Document:

Exhibit 4.2

 

EXECUTION COPY

 

THE SERVICEMASTER COMPANY

 

$100,000,000 8% SENIOR NOTES DUE 2020

 

EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

 

	
 
    	
 
    	
February 16, 2012
    
	
J.P.   Morgan Securities LLC,
    	
 
    	
 
    
	
            As   Representative of the Initial Purchasers
    	
 
    	
 
    
	
c/o   J.P. Morgan Securities LLC
    	
 
    	
 
    
	
383   Madison Avenue
    	
 
    	
 
    
	
New   York, New York 10179
    	
 
    	
 
    

 

Ladies and Gentlemen:

 

The ServiceMaster Company, a Delaware corporation (the “Company”), proposes to issue and sell upon the terms set forth in the Purchase Agreement (as defined herein) to the initial purchasers under the Purchase Agreement (the “Initial Purchasers”), an aggregate of $100,000,000 principal amount of the Company’s 8% Senior Notes due 2020 (the “Notes”) for whom J.P. Morgan Securities LLC is acting as representative (the “Representative”). The Notes will be issued pursuant to the Indenture (as defined below) and will be guaranteed (the “Guarantees”) at the Closing Date (as defined below) on a senior unsecured basis by each domestic subsidiary of the Company named in Schedule II to the Purchase Agreement (the “Guarantors”).

 

The Company previously issued $500.0 million principal amount of 8% Senior Notes due 2020 (the “Existing 8% Senior Notes”) under the Indenture.  The Notes will be treated as a single series as the Existing 8% Senior Notes and will have the same terms as the Existing 8% Senior Notes.

 

As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Company and the Guarantors agree with the Initial Purchasers for the benefit of holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows:

 

1.             Certain Definitions.  For purposes of this Exchange and Registration Rights Agreement, the following terms shall have the following respective meanings:

 

“Base Interest” shall mean the interest that would otherwise accrue on the Securities under the terms thereof and the Indenture, without giving effect to the provisions of this Agreement.

 

The term “broker-dealer” shall mean any broker or dealer registered with the Commission under the Exchange Act.

 

“Closing Date” shall mean the date on which the Securities are initially issued.

 

“Commission” shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose.

 

 

“Effective Time,” in the case of (i) an Exchange Registration, shall mean the time and date as of which the Commission declares the Exchange Registration Statement effective or as of which the Exchange Registration Statement otherwise becomes effective and (ii) a Shelf Registration, shall mean the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective.

 

“Electing Holder” shall mean any holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, or any successor thereto, as the same shall be amended from time to time.

 

“Exchange Offer” shall have the meaning assigned thereto in Section 2(a) hereof.

 

“Exchange Registration” shall have the meaning assigned thereto in Section 3(c) hereof.

 

“Exchange Registration Statement” shall have the meaning assigned thereto in Section 2(a) hereof.

 

“Exchange Securities” shall have the meaning assigned thereto in Section 2(a) hereof.

 

“Existing Notes Closing Date” shall mean February 13, 2012, the closing date of the issuance of the Existing 8% Senior Notes.

 

The term “holder” shall mean each of the Initial Purchasers and other persons who acquire Registrable Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Registrable Securities.

 

“Indenture” shall mean the Indenture, dated as of February 13, 2012, among the Company, the Guarantors and Wilmington Trust, National Association, as Trustee, governing the Notes, as supplemented by the First Supplemental Indenture, dated as of February 13, 2012, as further supplemented by the Second Supplemental Indenture, dated as of the Closing Date, as the same shall be amended or further supplemented from time to time.

 

“Majority Electing Holders” means the Electing Holders holding at least a majority in aggregate principal amount of the Registrable Securities and of the “Registrable Securities,” as defined in the Exchange and Registration Rights Agreement, dated as of the Existing Notes Closing Date, relating to the Existing 8% Senior Notes, collectively.

 

“Notice and Questionnaire” means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto, with such changes thereto as the Company may reasonably determine. For the avoidance of doubt, the Company may, at its election, issue a combined Notice and Questionnaire, with appropriate modifications, to holders of both the Notes and the Existing 8% Senior Notes.

 

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The term “person” shall mean a corporation, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency.

 

“Purchase Agreement” shall mean the Purchase Agreement, dated as of February 13, 2012, among the Initial Purchasers, the Company and the Guarantors relating to the Notes.

 

“Registrable Securities” shall mean the Securities; provided, however, that a Security shall cease to be a Registrable Security when (i) the Security has been exchanged for an Exchange Security in an Exchange Offer as contemplated in Section 2(a) hereof (provided that any Exchange Security that, pursuant to the final sentence of the first paragraph of Section 2(a), is included in a prospectus for use in connection with resales by broker-dealers shall be deemed to be a Registrable Security with respect to Sections 5 and 8 until resale of such Registrable Security has been effected within the 90-day period referred to in Section 2(a)); (ii) a Shelf Registration Statement registering such Security under the Securities Act has been declared or becomes effective and such Security has been sold or otherwise transferred by the holder thereof pursuant to and in a manner contemplated by such effective Shelf Registration Statement; (iii) such Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed or deemed removed by the Company or pursuant to the Indenture; (iv) on or following the earliest date that is no less than 545 days after the date of the Indenture and on which such Security would be saleable (if it were held by a non-affiliate of the Company) pursuant to Rule 144 without restrictions on volume or manner of sale or (v) such Security shall cease to be outstanding.

 

“Registration Default” shall have the meaning assigned thereto in Section 2(c) hereof.

 

“Registration Default Period” shall have the meaning assigned thereto in Section 2(c) hereof.

 

“Registration Expenses” shall have the meaning assigned thereto in Section 4 hereof.

 

“Resale Period” shall have the meaning assigned thereto in Section 2(a) hereof.

 

“Restricted Holder” shall mean (i) a holder that is an affiliate of the Company within the meaning of Rule 405, (ii) a holder that acquires Exchange Securities outside the ordinary course of such holder’s business, (iii) a holder that has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Securities and (iv) a holder that is a broker-dealer, but only with respect to Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Company.

 

“Rule 144,” “Rule 405” and “Rule 415” shall mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

 

“Securities” shall mean the Notes to be issued and sold to the Initial Purchasers, and securities issued in exchange therefor or in lieu thereof pursuant to the Indenture. Each Security is entitled to the benefit of the Guarantees and, unless the context otherwise requires, any reference herein to a “Security,” an “Exchange Security” or a “Registrable Security” shall include a reference to the related Guarantees, if any.

 

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“Securities Act” shall mean the Securities Act of 1933, or any successor thereto, as the same shall be amended from time to time.

 

“Shelf Registration” shall have the meaning assigned thereto in Section 2(b) hereof.

 

“Shelf Registration Statement” shall have the meaning assigned thereto in Section 2(b) hereof.

 

“Special Interest” shall have the meaning assigned thereto in Section 2(c) hereof.

 

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, all as the same shall be amended from time to time.

 

Unless the context otherwise requires, any reference herein to a “Section” or “clause” refers to a Section or clause, as the case may be, of this Exchange and Registration Rights Agreement, and the words “herein,” “hereof’ and “hereunder” and other words of similar import refer to this Exchange and Registration Rights Agreement as a whole and not to any particular Section or other subdivision.

 

2.             Registration Under the Securities Act.

 

(a)           Except as set forth in Section 2(b) below, the Company agrees to use its commercially reasonable efforts to file under the Securities Act a registration statement relating to an offer to exchange (such registration statement, the “Exchange Registration Statement”, and such offer, the “Exchange Offer”) any and all of the Securities for a like aggregate principal amount of debt securities issued by the Company and guaranteed by the Guarantors, which debt securities and Guarantees are substantially identical to the Securities (and are entitled to the benefits of a trust indenture which is substantially identical to the Indenture or is the Indenture and which has been qualified under the Trust Indenture Act), except that they have been registered pursuant to an effective registration statement under the Securities Act and do not contain restrictions on transfer or provisions for the additional interest contemplated in Section 2(c) below or the liquidated damages provided in Section 2(d) below (such new debt securities hereinafter called “Exchange Securities”). The Company agrees to use its commercially reasonable efforts to cause the Exchange Registration Statement to become effective under the Securities Act within 365 days following the Existing Notes Closing Date. The Exchange Offer will be registered under the Securities Act on the appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. The Company further agrees to use its commercially reasonable efforts to commence the Exchange Offer promptly after the Exchange Registration Statement becomes effective, hold the Exchange Offer open for the period required by applicable law (including pursuant to any applicable interpretation by the staff of the Commission), but in any event for at least 10 business days, and exchange the Exchange Securities for all Securities that have been validly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. If the Company commences the Exchange Offer, the Company will be entitled to close the Exchange Offer 30 days after the commencement thereof (or at the end of such shorter period permitted by applicable law; provided that such period shall not, in any case, be less than 10 business days); provided that the Company has accepted all the Securities validly tendered in accordance with the terms of the Exchange Offer. The Company agrees (x) to include in the Exchange Registration Statement a prospectus for use in any resales by any holder of Exchange Securities that is a broker-dealer and (y) to keep such Exchange Registration Statement effective for a period (the “Resale Period”)

 

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beginning when Exchange Securities are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 90th day after the Exchange Offer has been completed and such time as such broker-dealers no longer own any Registrable Securities.

 

Each holder participating in the Exchange Offer shall be required to represent to the Company that (i) any Exchange Securities received by such holder will be acquired in the ordinary course of business, (ii) at the time of the commencement of the Exchange Offer such holder has no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company, (iv) if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities, (v) if such holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such Exchange Securities and (vi) such holder is not acting on behalf of any person who could not truthfully make the foregoing representations.

 

(b)           If (i) on or prior to the time the Exchange Offer is consummated existing Commission interpretations are changed such that the Exchange Securities received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are not or would not be, upon receipt, transferable by each such holder without restriction under the Securities Act, (ii) the Exchange Offer has not been completed within 395 days following the Existing Notes Closing Date, (iii) any Initial Purchaser so requests with respect to Registrable Securities not eligible to be exchanged for Exchange Securities in the Exchange Offer and held by it following consummation of the Exchange Offer or (iv) any holder (other than an Initial Purchaser) shall be, and shall notify the Company that such holder is, prohibited by law or Commission policy from participating in the Exchange Offer or such holder may not resell the Exchange Securities acquired in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Registration Statement is not available for such resales by such holder (other than in either case (x) due solely to the status of such holder as an affiliate of the Company within the meaning of the Securities Act or (y) due to such holder’s inability to make the representations set forth in the second paragraph of Section 2(a) hereof) and any such holder so requests, the Company shall, in lieu of (or, in the case of clauses (iii) and (iv), in addition to) conducting the Exchange Offer contemplated by Section 2(a), use its commercially reasonable efforts to file under the Securities Act as promptly as reasonably practicable, a “shelf” registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all of the Registrable Securities (or, in the case of clause (iii), the Registrable Securities held by the Initial Purchasers, or, in the case of clause (iv), by the holders referred to in clause (iv), as the case may be), pursuant to Rule 415 or any similar rule that may be adopted by the Commission (such filing, the “Shelf Registration” and such registration statement, the “Shelf Registration Statement”). The Company agrees to use its commercially reasonable efforts (x) to cause the Shelf Registration Statement to become effective within 365 days after the date on which the obligation to file such Shelf Registration Statement arises and to use its commercially reasonable efforts to cause such Shelf Registration Statement to remain effective for a period ending on the earlier of 365 days following the Effective Time or such shorter period that will terminate when all the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or are distributed to the public pursuant to Rule 144 or, after the 90th day following the Effective Time, would be eligible for resale (if held by a non-affiliate of the Company) pursuant to Rule 144 without restriction on volume or manner of sale, if any; provided, however, that no holder shall be entitled to be named as a selling

 

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securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Registrable Securities unless such holder is an Electing Holder, and (y) after the Effective Time of the Shelf Registration Statement, promptly upon the request of any holder of Registrable Securities that is not then an Electing Holder, to take any action reasonably necessary to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action necessary to identify such holder as a selling securityholder in the Shelf Registration Statement; provided, however, that (i) nothing in this clause (y) shall relieve any such holder of the obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(iii) hereof and (ii) the Company shall not be required to take any such action with respect to any such holders more than once every quarter. The Company further agrees to supplement or make amendments to the Shelf Registration Statement, as and when required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or rules and regulations thereunder for shelf registration, and the Company agrees to furnish to each Electing Holder copies of any such supplement or amendment promptly following its filing with the Commission.

 

Notwithstanding the foregoing, the Company may suspend the availability of any Shelf Registration Statement (x) for up to an aggregate of 60 days in any consecutive twelve-month period if (i) such action is required by applicable law or (ii) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company’s obligations hereunder), including the acquisition or divestiture of assets, or (y) with respect to a Shelf Registration Statement required to be filed due to a failure to consummate the Exchange Offer within the required time period, if such action occurs following the consummation of the Exchange Offer.

 

(c)           The Company and the Initial Purchasers agree that the holders of Registrable Securities will suffer damages if the Company fails to fulfill its obligations under this Section and that it would not be feasible to ascertain the extent of such damages with precision.  In the event that (i) the Exchange Registration Statement has not become effective or been declared effective by the Commission on or before 365 days following the Existing Notes Closing Date, or (ii) the Exchange Offer has not been consummated within 395 days after the Existing Notes Closing Date, or (iii) if a Shelf Registration Statement required to be filed under Section 2(b) hereof is not declared effective within 365 days following the date on which the obligation to file the Shelf Registration Statement arises, or (iv) if any Shelf Registration Statement required by Section 2(b) hereof is filed and declared effective, and during the period the Company is required to use its commercially reasonable efforts to cause the Shelf Registration Statement to remain effective, (x) the Company shall have suspended the Shelf Registration Statement pursuant to Section 2(b) hereof for more than 60 days in the aggregate in any consecutive twelve-month period and be continuing to suspend the availability of the Shelf Registration Statement or (y) the Shelf Registration Statement shall cease to be effective (other than by action of the Company pursuant to the second paragraph of Section 2(b) hereof) without being replaced within 90 days by a shelf registration statement that is filed and declared effective (each such event referred to in clauses (i) through (iv), a “Registration Default” and each period during which a Registration Default has occurred and is continuing, a “Registration Default Period”), then, as liquidated damages for such Registration Default, subject to the provisions of Section 8(b), special interest (“Special Interest”), in addition to the Base Interest, shall accrue on Registrable Securities for the Registration Default Period (but only with respect to one Registration Default at any particular time) until such time as all Registration Defaults have been cured at a per annum rate of 0.25% for the first 90 days of the Registration Default Period, which rate shall increase by an additional 0.25% during each

 

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subsequent 90-day period, up to a maximum of 0.50% regardless of the number of Registration Defaults that shall have occurred and be continuing. Immediately following the cure of all Registration Defaults, the accrual of Special Interest will cease. A Registration Default under clause (iii) or (iv) will be deemed cured upon consummation of the Exchange Offer in the case of a Shelf Registration Statement required to be filed due to a failure to consummate the Exchange Offer within the required time period.

 

(d)           If during the 90-day period referenced in the final sentence of the first paragraph of Section 2(a) hereof the Exchange Offer Registration Statement is suspended by the Company or ceases to be effective such that any broker-dealer that (i) receives Exchange Securities in the Exchange Offer and (ii) is subject to prospectus delivery requirements cannot fulfill such requirements, the Company shall pay liquidated damages to such broker-dealers in an amount calculated in a manner consistent with that specified above with respect to Registration Defaults.

 

(e)           The Company shall take all actions reasonably necessary or advisable to be taken by it to ensure that the transactions contemplated herein are effected as so contemplated, including all actions necessary or desirable to register the Guarantees under the registration statement contemplated in Section 2(a) or 2(b) hereof, as applicable.

 

(f)            Any reference herein to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time and any reference herein to any post-effective amendment to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time.

 

(g)           Notwithstanding anything to the contrary in this Agreement, the Company may, on the same registration statement (whether an Exchange Registration Statement or a Shelf Registration Statement), register any of the Securities under this Agreement and any of the Existing 8% Senior Notes under the Exchange and Registration Rights Agreement, dated February 13, 2102, among the Company, the Guarantors and the Initial Purchasers, relating to the Existing 8% Senior Notes.

 

3.             Registration Procedures.

 

If the Company files a registration statement pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:

 

(a)           At or before the Effective Time of the Exchange Offer or the Shelf Registration, as the case may be, the Company shall qualify the Indenture under the Trust Indenture Act.

 

(b)           In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

 

(c)           In connection with the Company’s obligations with respect to the registration of Exchange Securities as contemplated by Section 2(a) (the “Exchange Registration”), if applicable, the Company shall:

 

(i)            use its commercially reasonable efforts to prepare and file with the Commission an Exchange Registration Statement on any form which may be utilized by the Company and

 

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which shall permit the Exchange Offer and resales of Exchange Securities by broker-dealers during the Resale Period to be effected as contemplated by Section 2(a), and use its commercially reasonable efforts to cause such Exchange Registration Statement to become effective within 365 days following the Existing Notes Closing Date;

 

(ii)           prepare and file with the Commission such amendments and supplements to such Exchange Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Exchange Registration Statement for the periods and purposes contemplated in Section 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Registration Statement, and promptly provide each broker-dealer holding Exchange Securities with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission thereunder, as such broker-dealer reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Securities;

 

(iii)          promptly notify each broker-dealer that has requested or received copies of the prospectus included in such registration statement, and confirm such advice in writing, (A) when such Exchange Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Exchange Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission for amendments or supplements to such Exchange Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Exchange Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Exchange Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, or (E) at any time during the Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(iv)          in the event that the Company would be required, pursuant to Section 3(c)(iii)(E) above, to notify any broker-dealers holding Exchange Securities, use its commercially reasonable efforts to prepare and furnish as soon as practicable to each such broker-dealer a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Securities during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

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(v)           use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Exchange Registration Statement or any post-effective amendment thereto at the earliest practicable date;

 

(vi)          use its commercially reasonable efforts to (A) register, qualify or confirm exemption from the Exchange Securities under the state securities laws or blue sky laws of such U.S. jurisdictions as any participating holder of the Registrable Securities reasonably requests in writing no later than the commencement of the Exchange Offer, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period and (C) take any and all other actions as may be reasonably necessary to enable each broker-dealer holding Exchange Securities to consummate the disposition thereof in such jurisdictions; provided, however, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(c)(vi), (2) consent to general service of process in any such jurisdiction, (3) subject itself to taxation in any such jurisdiction if it is not so subject or (4) make any changes to its certificate of incorporation, by-laws or other organizational document, or any agreement between it and any of its equityholders;

 

(vii)         provide a CUSIP number for all Exchange Securities, not later than the consummation of the Exchange Offer; and

 

(viii)        comply in all material respects with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but no later than eighteen months after the effective date of such Exchange Registration Statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder).

 

(d)           In connection with the Company’s obligations with respect to the Shelf Registration, if applicable, the Company shall:

 

(i)            use its commercially reasonable efforts to prepare and file with the Commission, within the time period specified in Section 2, a Shelf Registration Statement on any form which may be utilized by the Company and which shall register all of the Registrable Securities (or, in the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iii), the Registrable Securities held by the Initial Purchasers or, in the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iv), the Registrable Securities held by the holders specified in Section 2(b)(iv)) for resale by the holders thereof in accordance with such method or methods of disposition as may be specified in the applicable Notice and Questionnaire by such of the holders as, from time to time, may be Electing Holders and use its commercially reasonable efforts to cause such Shelf Registration Statement to become effective within the time periods specified in Section 2(b);

 

(ii)           not less than 15 calendar days prior to the Effective Time of the Shelf Registration Statement, mail the Notice and Questionnaire to the holders of Registrable Securities; no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no holder shall be entitled to use the prospectus forming a part thereof

 

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for resales of Registrable Securities at any time, unless such holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; provided, however, holders of Registrable Securities shall have at least 13 calendar days from the date on which the Notice and Questionnaire is first mailed to such holders to return a completed and signed Notice and Questionnaire to the Company;

 

(iii)          after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to such holder; provided that the Company shall not be required to take any action to name such holder as a selling securityholder in the Shelf Registration Statement or to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities until such holder has returned a completed and signed Notice and Questionnaire to the Company;

 

(iv)          as soon as practicable prepare and file with the Commission such amendments and supplements to such Shelf Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(b) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, and furnish to the Electing Holders copies of any such supplement or amendment as soon as practicable following its filing with the Commission. Notwithstanding the foregoing, the Company may suspend the availability of any Shelf Registration Statement (x) for up to an aggregate of 60 days in any consecutive twelve-month period if (i) such action is required by applicable law or (ii) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of the Company’s obligations hereunder), including the acquisition or divestiture of assets, or (y) with respect to a Shelf Registration Statement required to be filed due to a failure to consummate the Exchange Offer within the required time period, if such action occurs following the consummation of the Exchange Offer;

 

(v)           comply in all material respects with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities covered by such Shelf Registration Statement in accordance with the intended methods of disposition by the Electing Holders provided for in such Shelf Registration Statement;

 

(vi)          for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period specified in Section 2(b), make reasonably available at reasonable times at the Company’s principal place of business or such other reasonable place for inspection by a representative of, and not more than one counsel acting for, Majority Electing Holders and any underwriter participating in the distribution of the Registrable Securities being sold (including any person who may be deemed an underwriter within the meaning of Section 2(a)(ii) of the Securities Act) such relevant financial and other pertinent information and books and records of the Company, and use its commercially reasonable efforts to cause the officers, employees, counsel and independent certified public accountants of the Company to respond to such inquiries as shall be reasonably necessary to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing investigation and information gathering shall be coordinated on behalf of all such parties by one counsel designated by and on behalf of all such parties and provided, further, that each such party shall

 

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be required (pursuant to an agreement in form and substance reasonably satisfactory to the Company) to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such registration statement or otherwise except as a result of a breach of this or any other obligation of confidentiality to the Company known to such party), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter or any such court, agency or body requests such information from such person in connection with any examination, review or investigation (subject to the requirements of such order, subpoena or request, and only after such person shall have given the Company prompt prior written notice of such requirement so that the Company, at its expense, may undertake appropriate action to prevent disclosure of such information or records), or such disclosure is necessary in the opinion of counsel to establish a reasonable investigation within the meaning of Section 11 of the Securities Act in connection with any such subpoena, order, examination, review or investigation, or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(vii)         promptly notify each of the Electing Holders and any managing underwriter thereof and confirm such advice in writing, (A) when such Shelf Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose or (E) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(viii)        use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto at the earliest practicable date;

 

(ix)           if requested by any managing underwriter or the Majority Electing Holders, promptly incorporate in a prospectus supplement or post-effective amendment such information

 

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as is required by the applicable rules and regulations of the Commission and as such managing underwriter or such Majority Electing Holders shall specify should be included therein relating to the terms of the sale of such Registrable Securities, including information with respect to the principal amount of Registrable Securities being sold by such Majority Electing Holders or to any underwriters, the names and descriptions of such Majority Electing Holders or underwriters, the offering price of such Registrable Securities and any discount, commission or other compensation payable in respect thereof, the purchase price being paid therefor by such underwriters and with respect to any other terms of the offering of the Registrable Securities to be sold by such Majority Electing Holders or to such underwriters; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment;

 

(x)            furnish to each Electing Holder, and each underwriter, if any, thereof such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein) and of the prospectus included in such Shelf Registration Statement (including each preliminary prospectus), in conformity in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder, as such Electing Holder and underwriter, if any, may reasonably request in order to facilitate the offering and disposition of the Registrable Securities owned by such Electing Holder or underwritten by such underwriter and to permit such Electing Holder and underwriter, if any, to satisfy the prospectus delivery requirements of the Securities Act; and the Company hereby consents to the use of such prospectus (including such preliminary prospectus) and any amendment or supplement thereto by each such Electing Holder and by any such underwriter, in each case in the form most recently provided to such person by the Company, in connection with the offering and sale of the Registrable Securities covered by the prospectus (including such preliminary prospectus) or any supplement or amendment thereto;

 

(xi)           use its commercially reasonable efforts to (A) register, qualify or confirm exemption from the Registrable Securities to be included in such Shelf Registration Statement under such state securities laws or blue sky laws of such U.S. jurisdictions as any Electing Holder and managing underwriter, if any, thereof shall reasonably request, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration is required to remain effective under Section 2(b) above and for so long as may be necessary to enable any such Electing Holder or underwriter to complete its distribution of Securities pursuant to such Shelf Registration Statement and (C) take any and all other actions as may be reasonably necessary to enable each such Electing Holder and underwriter, if any, to consummate the disposition in such jurisdictions of such Registrable Securities; provided, however, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(d)(xi), (2) consent to general service of process in any such jurisdiction, (3) subject itself to taxation in any such jurisdiction if it is not so subject or (4) make any changes to its certificate of incorporation, by-laws or other organizational document, or any agreement between it and any of its equityholders;

 

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(xii)         unless any Registrable Securities shall be in book-entry only form, cooperate with the Electing Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends; and, in the case of an underwritten offering, enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriter may request a reasonable amount of time prior to any sale of the Registrable Securities;

 

(xiii)        provide a CUSIP number for all Registrable Securities, not later than the applicable Effective Time;

 

(xiv)        enter into one or more underwriting agreements in customary form, including customary provisions relating to indemnification and contribution, and use its commercially reasonable efforts to take such other actions, if any, in connection therewith as any Electing Holders aggregating at least 20% in aggregate principal amount of the Registrable Securities at the time outstanding shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

 

(xv)         if requested by the Majority Electing Holders or if the offering contemplated by the Shelf Registration is an underwritten offering, use its commercially reasonable efforts to (A) make such representations and warranties to the Electing Holders and the underwriters, if any, thereof in form, substance and scope as are customarily made in connection with an offering of debt securities pursuant to any underwriting agreement; (B) obtain an opinion of counsel to the Company in customary form subject to customary limitations, assumptions and exclusions and covering such matters, of the type customarily covered by such an opinion, as the managing underwriters, if any, or as any Electing Holders of at least 20% in aggregate principal amount of the Registrable Securities at the time outstanding may reasonably request, addressed to the Electing Holders and the underwriters, if any, thereof and dated the effective date of such Shelf Registration Statement (and if such Shelf Registration Statement contemplates an underwritten offering of a part or all of the Registrable Securities, dated the date of the closing under the underwriting agreement relating thereto); (C) obtain a “cold comfort” letter or letters from the independent certified public accountants of the Company addressed to the selling Electing Holders or the underwriters, if any, thereof, dated (i) the effective date of such Shelf Registration Statement and (ii) if such Shelf Registration Statement contemplates an underwritten offering, dated the date of the closing under the underwriting agreement relating thereto, such letter or letters to be in customary form and covering such matters of the type customarily covered by letters of such type, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72; and (D) deliver such customary documents and certificates, including officers’ certificates, as may be reasonably requested by the Majority Electing Holders and the managing underwriters, if any, thereof,

 

(xvi)        notify in writing each holder of Registrable Securities of any proposal by the Company to amend or waive any provision of this Exchange and Registration Rights Agreement pursuant to Section 8(h) hereof and of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text of the amendment or waiver proposed or effected, as the case may be;

 

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(xvii)       in the event that any broker-dealer registered under the Exchange Act shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate (within the meaning of the Conduct Rules (the “Conduct Rules”) of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or any successor thereto, as amended from time to time) thereof as an underwriter, use commercially reasonable efforts to provide information to assist such broker-dealer in complying with the requirements of such Conduct Rules;

 

(xviii)      comply in all material respects with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but in any event not later than eighteen months after the effective date of such Shelf Registration Statement, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder); and

 

(xix)        so long as any Registrable Securities remain outstanding, cause each additional Guarantor to execute a counterpart to this Agreement in the form attached hereto as Exhibit C and to deliver such counterpart to the Representative no later than five business days following the execution thereof.

 

(e)           In the event that the Company would be required, pursuant to Section 3(d)(vii)(E) above, to notify the Electing Holders and the managing underwriters, if any, thereof, the Company shall as soon as practicable prepare and furnish to each of the Electing Holders and to each such underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Each broker-dealer and Electing Holder agrees that upon receipt of any notice from the Company pursuant to Section 3(c)(iii)(E) or Section 3(d)(vii)(E) hereof, such broker-dealer or Electing Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the Exchange Registration Statement or Shelf Registration Statement applicable to such Registrable Securities until such broker-dealer or Electing Holder shall have received copies of such amended or supplemented prospectus, and if so directed by the Company, such broker-dealer or Electing Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such broker-dealer’s or Electing Holder’s possession of the prospectus covering such Registrable Securities at the time of receipt of such notice.

 

(f)            In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder in its Notice and Questionnaire, the Company may require such Electing Holder to furnish to the Company such additional information regarding such Electing Holder and such Electing Holder’s intended method of distribution of Registrable Securities as may be required in order to comply with the Securities Act. Each such Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such Shelf Registration contains or would contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities or omits to state any material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities required to be stated

 

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therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

 

4.             Registration Expenses.

 

The Company and the Guarantors agree to bear and to pay or cause to be paid promptly all expenses incident to the Company’s and the Guarantors’ performance of or compliance with this Exchange and Registration Rights Agreement, including (a) all Commission and any FINRA registration, filing and review fees and expenses including the reasonable fees and disbursements of counsel for the underwriters, if any, in connection with such registration, filing and review, (b) all fees and expenses in connection with the qualification of the Securities for offering and sale under the State securities and blue sky laws referred to in Section 3(d)(xi) hereof and determination of their eligibility for investment under the laws of such jurisdictions as any managing underwriters or the Electing Holders may reasonably designate, including the reasonable fees and disbursements of counsel for the Electing Holders or underwriters in connection with such qualification and determination, (c) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the expenses of preparing the Securities for delivery and the expenses of printing or producing any underwriting agreements, selling agreements and blue sky or legal investment memoranda and all other documents in connection with the offering, sale or delivery of Securities to be disposed of (including certificates representing the Securities), (d) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities and the preparation of documents referred in clause (c) above, (e) reasonable fees and expenses of the Trustee under the Indenture, any agent of the Trustee and any counsel for the Trustee and of any collateral agent or custodian, (f) internal expenses (including all salaries and expenses of the Company’s officers and employees performing legal or accounting duties), (g) fees, disbursements and expenses of counsel of the Company and independent certified public accountants of the Company (including the expenses of any opinions or “cold comfort” letters required by or incident to such performance and compliance), (h) reasonable fees, disbursements and expenses of any “qualified independent underwriter” engaged pursuant to Section 3(d)(xvii) hereof, (i) the reasonable fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by the Electing Holders of at least a majority in aggregate principal amount of the Registrable Securities held by Electing Holders (which counsel shall be reasonably satisfactory to the Company), (j) any fees charged by securities rating services for rating the Securities, and (k) fees, expenses and disbursements of any other persons, including special experts, retained by the Company in connection with such registration (collectively, the “Registration Expenses”). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Securities or any placement or sales agent therefor or underwriter thereof, the Company shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor, which shall be accompanied by written evidence of the expenses so incurred. Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts

 

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retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above.

 

5.             Indemnification.

 

(a)           Indemnification by the Company. The Company and the Guarantors, jointly and severally, will indemnify and hold harmless each of the broker-dealers who receives Exchange Securities for its own account in the Exchange Offer for securities that were acquired by such broker-dealer as a result of market-making or other trading activities and who delivers a prospectus contained in an Exchange Registration Statement in connection with any resale during the Resale Period, each of the Electing Holders of Registrable Securities included in a Shelf Registration Statement and each person, if any, who controls any such broker-dealer or Electing Holder, as applicable, within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities, joint or several, to which such broker-dealer, Electing Holder or controlling may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Exchange Registration Statement or Shelf Registration Statement, as the case may be, under which such Registrable Securities were registered under the Securities Act, including all documents incorporated therein by reference, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such broker-dealer or Electing Holder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse such broker-dealer, Electing Holder or other indemnified person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that (i) the Company and the Guarantors shall not be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or summary prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such person expressly for use therein and (ii) with respect to any untrue statement or alleged untrue statement or omission or alleged omission made in a Shelf Registration Statement or prospectus relating to a Shelf Registration Statement or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this Section 5(a) will not inure to the benefit of any broker-dealer or Electing Holder from whom the person asserting any such loss, claim, damage or liability purchased the Registrable Securities, to the extent that at the time of such purchase such broker-dealer or Electing Holder had received timely written advice from the Company prior to such purchase that the use of such prospectus, amendment, supplement or preliminary prospectus was suspended as provided in Section 3(e) hereof.

 

(b)           Indemnification by the Holders. The Company may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to Section 2(b) hereof, that the Company shall have received an undertaking reasonably satisfactory to it from the Electing Holder of such Registrable Securities, severally and not jointly, to (i) indemnify and hold harmless the Company, the Guarantors, and all other Electing Holders, against any losses, claims, damages or liabilities to which the Company, the Guarantors, or such other Electing Holders may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in

 

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respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such Electing Holder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder expressly for use therein, and (ii) reimburse the Company and the Guarantors for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no such Electing Holder shall be required to undertake liability to any person under this Section 5(b) for any amounts in excess of the dollar amount of the proceeds received by such Electing Holder from the sale of such Electing Holder’s Registrable Securities pursuant to such registration.

 

(c)           Notices of Claims, Etc. Promptly after receipt by an indemnified party under Section 5(a) or 5(b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 5, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by Section 5(a) or 5(b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation.  To the extent that an indemnifying party does not assume the defense of any such action, it is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred; provided that the fees and expenses of such separate firm or any local counsel shall be reasonable.  No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

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(d)           Contribution.  If  for  any  reason  the  indemnification  provisions  contemplated  by  Section  5(a)  or  Section  5(b)  hereof are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 5(d) were determined by pro rata allocation (even if the holders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 5(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5(d), no holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such holder from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders’ and any underwriters’ obligations in this Section 5(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint.

 

(e)           The obligations of the Company and the Guarantors under this Section 5 shall be in addition to any liability which the Company and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder and each person, if any, who controls any holder within the meaning of the Securities Act; and the obligations of the holders contemplated by this Section 5 shall be in addition to any liability which the respective holder may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or any Guarantor (including any person who, with his consent, is named in any registration statement as about to become a director of the Company or any Guarantor) and to each person, if any, who controls the Company within the meaning of the Securities Act.

 

6.             Underwritten Offerings.

 

(a)           Selection of Underwriters. If any of the Registrable Securities covered by the Shelf Registration are to be sold pursuant to an underwritten offering, the managing underwriter or underwriters thereof shall be designated by the Company, subject to the consent of the Electing Holders holding at least a majority in aggregate principal amount of the Registrable Securities to be included in

 

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such offering (which shall not be unreasonably withheld or delayed), and such Electing Holders shall be responsible for all underwriting discounts and commissions in connection therewith.

 

(b)           Participation by Holders. Each holder of Registrable Securities hereby agrees with each other such holder that no such holder may participate in any underwritten offering hereunder unless such holder (i) agrees to sell such holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

7.             Rule 144.

 

The Company covenants to the holders of Registrable Securities that to the extent it shall be required to do so under the Exchange Act, the Company shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder, and shall take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities in connection with that holder’s sale pursuant to Rule 144, the Company shall deliver to such holder a written statement as to whether it has complied with such requirements.  The Company will be deemed to have satisfied the foregoing requirements if any parent company of the Company files such reports and takes such actions of the types otherwise so required, in each case within the applicable time periods.

 

8.             Miscellaneous.

 

(a)           No Inconsistent Agreements. The Company represents warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Registrable Securities or any other securities which would be inconsistent with the terms contained in this Exchange and Registration Rights Agreement.

 

(b)           Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if the Company and the Guarantors fail to perform any of their obligations hereunder and that the Initial Purchasers and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Initial Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to seek to compel specific performance of the obligations of the Company under this Exchange and Registration Rights Agreement in accordance with the terms and conditions of this Exchange and Registration Rights Agreement, in any court of the United States or any State thereof having jurisdiction.

 

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(c)           Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: (i) if to the Company, to it at 860 Ridge Lake Boulevard, Memphis, Tennessee 38120, Attention: General Counsel, with a copy to David A. Brittenham, Esq. and Peter J. Loughran, Esq., Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, (ii) if to a holder, to the address of such holder set forth in the security register or other records of the Company or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt, and (iii) if to the Initial Purchasers, c/o J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179, Attention: Gerry Murray, with a copy to John C. Ericson, Esq., Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017.

 

(d)           Parties in Interest. All the terms and provisions of this Exchange and Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to time of the Registrable Securities and the respective successors and assigns of the parties hereto and such holders. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Exchange and Registration Rights Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Exchange and Registration Rights Agreement. If the Company shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable Securities subject to all of the applicable terms hereof.

 

(e)           Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Exchange and Registration Rights Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Agreement and the transfer and registration of Registrable Securities by such holder and the consummation of an Exchange Offer.

 

(f)            Governing Law. This Exchange and Registration Rights Agreement and any claim, controversy or dispute arising under or related to this Exchange and Registration Rights Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

(g)           Headings. The descriptive headings of the several Sections and paragraphs of this Exchange and Registration Rights Agreement are inserted for convenience only, do not constitute a part of this Exchange and Registration Rights Agreement and shall not affect in any way the meaning or interpretation of this Exchange and Registration Rights Agreement.

 

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(h)           Entire Agreement; Amendments. This Exchange and Registration Rights Agreement and the other writings referred to herein (including the Indenture and the form of Securities) or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Exchange and Registration Rights Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Exchange and Registration Rights Agreement may be amended and the observance of any term of this Exchange and Registration Rights Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the holders of at least a majority in aggregate principal amount of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 8(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder.

 

(i)            Counterparts. This Exchange and Registration Rights Agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

 

If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Initial Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Initial Purchasers, the Company and each of the Guarantors.

 

[Signature Pages Follow]

 

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   Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE   SERVICEMASTER COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
MERRY   MAIDS LIMITED PARTNERSHIP
    
	
 
    	
By:
    	
  MM MAIDS L.L.C., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:     Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MM   MAIDS L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:     Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SERVICEMASTER   CONSUMER SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:     Senior Vice President and Treasurer
    

 

Signature Page to Exchange and Registration Rights Agreement

 

 

	
 
    	
SERVICEMASTER   CONSUMER SERVICES LIMITED PARTNERSHIP
    
	
 
    	
By:    SERVICEMASTER CONSUMER   SERVICES, INC., 

its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SERVICEMASTER   HOLDING CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SERVICEMASTER   MANAGEMENT CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SERVICEMASTER   RESIDENTIAL/COMMERCIAL SERVICES LIMITED PARTNERSHIP
    
	
 
    	
By:     SM CLEAN L.L.C., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:     Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SM   CLEAN L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:     Senior Vice President and Treasurer
    
				

 

Signature Page to Exchange and Registration Rights Agreement

 

 

	
 
    	
TERMINIX   INTERNATIONAL, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE   TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP
    
	
 
    	
By:    TERMINIX INTERNATIONAL, INC.,
    
	
 
    	
     its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TRUGREEN   COMPANIES L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TRUGREEN, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TRUGREEN   LIMITED PARTNERSHIP
    
	
 
    	
By:    TRUGREEN, INC., its general   partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark W. Peterson
    
	
 
    	
 
    	
Name:   Mark W. Peterson
    
	
 
    	
 
    	
Title:   Senior Vice President and Treasurer
    

 

Signature Page to Exchange and Registration Rights Agreement

 

 

Accepted as of the date hereof for itself and as Representative of the several Initial Purchasers named in Schedule I to the Purchase Agreement:

 

	
J.P.   MORGAN SECURITIES LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Uri Birkenfeld
    	
 
    
	
 
    	
Name:    Uri Birkenfeld
    	
 
    
	
 
    	
Title:    Vice   President
    	
 
    

 

 

Signature Page to Exchange and Registration Rights Agreement

 

 

	
 
    	
Exhibit A
    

 

The ServiceMaster Company

 

INSTRUCTION TO DTC PARTICIPANTS

 

(Date of Mailing)

 

URGENT - IMMEDIATE ATTENTION REQUESTED

 

DEADLINE FOR RESPONSE:  [DATE]

 

The Depository Trust Company (“DTC”) has identified you as a DTC Participant through which beneficial interests in The ServiceMaster Company (the “Company”) $100,000,000 8% Senior Notes due 2020 (the “Securities”) are held.

 

The Company is in the process of registering the Securities under the Securities Act of 1933 for resale by the beneficial owners thereof. In order to have their Securities included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire.

 

It is important that beneficial owners of the Securities receive a copy of the enclosed materials as soon as possible as their rights to have the Securities included in the registration statement depend upon their returning the Notice and Questionnaire by [Deadline For Response]. Please forward a copy of the enclosed documents to each beneficial owner that holds interests in the Securities through you. If you require more copies of the enclosed materials or have any questions pertaining to this matter, please contact The ServiceMaster Company, 860 Ridge Lake Boulevard, Memphis, Tennessee 38120, Attention: General Counsel, [                    ].

 

A-1

 

The ServiceMaster Company

 

Notice of Registration Statement
 and
  Selling, Securityholder Questionnaire

 

(Date)

 

Reference is hereby made to the Exchange and Registration Rights Agreement (the “Exchange and Registration Rights Agreement”) between The ServiceMaster Company (the “Company”) and the Initial Purchasers named therein. Pursuant to the Exchange and Registration Rights Agreement, the Company has filed with the United States Securities and Exchange Commission (the “Commission”) a registration statement on Form [      ] (the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Company’s $100,000,000 8% Senior Notes due 2020 (the “Securities”). A copy of the Exchange and Registration Rights Agreement is attached hereto. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

 

Each beneficial owner of Registrable Securities (as defined below) is entitled to have the Registrable Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered to the Company’s counsel at the address set forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners of Registrable Securities who do not complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.

 

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.

 

The term “Registrable Securities” is defined in the Exchange and Registration Rights Agreement.

 

A-2

 

ELECTION

 

The undersigned holder (the “Selling Securityholder”) of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Exchange and Registration Rights Agreement, including, without limitation, Sections 3(e) and 5 of the Exchange and Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.

 

Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.

 

The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

 

A-3

 

QUESTIONNAIRE

 

1.                                       (a)                                  Full Legal Name of Selling Securityholder:

 

(b)                                 Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in Item (3) below:

 

(c)                                  Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) Through Which Registrable Securities Listed in Item (3) below are Held:

 

2.                                       Address for Notices to Selling Securityholder:

 

 

 

 

 

Telephone:

 

Fax:

 

Contact Person:

 

3.                                       Beneficial Ownership of Securities:

 

Except as set forth below in this Item (3), the undersigned does not beneficially own any Securities.

 

(a)                                  Principal amount of Registrable Securities beneficially owned:
 CUSIP No(s). of such Registrable Securities:

 

(b)                                 Principal amount of Securities other than Registrable Securities beneficially owned:
 CUSIP No(s). of such other Securities:

 

(c)                                  Principal amount of Registrable Securities which the undersigned wishes to be included in the Shelf Registration Statement:
 CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration Statement:

 

4.                                       Beneficial Ownership of Other Securities of the Company:

 

Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Company, other than the Securities listed above in Item (3).

 

State any exceptions here:

 

 

5.                                       Relationships with the Company:

 

Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

6.                                       Plan of Distribution:

 

Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all):  Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.

 

State any exceptions here:

 

By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M.

 

In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Exchange and Registration Rights Agreement.

 

By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus.

 

In accordance with the Selling Securityholder’s obligation under Section 3(d) of the Exchange and Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of

 

 

any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect. All notices hereunder and pursuant to the Exchange and Registration Rights Agreement shall be made in writing, by hand delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:

 

(i)                                     To the Company:

 

The ServiceMaster Company
 860 Ridge Lake Boulevard 
 Memphis, Tennessee 38120
 Attention: General Counsel

 

(ii)                                  With a copy to:

 

David A. Brittenham, Esq.
 Peter J. Loughran, Esq.
 Debevoise & Plimpton LLP
 919 Third Avenue
 New York, New York 10022

 

Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company’s counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above). This Agreement shall be governed in all respects by the laws of the State of New York.

 

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

Dated:

 

	
 
    	
 
    
	
 
    	
Selling   Securityholder

    
	
 
    	
(Print/type   full legal name of beneficial owner of Registrable Securities)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY’S COUNSEL AT:

 

David A. Brittenham, Esq.
 Peter J. Loughran, Esq. 
 Debevoise & Plimpton LLP
 919 Third Avenue
 New York, New York 10022

 

 

	
 
    	
Exhibit B
    

 

NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

 

Wilmington Trust, National Association
 The ServiceMaster Company
 c/o Wilmington Trust, National Association
 246 Goose Lane, Suite 105 
 Guilford, CT 06437

 

Attention:  Corporate Trust Services

 

Re:                               The ServiceMaster Company (the “Company”)
 $100,000,000 8% Senior Notes due 2020

 

Dear Sirs:

 

Please be advised that                    has transferred $             aggregate principal amount of the above-referenced Notes pursuant to an effective Registration Statement on Form [             ] (File No. 333-           ) filed by the Company.

 

We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied and that the above-named beneficial owner of the Notes is named as a “Selling Holder” in the Prospectus dated              or in              supplements thereto, and that the aggregate principal amount of the Notes transferred are the Notes listed in such Prospectus opposite such owner’s name.

 

Dated:

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Name)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
(Authorized   Signature)
    

 

 

	
 
    	
Exhibit C
    

 

Counterpart to Exchange and Registration Rights Agreement

 

The undersigned hereby absolutely, unconditionally and irrevocably agrees as a Guarantor (as defined in the Exchange and Registration Rights Agreement, dated as of February [16], 2012 by and among the Company, a Delaware corporation, the guarantors party thereto and J.P. Morgan Securities LLC, on behalf of itself and the other Initial Purchasers and other holders of Registrable Securities) to be bound by the terms and provisions of such Exchange and Registration Rights Agreement.

 

IN WITNESS WHEREOF, the undersigned has executed this counterpart as of                               .

 

	
 
    	
[NAME]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:ex10_1.htm

Exhibit 10.1

 

QEP RESOURCES, INC.

 

EXECUTIVE SEVERANCE COMPENSATION PLAN

 

  

  

  

 

QEP RESOURCES, INC.

EXECUTIVE SEVERANCE COMPENSATION PLAN

 

ARTICLE I

INTRODUCTION

 

The Board of Directors of QEP Resources, Inc. recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists.  This possibility, and the uncertainty it creates with executives, may be detrimental to the Company and its shareholders if executives are distracted and/or leave the Company.

 

The Board considers the avoidance of such loss and distraction to be essential to protecting and enhancing the best interests of the Company and its shareholders.  The Board also believes that when a Change in Control is perceived as imminent, or is occurring, the Board should be able to receive and rely on disinterested service from executive employees regarding the best interests of the Company and its shareholders without concern that the executive employees might be distracted or concerned by their personal uncertainties and risks created by the perception of an imminent or occurring Change in Control.

 

In addition, the Board believes that it is consistent with the Company’s employment practices and policies and in the best interests of the Company and its shareholders to compensate its executive employees whose employment terminates in connection with or following a Change in Control.

 

Accordingly, the Board has determined that appropriate steps should be taken to assure the Company and its Affiliates of the executive employees’ continued employment and attention and dedication to duty, and to seek to ensure the availability of their continued service, notwithstanding the possibility, threat or occurrence of a Change in Control.

 

In order to fulfill the above purposes, the Board hereby adopts this amended QEP Resources, Inc. Executive Severance Compensation Plan, t to be effective as of March 1, 2012.

 

ARTICLE II

ESTABLISHMENT OF PLAN

 

As of the Effective Date, the Company hereby adopts its severance compensation plan known as the QEP Resources, Inc. Executive Severance Compensation Plan, as set forth in this document.

QEP Resources, Inc.

Executive Severance Compensation Plan

  

Page 1

  

 

ARTICLE III

DEFINITIONS

 

As used herein, the following words and phrases shall have the following respective meanings unless the context clearly indicates otherwise.

 

(a)          Affiliate.  Any entity that is treated as the same employer as the Company under Sections 414(b), (c), (m), or (o) of the Code, any entity required to be aggregated with the Company pursuant to regulations adopted under Section 409A of the Code, or any entity otherwise designated as an Affiliate by the Company.

 

(b)          Annual Cash Incentive Plans.  Any annual cash incentive plan, program or arrangement offered by an Employer.

 

(c)          Annual Base Salary.  The Participant’s gross annual base salary in effect immediately prior to a Change in Control.

 

(d)          Average Annual Bonus Amount.  The average of the annual bonuses a Participant actually received under the Annual Cash Incentive Plans, including, with respect to any Transferred Participant under any annual cash incentive plan, program, or arrangement offered by Questar prior to the Effective Date, for the Look-Back Period.

 

(e)          Board.  The Board of Directors of the Company.

 

(f)           Cause.  Cause shall mean:  (i) the willful and continued failure of the Participant to perform substantially the Participant’s duties with an Employer (other than any such failure resulting from incapacity due to physical or mental illness), following written demand for substantial performance delivered to the Participant by the Board or the Chief Executive Officer of the Company; or (ii) the willful engaging by the Participant in conduct that is materially injurious to an Employer.  For purposes of this definition, no act or failure to act on the part of the Participant shall be considered “willful” unless it is done, or omitted to be done, by the Participant without reasonable belief that the Participant’s action or omission was in the best interests of an Employer.  The Company, acting through its Board of Directors, must notify the Participant in writing that the Participant’s employment is being terminated for “Cause”.  The notice shall include a list of the factual findings used to sustain the judgment that the Participant’s employment has been terminated for “Cause”.

 

(g)          Change in Control.  A Change in Control of the Company shall be deemed to have occurred if (i) any individual, entity, or group(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, is or becomes the beneficial owner (as such term is used in Rule 13d-3 under the Exchange Act) of securities of the Company representing 30 percent or more of the combined voting power of the Company; or (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving:  individuals who, as of the Effective Date, constitute the Company’s Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date, or whose appointment, election or nomination for election was previously so approved or recommended; or (iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any corporation, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60 percent of the combined voting power of the securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation, or a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 30 percent or more of the combined voting power of the Company’s then outstanding securities; or (iv) the Company’s stockholders approve a plan of complete liquidation or dissolution of the Company or there is consummated  the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60 percent of the combined voting power of the voting securities of which are owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.  In addition, if a Change in Control constitutes a payment event with respect to any payment under the Plan which provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in clauses (i), (ii), (iii) and (iv) with respect to such payment must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) before any such payment can be made.

QEP Resources, Inc.

Executive Severance Compensation Plan

  

Page 2

  

 

(h)          Code.  The Internal Revenue Code of 1986, as amended from time to time.

 

(i)           Company.  QEP Resources, Inc. and any successor to such entity.

 

(j)           Compensation.  For purposes of this Plan, “Compensation” means (i) with respect to any Participant who participates in the Retirement Plan, such Participant’s remuneration taken into account for purposes of calculating the retirement benefit thereunder, and, (ii) with respect to any Participant who participates in the SERP, such Participant’s remuneration taken into account for purposes of calculating the retirement benefit thereunder.

 

(k)          Date of Termination.  The date on which a Participant ceases to be an Employee of an Employer as a result of a Separation from Service.

 

(l)           Eligible Employee.  Any officer of any Employer.

 

(m)         Employee Matters Agreement.  That certain Employee Matters Agreement, by and between Questar Corporation and the Company, dated as of June 14, 2010.

 

(n)          Employer.  The Company and any Affiliate that participates in the Plan pursuant to Article IX hereof.

QEP Resources, Inc.

Executive Severance Compensation Plan

  

Page 3

  

 

(o)          ERISA.  The Employee Retirement Income Security Act of 1974, as amended from time to time.

 

(p)          Good Reason.  Good Reason, with respect to a Participant’s Separation from Service, means any of the following events or conditions that occur without the Participant’s written consent, and that remain in effect after notice has been provided by the Participant to the Company of such event or condition and the expiration of a 30 day cure period: (i) a material diminution in the Participant’s base compensation; (ii) a material diminution in the Participant’s authority, duties, or responsibilities; (iii) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the Board; (iv) a material diminution in the budget over which the Participant retains authority; (v) a material change in the geographic location at which the Participant performs services; or (vi) any other action or inaction that constitutes a material breach by an Employer of the Participant’s employment agreement (if any).  The Participant’s notification to the Company must be in writing and must occur within a reasonable period of time, not to exceed 90 days, following the initial existence of the relevant event or condition.

 

(q)          Long-Term Cash Incentive Plan.  Any long-term cash incentive plan, program or arrangement offered by an Employer.

 

(r)           Look-Back Period.  The last three full Years immediately prior to a Change in Control, or such shorter number of full Years that the Participant was actually employed by an Employer, including, with respect to any Transferred Participant, any such period during which the Transferred Participant was actually employed by Questar.

 

(s)          Participant.  An individual who is designated as such pursuant to Section 4.1.

 

(t)           Plan.  The QEP Resources, Inc. Executive Severance Compensation Plan, as set forth in this document.

 

(u)          Plan Administrator.  The Compensation Committee of the Board.

 

(v)          Questar.  Questar Corporation, a Utah corporation, and any of its Affiliates (as defined in the Questar Corporation Executive Severance Compensation Plan, as amended and restated effective October 23, 2007).

 

(w)         Retirement Plan.  The QEP Resources, Inc. Retirement Plan, as amended or restated from time to time, or any successor plan.

 

(x)          Separation Benefits.  The benefits described in Article VI that are provided to qualifying Participants under the Plan.

 

(y)          Separation from Service.  A Participant’s termination or deemed termination from employment with the Employer.  For purposes of determining whether a Separation from Service has occurred, the employment relationship is treated as continuing intact while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with his Employer under an applicable statute or by contract.  For this purpose, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.  If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship will be deemed to terminate on the first date immediately following such six-month period.  For purposes of this Plan, a Separation from Service occurs at the date as of which the facts and circumstances indicate either that, after such date: (i) the Participant and Employer reasonably anticipate the Participant will perform no further services for the Company or an Affiliate (whether as an employee or an independent contractor), or (ii) that the level of bona fide services the Participant will perform for the Company or any Affiliate (whether as an employee or independent contractor) will permanently decrease to no more than 20 percent of the average level of bona fide services performed over the immediately preceding 36- month period or, if the Participant has been providing services to the Company or an Affiliate for less than 36 months, the full period over which the Participant has rendered services, whether as an employee or independent contractor.  The determination of whether a Separation from Service has occurred shall be governed by the provisions of Treasury Regulation section 1.409A-1, as amended, taking into account the objective facts and circumstances with respect to the level of bona fide services performed by the Participant after a certain date.

QEP Resources, Inc.

Executive Severance Compensation Plan

  

Page 4

  

 

(z)          SERP.  The QEP Resources, Inc. Supplemental Executive Retirement Plan, as amended or restated from time to time, or any successor plan.

 

(aa)        Tier 1 Participant.                 A Participant who is either the Chief Executive Officer or Chief Financial Officer of the Company and any other person so designated by the Board.

 

(bb)        Tier 2 Participant.                 Each Participant who is not a Tier 1 Participant.

 

(cc)        Transferred Participant.  A Participant who is a “QEP Employee” (as such term is defined in the Employee Matters Agreement).

 

(dd)        Year.           The calendar year, unless otherwise specified.

 

ARTICLE IV

ELIGIBILITY

 

4.1          Participation.  The Board shall, in its sole discretion, select from the group of Eligible Employees those individuals who may participate in the Plan.  Any Eligible Employee selected for participation shall become a Participant upon written notification by the Board (or its designee) to such Eligible Employee of his or her participation in the Plan.

 

4.2          Duration of Participation.

 

(a)          Prior to the time that the Board knows or should know that a Change in Control is under consideration, is being negotiated or is otherwise contemplated, a Participant shall continue to participate in the Plan at the sole discretion of the Board, which may terminate the individual’s participation in the Plan for any reason.  A Participant shall automatically cease participation in the Plan when he ceases to be an Eligible Employee of any Employer prior to a Change in Control.

QEP Resources, Inc.

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(b)          On and after a Change in Control, a Participant shall cease to be a Participant in the Plan if he ceases to be an Eligible Employee of any Employer and is not entitled to payment of a Separation Benefit or any other benefits under the Plan.  A Participant entitled to payment of a Separation Benefit or any other amounts under the Plan shall remain a Participant in the Plan until the full amount of the Separation Benefit and any other amounts payable under the Plan have been paid.

 

ARTICLE V

ENTITLEMENT TO BENEFITS

 

5.1          Separations from Service That Give Rise to Separation Benefits Under This Plan.  A Participant shall be entitled to Separation Benefits as set forth in Article VI below if, at any time following a Change in Control and prior to the third anniversary of the Change in Control, the Participant incurs a Separation from Service from an Employer that is (a) initiated by the Participant’s Employer for any reason other than Cause or (b) initiated by the Participant for Good Reason within 60 days following the expiration of the cure period afforded the Company to rectify the condition giving rise to Good Reason.

 

5.2          Eligibility for Equity Incentive Benefits.  All Participants at the time of a Change in Control shall be eligible to receive the equity incentive benefits provided in Article VII.

 

ARTICLE VI

SEPARATION BENEFITS

 

6.1          Separation Benefits; General.  If a Participant’s employment is terminated in circumstances entitling the participant to Separation Benefits pursuant to Section 5.1, the Company shall provide to such Participant the cash payment set forth in Section 6.2 below, the bonuses set forth in Section 6.3 below, the enhanced retirement benefits set forth in Section 6.4 below, the continued welfare benefits as set forth in Section 6.5 below, and the stock option and stock appreciation right benefits set forth in Section 6.6 below.

 

6.2          Cash Severance.  Participants shall be eligible for cash severance equal to the aggregate of the following amounts:

 

(a)          (i)           For a Tier 1 Participant, an amount equal to three  times the Participant’s Annual Base Salary; (ii) For a Tier 2 Participant, an amount equal to two times the Participant’s Annual base Salary; and

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(b)          For all Participants an amount equal to three (3) times the Participant’s Average Annual Bonus Amount.

 

All cash payments required by this Section 6.2 shall be paid within 10 calendar days of the Participant’s Date of Termination; subject, however, to any payment delay required by Section 6.8(b).

 

6.3          Bonus Amounts.  Participants shall be eligible for a cash payment equal to the aggregate of the following bonus amounts:

 

(a)          a bonus equal to the product of (i) the bonus the Participant would have received under the Annual Cash Incentive Plans for the year in which the Date of Termination occurs, multiplied by (ii) a fraction, the numerator of which is the number of months (rounded up to whole months) the Participant was employed during the year in which the Date of Termination occurs, and the denominator of which is 12.  In the event the Date of Termination occurs prior to the establishment of a bonus amount under the Annual Cash Incentive Plans for the year in which the Date of Termination occurs, then, solely for purposes of this Section 6.3(a), the Date of Termination shall be deemed to be December 31st of the immediately preceding year.

 

(b)          Control shall be deemed to have occurred on December 31st of the immediately preceding Year.

 

(c)          for each of the performance periods outstanding under the Long Term Cash Incentive Plan as of the date of the Change in Control, a bonus equal to the actual bonus that would have been earned by the Participant under the Long Term Cash Incentive Plan for such performance period, based on the level of satisfaction of the performance goals that was achieved for the performance period in which the Change in Control occurs.  Solely for purposes of determining which performance periods are taken into account for purposes of the preceding sentence, (i) a performance period shall be deemed to be outstanding if payment has yet to occur for such period as of the date of the Change in Control, even if the actual performance period (i.e. the period over which performance is measured) has already ended, and (ii) a performance period shall not be deemed to be outstanding if a target bonus has yet to be established for such period as of the date of the Change in Control.

 

All cash payments required by this Section 6.3 shall be paid in a single lump sum within 60 days following the end of the year in which the Date of Termination occurs; subject, however, to any payment delay required by Section 6.8(b).

 

6.4          Enhanced Retirement Benefits.  Participants shall be entitled to an enhanced retirement benefit under the Retirement Plan and/or the SERP, to the extent that the Participant is a participant in such plan(s) as of the Date of Termination, as follows:

 

(a)          Vested Participants.  Participants who have an accrued vested benefit under either the Retirement Plan or both the Retirement Plan and the SERP as of the Date of Termination shall be entitled to an enhanced retirement benefit under this Plan in an amount equal to the excess of (i) the benefit the Participant would have accrued under the Retirement Plan and the SERP (if participating) as of the Date of Termination calculated as if (A) the Participant had been credited with two additional years of benefit service under the Retirement Plan and the SERP (if participating) as of the Date of Termination, and (B) the Participant’s Compensation under the Retirement Plan and the SERP (if participating) for each additional year of such service had been equal to the Participant’s Compensation for the last full Year prior to the Date of Termination, over (ii) the actual benefit accrued under the Retirement Plan and the SERP (if participating) as of the Date of Termination.

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(b)          Non-Vested Participants.  Participants who have an accrued unvested benefit under the Retirement Plan as of the Date of Termination shall be entitled to an enhanced retirement benefit under this Plan in an amount equal to what would be the Participant’s accrued vested benefit (if any) under the Retirement Plan and the SERP (if participating) as of the Date of Termination calculated as if (i) the Participant had been credited with two additional years of vesting and benefit service under the Retirement Plan and the SERP (if participating) as of the Date of Termination, and (ii) the Participant’s Compensation under the Retirement Plan and the SERP (if participating) for each additional year of such service had been equal to the Participant’s Compensation for the last full Year prior to the Date of Termination.

 

(c)          Transferred QEP SERP Participants.  Notwithstanding the foregoing, any Participant who is a “Transferred QEP SERP Participant” (as defined in the SERP) and who has an accrued vested benefit under the SERP as of the Date of Termination shall be entitled to an enhanced retirement benefit under the SERP only in an amount equal to the benefit accrued under the SERP as of the Date of Termination calculated as if (i) the Participant had been credited with two additional years of benefit service under the SERP as of the Date of Termination, and (ii) the Participant’s Compensation under the SERP for each additional year of such service had been equal to the Participant’s Compensation for the last full Year prior to the Date of Termination.

 

(d)          Payment of Enhanced Retirement Benefits.  Any enhanced retirement benefit to which a Participant may be entitled under paragraph (a), (b) or (c) above shall be paid in a single lump sum within 30 calendar days of the Date of Termination; subject, however, to any payment delay required by Section 6.8(b).  The lump-sum payment shall be equal to (i) the present value of the applicable enhanced retirement benefit on the Date of Termination, calculated using a standard mortality table referred to as the 1983 Group Annuity Mortality table and an interest rate equal to 80 percent of the average of the IRS 30-year Treasury Securities Rates for the six-month period preceding the participant’s Date of Termination, plus (ii) interest on such amount, credited monthly from the Date of Termination through the date of payment (taking into account any delay required by Section 6.8(b)), using the appropriate 30-year Treasury bond rate quoted in the Wall Street Journal on the first business day of each month.  The appropriate 30-year Treasury bond shall be the bond that has the closest maturity date (by month) preceding the month in which interest is to be credited.

 

(e)          Ineligible to Participate in Retirement Plan.  In no event shall a Participant be entitled to any benefit under this Section 6.4 if he or she is not a participant in the Retirement Plan and/or the SERP as of the Date of Termination.

 

6.5          Continued Welfare Benefits.  For a period of three years in the case of a Tier 1 participant, and two years in the case of a Tier 2 Participant, following the Participant’s Date of Termination, the Participant and his or her family shall be provided without cost medical, dental, accidental death and dismemberment, and life insurance benefits that are the same as, or substantially similar to, the benefits that would have been provided by the Company , an Affiliate or any successor during such period had the Participant’s employment not been terminated.  Some or all of the benefits required by this Section may be provided through the payment or reimbursement of premiums incurred for similar coverage procured by the Company, an Affiliate or any successor on the Participant’s behalf or by the Participant, through the payment of COBRA premiums, or pursuant to the terms and conditions of the Company’s retiree health insurance program, if applicable, in each case as determined by the Company in its sole discretion and subject to Sections 6.8 and 12.8 below.

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6.6          Stock Option and Stock Appreciation Right Benefits.  Notwithstanding any shorter period to the contrary in any agreement between a Participant and the Company evidencing a grant of stock options or stock appreciation rights, the Participant shall have a minimum of one year (but not beyond the date when the options or rights would otherwise expire by their terms) following the Date of Termination in which to exercise any vested stock options and stock appreciation rights outstanding as of the Change in Control.  Nothing in this Section 6.6, however, shall require the Company to continue in effect any stock option or stock appreciation right following a Change in Control, if, pursuant to the terms of the Change in Control, the Participant will receive automatically (on or within a reasonable time following the Change in Control), in cash or marketable securities, the intrinsic value of such awards as of the date of the Change in Control.

 

6.7          Other Benefits Payable.  To the extent not theretofore paid or provided, the Company shall timely pay or provide (or cause to be paid or provided) to a Participant entitled to Separation Benefits, any other amounts or benefits required to be paid or provided to the Participant or which the Participant is eligible to receive under any plan, program, policy or practice or contract or agreement of an Employer.  Thus, by way of example and not by way of limitation, benefits earned under the QEP Resources, Inc. Deferred Compensation Wrap Plan, as may be amended from time to time, or the SERP shall be unaffected by a Participant’s receipt of benefits hereunder, and shall continue to be payable solely in accordance with the relevant terms of those plans.  Notwithstanding the foregoing, if a Participant is entitled to Separation Benefits under this Plan and is also entitled to severance benefits under any employment agreement or other severance pay plan or policy of the Company, benefits from this Plan will be offset by the amount of the severance benefits or similar amounts received under or payable in accordance with such other agreements, plans, or policies.  In addition, Separation Benefits under this Plan shall also be reduced by any amounts that are paid under the Annual Cash Incentive Plans or Long Term Cash Incentive Plan which are contingent on the Participant’s termination of employment following a Change in Control.

 

6.8          Code Section 409A; Specified Employees.

 

(a)          Subject to Section 6.8(b) hereof, to the extent permitted under Code Section 409A, any separate payment or benefit under this Plan or otherwise shall not be deemed “nonqualified deferred compensation” subject to Code Section 409A, to the extent provided in the exceptions in Treasury Regulation Section 1.409A-1(b)(4), Section 1.409A-1(b)(9) or any other applicable exception or provision of Code Section 409A.

 

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(b)          Notwithstanding anything to the contrary in this Plan, no compensation or benefits shall be paid to a Participant during the six-month period following his or her Date of Termination to the extent that the Company determines that the Participant is a “specified employee” as of the Date of Termination and that paying such amounts at the time or times indicated in this Plan would be a prohibited distribution under Code Section 409A(a)(2)(B)(i).  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six-month period (or such earlier date upon which such amount can be paid under Code Section 409A without being subject to additional taxes, including as a result of the Participant’s death), the Company shall pay to the Participant a lump-sum amount equal to the cumulative amount that would have otherwise been payable to the Participant during such six-month period.

 

(c)          To the extent that Section 6.5 requires the Company, partially or wholly, to subsidize any continuation of health insurance benefits following the Participant’s Date of Termination:

 

   (i)           If such continued health insurance benefits are to be provided through third-party insurance maintained by the Company under the Company’s benefit plans in a manner that causes such health insurance benefits to be exempt from the application of Code Section 409A under Treasury Regulation Section 1.409A-1(a)(5), the Company shall pay or reimburse such premiums in accordance with the terms of this Plan, subject to Section 6.8(d); provided, however, that if, during the period of health insurance benefits continuation coverage (the “Health Benefits Continuation Period”), any plan pursuant to which such health insurance benefits are provided is not, or ceases prior to the expiration of the Health Benefits Continuation Period to be, exempt from the application of Code Section 409A under Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to each remaining premium payments shall thereafter be paid to the Participant as currently taxable compensation in substantially equal monthly installments over the remainder of the Health Benefits Continuation Period , accompanied by any additional amounts necessary to offset the taxable nature of such benefit to the extent such amounts are either exempt from or compliant with the requirements of Code Section 409A; or

 

   (ii)           If such continued health insurance benefits are to be provided in whole or in part through a self-funded plan maintained by the Company, the benefits of which are not fully-insured by a third-party insurer:

 

  (A)           To the greatest extent applicable, such health insurance benefits shall be construed to satisfy the exemption from Code Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v)(B), and

 

  (B)           To the extent such health insurance benefits do not satisfy such exemption and/or they do extend beyond the continuation period under COBRA, determined as of the Participant’s Date of Termination, the Company shall reimburse the premiums relating to such health insurance benefits in accordance with Section 6.8(d).

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(d)          To the extent that any payments or reimbursements provided to the Participant under Sections 6.5, 6.8(c) or 12.7 are deemed to constitute compensation to the Participant, such amounts shall be paid or reimbursed reasonably promptly, but not later than December 31 of the year following the year in which the expense was incurred.  The amount of any payments or expense reimbursements that constitute compensation in one year shall not affect the amount of payments or expense reimbursements constituting compensation that are eligible for payment or reimbursement in any subsequent year, and the Participant’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

 

ARTICLE VII

EQUITY INCENTIVE BENEFITS

 

All of a Participant’s stock options, stock appreciation rights, restricted stock awards, and other equity incentive awards, including, without limitation, any “conversion awards” (as defined in the Questar Corporation 2010 Long-Term Stock Incentive Plan) then held by the Participant, shall vest in full immediately prior to a Change in Control.

 

ARTICLE VIII

SPECIAL TAX PROVISIONS

 

8.1          Participant Choice.  Except as set forth below, in the event it shall be determined that any payment or distribution by an Employer to or for the benefit of a Participant pursuant to the terms of this Plan (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties would be incurred by the Participant with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Participant shall be entitled  to elect either to (a) receive the full amount of the Payment and be solely responsible for the payment of any Excise Tax due on such payment, or (b) have the payments, distributions or benefits owing to the Participant under this Plan “capped” or limited to the maximum dollar amount that can be paid from the Plan without the Participant’s incurring Excise Tax (the “Capped Amount”).

 

8.2          Determination of Capped Amount.  Subject to the provisions of Section 8.3, all determinations required to be made under this Article VIII, including computation of the Capped Amount, and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within 15 business days after the receipt of notice from the Participant that amounts payable to the Participant could constitute a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any costs and expenses incurred by the Company on behalf of the Participant under this Article VIII due to any tax contest, audit or litigation will be paid by the Company by the end of the Participant’s taxable year following the taxable year in which the taxes that are the subject of the tax contest, audit or litigation are remitted to the taxing authority, or where as a result of such tax contest, audit or litigation no taxes are remitted, the end of the Participant’s taxable year following the taxable year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the contest or litigation.  Subject to the provisions of Section 8.3 hereof, any determination by the Accounting Firm shall be binding upon the Company and the Participant.

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8.3          IRS Dispute Procedures.  In any instance where a Participant has elected under Section 8.1(b) to receive a Capped Payment, the Participant or the Company, as applicable, shall notify the other party in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Participant of an Excise Tax.  Such notification shall be given as soon as practicable but no later than ten business days after the Participant or the Company is informed in writing of such claim and shall apprise the other party of the nature of such claim and the date on which such claim is requested to be paid.  The Participant shall not pay such claim prior to the expiration of the 30-day period following the date on which the Participant learns of the claim (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Participant in writing prior to the expiration of such period that it desires to contest such claim, the Participant shall:

 

(a)          give the Company any information reasonably requested by the Company relating to such claim;

 

(b)          take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

 

(c)          cooperate with the Company in good faith in order to effectively contest such claim; and

 

(d)          permit the Company to participate in any proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Section 8.3, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may direct the Participant to contest the claim in any permissible manner (other than by paying the tax claimed and suing for a refund), and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Participant with respect to which such contested amount is claimed to be due is limited solely to such contested amount.

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8.4          Settlement.  At any time during the process set out in Section 8.3, the Participant shall be permitted to accept the position taken by the Internal Revenue Service and refund to the Company any distribution made that has been asserted to be subject to an Excise Tax.  Upon a final determination by an administrative tribunal or a court of competent jurisdiction that an Excise Tax is payable because any part of the Capped Amount paid to the Participant is an “excess parachute payment,” within the meaning of Section 4999 of the Code, such amount shall be refunded to the Company, and the Participant shall not have any right, title or interest in such amount, so that the amount repaid shall not be subject to the Excise Tax.  If , notwithstanding the Participant’s obligation to refund any such Payment, an Excise tax and interest and penalties are payable on such amount, the Excise Tax and any such interest and penalties shall be paid by the Participant.

 

8.5          Withholding.  All payments to the Participant in accordance with the provisions of this Plan shall be subject to applicable withholding of local, state, Federal and foreign taxes, as determined in the sole discretion of the Company.

 

ARTICLE IX

PARTICIPATING EMPLOYERS

 

Any Affiliate of the Company may become a participating Employer in the Plan following approval by the Company.  The provisions of the Plan shall be fully applicable to the Employees of any such Affiliate who are Participants pursuant to Section 4.1.

 

ARTICLE X

SUCCESSOR TO COMPANY

 

This Plan shall bind any successor of the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place.

 

In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  In the event of a Change in Control in which the successor fails to expressly and unconditionally assume and agree to perform the Company’s obligations under this Plan, each Participant in the Plan immediately prior to such Change in Control shall be deemed to have incurred a qualifying Separation from Service under Section 5.1 and shall be entitled to payment of the cash equivalent of all Separation Benefits set forth in Article VI as if the day prior to the date of such Change in Control were the Participant’s Date of Termination, in the form of a single lump sum within 60 days following the Change in Control.

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The term “Company,” as used in this Plan, shall mean the Company as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by this Plan.

 

ARTICLE XI

DURATION, AMENDMENT AND TERMINATION

 

11.1        Duration.  If a Change in Control has not occurred, this Plan shall continue indefinitely unless and until terminated by the Board pursuant to Section 11.2, below.  If a Change in Control occurs while this Plan is in effect, the Plan shall continue in full force and effect for three years following such Change in Control, and shall then automatically terminate; provided, however, that all Participants who become entitled to any payments hereunder shall continue to receive such payments notwithstanding any termination of the Plan.

 

11.2        Amendment or Termination.  The Board may amend or terminate this Plan for any reason prior to a Change in Control except that the Plan shall not be terminated or amended to reduce any benefits provided under the Plan at a time when the Board knows or should know that a Change in Control is under consideration, is being negotiated or is otherwise contemplated.  In the event of a Change in Control, this Plan shall automatically terminate as set forth in Section 11.1 but may not be amended or prematurely terminated.

 

11.3        Procedure for Extension, Amendment or Termination.  Any amendment or termination of this Plan by the Board in accordance with the foregoing shall be made by action of the Board in accordance with the Company’s charter and by-laws and applicable law.

 

ARTICLE XII

MISCELLANEOUS

 

12.1        Full Settlement.  Except as otherwise provided in Section 6.7, the Company’s obligation to make the payments provided for under this Plan and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against a Participant or others.  In no event shall a Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and such amounts shall not be reduced whether or not the Participant obtains other employment.

 

12.2        Employment Status.  This Plan does not constitute a contract of employment or impose on the Participant or the Participant’s Employer any obligation for the Participant to remain an Employee or change the status of the Participant’s employment or the policies of the Participant’s Employer regarding termination of employment.

 

12.3        Confidential Information.  Each Participant shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to an Employer, and their respective businesses, which shall have been obtained by the Participant during the Participant’s employment by the Participant’s Employer and which shall not be or become public knowledge (other than by acts by the Participant or representatives of the Participant in violation of this Plan).  After termination of a Participant’s employment with the Company or other Employer, the Participant shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.  In no event shall an asserted violation of the provisions of this Section 12.3 constitute a basis for deferring or withholding any amounts otherwise payable under this Plan.

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12.4        Named Fiduciary; Administration. The Company is the named fiduciary of the Plan, and shall administer the Plan, acting through the Company’s Compensation Committee, which shall be the Plan Administrator.  The Plan Administrator shall have full and complete discretionary authority to administer, construe, and interpret the Plan, to decide all questions of eligibility, to determine the amount, manner and time of payment, and to make all other determinations deemed necessary or advisable for the Plan.  The Plan Administrator shall review and determine all claims for benefits under this Plan.

 

12.5        Claim Procedure.

 

(a)          Filing a Claim.  All claims and inquiries concerning benefits under the Plan must be submitted to the Plan Administrator in writing.  The claimant may submit written comments, documents, records or any other information relating to the claim.  Furthermore, the claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits.  If an Employee or former Employee makes a written request alleging a right to receive benefits under this Plan or alleging a right to receive an adjustment in benefits being paid under the Plan, the Company shall treat it as a claim for benefits.

 

(b)          Review of Claims; Claims Denial.  The Plan Administrator shall initially deny or approve all claims for benefits under the Plan.  If any claim for benefits is denied in whole or in part, the Plan Administrator shall notify the claimant in writing of such denial and shall advise the claimant of his right to a review thereof.  Such written notice shall set forth, in a manner calculated to be understood by the claimant, specific reasons for such denial, specific references to the Plan provisions on which such denial is based, a description of any information or material necessary for the claimant to perfect his claim, an explanation of why such material is necessary and an explanation of the Plan’s review procedure, and the time limits applicable to such procedures.  Furthermore, the notification shall include a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.  Such written notice shall be given to the claimant within a reasonable period of time, which normally shall not exceed 90 days, after the claim is received by the Plan Administrator.

 

(c)          Appeals.  Any claimant or his duly authorized representative, whose claim for benefits is denied in whole or in part, may appeal such denial by submitting to the Plan Administrator a request for a review of the claim within 60 days after receiving written notice of such denial from the Plan Administrator.  The Plan Administrator shall give the claimant upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim of the claimant, in preparing his request for review.  The request for review must be in writing.  The request for review shall set forth all of the grounds upon which it is based, all facts in support thereof, and any other matters which the claimant deems pertinent.  The Plan Administrator may require the claimant to submit such additional facts, documents, or other materials as the Plan Administrator may deem necessary or appropriate in making its review.

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(d)          Review of Appeals.  The Plan Administrator shall act upon each request for review within 60 days after receipt thereof.  The review on appeal shall consider all comments, documents, records and other information submitted by the claimant relating to the claim without regard to whether this information was submitted or considered in the initial benefit determination.

 

(e)          Decision on Appeals.  The Plan Administrator shall give written notice of its decision to the claimant.   If the Plan Administrator confirms the denial of the application for benefits in whole or in part, such notice shall set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial, and specific references to the Plan provisions on which the decision is based.  The notice shall also contain a statement that the claimant is entitled to receive upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits.  Information is relevant to a claim if it was relied upon in making the benefit determination or was submitted, considered or generated in the course of making the benefit determination, whether it was relied upon or not.  The notice shall also contain a statement of the claimant’s right to bring an action under ERISA Section 502(a).  If the Plan Administrator has not rendered a decision on a request for review within 60 days after receipt of the request for review, the claimant’s claim shall be deemed to have been approved.  The Plan Administrator’s decision shall be final and not subject to further review within the Company.  There are no voluntary appeals procedures after appellate review by the Plan Administrator.

 

(f)           Determination of Time Periods.  If the day on which any of the foregoing time periods is to end is a Saturday, Sunday or holiday recognized by the Company, the period shall extend until the next following business day.

 

12.6        Unfunded Plan Status.  All payments pursuant to the Plan shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment.  No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company as a result of participating in the Plan.  Notwithstanding the foregoing, the Company may (but shall not be obligated to) create one or more grantor trusts, the assets of which are subject to the claims of the Company’s creditors, to assist it in accumulating funds to pay its obligations under the Plan.

 

12.7        Attorney Fees; Interest.  The Company agrees to pay as incurred, to the full extent permitted by law, and in accordance with Section 6.8(d) hereof, all legal fees and expenses which a Participant may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Participant, or others of the validity or enforceability of, or liability under, any provision of this Plan or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Plan), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.  The foregoing right to legal fees and expenses shall not apply to any contest brought by a Participant (or other party seeking payment under the Plan) that is found by a court of competent jurisdiction to be frivolous or vexatious.

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12.8        Code Section 409A Savings Clause.  The payments and benefits provided hereunder are intended to be exempt from or compliant with the requirements of Section 409A of the Code.  Notwithstanding any provision of this Plan to the contrary, in the event that the Company reasonably determines that any payments or benefits hereunder are not either exempt from or compliant with the requirements of Section 409A of the Code, the Company shall have the right to adopt such amendments to this Plan or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that are necessary or appropriate (i) to preserve the intended tax treatment of the payments and benefits provided hereunder, to preserve the economic benefits with respect to such payments and benefits, and/or (ii) to exempt such payments and benefits from Section 409A of the Code or to comply with the requirements of Section 409A of the Code and thereby avoid the application of penalty taxes thereunder; provided, however, that this Section 12.8 does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify any Participant for any failure to do so.

 

12.9        Validity and Severability.  The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

12.10      Governing Law.  The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of Colorado without reference to principles of conflict of law, except to the extent pre-empted by Federal law.

 

I hereby certify that this amended QEP Resources, Inc. Executive Severance Compensation Plan was duly adopted by the Board of Directors of QEP Resources, Inc. on _____________________________.

 

Executed on this ____ day of _______________, 2011.

 

	
                By:

	  	  
	  	
Richard J. Doleshek

	  
	  	
Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

QEP Resources, Inc.

Executive Severance Compensation Plan

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