Exhibit 2.1
ACQUISITION AGREEMENT
By And Among
SERVICEMASTER LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SERVICEMASTER ACQUISITION CORPORATION
(A Delaware Corporation)
and
BAREFOOT INC.
(A Delaware Corporation)
December 5, 1996
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ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT, dated December 5, 1996, is entered into by and
among ServiceMaster Limited Partnership ("ServiceMaster"), a Delaware limited
partnership, ServiceMaster Acquisition Corporation (the "MergerSub"), a Delaware
corporation and wholly-owned subsidiary of ServiceMaster and Barefoot Inc.
("Barefoot"), a Delaware corporation.
WHEREAS: ServiceMaster desires to make a tender offer to acquire all of the
outstanding shares of common stock, par value $0.01 per share, of Barefoot (the
"Barefoot Common Stock") together with the associated Series A Junior
Participating Preferred Stock Purchase Rights (the "Stock Purchase Rights"), in
accordance with the terms and subject to the conditions provided for herein. The
term "Share" whenever it is used in this Agreement means a share of Barefoot
Common Stock issued or issuable by Barefoot. Unless the context otherwise
requires, all references in this Agreement to Barefoot Common Stock or the
Shares shall include the associated Stock Purchase Rights.
WHEREAS: The parties intend that, for United States federal income tax
purposes, the exchange of Shares for ServiceMaster Shares pursuant to the Offer
as provided for herein will qualify as a tax free contribution to ServiceMaster
within the meaning of Section 721 of the Internal Revenue Code ("Code").
WHEREAS: To complete its acquisition of Barefoot, ServiceMaster desires to
effect as promptly as possible after consummation of the Offer a cash-out merger
of MergerSub with and into Barefoot upon the terms and subject to the conditions
set forth in a Merger Agreement executed simultaneously with this Agreement (the
"Merger Agreement").
WHEREAS: The Board of Directors of Barefoot, has, in light of and subject
to the terms and conditions set forth herein, (i) determined that each of the
Offer and the Merger (as defined in Section 2.1) is fair to the stockholders of
Barefoot and in the best interests of such stockholders and (ii) approved and
adopted this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby and resolved to recommend acceptance of the
Offer and approval and adoption by the stockholders of Barefoot of the Merger
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Barefoot, ServiceMaster and MergerSub hereby agree as follows:
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ARTICLE 1.0
The Offer
1.1 Commitment to Make the Offer.
(a) All Shares Offer. Subject to the terms and conditions set forth in this
Agreement, ServiceMaster shall make a tender offer (herein called the
"Offer") to acquire all of the outstanding Shares on the terms specified in
this Article 1, subject to the conditions prescribed in Annex 1 to this
Agreement and on such other terms as shall be approved by ServiceMaster and
Barefoot. Subject to the terms and conditions of the Offer, at the Closing
Time (as defined in Section 1.7) ServiceMaster shall accept all Shares
which have been properly tendered and not withdrawn pursuant to the Offer
by 12:00 midnight New York City time on the Expiration Date (as defined in
subsection 1.1(b)). The Offer shall be conducted in accordance with all
applicable requirements of the Securities Act of 1933 (the "Securities
Act"), the Securities Exchange Act of 1934 (the "Exchange Act") and all
other applicable legal and regulatory requirements.
(b) Consideration for Shares. Upon the terms and subject to the conditions of
the Offer, the Offer shall commit ServiceMaster to acquire each Share for,
at the election of the holder as provided in and subject to the limitations
set forth in this Article 1, either:
(i) a fraction (the "Conversion Fraction") of a validly issued, fully paid
and nonassessable share ("ServiceMaster Share") of limited partnership
interest in ServiceMaster, determined by dividing $16 by the greater
of (x) $23.00 or (y) the average (without rounding) of the closing
price (the "Average ServiceMaster Share Price") of ServiceMaster
Shares on the New York Stock Exchange ("NYSE") as reported on the NYSE
Composite Tape for the 15 consecutive NYSE trading days ending on the
fifth NYSE trading day immediately preceding the date that the Offer
expires (the "Expiration Date") and rounding the result to the nearest
one one-hundred thousandth of a share (the "Share Consideration"); or
(ii) $16 in cash, without any interest thereon (the "Cash Consideration"
and collectively with the Share Consideration, the "Offer
Consideration").
(c) Commencement Date. ServiceMaster shall commence the Offer not later than
the fifth business day after the Registration Statement (as defined in
Section 1.4(a) hereof) is declared effective pursuant to the Securities Act
by the Securities and Exchange Commission (the "SEC"). ServiceMaster shall
not be obligated to commence the Offer if any state of facts shall exist
which would entitle ServiceMaster not to acquire the Shares tendered in
response to the Offer under the conditions expressly set forth in
paragraphs (b), (c), (d), (e), (f), (g), (h), (i) and (n) of Annex 1,
provided that the condition in clause (f) shall be applied as of the date
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on which ServiceMaster would otherwise be obligated to commence the Offer
and that the condition in (g) shall apply only with respect to the terms,
agreements and conditions which this Agreement contemplates would be
satisfied or performed prior to the time the Offer commences.
(d) 25 Business Day Minimum Duration. If ServiceMaster shall commence the
Offer, then (except as otherwise provided in Section 1.7 or Section 6.2)
ServiceMaster shall keep the Offer open for at least 25 business days after
the Commencement Date.
(e) Tax-Free Contributions of Shares. The parties intend that, for United
States federal income tax purposes, the exchange of Shares for
ServiceMaster Shares pursuant to the Offer as provided for herein will
qualify as a tax free contribution to ServiceMaster within the meaning of
Section 721 of the Code.
1.2 Election Procedure. Each holder of Shares which have been properly
tendered and not withdrawn pursuant to the Offer by 12:00 midnight New York City
time on the Expiration Date ("Tendered Shares"), shall have the right, subject
to the limitations set forth in this Article 1, to submit a request specifying
the number of Tendered Shares that such holder desires to have exchanged into
the Share Consideration pursuant to the Offer and the number of Tendered Shares
that such holder desires to have exchanged for the Cash Consideration pursuant
to the Offer in accordance with the following procedures:
(a) Each holder of Tendered Shares may specify in a request made in accordance
with the provisions of this Section 1.2 (herein called an "Election") (i)
the number of Tendered Shares owned by such holder that such holder desires
to exchange for the Share Consideration in the Offer (a "Share Election")
and (ii) the number of Shares owned by such holder that such holder desires
to have exchanged for the Cash Consideration in the Offer (a "Cash
Election").
(b) ServiceMaster shall prepare a form reasonably acceptable to Barefoot (the
"Form of Election") which shall upon commencement of the Offer be mailed to
Barefoot's stockholders as part of the Offer Documents (as defined in
Section 1.4(b)) so as to permit Barefoot's stockholders to exercise their
right to make an Election on or prior to the Expiration Date.
(c) Any Election shall have been made properly only if the person authorized to
receive Elections and to act as exchange agent pursuant to the Offer, which
person shall be designated by ServiceMaster and shall be reasonably
satisfactory to Barefoot (the "Exchange Agent"), shall have received, by
12:00 midnight New York City time on the Expiration Date, a Form of
Election properly completed and signed and accompanied or preceded by
certificates for the Shares to which such Form of Election relates (or by
an appropriate guarantee of delivery of such certificates, as set forth in
the notice of guaranteed delivery, from a member of any registered national
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securities exchange or of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States provided
such certificates are in fact delivered to the Exchange Agent by the time
required in such guarantee of delivery).
(d) Any Barefoot stockholder may at any time prior to 12:00 midnight New York
City time on the Expiration Date, change his or her Election by written
notice received by the Exchange Agent prior to 12:00 midnight New York City
time on the Expiration Date, accompanied by a properly completed and
signed, revised Form of Election. A revised Form of Election shall be
deemed to invalidate any previously submitted Form of Election.
(e) Any Barefoot stockholder may, at any time prior to 12:00 midnight New York
City time on the Expiration Date, revoke such stockholder's Election by
written notice received by the Exchange Agent prior to 12:00 midnight New
York City time on the Expiration Date, or by withdrawal prior to 12:00
midnight New York City time on the Expiration Date of such stockholder's
certificates for Shares, or of the guarantee of delivery of such
certificates, previously deposited with the Exchange Agent pursuant to the
procedures for withdrawal set forth in the Offer Documents.
(f) ServiceMaster shall have the right to make rules (which shall be not
inconsistent with the terms of this Agreement and shall be reasonably
acceptable to Barefoot) governing the validity of the Forms of Election,
the manner and extent to which Elections are to be taken into account in
making the determinations prescribed by Sections 1.2 and 1.3, the issuance
and delivery of certificates for ServiceMaster Shares into which Tendered
Shares are to be exchanged pursuant to the Offer and the payment of Cash
Consideration pursuant to the Offer.
1.3 Issuance of ServiceMaster Shares and Payment of Cash Consideration at
the Closing Time. The manner in which each Tendered Share shall be exchanged for
either the Share Consideration or the Cash Consideration pursuant to the Offer
shall be as set forth in this Section 1.3.
(a) Each Tendered Share for which a Share Election has been received shall be,
at the Closing (as defined in Section 1.7), exchanged for the Share
Consideration in the Offer; provided, however, no certificates or scrip
representing fractional ServiceMaster Shares shall be issued upon the
exchange for such Tendered Shares. In lieu of any such fractional
ServiceMaster Share, ServiceMaster shall pay to each such stockholder of
Barefoot who otherwise would be entitled to receive a fractional
ServiceMaster Share an amount in cash determined by multiplying (i) the
greater of $23.00 or the Average ServiceMaster Share Price by (ii) the
fractional interest in a ServiceMaster Share to which such holder would
otherwise be entitled.
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(b) Each Tendered Share for which a Cash Election has been received and each
Tendered Share as to which an Election is not in effect at 12:00 midnight
New York City time on the Expiration Date, (a "Non-Electing Share") shall
be, at the Closing, exchanged for the Cash Consideration in the Offer.
(c) If ServiceMaster shall determine that any Election is not properly made
with respect to any Tendered Shares, such Election shall be deemed to be
not in effect, and the Tendered Shares covered by such Election shall, for
purposes hereof and the Offer, be deemed to be Non-Electing Shares.
(d) In the event that, between the date of this Agreement and the Closing Time,
the issued and outstanding ServiceMaster Shares shall have been affected or
changed into a different number of shares or a different class of shares as
a result of a share split, reverse share split, share distribution,
spin-off, extraordinary distribution, recapitalization, reclassification or
other similar transaction with a record date within such period, the
Conversion Fraction shall be equitably adjusted by ServiceMaster in a
manner reasonably satisfactory to Barefoot.
1.4 ServiceMaster Action.
(a) In connection with the registration pursuant to the Securities Act of
ServiceMaster Shares to be issued by ServiceMaster as the Share
Consideration pursuant to the Offer, ServiceMaster shall as soon as
practicable after execution of this Agreement file with the SEC a
Registration Statement on Form S-4 (together with all amendments,
schedules, and exhibits thereto, the "Registration Statement").
ServiceMaster shall use reasonable efforts to have the Registration
Statement declared effective by the SEC at the earliest practicable date.
Barefoot shall reasonably assist and cooperate with ServiceMaster in the
preparation of the Registration Statement and shall use reasonable efforts
to assist ServiceMaster to have the Registration Statement declared
effective by the SEC at the earliest practicable date.
(b) Subject to Section 1.1(c), as soon as practicable after the Registration
Statement is declared effective by the SEC, ServiceMaster shall commence
the Offer. As soon as practicable on the date of commencement of the Offer,
ServiceMaster shall file with the SEC a Tender Offer Statement on Schedule
14D-1 with respect to the Offer which will contain the offer to purchase
and form of the related letter of transmittal (together with any
supplements or amendments thereto, collectively the "Offer Documents"). The
Offer Documents shall comply with the provisions of the applicable
securities laws.
1.5 Barefoot Actions.
(a) Approvals. Barefoot hereby approves of and consents to the Offer and
represents and warrants that Barefoot's Board of Directors (the "Board"),
at a meeting duly called and held took all of the following
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actions in the manner and to the extent indicated in Annex 4: (i)
determined that this Agreement and the Merger Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are
fair to, and in the best interests of, the stockholders of Barefoot, (ii)
approved this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby, including the Offer and the Merger, in all
respects and determined that such approval constitutes approval of the
Offer, this Agreement, the Merger Agreement and the Merger for purposes of
Section 251(b) of the Delaware General Corporation Law (the "DGCL") and
(iii) resolved to recommend that the stockholders of Barefoot accept the
Offer, tender their Shares thereunder to ServiceMaster (subject to the
reservation with respect to the Share Election contained in Annex 4) and to
recommend that the stockholders of Barefoot approve and adopt the Merger
Agreement and the Merger. Barefoot consents to the inclusion of such
recommendation and approval in the Offer Documents. Barefoot warrants to
ServiceMaster that a complete an accurate copy of the resolution by its
Board taking the actions specified in the preceding sentence is attached to
this Agreement as Annex 4. Barefoot's Board shall not withdraw, modify or
amend its recommendation specified in Annex 4 unless and until either
(i) prior to the consummation of the Offer another offer to acquire
Barefoot shall be made and the Board of Directors of Barefoot
determines, after having received the advice of outside legal counsel
to Barefoot and the advice of Barefoot's financial advisor, that such
offer is for consideration per Share in excess of the Offer
Consideration and the Board is required in the exercise of its
fiduciary duties under applicable law to withdraw, modify or amend its
recommendation specified in Annex 4 and (ii) all conditions specified
in Section 6.1(c)(1) of this Agreement as requisite to Barefoot's
termination of this Agreement have been satisfied, or
(ii) this Agreement shall have been terminated in accordance with the terms
specified in Section 6.1 and any amount due from Barefoot under
Section 7.1 shall have been paid to ServiceMaster.
(b) 14D-9 SEC Filing. Contemporaneously with the commencement of the Offer,
Barefoot shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which shall reflect the
recommendation of the Offer and of the Merger by Barefoot's Board of
Directors, provided that if Barefoot shall become entitled to withdraw its
recommendation of the Offer or the Merger under the provisions of Section
1.5(a), then neither such withdrawal nor the modification of the Schedule
14D-9 to reflect such withdrawal and any position taken by the Board
subsequent to such withdrawal shall constitute a breach by Barefoot of this
Agreement. The Schedule 14D-9 shall contain the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder
with respect to ServiceMaster's designees for election to Barefoot's Board
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of Directors pursuant to Section 1.7(e) hereof. ServiceMaster shall supply
any information with respect to itself or its designees which may be
required for inclusion therein. The Schedule 14D-9, together with any
supplements or amendments thereto, shall comply with the provisions of the
applicable federal securities laws.
(c) Stockholder Lists. In connection with the Offer, Barefoot shall within two
business days after a request from ServiceMaster furnish ServiceMaster with
mailing labels, security position listings and any available listing or
computer file containing the names and addresses of the record holders of
the Shares as of the latest practicable date and shall furnish
ServiceMaster with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists
of securities positions) as ServiceMaster or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, ServiceMaster and its
affiliates and associates shall use the information contained in any such
labels, listings and files only in connection with and for the purpose of
the Offer and the Merger, and if this Agreement shall be terminated
ServiceMaster will deliver to Barefoot or destroy all copies of such
information then in the possession of ServiceMaster or any of
ServiceMaster's affiliates or associates.
1.6 Treatment of Barefoot Stock Options. Barefoot warrants to ServiceMaster
that Section 1.6 of the Disclosure Schedule accurately shows the number of
shares subject to issuance under each outstanding option granted under
Barefoot's stock option program for officers and other employees (and all
options outstanding under such programs are herein called "Barefoot Stock
Options") and the exercise price per share of each such option. At the Closing,
Barefoot shall pay to each person who holds any Barefoot Stock Option an amount
of cash equal to the number of shares subject to that Option at the Closing
(whether or not then vested) times the remainder derived by subtracting the
exercise price per share from $16. Barefoot shall obtain an agreement in a form
reasonably satisfactory to ServiceMaster from each holder of every Barefoot
Stock Option to accept such payment in exchange for a surrender of all rights of
such holder under or by reason of such Option including but not limited to the
termination of the holder's rights to purchase any shares with such Option after
the Closing. The obtaining of such an agreement from each Option holder shall be
a condition to ServiceMaster's obligation to consummate the Closing.
ServiceMaster consents to Barefoot's actions prescribed by this Section 1.6.
1.7 The Closing; Minimum Number of Shares. ServiceMaster shall consummate
the Offer and acquire all Shares properly tendered and not withdrawn (the
"Closing") at the earliest time permitted under the Exchange Act and the
earliest time as of which: (i) the Minimum Number of Shares (as defined below)
shall have been properly tendered and not withdrawn and shall be available for
purchase under the terms of the Offer and applicable law and (ii) all conditions
to ServiceMaster's obligation to consummate the Offer contained in Annex 1 shall
have been satisfied or waived by ServiceMaster; provided, that ServiceMaster may
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allow the Offer to remain open for an additional period of time but no later
than 20 business days after the Minimum Number of Shares shall have been
properly tendered. For purposes of this Agreement, the "Closing Time" shall be
the time at which ServiceMaster shall acquire Shares by means of the Offer. The
Minimum Number shall be such number that when added to all Shares owned by
ServiceMaster and its affiliates prior to consummation of the Offer will provide
ServiceMaster and its affiliates with ownership of 75% of the Shares which shall
be outstanding at the Closing Time. The Closing shall take place in the offices
of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ in Chicago, Illinois at the Closing Time.
At the Closing:
(a) ServiceMaster shall deliver, in trust, to the Exchange Agent, for the
benefit of the holders of Shares, certificates representing an aggregate
number of ServiceMaster Shares as nearly as practicable equal to the
product of the Conversion Fraction and the number of Tendered Shares to be
converted into ServiceMaster Shares as determined in subsections 1.1(b)(i)
and 1.3(a). As soon as practicable after the Closing Time, each holder of
Tendered Shares exchanged into ServiceMaster Shares pursuant to the Offer,
shall be, upon such holder's compliance with the Offer Documents regarding
the delivery of certificates representing Tendered Shares not previously
delivered), entitled to receive certificates representing the number of
ServiceMaster Shares for which such Tendered Shares shall have been
exchanged as determined in subsections 1.1(b)(i) and 1.3(a). If any
certificate for such ServiceMaster Shares is to be issued in a name other
than that in which the certificate for Tendered Shares surrendered in
exchange therefor is registered, it shall be a condition of such exchange
that the person requesting such exchange shall pay to the Exchange Agent
any transfer or other taxes required by reason of issuance of certificates
for such ServiceMaster Shares in a name other than the registered holder of
the certificate surrendered, or shall establish to the reasonable
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(b) ServiceMaster shall deposit in trust with the Exchange Agent, for the
benefit of the holders of Tendered Shares, an amount in cash equal to the
Cash Consideration multiplied by the number of Tendered Shares to be
exchanged for the Cash Consideration as determined in subsections
1.1(b)(ii) and 1.3(b). As soon as practicable after the Closing Time, the
Exchange Agent shall distribute to such holders of Tendered Shares, upon
such holder's compliance with the Offer Documents regarding the delivery of
certificates representing Tendered Shares not previously delivered), the
Cash Consideration in the form of a bank check for an amount equal to the
Cash Consideration times the number of Tendered Shares so exchanged. In no
event shall the holder of any such surrendered certificates be entitled to
receive interest on any of the Cash Consideration to be received in the
Offer. If such check is to be issued in the name of a person other than the
person in whose name the certificates for the Tendered Shares surrendered
for exchange therefor are registered, it shall be a condition of the
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of issuance of such
check to a person other than the registered holder of the certificates
surrendered, or shall establish to the reasonable
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satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(c) The Exchange Agent shall deliver to ServiceMaster such stock certificates
representing Tendered Shares as the Exchange Agent shall have received by
the Closing Time against receipt of the Offer Consideration therefor. The
Exchange Agent shall promptly deliver to ServiceMaster stock certificates
representing Tendered Shares not previously delivered as the Exchange Agent
shall receive after the Closing Time.
(d) Barefoot shall deliver to ServiceMaster the agreement from the holder of
every Barefoot Stock Option required by Section 1.6.
(e) The incumbent directors of Barefoot shall appoint designees of
ServiceMaster to the Board of Directors of Barefoot and all incumbent
directors of Barefoot shall resign.
1.8 It shall be a condition to ServiceMaster's obligation to consummate the
Closing that Barefoot shall deliver, or caused to be delivered, to ServiceMaster
all of the following:
(i) a certificate executed on its behalf by its Chief Executive Officer
and its Chief Financial Officer in their corporate capacity to the
effect that: (A) the representations and warranties of Barefoot set
forth in this Agreement are true and accurate as of the Closing Time
as if made at and as of such time (except for those representations
and warranties that address matters only as of a particular date or
only with respect to a specific period of time which need only be true
and accurate as of such date or with respect to such period), except
where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein), would
not have, and is not reasonably likely to have, individually or in the
aggregate, a material adverse effect on Barefoot and its subsidiaries
taken as a whole; (B) Barefoot shall have performed in all material
respects its obligations hereunder required to be performed by it at
or prior to the Closing Time; and (C) since September 30, 1996, there
shall not have occurred any event, change or effect having, or which
would be reasonably likely to have, in the aggregate, a material
adverse effect on Barefoot and its subsidiaries, taken as a whole;
(ii) a certificate of good standing from the Secretary of State of each
state in which Barefoot and its subsidiaries are incorporated or
qualified to do business stating that each is a validly existing
corporation in good standing;
(iii)duly adopted resolutions of the Board of Directors of Barefoot
approving the execution, delivery and performance of this Agreement
and the instruments contemplated hereby, certified by the Secretary of
Barefoot;
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(iv) a true and complete copy of the Restated Certificate of Incorporation,
as amended, of Barefoot and each of Barefoot's subsidiaries certified
by the Delaware Secretary of State, and a true and complete copy of
the Bylaws, as amended, of Barefoot and each of Barefoot's
subsidiaries certified by the Secretary thereof;
(v) the duly executed Director and Officer Actions (as defined in Section
5.13); and
(vi) such other documents and instruments as ServiceMaster reasonably may
request.
ARTICLE 2.0
The Merger
2.1 The Merger. As soon as practicable after the purchase of Shares
pursuant to the Offer and receipt of requisite approval by the holders of not
less than 75% of the outstanding Shares, ServiceMaster, MergerSub and Barefoot
shall engage in a merger (herein called the "Merger") pursuant to which (i)
MergerSub shall be merged with and into Barefoot, (ii) the separate existence of
MergerSub (except as may be continued by operation of law) shall cease, (iii)
Barefoot shall continue as the surviving corporation, (iv) each Share
outstanding immediately prior to the Merger (other than Shares owned by
ServiceMaster and its affiliates) shall be converted into cash in an amount per
share equal to the Cash Consideration, and (v) Barefoot shall become a wholly
owned subsidiary of ServiceMaster. Contemporaneously with the execution of this
Agreement, ServiceMaster, MergerSub and Barefoot shall enter into a Plan and
Agreement of Merger (the "Merger Agreement"), providing for the Merger in
accordance with this Agreement, the Merger Agreement, and the DGCL. Barefoot, in
its capacity as the corporation surviving the Merger, sometimes is referred to
as the "Surviving Corporation."
2.2 Proxy Statement. As soon as practicable after execution of this
Agreement, Barefoot shall file with the SEC under the Exchange Act, and all
parties hereto shall use all reasonable efforts to have cleared by the SEC by
the Closing Time, a proxy statement or information statement, as Barefoot shall
designate (the "Proxy Statement"), with respect to the approval by Barefoot's
stockholders of the Merger Agreement and the Merger. The Proxy Statement shall
be in form and substance reasonably satisfactory to Barefoot and ServiceMaster.
The information provided and to be provided by ServiceMaster, MergerSub and
Barefoot, respectively, for use in the Proxy Statement shall be true and correct
in all material respects and shall not omit to state any material fact necessary
in order to make such information and the Proxy Statement not misleading as of
the date of mailing of the Proxy Statement. The Proxy Statement shall comply in
all material respects with the Exchange Act and the rules and regulations
thereunder. The Proxy Statement shall contain the recommendation of the Board of
Directors of Barefoot that stockholders approve the Merger.
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2.3 Short Form Merger. In the event that after consummation of the Offer,
ServiceMaster and its affiliates shall own at least 90% of the outstanding
Shares, then as soon as practicable after the Closing Time, MergerSub and
appropriate officers of MergerSub shall execute a certificate of ownership and
merger and shall cause such certificate to be filed with the Delaware Secretary
of State. Barefoot and MergerSub shall also take any other actions which shall
be necessary to cause the Merger to occur in accordance with Section 253 of the
Delaware Law and shall provide all notices to stockholders and take such other
actions as shall be required by the Delaware Law or other applicable
governmental requirements by reason of the consummation of the Merger.
2.4 Stockholder Approval. In the event that ServiceMaster and its
affiliates after consummation of the Offer, do not own at least 90% of all
Shares outstanding at that time, then as soon as practicable after the Closing
Time, Barefoot shall take all action necessary in accordance with the Delaware
Law and other applicable governmental requirements and its Restated Certificate
of Incorporation and By-Laws either (at Barefoot's election) to (a) distribute
the Proxy Statement and convene a meeting of its stockholders as promptly as
possible after the Closing Time to consider and vote upon the Merger Agreement
and the Merger or (b) submit the Merger Agreement and the Merger for approval by
written consent in lieu of a meeting of stockholders. If a stockholders' meeting
is convened or consents are to be solicited, the Board of Directors of Barefoot
shall recommend that the stockholders of Barefoot vote to adopt and approve the
Merger Agreement and the Merger. Barefoot shall use its best efforts to solicit
from stockholders of Barefoot proxies or consents in favor of such adoption and
approval to the extent such consents or approvals are required and shall take
all other action necessary or helpful to secure a vote or consent of
stockholders in favor of the Merger. At any such meeting ServiceMaster and its
affiliates shall vote all Shares held by them in favor of the Merger, and
Barefoot shall vote all Shares with respect to which proxies in the form
distributed by Barefoot shall have been given in favor of the Merger. In
connection with any such vote or consent, ServiceMaster and its affiliates shall
vote in favor of or consent to the Merger Agreement and the Merger with respect
to all Shares any of them have the power to vote and Barefoot shall give any
such consents which it is authorized to give by stockholder consent. As soon as
is practicable after the satisfaction or waiver of the conditions set forth in
Section 2.5 below, and in no event later than five business days after such
satisfaction or waiver, MergerSub will cause a Certificate of Merger to be filed
with the Secretary of State of the State of Delaware. Notwithstanding the
foregoing, in lieu of holding a stockholders' meeting or seeking consents for
approval of the Merger Agreement and the Merger, the Merger Agreement and the
Merger may be approved by ServiceMaster and its affiliates if they shall own at
least 75% of all outstanding Shares upon consummation of the Offer, in which
event proxies need not be solicited from other stockholders but all required
statements and information shall be furnished to such stockholders in accordance
with all applicable laws and regulations.
2.5 Conditions to the Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver of each of the conditions set forth below:
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(a) If ServiceMaster and its affiliates shall own less than 90% of all Shares
outstanding at the conclusion of the Offer, the Merger and the Merger
Agreement shall have been approved and adopted by the requisite vote or
consent of stockholders of Barefoot in accordance with Barefoot's Restated
Certificate of Incorporation and By-laws and the Delaware Law;
(b) The Offer shall have been consummated pursuant to the terms of this
Agreement; and
(c) No injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission nor any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority shall be in effect,
which would make the acquisition or holding by ServiceMaster or its
subsidiaries of the Shares or shares of common stock of the Surviving
Corporation illegal or otherwise prevent the consummation of the Merger.
2.6 Dissenters' Rights. Barefoot shall not settle or compromise any
claim for dissenters' rights without the prior written consent of ServiceMaster.
ARTICLE 3.0
Representations and Warranties of Barefoot
Barefoot represents and warrants to ServiceMaster and MergerSub as follows:
3.1 Organization. Each of Barefoot and its subsidiaries (as defined below)
is a corporation, partnership or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, and has all requisite corporate or other power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and governmental approvals would not have a material adverse effect (as defined
below) on Barefoot and its subsidiaries taken as a whole. Each of Barefoot and
its subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, in the aggregate, have a material
adverse effect on Barefoot and its subsidiaries taken as a whole. As used in
this Agreement, the word "subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other subsidiary of such party is a general partner
(excluding such partnerships where such party or any subsidiary of such party do
not have a majority of the voting interest in such partnership) or (ii) at least
a majority of the securities or other interests having by their terms ordinary
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voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries. As
used in this Agreement, any reference to any event, change or effect having a
material adverse effect on or with respect to any entity (or group of entities
taken as a whole) means such event, change or effect, in the aggregate with such
other events, changes, or effects, which is materially adverse to the financial
condition, results of operations or business of such entity. Section 3.1 of the
Disclosure Schedule delivered by Barefoot to ServiceMaster on or prior to the
date hereof (the "Disclosure Schedule") sets forth a complete list of Barefoot's
subsidiaries.
3.2 Capitalization.
(a) The authorized capital stock of Barefoot consists of 45,000,000 shares
consisting of 40,000,000 shares of Barefoot Common Stock and 5,000,000
shares of Preferred Stock, $0.01 par value (the "Preferred Stock"). As of
the date hereof, 14,519,760 shares of Barefoot Common Stock are issued and
outstanding and 2,277,000 shares of Barefoot Common Stock are held in the
treasury of Barefoot. As of the date hereof, no shares of Preferred Stock
are issued and outstanding and 400,000 shares of Preferred Stock has been
designated as Series A Junior Participating Preferred Stock issuable upon
exercise of the Stock Purchase Rights. As of the date hereof, options to
acquire an aggregate of 412,550 shares of Barefoot Common Stock have been
issued pursuant to Barefoot Stock Options. All the outstanding shares of
Barefoot's capital stock are duly authorized, validly issued, fully paid
and non-assessable.
(b) There are no bonds, debentures, notes or other indebtedness having voting
rights (or convertible into securities having such rights) ("Voting Debt")
of Barefoot or any of its subsidiaries issued and outstanding. Except as
set forth above and for the transactions contemplated by this Agreement
which will result in issuance of shares to ServiceMaster, (i) there are no
shares of capital stock of Barefoot authorized, issued or outstanding and
(ii) there are no existing options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements,
arrangements or commitments of any character, relating to the issued or
unissued capital stock of Barefoot or any of its subsidiaries, obligating
Barefoot or any of its subsidiaries to issue, transfer or sell or cause to
be issued, transferred or sold any shares of capital stock or Voting Debt
of, or other equity interest in, Barefoot or any of its subsidiaries or
securities convertible into or exchangeable for such shares or equity
interests or obligations of Barefoot or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, convertible security, agreement, arrangement or commitment.
(c) There are no outstanding contractual obligations of Barefoot or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Shares or the
capital stock of Barefoot or any subsidiary or affiliate of Barefoot or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any subsidiary or any
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other entity. None of Barefoot or its subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of Barefoot, or any
of its subsidiaries, respectively, as a result of the transactions
contemplated by this Agreement.
(d) All of the outstanding shares of capital stock of each of the subsidiaries
are beneficially owned by Barefoot, directly or indirectly, and all such
shares have been validly issued and are fully paid and nonassessable and
are owned by either Barefoot or one of its subsidiaries free and clear of
all liens, charges, security interests, options, claims or encumbrances of
any nature whatsoever.
(e) There are no voting trusts or other agreements or understandings to which
Barefoot or any of its subsidiaries is a party with respect to the voting
of the capital stock of Barefoot or any of the subsidiaries.
(f) At the Closing Time, the number of shares of Barefoot Common Stock
outstanding shall not exceed 14,982,310. At and after the Closing Time,
neither Barefoot nor any of its subsidiaries will have any obligation to
issue, transfer or sell any shares of its capital stock to anyone other
than ServiceMaster.
3.3 Corporate Authorization; Validity of Agreement; Barefoot Action.
(a) Barefoot has full corporate power and authority to execute and deliver this
Agreement and, subject to obtaining any necessary approval of its
stockholders as contemplated by Section 2.2 hereof with respect to the
Merger, to consummate the transactions contemplated hereby. The execution,
delivery and performance by Barefoot of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
and validly authorized by its Board of Directors and, except for obtaining
the approval of its stockholders as contemplated by Section 2.2 hereof with
respect to the Merger, no other corporate action or proceedings on the part
of Barefoot is necessary to authorize the execution and delivery by
Barefoot of this Agreement, and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Barefoot and, assuming this Agreement constitutes a valid and binding
obligation of ServiceMaster and MergerSub, constitutes a valid and binding
obligation of Barefoot enforceable against Barefoot in accordance with its
terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(b) The Board of Directors of Barefoot has duly and validly approved and taken
all corporate action required to be taken by the Board of Directors for the
consummation of the transactions contemplated by
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this Agreement. The affirmative vote of the holders of 75% of the Shares is
the only vote of the holders of any class or series of Barefoot capital
stock necessary to approve the Merger.
(c) A complete and accurate copy of the resolutions adopted by Barefoot's Board
of Directors with respect to the Offer and the Merger is attached to this
Agreement as Annex 5.
3.4 Consents and Approvals; No Violations. Except as set forth in Section
3.4 of the Disclosure Schedule and for all filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act (as defined herein), the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the state
securities or "blue sky" laws, state takeover laws, and for the approval of the
Merger by Barefoot's stockholders and the filing and recordation of the
Certificate of Merger as required by the DGCL, neither the execution, delivery
or performance of this Agreement nor the consummation by Barefoot of the
transactions contemplated hereby nor compliance by Barefoot with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or by-laws or similar
organizational documents of Barefoot or of any of its subsidiaries, (ii) require
any filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
other regulatory authority, commission or agency (a "Governmental Entity"),
except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not have a material adverse effect on
Barefoot and its subsidiaries taken as a whole and would not, or would not be
reasonably likely to, materially impair the ability of Barefoot, ServiceMaster
or MergerSub to consummate the Offer, the Merger or the other transactions
contemplated hereby, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness (collectively, the "Debt
Instruments"), lease, license, contract, agreement or other instrument or
obligation to which Barefoot or any of its subsidiaries is a party or by which
any of them or any of their properties or assets may be bound (a "Barefoot
Agreement") or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Barefoot, any of its subsidiaries or any of their
properties or assets, except in the case of clauses (iii) and (iv) for
violations, breaches or defaults which would not have a material adverse effect
on Barefoot and its subsidiaries taken as a whole.
3.5 SEC Reports and Financial Statements. Barefoot has filed with the SEC
and has heretofore made available to ServiceMaster true and complete copies of,
all forms, reports, schedules, statements and other documents required to be
filed by it and its subsidiaries since January 1, 1994 under the Exchange Act
and the Securities Act (as such documents have been amended since the time of
their filing, collectively, the "Barefoot SEC Documents"). As of their
respective dates or, if amended, as of the date of the last such amendment,
Barefoot SEC Documents, including, without limitation, any financial statements
or schedules included therein (i) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
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under which they were made, not misleading and (ii) complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder. Each of the consolidated financial statements included in Barefoot
SEC Documents have been prepared from, and are in accordance with, the books and
records of Barefoot and/or its consolidated subsidiaries, comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position and the consolidated results of operations and
cash flows (and changes in financial position, if any) of Barefoot and its
consolidated subsidiaries as at the dates thereof or for the periods presented
therein (subject, in the case of unaudited interim financial statements, to
normal year end adjustments and lack of footnote disclosures).
3.6 Absence of Certain Changes. Except as disclosed in Barefoot SEC
Documents filed with the SEC prior to the date hereof, since January 1, 1996,
Barefoot and its subsidiaries have conducted their respective businesses and
operations in the ordinary course of business consistent with past practice.
Since September 30, 1996, there has not occurred (i) any events, changes, or
effects (including the incurrence of any liabilities of any nature, whether or
not accrued, contingent or otherwise) having or, which would be reasonably
likely to have, in the aggregate, a material adverse effect on Barefoot and its
subsidiaries taken as a whole; (ii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to the equity interests of Barefoot or of any of its subsidiaries, other
than regular quarterly cash dividends or dividends paid by wholly owned
subsidiaries; or (iii) any change by Barefoot or any of its subsidiaries in
accounting principles or methods.
3.7 No Undisclosed Liabilities. Except (a) as disclosed in Section 3.7 of
the Disclosure Schedule, (b) to the extent disclosed in Barefoot SEC Documents
filed prior to the date of this Agreement and (c) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, since January 1, 1996, neither Barefoot nor any of its subsidiaries
has incurred any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that have, or would be reasonably likely to
have, a material adverse effect on Barefoot and its subsidiaries. Section 3.7 of
the Disclosure Schedule sets forth each instrument evidencing indebtedness of
Barefoot and its subsidiaries which will accelerate or become due or payable, or
result in a right of redemption or repurchase on the part of the holder of such
indebtedness, or with respect to which any other payment or amount will become
due or payable, in any such case with or without due notice or lapse of time, as
a result of this Agreement, the Offer, the Merger or the other transactions
contemplated hereby.
3.8 Employee Benefit Plans; ERISA. As of the date of this Agree- ment and
as of the Closing Time:
(a) There are no material employee or director benefit plans, arrangements,
practices, contracts or agreements (including, without limitation,
employment agreements, change of control employment agreements and
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severance agreements, incentive compensation, bonus, stock option, stock
appreciation rights and stock purchase plans) of any type (including but
not limited to plans described in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), maintained by Barefoot,
any of its subsidiaries or any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with Barefoot would be
deemed a "controlled group" within the meaning of Section 4001(a)(14) of
ERISA, or with respect to which Barefoot or any of its subsidiaries has or
may have a liability, other than those listed on Section 3.8(a) of the
Disclosure Schedule (the "Benefit Plans"). Except as disclosed in Section
3.8(a) of the Disclosure Schedule (or as otherwise permitted by this
Agreement) neither Barefoot nor any ERISA Affiliate has any formal plan or
commitment, whether legally binding or not, to create any additional
Benefit Plan or modify or change any existing Benefit Plan that would
affect any employee or terminated employee of Barefoot or any ERISA
Affiliate.
(b) With respect to any Benefit Plan, there are no material amounts accrued but
unpaid as of the most recent balance sheet date that are not reflected on
that balance sheet prepared in accordance with GAAP.
(c) With respect to each Benefit Plan: (i) if intended to qualify under Section
401(a), 401(k) or 403(a) of the Code, such plan has received, or an
application is pending for, a determination letter from the Service that
the Plan so qualifies, and its trust is exempt from taxation under Section
501(a) of the Code and Barefoot knows of no event that would prevent such
qualification; (ii) such plan has been administered in all material
respects in accordance with its terms and applicable law; (iii) no breaches
of fiduciary duty have occurred; (iv) no material disputes are pending, or,
to the knowledge of Barefoot, threatened; (v) no prohibited transaction
(within the meaning of Section 406 of ERISA) has occurred; (vi) all
contributions and premiums due (including any extensions for such
contributions and premiums) have been made in full; (vii) no such Plan has
incurred or will incur any "accumulated funding deficiency," as such term
is defined in Section 412 of the Code, whether or not waived; (viii) no
such Plan provides medical or death benefits with respect to current or
former employees of Barefoot or any of its subsidiaries beyond their
termination of employment, other than on an employee-pay-all basis; and
(ix) no Plan is a "multiemployer plan," as such term is defined in Section
3(37) of ERISA, or is covered by Section 4063 or 4064 of ERISA.
(d) Neither Barefoot nor any ERISA Affiliate has incurred any material
liability under Title IV of ERISA since the effective date of ERISA that
has not been satisfied in full (including sections 4063-4064 and 4069 of
ERISA) and, to the knowledge of Barefoot, no basis for any such liability
exists. Neither Barefoot nor any ERISA Affiliate maintains (or contributes
to), or has maintained (or has contributed to) within the last six years,
any employee benefit plan that is subject to Title IV of ERISA (other than
a Benefit Plan).
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(e) Except as set forth in Section 3.8(e) of the Disclosure Schedule or to the
extent disclosed in Barefoot SEC Documents, the consummation of the
transactions contemplated by this Agreement will not entitle any individual
to severance pay or accelerate the time of payment or vesting, or increase
the amount, of compensation or benefits due to any individual with respect
to any Benefit Plan. As a result of the transactions described herein,
either alone or together with another event such as termination of
employment, except as set forth in Section 3.8(e) of the Disclosure
Schedule, no party will be required to make a "parachute payment" to a
"disqualified individual" within the meaning of Section 280G of the Code.
(f) Barefoot has delivered or made available to ServiceMaster accurate and
complete copies of all plan texts, summary plan descriptions, trust
agreements and other related agreements including all amendments to the
foregoing; the two most recent annual reports; the most recent annual and
periodic accounting of plan assets; the most recent determination letter
received from the United States Internal Revenue Service (the "Service");
and the two most recent actuarial reports, to the extent any of the
foregoing may be applicable to a particular Benefit Plan.
3.9 Litigation; Compliance with Law.
(a) Except to the extent disclosed in Barefoot SEC Documents filed prior to the
date of this Agreement, there is no suit, claim, action, proceeding, review
or investigation pending or, to the knowledge of Barefoot, threatened
against or affecting, Barefoot or any of its subsidiaries which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on Barefoot and its subsidiaries taken as a whole, or would,
or would be reasonably likely to, materially impair the ability of
ServiceMaster to consummate the Offer or Barefoot and MergerSub to
consummate the Merger or the other transactions contemplated hereby.
(b) Barefoot and its subsidiaries have complied with all laws, statutes,
regulations, rules, ordinances, and judgments, decrees, orders, writs and
injunctions, of any court or Governmental Entity relating to any of the
property owned, leased or used by them, or applicable to their business,
including, but not limited to, equal employment opportunity,
discrimination, occupational safety and health, environmental, insurance
regulatory, antitrust laws, ERISA and laws relating to Taxes (as defined in
Section 3.11) except to the extent that any such non-compliance would not
have a material adverse effect on Barefoot and its subsidiaries taken as a
whole.
3.10 No Default. Except as disclosed in Barefoot SEC Documents, the
business of Barefoot and each of its subsidiaries is not being conducted in
default or violation of any term, condition or provision of (a) its respective
certificate of incorporation or by-laws or similar organizational documents, or
(b) any Barefoot Agreement, excluding from the foregoing clause (b), defaults or
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violations that would not have a material adverse effect on Barefoot and its
subsidiaries taken as a whole or would not, or would not be reasonably likely
to, materially impair the ability of Barefoot or ServiceMaster to consummate the
Offer, the Merger or the other transactions contemplated hereby.
3.11 Taxes.
(a) Tax Filings and Payments.
(1) All Returns required to be filed on or before the date hereof and the
date of the Closing by or on behalf of Barefoot have been duly filed
on a timely basis and such Returns are, to Barefoot's knowledge, true,
correct and complete in all respects except that such returns may
contain inadvertent errors and omissions which are not material.
(2) Barefoot will timely file all of its Returns for the year ending March
31, 1996 no later than December 15, 1996. Barefoot's final federal
income tax return for the taxable year ended March 31, 1996 will be
essentially consistent with the proforma return which was furnished to
ServiceMaster prior to the date hereof.
(3) Barefoot has timely paid all Taxes that have been shown as due and
payable on the Returns that have been filed in all respects, and, to
Barefoot's knowledge, no other Taxes are payable by Barefoot with
respect to items or periods covered by such Returns (whether or not
shown on or reportable on such Returns).
(4) Barefoot has made or will make adequate provision for all Taxes
payable for any periods that end on or before the Closing for which no
Returns have yet been filed and for any periods that begin before the
Closing and end after the Closing to the extent such Taxes are
attributable to the portion of any such period ending at the Closing.
(5) The charges, accruals and reserves for current Taxes (excluding
reserves for deferred Taxes) reflected on the books of Barefoot are
not materially less than the Tax liabilities accruing or payable by
Barefoot in respect of periods prior to the date hereof and such
charges, accruals and reserves are reflected on Barefoot's most recent
financial statements.
(6) Barefoot is not delinquent in the payment of any Taxes or has
requested any extension of time within which to file or send any
Return, which Return has not since been filed or sent and which Taxes
have not been paid.
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(7) No deficiencies exist for any Taxes or any penalties, interest or
assessments nor have any been proposed, asserted, or assessed against
Barefoot that are not adequately reserved for.
(8) There is no dispute or claim concerning any Tax liability of Barefoot
either (A) claimed or raised by any authority in writing or (B) as to
which Barefoot has knowledge based upon personal contact with any
agent of such authority.
(9) There is no pending audit, examination, or, to Barefoot's knowledge,
any investigation of any Return by any authority nor has Barefoot
received any notice of such audit, examination, or investigation.
(10) Except as identified in Section 3.11 (a)(10) of the Disclosure
Schedule, Barefoot has not waived any statute of limitations in
respect of Taxes or granted any extension of the limitations period
applicable to any claim of Taxes.
(11) Barefoot is not subject to liability for Taxes of any person (other
than Barefoot or any other member of the affiliated group of
corporations that files a consolidated federal income tax return, of
which Barefoot is the common parent), including, without limitation,
liability arising from the application of U.S. Treasury Regulation
section 1.1502-6 or any analogous provision of state, local or foreign
law.
(12) Barefoot is not nor has it ever been a party to any tax sharing
agreement with any entity.
(13) To Barefoot's knowledge, no claim has ever been made by an authority
in a jurisdiction where Barefoot does not file Returns that it is or
may be subject to taxation by that jurisdiction.
(14) There are no liens on any of the assets of Barefoot that arose in
connection with any failure (or alleged failure) to pay any Taxes.
(15) Barefoot has withheld and paid over and complied with all material
information reporting and backup withholding requirements, including,
without limitation, maintenance of required records with respect
thereto, in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(16) Barefoot does not expect any authority to assess any additional Taxes
for any period for which Returns have been filed except to an extent
consistent with Barefoot's past experience as reflected in its
publicly released financial statements.
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(17) Barefoot has delivered to ServiceMaster correct and complete copies of
all Returns, examination reports, and statements of deficiencies
assessed against or agreed to by Barefoot.
(18) Barefoot is not a party to any safe harbor lease within the meaning of
Section 168(f)(8) of the Code, as in effect prior to the amendment by
the Tax Equity and Fiscal Responsibility Act of 1982.
(19) All material net operating losses, credits and other tax attributes
utilized by Barefoot during any taxable year ending on or prior to the
Closing were fully and properly available to Barefoot under all
applicable tax laws, regulations and administrative interpretations
thereof.
(b) Tax Characteristics of Barefoot.
(1) To Barefoot's knowledge, no stockholder of Barefoot who owns (A) more
than 5% of any class of Barefoot's stock that is regularly traded on
an established securities market, within the meaning of Section
897(c)(3) of the Code, or (B) any amount of any other class of
Barefoot's stock is a "foreign person" (as that term is defined in
Section 1445(f)(3) of the Code).
(2) Barefoot is not a "consenting corporation" under Sec- tion 341(f) of
the Code.
(3) Barefoot has not entered into any compensatory agreement with respect
to the performance of services which payment thereunder would result
in a nondeductible expense to Barefoot pursuant to Sections 162(m) or
280G of the Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Code.
(4) Barefoot has not agreed, nor is it required to make, any adjustment
under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
(5) To Barefoot's knowledge, Barefoot will not be required as a result of
any "closing agreement" described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law), to
include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period (or portion thereof) ending
after the Closing.
(6) Barefoot will not be required as a result of any deferred intercompany
gain described in Treasury Regulation Section 1.1502-13 or any excess
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loss account described in Treasury Regulation Section 1.1502-19 (or
any corresponding or similar provision or administrative rule of
federal, state, local or foreign income tax law), to include any item
of income in taxable income for any period (or portion thereof) ending
after the Closing Date.
(7) Section 3.11(b)(7) of the Disclosure Schedule sets forth the following
information with respect to Barefoot as of March 31, 1996; (A) the
amount of any net operating loss, net capital loss, unused credits,
unused foreign tax, or excess charitable contribution; and (B) the
amount of any deferred gain or loss arising out of any deferred
intercompany transaction.
(c) Definitions. For purposes of all of Section 3.11:
(1) The term "Barefoot" includes Barefoot and each sub- sidiary of
Barefoot.
(2) The term "Tax" means any federal, state, local or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise,
natural resources, severance, stamp, occupation, premium, windfall
profit, environmental, customs, duties, real property, personal
property, capital stock, social security, unemployment, disability,
payroll, license, employee or other withholding, or other tax, of any
kind whatsoever, including any interest, penalties or additions to tax
or additional amounts in respect of the foregoing.
(3) The term "Return" means any returns, declarations, reports, claims for
refund, amended returns, information returns or other documents
(including any related or supporting schedules, statements or
information) filed or required to be filed in connection with the
determination, assessment or collection of any Tax, or the
administration of any laws, regulations or administrative requirements
relating to any Tax.
3.12 Contracts. Each material Barefoot Agreement is valid, binding and
enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a material
adverse effect on Barefoot and its subsidiaries taken as a whole, and there are
no defaults thereunder, except those defaults that would not have a material
adverse effect on Barefoot and its subsidiaries taken as a whole. Neither
Barefoot nor any subsidiary is a party to any agreement that expressly and
materially limits the ability of Barefoot or any subsidiary to compete in or
conduct any line of business or compete with any person or in any geographic
area or during any period of time except that Barefoot is subject to the
agreement restricting its ability to compete with Tru-Green in the Louisville
Kentucky area identified in Section 3.12 of the Disclosure Schedule.
3.13 Transactions with Affiliates. Except to the extent disclosed in
Barefoot SEC Documents filed prior to the date of this Agreement, since January
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1, 1994 there have been no material transactions, agreements, arrangements or
understandings between Barefoot or its subsidiaries, on the one hand, and
Barefoot's affiliates (other than wholly-owned subsidiaries of Barefoot) or
other Persons, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act.
3.14 Environmental Matters. Except as set forth in the Barefoot SEC
Documents:
(a) Barefoot and its subsidiaries are in compliance with all applicable
Environmental Laws (as defined below), except for any noncompliance that
would not, in the aggregate, have a material adverse effect on Barefoot and
its subsidiaries taken as a whole. Except as set forth in Barefoot SEC
Documents or as previously disclosed to ServiceMaster, neither Barefoot nor
any of its subsidiaries has received any communication (written or oral),
whether from a governmental authority, citizens group, employee or
otherwise, that alleges that Barefoot or any of its subsidiaries is not in
such compliance and, to Barefoot's best knowledge, there are no
circumstances that would prevent or interfere with such compliance in the
future and which would, in the aggregate, have a material adverse effect on
Barefoot and its subsidiaries taken as a whole.
(b) Except as set forth in Barefoot SEC Documents, there is no Environmental
Claim (as defined below) pending or, to the best knowledge of Barefoot,
threatened against Barefoot or any of its subsidiaries or, to Barefoot's
best knowledge, against any person or entity whose liability for any
Environmental Claim Barefoot or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law, except for
any Environmental Claim or Claims that would not, in the aggregate, have a
material adverse effect on Barefoot and its subsidiaries taken as a whole.
(c) Except as set forth in Barefoot SEC Documents, there are no past or present
actions, activities, circumstances conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence
or disposal of any Material of Environmental Concern (as defined below),
that would form the basis of any Environmental Claim against Barefoot or
any of its subsidiaries or, to Barefoot's best knowledge, against any
person or entity whose liability for any Environmental Claim Barefoot or
any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law, except for any Environmental Claim or
Claims that would not, in the aggregate, have a material adverse effect on
Barefoot and its subsidiaries taken as a whole.
(d) For purposes of this Agreement, "Environmental Claim" means any claim,
action, or cause of action, of any person or entity alleging potential
liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from (a) the presence, or release
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into the environment, of any Material of Environmental Concern at any
location, whether or not owned or operated by Barefoot or any of its
subsidiaries or (b) any violation or alleged violation of any Environmental
Law.
(e) For purposes of this Agreement, "Environmental Laws" means all federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strats), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
(f) For purposes of this Agreement, "Materials of Environmental Concern" means
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum
and petroleum products.
3.15 Year End Cash. Based on information known to Barefoot's management on
the date hereof, it is the expectation of Barefoot's management on the date
hereof that Barefoot will have at least $8 million in cash at December 31, 1996
and that this $8 million cash balance will be achieved without any special
actions (such as borrowings or extension of payables) outside of the normal
course or which would not have been taken other than to produce such result,
provided that Barefoot makes no representation or warranty that such expectation
will be achieved.
3.16 Opinion of Financial Advisor. Barefoot has received an opinion from
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. ("Baird") with respect to the fairness to the stockholders
of Barefoot of the consideration to be received pursuant to the Offer and the
Merger.
3.17 Finders and Investment Bankers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission, or to the
reimbursement of any of its expenses, in connection with the Offer, or the
Merger or any similar transaction based upon arrangements made by or on behalf
of Barefoot, except for the arrangements between Barefoot and Baird, the terms
and provisions of which have been disclosed in writing to ServiceMaster by
Barefoot on or prior to the date hereof.
ARTICLE 4.0
Representations and Warranties of ServiceMaster and MergerSub
ServiceMaster and MergerSub represent and warrant to Barefoot as follows:
4.1 Organization. ServiceMaster is a limited partnership duly organized,
validly existing and in good standing under the laws of Delaware. MergerSub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware. Each of ServiceMaster and its subsidiaries has all requisite
partnership, corporate or other power and authority and all necessary
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governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
governmental approvals would not have a material adverse effect on ServiceMaster
and its subsidiaries taken as a whole. ServiceMaster and each of its
subsidiaries is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not have a material adverse effect on ServiceMaster and its
subsidiaries taken as a whole. MergerSub has not heretofore conducted any
business other than in connection with this Agreement and the transactions
contemplated hereby.
4.2 Capitalization. As of November 30, 1996, (i) approximately 144 million
ServiceMaster Shares are issued and outstanding, (ii) not more than 11 million]
ServiceMaster Shares are reserved for option and employee benefit plans of
ServiceMaster, and (iii) the number of additional shares which ServiceMaster may
be required to issue as a result of convertible debt and other outstanding
rights (in addition to the rights cited in clause (ii)) does not exceed three
million shares. All of the outstanding ServiceMaster Shares are duly authorized,
validly issued, fully paid and non-assessable.
4.3 Partnership/Corporate Authorization; Validity of Agreement; Necessary
Action. ServiceMaster has full partnership power and authority and MergerSub has
full corporate power and authority, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by ServiceMaster and MergerSub of this Agreement and the
consummation by ServiceMaster and MergerSub of the transactions contemplated
hereby have been duly and validly authorized by their respective Boards of
Directors and no other partnership or corporate action or proceedings on the
part of ServiceMaster and MergerSub are necessary to authorize the execution and
delivery by ServiceMaster and MergerSub of this Agreement, and the consummation
by ServiceMaster and MergerSub of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by ServiceMaster and MergerSub,
and, assuming this Agreement constitutes a valid and binding obligation of
Barefoot, constitutes a valid and binding obligation of each of ServiceMaster
and MergerSub, enforceable against each of them in accordance with their terms,
except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. ServiceMaster Shares to be issued pursuant to the Offer will be
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. No vote of the holders of ServiceMaster Shares is necessary
for ServiceMaster to consummate the Offer or for MergerSub to consummate the
Merger.
4.4 Consents and Approvals; No Violations. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Securities Act, the DGCL, the
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HSR Act, state blue sky laws and any applicable state takeover laws, neither the
execution, delivery or performance of this Agreement by ServiceMaster and
MergerSub nor the consummation by ServiceMaster and MergerSub of the
transactions contemplated hereby nor compliance by ServiceMaster and MergerSub
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the Partnership Agreement of ServiceMaster or the
Certificate of Incorporation or by-laws of MergerSub or any other subsidiary,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have a
material adverse effect on ServiceMaster and its subsidiaries taken as a whole
or would not, or would not be reasonably likely to, materially impair the
ability of ServiceMaster and MergerSub to consummate the Offer or the Merger or
the other transactions contemplated hereby), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease,
license, contract, agreement or other instrument or obligation to which
ServiceMaster or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to ServiceMaster, any
of its subsidiaries or any of their properties or assets, except in the case of
clauses (iii) and (iv) for violations, breaches or defaults which would not have
a material adverse effect on ServiceMaster and its subsidiaries taken as a
whole.
4.5 Opinion of Financial Advisor. ServiceMaster has received an opinion
from ▇▇▇▇▇▇▇, Sachs & Co. ("▇▇▇▇▇▇▇, ▇▇▇▇▇") dated the date of this Agreement to
the effect that, as of such date, the consideration to be paid by ServiceMaster
in the Offer and the Merger is fair to ServiceMaster from a financial point of
view.
4.6 Financial Resources. ServiceMaster has sufficient financial resources
to enable ServiceMaster to make all cash payments for the Shares in the Offer
and the Merger.
4.7 SEC Reports and Financial Statements. ServiceMaster has filed with the
SEC and has heretofore made available to Barefoot true and complete copies of,
all forms, reports, schedules, statements and other documents required to be
filed by ServiceMaster since January 1, 1994 under the Exchange Act and the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "ServiceMaster SEC Documents"). As of their respective
dates or, if amended, as of the date of the last such amendment, the
ServiceMaster SEC Documents, including, without limitation, any financial
statements or schedules included therein (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (ii) complied
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. Each of the consolidated financial statements
included in the ServiceMaster SEC Documents comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
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basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated financial
position and the consolidated results of operations and cash flows (and changes
in financial position, if any) of ServiceMaster and its consolidated
subsidiaries as at the dates thereof or for the periods presented therein
(subject, in the case of unaudited interim financial statements, to normal year
end adjustments and lack of footnote disclosures).
4.8 Absence of Certain Changes. Except as disclosed in the ServiceMaster
SEC Documents, since January 1, 1996, ServiceMaster and its subsidiaries have
conducted their respective businesses and operations in the ordinary course of
business consistent with past practice. Since September 30, 1996, there has not
occurred (i) any events, changes, or effects (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having or, which would be reasonably likely to have, in the aggregate, a
material adverse effect on ServiceMaster and its subsidiaries taken as a whole;
(ii) any declaration, setting aside or payment of any distribution (whether in
cash, shares or property) with respect to the equity interests of ServiceMaster
other than regular quarterly cash distributions paid by ServiceMaster; or (iii)
any change by ServiceMaster or any of its subsidiaries in accounting principles
or methods. Since January 1, 1996 ServiceMaster and its subsidiaries have
conducted their respective businesses in the ordinary course consistent with
past practice.
4.9 No Undisclosed Liabilities. Except to the extent disclosed in the
ServiceMaster SEC Documents filed prior to the date of this Agreement and except
for liabilities and obligations incurred in the ordinary course of business
consistent with past practice, since January 1, 1996, neither ServiceMaster nor
any of its subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, a material adverse effect on ServiceMaster and its
subsidiaries.
4.10 Litigation; Compliance with Law.
(a) Except to the extent disclosed in the ServiceMaster SEC Documents filed
prior to the date of this Agreement, there is no suit, claim, action,
proceeding, review or investigation pending or, to the knowledge of
ServiceMaster, threatened against or affecting, ServiceMaster or any of its
subsidiaries which, individually or in the aggregate, is reasonably likely
to have a material adverse effect on ServiceMaster and its subsidiaries
taken as a whole, or would, or would be reasonably likely to, materially
impair the ability of ServiceMaster to consummate the Offer or
ServiceMaster and MergerSub to consummate the Merger or the other
transactions contemplated hereby.
(b) ServiceMaster and its subsidiaries have complied with all laws, statutes,
regulations, rules, ordinances, and judgments, decrees, orders, writs and
injunctions, of any court or Governmental Entity relating to any of the
property owned, leased or used by them, or applicable to their business,
including, but not limited to, equal employment opportunity,
discrimination, occupational safety and health, environmental, insurance,
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regulatory, antitrust laws, ERISA and laws relating to Taxes (as defined in
Section 3.11) except to the extent that any such non-compliance would not
have a material adverse effect on ServiceMaster and its subsidiaries taken
as a whole.
4.11 No Default. Except as disclosed in the ServiceMaster SEC Documents,
the business of ServiceMaster and each of its subsidiaries is not being
conducted in default or violation of any term, condition or provision of (a) its
respective partnership agreement, certificate of incorporation or by-laws or
similar organizational documents, or (b) agreements to which ServiceMaster and
its subsidiaries are parties, excluding from the foregoing clause (b), defaults
or violations that would not have a material adverse effect on ServiceMaster and
its subsidiaries taken as a whole or would not, or would not be reasonably
likely to, materially impair the ability of ServiceMaster or Barefoot to
consummate the Offer, the Merger or the other transactions contemplated hereby.
ARTICLE 5.0
Covenants
5.1 Interim Operations of Barefoot. Barefoot covenants and agrees that,
except (i) as expressly provided in this Agreement or the Merger Agreement, (ii)
with the prior written consent of ServiceMaster or (iii) as set forth on Section
5.1 of the Disclosure Schedule, after the date hereof and prior to the Closing
Time:
(a) the business of Barefoot and its subsidiaries, including, without
limitation, investment practices and policies, shall be conducted only in
the ordinary course of business consistent with past practice and, each of
Barefoot and its subsidiaries shall use all reasonable efforts to preserve
its business organization intact and maintain its existing relations with
material customers, suppliers, franchisees, employees, creditors and
business partners;
(b) Barefoot will not, directly or indirectly, split, combine or reclassify the
outstanding Barefoot Common Stock, or any outstanding capital stock of any
of the subsidiaries of Barefoot;
(c) neither Barefoot nor any of its subsidiaries shall: (i) amend its
certificate of incorporation or by-laws or similar organizational
documents; (ii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock other than dividends paid by Barefoot's wholly-owned subsidiaries to
Barefoot or its wholly-owned subsidiaries and other than ordinary quarterly
cash dividends by Barefoot not to exceed $0.05 per share per quarter and
other than an expenditure of not more than an additional $.01 per share to
redeem outstanding stock purchase rights; (iii) issue, sell, transfer,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls,
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commitments or rights of any kind to acquire, any shares of capital stock
of any class of Barefoot or its subsidiaries, other than issuances pursuant
to exercise of Barefoot Stock Options outstanding on the date hereof as
disclosed in Section 1.6 hereof; (iv) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any assets that are in the
aggregate material to Barefoot and its subsidiaries taken as a whole other
than sales of investment assets in the ordinary course of business
consistent with past practice; or (v) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock;
(d) neither Barefoot nor any of its subsidiaries shall: (i) grant any increase
in the compensation payable or to become payable by Barefoot or any of its
subsidiaries to any officer or employee other than scheduled annual
increases in the ordinary course of business consistent with past practice;
(ii) adopt any new, or amend or otherwise increase, or accelerate the
payment or vesting of the amounts payable or to become payable under any
existing, bonus, incentive compensation, deferred compensation, severance,
profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan agreement or arrangement; (iii)
enter into any, or amend any existing, employment, consulting or severance
agreement with or, except in accordance with the existing written policies
of Barefoot, grant any severance or termination pay to any officer,
director or employee of Barefoot or any of its subsidiaries; (iv) make any
additional contributions to any grantor trust created by Barefoot to
provide funding for non-tax-qualified employee benefits or compensation; or
(v) provide any severance program to any subsidiary which does not have a
severance program as of the date of this Agreement;
(e) neither Barefoot nor any of its subsidiaries shall modify, amend or
terminate any of the material Barefoot Agreements or waive, release or
assign any material rights or claims, except in the ordinary course of
business consistent with past practice;
(f) neither Barefoot nor any of its subsidiaries shall permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated, except in the ordinary course of business
consistent with past practice;
(g) neither Barefoot nor any of its subsidiaries shall: (i) incur or assume any
debt except for borrowings under existing credit facilities and except for
vehicle financing in each case in the ordinary course of business and in
amounts consistent with past practice; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business consistent with past practice; (iii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to wholly owned subsidiaries of Barefoot or customary loans or
advances to employees in accordance with past practice and other than as to
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such matters related to Barefoot's or any of its subsidiaries' investment
portfolios in the ordinary course of business consistent with past
practice); or (iv) enter into any material commitment (including, but not
limited to, any capital expenditure or purchase of assets) other than in
the ordinary course of business consistent with past practice;
(h) neither Barefoot nor any of its subsidiaries shall change any of the
accounting principles used by it unless required by GAAP;
(i) neither Barefoot nor any of its subsidiaries shall pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of any such claims, liabilities or obligations,
(x) reflected or reserved against in, or contemplated by, the consolidated
financial statements (or the notes thereto) of Barefoot and its
consolidated subsidiaries, (y) incurred in the ordinary course of business
consistent with past practice or (z) which are legally required to be paid,
discharged or satisfied;
(j) subject to the rights of Barefoot to terminate this Agreement pursuant to
Section 6.1(c)(1) and the obligation of Barefoot to pay ServiceMaster the
fees and expenses required by Section 7.1(b) hereof, neither Barefoot nor
any of its subsidiaries will adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization of Barefoot or any of its
subsidiaries or any agreement relating to a Takeover Proposal (as defined
in Section 5.5(c)) (other than the Offer or the Merger) other than
confidentiality agreements as provided in Section 5.5(a);
(k) neither Barefoot nor any of its subsidiaries will engage in any transaction
with, or enter into any agreement, arrangement, or understanding with,
directly or indirectly, any of Barefoot's affiliates, including, without
limitation, any transactions, agreements, arrangements or understandings
with any affiliate or other Person covered under Item 404 of Regulation S-K
under the Securities Act that would be required to be disclosed under such
Item 404 other than such transactions of the same general nature, scope and
magnitude as are disclosed in Barefoot SEC Documents;
(l) except upon the prior written consent of ServiceMaster, Barefoot shall not
make any Tax election; and
(m) neither Barefoot nor any of its subsidiaries will enter into an agreement,
contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
5.2 Access to Information.
(a) Barefoot shall (and shall cause each of its subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of ServiceMaster, reasonable access during the period prior
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to the Closing Time, to all of its and its subsidiaries' properties, books,
contracts, commitments and records (including any Tax Returns or other Tax
related information pertaining to Barefoot and its subsidiaries) and,
during such period, Barefoot shall (and shall cause each of its
subsidiaries to) furnish promptly to ServiceMaster (a) a copy of each
report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of the
federal securities laws and (b) all other information concerning its
business, properties and personnel as ServiceMaster may reasonably request
(including any Tax Returns or other Tax related information pertaining to
Barefoot and its subsidiaries). ServiceMaster shall access such information
in a manner reasonably calculated not to cause any unnecessary disruption
in the Company's business. ServiceMaster will use such information only for
purposes of the Offer and the Merger and shall disclose such information
only to the extent ServiceMaster reasonably concludes such disclosure
should be made in connection with such purposes or for such other purposes
as are permitted by the Confidentiality Agreement dated November 11, 1996
between ServiceMaster and Barefoot.
(b) ServiceMaster shall afford Barefoot and its advisors such access to
information about ServiceMaster as Barefoot and its advisors reasonably
deem necessary for purposes of due diligence investigations relating to the
transactions contemplated by this Agreement and for disclosures to
Barefoot's stockholders relating to such transactions. Barefoot shall not
use or disclose any nonpublic information obtained from ServiceMaster
except for the purposes indicated in the preceding sentence.
5.3 Consents and Approvals. Each of Barefoot, ServiceMaster and MergerSub
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby which actions shall include, without
limitation, furnishing all information in connection with approvals of or
filings with any Governmental Entity, including, without limitation, any
schedule, or reports required to be filed with the SEC, and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their subsidiaries in connection
with this Agreement and the transactions contemplated hereby. Each of Barefoot,
ServiceMaster and MergerSub will, and will cause its subsidiaries to, take all
reasonable actions necessary to obtain any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by ServiceMaster,
MergerSub, Barefoot or any of their subsidiaries in connection with the Offer or
the Merger or the taking of any action contemplated thereby or by this
Agreement.
5.4 Severance and Stay Protection Plan. At or before the Closing Time,
Barefoot shall adopt a severance and stay protection plan, the substantive terms
of which are set forth on Annex 2 hereof. From and after the Closing Time,
ServiceMaster and MergerSub shall honor such plan in accordance the terms
thereof. Except to the extent otherwise permitted by Barefoot's chief executive
officer or chief financial officer, ServiceMaster shall not communicate with any
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employees of Barefoot or any Barefoot subsidiary about future employment
relationships or terms prior to the Closing.
5.5 No Solicitation.
(a) Barefoot (and its subsidiaries and affiliates) shall not, and Barefoot (and
its subsidiaries and affiliates) will use their best efforts to ensure that
their respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents do not, directly or indirectly: (i)
initiate, solicit or encourage, or (except to the extent permitted by
clause (ii) below) take any action to facilitate the making of, any offer
or proposal which constitutes or is reasonably likely to lead to any
Takeover Proposal (as defined below) of Barefoot or any subsidiary or an
inquiry with respect thereto, or, (ii) in the event of an unsolicited bona
fide Takeover Proposal for Barefoot or any subsidiary of Barefoot, engage
in negotiations or discussions with, or provide any information or data to,
any corporation, partnership, person or other entity or group (other than
ServiceMaster or any of its affiliates or representatives) ("Person")
relating to any Takeover Proposal; except in the case of clause (ii) above,
to the extent that Barefoot's Board of Directors reasonably concludes,
after having received the advice of outside legal counsel to Barefoot and
the advice of Barefoot's financial advisor, and after having had the
opportunity to discuss the Takeover Proposal with such person making the
Takeover Proposal (which discussions shall not be deemed to be a violation
of this Agreement) that such Takeover Proposal is reasonably likely to
result in consideration per Share in excess of the Offer Consideration and
the failure to engage in such negotiations or discussions or provide such
information is reasonably likely to result in a breach of the Board of
Directors' fiduciary duties under applicable law; provided, however, that
notwithstanding the foregoing, Barefoot's Board of Directors may take, and
disclose to Barefoot's stockholders a position contemplated by Rules for
14d-9 and 14e-2 promulgated under the Exchange Act with respect to any
tender offer for shares of capital stock of Barefoot. Prior to furnishing
any information to any such Person making a Takeover Proposal, Barefoot
shall have obtained a confidentiality agreement from such Person containing
confidentiality provisions substantially similar to the confidentiality
provisions in the Confidentiality Agreement. Barefoot shall notify
ServiceMaster of any such offers, proposals, inquiries or Takeover
Proposals (including, without limitation, the material terms and conditions
thereof and the identity of the Person making it), within 24 hours of the
receipt thereof, and shall provide ServiceMaster with a copy of any written
Takeover Proposal or amendments or supplements thereto, and shall
thereafter inform ServiceMaster on a reasonable basis of the status of any
discussions or negotiations with such a third party, and any material
changes to the terms and conditions of such Takeover Proposal, and shall
promptly give ServiceMaster a copy of any information delivered to such
Person which has not previously been reviewed by ServiceMaster.
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(b) Barefoot hereby represents and warrants to ServiceMaster that Barefoot, its
subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents, are
not presently, and have not since November 1, 1996, engaged in or
participated in any discussions or negotiations whatsoever with any person,
entity or "group" (as that term is defined in Section 13(d)(3) of the
Exchange Act) with respect to any Takeover Proposal relating to Barefoot.
(c) As used in this Agreement, "Takeover Proposal" shall mean any tender or
exchange offer involving the capital stock of Barefoot, any proposal for a
merger, consolidation or other business combination involving Barefoot, any
proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the business or assets of, Barefoot or any
subsidiary of Barefoot, any proposal or offer with respect to any
recapitalization or restructuring with respect to Barefoot or any
subsidiary of Barefoot or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to Barefoot or any
subsidiary of Barefoot other than pursuant to the transactions to be
effected pursuant to this Agreement.
5.6 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its diligent efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable, whether under applicable laws and regulations or
otherwise, or to remove any injunctions or other impediments or delays, legal or
otherwise, to consummate and make effective the Offer and the Merger and the
other transactions contemplated by this Agreement; provided however, the
foregoing shall not require any party to waive or modify any condition or
provision hereof.
5.7 Barefoot Franchises. As soon as practicable after the Closing Time
ServiceMaster shall make every effort to provide to each Barefoot franchisee the
option to do any of the following: (i) to sell such franchise to Barefoot on
terms and conditions as the franchisee and ServiceMaster may agree; (ii) to
continue to operate Barefoot franchise in accordance with existing agreements
between the franchisee and Barefoot (very likely to be in competition with other
affiliates of ServiceMaster engaged in the lawn care business); or (iii) to
terminate the existing agreement between the franchisee and Barefoot and to
operate its business independently without use of Barefoot trade names, service
marks or similar rights.
5.8 Publicity. So long as this Agreement is in effect, neither Barefoot nor
ServiceMaster nor their affiliates shall issue or cause the publication of any
press release or other public statement or announcement with respect to this
Agreement or the transactions contemplated hereby without prior consultation
with the other party, except as may be reasonably required by law, reasonably
necessary for compliance with the Securities Act or Exchange Act or by
obligations pursuant to any listing agreement with a national securities
exchange, and in such case shall use all reasonable efforts to consult with the
other party prior to such release or announcement being issued.
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5.9 Notification of Certain Matters. Barefoot shall give prompt notice to
ServiceMaster and MergerSub, and ServiceMaster and MergerSub shall give prompt
notice to Barefoot, of (a) the occurrence, or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Closing Date and (b) any material failure of Barefoot,
MergerSub or ServiceMaster, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.9 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
5.10 Directors' and Officers' Insurance and Indemnification. ServiceMaster
agrees that at all times after the Closing Time, it shall indemnify (and advance
expenses to) each person who is now, or has been at any time prior to the date
hereof, a director or officer of Barefoot or of any of Barefoot's subsidiaries
(individually an "Indemnified Party" and collectively the "Indemnified
Parties"), to the same extent and in the same manner as is now provided in the
respective charters or by-laws of Barefoot and such subsidiaries or otherwise in
effect on the date hereof, with respect to any claim, liability, loss, damage,
cost or expense (whenever asserted or claimed) ("Indemnified Liability") based
in whole or in part on, or arising in whole or in part out of, any matter
existing or occurring at or prior to the Closing Time. ServiceMaster shall, or
shall cause Barefoot to, maintain in effect for not less than six (6) years
after the Closing the current policies of directors' and officers' liability
insurance maintained by Barefoot and its subsidiaries on the date hereof with
respect to matters existing or occurring at or prior to the Closing Time
(provided that ServiceMaster may substitute therefor policies having at least
the same coverage and containing terms and conditions which are no less
advantageous to the persons currently covered by such policies and with carriers
reasonably comparable to Barefoot's existing carriers in terms of
creditworthiness). The insurance required by the preceding sentence shall be in
an amount at any particular time equal to the greater of (i) the amount of
coverage provided by Barefoot's insurance on the date hereof or (ii) the amount
of coverage provided to ServiceMaster's own directors at the particular time.
Promptly after receipt by an Indemnified Party of notice of the assertion (an
"Assertion") of any claim or the commencement of any action against him or her
in respect to which indemnity or reimbursement may be sought against
ServiceMaster, Barefoot, the Surviving Corporation or a subsidiary of Barefoot
or the Surviving Corporation ("Indemnitors") hereunder, such Indemnified Party
shall notify any Indemnitor in writing of the Assertion, but the failure to so
notify any Indemnitor shall not relieve any Indemnitor of any liability it may
have to such Indemnified Party hereunder except where such failure shall have
materially prejudiced Indemnitor in defending against such Assertion. No
Indemnified Party shall settle any Assertion without the prior written consent
of ServiceMaster. The provisions of this Section 5.10 are intended for the
benefit of, and shall be enforceable by, the respective Indemnified Parties.
5.11 Existing Stockholder Agreements and Registration Rights Agreements.
Barefoot will use its best efforts to terminate or cause to be terminated, prior
to the Closing Time, any stockholder agreements or registration rights
agreements with or among any of its security holders. Barefoot will suspend all
sales under any shelf registration statement at least two business days prior to
the Expiration Date and will cause any registration rights agreement not to have
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any application to any securities of ServiceMaster or its subsidiaries following
the Closing Time.
5.12 Stock Exchange Listing. ServiceMaster shall cause ServiceMaster Shares
issued pursuant to the Offer to be approved for listing on the NYSE prior to the
Closing.
5.13 Resignations/Replacement of Directors and Officers. Barefoot shall
cause such officers and directors of Barefoot and its subsidiaries as
ServiceMaster may request to resign their positions as such at the Closing Time
and/or shall arrange for the election or appointment as officers and directors
of Barefoot and its subsidiaries, at the Closing Time, of the persons designated
by ServiceMaster. The instruments effecting the foregoing resignations,
appointments and/or elections to act are herein referred to as the "Director and
Officer Actions."
5.14 HSR. Each of Barefoot and ServiceMaster shall as soon as practicable,
file Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the 'FTC') and the Antitrust Division of the Department of Justice
(the 'Antitrust Division') and shall use its best efforts to cooperate and
respond as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation.
5.15 Material Consents. Between the date of this Agreement and the Closing
Date, Barefoot and ServiceMaster and each of their respective subsidiaries shall
in good faith use their reasonable best efforts to obtain all consents and
approvals of all lenders, lessors, franchisees, vendors, customers, and other
persons necessary to permit the Offer and the Merger and other transactions
contemplated by this Agreement to be consummated without violating any loan
agreement, lease or other material contract to which Barefoot, ServiceMaster, or
any of their respective subsidiaries is a party or by which Barefoot,
ServiceMaster, or any of their respective subsidiaries is bound.
5.16 Stock Purchase Rights. As of the date of this Agreement there are
outstanding a number of Stock Purchase Rights equal to the aggregate number of
Shares issued and outstanding, which rights are exercisable for shares of
Barefoot's Series A Junior Participating Preferred Stock pursuant to the terms
of the Rights Agreement dated as of April 11, 1995 between Barefoot and National
City Bank (the "Rights Agreement"). The Board of Directors of Barefoot has taken
such action, and will take such additional action, as is required to prevent the
Stock Purchase Rights from becoming exercisable by reason of this Agreement, the
Merger Agreement, the Offer or the Merger.
5.17 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to cooperate with each other and to
use its reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, in each case consistent with the fiduciary duties of their
respective Boards of Directors, all things necessary, proper or advisable (i)
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as reasonably practicable,
including to obtain all necessary waivers, consents and approvals and to effect
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all necessary registrations and filings and all actions necessary to comply with
and to permit the Offer and Merger to proceed under Section 1707.041 of the Ohio
Revised Code and (ii) to lift any injunction or other legal bar to the Offer or
the Merger as soon as reasonably practicable; provided, however, that nothing in
this Section or elsewhere in this Agreement shall require any party hereto to
incur any expense or make any commitment in connection with the transactions
contemplated hereby which in its reasonable judgement is not warranted under the
circumstances (including but not limited to any divestiture of a significant
asset or acceptance of any material restriction on the operations of any party
in order to obtain any waiver, consent or approval required by this Agreement).
The preceding proviso shall not limit Barefoot's obligation under this paragraph
with respect to any expense, commitment or action which would only apply or
become effective if the Offer is closed and which shall be approved by
ServiceMaster.
ARTICLE 6.0
Termination
6.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement and the Merger Agreement may be terminated and
Offer and the Merger contemplated herein may be abandoned at any time prior to
the Closing:
(a) By the mutual consent of the Board of Directors of ServiceMaster and the
Board of Directors of Barefoot;
(b) By either of the Board of Directors of Barefoot or the Board of Directors
of ServiceMaster:
(1) if the Offer shall not have been commenced by February 15, 1997;
provided, however, that the right to terminate this Agreement under
this Section 6.1(b)(1) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
primary and but-for cause of the failure of the Offer to have been
commenced by February 15, 1997; or
(2) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their diligent efforts to lift),
in each case permanently restraining, enjoining or otherwise
prohibiting the Offer or the Merger or any material aspect of Offer or
the Merger and such order, decree, ruling or other action shall have
become final and non-appealable;
(c) By the Board of Directors of Barefoot:
(1) if the Board of Directors of Barefoot shall have (A) withdrawn, or
modified or changed in a manner adverse to ServiceMaster its approval
or recommendation of this Agreement, the Offer or the Merger as a
result of a Takeover Proposal (other than the Offer or the Merger), in
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order to approve a Takeover Proposal (other than the Offer or the
Merger), or to permit Barefoot to execute a definitive agreement
relating to a Takeover Proposal, and (B) determined, after having
received the advice of outside legal counsel to Barefoot and the
advice of Barefoot's financial advisor, that such Takeover Proposal is
for consideration per Share in excess of the Offer Consideration and
the failure to take such action as set forth in the preceding clause
(A) would result in a breach of the Board of Directors' fiduciary
duties under applicable law; provided, however, that Barefoot shall
have given ServiceMaster forty-eight (48) hours advance notice of any
termination pursuant to this Section 6.1(c)(1) and that Barefoot shall
have paid ServiceMaster the fees and expenses required by Section
7.1(b) hereof;
(2) if ServiceMaster or MergerSub breaches or fails in any material
respect to perform or comply with any of its material covenants and
agreements contained herein; provided, however, that if any such
breach is curable by the breaching party through the exercise of the
breaching party's diligent efforts and for so long as the breaching
party shall be so using diligent efforts to cure such breach, Barefoot
may not terminate this Agreement pursuant to this Section 6.1(c)(2);
or
(3) if ServiceMaster breaches any of its representations or warranties and
such breach (i) is reasonably likely to have a material adverse effect
upon ServiceMaster and its subsidiaries taken as a whole and (ii) has
not been incorporated into the prospectus provided to Barefoot
shareholders.
(d) By the Board of Directors of ServiceMaster:
(1) if Barefoot (x) breaches or fails in any material respect to perform
or comply with any of its material covenants and agreements contained
herein or (y) breaches its representations and warranties in any
material respect and such breach would have or would be reasonably
likely to have a material adverse effect on Barefoot and its
subsidiaries or create a situation in which any of the conditions set
forth in Annex 1 would not reasonably be expected to be satisfied
prior to Closing; provided, however, that if any such breach is
curable by Barefoot through the exercise of Barefoot's diligent
efforts and for so long as Barefoot shall be so using diligent efforts
to cure such breach, ServiceMaster may not terminate this Agreement
pursuant to this Section 6.1(d)(1); or
(2) if the Board of Directors of Barefoot shall have withdrawn, or
modified or changed in a manner adverse to ServiceMaster its approval
or recommendation of this Agreement, the Offer or the Merger or shall
have recommended a Takeover Proposal or other business combination, or
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Barefoot shall have entered into an agreement in principle (or similar
agreement) or definitive agreement providing for a Takeover Proposal
or other business combination with a person or entity other than
ServiceMaster, MergerSub or their subsidiaries (or the Board of
Directors of Barefoot resolves to do any of the foregoing by formal
action); or
(3) by ServiceMaster if the Offer shall have expired or been terminated
without any Shares being purchased thereunder as a result of the
occurrence of any event that would result in the failure to satisfy
any of the conditions set forth in Annex 1; or
(4) as provided in Annex 3.
Such right of termination shall be exercised by written notice of termination
given by the terminating party to the other parties hereto in the manner
hereinafter provided.
6.2 Effect of Termination. If this Agreement is validly terminated by
Barefoot or ServiceMaster pursuant to Section 6.1, this Agreement and the Merger
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either Barefoot, ServiceMaster or MergerSub (or any of
their respective representatives or affiliates) in respect of this Agreement or
the Merger Agreement, except that this Section 6.2 and Section 7.1 shall
continue to apply after such termination. Without limiting by implication the
generality of the preceding sentence, ServiceMaster shall not be obligated to
continue the Offer after any termination of this Agreement pursuant to any
provision in Section 6.1. No termination of this Agreement or the Merger
Agreement shall impair or terminate the rights or obligations of ServiceMaster
or Barefoot under the Confidentiality Agreement to which they are parties.
ARTICLE 7.0
Miscellaneous
7.1 Fees and Expenses.
(a) Except as otherwise set forth in this Section 7.1, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses. All legal fees and accounting fees incurred by Barefoot shall be
based upon actual time spent on the transactions contemplated by this
Agreement and on hourly rates consistent with past practices.
(b) In the event
(1) the Board of Directors of Barefoot shall terminate this Agreement
pursuant to subsection 6.1(c)(1) hereof, or
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(2) the Board of Directors of ServiceMaster shall terminate this Agreement
pursuant to subsection 6.1(d)(2), then Barefoot shall pay $9.3 million
in cash to ServiceMaster.
(c) In the event ServiceMaster shall not consummate the offer and shall be
entitled to take such action because of the failure of any of the
conditions specified in clause (a), (b), (h), (k), or (l) in Annex 1 or
because rights to purchase Barefoot shares representing more than 1% of
Barefoot's outstanding common stock would remain outstanding after the
Closing then Barefoot shall pay $7 million in cash to ServiceMaster.
(d) In the event ServiceMaster shall be entitled payment under the provisions
of both 7.1(b) and Section 7.1(c), then the amount of the payment owed by
Barefoot to ServiceMaster shall be the amount specified in Section 7.1(b)
and ServiceMaster shall not have the right to obtain any additional payment
under Section 7.1(c).
(e) The payment specified under Section 7.1(b) or Section 7.1(c) shall be due
on the date (the "due date") upon which Barefoot shall receive written
request from ServiceMaster for such payment after the occurrence of the
event specified in such Section. If Barefoot shall for any reason fail to
make the payment specified under Section 7.1(b) or Section 7.1(c) on its
due date, then Barefoot shall pay ServiceMaster on demand interest at 300
basis points in excess of the prime rate (as reported in the Wall Street
Journal) on the amount remaining unpaid from that due date until such
payment shall be received by ServiceMaster and shall also reimburse
ServiceMaster for all attorney's fees and other expenses which
ServiceMaster shall reasonably incur to enforce its rights to such payment.
7.2 ServiceMaster Reincorporating Merger. Barefoot understands that: (i)
ServiceMaster's shareholders have previously approved a merger described in a
proxy statement/prospectus dated December 11, 1991 (the "Reincorporation Proxy
Statement") pursuant to which (i) ServiceMaster will be replaced as the parent
company for the ServiceMaster enterprise by ServiceMaster Incorporated of
Delaware ("ServiceMaster Incorporated") and each ServiceMaster partnership share
outstanding immediately prior to the merger will be converted into a share of
common stock issued by ServiceMaster Incorporated. Barefoot understands that to
the extent that Barefoot Stockholders acquire any ServiceMaster Shares pursuant
to the Offer that such ServiceMaster Shares shall be subject to the pre-approval
of the Reincorporating Merger by ServiceMaster's shareholders pursuant to the
Reincorporation Proxy Statement.
7.3 Amendment and Modification. This Agreement may not be amended except by
an instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
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7.4 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
consummation of the Merger.
7.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by an overnight courier service, such as Federal Express, to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to ServiceMaster or MergerSub, to:
ServiceMaster Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
(b) if to Barefoot, to:
Barefoot Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
with a copy to:
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Either party may change the address to which notices and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
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7.6 Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date written in the first
paragraph of this Agreement. As used in this Agreement, the term "affiliate(s)"
shall have the meaning set forth in Rule l2b-2 of the Exchange Act.
7.7 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
7.8 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement, the Merger Agreement and the Confidentiality Agreement
(including the exhibits hereto and the documents and the instruments referred to
herein and therein): (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided in Section 5.10
are not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
7.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
7.10 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, except that ServiceMaster may assign, in its sole discretion, any or
all of its rights, interests and obligations hereunder to ServiceMaster or to
any direct or indirect wholly owned subsidiary of ServiceMaster; provided,
however, that no such assignment shall relieve ServiceMaster from any of its
obligations hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
7.11 No Strict Construction. No rule of strict construction, rule resolving
ambiguities against the person who drafted the provision giving rise to such
ambiguities, or other such rule of interpretation shall be applied against any
party with respect to this Agreement.
7.12 Specific Performance. Each party to this Agreement shall have the
right to enforce each obligation of the other party under this Agreement by
specific performance or by injunctive relief.
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7.13 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
* * * *
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IN WITNESS WHEREOF, ServiceMaster, MergerSub and Barefoot have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
SERVICEMASTER LIMITED PARTNERSHIP
By ServiceMaster Management Corporation
Managing General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
SERVICEMASTER ACQUISITION
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
BAREFOOT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
-49-
ANNEX 1
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Agreement or the Offer, and
except as expressly limited below, ServiceMaster shall not be required to
purchase any Shares tendered, if, prior to the time of purchase of any such
Shares, any of the following events (each, an "Event") shall have occurred,
(each of paragraphs (a) through (n) providing a separate and independent
condition to ServiceMaster's obligations pursuant to the Agreement and the
Offer):
(a) fewer than the Minimum Number of all outstanding Shares are validly
tendered and not withdrawn prior to 12:00 midnight, New York City Time on
the Expiration Date;
(b) except as contemplated by the provisions of this Agreement Barefoot or any
subsidiary of Barefoot shall have authorized or recommended, or shall have
announced an intention to authorize or, recommend, or shall have entered
into an agreement in principle with respect to, any merger, consolidation
or business combination, any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or
any material change in its capitalization or any release or relinquishment
of any material contract rights not in the ordinary course of business;
(c) an injunction or other order shall have been entered and remain in effect
in any action or proceeding before any court or governmental agency or
other regulatory or administrative agency or commission, domestic or
foreign, based upon any provision of the Offer (i) making the acceptance
for payment of, or purchase or payment for, the Shares pursuant to the
Offer or the Merger illegal, or resulting in a material delay in the
ability of ServiceMaster to accept for payment or pay for some or all of
the Shares, (ii) imposing material limitations on the ability of
ServiceMaster effectively to acquire or hold or to exercise full rights of
ownership of the Shares acquired by it, including, but not limited to, the
right to vote the Shares purchased by it on all matters properly presented
to the stockholders of Barefoot, (iii) imposing material limitations on the
ability of either ServiceMaster (so long as such injunction or other order
is related to the Offer or the Merger) or Barefoot to continue effectively
all or any material portion of its respective business as heretofore
conducted or to continue to own or operate effectively all or any material
portion of its respective assets as heretofore owned or operated or (iv) to
the effect that the Offer or the Merger is violative of any applicable law;
(d) there shall have been any law, statute, rule or regulation, domestic or
foreign, promulgated or proposed after the date hereof that, directly or
indirectly, results or may be reasonably anticipated to result in any of
the consequences referred to in paragraph (c) above (other than any state
law, statute, rule or regulation whose applicability can be avoided by not
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extending the Offer to residents of such state provided that in the
aggregate not more than 2% of the outstanding Shares on the date of the
Closing shall be owned of record by residents of any such state);
(e) there shall have occurred (i) any general suspension of, or limitation on
prices for, trading in securities on the New York Stock Exchange or in the
over-the-counter market, (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iii)
the commencement of war involving the United States, or (iv) any limitation
not in existence as of the date of the Agreement by any governmental
authority, or any other event not in existence as of the date of the
Agreement, which will materially limit the extension of credit by banks or
other lending institutions in the United States;
(f) the representations and warranties of Barefoot contained herein shall not
be true and correct at and as of the time of each purchase under the Offer
as if made at and as of such time except for matters which, individually or
in the aggregate, do not and will not have a material adverse effect on the
business, operation or financial condition of Barefoot and its subsidiaries
taken as a whole and the ability of Barefoot to perform its obligations
under the Merger Agreement;
(g) all material terms, agreements and conditions of the Agreement and the
Merger Agreement to be complied with or performed or fulfilled by Barefoot
at or prior to any purchase pursuant to the Offer shall not have been
complied with, performed and fulfilled in all material respects;
(h) Barefoot's Board of Directors shall have modified or amended in any respect
its recommendation of the Offer and the Merger to the stockholders of
Barefoot in any manner not approved by ServiceMaster or shall have resolved
to do so by formal action;
(i) Barefoot and ServiceMaster shall have reached an agreement that the Offer
shall be terminated;
(j) any waiting period (and any extension thereof) applicable to the
consummation of the Offer under the HSR Act shall not have expired or been
terminated;
(k) the rights under the Rights Agreement shall not have been redeemed or made
inapplicable to the Offer, the separation of outstanding Stock Purchase
Rights from the Shares shall have occurred, or the Stock Purchase Rights
shall have become exercisable;
(l) any director of Barefoot or its subsidiaries (as requested by
ServiceMaster) shall have failed to resign effective as of the consummation
of the Offer;
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(m) the conditions precedent specified in Section 1.6 or 1.8 of the Acquisition
Agreement shall not be satisfied; or
(n) a stop order suspending effectiveness of the Registration Statement shall
have been issued or a proceeding for that purpose shall have been initiated
or threatened by the SEC.
which in the reasonable judgment of ServiceMaster, in any such case and
regardless of the circumstances (including any action or inaction by
ServiceMaster or any of its affiliates) giving rise to any such condition, makes
it inadvisable to proceed with the Offer or with such acceptance for payment or
payment for the Shares.
The foregoing conditions are for the benefit of ServiceMaster and may be
asserted by ServiceMaster regardless of the circumstances giving rise to any
such condition and, subject to the terms and conditions of the Acquisition
Agreement, may be waived by ServiceMaster, in whole or in part, at any time and
from time to time, in the sole discretion of ServiceMaster. The failure by
ServiceMaster at any time to exercise any of the foregoing rights will not be
deemed a waiver of any other right and each right will be deemed an ongoing
right which may be asserted at any time and from time to time. Notwithstanding
the fact that ServiceMaster reserves the right to assert the occurrence of a
condition following acceptance for payment but prior to payment in order to
delay or cancel its obligation to pay for properly tendered Shares,
ServiceMaster will either promptly pay for such Shares or promptly return such
Shares.
Each term which is defined in the Acquisition Agreement has the same
meaning whenever it is used in this Annex 1 as the meaning it is given in the
Acquisition Agreement.
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ANNEX 2
Severance and Stay Pay Benefits
The severance and stay protection plan benefits as adopted by Barefoot
shall be as follows:
▇. ▇▇▇▇▇▇▇▇▇: one week of compensation for each year of service with Barefoot,
provided that the employee leaves in good standing.
B. Stay pay: additional compensation of four, six or eight weeks, as
applicable, to employees who are scheduled to remain for extended periods
to assist with the transaction. The specific amount of stay pay for an
employee shall be determined by the employee's position. These benefits may
be modified based on individual circumstances and/or critical value.
C. Vacation: vested vacation shall be paid in addition to items A and B.
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ANNEX 3
COMPLETION OF DUE DILIGENCE
1. ServiceMaster shall have the right to continue its due diligence
investigation of Barefoot after the date hereof. Such investigation may include
(but is not limited to) on-site inspections and environmental audits of any and
all branch facilities and access to branch records; access to Barefoot branch
and key home office personnel; access to legal counsel for review of pending or
threatened litigation (if any); review of accounting and financial records
(including all detail profit and cost center statements for 1995 and 1996 and
detailed balance sheets); and review of outstanding contractual commitments in
excess of $10,000 (including chemical and supply purchases, capital
expenditures, software development, franchise sales, direct mail and other
advertising expenditures).
2. Subject to paragraphs 3 and 4, ServiceMaster shall have the right to
terminate this Agreement at any time on or before December 31, 1996 if the due
diligence investigation conducted pursuant to paragraph 1 discloses any one or
more of the following conditions:
(a) Unreserved environmental exposures (whether or not Superfund-related) at
sites of current or former Barefoot facilities or unreserved exposures
attributable to other activities of Barefoot (for example, improper
chemical disposal activities);
(b) Other unrecorded or understated liabilities or overstated assets;
(c) Material differences between the customer base (after allowing for normal
year end cancellations) as reflected in branch records compared to the
reported revenue base of Barefoot.
3. Notwithstanding the disclosure of facts of a nature described in items
(a), (b) and/or (c) in paragraph 2, such facts shall give ServiceMaster the
right to terminate this Agreement only if:
In the case of Item (a) and Item (b) (taken together), the probable loss
exposure, net of recorded reserves, and the extent of the under recording
of liabilities and the overstatement of assets is, in ServiceMaster's
reasonable judgment, likely to exceed $2,000,000 in total. The basis for
such reasonable judgment shall be set forth in a written statement which
shall be submitted to Barefoot on or before December 19, 1996 and which
shall set forth the amount of the expected loss, under recording and/or
overstatement, as the case may be, and the reasons why such matters are
expected to be of such magnitude.
In the case of Item (c), differences between the customer base as reflected
in branch records and Barefoot's reported revenue base will be considered
"material" only if the difference would have an aggregate adverse impact on
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the annual pre-tax profits of Barefoot of more than $1,000,000. The details
of such adverse impact shall be set forth in a written statement which
shall be submitted to Barefoot on or before December 19, 1996.
4. If ServiceMaster submits one or more statements to Barefoot pursuant to
paragraph 3, Barefoot shall have five business days to respond to such
statement(s) before ServiceMaster's right to terminate this Agreement shall
become final. During such period, senior executives of ServiceMaster and
Barefoot shall mutually review such statements with a view to determining the
correctness thereof and whether the basis or bases for ServiceMaster's
termination right under this Annex 3 in fact exists. If, by the end of such
period, ServiceMaster is not in good faith satisfied that such basis or bases do
not in fact exist, then ServiceMaster shall have the right to terminate this
Agreement without any obligation to commence the Offering and without liability
of any kind to Barefoot, provided that such right of termination shall expire
and shall not be exercisable unless ServiceMaster shall provide Barefoot with
written notice of ServiceMaster's exercise of such right on or before December
31, 1996.
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ANNEX 4
Barefoot Board Resolutions Approving the Offer and the Merger
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