

 

WHEREAS, each Additional Granting Party is a member of an affiliated group of companies that includes the Borrower and each other Granting Party; the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Granting Parties (including the Additional Granting Parties) in connection with the operation of their respective businesses; and the Borrower and the other Granting Parties (including the Additional Granting Parties) are engaged in related businesses, and each such Granting Party (including the Additional Granting Parties) will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement;

 

WHEREAS, the Credit Agreement requires each Additional Granting Party to become a party to the Guarantee and Collateral Agreement; and

 

WHEREAS, each Additional Granting Party has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1



 

1.                                       Guarantee and Collateral Agreement .  By executing and delivering this Assumption Agreement, each Additional Granting Party, as provided in subsection 9.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Granting Party thereunder with the same force and effect as if originally named therein as a Guarantor, Grantor and Pledgor (it being understood that each Additional Granting Party is no longer an Immaterial Subsidiary) and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor, Grantor and Pledgor thereunder.  The information set forth in Annex 1-A hereto is hereby added to the information set forth in the Schedules to the Guarantee and Collateral Agreement, and such Schedules are hereby amended and modified to include such information.  Each Additional Granting Party hereby represents and warrants that each of the representations and warranties of such Additional Granting Party, in its capacities as a Guarantor, Grantor and Pledgor contained in Section 4 of the Guarantee and Collateral Agreement is true and correct in all material respects on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date.

 

2.                                       GOVERNING LAW .  THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

[ remainder of page intentionally left blank ]

 

2



 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

 

SMCS HOLDCO, INC.

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

 

 

 

 

 

 

SMCS HOLDCO II, INC.

 

 

 

 

 

By:

/s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

[Signature Page to Assumption Agreement — Term Loan GCA]

 



 

Acknowledged and Agreed to as
of the date hereof by:

 

CITIBANK, N.A.,
as Collateral Agent and Administrative Agent

 

 

By:

/s/ Alvaro De Velasco

 

 

Name:

Alvaro De Velasco

 

 

Title:

Vice President

 

 

 

(212) 816-4312

 

 

[Signature Page to Assumption Agreement — Term Loan GCA]

 



 

Annex 1-A to
Assumption Agreement

 

Supplement to
Guarantee and Collateral Agreement
Schedule 1

 

NOTICE ADDRESSES OF GUARANTORS

 

SMCS Holdco, Inc.

 

860 Ridge Lake Boulevard

 

Memphis, Tennessee 38120

 

Attention: Alan J. Haughie, President & CFO

 

& James T. Lucke, Senior Vice President

 

Telephone: (901) 766-1400

 

Facsimile: (901) 766-1107

 

 

 

SMCS Holdco II, Inc.

 

860 Ridge Lake Boulevard

 

Memphis, Tennessee 38120

 

Attention: Alan J. Haughie, President & CFO

 

& James T. Lucke, Senior Vice President

 

Telephone: (901) 766-1400

 

Facsimile: (901) 766-1107

 

 

 

In each case, with copies to:

 

 

 

The ServiceMaster Company, LLC

 

860 Ridge Lake Boulevard

 

Memphis, Tennessee 38120

 

Attention: James T. Lucke, Senior Vice President & General Counsel

 

Telephone: (901) 766-1400

 

Facsimile:  (901) 766-1107

 

 

 

and

 

 

 

Debevoise & Plimpton LLP

 

919 Third Avenue

 

New York, New York 10022

 

Attention:   David A. Brittenham, Esq.

 

Facsimile:  (212) 909-6836

 

Telephone: (212) 909-6000

 

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 2

 

Pledged Stock

 

Pledgor

 

Issuer

 

Cert. No., etc.

 

Equity
Interest

 

SMCS Holdco, Inc.

 

ServiceMaster Consumer Services, LP

 

n/a

 

50

%

SMCS Holdco, Inc.

 

Terminix International, Inc.

 

4, representing 1,000 shares

 

100

%

SMCS Holdco II, Inc.

 

ServiceMaster Consumer Services, LP

 

n/a

 

50

%

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 3

 

PERFECTION MATTERS

 

UCC Filings

 

Debtor

 

Jurisdiction

SMCS Holdco, Inc.

 

Delaware

SMCS Holdco II, Inc.

 

Delaware

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 4

 

LOCATION OF JURISDICTION OF ORGANIZATION

 

Grantor

 

Jurisdiction of Organization

SMCS Holdco, Inc.

 

Delaware

SMCS Holdco II, Inc.

 

Delaware

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 5

 

INTELLECTUAL PROPERTY

 

None.

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 6

 

EXCLUDED CONTRACTS

 

None.

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 7

 

COMMERCIAL TORT CLAIMS

 

None.

 


Exhibit 10.4

 

EXECUTION COPY

 

ASSUMPTION AGREEMENT

 

ASSUMPTION AGREEMENT, dated as of January 14, 2014, made by SMCS Holdco, Inc., a Delaware corporation, and SMCS Holdco II, Inc., a Delaware corporation (each an “ Additional Granting Party ” and together, the “ Additional Granting Parties ”), in favor of CITIBANK, N.A., as administrative agent and collateral agent (in such capacity, the “ Revolving Collateral Agent ”) for the banks and other financial institutions (the “ Lenders ”) from time to time parties to the Revolving Credit Agreement referred to below and the other Secured Parties (as defined below).  All capitalized terms not defined herein shall have the meaning ascribed to them in such the Guarantee and Collateral Agreement referred to below, or if not defined therein, in the Revolving Credit Agreement.

 

W I T N E S S E T H :

 

WHEREAS, The ServiceMaster Company, a Delaware corporation (to be merged with and into The ServiceMaster Company, LLC, a Delaware limited liability company, on the date hereof) (the “ Parent Borrower ”), Citibank, N.A., as administrative agent and revolving collateral agent, JPMorgan Chase Bank, N.A., as syndication agent and the Lenders are parties to a Revolving Credit Agreement, dated as of July 24, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “ Revolving Credit Agreement ”);

 

WHEREAS, the Parent Borrower, CDRSVM Holding, Inc., a Delaware corporation (to be converted into CDRSVM Holding, LLC, a Delaware limited liability company, on the date hereof) (“ Holding ”)  and the Subsidiary Guarantors are, or are to become, parties to the Guarantee and Collateral Agreement, dated as of July 24, 2007 (as amended, supplemented, waived or otherwise modified from time to time, the “ Guarantee and Collateral Agreement ”), in favor of the Revolving Collateral Agent, for the ratable benefit of the Secured Parties (as defined in the Guarantee and Collateral Agreement);

 

WHEREAS, each Additional Granting Party is a member of an affiliated group of companies that includes the Parent Borrower and each other Granting Party; the proceeds of the extensions of credit under the Revolving Credit Agreement will be used in part to enable the Parent Borrower to make valuable transfers to one or more of the other Granting Parties (including the Additional Granting Parties) in connection with the operation of their respective businesses; and the Parent Borrower and the other Granting Parties (including the Additional Granting Parties) are engaged in related businesses, and each such Granting Party (including the Additional Granting Parties) will derive substantial direct and indirect benefit from the making of the extensions of credit under the Revolving Credit Agreement;

 

WHEREAS, the Revolving Credit Agreement requires each Additional Granting Party to become a party to the Guarantee and Collateral Agreement; and

 

WHEREAS, each Additional Granting Party has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1



 

1.                                       Guarantee and Collateral Agreement .  By executing and delivering this Assumption Agreement, each Additional Granting Party, as provided in subsection 9.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Granting Party thereunder with the same force and effect as if originally named therein as a Guarantor, Grantor and Pledgor (it being understood that each Additional Granting Party is no longer an Immaterial Subsidiary) and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor, Grantor and Pledgor thereunder.  The information set forth in Annex 1-A hereto is hereby added to the information set forth in the Schedules to the Guarantee and Collateral Agreement, and such Schedules are hereby amended and modified to include such information.  Each Additional Granting Party hereby represents and warrants that each of the representations and warranties of such Additional Granting Party, in its capacities as a Guarantor, Grantor and Pledgor contained in Section 4 of the Guarantee and Collateral Agreement is true and correct in all material respects on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date.

 

2.                                       GOVERNING LAW .  THIS ASSUMPTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

[ remainder of page intentionally left blank ]

 

2



 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

 

 

SMCS HOLDCO, INC.

 

 

 

 

 

 

 

By:

   /s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

 

 

 

 

 

 

SMCS HOLDCO II, INC.

 

 

 

 

 

 

 

By:

  /s/ Alan J. M. Haughie

 

 

Name:

Alan J. M. Haughie

 

 

Title:

President & Chief Financial Officer

 

[Signature Page to Assumption Agreement — Revolver GCA]

 



 

Acknowledged and Agreed to as
of the date hereof by:

 

CITIBANK, N.A.,
as Revolving Collateral Agent and Administrative Agent

 

 

By:

/s/ Alvaro De Velasco

 

 

 

Name:

Alvaro De Velasco

 

 

 

Title:

Vice President

 

 

 

 

(212) 816-4312

 

 

 

[Signature Page to Assumption Agreement — Revolver GCA]

 



 

Annex 1-A to
Assumption Agreement

 

Supplement to
Guarantee and Collateral Agreement
Schedule 1

 

NOTICE ADDRESSES OF GUARANTORS

 

SMCS Holdco, Inc.
860 Ridge Lake Boulevard

Memphis, Tennessee 38120
Attention: Alan J. Haughie, President & CFO

& James T. Lucke, Senior Vice President

Telephone:  (901) 766-1400

Facsimile:  (901) 766-1107

 

SMCS Holdco II, Inc.
860 Ridge Lake Boulevard

Memphis, Tennessee 38120
Attention: Alan J. Haughie, President & CFO

& James T. Lucke, Senior Vice President
Telephone:  (901) 766-1400
Facsimile:  (901) 766-1107

 

In each case, with copies to:

 

The ServiceMaster Company, LLC
860 Ridge Lake Boulevard

Memphis, Tennessee 38120
Attention: James T. Lucke, Senior Vice President & General Counsel
Telephone:  (901) 766-1400
Facsimile:  (901) 766-1107

 

and

 

Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Attention:
                 David A. Brittenham, Esq.
Facsimile:
                 (212) 909-6836
Telephone:
           (212) 909-6000

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 2

 

Pledged Stock

 

Pledgor

 

Issuer

 

Cert. No., etc.

 

Equity
Interest

 

SMCS Holdco, Inc.

 

ServiceMaster Consumer Services, LP

 

n/a

 

50

%

SMCS Holdco, Inc.

 

Terminix International, Inc.

 

4, representing 1,000 shares

 

100

%

SMCS Holdco II, Inc.

 

ServiceMaster Consumer Services, LP

 

n/a

 

50

%

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 3

 

PERFECTION MATTERS

 

UCC Filings

 

Debtor

 

Jurisdiction

SMCS Holdco, Inc.

 

Delaware

SMCS Holdco II, Inc.

 

Delaware

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 4

 

LOCATION OF JURISDICTION OF ORGANIZATION

 

Grantor

 

Jurisdiction of Organization

SMCS Holdco, Inc.

 

Delaware

SMCS Holdco II, Inc.

 

Delaware

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 5

 

INTELLECTUAL PROPERTY

 

None.

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 6

 

EXCLUDED CONTRACTS

 

None.

 



 

Supplement to
Guarantee and Collateral Agreement
Schedule 7

 

COMMERCIAL TORT CLAIMS

 

None.

 


Exhibit 99.1

 

The ServiceMaster Company

Unaudited Pro Forma Financial Statements

 

Overview

 

On January 14, 2014, ServiceMaster Global Holdings, Inc. (“Holdings”), the indirect parent corporation of The ServiceMaster Company, LLC (“ServiceMaster”), completed the previously announced separation transaction (the “Transaction”) resulting in the spin-off of the assets and certain liabilities of the business that comprises the lawn, tree and shrub care services previously conducted by ServiceMaster primarily under the TruGreen brand name (collectively, the “TruGreen Business”) through a tax-free, pro rata dividend to the stockholders of Holdings.  As a result of the completion of the Transaction, TruGreen Holding Corporation (“New TruGreen”) will operate the TruGreen Business as a private independent company.

 

Basis of Presentation

 

The unaudited pro forma consolidated statements of operations for the fiscal years ended December 31, 2012, 2011 and 2010 give effect to the Transaction and have been derived from the audited consolidated financial statements and notes thereto included in ServiceMaster’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 that has been filed with the Securities and Exchange Commission (“SEC”). The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2013 and the unaudited pro forma consolidated statement of financial position as of September 30, 2013 give effect to the Transaction and have been derived from the unaudited consolidated financial statements and notes thereto included in ServiceMaster’s Form 10-Q for the nine months ended September 30, 2013 that has been filed with the SEC. The unaudited pro forma consolidated financial statements are based upon available information and assumptions that ServiceMaster believes are reasonable.

 

The unaudited pro forma consolidated financial statements are provided for informational purposes only and do not purport to project the future financial position or operating results of ServiceMaster.  In accordance with pro forma rules, the pro forma unaudited consolidated statements of operations have been prepared as if the Transaction occurred on January 1, 2010, and the pro forma unaudited consolidated statements of financial position have been prepared as if the Transaction occurred on September 30, 2013. The unaudited pro forma consolidated financial statements, including the notes thereto, should be read in conjunction with ServiceMaster’s audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and ServiceMaster’s unaudited consolidated financial statements and notes thereto included in its Form 10-Q for the nine months ended September 30, 2013 that have been filed with the SEC.

 

The unaudited pro forma consolidated financial statements give effect to the following:

 

·                   the elimination of the TruGreen segment;

·                   the removal of non-recurring Transaction costs of $7.8 million; and

·                   a $35 million cash contribution from ServiceMaster to New TruGreen

 

ServiceMaster historically incurred the cost of certain corporate-level activities which it performed on behalf of the TruGreen Business. Such corporate costs include: accounting and finance, legal, human resources, information technology, insurance, operations, real estate, tax services and other costs. These costs will be transitioned to New TruGreen through a combination of (1) immediate transfers of certain activities to New TruGreen and (2) payments to ServiceMaster by New TruGreen under transition services agreements. ServiceMaster expects an approximate $25 million reduction in annual costs associated with the transition of these activities to New TruGreen. The adjustments presented in these unaudited pro forma consolidated financial statements do not include the impact of these reduced costs.

 



 

THE SERVICEMASTER COMPANY

Unaudited Pro Forma Consolidated Statements of Operations

(In thousands)

 

 

 

Nine Months Ended September 30, 2013

 

 

 

As Reported

 

Adjustments
for
TruGreen(A)

 

Pro Forma

 

Operating Revenue

 

$

2,475,591

 

$

715,499

 

$

1,760,092

 

 

 

 

 

 

 

 

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

Cost of services rendered and products sold

 

1,459,288

 

535,656

 

923,632

 

Selling and administrative expenses

 

715,639

 

189,670

 

525,969

 

Amortization expense

 

41,663

 

3,516

 

38,147

 

Goodwill and trade name impairment

 

673,253

 

673,253

 

 

Restructuring charges

 

9,331

 

5,615

 

3,716

 

Total operating costs and expenses

 

2,899,174

 

1,407,710

 

1,491,464

 

 

 

 

 

 

 

 

 

Operating (Loss) Income

 

(423,583

)

(692,211

)

268,628

 

 

 

 

 

 

 

 

 

Non-operating Expense (Income):

 

 

 

 

 

 

 

Interest expense

 

187,034

 

1,432

 

185,602

 

Interest and net investment income

 

(6,528

)

(418

)

(6,110

)

Loss on extinguishment of debt

 

 

 

 

Other expense

 

435

 

 

435

 

 

 

 

 

 

 

 

 

(Loss) Income from Continuing Operations before Income Taxes

 

(604,524

)

(693,225

)

88,701

 

(Benefit) provision for income taxes

 

(118,110

)

(156,336

)

38,226

 

Equity in losses of joint venture

 

(164

)

 

(164

)

(Loss) Income from Continuing Operations

 

$

(486,578

)

$

(536,889

)

$

50,311

 

 


Note A: Adjustments reflect results of operations of the TruGreen Business and the elimination of non-recurring costs of $7.8 million, which were directly related to the Transaction. Tax effects were calculated as the difference in ServiceMaster’s previously reported tax provision compared to the computation of ServiceMaster’s tax provision excluding the TruGreen Business.

 



 

THE SERVICEMASTER COMPANY

Unaudited Pro Forma Consolidated Statements of Operations

(In thousands)

 

 

 

Year Ended December 31, 2012

 

 

 

As Reported

 

Adjustments
for
TruGreen(A)

 

Pro Forma

 

Operating Revenue

 

$

3,193,281

 

$

979,081

 

$

2,214,200

 

 

 

 

 

 

 

 

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

Cost of services rendered and products sold

 

1,861,669

 

665,779

 

1,195,890

 

Selling and administrative expenses

 

872,026

 

195,118

 

676,908

 

Amortization expense

 

65,298

 

6,775

 

58,523

 

Goodwill and trade name impairment

 

908,873

 

908,873

 

 

Restructuring charges

 

18,177

 

3,241

 

14,936

 

Total operating costs and expenses

 

3,726,043

 

1,779,786

 

1,946,257

 

 

 

 

 

 

 

 

 

Operating (Loss) Income

 

(532,762

)

(800,705

)

267,943

 

 

 

 

 

 

 

 

 

Non-operating Expense (Income):

 

 

 

 

 

 

 

Interest expense

 

246,284

 

1,763

 

244,521

 

Interest and net investment income

 

(7,845

)

(435

)

(7,410

)

Loss on extinguishment of debt

 

55,554

 

 

55,554

 

Other expense

 

622

 

 

622

 

 

 

 

 

 

 

 

 

Loss from Continuing Operations before Income Taxes

 

(827,377

)

(802,033

)

(25,344

)

Benefit for income taxes

 

(114,260

)

(106,628

)

(7,632

)

Equity in losses of joint venture

 

(226

)

 

(226

)

Loss from Continuing Operations

 

$

(713,343

)

$

(695,405

)

$

(17,938

)

 


Note A: Adjustments reflect results of operations of the TruGreen Business. Tax effects were calculated as the difference in ServiceMaster’s previously reported tax provision compared to the computation of ServiceMaster’s tax provision excluding the TruGreen Business.

 



 

THE SERVICEMASTER COMPANY

Unaudited Pro Forma Consolidated Statements of Operations

(In thousands)

 

 

 

Year Ended December 31, 2011

 

 

 

As Reported

 

Adjustments
for
TruGreen(A)

 

Pro Forma

 

Operating Revenue

 

$

3,205,872

 

$

1,100,741

 

$

2,105,131

 

 

 

 

 

 

 

 

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

Cost of services rendered and products sold

 

1,813,706

 

689,219

 

1,124,487

 

Selling and administrative expenses

 

880,492

 

232,611

 

647,881

 

Amortization expense

 

91,352

 

7,897

 

83,455

 

Goodwill and trade name impairment

 

36,700

 

36,700

 

 

Restructuring charges

 

8,162

 

1,115

 

7,047

 

Total operating costs and expenses

 

2,830,412

 

967,542

 

1,862,870

 

 

 

 

 

 

 

 

 

Operating Income

 

375,460

 

133,199

 

242,261

 

 

 

 

 

 

 

 

 

Non-operating Expense (Income):

 

 

 

 

 

 

 

Interest expense

 

273,123

 

856

 

272,267

 

Interest and net investment income

 

(10,886

)

16

 

(10,902

)

Loss on extinguishment of debt

 

774

 

 

774

 

Other expense

 

700

 

 

700

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations before Income Taxes

 

111,749

 

132,327

 

(20,578

)

Provision (benefit) for income taxes

 

43,912

 

52,287

 

(8,375

)

Equity in losses of joint venture

 

 

 

 

Income (Loss) from Continuing Operations

 

$

67,837

 

$

80,040

 

$

(12,203

)

 


Note A: Adjustments reflect results of operations of the TruGreen Business. Tax effects were calculated as the difference in ServiceMaster’s previously reported tax provision compared to the computation of ServiceMaster’s tax provision excluding the TruGreen Business.

 



 

THE SERVICEMASTER COMPANY

Unaudited Pro Forma Consolidated Statements of Operations

(In thousands)

 

 

 

Year Ended December 31, 2010

 

 

 

As Reported

 

Adjustments
for
TruGreen(A)

 

Pro Forma

 

Operating Revenue

 

$

3,127,394

 

$

1,096,667

 

$

2,030,727

 

 

 

 

 

 

 

 

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

Cost of services rendered and products sold

 

1,777,304

 

681,976

 

1,095,328

 

Selling and administrative expenses

 

895,950

 

253,374

 

642,576

 

Amortization expense

 

136,000

 

39,736

 

96,264

 

Goodwill and trade name impairment

 

 

 

 

Restructuring charges

 

11,448

 

6,922

 

4,526

 

Total operating costs and expenses

 

2,820,702

 

982,008

 

1,838,694

 

 

 

 

 

 

 

 

 

Operating (Loss) Income

 

306,692

 

114,659

 

192,033

 

 

 

 

 

 

 

 

 

Non-operating Expense (Income):

 

 

 

 

 

 

 

Interest expense

 

286,933

 

329

 

286,604

 

Interest and net investment income

 

(9,358

)

(392

)

(8,966

)

Loss on extinguishment of debt

 

 

 

 

Other expense

 

733

 

 

733

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations before Income Taxes

 

28,384

 

114,722

 

(86,338

)

Provision (benefit) for income taxes

 

10,945

 

45,717

 

(34,772

)

Equity in losses of joint venture

 

 

 

 

Income (Loss) from Continuing Operations

 

$

17,439

 

$

69,005

 

$

(51,566

)

 


Note A: Adjustments reflect results of operations of the TruGreen Business. Tax effects were calculated as the difference in ServiceMaster’s previously reported tax provision compared to the computation of ServiceMaster’s tax provision excluding the TruGreen Business.

 



 

THE SERVICEMASTER COMPANY

Unaudited Pro Forma Consolidated Statement of Financial Position

(In thousands, except share data)

 

 

 

As of September 30, 2013

 

 

 

 

 

Adjustments

 

 

 

 

 

As Reported

 

for   TruGreen   (A)

 

Pro Forma

 

Assets:

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

358,506

 

$

46,400

 

$

312,106

 

Marketable securities

 

39,199

 

 

39,199

 

Receivables, net

 

499,504

 

73,061

 

426,443

 

Inventories

 

58,263

 

18,460

 

39,803

 

Prepaid expenses and other assets

 

75,698

 

19,157

 

56,541

 

Deferred customer acquisition costs

 

46,154

 

12,827

 

33,327

 

Deferred taxes

 

102,476

 

3,060

 

99,416

 

Total Current Assets

 

1,179,800

 

172,965

 

1,006,835

 

Property and Equipment:

 

 

 

 

 

 

 

At cost

 

721,802

 

351,153

 

370,649

 

Less: accumulated depreciation

 

(353,960

)

(160,894

)

(193,066

)

Net Property and Equipment

 

367,842

 

190,259

 

177,583

 

Other Assets:

 

 

 

 

 

 

 

Goodwill

 

2,015,489

 

 

2,015,489

 

Intangible assets, primarily trade names, service marks and trademarks, net

 

2,082,100

 

356,255

 

1,725,845

 

Notes receivable

 

35,960

 

10

 

35,950

 

Long-term marketable securities

 

127,452

 

 

127,452

 

Other assets

 

46,851

 

15,399

 

31,452

 

Debt issuance costs

 

43,057

 

 

43,057

 

Total Assets

 

$

5,898,551

 

$

734,888

 

$

5,163,663

 

 

 

 

 

 

 

 

 

Liabilities and Shareholder’s Equity (Deficit):

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

126,881

 

$

29,419

 

$

97,462

 

Accrued liabilities:

 

 

 

 

 

 

 

Payroll and related expenses

 

80,610

 

9,774

 

70,836

 

Self-insured claims and related expenses

 

97,705

 

7,206

 

90,499

 

Accrued interest payable

 

19,224

 

 

19,224

 

Other

 

61,883

 

8,142

 

53,741

 

Deferred revenue

 

514,305

 

61,093

 

453,212

 

Liabilities of discontinued operations

 

1,220

 

 

1,220

 

Current portion of long-term debt

 

60,067

 

12,575

 

47,492

 

Total Current Liabilities

 

961,895

 

128,209

 

833,686

 

Long-Term Debt

 

3,907,930

 

38,543

 

3,869,387

 

Other Long-Term Liabilities:

 

 

 

 

 

 

 

Deferred taxes

 

803,370

 

111,461

 

691,909

 

Other long-term obligations, primarily self-insured claims

 

153,973

 

15,619

 

138,354

 

Total Other Long-Term Liabilities

 

957,343

 

127,080

 

830,263

 

Commitments and Contingencies

 

 

 

 

 

 

 

Shareholder’s Equity (Deficit):

 

 

 

 

 

 

 

Common stock $0.01 par value, authorized 1,000 shares; issued 1,000 shares

 

 

 

 

Additional paid-in capital

 

1,475,141

 

 

1,475,141

 

Retained (deficit) earnings

 

(1,411,358

)

437,921

 

(1,849,279

)

Accumulated other comprehensive income

 

7,600

 

3,135

 

4,465

 

Total Shareholder’s Equity (Deficit)

 

71,383

 

441,056

 

(369,673

)

Total Liabilities and Shareholder’s Equity (Deficit)

 

$

5,898,551

 

$

734,888

 

$

5,163,663

 

 


Note A: Adjustments reflect the assets, liabilities and equity of the TruGreen Business and the $35 million cash contribution from ServiceMaster to New TruGreen.