EXHIBIT 2d
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.
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (the "Amendment") is
entered into as of the 1st day of December, 1999 by and among ORKIN
EXTERMINATING COMPANY, INC., a Delaware corporation ("Orkin"), ▇▇▇▇ PEST CONTROL
COMPANY, INC., a Mississippi corporation ("▇▇▇▇"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, an
individual resident of the state of Mississippi ("▇▇▇▇▇▇▇ ▇▇▇▇").
WITNESSETH:
WHEREAS, on October 19, 1999, the parties entered into that certain
ASSET PURCHASE AGREEMENT (the "Agreement"; capitalized terms used but not
otherwise defined herein shall have the meaning as set forth in the Agreement),
whereby ▇▇▇▇ agreed to sell all of the Assets owned and used by ▇▇▇▇ in
connection with the Pest Business and assume certain liabilities of ▇▇▇▇ in
connection therewith (other than the Excluded Assets); and
WHEREAS, ▇▇▇▇ has heretofore transferred certain of its assets to
▇▇▇▇▇▇▇ ▇▇▇▇, and
WHEREAS, certain actions which have occurred at or with respect to
▇▇▇▇'▇ pest control operations in [***],[***], and [***]could be construed as
having a material adverse change upon the Business, but Orkin desires to
waive its right to terminate the Agreement as a result thereof, subject to the
agreements as further set forth herein; and
WHEREAS, the parties hereto desire to amend the Agreement in certain
other respects as specifically set forth herein; and
WHEREAS, except as specifically set forth herein, the parties hereto
desire to affirm the terms and conditions, and their obligations, under the
Agreement, and wish to agree that such terms, conditions, and obligations, as
amended pursuant to this Amendment, are and shall remain in full force and
effect.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. The recitals set forth above are true and correct and are
incorporated into this Amendment by this reference.
2. The parties acknowledge and agree that the Closing shall occur on
Friday, December 3, 1999 at the offices of Barnes, Broom, Dallas and ▇▇▇▇▇▇,
PLLC, in Jackson, Mississippi. The Closing shall be effective as of 12:01am
local time on December 4, 1999 (or, if the Closing does not occur on December 3,
1999, on such other date as may be mutually acceptable to the parties), which
shall be the "Closing Date".
3. Orkin acknowledges that ▇▇▇▇ has transferred all of the depreciable
assets used in the conduct of the Business to ▇▇▇▇▇▇▇ ▇▇▇▇ on or before the date
hereof ( the "Transferred
[***] - CONFIDENTIAL TREATMENT REQUESTED
Assets"), and further acknowledges that such transaction is not a material
adverse change upon the Business. ▇▇▇▇▇▇▇ ▇▇▇▇ agrees to sell and transfer the
Transferred Assets to Orkin at the Closing by ▇▇▇▇ of Sale, free and clear of
all liens and encumbrances other than the Permitted Encumbrances, in exchange
for a payment equal to the book value of the Transferred Assets (as set forth on
▇▇▇▇'▇ last financial statement immediately preceding the Closing Date) in
immediately available funds. ▇▇▇▇ acknowledges and agrees that the Closing Cash
Payment shall be reduced by the amount paid to ▇▇▇▇▇▇▇ ▇▇▇▇ for the Transferred
Assets. ▇▇▇▇ further acknowledges and agrees that, notwithstanding the transfer
of the Transferred Assets to ▇▇▇▇▇▇▇ ▇▇▇▇, each and every of its representations
and warranties with respect to the Transferred Assets (other than the
representation and warranty with respect to title to the Transferred Assets,
which is amended to provide that ▇▇▇▇ represents and warrants that title to such
assets is in ▇▇▇▇▇▇▇ ▇▇▇▇, as opposed to ▇▇▇▇) are true, correct, and complete,
are being relied upon by Orkin, and a breach thereof shall entitle Orkin to make
a claim for indemnification against ▇▇▇▇ under the provisions of Section 8.01 of
the Agreement.
4. The parties acknowledge and agree that, notwithstanding the Closing
Date, Orkin shall be entitled to all revenues generated in the conduct of the
Business from and after December 1, 1999 (the "Cutover Date"), and shall be
obligated to pay, or to reimburse ▇▇▇▇ for, all ordinary and necessary
operational expenses incurred in the operation of the Business by ▇▇▇▇ from and
after the Cutover Date until the Closing Date. Provided, however, that such
expenses shall not include insurance expenses and other comparable overhead
expenses incurred by ▇▇▇▇, other than Orkin's obligation to reimburse ▇▇▇▇ for
[***] of ▇▇▇▇'▇ cost of providing health insurance for ▇▇▇▇'▇ employees for
the month of December, 1999, promptly upon presentation of a ▇▇▇▇ therefor, and
also shall not include any lease or other occupancy costs or expenses
attributable to any ▇▇▇▇ locations other than those locations which are listed
on Schedule 1.01(d) of the Agreement. Except as specifically set forth in this
paragraph or as expressly set forth in the Agreement, Orkin does not assume any
expense, obligation, loss, cost or liability incurred by ▇▇▇▇ before the Closing
Date, whether incurred before, on, or after the Cutover Date, and ▇▇▇▇ shall
indemnify Orkin therefor pursuant to the provisions of Section 8.01 of the
Agreement. ▇▇▇▇ shall establish a separate account into which all revenues
attributable to the operation of the Business from and after the Cutover Date
shall be deposited, which account shall be delivered to Orkin at the Closing.
5. The parties acknowledge and agree that, notwithstanding the
provisions of the Agreement to the contrary, the Closing Cash Payment shall also
be reduced by [***] DOLLARS (the [***]).
The [***] shall not be delivered to a third party, but shall
be retained by Orkin in whole or in part, or shall be paid by Orkin in whole or
in part to ▇▇▇▇, pursuant to the further provisions of this paragraph.
▇▇▇▇ represents and warrants that, as of [***], the monthly
recurring pest control revenue attributable to the customers serviced by its
[***] and [***] branches, and by [***] and [***] in its [***] branch, is equal
to or greater than [***]. For purposes hereof, [***] is the "Base Revenue". ▇▇▇▇
further represents and warrants that those accounts listed on Attachment 1
hereto are all of the accounts serviced by its [***] and [***] branches, and
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[***] - CONFIDENTIAL TREATMENT REQUESTED
by [***] and [***] in its [***] branch, which generate recurring pest control
revenue. The accounts listed on Attachment 1 are the "Target Revenue Accounts"
for purposes hereof.
The parties hereto agree that "Target Revenue",for purposes hereof,
shall be equal to [***] of the Base Revenue, or [***].
As soon as practicable after [***], Orkin shall determine
the monthly recurring pest control revenue attributable to the Target Revenue
Accounts for the month of [***] (the "True Up Revenue"). If the True Up
Revenue is equal to or greater than the Target Revenue, then Orkin shall
promptly deliver the [***], plus simple interest thereon from the Closing Date
until the date of payment at an interest rate of [***], to ▇▇▇▇. If the True Up
Revenue is less than the Target Revenue (the amount being the "Shortfall"), then
Orkin shall be entitled to retain that portion of the Revenue Holdback which
shall be equal to the [***] (ie, the [***] multiplied by [***]), multiplied by
[***] (the "Orkin Holdback Retention"). If the Orkin Holdback Retention is less
than the [***], then Orkin shall promptly deliver the [***], less the Orkin
Holdback Retention, plus simple interest thereon from the Closing Date until the
date of payment at an interest rate of [***] to ▇▇▇▇.
For example, if Orkin determined that the True Up Revenue is
[***], then the [***] will be [***]. If the Shortfall is [***], then the Orkin
Holdback Retention will be [***]. Orkin shall be entitled to retain [***] of the
[***], and shall be required to deliver [***], plus simple interest thereon from
the Closing Date until the date of payment at an interest rate of [***], to
▇▇▇▇, promptly after Orkin has determined the True Up Revenue.
Orkin acknowledges that, subject to the forgoing provisions, to its
knowledge, there are no additional issues, conditions or developments with
respect to ▇▇▇▇'▇ revenues which Orkin would contend as having a material
adverse effect or change upon the Business so as to give Orkin a right to
terminate the Agreement pursuant to the provisions of Section 6.01 and/or 10.07
thereof, or which Orkin would claim to be a breach of ▇▇▇▇'▇ representations and
warranties set forth in the fourth sentence of Section 3.05, Section 3.11, or
Section 6.01 of the Agreement.
6. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇ shall deliver an indemnity agreement, in form
and substance reasonably satisfactory to Orkin, which shall set forth ▇▇▇▇'▇ and
▇▇▇▇▇▇▇ ▇▇▇▇'▇ acknowledgement and agreement that Orkin shall not assume and
shall be indemnified against any obligations due ▇▇▇▇▇▇▇ ▇▇▇▇ from ▇▇▇▇. Orkin
acknowledges that the delivery of such an instrument shall satisfy the
conditions precedent to the Closing set forth in Section 6.05 of the Agreement.
7. The parties hereto acknowledge and agree that the Days Off Accruals,
for purposes of determining the adjustment to the Purchase Price as set forth in
Section 2.03 of the Agreement, shall not include accrued but unused vacation
days for ▇▇▇▇ employees, and that therefore such obligation is not an Assumed
Liability. ▇▇▇▇ covenants and agrees to pay its
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employees an amount necessary to
satisfy its vacation pay accrual with respect to its employees, and to obtain
documentation acknowledging that they have no carryover vacation pay accruals
upon the commencement of their employment with Orkin.
8. The Agreement, as amended by this Amendment, contains the entire
agreement and understanding between the parties hereto with respect to the
subject matters thereof, and no amendment or modification thereto may be made
except in writing signed by all parties hereto. This Amendment shall be
construed in accordance with the internal laws of the State of Mississippi
applicable to agreements made and to be performed entirely within such state,
without regard to the conflicts of law principles of such state. Any claim for
indemnification for a breach of a representation or warranty as set forth in
this Amendment shall be governed by the provisions of Article VIII of the
Agreement, and any dispute between the parties with respect to this Amendment
shall be settled in the manner set forth in Section 10.09(b) of the Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Amendment as of the date
first set forth above.
"ORKIN"
ORKIN EXTERMINATING COMPANY, INC.
By:_____________________________________
Title:__________________________________
"▇▇▇▇"
▇▇▇▇ PEST CONTROL COMPANY, INC.
By:_____________________________________
Title:____________________________________
"▇▇▇▇▇▇▇ ▇▇▇▇"
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Attachment 1
Target Revenue Accounts
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