CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions Of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
ASSET PURCHASE AGREEMENT
This agreement ("Agreement") dated as of March 26, 1999 is by and between
ORKIN EXTERMINATING COMPANY, INC., a Delaware corporation ("Orkin"), and PRISM
INTEGRATED SANITATION MANAGEMENT, INC., a Florida corporation ("PRISM").
W I T N E S S E T H:
WHEREAS, PRISM is engaged in the Pest Business (as defined in
Section 2.01 below);
WHEREAS, PRISM is also engaged in the kitchen services business (the
"Kitchen Services Business") throughout the United States;
WHEREAS, PRISM wishes to distribute certain specified assets used by it in
the Pest Business (including retail customer contracts and accounts receivable
related thereto), to S.C. ▇▇▇▇▇▇▇ Commercial Markets, Inc. ("Commercial
Markets") and Commercial Markets and Orkin wish to form a joint venture by
having both Commercial Markets and Orkin participate in a limited liability
company (the "Joint Venture") which will include the retail customer contracts
distributed to Commercial Markets and retail customer contracts of Orkin and to
that effect intend to enter into an operating agreement respecting the Joint
Venture ("Joint Venture Agreement") immediately prior to the closing of this
transaction; and
WHEREAS, Orkin desires to purchase substantially all of the assets owned
and used by PRISM in connection with the Pest Business (other than those assets
distributed by PRISM to Commercial Markets) and assume certain liabilities of
PRISM in connection therewith, all upon terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises, the promises hereinafter
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
PURCHASE OF ASSETS AND RELATED AGREEMENTS
1.01 Purchase and Sale of Assets. At the Closing (as defined in Section
1.06 below) and subject to the terms hereof, PRISM agrees to sell and deliver to
Orkin, and Orkin agrees to purchase, all of PRISM's right, title and interest in
the following described assets of PRISM as of the Closing Date (collectively the
"Assets"), effective as of 12:01 a.m. local time on the Closing Date (as defined
in Section 1.06 below):
(a) Customer Contracts and Customer Lists. All of PRISM's rights
pursuant to written or oral contracts existing as of the Closing Date to provide
Pest Services to Customers other than Retail Customers (as defined in Section
2.01 below), ("Customer Contracts"), and PRISM's
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existing lists of PRISM's current Pest Service Customers other than Retail
Customers ("Customer Lists").
(b) Accounts Receivable and Prepaid Expenses. All accounts receivable
of PRISM as of the Closing Date attributable to the Pest Business (other than
accounts receivable attributable to Retail Customers) (the "Receivables"), and
all prepaid expenses of PRISM (including leasehold security deposits and prepaid
rent for those properties covered by the Leases as defined in Section 1.01(d)
below) and prepaid advertising as of the Closing Date attributable to the Pest
Business (other than those prepaid expenses attributable to Retail Customers
which are contributed to the Joint Venture) ("Prepaid Expenses").
(c) Fixed Assets. All fixtures, tools, items of furniture, equipment,
computers and vehicles owned by PRISM that are located in those operational
field office locations covered by the Leases and storage sites, at the
residences of sales managers of the Pest Business or in vehicles covered by the
Leases or Non-Retail Customer locations (but only to the extent the foregoing
are primarily used in the conduct of the Pest Business), including those listed
on Schedule 1.01(c) (the "Fixed Assets").
(d) Leases. To the extent assignable (or, if not assignable, to the
extent that the respective lessor consents to such assignment or Orkin waives
receipt of such consent) all of PRISM's leasehold interest in those operational
field office locations and vehicles covered by the leases listed on Schedule
1.01(d) (the "Leases").
(e) Inventory. All inventories (including inventories covered by
PRISM purchase orders, warehoused inventories, owned inventories held by
suppliers, inventories covered by customer purchase orders and sample and
promotional goods) that are used in the conduct of the Pest Business as of the
Closing Date, including any inventories acquired after the date of this
Agreement but excluding any inventories (i) sold or otherwise disposed of after
the date of this Agreement, or (ii) used in the PRISM Kitchen Services (PKS)
business that is ordered by a PKS manager (the "Inventory").
(f) Other Contracts and Purchase Orders. All of PRISM's rights, to
the extent assignable or transferable (or, if not assignable, to the extent that
each respective third party to such agreement consents to the assignment
thereof, or Orkin waives receipt of such consent), pursuant to: employment
agreements, covenants not to compete and confidentiality agreements with
Transferred Employees; to the extent Orkin can be a third-party beneficiary,
covenants not to compete and confidentiality agreements with all Available
Employees (as defined in Section 5.04(a)) hereto; and those non-disclosure
agreements, confidentiality agreements, licenses, service contracts and other
contracts, in each case, related primarily to the conduct of the Pest Business
(other than the Customer Contracts and similar contracts relating to or with
Retail Customers), including those listed on Schedule 1.01(f) hereto ("Other
Contracts"). All of PRISM's commitments and orders for the purchase and sale of
goods and equipment (including Inventory) and services (including advertising,
maintenance and other incidental services) relating primarily to the conduct of
the Pest Business ("Purchase Orders").
-2-
(g) Intellectual Property. All of PRISM's right, title and interest
in the logos, service marks and trademarks which are primarily related to the
Pest Business and are identified on Schedule 1.01(g) (collectively, "Scheduled
Intellectual Property"); and all of PRISM's right, title, and interest in and to
existing quality control procedures and protocols (including those related to
ISO 9002), service procedures and protocols, field computer software (to the
extent assignable or transferable or if not assignable, to the extent the
licensor consents to the assignment thereof or Orkin waives receipt of such
consent), and technical know-how but only to the extent related primarily to the
operation of the Pest Business, and in and to computer data (to the extent
related primarily to the operation of the Non-Retail Pest Business).
(h) Other Assets. All of PRISM's rights to its telephone numbers for
field office locations listed on Schedule1.01(h); telephone directory
advertising related primarily to the operation of the Pest Business; existing
files and records (including correspondence) of current and former customers of
the Pest Business (other than files and records for Retail Customers which are
transferred to the Joint Venture), all licenses, consents, permits, variances,
certifications, and approvals of governmental agencies to the extent
attributable to the Pest Business and to the extent transferable; existing books
of account, financial, accounting, marketing, and other records relating
primarily to the operation of the Pest Business (excluding any such items
relating to Retail Customers which are transferred to the Joint Venture, and the
corporate minute books and stock ledgers of PRISM) and all current, existing
pricing and cost information (other than any intercompany pricing and cost
information between or among PRISM and its affiliates of any nature whatsoever)
relating to the Pest Business and supplier lists relating to the Pest Business
(other than such items relating to Retail Customers which are transferred to the
Joint Venture); and, except as otherwise provided in this Agreement, all
deposits, refunds, causes of action, rights of recovery, rights of set off and
rights of recoupment related to the Pest Business (other than such items
relating to Retail Customers which are transferred to the Joint Venture).
1.02 Excluded Assets. The Assets shall not include any assets other than
the assets specifically listed or described in Section 1.01 above, and, without
limiting the generality of the foregoing and notwithstanding anything to the
contrary in Section 1.01 above, shall expressly exclude the following
(collectively, the "Excluded Assets"):
(a) Cash and Cash Equivalents. All cash and cash equivalents and
accounts and notes receivable of PRISM (other than the Receivables and Prepaid
Expenses).
(b) Insurance Policies; Tax Refunds. All insurance policies and
claims thereunder of PRISM, claims for and rights to receive tax refunds, tax
deductions for losses, expenses and other tax benefits of the Pest Business such
as credits and losses accrued or arising prior to the Closing Date, all tax
returns of PRISM (whether relating to the Pest Business or otherwise) and any
notes, worksheets, files or documents relating thereto or relating to
intercompany transactions or pricing or cost information between PRISM and its
affiliates of any nature whatsoever, and any legal files or other documents
covered by an evidentiary privilege.
(c) Transaction Documentation. All books, documents, records and
files prepared in connection with or relating to the transactions contemplated
by this Agreement.
-3-
(d) Transaction Rights. All of PRISM's rights under or pursuant to
this Agreement and the other agreements between PRISM and Orkin contemplated
hereby.
(e) Corporate Records. All minute books and stockholder and stock
transfer records and similar corporate records of PRISM.
(f) Trademarks. All logos, service marks, trademarks and tradenames
not listed or described on Schedule 1.01(g) hereto and all logos, designs and
goodwill associated therewith.
(g) Computer Software and Systems. All computer software and systems
not primarily related to the Pest Business.
(h) Retail Customer Contracts. All of PRISM's written or oral
contracts to provide Pest Services to Retail Customers.
(i) Other Assets. Any other assets which are not included in the
Assets (together with any and all claims relating to any of the foregoing).
1.03 Shared Lease. Orkin and PRISM shall enter into a Sublease Agreement
at the Closing in the form of Exhibit A attached hereto (the "Sublease
Agreement") pursuant to which PRISM will sublease to Orkin, to the extent
permissible, a specified amount of space at the facility covered by the lease
specified on Schedule 1.03 hereto (the "Shared Lease")
1.04 Assumption of Liabilities.
(a) Orkin shall assume on the Closing Date and shall pay, perform and
discharge when due all of PRISM's obligations and liabilities arising from and
after the Closing under the Customer Contracts (and the related guarantees of
PRISM), the Other Contracts, the Leases and the Purchase Orders ("Executory
Contractual Liabilities"). In consideration of a reduction in the Purchase Price
for the Assets, Orkin shall also assume the liabilities of PRISM relating to the
Pest Business for accrued but unused vacation, bonus days with pay, banked sick
days, and/or personal choice days of Transferred Employees (as defined in
Section 5.04) as of the Closing Date and certain specified accounts payable as
identified and in the amount contained on the Assumed Payables List (the
"Special Liabilities") (the Special Liabilities collectively, together with the
Executory Contractual Liabilities are the "Assumed Liabilities"). Orkin's
obligations under this Section 1.04(a) shall not be subject to offset or
reduction by reason of any actual or alleged breach of any representation,
warranty or covenant contained in this Agreement or any agreement or document
delivered in connection herewith or any right or alleged right to
indemnification hereunder.
(b) Except for the Assumed Liabilities and except as provided in
Section 5.04(g) or Section 5.10(a) hereof, it is expressly understood and agreed
between the parties hereto that ORKIN SHALL NOT ASSUME AND IS NOT ASSUMING, NOR
SHALL ORKIN BECOME LIABLE, OBLIGATED OR RESPONSIBLE FOR THE PAYMENT OF ANY
DEBTS, LIABILITIES OR OBLIGATIONS OR THE PERFORMANCE OF ANY DUTIES OF PRISM OF
ANY KIND OR NATURE WHATSOEVER, KNOWN OR UNKNOWN, WHETHER ARISING BEFORE, ON OR
SUBSEQUENT TO THE CLOSING AND WHETHER CONTINGENT OR
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[***] - CONFIDENTIAL TREATMENT REQUESTED
LIQUIDATED IN AMOUNT (INCLUDING, WITHOUT LIMITATION, ANY DEBT, LIABILITIES,
OBLIGATIONS OR DUTIES ARISING OUT OF ACCOUNTS PAYABLE, TAX LIABILITIES,
ENVIRONMENTAL, IMMIGRATION OR PRODUCT LIABILITY MATTERS, EMPLOYEE BENEFITS,
CUSTOMER CONTRACTS OR OTHER CONTRACTS, AGREEMENTS OR OTHER LIABILITIES OF PRISM)
RELATED TO THE ASSETS OR THE OPERATION OF PRISM'S BUSINESS PRIOR TO CLOSING.
1.05 Transition Services Agreement. At the Closing, Orkin and PRISM shall
enter into a Transition Services Agreement in the form of Exhibit B attached
hereto (the "Transition Services Agreement").
1.06 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Commercial Markets in Racine,
Wisconsin on April 30, 1999, or, if any of the conditions to Closing set forth
in Sections 6.02, 6.04, 7.02 or 7.04 have not been satisfied or waived on or
prior to such date, on the second business day following satisfaction or waiver
of such conditions. The Closing shall be effective as of 12:01am on May 1, 1999
(or, if the Closing does not occur on April 30, 1999 on such other date as may
be mutually acceptable to the parties hereto), which shall be the "Closing
Date".
ARTICLE II
DEFINITIONS; PURCHASE PRICE
2.01 Certain Definitions. As used herein, the following terms shall have
the meanings set forth below.
(a) "Assumed Payables List" shall be a list of payables of PRISM
which shall be assumed by Orkin and which shall be reflected as a Special
Liability (and thus trigger a reduction to the Purchase Price). A draft of the
Assumed Payables List shall be provided by PRISM to Orkin on or before two (2)
business days prior to the Closing Date. The Assumed Payables List shall be
updated as of the Closing Date, and shall be finalized as a part of the Purchase
Price Adjustments Calculation after the Closing Date.
(b) "Customer Prepayments" means the amount of customer prepayments
received by PRISM prior to Closing for services to be performed by Orkin under
Customer Contracts whether or not these prepayments have been recorded on
PRISM's books.
(c) "knowledge" with respect to PRISM and the phrase "to the
knowledge of PRISM" shall mean, and shall be limited to, the actual knowledge of
, [***], except that with respect to the period of time from the date of this
Agreement to the Closing and with respect to Section 3.05 only, "knowledge" and
"to the knowledge of PRISM" shall also mean matters that [***] should know
through the exercise of reasonable diligence.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(d) "Major Customers" shall mean those Non-Retail Customers
identified on Schedule 2.01(d) attached hereto, constituting the 20 largest
Non-Retail Customers based on the Non-Retail Revenue generated by such
Non-Retail Customers for the year ended February 28, 1999.
(e) "Non-Retail Customers" shall mean customers of PRISM's Pest
Services other than Retail Customers.
(f) "Non-Retail Pest Business" shall mean the provision of Pest
Services by Prism to Non-Retail Customers.
(g) "Non-Retail Revenues" shall mean the net revenues (gross revenues
determined after discounts and allowances), accrued for the period designated,
generated in connection with the performance by PRISM of Pest Services for its
Non-Retail Customers, excluding any revenues received from Retail Customers,
determined in accordance with PRISM's accounting policies and procedures
consistently applied, which policies and procedures are generally in accordance
with United States generally accepted accounting principles.
(h) "Permitted Encumbrances" shall mean (i) claims, security
interests, liens and other title encumbrances that are disclosed on Schedule
2.01(h) or the other Schedules hereto, (ii) mechanics', carriers, workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and liens for taxes and other governmental charges which are
not due and payable or which may thereafter be paid without penalty and (iii)
other imperfections of title, restrictions or encumbrances, if any, which
imperfections of title, restrictions or encumbrances do not, individually or in
the aggregate, materially impair the continued use and operation of the Assets
to which they relate in the operation of the Pest Business as currently
conducted.
(i) "Pest Business" shall mean the Non-Retail Pest Business and the
Retail Pest Business.
(j) "Pest Services" shall mean the provision of pest control and
elimination services, and the sale or leasing of pest control and elimination
products.
(k) "PRISM Test Asset Deficit" shall mean the dollar amount, if any,
by which [***] exceeds the aggregate [***] of the Test Assets as of the Closing
Date as finally determined pursuant to the procedures described in Section 2.05.
(l) "PRISM Test Asset Surplus" shall mean the dollar amount, if any,
by which the aggregate [***] of the Test Assets as of the Closing Date as
finally determined pursuant to the procedures described in Section 2.05 exceeds
[***].
(m) "PRISM Test Revenue Deficit" shall mean the dollar amount, if
any, by which [***] exceeds the [***] for the [***] (or, if the Closing shall
not occur on April 30, 1999, for the [***] at the [***] of the [***]
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[***] - CONFIDENTIAL TREATMENT REQUESTED
the Closing Date for which revenue information is available) finally determined
pursuant to the procedures described in Section 2.05.
(n) "PRISM Test Revenue Surplus" shall mean the dollar amount, if
any, by which the [***] for the [***] (or, if the Closing shall not occur on
April 30, 1999, for the [***] at the [***] of the [***] the Closing Date for
which revenue information is available) exceeds [***] finally determined
pursuant to the procedures described in Section 2.05.
(o) "Retail Customers" shall mean solely (i) the customers of the
Retail Pest Business whose accounts are transferred to the Joint Venture
pursuant to the Joint Venture Agreement, which customers are listed on Schedule
2.01(o), and (ii) [***].
(p) "Retail Pest Business" shall mean the business currently
conducted by PRISM in the United States and its territories relating exclusively
to the provision of Pest Services to Retail Customers.
(q) "Test Assets" shall mean Receivables, Inventory, Fixed Assets,
and Prepaid Expenses. Receivables shall be valued for purposes of the
determination of the PRISM Test Asset Surplus and PRISM Test Asset Deficit at
[***] of the gross book value thereof (prior to any reserve for bad debts), less
[***], as of the Closing Date, provided that the aging for the Receivables at
Closing is not materially different from the aging of the Receivables as
presented to Orkin from PRISM's [***] receivables aging report.
2.02 Purchase Price. The purchase price ("Purchase Price") for the Assets
and the Noncompetition Agreement (as defined in Article IX) shall be equal to
$23,450,000, subject to the adjustments, if any, required to be made pursuant to
Sections 2.03 and subject to final determination in accordance with Sections
2.05.
2.03 Adjustments to Purchase Price. The Purchase Price shall be (i)
increased or decreased, [***], as the case may be, by the net aggregate amount,
as finally determined, of any PRISM Test Asset Surplus, PRISM Test Asset
Deficit, PRISM Test Non-Retail Revenue Surplus, PRISM Test Non-Retail Revenue
Deficit, Special Liabilities and Customer Prepayments, and (ii) adjusted, if
applicable, in the manner set forth in Section 6.01 hereof.
2.04 Cash Payment at Closing. On or before two business days prior to the
Closing Date, PRISM shall make a good faith estimate as of the Closing Date of
the Special Liabilities, the PRISM Test Asset Surplus or Deficit, the PRISM Test
Non-Retail Revenues Surplus or Deficit and the Customer Prepayments, if any, and
shall notify Orkin in writing of such estimates. At the Closing, Orkin shall pay
to PRISM by wire transfer of immediately available funds to an account
designated in writing by PRISM, the "Closing Cash Payment" in the amount of
$23,450,000 plus or minus, as the case may be, the aggregate amount of the
Estimated Purchase Price Adjustment (calculated as provided herein). The amount
of the Estimated Purchase Price Adjustment shall be equal to: (i) the amount of
the estimated Special Liabilities (expressed as a negative number), (ii) plus,
the amount of any estimated PRISM Test Asset Surplus and any estimated PRISM
Test Non-Retail Revenues
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[***] - CONFIDENTIAL TREATMENT REQUESTED
Surplus, (iii) minus, the amount of any estimated PRISM Test Asset Deficit and
any estimated PRISM Test Non-Retail Revenues Deficit and (iv) minus the
estimated amount of any Customer Prepayments.
2.05 Calculation of Purchase Price Adjustments.
(a) Initial Calculation and Objections. In order to finally determine
the amount of the Purchase Price, after the Closing, PRISM shall perform an
initial calculation of the adjustments to be made pursuant to Section 2.03
("Purchase Price Adjustments Calculation") which shall be delivered to Orkin
within 30 days following the Closing Date. All expenses incurred in connection
therewith shall be borne by PRISM. Orkin shall have a period of 30 days after
receipt of the Purchase Price Adjustments Calculation to present to PRISM in
writing any objections and the amounts related thereto (the "Section 2.05
Objections") which Orkin may have with respect to the computation of the
Purchase Price Adjustments Calculation, which Section 2.05 Objections shall be
presented in reasonable detail. Orkin (including its internal auditors) and its
certified public accountants shall have the opportunity during and following the
preparation of the Purchase Price Adjustments Calculation to consult with ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and the chief financial officer, controller, or any other officer of
PRISM engaged in the calculation, to observe, review, and examine the work
papers, schedules, and other documents prepared or used in connection with the
Purchase Price Adjustments Calculation, and to review the books and records of
PRISM related to such calculation. If no Section 2.05 Objections are raised by
Orkin within such 30-day period, the Purchase Price Adjustments Calculation
shall be deemed accepted and approved by Orkin and the adjustments to Purchase
Price required by Section 2.03 shall be made accordingly.
(b) Resolution by Parties. If, within such 30-day period, Orkin
raises Section 2.05 Objections, Orkin and PRISM shall attempt in good faith to
resolve the matter or matters in dispute and, if resolved, such resolution shall
be final, conclusive and binding upon the parties hereto and the adjustments to
Purchase Price required by Section 2.03 shall be made accordingly.
(c) Resolution by Independent Accounting Firm. If the dispute
referred to in Section 2.05(b) is not resolved by Orkin and PRISM within 10 days
after delivery of the Section 2.05 Objections, then the specific matters in
dispute shall be submitted to Ernst & Young or such other nationally recognized
accounting firm as Orkin and PRISM may mutually agree upon (the "Independent
Accounting Firm"), which firm shall be requested to make a determination as to
such matter or matters as are in dispute within 30 days after the such
submission of the dispute to the Independent Accounting Firm, which
determination shall be final, conclusive and binding upon the parties hereto and
the Purchase Price shall be revised to reflect such determination. The
Independent Accounting Firm shall simultaneously deliver its written
determination to Orkin and PRISM. The fees and expenses of the Independent
Accounting Firm shall be [***]. PRISM and Orkin agree to cooperate in good faith
with each other, with each other's authorized representatives and with the
Independent Accounting Firm, if any, in order that any and all matters in
dispute may be resolved as soon as practicable.
2.06 Payment After Determination of Final Purchase Price Adjustments. If
the final Purchase Price Adjustments Calculation results in a Purchase Price
that is greater than the Closing Cash Payment, then Orkin shall pay the
difference between the final Purchase Price and the Closing
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Cash Payment to PRISM. If the final Purchase Price Adjustments Calculation
results in a Purchase Price that is less than the Closing Cash Payment, then
PRISM shall pay the difference between the final Purchase Price and the Closing
Cash Payment to Orkin. No interest shall be due or payable respecting any
payments to be made pursuant to this Section 2.06. Any and all payments required
to be made by Orkin or PRISM as a result of adjustments made pursuant to this
Section 2.06 shall be made by wire transfer of immediately available funds
within five business days after the final determination of the amount of the
Purchase Price.
2.07 Allocation. The Purchase Price received by PRISM shall be allocated
among each class of Assets of PRISM and to the Non-Competition Agreement (as
defined in Article IX) as mutually agreed by the parties on or before the
Closing. PRISM agrees that it will prepare and file any notice or other filings
required pursuant to Section 1060 of the Internal Revenue Code of 1986, as
amended, and that any such notices or filings will be prepared based on such tax
allocation of the Purchase Price. PRISM agrees to send to Orkin a completed copy
of its Form 8594 with respect to this transaction prior to filing such form with
the Internal Revenue Service.
2.08 Accounting Principles. Except with respect to Receivables which shall
be accounted for in accordance with Schedule 2.01(p), all determinations of
amounts made pursuant to this Article 2 shall be made in accordance with PRISM's
accounting policies and procedures consistently applied, which such policies and
procedures are generally in accordance with United States generally accepted
accounting principles.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRISM
PRISM makes the following representations and warranties to Orkin, all of
which shall survive the Closing as herein provided and each of which is
acknowledged by PRISM to be relied upon by Orkin.
3.01 Organization. PRISM is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida and has the
corporate power and authority to own and use its properties and to conduct its
business as currently conducted in all places where it does business.
3.02 Authorization; Effect of Agreement; Consents.
(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action of PRISM. This Agreement constitutes a valid
and binding obligation of PRISM, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and principles
governing the availability of equitable remedies.
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(b) Schedule 3.02(b) to this Agreement lists all approvals and
consents required under the Material Contracts (as defined in Section 3.05
below) in order that PRISM's rights thereunder may be assigned to Orkin as
contemplated hereby (the "Consents").
3.03 Title to Assets. PRISM has good and marketable title to all tangible
Assets (and a valid and enforceable leasehold interest in all assets subject to
Leases which are Material Contracts) free and clear of all claims, security
interests, liens and other title encumbrances other than Permitted Encumbrances.
3.04 Condition of Certain Assets. Schedule 1.01(c) sets forth a true,
correct and complete list as of the date hereof of certain assets owned by PRISM
and included in the Fixed Assets. Except as disclosed in Schedule 1.01(c), the
Fixed Assets and the assets subject to Leases which are Material Contracts are,
in good operating condition, ordinary wear and tear excepted and subject to
obsolescence and depreciation and/or replacement in the ordinary course of
business. Except as set forth in the prior sentence, PRISM makes no
representation or warranty with respect to the Fixed Assets including any
warranty of merchantability or fitness for a particular purpose.
3.05 Leases, Other Contracts, Customer Contracts and Customer Lists.
Schedule 1.01(d) sets forth a true, correct and complete list as of the date
hereof of all real property and vehicle leases used by PRISM in the conduct of
the Pest Business, and which are not exclusively related to Retail Customers and
transferred to the Joint Venture ("Material Contracts"). Schedule 2.01(b) sets
forth the Major Customers who, as of February 28, 1999, are parties to Customer
Contracts. Schedule 3.05 sets forth the Non Retail Customers, including the
Major Customers, who, as of February 28, 1999, are parties to Customer
Contracts. Further, Schedule 3.05 includes, among other information, the
commencement and initial expiration dates of such Customer Contracts of Major
Customers, the monthly rate and the addresses of such Major Customers. Except as
set forth on Schedule 3.05 hereto, PRISM has no knowledge of any condition or
development which threatens to have a material adverse effect upon the aggregate
Non-Retail Revenues related to such Major Customers, although customers will
continue to be added and lost in the ordinary course of business. Neither PRISM
nor, to PRISM's knowledge, any other party to any Material Contract is in breach
of, or in default under, such Material Contract and no event has occurred which,
but for the lapse of time or the giving of notice, or both, would be such a
default. Except as disclosed on Schedule 3.05, as of the date hereof, all Major
Customers and substantially all Non-Retail Customers are active customers of the
Non-Retail Pest Business.
3.06 Inventory. Except as noted on Schedule 3.06, the Inventory is not
obsolete, damaged or defective, has been stored and maintained in accordance
with normal industry practice and is generally suitable for the purposes for
which it is used.
3.07 Intellectual Property. Except for the trademarks licensed to Orkin
per the License Agreement and the name SC ▇▇▇▇▇▇▇ Wax (and variations of such),
Schedule 1.01(g), sub part 1, sets forth a true, correct and complete list as of
the date hereof of each patent, copyright (other than copyrighted labels,
advertising and promotional materials), logo, service ▇▇▇▇ or trademark actively
used in the Non-Retail Pest Business. PRISM has full right, title and interest
to each patent, copyright, trademark or trade name actively used in the
Non-Retail Pest Business and included in Schedule
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1.01(g), sub part 1. There are no pending or, to PRISM's knowledge, threatened
claims against PRISM alleging that the conduct of the Non-Retail Pest Business
infringes or conflicts with the rights of others under patents, trademarks,
copyrights and trade secrets. Except for the name SC ▇▇▇▇▇▇▇ Wax (and variations
of such), PRISM owns or possesses the right to use all the patents, copyrights,
trademarks, trade names, service marks, licenses and rights with respect to the
foregoing necessary for the operation of the Non-Retail Pest Business as now
conducted. PRISM is not aware of any violation by a third party of any of
PRISM's patents, licenses, trademarks, service marks, trade names, copyrights,
trade secrets, or other proprietary rights used in the Pest Business.
Schedule 1.01(g), sub part 2, sets forth a true, correct and complete
list as of the date hereof of each trademark owned by PRISM but not actively
used in the Pest Business. PRISM makes no representations or warranties with
respect to these trademarks.
3.08 Availability of Certain Assets. All of the Fixed Assets (other than
vehicles when in use and Fixed Assets leased to Non-Retail Customers pursuant to
Customer Contracts or in the possession of such Non-Retail Customers at their
locations, in vehicles covered by the Leases or at the residences of sales
managers and field personnel of the Pest Business) and Inventory (other than
Inventory when being used) are located at a PRISM facility or storage site, or
at the residences of sales managers and field personnel of the Pest Business
(and, on reasonable conditions, PRISM will make such items available for
inspection by Orkin). PRISM has generally maintained such items in the ordinary
course of its business.
3.09 All Assets. The Assets, all assets subject to Leases, and the assets
contributed by Commercial Markets to the Joint Venture constitute all material
properties of any nature (other than accounts receivable attributable to Retail
Customers) with which PRISM has conducted the Pest Business for the 12-month
period prior to the date hereof, subject to the addition and deletion of assets
in the ordinary course of its business, except that the Assets do not include
(i) office equipment, computers, software and other assets used by PRISM at
PRISM's Miami Home Office; (ii) assets covered by the License Agreement; (iii)
any Leases and other Contracts which require consent for the assignment thereof
if such Consent has not been obtained. All facilities currently used by PRISM
are supplied with utilities reasonably necessary for the operation of such
facilities.
3.10 Financial Schedules. Schedule 3.10 sets forth a schedule of PRISM's
unaudited gross revenue and gross profit for the Pest Business for each year in
the three-year period ended June 30, 1998 (the "Financial Schedules"). Except as
disclosed on Schedule 3.10, the gross revenue and gross profit data presented in
the Financial Schedules have been derived from the books and records of PRISM,
are accurate in all material respects and are fairly presented, in all material
respects, for the respective periods covered thereby. Except as disclosed on
Schedule 3.10, the gross revenue and gross profit data in the Financial
Schedules were recorded in the accounting books and records of PRISM generally
in accordance with United States generally accepted accounting principles
consistently applied throughout the periods covered thereby.
3.11 Absence of Material Changes. Except as set forth in Schedule 3.11,
from June 30, 1998 through the date of this Agreement there has been, and
through the Closing Date there will be: (A) no material adverse change in the
assets constituting the Assets (including any acquisition or
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purchase, sale, pledge or other transfer, exchange or disposition of any asset
except in the ordinary course of business) or the Non-Retail Pest Business, (B)
no increases in the wages and salaries of the officers or employees of the
Non-Retail Pest Business other than in the ordinary course of business; and (C)
no contracts for the purchase of goods and services by the Non-Retail Pest
Business providing for payments in an amount in excess of $25,000 per month
except (x) purchases of inventory in the ordinary course of business, (y) as
listed on Schedule 3.11 or (z) as consented to by Orkin.
3.12 Receivables. Schedule 3.12 hereto sets forth in all material respects
a true, correct and complete list of Receivables, in the aggregate, in 30-day
aging categories as of January 31, 1999. All Receivables included in the Assets
will have arisen in the ordinary course of the business of the Non-Retail Pest
Business.
3.13 No Conflict. The execution and delivery of this Agreement by PRISM
does not, and the performance of this Agreement by PRISM will not, (i) conflict
with or violate any law, regulation, court order, judgment or decree applicable
to PRISM, the Non-Retail Pest Business or by which any of the Assets are bound
or affected, (ii) violate or conflict with either the charter or bylaws of
PRISM, or (iii) except as may result from the failure to obtain any required
third-party consent or approval, result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under any Material Contract, instrument, permit, license or franchise of which
PRISM is a party.
3.14 Taxes and Assessments. PRISM has filed or will file when and as due
all sales, use, payroll, excise, business and license tax returns required by
law to be filed by PRISM with respect to the Non-Retail Pest Business or the
ownership of the Assets; and PRISM has paid or will pay when and as due all
federal, state, local or foreign taxes or other governmental charges including
interest or penalties imposed with respect to the Non-Retail Pest Business or
the ownership of the Assets to the Closing Date, except for such items which in
the aggregate are not materially adverse to the Non-Retail Pest Business.
3.15 Employees. PRISM's employees engaged in the Non-Retail Pest Business
are not represented by a union or subject to a collective bargaining agreement
and PRISM has no knowledge of any attempts to organize PRISM's employees. There
are no strikes, labor disputes, union representation contests, state labor or
National Labor Relations Board proceedings or litigation pending, or to the
knowledge of PRISM, threatened against or affecting the operation of the
Non-Retail Pest Business or its relations with its employees, except as set
forth on Schedule 3.15. Except for such items which in the aggregate are not
materially adverse to the Non-Retail Pest Business, PRISM is, to PRISM's
knowledge, in substantial compliance with all federal, state and local laws,
rules and regulations with respect to employment, wages, hours and benefits
relating to the Non-Retail Pest Business. Except as set forth on Schedule
3.15,PRISM is not engaged in any unfair labor practices relating to the
Non-Retail Pest Business nor are any unfair labor practices or other complaints
pending against PRISM filed with or, to the knowledge of PRISM, threatened to be
filed with or by the National Labor Relations Board, Equal Employment
Opportunity Commission, Department of Labor or any similar agency or
instrumentality of any state or local government; and PRISM has experienced no
strikes or collective work stoppage over the past three years with respect to
the Non-Retail Pest Business.
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3.16 Benefit Plans.
(a) Schedule 3.16 sets forth a list of each "employee benefit plan"
(as defined by Section 3(3) of ERISA) and any other bonus, profit sharing,
pension, deferred compensation, stock option, stock purchase, fringe benefit,
severance, post-retirement, scholarship, disability, sick leave, vacation,
commission or other employee benefit plan, agreement, policy, trust fund or
arrangement (each such plan, agreement, policy, trust fund or arrangement is
referred to herein as an "Employee Benefit Plan") that is currently in effect
for the benefit of current employees of PRISM engaged in the Non-Retail Pest
Business.
(b) Except as otherwise provided in this Section 3.16(b) or in
Section 5.04 below, the participation of all Transferred Employees in any
Employee Benefit Plan shall terminate at Closing; and, thereafter, such
Transferred Employees shall be provided only those benefits and policies as are
established and maintained by Orkin including those pursuant to Section 5.04.
With respect to any employee benefit plan, fringe benefit plan or payroll
practice or policy established by Orkin, PRISM shall not have any involvement,
responsibility or liability therefor. Likewise, except as otherwise expressly
provided in Section 1.04(a) and Section 5.04, with respect to any Employee
Benefit Plan, fringe benefit program or payroll practice or policy maintained by
PRISM prior to Closing, Orkin shall not have any involvement, responsibility or
liability therefor.
3.17 Compliance with Laws; Licenses and Permits. Except as set
forth on Schedule 3.17 hereto:
(a) To PRISM's knowledge, PRISM is in substantial compliance with the
Federal Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the
Equal Pay Act, the Age Discrimination in Employment Act and Executive Order
11246, and all other applicable laws, orders, rules and regulations enacted or
promulgated by the Environmental Protection Agency, the Occupational Health and
Safety Administration and by all other governmental bodies and agencies,
including state labor boards, except for such items which in the aggregate are
not materially adverse to the Non-Retail Pest Business. To PRISM's knowledge,
PRISM has not received notice of any noncompliance with the foregoing.
(b) To PRISM's knowledge, PRISM has all governmental licenses,
permits and approvals necessary for the operation of the Non-Retail Pest
Business and has not received since December 31, 1996, notice of any material
violations in respect of any such license, permits or approvals. No proceeding
is pending or, to the knowledge of PRISM is threatened, which seeks revocation
or limitation of any such license, permits or approvals.
3.18 Non-Retail Customers. PRISM has a Customer Contract with each of its
Non-Retail Customers included on the Customer List. To the knowledge of PRISM,
all services to such Non-Retail Customers have been rendered in material
compliance with such Customer Contracts, and have been performed in material
compliance with the applicable laws, rules and regulations (including business
and professional codes, home solicitation acts, credit sales acts, and the
Federal Insecticide, Fungicide and Rodenticide Act) of all federal, state and
local governmental bodies, agencies and
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boards, including departments of agriculture, except for such items which in the
aggregate are not materially adverse to the Non-Retail Pest Business and except
as set forth in Schedule 3.18.
3.19 Litigation. Except as set forth in Schedule 3.19, there is no suit,
claim, action or proceeding relating to the Non-Retail Pest Business which is
pending or, to the knowledge of PRISM, threatened against PRISM, except for such
suits, claims, actions or proceedings which if decided adversely to PRISM would
not have a materially adverse effect on the Non-Retail Pest Business.
3.20 Fulfillment of Guarantees. All requests or demands for treatment or
other service made by Non-Retail Customers of the Non-Retail Pest Business to
fulfill warranties or guarantees made or given by PRISM to such customers have
been handled in the ordinary course of business.
3.21 Broker's Fees. PRISM has incurred no obligation or liability,
contingent or otherwise, for any brokerage fee, finder's fee, agent's commission
or other like payment in connection with this Agreement or the transactions
contemplated hereby.
3.22 Environment, Health and Safety.
(a) To PRISM's knowledge, PRISM has obtained all material permits,
licenses, approvals and other authorizations which are required under all
Environmental Laws (as defined below) and is in compliance in all material
respects with the terms and conditions of all such licenses, approvals and
authorizations, except for such failures to obtain or comply which in the
aggregate are not materially adverse to the Pest Business, and in compliance
with all other limitations, restrictions and requirements, including without
limitation, the submission of all required reports, notices and other filings,
contained in any applicable Environmental Law, except for such failures to
comply which in the aggregate are not materially adverse to the Non-Retail Pest
Business.
(b) Except as identified on Schedule 3.22(b), there is no pending, or
to PRISM's knowledge, threatened, charge, complaint, action, suit, proceeding
hearing, investigation, claim, or demand against PRISM with respect to the
Non-Retail Pest Business under any Environmental Law as amended or other laws,
rules or regulations of any federal, state or municipal government or agency
thereof concerning environmental matters nor has PRISM received any notice of
any of the foregoing.
(c) Except as identified on Schedule 3.22(c), PRISM is not subject to
any pending (nor does PRISM have knowledge of any threatened) claim, complaint,
action, suit, proceeding, hearing, investigation, or demand, from any
governmental or private agency, entity or person concerning any intentional or
unintentional act or omission by PRISM, any predecessor to PRISM, or by any
other person or entity, with respect to (1) the investigation, remediation, or
other activities related to the clean-up, management, manufacture or processing,
or other handling of Hazardous Materials on, under or at any property now or
previously owned, leased or operated by PRISM in connection with the Non-Retail
Pest Business, (2) any actual or alleged violation with respect to any
Environmental Law in connection with the Non-Retail Pest Business, or (3) any
actual or alleged claim related to any damage to health, safety or the
environment caused by Hazardous Materials in connection with the Non-Retail Pest
Business.
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(d) PRISM is not subject to any pending (nor does PRISM have any
knowledge of any threatened) private, governmental or judicial claim, order,
decree, or investigation related to the clean-up, management, manufacture or
processing, or other handling of Hazardous Materials on, under or at any
property now or previously owned, leased or operated by PRISM in connection with
the Non-Retail Pest Business.
(e) Schedule 3.22(e) sets forth any material past or present
enforcement actions, orders, consent decrees or agreements, citations,
violations or notices of violation, or penalties against or paid by PRISM with
respect to the Non-Retail Pest Business in connection with any Environmental Law
since December 31, 1997.
(f) Except as disclosed on Schedule 3.22(e), to PRISM's knowledge,
there are no active, inactive or abandoned underground storage tanks ("USTs")
for Hazardous Materials on any property leased or operated by PRISM exclusively
in the Non-Retail Pest Business. To Prism's knowledge, each such UST identified
in Schedule 3.22(e) is in material compliance with all requirements of
Environmental Laws.
(g) Except as disclosed on Schedule 3.22(g), PRISM has no knowledge
of the presence of any material quantities of PCB or asbestos materials at any
property leased or operated by PRISM exclusively in the Non-Retail Pest
Business.
(h) Except as disclosed on Schedule 3.22(h), PRISM has no knowledge
that any material quantities of Hazardous Materials have been released, spilled,
leaked, pumped, poured, emitted, emptied, discharged, injected, escaped,
leached, dumped or disposed of into, on or from any property leased or operated
by PRISM exclusively in the Non-Retail Pest Business.
(i) Except as disclosed on Schedule 3.22(i), PRISM has no knowledge
of any environmental reports, investigations, studies, audits, tests, reviews or
other analyses conducted by, or which are in the possession of, PRISM in
relation to any Facility (as defined in Section 3.24(a)) which have not been
made available to Orkin. PRISM has no knowledge of any material omissions or
misstatements in any such reports, investigations, studies, audits, tests,
reviews or other analyses relating to environmental conditions on or at any
Facility.
(j) For purposes hereof, the term "Environmental Laws" shall mean any
and all federal, state, local and foreign statutes, laws, regulations,
requirements, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions, including without limitation, the Comprehensive Environmental
Response Compensation and Liability Act, as amended ("CERCLA"), the Hazardous
Materials Transportation Act, as amended, the Resource Conservation and Recovery
Act, as amended, the Clean Water Act, as amended, the Federal Insecticide,
Fungicide and Rodenticide Act, as amended, the Toxic Substances Control Act, as
amended, and any other federal, state or local law, regulation, requirement,
ordinance, rule, judgment, order, decree, permit, concession, grant, franchise,
license, agreement, other governmental restriction or any common law based on
nuisance, tort or strict liability, relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, hazardous
constituents, petroleum,
-15-
petroleum products, radon gas, and radioactive matter into the environment or
otherwise related to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes, hazardous
constituents, petroleum, petroleum products, radon gas and radioactive matter to
the extent enacted and in effect on or prior to the Closing Date.
3.23 Immigration Matters.
(a) To PRISM's knowledge, with respect to all Available Employees (as
defined in Section 5.04 (a)), copies of all Forms I-9 (Employment Eligibility
Verification Forms) completed pursuant to the Immigration Reform and Control Act
of 1986 and all regulations promulgated thereunder ("IRCA") and any and all
copies of documentation, records or other papers retained with Forms I-9, have
been or, at Orkin's request, will be made available to Orkin prior to the
Closing. PRISM has complied in all material respects with IRCA with respect to
the completion of Forms I-9 for all such employees and the reverification of the
employment status of any and all such employees whose employment authorization
documents indicated a limited period of employment authorization.
(b) To PRISM's knowledge, with respect to all former employees of the
Non-Retail Pest Business who left PRISM's employment within three years prior to
the Closing, PRISM has complied in all material respects with IRCA with respect
to the maintenance of Forms I-9 for at least three years from the date of
employment or for one year beyond the date of termination, whichever is later.
Copies of all Forms I-9 maintained for such former employees pursuant to IRCA,
and any and all copies of documentation, records or other papers retained with
Forms I-9, have been or, at Orkin's request, will be made available to Orkin
prior to the Closing.
(c) Except as disclosed on Schedule 3.23, to PRISM's knowledge, PRISM
has had no material immigration law violations and has only employed individuals
authorized to work in the United States with respect to the Non-Retail Pest
Business. To PRISM's knowledge, since December 31, 1994, PRISM has not been the
subject of any inspection or investigation relating to its compliance with or
violation of IRCA, nor has it been warned in writing, fined or otherwise
penalized by reason of any failure to comply with IRCA, nor is any such
proceeding pending or threatened, except for such as would not have a material
adverse effect on the Non-Retail Pest Business.
3.24 Matters Relating to the Facilities.
(a) Other than as set forth on Schedule 3.24, there are no
encroachments, rights-of-way, easements, or conditions to the knowledge of PRISM
which could materially and adversely affect the present use of the field
locations leased under the Leases included in the Material Contracts
(collectively, the "Facilities").
(b) There are no condemnation, or eminent domain proceedings pending
or, to PRISM's knowledge, contemplated, against any Facility or any part thereof
and PRISM has received no notice of the intent of any public authority or other
entity to take or use any Facility. To PRISM's knowledge, there are no
contemplated real property assessments affecting any Facility or any portion
thereof which will materially and adversely affect such Facility.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(c) PRISM has received no written notice of any pending, and to the
knowledge of PRISM there is no threatened, action or governmental proceeding
relating to, zoning changes which will materially and adversely affect any
Facility, nor does PRISM have knowledge of any existing event or condition which
would reasonably constitute a basis for any such proceeding. To the knowledge of
PRISM, there is no present use of any real property adjacent to any Facility
which materially and adversely affects the conduct of the Non Retail Pest
Business at such Facility.
(d) Except as set forth in Schedule 3.24 attached hereto, usable
public sanitary and storm sewers, public water facilities, and gas and
electrical facilities (collectively, the "Public Utilities") as currently used
at each Facility as provided in the applicable Lease are of capacity sufficient
for the current operation of the Non-Retail Pest Business at such Facility.
(e) Each Facility currently has access to and from public streets and
roads, and to the knowledge of PRISM, there are no facts or conditions that
would result in the termination or material impairment of the present access
from any Facility to such existing highways and roads.
3.25 No Termite Control Business. To the knowledge of PRISM, except as
described on Schedule 3.25, PRISM has not conducted a termite control business
since [***].
3.26 Complete Copies. The copies of all leases, instruments, agreements,
licenses, permits, certificates or other documents which are listed on
disclosure schedules attached hereto which have been delivered or made available
to Orkin have been or will be complete and correct in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ORKIN
Orkin hereby makes the following representations and warranties to PRISM,
all of which shall survive the Closing as herein provided and each of which is
acknowledged by Orkin to be relied upon by PRISM:
4.01 Organization. Orkin is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to own and use it properties and to conduct its
business as currently conducted in all places where it does business.
4.02 Authorization; Effect of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
of Orkin. This Agreement constitutes a valid and binding obligation of Orkin
enforceable against Orkin in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the rights of creditors generally, and principles governing the availability of
equitable remedies.
4.03 No Conflict. The execution and delivery of this Agreement by Orkin
does not, and the performance of this Agreement by Orkin will not, (i) conflict
with or violate any law, regulation, court order, judgment or decree applicable
to Orkin, (ii) violate or conflict with either the charter or bylaws
-17-
of Orkin or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under any
material contract, instrument, permit, license or franchise to which Orkin is a
party.
4.04 Broker's Fees. Orkin has not incurred any obligation or liability,
contingent or otherwise, for any brokerage fee, finder's fee, agent's commission
or other like payment in connection with this Agreement or the transactions
contemplated hereby.
ARTICLE V
COVENANTS OF PRISM AND ORKIN
5.01 Receivables.
(a) From and after the Closing, Orkin shall have the sole right to
collect and to endorse with the name of PRISM any checks received on account of
any outstanding Receivables.
(b) PRISM shall promptly forward or cause to be forwarded to Orkin
any and all Receivables proceeds received by PRISM or any of its affiliates
after the Closing Date.
(c) Orkin shall promptly forward or cause to be forwarded to PRISM or
Commercial Markets all checks or instruments received by Orkin or any of its
affiliates after the Closing Date relating to accounts receivable attributable
to Retail Customers which are not Receivables.
(d) After the Closing, PRISM shall cause its headquarters-level
employees who are not Transferred Employees (to the extent still employed by
PRISM), but who have had primary accounting contact with Major Customers, to
provide such reasonable assistance to Orkin as may be necessary or appropriate
to ensure that the Receivables for such Major Customers are collected in a
manner consistent with past practice and experience.
5.02 Covenant of Further Assurances.
(a) Each party hereto shall use its best efforts to take all actions
and to do all things reasonably necessary in order to consummate and effect the
transactions contemplated by this Agreement (subject to the limitations
contained in this Agreement). Without further consideration, each party hereto
will, at any time and from time to time following the Closing, execute and
deliver such further instruments of conveyance and transfer, and take such other
action as the other party may reasonably request (subject to the limitations set
forth in this Agreement), to consummate the transactions contemplated by this
Agreement.
(b) Certain of the Assets may be in the possession of third parties
on the Closing Date. Prior to the Closing, except as otherwise provided in this
Agreement, PRISM and Orkin shall agree on reasonable procedures to transfer
possession of the Assets to Orkin as soon as practicable after the Closing Date,
and PRISM shall provide reasonable assistance to Orkin in connection with the
transfer thereof. Each of PRISM and Orkin shall bear their own respective
out-of-pocket costs incurred in connection with transferring such Assets.
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(c) Orkin acknowledges that certain books and records and other
materials in the possession of PRISM may contain incidental information relating
to the Assets, the Assumed Liabilities, and the Non-Retail Pest Business or may
relate to its parent (Commercial Markets) or other divisions or affiliates of
PRISM, and that PRISM may retain such books and records and other materials,
except that PRISM shall use reasonable efforts to provide or cause to be
provided to Orkin copies (which may be redacted) of the portions of such books,
records and other materials that contain Assets, and Orkin further acknowledges
that PRISM shall have no obligation to deliver to Orkin (or provide Orkin with
access or copies of) any legal files or other documents covered by an
evidentiary privilege exercisable by PRISM or any of its affiliates, unless such
legal files or documents relate primarily to an Assumed Liability.
5.03 Consents. Orkin acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from parties to the
Customer Contracts, Leases and Other Contracts and that such consents have not
been obtained. Orkin and Prism agree that they will use their reasonable efforts
to jointly seek and obtain prior to Closing the consent of all Major Customers
to the transactions contemplated by this Agreement. PRISM shall use its
reasonable efforts to obtain and deliver to Orkin prior to the Closing the
consent of each lessor of the Leases. If any Lessor requires the payment of any
fees in order to obtain such consent, the parties shall bear the cost of such
fees equally. Except as contemplated in the immediately preceding sentence,
Orkin agrees that PRISM shall not have any liability whatsoever to Orkin arising
out of or relating to the failure to obtain any consents that may have been or
may be required in connection with the transactions contemplated by this
Agreement or, because of the default, acceleration or termination of any
Customer Contracts, Leases and Other Contracts as a result thereof. Orkin
further agrees that no representation, warranty or covenant of PRISM contained
herein shall be breached or deemed breached as a result of (A) the failure to
obtain any consent or as a result of any such default, acceleration or
termination or (B) any lawsuit, action, claim, proceeding or investigation
commenced or threatened by or on behalf of any persons arising out of or
relating to the failure to obtain any consent or any such default, acceleration
or termination. At Orkin's written request prior to the Closing, PRISM shall
cooperate with Orkin in any reasonable manner in connection with Orkin's
obtaining the consents described above; provided, however, that such cooperation
shall not include any requirement of PRISM to expend money (other than
reasonable out-of-pocket travel and related expenses and as expressly
contemplated above), commence any litigation or offer or grant any accommodation
(financial or otherwise) to any third party.
5.04 Employee and Related Matters.
(a) General. Orkin shall offer (or shall cause the Joint Venture to
offer) employment effective on the Closing Date, to all PRISM's employees who
are as of the day prior to the Closing Date employed by PRISM in connection with
the Pest Business in the quality assurance function, in the sales function and
all field personnel (including technicians) in any location other than the
headquarters of PRISM, which employees are listed on Schedule 5.04(a)
("Available Employees"; employment of the Available Employees by Orkin or the
Joint Venture may be referred to hereinafter as employment by Orkin).
Specifically excluded from Schedule 5.04(a) are those PRISM employees assigned
to the Miami Home Office/Administrative areas. Each offer of employment shall be
for as similar a position as is reasonably possible to the
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position previously performed for PRISM by each such Available Employee and may
extend to the Joint Venture or any of the ▇▇▇▇▇▇▇, Inc. divisions, subsidiaries
or operating units. Compensation packages for the offers made to Available
Employees (i) shall be [***] to the PRISM employee's [***], and shall include a
[***] that is [***] than the PRISM employee's [***], and (ii) shall be [***] to
reflect the [***] between the [***] (in terms of types of [***], and other such
factors) which are provided to an Available Employee while employed by PRISM and
which will be provided to an Available Employee if such employee accepts Orkin's
offer of employment. PRISM makes no representation that any Available Employee
will accept employment with Orkin. Provided, however, that PRISM shall use its
reasonable efforts to encourage (but without requiring the payment of any monies
in connection therewith), through communications or otherwise, its Available
Employees to accept employment with Orkin. Any Available Employee who accepts
employment with Orkin and becomes an employee of Orkin as of or following the
Closing shall be referred to in this Agreement as a "Transferred Employee." Any
Transferred Employee shall become an employee of Orkin and shall not constitute
an employee of PRISM.
(b) Limitation. Notwithstanding the provisions of clause (a) of this
Section, Orkin shall not be required to offer employment to a person and such
person shall not be an "Available Employee" if, as of the Closing Date, (i) such
person has been determined to be eligible for and actually receiving disability
benefits on the Closing Date pursuant to an occurrence prior to the Closing
Date, excepting any person who is able to perform the essential functions, with
or without reasonable accommodation, of the position which they would have been
offered if there had been no disability benefits paid or (ii) such person fails
to comply with those Orkin employment criteria described on Schedule 5.04(b)
("Orkin Minimum Employment Criteria").
(c) Benefit Plans. Effective [***], Transferred Employees shall be
eligible to participate in any ERISA qualified or employee welfare programs
and/or benefits and any incentive or other compensation program (e.g., pension,
retirement, profit sharing, stock option, incentive, vacation, education
reimbursement or assistance, deferred compensation, hospitalization, medical,
dental, life insurance, sick pay, disability, severance or other plan, program,
policy or arrangement) offered by Orkin, to the [***] that Orkin's similarly
situated employees are eligible to participate in such programs and/or plans
("Employee Benefits"). Other than for purposes of calculating any qualified
defined benefit retirement benefit, Orkin shall grant all Transferred Employees
[***] for the [***] that the Transferred Employees were employed by PRISM (and
its parent, affiliated and/or subsidiary companies). Such [***] shall apply for
all eligibility and vesting requirements set forth in any Employee Benefits.
PRISM shall take such actions as may be necessary to allow all Transferred
Employees to "roll-over" any moneys held in PRISM's IRS Section 401(k) qualified
savings plan into Orkin's IRS Section 401(k) qualified savings plan effective
the Closing Date. PRISM agrees to [***], effective as of the Closing Date, but
contingent on the Closing, all Transferred Employees who are participants in the
PRISM's IRS Section 401(K) qualified savings plan. The provisions of clauses (d)
through (i) below shall not be deemed or interpreted to limit the scope of this
clause (c).
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(d) Medical/Dental Plans.
(i) Orkin agrees that Transferred Employees and their eligible
dependents shall be [***] (on a [***]) in [***], if any ([***]), effective [***]
that Orkin's similarly situated employees were eligible to participate in such
Plans. All such [***] shall be offered to Transferred Employees on the [***]
offered to Orkin's similarly situated employees. Orkin shall maintain an equal
and consistent policy regarding [***] and other [***] by and between Transferred
Employees and Orkin's similarly situated employees. Any and all [***] and [***]
or other [***] (except as stated in Schedule 5.04(d)) shall be [***] under [***]
with respect to Transferred Employees and their eligible dependents who are
covered under PRISM's medical plan as of the day before the Closing Date. In
addition, if applicable, Orkin shall cause [***] to [***] any [***] and [***]
(not including [***] not covered by PRISM's medical or dental plan) incurred by
Transferred Employees and their eligible dependents who are covered under
PRISM's medical or dental plan as of the day before the Closing Date, prior to
the Closing Date and during the calendar year containing the Closing Date, for
purposes of determining any [***] and/or [***] provided under [***]. Transferred
Employees and/or their eligible dependents who were eligible for, but declined
coverage under PRISM's medical or dental plan (by default or in writing), will
be required to [***] for the [***] before becoming covered under [***].
(ii) PRISM agrees to [***] under PRISM's health plans for [***]
incurred by Transferred Employees and their covered dependents prior to the
Closing Date. PRISM shall comply with the requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA).
(e) Short and Long Term Disability. Orkin agrees that Transferred
Employees shall be [***] (on a [***]) in Orkin's [***], if any, effective [***]
that Orkin's similarly situated employees were eligible to participate in such
Plans. All such [***] shall be offered to Transferred Employees on the [***]
offered to Orkin's similarly situated employees. All [***] and/or [***] shall be
[***] under [***], if any, for all Transferred Employees who are covered under
PRISM's disability plans as of the day before the Closing Date. Transferred
Employees who were eligible for, but declined coverage under PRISM's disability
plans (by default or in writing), will be required to prove insurability before
becoming covered under [***]. Transferred Employees eligible for, but not
covered as of the Closing Date because they have not met the waiting period
requirements for PRISM's disability plans, will be [***] for such [***] when
considering the waiting period requirement under [***].
(f) Life Insurance. Orkin agrees that Transferred Employees and their
eligible dependents shall be [***] (on a [***]) in [***], if any, effective
[***] that Orkin's similarly situated employees
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were eligible to participate in such plans. All [***] and/or [***] shall be
[***] under [***] for all Transferred Employees and their eligible dependents
who are covered under PRISM's life insurance plans (basic and/or optional or
supplemental) as of the day before the Closing Date. In addition, Orkin agrees
to make available to each Transferred Employee, effective as of the Closing
Date, such [***], if any, as is offered to employees of Orkin. All such
insurance shall be offered to Transferred Employees on the [***] offered to
Orkin's similarly situated employees. Transferred Employees and/or their
eligible dependents who were eligible for, but declined coverage under PRISM's
life insurance plans (by default or in writing), will be required to prove
insurability before becoming covered under the [***]. Transferred Employees
eligible for, but not covered as of the Closing Date because they have not met
the waiting period requirements for PRISM's life insurance plans, will be [***]
for such [***] when considering the waiting period requirement under the [***].
If PRISM does not offer an [***], all Transferred Employees must satisfy the
eligibility and waiting period requirements for the Orkin's [***] as Orkin's
similarly situated employees.
(g) Severance. The terms of the PRISM Severance Pay Policy are
described on Schedule 5.04 (the "PRISM Severance Pay Policy"). Orkin agrees that
it [***] for any [***] under the PRISM Severance Pay Policy to Available
Employees who satisfy the Orkin Employment Criteria who are not offered
employment upon the Closing with Orkin or the Joint Venture (or a division,
subsidiary or operating unit of Orkin or ▇▇▇▇▇▇▇, Inc.) in accordance with the
terms and conditions of this Section 5.04. For the benefit of PRISM, Orkin shall
obtain a legally binding waiver from each Transferred Employee of any claim such
Transferred Employee might have against PRISM under the PRISM Severance Pay
Policy respecting the termination of employment with PRISM of such Transferred
Employee caused by the transactions contemplated by this Agreement. Orkin agrees
to adopt (and shall vote in favor of the adoption by the Joint Venture),
effective as of the Closing Date, and to keep in effect for [***] after the
Closing, a [***] for Transferred Employees which is [***] to the [***] as in
effect immediately prior to the Closing and which provides all Transferred
Employees [***] for the [***] that the Transferred Employees were employed by
PRISM (and its parent, affiliated and/or subsidiary companies). Orkin [***] the
[***] of any [***] to be made to any Transferred Employee under the [***] to be
adopted by the Joint Venture. After the termination of each such [***], Orkin
agrees that Transferred Employees shall be eligible to participate in Orkin's
then [***] and with respect to such [***], all Transferred Employees shall be
provided [***] for the [***] that the Transferred Employees were employed by
PRISM (and its parent, affiliated and/or subsidiary companies).
PRISM represents, warrants, covenants, and agrees that it has [***]
(or will [***] prior to the Closing) the PRISM Severance Pay Policy to clarify
that it is [***] to Available Employees who are offered substantially comparable
positions with Orkin, the Joint Venture, or any of the ▇▇▇▇▇▇▇, Inc. divisions,
subsidiaries or operating units in accordance with
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[***] - CONFIDENTIAL TREATMENT REQUESTED
the provisions of this Section 5.04. PRISM shall comply with the terms and
conditions of PRISM Severance Pay Policy, as so [***], from and after the date
of this Agreement.
(h) Worker's Compensation. Orkin shall be responsible for [***] and
[***] (whether absolute, contingent or otherwise) relating to worker's
compensation claims which [***] or which [***] into a claim which is [***] and
which could first be [***] and/or [***] pursuant to the applicable state
Worker's Compensation Act on or after the Closing Date. PRISM shall remain
responsible for [***] and [***] for any [***] and [***] worker's compensation
claims and for all worker's compensation claims which [***] or which [***] into
a claim which is [***] and which could first be [***] and/or [***] pursuant to
the applicable state Worker's Compensation Act prior to the Closing Date. Orkin
hereby agrees to [***] from any [***] and/or [***], that Orkin assumes pursuant
to this subsection and shall [***] as a [***] on its worker's compensation
policy regarding such claims. PRISM hereby agrees to [***] Orkin from any [***]
and/or [***], that PRISM retains pursuant to this subparagraph.
(i) Miscellaneous.
(i) PRISM and Orkin shall cooperate with each other in all
respects relating to any actions to be taken pursuant to this Section 5.04.
Orkin shall condition its employment of Transferred Employees on the provision
of a properly executed release which authorizes the release of all information
held by PRISM regarding such Transferred Employee to Orkin. Upon receipt of such
executed information release, PRISM shall provide promptly to Orkin, at Orkin's
request, any information or copies of any personnel records (including, but not
limited to, addresses, dates of birth and dependent information) relating to
Transferred Employees or related to the service of Transferred Employees under
PRISM plans.
(ii) To the extent accrued by PRISM, with respect to
Transferred Employees, PRISM shall be responsible for any wages, incentive
bonuses and/or commissions owed prior to the Closing Date pursuant to the
applicable policies of PRISM.
(iii) PRISM shall provide Orkin with specified employee
information for the employees listed on Schedule 5.04(a), including only job,
job level, date of hire, and cash compensation paid during the prior reporting
year. PRISM shall provide Orkin with reasonable access prior to Closing to all
employees listed on Schedule 5.04(a) for the purpose of conducting an employment
interview. Orkin shall [***] and [***] from any [***] and/or [***], associated
with and/or arising out of, in any manner, [***] and/or [***] regarding any
employee listed on Schedule 5.04(a), including, without limitation, its [***] or
[***] and/or [***]. If any employee listed on Schedule 5.04(a) contacts
Commercial Markets or any of its affiliated entities pursuant to a job posting,
newspaper advertisement, or other inquiry, Commercial Markets or its affiliate
shall be [***] to discuss employment opportunities with such employee; provided
that neither Commercial Markets nor its
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[***] - CONFIDENTIAL TREATMENT REQUESTED
affiliates may make an [***] to any such individual between [***] and the [***]
after the Closing Date without Orkin's consent. Notwithstanding the foregoing,
Commercial Markets may contact and make [***] to certain persons who are
specifically identified on Schedule 5.04(a), and such actions shall not be in
violation of the provisions of this Section 5.04(i) (iii).
5.05 Customers.
(a) From and after the date hereof and until the Closing Date, PRISM
shall use its reasonable efforts to retain the Major Customers as customers of
the Non-Retail Pest Business, including using its reasonable efforts, in all
material respects, to:
(i) service all Major Customers with the same service personnel
used by PRISM to service such Major Customers (to the extent reasonably
practicable) and with a level of service and quality consistent with PRISM's
past practices;
(ii) abide by the terms of all existing contracts (including
Customer Contracts) relating to the Major Customers and the operation of the
Non-Retail Pest Business with respect to such Major Customers;
(iii)abide by the terms of all guarantees associated with
Customer Contracts for such Major Customers and perform all necessary work and
satisfy all obligations thereunder;
(iv) communicate with and call upon the Major Customers in a
manner consistent with PRISM's past practices and with the same sales personnel
used by PRISM to communicate and call upon such Major Customers (to the extent
reasonably practicable); and
(v) take such other actions relating to the to provision of
Pest Services the Major Customers consistent with PRISM's past practices.
(b) From and after the date hereof and until the Closing Date, PRISM
agrees to use its reasonable efforts to cooperate with Orkin in consummating the
transactions contemplated hereby and in effecting an orderly transition of the
Non-Retail Customers, the Assets and the Assumed Liabilities to Orkin; provided,
however, that such cooperation shall not include any requirement of PRISM to
expend money (other than reasonable out-of-pocket travel and related expenses or
as otherwise provided herein), commence any litigation, actions or proceedings
or offer or grant any accommodation (financial or otherwise) to any third party.
5.06 Access. Prior to the Closing, PRISM shall grant to Orkin or cause to
be granted to Orkin and its representatives, employees (including information
technology personnel), counsel and accountants reasonable access, during normal
business hours and upon reasonable notice, (i) to the personnel, properties,
systems, books and records (other than intercompany pricing and cost information
between PRISM and its affiliates of any nature whatsoever) of PRISM relating
exclusively to the Pest Business, for the sole purpose of an orderly transfer of
the Assets and the Non-Retail Pest Business, (ii) to the employees exclusively
employed in the Pest Business for the sole purpose of
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facilitating hiring by Orkin and integrating employees into Orkin, (iii) to the
books and records of PRISM (other than to intercompany pricing and cost
information between PRISM and its affiliates of any nature whatsoever) for the
sole purpose of providing Orkin with information demonstrated by Orkin as
required to be included in a required filing under Form 8-K promulgated under
the Securities Exchange Act of 1934, as amended, and (iv) subject to the consent
of the relevant landlord or lessor, to the premises covered by the Leases and
the Shared Lease for the sole purpose of conducting a Phase I environmental
investigation of such premises (it being agreed by the parties hereto that in
the event that Orkin, in the process of such investigations, discovers an
Environmental Violation at any of such premises which materially and adversely
affects such premises, then Orkin must disclose to Prism the results of the
Phase 1 investigation and may refuse to assume, and PRISM shall not assign and
transfer, the Lease(s), and/or sublease the Shared Lease covering such premises;
it being understood that PRISM shall not have any liability whatsoever to Orkin
arising out of or relating to the failure to assign any such Lease or sublease
the Shared Lease and that no representation, warranty or covenant of PRISM
contained herein shall be breached or deemed breached, and that there shall be
no adjustment to the Purchase Price, as a result of the failure to assign or
transfer any such Lease or to sublease the Shared Lease); provided, however,
that such access does not unreasonably interfere with the normal operations of
PRISM or its Business; and provided further, however, that all requests for
access shall be directed to ▇▇▇▇ ▇▇▇▇▇▇▇, or such other person as PRISM shall
designate from time to time.
5.07 Name Change. At the Closing, PRISM and Orkin shall execute a license
agreement in the form of Exhibit C (the "License Agreement") allowing Orkin to
utilize certain trademarks used by PRISM in connection with the conduct of the
Non-Retail Pest Business for limited periods of time following the Closing.
5.08 Knowledge of Misrepresentations and Omissions. As of the date hereof,
Orkin has no knowledge of any misrepresentations or omissions in the
representations and warranties of PRISM in this Agreement and the Schedules
hereto, and prior to the Closing, Orkin shall promptly notify PRISM if Orkin
obtains knowledge that the representations and warranties of PRISM in this
Agreement and the Schedules hereto are not true and correct in all material
respects or if any of them contains any material errors or omissions. As used
herein, Orkin shall be deemed to have knowledge of only those misrepresentations
or omissions actually known by the following individuals: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or ▇▇▇▇▇ ▇▇▇▇▇▇.
5.09 Antitrust Notification. PRISM and Orkin will as promptly as
practicable, but in no event later than two business days following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form, if any, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act") and shall ask for early termination of the waiting
period. Any such notification and report form and supplemental information will
be in substantial compliance with the requirements of the HSR Act. Each of PRISM
and Orkin shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act. PRISM and Orkin shall
keep each other apprised of the status of any communications with, and inquiries
or requests for additional information from, the FTC and the DOJ and shall
comply promptly
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with any such inquiry or request. Each of Orkin and PRISM shall pay fifty
percent of the fees payable in connection with making the filing required under
the HSR Act. Each of PRISM and Orkin will use its reasonable efforts to obtain
as promptly as possible any clearance required under the HSR Act for the
purchase and sale of the Assets; provided, however, that such efforts shall not
include any requirement that the parties hereto expend money (other than in
connection with the fees and expenses referenced above), commence any
litigation, defend or prosecute any governmental proceeding or grant any
accommodation (financial or otherwise) to any third party, but shall include a
requirement that the parties respond in good faith to any requests for
information or inquiries by the FTC or the DOJ for information until the earlier
of (i) the expiration or termination of the waiting period under the HSR Act or
(ii) the delivery by the FTC or the DOJ of a "second request" for information
with respect to the transactions contemplated hereby or by the Joint Venture
Agreement.
5.10 Sales or Transfer Taxes and Other Charges.
(a) Except as otherwise specifically provided in this Agreement,
Orkin and PRISM shall each be responsible for and shall pay fifty percent of the
cost of all sales, use, value-added, excise, business, goods and services,
transfer, stamp, recording, registration, conveyance, or similar taxes or
expenses that may be imposed as the result of the sale and transfer of the
Assets (including without limitation, any duty or other tax chargeable in
respect of any instrument transferring property and all filing fees or expenses
payable in connection with the sale and transfer of the intellectual property
described in Section 1.01(g), but excluding any and all penalties, interest and
additions to any of such taxes which shall be paid by the party against whom
such penalty, interest or addition was levied), and the parties shall cooperate
in timely making all filings, returns, reports, and forms as may be required to
comply with the provisions of any applicable tax law. PRISM shall be responsible
for the preparation and filing of any sales and use tax filings necessitated by
the consummation of the transactions contemplated in this Agreement, but shall
provide drafts of any such filings to Orkin within a reasonable period of time
prior to the due date for filing the same, and shall revise such filings, as
appropriate, to take into account any reasonable comments thereto as provided by
Orkin. Orkin shall be responsible for the preparation and filing of any transfer
tax filings necessitated by the consummation of the transactions contemplated in
this Agreement, but shall provide drafts of any such filings to PRISM within a
reasonable period of time prior to the due date for filing the same, and shall
revise such filings, as appropriate, to take into account any reasonable
comments thereto as provided by PRISM. Orkin will provide to PRISM resale
certificates, as appropriate..
(b) The following expense items relating to the Non-Retail Pest
Business shall be apportioned at the Closing in an equitable manner (based on
actual tax or other relevant bills or, to the extent such bills are not
available prior to the Closing, based on the most recently ascertainable tax or
other relevant bills). To the extent necessary, the parties shall make
appropriate adjustments and payments one to the other after the Closing so that
the income and expense items with respect to the period up to the Closing Date
shall be for PRISM's account and the income and expense items with respect to
the period on and after the Closing Date shall be for Orkin's account:
(i) Real estate taxes and payments in lieu of tax with respect
to the properties covered by the Leases on the basis of the fiscal year for
which assessed.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(ii) Personal property taxes, if any, on the basis of the
fiscal year for which assessed.
(iii)Utilities, telephone charges and other apportionments and
adjustments on the basis of the fiscal year for which assessed.
5.11 Tax Assistance. After the Closing and upon reasonable written notice,
the parties shall furnish or cause to be furnished to each other and their
respective representatives, employees, counsel, and accountants access during
normal business hours, such information (including records pertinent to the
Non-Retail Pest Business but, in the case of PRISM, excluding any intercompany
pricing or cost information between PRISM and its affiliates of any nature
whatsoever) and assistance relating to the Non-Retail Pest Business as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any tax returns, reports, or forms, or the defense of
any tax claim or assessment; provided, however, that this access shall not
unreasonably disrupt the normal operations of Orkin or PRISM, and the party
requesting cooperation shall pay the reasonable out-of-pocket costs incurred by
the party furnishing cooperation. This cooperation will continue for a
reasonable period from the Closing Date plus any additional time during which a
party has been advised (a) that there is an ongoing tax audit with respect to
periods before the Closing Date or (b) that the period is open to assessment.
PRISM shall be responsible for any tax returns and filings attributable to
income earned, or fiscal or filing periods ending, before the Closing Date, and
Orkin shall be responsible for any tax returns and filings attributable to
income earned, or fiscal or filing periods ending, on or after the Closing Date.
5.12 Shared Vehicle Leases. Orkin acknowledges that the Vehicle Lease
Agreements between each of [***] (the "Parent Leases") do not constitute Assets
and shall not be assigned by PRISM to Orkin at the Closing. With respect to the
Parent Leases, PRISM will use its reasonable efforts to obtain the consent of
each of [***] to enter into separate agreements with PRISM with respect to those
leased vehicles relating exclusively to the Pest Business. In the event that
separate leases are entered into by PRISM and such parties prior to the Closing,
PRISM agrees to assign, and Orkin agrees to assume, to the extent assignable,
such leases as part of the Assets at the Closing. PRISM's obligations pursuant
to this Section 5.13 shall not include any requirement of PRISM to expend money,
commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party. PRISM shall notify Orkin, in writing, of the
results of its efforts with respect to the foregoing on or before April 15,
1999. Orkin agrees that PRISM shall not have any liability whatsoever to Orkin
arising out of or relating to the failure to obtain any such separate agreement.
Orkin further agrees that no representation, warranty or covenant of PRISM
contained herein shall be breached or deemed breached, and that there shall be
no adjustment to the Purchase Price, as a result of the failure to obtain any
such separate agreement or as a result of any facts relating to the Parent
Leases.]
5.13 Updated Schedules. Prior to the Closing, PRISM shall have the right
to supplement, modify or update the Schedules hereto to reflect any changes in,
or facts, events or circumstances relating to, the Pest Business that occur
prior to the Closing; provided, however, that any such supplements,
modifications or updates shall be subject to Orkin's rights under Section 6.01
hereof.
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Any such supplements, modifications and updates shall have the effect of
modifying the representations and warranties of PRISM from and after the Closing
for purposes of Article 8 hereof.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF ORKIN
The obligation of Orkin to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of each of the following
conditions unless waived in writing by Orkin:
6.01 Representations and Warranties; Covenants. The representations and
warranties of PRISM made in this Agreement shall be true and correct in all
respects on and as of the Closing Date as though made on and as of the Closing
Date and PRISM shall have performed or complied with all obligations and
covenants required by this Agreement to be performed or complied with by PRISM
by the time of the Closing, except to the extent of changes or developments
caused or contemplated by the transactions expressly contemplated by this
Agreement, for representations and warranties that speak as of a specific date
or time (which need only be true and correct as of such date or time) and for
breaches of such representations and warranties and covenants that, in the
aggregate, together with all supplements, modifications and updates to the
Schedules made by PRISM as permitted by Section 5.14 above, would not have a
material adverse effect on the Non-Retail Pest Business taken as a whole; and
PRISM shall have delivered to Orkin a certificate dated the Closing Date and
signed by a duly authorized officer of PRISM confirming the foregoing. Provided,
however, that in the event that there shall be a material adverse effect on the
Non-Retail Pest Business taken as a whole which is attributable to a reduction
in the Non-Retail Revenues between the date of this Agreement and the Closing,
then, at the election of Orkin and in lieu of Orkin's right to terminate this
Agreement, the parties shall negotiate in good faith to adjust the Purchase
Price on an equitable basis to reflect the payment of appropriate consideration
for a smaller revenue stream than as originally contemplated.
6.02 No Injunctions, etc. No injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect as of the
Closing which restrains or prohibits the purchase and sale of the Assets or the
operation or formation of the Joint Venture.
6.03 Deliveries. PRISM shall have delivered, or cause to be delivered, to
Orkin each of the following documents:
(a) A ▇▇▇▇ of sale and any other appropriate instruments of transfer,
assignment and conveyance in form and substance reasonably satisfactory to
Orkin, all dated as of the Closing Date, evidencing and effecting the sale and
transfer to Orkin of the Assets (it being understood that none of the foregoing
shall require PRISM or any other person to make any additional representations,
warranties or covenants, express or implied, not contained in this Agreement,
and any additional statement contained therein shall not constitute a
representation or warranty), including assignments of the Scheduled Intellectual
Property and such other intellectual property described in Section 1.01(g) above
included in the Assets in form appropriate for recordation with relevant
governmental agencies or authorities responsible for intellectual property.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(b) An Opinion of PRISM's in-house counsel in form reasonably
satisfactory to Orkin and its counsel.
(c) The Transition Services Agreement executed by PRISM.
(d) The Sublease Agreement executed by PRISM.
(e) The Non-Competition Agreement referred to in Article IX duly
executed by PRISM and Commercial Markets.
(f) The License Agreement executed by PRISM.
(g) A Guaranty executed by Commercial Markets in the form attached
hereto as Exhibit E.
(h) Orkin shall have received from Commercial Markets an agreement
which shall provide, in substance, as follows: if Commercial Markets shall
decide to [***] the [***] or [***] of the [***] of [***] within [***] after the
Closing, Commercial Markets shall notify Orkin [***] any other [***], either
directly or through an [***] or other [***]. Within a period of [***] after
receipt of the [***], Orkin may [***] to Commercial Markets to [***] the [***],
or [***], of [***], upon such terms and conditions as may be determined by Orkin
[***]. At the request of Orkin, such [***] may be made to the senior management
of Commercial Markets in person at Commercial Markets' offices in Racine,
Wisconsin. Commercial Markets shall be required to [***] with Orkin with respect
to the [***} for a period of [***] after Commercial Market's receipt thereof and
[***] any other [***] of [***], either directly or through an [***] or other
[***]. Commercial Markets shall have [***] to [***] a [***] by Orkin, and any
decision to [***] or [***] a [***] may be made in [***].
6.04 HSR Act. The parties shall have complied with the HSR Act, and any
waiting period (and any extension thereof) under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated.
6.05 Closing of Related Transactions. Simultaneously with the Closing of
this Agreement, the transaction contemplated by the Joint Venture Agreement
shall close, and Orkin and Commercial Markets shall execute the Joint Venture
Agreement in the form attached as Exhibit D.
6.06 Board Approval. The transactions contemplated by this Agreement shall
have been approved by the Board of Directors of Orkin.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PRISM
The obligation of PRISM to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of the following conditions unless
waived in writing by PRISM:
7.01 Representations and Warranties; Covenants. The representations and
warranties of Orkin made in this Agreement shall be true and correct in all
respects on and as of the Closing Date as though made on and as of the Closing
Date and Orkin shall have performed or complied with all obligations and
covenants required by this Agreement to be performed or complied with by Orkin
by the time of the Closing, except to the extent of changes or developments
caused or contemplated by the transactions expressly contemplated by this
Agreement and for representations and warranties that speak as of a specific
date or time (which need only be true and correct as of such date or time).
7.02 No Injunctions, etc. No injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect as of the
Closing which restrains or prohibits the purchase and sale of the Assets or the
operation or formation of the Joint Venture.
7.03 Deliveries. Orkin shall have delivered:
(i) payment of the Closing Cash Payment amount.
(ii) an Opinion of Orkin's counsel in form reasonably
satisfactory to PRISM and its counsel.
(iii) the Transition Service Agreement executed by Orkin.
(iv) the License Agreement executed by Orkin.
(v) an assumption agreement in form and substance reasonably
satisfactory to PRISM evidencing and effecting the assumption by Orkin of the
Assumed Liabilities.
7.04 HSR Act. The parties shall have complied with the HSR Act, and any
waiting period (and any extension thereof) under the HSR Act applicable to the
transaction contemplated hereby shall have expired or been terminated.
7.05 Closing of Related Transactions. Simultaneously with the Closing of
this Agreement, the transactions contemplated by the Joint Venture Agreement
shall close, and Orkin and Commercial Markets shall execute the Joint Venture
Agreement in the form attached as Exhibit D..
7.06 Board Approval. The transactions contemplated by this
Agreement shall have been approved by the Board of Directors of
Commercial Markets and S. C. ▇▇▇▇▇▇▇ & Son, Inc.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
ARTICLE VIII
INDEMNIFICATION
8.01 Indemnification by PRISM. PRISM shall indemnify and hold harmless
Orkin, its officers, directors, employees, affiliates, subsidiaries, agents and
permitted assigns, from and against any and all liabilities, obligations,
claims, demands, losses, actions and suits at law, administrative proceedings
and investigations, or proceedings in equity, damages, judgments, assessments,
charges, fines, penalties, costs and expenses, including reasonable attorneys'
fees but excluding punitive damages (collectively, "Losses"), arising out of or
caused by (i) a breach of any representation or warranty of PRISM contained in
this Agreement, (ii) a breach of any covenant of PRISM contained in this
Agreement and (iii) any liability or obligation of PRISM that is not an Assumed
Liability. Notwithstanding the foregoing, PRISM shall have no liability for
indemnification solely due to a breach of any representation or warranty of
PRISM contained in this Agreement until the aggregate amount of all Losses
relating solely to breaches of representations and warranties for which PRISM
would, but for this provision, be liable [***] of the
Purchase Price (the "Deductible Amount") and PRISM shall be liable only for the
amount of such Losses which are in excess of the Deductible Amount; and PRISM's
aggregate liability for breaches of representations and warranties under this
Article VIII shall in no event [***] of the Purchase
Price. Provided, however, that the preceding sentence (which sets forth PRISM's
aggregate liability with respect to indemnified Losses incurred by Orkin) shall
not be applicable to Losses attributable to (i) the failure of the parties to
comply with the provisions of any applicable bulk sales law or similar statute;
(ii) any liability (other than Executory Contractual Liabilities) which was not
listed as a Special Liability.
8.02 Indemnification by Orkin. Orkin shall indemnify and hold harmless
PRISM, its officers, directors, employees, affiliates, subsidiaries, agents and
permitted assigns from and against any and all liabilities, obligations, claims,
demands, losses, actions and suits at law, administrative proceedings and
investigations, or proceedings in equity, damages, judgments, assessments,
charges, fines, penalties, costs and expenses, including reasonable attorneys'
fees but excluding punitive damages (collectively, "Losses") arising out of or
attributable to any liabilities or obligations expressly assumed by Orkin
hereunder, or arising out of or caused by a breach of any representation,
warranty or covenant of Orkin contained in this Agreement and for any failure to
perform after Closing under any Customer Contract, Lease, Purchase Order or
Other Contract. Notwithstanding the foregoing but without affecting Orkin's
responsibilities respecting Assumed Liabilities or any covenant contained in
this Agreement, Orkin shall have no liability for indemnification solely due to
breaches of a representation or warranty contained in this Agreement under this
Section 8.02 until the aggregate amount of all Losses relating thereto for which
Orkin would, but for this provision, be liable [***] of the
Purchase Price (the "Deductible Amount") and Orkin shall be liable only for the
amount of such Losses which are in excess of the Deductible Amount; and Orkin's
aggregate liability under this Article VIII for breaches of representations and
warranties shall in no event [***] of the Purchase Price.
8.03 Environmental Matters. Notwithstanding the foregoing, in the event
either party, its officers, directors, employees, affiliates, subsidiaries,
agents or permitted assigns incurs any Loss arising from any claim, demand,
action or suit at law, administrative proceeding or investigation, or proceeding
in equity, or judgment, as a result of the violation of any Environmental Laws
(an "Environmental Violation"), which Environmental Violation is connected to
the use or ownership of
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the Assets or operation of the Non-Retail Pest Business either prior to or after
the Closing, and in the event the proportion in which the fact, event or
condition giving rise to such Environmental Violation occurred or was caused
prior to or after the Closing cannot be reasonably ascertained, the parties
agree to share all Losses, including any associated clean-up costs, and to
indemnify and hold harmless one another, as follows: each party shall be
responsible for a portion of the total Loss determined by multiplying the total
Loss amount by a fraction, the numerator of which is the number of months, both
prior to and after the Closing, during which such party occupied the Facility
involved in the Environmental Violation and the denominator of which is the
total number of months which both parties occupied such Facility (the "Shared
Indemnification Provisions"). To the extent the Closing does not occur at the
end of a month, the portion of the Loss allocated to the months of the Closing
shall be apportioned between the parties pro rata, based on the number of days
of such month in which each party occupied such Facility. To the extent the
Facility is covered by a Shared Lease, the Loss shall be further apportioned
between the parties pro rata, based on the square footage occupied by each party
at such Facility. In the event the extent to which the fact, event or condition
giving rise to the Environmental Violation occurred or was caused prior to
and/or after the Closing can be reasonably ascertained, Orkin shall be
responsible for indemnifying PRISM to the extent such fact, event or condition
occurred or was caused after the Closing, and PRISM shall be responsible for
indemnifying Orkin to the extent such fact, event or condition occurred or was
caused prior to the Closing (the "Separate Indemnification Provisions"). If a
claim to which the Shared Indemnification Provisions apply arises out of a suit
or other demand by a third party against PRISM or Orkin, their respective
officers, directors, employees, affiliates, subsidiaries, agents, or permitted
assigns, such party shall give prompt notice thereof to the other party, and
both parties will cooperate in conducting the defense of the claim. Any claim to
which the Separate Indemnification Provisions apply which arises out of a suit
or other demand by a third party against PRISM or Orkin, their respective
officers, directors, employees, affiliates, subsidiaries, agents or permitted
assigns shall be governed by the procedures set forth in Section 8.07 hereto,
except that the party who bears the greater proportionate responsibility for
such matters pursuant to this Section shall be considered the "indemnifying
party" for purposes of such procedures. Except for actions taken in good faith
and in the ordinary course of business of the Non-Retail Pest Business (which
actions shall not include any investigation or other activity the intent of
which is to create or preserve an indemnification claim hereunder), neither
Orkin nor any of its affiliates, agents, representatives or employees will
instigate any investigation or other activity that would require or encourage
any federal, state, municipal or other governmental or public body or authority
to investigate matters covered by PRISM's representations and warranties in
Section 3.22 above or indemnities with respect to such representations and
warranties in Section 8.01 or contained in this Section 8.03 or would otherwise
give rise to any claim, demand, action or suit at law, administrative proceeding
or investigation, or proceeding in equity, or judgment with respect thereto.
8.04 Exclusive Remedy. Orkin acknowledges and agrees that, from and after
the Closing, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement and the other agreements
contemplated hereby shall be pursuant to the indemnification provisions set
forth in this Article 8; provided, however, that notwithstanding the foregoing,
Orkin shall be entitled to seek equitable remedies (including, without
limitation, specific performance) with respect to breaches, or contemplated
breaches, of Sections 1.01, 2.05, 5.02, 5.03, 5.04(i), 5.05, 5.06, 6.04, 10.05,
and any breach of the Sublease Agreement, the Transition Services Agreement, the
Non-
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[***] - CONFIDENTIAL TREATMENT REQUESTED
Competition Agreement, or the License Agreement. Except with respect to the
indemnification claims under this Article 8 or equitable remedies as set forth
in the preceding sentence, Orkin hereby waives, from and after the Closing, to
the fullest extent permitted under applicable law, any and all rights, claims
and causes of action it may have against PRISM, including without limitation any
such rights, claims or causes or action relating to environmental, health or
safety matters (including without limitation any such claims arising under
CERCLA or analogous state laws), relating to the subject matter of this
Agreement and the other agreements contemplated hereby (other than the Joint
Venture Agreement) arising under or based upon any federal, state, local or
foreign statute, law, ordinance, rule or regulation or otherwise. Orkin further
acknowledges and agrees that (i) other than the representations and warranties
of PRISM specifically contained in this Agreement, there are no representations
or warranties of PRISM or its representatives or any other person or entity
either express or implied with respect to the Non-Retail Pest Business, the
Assets or the Assumed Liabilities and (ii) except as expressly provided in this
Article VIII, it shall have no claim or right to indemnification based on any
information, documents or materials furnished by PRISM or its representatives or
any other person or entity or any of their officers, directors, employees,
agents or advisors, including any information, documents or material made
available to Orkin in expectation of the transactions contemplated by this
Agreement.
8.05 Determination of Losses. The parties hereto shall make appropriate
adjustments for tax benefits and amounts recovered or recoverable under
insurance policies in determining Losses for purposes of this Article 8. Any
indemnification payment under this Article 8 shall be treated as an adjustment
to the Purchase Price for tax purposes.
8.06 Termination of Indemnification. The obligations to indemnify and hold
harmless a party hereto pursuant to this Article 8 and in accordance with this
Agreement shall terminate [***] after the Closing Date; provided,
however that such obligations to indemnify and hold harmless will not terminate
with respect to any item as to which the person to be indemnified or the related
party shall have, before the expiration of the applicable period, previously
made a claim by delivering a notice (stating in reasonable detail the basis of
such claim) to the indemnifying party.
8.07 Procedures Relating to Indemnification.
(a) In order for a party (the "indemnified party") to be entitled to
any indemnification provided for under this Agreement with respect to a claim or
demand made by any third party against the indemnified party (a "Third Party
Claim") such indemnified party must notify the party from whom indemnification
is sought (the "indemnifying party") in writing, and in reasonable detail, of
the Third Party Claim as promptly as reasonably possible after receipt by the
indemnified party of written notice of the Third Party Claim; provided, however,
that failure to give such notification will not affect the indemnification
provided under this Agreement except to the extent the indemnifying party has
been actually prejudiced as a result of the failure to provide prompt and
reasonably detailed written notice. Thereafter, the indemnified party shall
deliver to the indemnifying party, within five business days after the
indemnified party's receipt of notice, copies of all notices and documents
(including court papers) received by the indemnified party relating to the Third
Party Claim.
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(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense of such claim
and, if it so chooses and acknowledges its obligation to indemnify the
indemnified party therefor, to assume the defense of such claim with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party. Notwithstanding any acknowledgment made pursuant to the
immediately preceding sentence, the indemnifying party shall be entitled to
continue to assert any limitation on its indemnification responsibility
contained in Section 8.01 or in Section 8.02. Should the indemnifying party so
elect to assume the defense of a Third Party Claim, the indemnifying party will
not be liable to the indemnified party for legal expenses subsequently incurred
by the indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party, with the
understanding that the indemnifying party shall control the defense thereof. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
not assumed defense thereof. If the indemnifying party chooses to defend a Third
Party Claim, the parties shall cooperate in the defense or prosecution of the
claim. This cooperation will include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records and
information that are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the indemnifying party assumes defense of the Third Party Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise, or
discharge, such Third Party Claim without the indemnifying party's prior written
consent (which consent will not be unreasonably withheld). If the indemnifying
party shall have assumed the defense of the third Party Claim, the indemnifying
party shall not settle such Third Party Claim without the indemnified party's
prior written consent (which consent will not be unreasonably withheld).
ARTICLE IX
COVENANT NOT TO COMPETE
PRISM and Commercial Markets shall execute and deliver at Closing a
Non-Competition Agreement in the form attached as Exhibit F (the
"Non-Competition Agreement"). PRISM and Commercial Markets shall acknowledge in
the Non-Competition Agreement that the geographic area and the period and nature
of the agreed restrictions set forth in the Non-Competition Agreement are
necessary and reasonable for the protection of Orkin and shall acknowledge that
the restrictions contained therein relate exclusively to the Non-Retail Pest
Business.
ARTICLE X
GENERAL
10.1 All notices, requests, demands, approvals, consents, waivers or other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (a) delivered personally (including delivery by an express courier
service which guarantees next day delivery), (b) mailed by registered or
certified mail, return receipt requested, postage prepaid, or (c) sent by
telecopy, with written confirmation of receipt and a copy sent by the methods
described in (a) or (b), as follows (or to such other address as any party shall
specify by notice in writing to all other parties):
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If to PRISM or Commercial S.C. ▇▇▇▇▇▇▇ Commercial Markets,
Markets: Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Orkin: Orkin Exterminating Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: General Counsel
▇▇▇▇▇▇▇, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Arnall Golden & ▇▇▇▇▇▇▇
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice, request, demand, approval, consent, waiver or other
communication shall be deemed to have been received (i) if by personal delivery,
on the date of delivery if delivered by hand or on the next business day if sent
by express courier, (ii) if by mail, on the third business day following the
mailing thereof, or (iii) if by telecopy as described above, upon transmission.
10.02 Entire Agreement; Amendments. Except as provided in Section 10.05
below with respect to the Confidentiality Agreement (as defined in Section
10.05), this Agreement (including the disclosure schedules and other documents
to be delivered at or prior to Closing) constitutes the entire agreement and
understanding of the parties hereto, and supersedes all prior agreements and
understandings among the parties hereto, in respect of the subject matter hereof
and no amendment or modification of the Agreement may be made except in writing
signed by all parties hereto.
10.03 Expenses. Each party hereto shall pay its own expenses incidental to
the preparation and negotiation of this Agreement and the consummation of the
transactions contemplated hereby, except as otherwise expressly provided herein.
10.04 Bulk Sales Laws. Without implying that such laws apply to the
transactions contemplated hereby, the parties shall not comply with the
provisions of bulk sales or bulk transfer laws of any states relating to
creditors rights. PRISM agrees, in addition to the provisions of Section 8.01
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(and without regard to the Deductible Amount) to indemnify and hold Orkin
harmless from any loss, cost, or expense which arises out of any noncompliance
with any state bulk sales or bulk transfer law relating to creditor's rights.
10.05 Confidentiality.
(a) Orkin acknowledges that all information provided to it by PRISM
and its affiliates, agents and representatives is subject to the terms of a
confidentiality agreement between Orkin and PRISM (the "Confidentiality
Agreement"), the terms of which are incorporated herein by reference. Effective
upon, and only upon, the Closing, the referenced Confidentiality Agreement will
terminate; provided, however, that Orkin acknowledges and agrees that the
Confidentiality Agreement will terminate only with respect to information
provided to Orkin (and if permitted, its affiliates) that relates solely to the
Non-Retail Pest Business, the Assets, and the Assumed Liabilities. Orkin
acknowledges that any information furnished to it by PRISM and its affiliates,
agents, and representatives concerning PRISM (other than information relating
solely to the Non-Retail Pest Business, the Assets, and the Assumed Liabilities)
will remain subject to the terms and conditions of the referenced
Confidentiality Agreement after the Closing Date.
(b) Orkin shall, and shall use all reasonable efforts to cause its
directors, officers, employees, advisors, and affiliates to keep confidential
for a period of three years from the Closing Date all information concerning
PRISM, other than information that relates solely to the Assets, the Non-Retail
Pest Business or the Assumed Liabilities, and other than any such information
that is available to the public on the Closing Date or thereafter becomes
available to the public, other than the result of a breach of this Section
10.05. Nonetheless, Orkin may disclose any confidential information required by
law or legal or administrative process to be disclosed without violating this
Section 10.05.
(c) PRISM agrees to use all reasonable efforts after the Closing Date
to cause its directors, officers, employees, advisors and affiliates to keep the
Information (as defined below) confidential for a period of three years from the
Closing Date, except that any Information required by law or legal or
administrative process to be disclosed may be disclosed without violating the
provisions of this Section 10.05(c), and except that any Information may be used
and disclosed (i) in connection with the performance by PRISM of its obligations
under the other agreements contemplated hereby, (ii) in geographical areas
outside of the United States and its territories, and (iii) in connection with
the conduct of business other than the Non-Retail Pest Business, in each case
without violating the provisions of this Section 10.05(c). For purposes hereof,
the term "Information" means all information exclusively concerning the
Non-Retail Pest Business, the Assets and the Assumed Liabilities, other than any
such information that is available to the public on the Closing Date, or that
thereafter becomes available to the public other than as a result of a breach of
this Section 10.05(c), or that is developed independently by PRISM or its
affiliates or is obtained from third parties.
10.06 Announcements. Except to the extent required by law, regulations or
judicial process or as may be necessary to obtain any Consents or for financial
reporting purposes, and except to the extent disclosed to the parties'
respective accountants and other representatives as necessary in connection with
the ordinary conduct of their respective businesses (so long as the recipients
of such information agree to keep the terms of this Agreement confidential),
each party agrees not to disclose
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the existence or terms of this Agreement to any third party without the prior
written consent of the other parties, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the parties agree that each party shall
have the right to announce publicly the existence and the terms of this
Agreement if such party reasonably believes that such disclosure is required by
the Securities Exchange Act of 1934 or regulations promulgated thereunder or by
the rules and regulations of the New York Stock Exchange, provided that each
party shall give reasonable notice to the other before making any such
announcement and shall allow the other party reasonable time to comment on such
release or announcement in advance of such release or announcement.
10.07 Termination.
(a) This Agreement may be terminated at any time prior to Closing:
(i) by the mutual written consent of Orkin and
PRISM; or
(ii) by either party hereto if the Closing has not occurred by
August 1, 1999, provided the terminating party has not, through breach of a
representation, warranty or covenant, prevented the Closing from occurring on or
before such date.
(b) In the event Orkin or PRISM seeks to terminate this Agreement as
provided in Section 10.07(a) above, such terminating party shall give the other
parties notice thereof, whereupon this Agreement (other than Sections 10.05 and
10.06 and this Section 10.07(b)) shall terminate without any liability of any
party hereto other than any liability for a pre-termination breach of warranty,
representation or covenant of any non-terminating party contained herein.
10.08 Headings. The headings and captions in this Agreement and in any
Exhibit or Schedule hereto are solely for the convenience of the parties and
shall be of no force or effect in the construction of the Agreement.
10.09 Governing Law; Arbitration.
(a) This Agreement shall be construed in accordance with the internal
laws of the State of Delaware applicable to agreements made and to be performed
entirely within such state, without regard to the conflicts of law principles of
such state.
(b) Arbitration. Any controversy, dispute or claim arising out of or
relating in any way to this Agreement or the other agreements contemplated
hereby shall, except as otherwise provided in Article II or with respect to
seeking equitable remedies as contemplated in Section 8.04, be settled
exclusively by arbitration in the City of Washington, D.C. Such arbitration
shall be administered by the American Arbitration Association ("AAA") in
accordance with its then prevailing rules (except as otherwise provided herein),
by one independent and impartial arbitrator. Notwithstanding anything to the
contrary provided in clause (a) above, the arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. ss. 1 et seq. The fees and expenses of
the AAA and the arbitrator shall be shared equally by the parties and advanced
by them from time to time as required; provided that at the conclusion of the
arbitration, the arbitrator shall award costs and expenses (including the costs
of the arbitration previously advanced and the fees and expenses of attorneys,
accountants and other experts)
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and interest at the prime interest rate to the prevailing party. Pre-arbitration
discovery shall be permitted in accordance with the rules of the AAA. The
arbitrator shall render his award within 90 days of the conclusion of the
arbitration hearing. The arbitrator shall not be empowered to award to either
party any punitive damages in connection with any dispute between them arising
out of or relating in any way to this Agreement or the other agreements
contemplated hereby or the transactions arising hereunder or thereunder, and
each party hereby irrevocably waives any right to recover such damages.
Notwithstanding anything to the contrary provided in this Section 10.09(b) and
without prejudice to the above procedures, either party may apply to any court
of competent jurisdiction for temporary injunctive or other provisional judicial
relief if such action is necessary to avoid irreparable damage or to preserve
the status quo until such time as the arbitration panel is convened and
available to hear such party's request for temporary relief. The award rendered
by the arbitrator shall be final and not subject to judicial review and judgment
thereon may be entered in any court of competent jurisdiction.
10.10 Counterparts. This Agreement may be executed in two or more
counterparts (including by means of telecopied signature pages), each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement shall become effective when counterparts,
which together contain the signatures of all parties hereto, shall have been
delivered to PRISM and Orkin.
10.11 Assignment. Except as set forth below, this Agreement and any rights
and obligations hereunder shall not be assignable or transferable by Orkin or
PRISM (including by operation of law in connection with a merger or sale of
stock, or sale of substantially all the assets, of Orkin or PRISM) without the
prior written consent of the other party and any purported assignment without
such consent shall be void and without effect; provided that, without the
consent of PRISM, Orkin may assign its right to purchase any of the Assets
hereunder to one or more wholly-owned subsidiaries of Orkin upon written notice
of such assignment to PRISM (it being understood, however, that no such
assignment shall limit or otherwise affect Orkin's obligations hereunder).
10.12 No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the parties hereto, and their permitted assigns and nothing herein express or
implied shall give or be construed to give to any person or entity, other than
the parties hereto and such permitted assigns, any legal or equitable rights
hereunder.
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* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first hereinabove set forth, by their
representatives thereunto duly authorized.
"ORKIN":
ORKIN EXTERMINATING COMPANY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
"PRISM":
PRISM INTEGRATED SANITATION
MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Title: President
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SCHEDULES
Schedule Title
1.01(c) Fixed Assets
1.01(d) Leases
1.01(f) Other Contracts
1.01(g) Scheduled Intellectual Property
1.01(h) Transferred telephone numbers
1.03 Shared Lease
2.01(d) Major Customers
2.01(h) Permitted Encumbrances
2.01(o) Retail Customers
3.02(b) Consents
3.05 Customer Developments
3.06 Inventory
3.10 Financial Schedules
3.11 Absence of Material Changes
3.12 Receivables
3.15 Labor Disputes
3.16 Employee Benefit Plans
3.17 Notice of Violations of Governmental Licenses,
Permits or Approvals
3.18 Customer Compliance
3.19 Litigation
3.22 Environmental Matters
3.23 Immigration Matters
3.24 Facilities
3.25 Exception to No Termite Control Business
5.04(a) Available Employees
5.04(b) Orkin Mandatory Employment Criteria
5.04(d) Plan Conditions
5.04(g) PRISM Severance Pay Policy
LIST OF EXHIBITS
Exhibit Title
A Sublease Agreement for Shared Facility (Section 1.03)]
B Form of Transition Services Agreement (Section 1.04)
C Form of License Agreement (Section 5.07)
D Form of Joint Venture Agreement (Article VI;VII )
E Form of Guaranty (Article VI)
F Form of Non-Competition Agreement (Article IX)