Agreement of Merger And Amendment No. 4 of Agreement of Limited Partnership of ServiceMaster Consumer Services Limited Partnership

 

 

Provisions

 

NOW, THEREFORE, in consideration of the Recitals and the mutual commitments contained in this Agreement, the receipt and sufficiency of which the Parties acknowledge, the Parties agree as follows:

 

1.         Merger . Strategic will be merged with and into Consumer Services LP according to Section 17-211 of the Delaware Revised Uniform Limited Partnership Act and the terms and conditions of this Agreement (“Merger”).

 

2.         Survivorship . Consumer Services LP will be the resulting and continuing Delaware limited partnership of the Merger, and the Agreement of Limited Partnership of Consumer Services LP, as amended by this Agreement, will be the agreement of limited partnership governing Consumer Services LP (“LP Agreement”).

 

3.         Effective Date . The effective date of the Merger is the date on which a Certificate of Merger regarding the Merger is filed with the Secretary of State of the State of Delaware.

 

4.         Partners . The following charts explain ownership of Consumer Services LP and Strategic before the Merger and ownership of Consumer Services after the Merger. As a result of the Merger, the partners of Consumer Services LP, each partner’s status as a general partner or a limited partner, and partners’ respective partnership interests in Consumer Services LP will be as follows:

 

		Consumer Services LP				Strategic				Combined
Name		Units		%		Units		%		Units		%
Consumer Services INC		10,166.55		1.0		N/A		N/A		10,166.55		0.82
Holding		1,006,488.45		99.0		N/A		99.0		1,224,512.99		99.00
SMMC		N/A		N/A		N/A		1.0		2,202.27		0.18
Total		1,016,655.00		100.0		N/A		100.0		1,236,881.81		100.00

 

Name		Type		Interest (%)
Consumer Services INC		General partner		0.8220
ServiceMaster Holding Corporation		Limited partner		99.0000
ServiceMaster Management Corporation		Limited partner		0.1781

 

2

 

5.         Amendments to LP Agreement of Consumer Services LP . The LP Agreement is amended as follows:

 

5.1       Admission of SMMC . Consumer Services INC, in its capacity as the general partner of Consumer Services LP, approves the admission of SMMC as a limited partner of Consumer Services LP, and SMMC accedes to the LP Agreement.

 

5.2       Reclassification of Units . Under Article 4 of the LP Agreement, the distinction between Regular Common Units and Special Common Units is eliminated such that all units are Common Units.

 

5.3       Issuance of Additional Common Units . As part of the consideration for the Merger, Consumer Services LP will issue 220,226.81 additional Common Units, increasing the total number of Common Units under Article 4 of the LP Agreement to 1,236,881.81. The additional Common Units will be issued as follows:

 

Name		Units Issued in  Merger		Units Pre- Merger		Total Units Post-Merger
Consumer Services INC		0		10,166.55		10,166.55
ServiceMaster Holding Corporation		218,024.54		1,006,488.45		1,224,512.99
ServiceMaster Management Corporation		2,202.27		0		2,202.27
Total		220,226.81		1,016,655.00		1,236,881.81

 

5.4       Allocation of Common Units . The Common Units of Consumer Services LP are allocated among the partners according to Sections 4 and 5.3 of this Agreement.

 

5.5       Percentage Interests . The percentage interests of the partners of Consumer Services LP are increased or decreased, as appropriate, to reconcile with the allocation of Common Units among the partners according to Sections 4, 5.3, and 5.4 of this Agreement.

 

6.         Approval of Limited Partner . Pursuant to Section 18.3 of the LP Agreement, Holding, as the sole limited partner of Consumer Services LP before the Merger, approves the Merger.

 

7.         Confirmatory Assignments . Upon request, Strategic promptly win execute and deliver to Consumer Services LP all assignments and other instruments and documents necessary or appropriate to vest in or confirm to Consumer Services LP full, complete, good, and marketable title to the assets of Strategic and to carry out the intent of this Agreement.

 

3

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the Agreement Date.

 

Strategic:			Consumer Services LP:
ServiceMaster Strategic Limited Partnership			ServiceMaster Consumer Services Limited Partnership
By:	ServiceMaster Management Corporation, general partner		By:	ServiceMaster Consumer Services Inc., general partner
By:	/s/ Douglas Colber		By:	/s/ Authorized Signatory
	Its: V.P.			Its:  Senior Vice President

 

 

SMMC:			Consumer Services INC:
ServiceMaster Management Corporation			ServiceMaster Consumer Services, Inc.
By:	/s/ Douglas Colber		By:	/s/ Authorized Signatory
	Its: V.P.			Its:  Senior Vice President
Holding:
ServiceMaster Holding Corporation
By:	/s/ Douglas Colber
	Its: V.P.

 

4

 

Amendment No. 3

 

Amended and Restated Agreement of Limited Partnership
of
ServiceMaster Consumer Services Limited Partnership
dated June 30,1992

 

THIS AMENDMENT is made on July 1,1998 by and among ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (“ServiceMaster Consumer Services L.P.”), and The ServiceMaster Company, a Delaware corporation.

 

Recitals

 

A.       The current partners of ServiceMaster Consumer Services L.P. are as follows:

 

Company		State of  Organization		Partner Type
ServiceMaster Consumer Services, Inc.		Delaware		General Partner—1%
The ServiceMaster Company		Delaware		Limited Partner—99%

 

B.        The ServiceMaster Company desires to withdraw as the 99% limited partner of ServiceMaster Consumer Services L.P.

 

C.        ServiceMaster Consumer Services, Inc. desires to admit ServiceMaster Holding Corporation, a Delaware corporation, as the 99% limited partner of ServiceMaster Consumer Services L.P.

 

D.        As a result of the transaction contemplated by this Amendment, the partners of ServiceMaster Consumer Services L.P. will be as follows:

 

Company		State of  Organization		Partner Type
ServiceMaster Consumer Services, Inc.		Delaware		General Partner—1%
ServiceMaster Holding Corporation		Delaware		Limited Partner—99%

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1

 

1.         Admission of Limited Partner . ServiceMaster Consumer Services L.P. and ServiceMaster Consumer Services, Inc. accept ServiceMaster Holding Corporation as the 99% limited partner of ServiceMaster Consumer Services L.P.

 

2.         Partners after Withdrawal . As a result of the withdrawal of The ServiceMaster Company, ServiceMaster Consumer Services, Inc. is the sole general partner of ServiceMaster Consumer Services L.P., and ServiceMaster Holding Corporation is the sole limited partner of ServiceMaster Consumer Services L.P.

 

3.         No Other Changes . The Parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

ServiceMaster Consumer Services Limited Partnership			ServiceMaster Holding Corporation
By:	ServiceMaster Consumer Services, Inc., general partner
By:	/s/ Ernest Mrozek		By:	/s/ Douglas Colber
	Ernest J. Mrozek			Douglas W. Colber
	President			Vice President and Legal Counsel

 

2

 

Amendment No. 2

 

Amended and Restated Agreement of Limited Partnership
of
ServiceMaster Consumer Services Limited Partnership
dated June 30, 1992

 

THIS AMENDMENT is made on January 1, 1998 by and among ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (“ServiceMaster Consumer Services L.P.”), and The ServiceMaster Company Limited Partnership, a Delaware limited partnership (“The ServiceMaster Company L.P.”).

 

Recitals

 

A.       The current partners of ServiceMaster Consumer Services L.P. are as follows:

 

Company		State of  Organization		Partner Type
ServiceMaster Consumer Services, Inc.		Delaware		General Partner—1%
The ServiceMaster Company L.P.		Delaware		Limited Partner—99%

 

B.        Pursuant to Section 12.2 of that certain Amended and Restated Agreement of “Limited Partnership of ServiceMaster Consumer Services L.P., dated June 30,1992 (“LP Agreement”), The ServiceMaster Company L.P. has exercised its right to assign its limited partnership interests in ServiceMaster Consumer Services L.P. to The ServiceMaster Company, its successor by merger.

 

C.        As a result of the transaction contemplated by this Amendment, the partners of ServiceMaster Consumer Services L.P. will be as follows:

 

Company		State of Organization		Partner Type
ServiceMaster Consumer Services, Inc.		Delaware		General Partner—1%
The ServiceMaster Company		Delaware		Limited Partner—99%

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1

 

1.         Assignment of Limited Partnership Interest . The ServiceMaster Company L.P. assigns its 99% limited partnership interest to The ServiceMaster Company.

 

2.         Partners after Assignment . As a result of transaction contemplated by this Amendment, ServiceMaster Consumer Services, Inc. is the sole general partner of ServiceMaster Consumer Services L.P., and The ServiceMaster Company is the sole limited partner of ServiceMaster Consumer Services L.P.

 

3.         No Other Changes . The Parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

ServiceMaster Consumer Services Limited Partnership			The ServiceMaster Company Limited Partnership
By:	ServiceMaster Consumer Services Inc., general partner		By:	ServiceMaster Management Corporation, general partner
By:	/s/ Ernest J. Mrozek		By:	/s/ Carlos H. Cantu
	Ernest J. Mrozek			Carlos H. Cantu
	President			President

 

2

 

Amendment No. 1

 

Amended and Restated Agreement of Limited Partnership
of
ServiceMaster Consumer Services Limited Partnership
dated June 30, 1992

 

THIS AMENDMENT is made on January 1, 1998 by and among ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (“ServiceMaster Consumer Services L.P.”), and The ServiceMaster Company Limited Partnership, a Delaware limited partnership (“The ServiceMaster Company L.P.”).

 

Recitals

 

A.       The current partners of ServiceMaster Consumer Services L.P. are as follows:

 

Company		State of  Organization		Partner Type
ServiceMaster Consumer Services, Inc.		Delaware		General Partner—.01%
The ServiceMaster Company L.P.		Delaware		General Partner—.09%
The ServiceMaster Company L.P.		Delaware		Limited Partner—99%

 

B.        Pursuant to Section 12.2 of that certain Amended and Restated Agreement of Limited Partnership of ServiceMaster Consumer Services L.P., dated June 30,1992 (“LP Agreement”), The ServiceMaster Company L.P. has exercised its right to assign its general partnership interests in ServiceMaster Consumer Services L.P. to ServiceMaster Consumer Services, Inc., its successor in interest.

 

C.        As a result of the transaction contemplated by this Amendment, the partners of ServiceMaster Consumer Services L.P. will be as follows:

 

Company		State of  Organization		Partner Type
ServiceMaster Consumer Services, Inc.		Delaware		General Partner—1%
The ServiceMaster Company L.P.		Delaware		Limited Partner—99%

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1

 

1.         Assignment of General Partnership Interest . The ServiceMaster Company L.P. assigns its .09% general partnership interest to ServiceMaster Consumer Services, Inc.

 

2.         Partners after Assignment . As a result of the transaction contemplated by this Amendment, ServiceMaster Consumer Services, Inc. is the sole general partner of ServiceMaster Consumer Services L.P., and The ServiceMaster Company L.P. is the sole limited partner of ServiceMaster Consumer Services L.P.

 

3.         No Other Changes . The Parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

ServiceMaster Consumer Services Limited Partnership			The ServiceMaster Company Limited Partnership
By:	ServiceMaster Consumer Services Inc., general partner		By:	ServiceMaster Management Corporation, general partner
By:	/s/ Ernest J. Mrozek		By:	/s/ Authorized Segmantory
	Ernest J. Mrozek			Carlos H. Cantu
	President			President

 

2

 

TABLE OF CONTENTS

 

ARTICLE  1
ORGANIZATIONAL MATTERS
1.1	Purpose of this Agreement; Modification of Original Arrangements		1
1.2	Domicile		2
1.3	Name		2
1.4	Registered Office; Principal Office		3
1.5	Power of Attorney		3
1.6	Term		5
ARTICLE  2
PURPOSE
2.1	Purpose		5
ARTICLE  3
CAPITAL CONTRIBUTIONS
3.1	Managing General Partner		5
3.2	Contribution of the ServiceMaster Contributed Assets		5
3.3	Contribution of the WM Contributed Assets		6
3.4	22% Option		6
3.5	Additional Issuance of Units and Other Securities		10
3.6	Restrictions on Issuances to ServiceMaster Affiliates		11
3.7	Capital Changes		12
ARTICLE  3A
WM PARTNER PURCHASE RIGHT
3A.1	Basic Right		13
3A.2	WM Partner Exercise Procedures		14
3A.3	Partnership Call Right		17
3A.4	Call Right Exercise Procedures		18
3A.5	WM Partner Right to Reject Call		21
3A.6	Anti-Dilution and Other Protective Provisions		22
3A.7	Retained Control and Change in Control Acquisitions		24

 

 

ARTICLE  4
PRE-JUNE AMENDMENT DATE ISSUANCE
4.1	Initial Issuance of Units	25
4.2	Conversion of WM Preferred Units to Special Common Units	25
4.3	Common Units	25
4.4	WM Preferred Units	26
ARTICLE  5
CAPITAL ACCOUNTS
5.1	General Description of Partnership Allocations	26
5.2	General Capital Account Requirement	26
5.3	Opening Capital Account Balances	27
5.4	General Allocation Requirement	27
5.5	Computation Rules	28
5.6	Effect of Transfer of Partnership Interest	29
5.7	Issuance of Additional Partnership Interests	29
5.8	Redemptions	30
5.9	Capital Per Common Unit Always Identical	30
5.10	Interest	30
5.11	No Withdrawal	31
ARTICLE  6
ALLOCATIONS AND DISTRIBUTIONS
6.1	Allocations for Capital Account Purposes	31
6.2	Allocations for Tax Purposes	33
6.3	WM Preferred Return	35
6.4	Distributions	35
6.5	One Percent Allocation to General Partners	35
ARTICLE  7
MANAGEMENT AND OPERATION OF BUSINESS
7.1	Management	36
7.2	Certificate of Limited Partnership	38
7.3	Reliance by Third Parties	39
7.4	Rights of Managing General Partner as a Limited Partner	40
7.5	Compensation and Reimbursement of General Partners	40
7.6	Partnership Funds	40
7.7	Loans to or from the Managing General Partner; Contracts with Affiliates	40
7.8	General Partner Net Worth	41
7.9	Indemnification	41

 

ii

 

7.10	Liability	44
7.11	Resolution of Conflicts of Interest	44
7.12	Other Matters Concerning the General Partner	45
7.13	Title to Partnership Assets	46
7.14	Outside Activities	46
7.15	Indemnification of the WM Partner	46
ARTICLE  8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1	Limitation of Liability	47
8.2	Management of Business	47
8.3	Outside Activities	47
8.4	Return of Capital	47
8.5	Rights of Limited Partners Relating to the Partnership	47
ARTICLE  9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1	Records and Accounting	48
9.2	Fiscal Year	49
9.3	Reports	49
9.4	Other Information	49
ARTICLE  10
TAX MATTERS
10.1	Preparation of Tax Returns	50
10.2	Tax Elections	50
10.3	Tax Controversies	50
10.4	Organizational Expenses	50
10.5	Opinions Regarding Taxation as a Partnership	50
10.6	Withholding	51
10.7	Tax Shelter Investor List	51
ARTICLE  l1
CERTIFICATES
11.1	Certificates	51
11.2	Registration of Transfer and Exchange	52
11.3	Mutilated. Destroyed Lost or Stolen Certificates	52
11.4	Registered Owner	52

 

iii

 

ARTICLE  12
TRANSFER OF INTERESTS
12.1	Transfer		53
12.2	Transfer of Interests of General Partner		53
12.3	Transfer of Units		54
12.4	Restrictions on Transfer		54
ARTICLE  13
ADMISSION OF PARTNERS
13.1	Existing Partners		55
13.2	Admission of Additional Limited Partners		55
13.3	Admission of Successor Managing General Partner		56
13.4	Admission of Successor Special General Partner		56
13.5	Amendment of Agreement and of Certificate of Limited Partnership		56
ARTICLE  14
WITHDRAWAL OR REMOVAL OF GENERAL PARTNERS
14.1	Withdrawal or Removal of Managing General Partner		56
14.2	Withdrawal or Removal of Special General Partner		58
14.3	Interest of Departing General Partner and Successor		60
14.4	Continuation of Partnership		60
ARTICLE  15
WM PARTNER TERMINATION RIGHT
15.1		Basic Right and Certain Definitions	60
15.2		Determination of Number of Parent Company Shares Distributable	61
15.3		Exercise Procedures	62
15.4		Conditions to Closing; WM Withdrawal Date	66
15.5		Market Price Test	67
15.6		Surrogate Security	68
15.7		Retained Control Acquisition	69
15.8		Change in Control Acquisition	70
15.9		Special Termination Opportunity Periods	71
15.10		WM Partner Withdrawal Date in Special Cases	72
15.11		Hart-Scott-Rodino Act Filings	72
15.12		Liquidating Distribution	73
15.13		Capital Account Adjustments	74
15.14		No Other Limited Partner Withdrawal Right	75

 

iv

 

15.15		Covenant to Maintain Public Market For Parent Company Shares	75
15.16		Partnership Right to Substitute Cash For Parent Company Shares	75
15.17		Parent Company’s Commitment to Register Parent Company Shares	75
15.18		Reports to be Filed; Rule 144	86
15.19		Personal Rights of WM Partner	86
15.20		Reserve Commitment; Commitment of ServiceMaster Limited Partnership and ServiceMaster Incorporated of Delaware to Issue Shares	86
15.21		ServiceMaster Limited Partnership Guaranty	86
ARTICLE  16
DISSOLUTION AND LIQUIDATION
16.1	Dissolution		86
16.2	Continuation of Business of Partnership After Dissolution		87
16.3	Liquidation		88
16.4	Distribution in Kind		89
16.5	Cancellation of Certificate of Limited Partnership		90
16.6	Reasonable Time for Winding Up		90
16.7	Return of Capital		90
16.8	Capital Account Restoration		90
16.9	Waiver of Partition		91
ARTICLE  17
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
17.1		Amendments to be Adopted Solely By Managing General Partner	91
17.2		Amendments to be Adopted Only with Consent of WM Partner	91
17.3		Amendments to WM Withdrawal Right; Amendments that would have a Material Adverse Effect on the WM Partner	92
17.4		Amendment Procedures	93
17.5		Amendment Requirements	93
17.6		Meetings	94
17.7		Notice of a Meeting	94
17.8		Record Date	94
17.9		Adjournment	95
17.10		Waiver of Notice; Consent to Meeting: Approval of Minutes	95
17.11		Quorum	95
17.12		Conduct of Meeting	96
17.13		Action Without a Meeting	96
17.14		Voting Rights	97

 

v

 

ARTICLE  18
MERGER
18.1	Authority	97
18.2	Procedure for Merger or Consolidation	98
18.3	Approval by the Limited Partners of Merger or Consolidation	99
18.4	Certificate of Merger	99
18.5	Effect of Merger	99
ARTICLE  19
PROHIBITIONS AND LIMITATIONS
19.1	Prohibitions and Limitations	100
ARTICLE  20
RIGHT TO ACQUIRE UNITS
20.1	Right to Acquire Units	101
ARTICLE  21
INTERPRETATION OF THIS AGREEMENT
21.1	Definitions	101
21.2	Participation Agreement	110
21.3	Severability	110
21.4	Benefits of this Agreement	111
21.5	Recitals and Captions	111
21.6	No Strict Construction	111
21.7	Complete Agreement	111
21.8	Counterparts and Duplicate Originals	111
21.9	General Interpretation Rules	111
21.10	No Circumvention	112
ARTICLE  22
GENERAL PROVISIONS
22.1	Notices	112
22.2	No Oral Commitments	113
22.3	Enforcement Expenses	113
22.4	Further Action	114
22.5	Creditors	114
22.6	Applicable Law	114

 

vi

 

SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP

 

This Second Amended and Restated Agreement of Limited Partnership is entered into on June 30 , 1992 (herein called the June 1992 Amendment Date”) by ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (the “Partnership”); ServiceMaster Consumer Services, Inc. (formerly named ServiceMaster Consumer Services Management Corporation), a Delaware corporation (the “Management Corporation”), as the General Partner; The ServiceMaster Company Limited Partnership, a Delaware limited partnership (“ServiceMaster”), as the Special General Partner and as a Limited Partner; and WMI Urban Services, Inc. (“WMUS”), as a Limited Partner. ServiceMaster Limited Partnership, a Delaware limited partnership, and ServiceMaster Incorporated, a Delaware corporation, have executed this Agreement for the purposes set forth on the page on which their signatures appear.

 

The Partnership was formed by the filing of a certificate of limited partnership on August 24, 1990. On November 8, 1990 (the “Commencement Date”), the General Partners and the Limited Partners amended and restated the agreement of limited partnership in its entirety (the “First Amended and Restated Partnership Agreement’’).

 

The General Partners and the Limited Partners now desire to further amend and to restate the agreement of limited partnership of the Partnership in its entirety as follows:

 

ARTICLE 1
ORGANIZATIONAL MATTERS

 

1.1       Purpose of this Agreement; Modification of Original Arrangements . (a) The Partners hereby enter into this Agreement in order to set forth their rights and obligations and certain matters related thereto. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Delaware Act.

 

(b)       The parties acknowledge that the Partnership was originally organized as a limited partnership under the laws of the State of Delaware on August 24, 1990 by the Managing General Partner as the sole general partner and ServiceMaster as the sole limited partner. The Partnership did not conduct any business between such date and the Commencement Date and immediately prior to the Commencement Date the Partnership had no assets or liabilities except for a receivable in the amount of $1,000 which

 

 

represented ServiceMaster’s commitment to make an initial capital contribution in that amount. Such receivable was canceled on the Commencement Date and ServiceMaster was released from such commitment. The Managing General Partner thereafter caused the Certificate of Limited Partnership to be amended to reflect the admission of ServiceMaster to the Partnership as a Special General Partner.

 

(c)       The parties further acknowledge that on the Commencement Date ServiceMaster made the capital contribution to the Partnership which is described in Section 3.2 hereof and WMUS made the capital contribution to the Partnership which is described in Section 3.3 hereof and the General Partner, the Special General Partner and the Limited Partners (collectively, the “Partners”) amended and restated the agreement of limited partnership in its entirety.

 

(d)       The parties further acknowledge that on January 1, 1992, WMUS converted the WM Preferred Units which it had received on the Commencement Date into Special Common Units in accordance with the relevant provisions of the First Amended Partnership Agreement and that from and after January 1, 1992 WMUS has held only Special Common Units.

 

1.2       Domicile . (a) The domicile of the Partnership shall be the State of Delaware.

 

(b)       The Partnership may also be formed under the laws of any other jurisdictions in which the Partnership may conduct business or own property if the Managing General Partner deems such formation appropriate or necessary to qualify, or to continue the qualification of, the Partnership as a limited partnership (or a partnership in which limited partners have limited liability) in such jurisdictions; provided that all partnerships so formed shall constitute one and the same partnership, which shall be the Partnership and which shall be governed to the full extent permitted by the Delaware Act.

 

(c)       A Partnership Interest shall be personal property for all purposes.

 

1.3       Name . The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name of, “ServiceMaster Consumer Services Limited Partnership”; provided that the Partnership’s business may be conducted under any other name or names deemed advisable by the Managing General Partner. The words “Limited Partnership”, “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so require or for other general business purposes as the Managing General Partner may deem appropriate. The Managing General Partner in its sole discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of

 

2

 

such change in the next regular communication to the Partners.

 

1.4       Registered Office; Principal Office . (a) Until and unless changed at the initiative of the Managing General Partner, the address of the registered office of the Partnership in the State of Delaware shall be Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be The Corporation Trust Company. The Managing General Partner shall have the right in its sole discretion to cause the Partnership at any time to change its registered office in the State of Delaware and its registered agent for service within the State of Delaware.

 

(b)       The principal office of the Partnership shall be located at 855 Ridge Lake Boulevard, Memphis, Tennessee, or such other place as the Managing General Partner may from time to time designate by notice to the Partners. The Partnership may maintain offices at such other place or places as the Managing General partner deems advisable.

 

1.5       Power of Attorney . (a) Each Partner hereby constitutes and appoints the Managing General Partner and the Liquidator (and any successor to either thereof by merger, transfer, assignment, election or otherwise), and the authorized officers and attorneys-in-fact of each, with full power of substitution as his true and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead:

 

(i)        to execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) this Agreement, all certificates and other instruments and all amendments thereof that the Managing General Partner or the Liquidator deems reasonable and appropriate or necessary to form, qualify or continue the existence or qualification of, the Partnership as a limited partnership (or a partnership in which the Limited Partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property, including, without limitation, all such certificates and instruments relating to the formation of a partnership in such jurisdictions pursuant to Section 1.2(b); (B) all certificates and instruments that the Managing General Partner or the Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances, certificates and other instruments that the Managing General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including a certificate

 

3

 

of cancellation; (D) all certificates and other instruments relating to the admission, withdrawal or substitution of any Partner pursuant to Article 13, 14 or 15 or the Capital Contribution of any Partner; (E) all certificates, agreements and other instruments (including this Agreement and amendments and restatements hereof) relating to the determination of the rights, preferences and privileges of any class or series of Partnership Securities; (F) all certificates and other instruments relating to any Operating Partnership pursuant to Section 7.1) (e) and (G) all agreements and other instruments (including without limitation a certificate of merger) relating to a merger or consolidation of the Partnership pursuant to Article 18 hereof; and

 

(ii)       to execute, swear to and acknowledge all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole discretion of the Managing General Partner or the Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Partners hereunder, which is consistent with the terms of this Agreement or which is appropriate or necessary, in each case the sole discretion of the Managing General Partner or the Liquidator, to effectuate the terms or intent of this Agreement; provided that, when any other provision of this Agreement establishes a percentage of the Limited Partners required to take any action as a whole, or a percentage of interests in the Partnership in any particular class or series held by any Partners, the Managing General Partner or the Liquidator may exercise the power of attorney granted in this Section 1.5(a) (ii) only after the necessary vote, consent or approval of the Partners or of the Partners holding such interests prescribed by this Agreement of such class or series. Nothing herein contained shall be construed as authorizing the Managing General Partner to amend this Agreement except in accordance with Article 17 or as may be otherwise expressly provided in this Agreement.

 

(b)       The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Partner or Assignee and the transfer of all or any portion of his Partnership Interest and shall extend to such Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each Partner and Assignee hereby agrees to be bound by any representations made by the Managing General Partner or the Liquidator acting in good faith pursuant to such power of attorney; and each Partner and Assignee hereby waives any and all defenses

 

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3.3.                  Contribution of the WM Contributed Assets . On the Commencement Date and immediately subsequent to the contribution of the ServiceMaster Contributed Assets, WM Partner contributed, transferred, conveyed, assigned and delivered to the Partnership, or caused to be contributed, transferred, conveyed, assigned and delivered to the Partnership, the WM Contributed Assets as and to the extent provided in the Participation Agreement in exchange for (i) 26,924 WM Preferred Units, (ii) 199,000 Special Common Units and (iii) the assumption by the Partnership of the liabilities of the WM Partner and WMPC, Inc., as and to the extent provided in the Participation Agreement.

 

3.4                     22% Option .

 

(a)                      Basic Option . If at any time prior to the end of the 22% Option Period the Partnership issues any Common Units, the WM Partner shall have the continuing option to purchase from the Partnership such number of Common Units as, when added to all Common Units held directly or indirectly by the WM Partner on the date of exercise of the 22% Option (the “Exercise Date”), equals 22% of the difference between (i) the total number of Common Units that would have been outstanding on the Exercise Date assuming that the issuance of Common Units pursuant to the exercise of the 22% Option had been completed on the Exercise Date and (ii) the number of Common Units outstanding on the Exercise Date that were issued to employees of the Partnership and its subsidiaries pursuant to option plans and/or incentive programs of the Partnership (herein called “Employee Units”). The option rights granted to the WM Partner under this Section 3.4 are herein collectively called the “22% Option”.

 

(b)                     Increase in the 22% Option . On each occasion on which WM Partner exercises the WM Partner Purchase Right as set forth in Article 3A (whether on WM Partner’s own initiative or in response to the exercise by the Partnership of the Partnership Call Right), this Section 3.4 and each other section of this Agreement where a reference now appears to the “22% Option”, shall be automatically amended without action by the parties hereto so as replace the percentage figure in such sections as in effect immediately before such exercise of the WM Partner Purchase Right with the percentage figure which results from the exercise of the WM Partner Purchase Right. (Thus, for example, if WM Partner were to exercise the WM Partner Purchase Right pursuant to Section 3A.1,and assuming that no Units had otherwise been issued, each place in this Agreement where the terms “22% Option” and “22%” now appear will be deemed to be amended to read “27.757% Option” and “27.757%”).

 

(c)                      22% Option Period . The WM Partner may exercise the 22% Option as often as the WM Partner shall desire during the 22% Option Period. The “22% Option Period” began on January 1, 1992 and shall end on the earliest of (a) the first March 31 by which the WM Partner shall not have exercised the 22% Option as to all Common

 

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Units which the WM Partner shall have been entitled to acquire on the immediately preceding December 31, or (b) the time at which the WM Partner shall sell or dispose of any Common Units (other than through transfers to WM Affiliates permitted by Section 12.3) or (c) the consummation of a Change in Control Acquisition, as defined in Section 15.6. In no event shall the WM Partner be entitled to exercise the 22% Option after the end of the 22% Option Period. The Managing General Partner shall advise the WM Partner regarding the number of Common Units, Employee Units and any other Partnership Securities outstanding on each December 31 which occurs prior to the end of the 22% Option Period to enable the WM Partner to determine the number of Units (and/or other Partnership Securities) the WM Partner must purchase by the March 31 immediately thereafter in order to prevent its 22% Option from lapsing.

 

(d)                     Purchase Price . (1) Except as provided in paragraph (d) (2), the purchase price per Common Unit to be paid by the WM Partner in the purchase of Common Units pursuant to the 22% Option shall be (a) if the Initial Public Offering shall have been consummated at least 10 (ten) trading days prior to exercise of the 22% Option, the average of the daily closing prices in the principal trading market for the Common Units for each of the ten (10) trading days immediately preceding the Exercise Date or (b) if the Initial Public Offering shall not have been so consummated, the average price per Common Unit paid to the Partnership for all issuances of Common Units for the period beginning on the date of the WM Partner’s last exercise of the 22% Option or, if there shall have been no such exercise, the day after the Commencement Date, and ending on the Exercise Date, other than Units issued to employees of the Partnership and its Subsidiaries (such average shall be determined by dividing the aggregate fair market value of all consideration received by the Partnership for all issuances of Common Units during such period by the total number of Common Units issued during such period). If the 22% Option shall be exercised in order to purchase securities issued by the survivor of a Retained Control Acquisition and if such securities are not publicly traded, such securities shall be purchased at the exercise of the 22% Option next following such Acquisition at their fair market value at the time of such Retained Control Acquisition. If any Common Units shall have been issued in any acquisition or otherwise for consideration other than cash, then (i) the fair market value of such consideration at the time such Units were issued shall be used for purposes of determining the average pursuant to this paragraph of such Units and (ii) the fair market value of all consideration other than cash shall be as agreed by WM Partner and the Partnership. If they fail to agree within 10 days after either of them requests such agreement in writing, each of them will appoint a nationally recognized appraiser who shall not have provided services to WM Partner, the Partnership or any Affiliate of either within 5 years prior thereto. Each such appraiser shall determine the fair market value of such consideration. If their appraisals are the same, their appraisal shall be the fair market value of

 

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such consideration. If the higher appraisal does not exceed 105% of the lower appraisal, the fair market value shall be 102.5% of the lower appraisal. If neither of the foregoing applies, the two appraisers shall select a third nationally recognized appraiser (who must be an appraiser eligible for selection initially by WM Partner or the Partnership). Such third appraiser shall independently appraise such consideration and his appraisal shall be the fair market value of such consideration and shall be final and binding on WM Partner and the Partnership; provided that WM Partner may withdraw its exercise of the 22% Option if it determines such finally appraised fair market value to be too high. The costs and expenses of all such appraisals shall be shared 35% by WM Partner and 65% by the Partnership. The Parties will cooperate fully in all such appraisals and will use reasonable good faith efforts to cause them to be completed within 60 days after WM Partner’s exercise of the 22% Option.

 

(2)                      If the Partnership issues one or more options or warrants for any equity interests in the Partnership or if the Partnership issues any securities which are convertible into equity interests in the Partnership at a time when the WM Partner Purchase Right has not been fully exercised, and if WM Partner thereafter exercises the WM Partner Purchase Right in whole or in part, then, upon the exercise of any of such options or warrants or upon the exercise of such convertible security, the amount payable by WM Partner under the 22% Option (as adjusted to reflect the earlier exercise of the WM Partner Purchase Right) shall be the Contribution Price to the extent that the exercise of the 22% Option (as adjusted) reflects WM Partner’s earlier exercise of the WM Partner Purchase Right. Such price adjustment under the 22% Option shall be in lieu of the price formulation which would otherwise be applied under paragraph (1) above.

 

(e)                      Consummation of Purchase . The consummation of the purchase and sale of the Common Units to be issued pursuant to each exercise of the 22% Option shall take place on the tenth business day next following the Exercise Date (or if the above described appraisal procedure is followed, as soon as possible after completion of such procedure) and the WM Partner shall pay the Partnership cash equal to the purchase price for the Units simultaneous with the receipt of a certificate representing the Units purchased or other confirmation reasonably satisfactory to the WM Partner that such Units have been issued to it. The Partnership represents and warrants that upon receipt by the Partnership of such price the WM Partner will have Clear Ownership of any and all Common Units and other securities or property issued to WM Partner pursuant to exercise of the 22% Option upon their being issued to the WM Partner. The price per Common Unit or Partnership Security taken into account in the calculation of the per Common Unit or other Partnership Security purchase price to be paid upon exercise of the 22% Option shall be adjusted on an equitable basis to take account of any Capital Change or distribution affecting any Common Unit or

 

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Partnership Security.

 

(f)                        Units Issuable .

 

  (1)                 Common Units . Special Common Units shall be issued for each exercise of the 22% Option which consummates at a time prior to the exercise or expiration of the WM Partner Termination Right set forth in Article 15. Regular Common Units shall be issued for each exercise of the 22% Option which consummates at any other time.

 

  (2)                 New Classes of Securities . In the event the Partnership shall issue any Partnership Security other than Common Units (herein called a “New Security”), then the 22% option shall entitle the WM Partner to purchase a quantity of the New Security sufficient to enable the WM Partner to own 22% of the Partnership Interests represented by the New Securities outstanding after giving effect to such exercise. The terms for the exercise of the 22% Option with respect to any such New Security shall be the same terms as apply with respect to the Common Units, modified as necessary to take account of the fact that New Securities rather than Common Units are to be issued.

 

(g)                     Capital Change Adjustments . In the event of any Retained Control Acquisition or any reorganization, recapitalization, dissolution or other Capital Change, appropriate provision shall be made on an equitable basis in such Retained Control Acquisition, reorganization, recapitalization, dissolution or other Capital Change for the 22% Option to survive and to be exercisable with respect to, as the case may be, the equity interests of the corporation or other entity surviving such Retained Control Acquisition or the equity interests of the Partnership immediately following such reorganization, recapitalization, dissolution, or other Capital Change to the same extent as immediately before such transaction or event. In the event of any Retained Control Acquisition or any reorganization, recapitalization, dissolution, Capital Change or other change in the capital structure or nature of the Partnership after the exercise of the 22% Option but prior to issuance of the Common Units, securities or other property (other than cash) purchased thereby, there shall be substituted on an equitable basis for each Common Unit, securities or other property (other than cash) to be issued pursuant to the exercise of the 22% Option the number and kind of partnership units, shares of stock or other securities or property to which the holders of Common Units, securities or other property (other than cash) shall be entitled pursuant to such transaction.

 

(h)                     Reserve Commitment . The Partnership will at all times keep reserved for issuance to the WM Partner upon exercise of the 22% Option such number of Partnership Securities of the appropriate kind as shall be issuable from time to time upon exercise of the 22% Option.

 

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(i)                         No Preemptive Rights . Except as otherwise expressly provided in this Agreement or the other Venture Agreements, no Partner shall have any preemptive or preferential right, including any such right with respect to: (i) additional Capital Contributions; (ii) issuance or sale of Units whether unissued, held in the treasury, or hereafter converted; (iii) issuance of any obligations, evidences of indebtedness or other securities of the Partnership convertible into or exchangeable for, or carrying or accompanied by any rights to receive, purchase or subscribe to, Partnership Securities; (iv) issuance of any right of, subscription to or right to receive, or any warrant or option for the purchase of, any of the foregoing securities; or (v) issuance or sale of any other securities that may be issued or sold by the Partnership.

 

3.5                     Additional Issuance of Units and Other Securities . Except as otherwise provided in Section 3.6: (a) In order to raise additional capital, to acquire assets, to redeem or retire Partnership debt or for any other Partnership purposes, the Managing General Partner is authorized to cause the Partnership to issue (i) Units in addition to those issued pursuant to Sections 3.1, 3.2, 3.3 and 3.4 in classes or series thereof, or options, rights, warrants or appreciation rights relating thereto or to any debt obligations, or (ii) any other type of security (including without limitation, secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into or exchangeable for any class or series of Units that may be issued by the Partnership or any combination of any of the foregoing) that the Partnership may lawfully issue (and the securities specified in preceding classes (i) and (ii) are herein collectively called “Partnership Securities”) at any time or from time to time to any General Partner, any Limited Partner or other Person and to admit such Partner or other Person to the Partnership as an Additional Limited Partner.

 

(b)                     Except as otherwise expressly provided in this Agreement, the Managing General Partner shall have sole and complete discretion in determining the consideration and terms and conditions with respect to any future issuance of Partnership Securities and the Managing General Partner shall have sole and complete discretion, without the approval of any other Partners, to cause the Partnership to issue such Partnership Securities from time to time in one or more classes, or one or more series of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to existing classes and series of Limited Partners, as shall be fixed by the Managing General Partner in the exercise of its sole and complete discretion, including, without limitation: (i) the allocation of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Securities; (ii) the right of each such class or series of Partnership Securities to share in Partnership distributions; (iii) the rights of each such class or

 

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series of Partnership Securities upon dissolution and liquidation of the Partnership; (iv) the price at which and the terms and conditions, if any, upon which each such class or series of Partnership Securities may be redeemed by the Partnership; (v) the rate at which and the terms and conditions upon which each such class or series of Partnership Securities may be converted into another class or series of Partnership Securities, if any such class or series is convertible into other securities of the Partnership; (vi) the terms and conditions upon which each such class or series of Partnership Securities may be converted into another class or series of Partnership securities, if any such class or series is convertible into other securities of the Partnership; (vii) the terms and conditions upon which each such class or series of Partnership Securities will be issued, and assigned or transferred; and (viii) the right of each such class or series of Partnership Securities to vote on Partnership matters.

 

3.6                     Restrictions on Issuances to ServiceMaster Affiliates .

 

 (a)                   Issuance to ServiceMaster Nonventure Company . Until such as WM Partner has disposed of all of its Special Common Units, the Partnership shall not issue or sell any Partnership Security to any ServiceMaster Nonventure Company except: (i) on terms agreed to by the Managing General Partner and the WM Partner; (ii) sales of Common Units after the Initial Public Offering at a price per Common Unit equal to or greater than the market price at the time of such sale; and (iii) as provided pursuant to the following sentence. In the event that the Managing General Partner and the WM Partner shall be unable to agree on the price for which any Partnership Security shall be issued to a ServiceMaster Nonventure Company prior to an Initial Public Offering, then (i) only Common Units may be sold by the Partnership to the ServiceMaster Nonventure Company and such Common Units may only be sold for cash and (ii) the price per Unit paid by the ServiceMaster Nonventure Company shall be at least equal to the price at which the Units purchased could be sold in the public market if the Partnership’s Common Units were publicly traded as determined by a party mutually agreed to by the Managing General Partner and the WM Partner. The cost of the determination by such party shall be paid by the Partnership.

 

 (b)                  Issuances to Partnership Employees . The Partnership shall have the right to grant options and otherwise issue and sell Common Units to employees of the Partnership or any Partnership Subsidiary provided that, until such time as WM Partner has disposed of all of its Special Common Units, the Partnership shall not sell or agree to sell Common Units to employees if after giving effect to the sale or agreement to sell, the sum of the number of Common Units which shall have been sold to employees plus the number of Units the Partnership shall be obligated to sell to employees would (if the Units the Partnership shall be obligated to sell were issued)

 

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represent more than a 5% Percentage Interest in the Partnership. The Partnership will not issue any Partnership Security to employees prior to the WM Departure Time except Common Units and rights to acquire Common Units.

 

 (c)                   Termination . The requirements in the two preceding paragraphs shall cease to apply at such time as WM has disposed of all of its Special Common Units. The WM Partner shall have the right acting alone to release ServiceMaster from any restriction contained in the two preceding paragraphs provided that any such release shall be effective only if it is in writing and then only to the extent specified in such release.

 

3.7                     Capital Changes (a) The Managing General Partner may make a distribution in Units to all Record Holders or may effect a subdivision or combination of Units, but in each case only on a pro rata basis so that, after such distribution, subdivision or combination, each Partner and Assignee shall have the same Percentage Interest in the Partnership as before such distribution, subdivision or combination.

 

(b)                     Whenever such a distribution, subdivision or combination is declared, the Managing General Partner shall select a Record Date as of which the distribution, subdivision or combination shall be effective. The Managing General Partner also may cause a firm of independent public accountants selected by it to calculate the number of Units to be held by each Record Holder after giving effect to such distribution, subdivision or combination.

 

(c)                      Promptly following any such distribution, subdivision or combination, the Managing General Partner may cause certificates to be issued to the Record Holders of Units as of the applicable Record Date representing the new number of Units held by such Record Holder, or the Managing General Partner may adopt such other procedures as it may deem appropriate to reflect such distribution, subdivision or combination; provided that in the event any such distribution, subdivision or combination results in a smaller total number of Units Outstanding, the Managing General Partner shall require as a condition to the delivery to a Record Holder of such new Certificate, the surrender of any Certificate held by such Record Holder immediately prior to such Record Date.

 

(d)                     The term “Capital Change” when applied to any particular security means: any distribution, split or combination which shall be effected under this Section 3.7; any merger, consolidation, reclassification or recapitalization in which such security shall be converted into or exchanged for another security or other property; complete or partial liquidation of the issuer of such security; and any other occurrence which in the reasonable judgment of the Managing General Partner has an effect on the particular security analogous to any of the actions specifically identified in this paragraph.

 

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ARTICLE 3A

WM PARTNER PURCHASE RIGHT

 

3A.1           Basic Right .

 

(a)                      Contribution Amount and Common Units Issuable . At any time from and after the June 1992 Amendment Date, WM Partner shall have the right (the “WM Partner Purchase Right”) to purchase Special Common Units representing eight percent (8%) of the number of Common Units outstanding immediately prior to the date of issuance of such Special Common Units at a price of $827.715 or as adjusted pursuant to this Article 3A per Unit (the “Contribution Price”). The payment by WM Partner for all Special Common Units issued to it pursuant to this Section 3A.1 shall be a contribution to the capital of the Partnership and shall be so recorded on the Partnership’s books and records. The Contribution Price is subject to adjustment in certain cases as provided in Section 3A.6.

 

(b)                     Common Units Outstanding . For purposes of this Article 3A the number of Common Units outstanding on the June 1992 Amendment Date shall consist of (i) the 1,016,655 Common Units referred to in Section 4.2 and (ii) an additional 10,269 Common Units which shall be deemed to have been issued to the General Partner and the Special General Partner collectively (10,269 being the number of Common Units which would establish a 1% interest if they were outstanding on the June 1992 Amendment Date). The foregoing provision means that, for purposes of this Section 3A.1, a total of 1,026,924 Common Units shall be considered as outstanding on the June 1992 Amendment Date. The purpose of the foregoing provision is to properly take into account the carried interest of the General Partner and the Special General Partner. If the number of Common Units actually issued by the Partnership should change at any time or from time to time after the June 30 1992 Amendment Date, then for purposes of this Article 3A the number of Common Units deemed to be issued to the General Partner and the Special General Partner on account of their carried interest shall be adjusted in accordance with the principle set forth above. (If a form of equity interest in the Partnership other than a Common Unit is issued, it shall be translated for purposes of this Article 3A into its equivalent number of Common Units which shall be deemed to be issued to the general partners in respect of their carried interest in order to preserve the principle set forth in this Section 3A.l(b)) and such equivalent number of Common Units shall be deemed to be outstanding for purposes of this Article 3A).

 

(c)                      Illustration . The parties acknowledge that if the WM Partner Purchase Right were exercised immediately after the June 1992 Amendment Date the following results would occur: (i) WM Partner would be entitled to receive 82,154 Special Common Units at

 

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a Contribution Price of $827.715 per unit; (ii) such new Common Units, together with the 225,924 Special Common Units theretofore held by WM Partner, would cause the total number of Common Units outstanding (including the Units deemed to be outstanding on account of the carried interest of the general partners) to become 1,109,908; (iii) the total number of Special Common Units held by WM Partner would become 308,078; and (v) taking into account the 1% carried interest of the general partners, WM Partner’s Percentage Interest in the Partnership would become 27.757%.

 

(d)                     Multiple Exercises; Exceptions . The WM Partner Purchase Right may be exercised from time to time by WM Partner in increments of not less than one-third (1/3) of the number of Special Common Units which would be issued if the WM Partner Purchase Right were then to be exercised in full. The foregoing condition shall not apply to exercises of the WM Purchase Right made in response to the Partnership’s exercise of the Partnership Call Right as set forth in Section 3A.3.

 

(e)                      Redesignation of the Units Issued Under Sub-Paragraph (a) in Certain Cases . The Units issuable to WM Partner under sub-paragraph (a) are designated as “Special Common Units” to reflect the fact that Parent Company Shares (as defined in Article 15) may be distributed with respect to such Units under Article 15. If the WM Partner Termination Right as defined in Article 15 should expire, all Special Common Units previously issued to WM Partner under Section 3A.1 shall be redesignated as Regular Common Units and all Common Units which may thereafter be issued to WM Partner under Section 3A.1 shall be designated as Regular Common Units.

 

3A.2           WM Partner Exercise Procedures .

 

(a)                      Exercise Notice; Partnership Review Documents . If WM Partner contemplates exercising the WM Partner Purchase Right, WM Partner and the Partnership shall proceed as follows:

 

(1)                   WM Partner shall notify the Partnership, in writing, that WM Partner proposes to exercise the WM Partner Purchase Right subject to the satisfaction of the conditions set forth in this Section 3A.2 (the “Preliminary Exercise Notice”).

 

(2)                   Promptly after the receipt of the Preliminary Exercise Notice, the Partnership shall provide WM Partner with: (i) a set of its most recent audited financial statements; (ii) a set of its most recent unaudited financial statements; and (iii) a statement containing the representations set forth in paragraph (b) below.

 

(3)                   WM Partner shall have 14 days after the receipt of the materials specified in item (2) to review such

 

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materials. During such 14-day period, representatives of the Partnership shall remain available to respond to such reasonable inquiries as WM Partner may make with respect to such materials or with respect to the business and condition of the Partnership. If WM Partner fails to act at the end of such 14-day period, WM Partner shall have no liability and WM Partner’s rights with respect to the WM Partner Purchase Right shall not be prejudiced in any way.

 

(4)                       At the close of such period, WM Partner shall notify the Partnership, in writing, whether WM Partner will proceed to exercise the WM Partner Purchase Right (subject to satisfaction of the conditions to closing as set forth below) or whether WM Partner has determined not to exercise the WM Partner Purchase Right at this time (the “Final Exercise Notice”). If, in the Final Exercise Notice, WM Partner elects to exercise the WM Partner Purchase Right, the parties shall proceed to a closing of the transaction as provided in paragraph (c) below. If WM Partner elects not to exercise the WM Partner Purchase Right, WM Partner’s rights with respect to the WM Partner Purchase Right shall not be prejudiced in any way.

 

(b)                     Partnership’s Representations . The representations referred to in item (2) of paragraph (a) above shall be the following:

 

(i)                          The Partnership is duly organized, validly existing and is in good standing as a limited partnership in the state of its organization;

 

(ii)                       The issuance of the Common Units issuable in response to WM Partner’s exercise of the WM Partner Purchase Right does not contravene: (A) any provision of the Partnership’s certificate of limited partnership, the Partnership’s agreement of limited partnership, the certificate of incorporation of the Managing Corporation or the bylaws of the Management Corporation; (B) any agreement to which the Partnership is a party; or (C) any provision of any law or regulation;

 

(iii)                    The issuance of Common Units issuable in response to WM Partner’s exercise of the WM Partner Purchase Right will, upon issuance, have been duly authorized by the Managing Partner of the Partnership;

 

(iv)                   The Common Units as issued in response to WM Partner’s exercise of the WM Partner Purchase Right will be free and clear of all liens, claims, encumbrances and restrictions (except for the security law restriction described in paragraph (c) below);

 

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(v)                      Upon the payment of the Contribution Price for the Common Units issued in response to WM Partner’s exercise of the WM Partner Purchase Right, such Common Units will be fully paid and non-assessable;

 

(vi)                   The financial statements delivered to WM Partner in connection with the Preliminary Exercise Notice were prepared in accordance with generally accepted accounting principles applied on a consistent basis and present fairly the financial condition of the Partnership for the dates and as of the periods stated therein;

 

(vii)                Except as disclosed in the Partnership’s representation statement, the Partnership is not aware of any fact or set of facts or trend or known uncertainty which have materially and adversely affected or may materially and adversely affect the business, financial condition or results of operations of the Partnership (whether actual or prospective) which are not disclosed by the financial statements referred to above, by information publicly disclosed by the Partnership or any of its parent entities; or by the Partnership to a senior officer of WM Partner through other forms of written communication;

 

(viii)             A statement of the financial structure of the Partnership as at the date of the Preliminary Exercise Notice (including a listing of all options, warrants or other rights to acquire equity interests in the Partnership which are then outstanding); and

 

(ix)                     A schedule of all issuances of equity interests and the prices therefor which have been issued by the Partnership since the June 1992 Amendment Date.

 

(c)                      WM Partner’s Investment Acknowledgements and Representation . WM Partner acknowledges that the Common Units to be issued by the Partnership in response to the Preliminary Exercise Notice and the Final Exercise Notice will not be registered securities under state or federal law and that the certificate (s) representing such Common Units will have a legend to such effect. WM Partner will deliver a certificate to the Partnership at the Closing to the effect that WM Partner is acquiring such Common Units for investment and not with a view to distribution or resale, except in compliance with federal and state security laws.

 

(d)                     Time of Closing . If WM Partner elects to exercise the WM Partner Purchase Right, the closing of the transaction shall occur on the later of: (i) five business days after the date of the Final Exercise Notice; or (ii) the date on which all of the conditions

 

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delivery by the Partnership to WM Partner of the Partnership’s audited financial statements for the immediately preceding year, provided that the Partnership Call Right may not be exercised prior to July 1, 1995 and, for the year 1995, such 30-day period shall be the period from July 1 to July 30, 1995).

 

(2)                     If the Partnership exercises the Partnership Call Right in 1995 (within the limitations set forth in item (1)), the call shall be limited to that number of Special Common Units determined by subtracting from one-third of the total number of Special Common Units available under the WM Partner Purchase Right the number (if any) of Special Common Units which have previously been purchased under the WM Partner Purchase Right.

 

(3)                     If the Partnership exercises the Partnership Call Right in 1996, the call shall be limited to that number of Special Common Units determined by subtracting from two- thirds of the total number of Special Common Units available under the WM Partner Purchase Right the number (if any) of Special Common Units which have previously been purchased under the WM Partner Purchase Right.

 

(4)                     If the Partnership exercises the Partnership Call Right in 1997 or thereafter, the call may be made for the total number of Special Common Units then available under the WM Partner Purchase Right.

 

(5)                     The Partnership may not exercise the Partnership Call Right in any year unless both of the following conditions are satisfied:

 

 (i)                      for the immediately preceding calendar year, the net income of the Partnership (excluding extraordinary items) was at least $37,500,000 as documented by the Partnership’s audited financial statements for such year; and

 

(ii)                      the Partnership makes the deliveries and satisfies the conditions set forth in Section 3A.4 below.

 

3A.4    Call Right Exercise Procedures .

 

(a)        Exercise Notice; Partnership Review Documents . If the Partnership elects to exercise the Partnership Call Right, the Partnership and WM Partner shall proceed as follows:

 

(1)        The Partnership shall notify WM Partner, in writing, that the Partnership elects to exercise the Partnership Call Right subject to the satisfaction of the conditions set forth in this Section 3A.4 (the “Call

 

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Notice”).

 

(2)        Concurrently with the delivery of the Call Notice, the Partnership shall provide WM Partner with: (i) a set of its most recent audited financial statements; (ii) a set of its most recent unaudited financial statements; and (iii) a statement containing the representations set forth in paragraph (b) below.

 

(3)        WM Partner shall have 30 days from the date on which WM Partner receives the Call Notice to review the materials submitted under item (2). During such 30-day period, representatives of the Partnership shall remain available to respond to such reasonable inquiries as WM Partner may make with respect to such materials or with respect to the business and condition of the Partnership.

 

(4)        At the close of such period, the parties shall proceed to a closing of the transaction as provided in paragraph (c) below, unless WM Partner believes that it is not obligated to close the transaction. Any such belief shall be set forth in writing, together with a statement of the reasons for such belief.

 

(b)        Partnership’s Representations . The representations referred to in item (2) of paragraph (a) above shall be the following:

 

(i)         The Partnership is duly organized, validly existing and in good standing as a limited partnership in the state of its organization;

 

(ii)        The issuance of the Common Units issuable in response to WM Partner’s exercise of the WM Partner Purchase Right does not contravene: (A) any provision of the Partnership’s certificate of limited partnership, the Partnership’s agreement of limited partnership, the certificate of incorporation of the Managing Corporation or by bylaws of the Management Corporation; (B) any agreement to which the Partnership is a party; or (C) any provision of any law or regulation;

 

(iii)       The issuance of Common Units issuable in response to WM Partner’s exercise of the WM Partner Purchase Right will, upon issuance, have been duly authorized by the Managing Partner of the Partnership;

 

(iv)       The Common Units as issued in response to WM Partner’s exercise of the WM Partner Purchase Right will be free and clear of all liens, claims, encumbrances and restrictions (except for the security law restriction

 

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described in paragraph (c) below);

 

(v)        Upon the payment of the Contribution Price for the Common Units issued in response to WM Partner’s exercise of the WM Partner Purchase Right, such Common Units will be fully paid and non-assessable;

 

(vi)       The financial statements delivered to WM Partner in connection with the Call Notice were prepared in accordance with generally accepted accounting principles applied on a consistent basis and present fairly the financial condition of the Partnership for the dates and as of the periods stated therein;

 

(vii)      Except as disclosed in the Partnership’s representation statement, the Partnership is not aware of any fact or set of facts or trend or known uncertainty which have materially and adversely affected or may materially and adversely affect the business, financial condition or results of operations of the Partnership (whether actual or prospective) which are not disclosed by the financial statements referred to above, by information publicly disclosed by the Partnership or any of its parent entities; or by the Partnership to a senior officer of WM Partner through other forms of written communication;

 

(viii)     A statement of the financial structure of the Partnership as at the date of the Call Notice (including a listing of all options, warrants or other rights to acquire equity interests in the Partnership which are then outstanding; and

 

(ix)        A schedule of all issuances of equity interests and the prices therefor which have been issued by the Partnership since the June 1992 Amendment Date.

 

(c)        WM Partner’s Investment Acknowledgements and Representation . WM Partner acknowledges that the Common Units to be issued by the Partnership in response to the Preliminary Exercise Notice and the Final Exercise Notice will not be registered securities under state or federal law and that the certificate(s) representing such Common Units will have a legend to such effect. WM Partner will deliver a certificate to the Partnership at the Closing to the effect that WM Partner is acquiring such Common Units for investment and not with a view to distribution or resale, except in compliance with federal and state security laws.

 

(d)        Time of Closing . The closing of the transaction shall occur on the later of: (i) five business days after the conclusion of the 30-day review period described in item (3) of paragraph (b)

 

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above; or (ii) “the date on which all of the conditions set forth in Section 15.4 are satisfied (the “Closing Date”).

 

(e)        Closing; Closing Conditions . Provided that there are no legal proceedings then pending which prevent the Closing, at the Closing, and as a condition to the obligation of WM Partner to pay the Contribution Price, the Partnership shall deliver to WM Partner a letter or certificate which restates, as at the date of the Closing (the “Closing Date”), the representations set forth in paragraph (b) above. At the Closing, and as a condition to the obligation of the Partnership to deliver the certificate(s) for the Common Units to be acquired by WM Partnership, WM Partner shall deliver to the Partnership a letter or certificate which makes the investment representation set forth in paragraph (c) above. Upon satisfaction of all of the foregoing conditions, the Partnership shall deliver one or more certificates for the Common Units to be issued to WM Partner and WM Partner shall pay to the Partnership the Contribution Price therefor by wire transfer of immediately available funds.

 

(f)         Effect of Failure to Close for Breach of a Condition . If an exercise of the Partnership Call Right is not closed because of a failure of the Partnership to satisfy its obligations under this Section 3A.4 or because a condition precedent to WM Partner’s obligation to close is not satisfied, and WM Partner does not waive such failure or condition, then the Partnership Call Right shall be deemed not to have been exercised in the first instance.

 

3A.5    WM Partner Right to Reject Call . (a) On each occasion on which the Partnership exercises the Partnership Call Right, WM Partner may elect to reject the call and thereby be relieved of its obligation to make the capital contribution otherwise required of it. If and whenever WM Partner exercises its rejection right under this Section 3A.5, and provided that all of the obligations of the Partnership in connection with the exercise of the Call Right have been satisfied and all of the conditions to WM Partner’s obligation to proceed to a closing as set forth in Section 3 A.4 are satisfied, the WM Purchase Right shall be modified without further action by the parties hereto as follows: (i) the total number of Special Common Shares then available for purchase under the WM Purchase Right shall be reduced by the number of such shares which were the subject of the exercise of the Partnership Call Right which was rejected; and (ii) the amount of the then total capital contribution required by the WM Partner Purchase Right shall be reduced proportionately.

 

(b)        If WM Partner elects to exercise its right to reject a call made under the Partnership Call Right, it shall give the Partnership a written notice to that effect. Such notice shall be delivered to the Partnership by not later than the end of the 30-day review period described in item (3) of Section 3A.4(a).

 

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3A.6    Anti-Dilution and Other Protective Provisions

 

(a)        Definition of “Other Partnership Equity Interest”; Translation to Common Units . As used in the Article 3A, the term “Other Partnership Equity Interest” means any equity interests in the Partnership (other than the Common Units) which are not limited to a fixed return on the principal amount thereof or which are not limited to a fixed payment of principal upon liquidation of the Partnership. All Other Partnership Equity Interests shall be translated to Common Units in the manner described in Section 3A.l(b) with respect to the carried interest of the general partners whenever it is necessary under this Article 3A to make a determination of the total number of Common Units outstanding.

 

(b)        Effect of Issuances of Common Units For Less Than the Contribution Price. If and whenever the Partnership issues Common Units or Other Partnership Equity Interests and the consideration received therefor is less than the Contribution Price as in effect at such time, the Contribution Price shall be automatically reestablished at the amount per Common Unit or Other Partnership Equity Interest which was received by the Partnership in such transaction.

 

(b)        Effect of Issuance of Options, Warrants and Subscription Rights For Less Than the Contribution Price. Except for options or warrants which may be issued to officers and/or employees of the Partnership or any of its subsidiary organizations pursuant to an option plan which do not in the aggregate exceed the number of Common Units which may be issued under Section 3.6(b) without activating the 22% Option, if the Partnership shall in any manner offer any options (other than options within the limitation referred to immediately above), warrants or rights to subscribe for or to purchase Common Units or Other Partnership Equity Interests at a price per unit (the “option/warrant/subscription unit price”) which is less than the Contribution Price then in effect, then the Contribution Price shall be automatically reestablished at the amount of the option/warrant/subscription unit price.

 

(c)        Effect of Convertible Securities with a Conversion Price of Less Than the Contribution Price . If the Partnership issues any obligations which are directly or indirectly convertible into or exchangeable for Common Units or Other Partnership Equity Interests and if the effective price per Common Unit or other such interest for which such Common Units or other such interests are deliverable upon such conversion or exchange (determined by dividing (A) the total amount received or receivable by the Partnership in consideration of the issue or sale of such convertible interests or obligations plus the total amount of premiums, if any, payable to the Partnership upon conversion or exchange by (B) the total number of Common Units or Other Partnership Equity Interest necessary to effect the conversion or exchange of all such convertible interests or obligations) (the “conversion price”) shall be less than the

 

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Contribution Price then in effect, then the Contribution Price shall be automatically reestablished at the amount of the conversion price.

 

(d)        Lapse or Other Expiration of the Rights Described in Sub-Paragraphs (b) and (c) . If the subscription rights or options or warrants or conversion rights with respect to which a change in the Contribution Price has been made pursuant to sub-paragraph (b) or sub-paragraph (c) shall lapse or otherwise expire without any exercise by the holder(s) thereof, and if the Contrib