-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JvDDYcfjwmvxH+Mj5NriHt0S0NM9TaxyFW4btTu9Y3ROJjCe1yn5KCHCDS7BKhL/ TPqw3WSAiH1HpyggYNl1Dg== 0000950131-97-004783.txt : 19970807 0000950131-97-004783.hdr.sgml : 19970807 ACCESSION NUMBER: 0000950131-97-004783 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970806 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICEMASTER LTD PARTNERSHIP CENTRAL INDEX KEY: 0000806027 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 363497008 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-32167 FILM NUMBER: 97652404 BUSINESS ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 7089641300 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICEMASTER CO LTD PARTNERSHIP CENTRAL INDEX KEY: 0000836803 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 363482710 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-32167-01 FILM NUMBER: 97652405 BUSINESS ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 6302711300 MAIL ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVE STATE: IL ZIP: 60515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICEMASTER INCORPORATED OF DELAWARE CENTRAL INDEX KEY: 0000879099 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 363858106 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-32167-02 FILM NUMBER: 97652406 BUSINESS ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVER STATE: IL ZIP: 60515 BUSINESS PHONE: 6302711300 MAIL ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVE STATE: IL ZIP: 60515 S-3/A 1 AMENDMENT NO. 1 TO FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1997 REGISTRATION NO. 333-32167 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- SERVICEMASTER LIMITED PARTNERSHIP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE ONE SERVICEMASTER WAY 36-3497008 (STATE OR OTHER DOWNERS GROVE, ILLINOIS 60515 (I.R.S. EMPLOYER JURISDICTION (630) 271-1300 IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE ONE SERVICEMASTER WAY 36-3482710 (STATE OR OTHER DOWNERS GROVE, ILLINOIS 60515 (I.R.S. EMPLOYER JURISDICTION (630) 271-1300 IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- SERVICEMASTER INCORPORATED OF DELAWARE (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE ONE SERVICEMASTER WAY 36-3858106 (STATE OR OTHER DOWNERS GROVE, ILLINOIS 60515 (I.R.S. EMPLOYER JURISDICTION (630) 271-1300 IDENTIFICATION NO.) OF INCORPORATION OR ORGANIZATION) (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- VERNON T. SQUIRES SENIOR VICE PRESIDENT AND GENERAL COUNSEL ONE SERVICEMASTER WAY DOWNERS GROVE, ILLINOIS 60515 (630) 271-1300 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) --------------- COPIES TO: ROBERT H. KINDERMAN JAMES A. FLORACK KIRKLAND & ELLIS DAVIS POLK & WARDWELL 200 E. RANDOLPH DRIVE 450 LEXINGTON AVENUE CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10017 (312) 861-2096 (212) 450-4000 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective as determined by market conditions and other factors. --------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest investment plans, check the following box. [X] (Cover page continued) If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] --------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TWO CORE PROSPECTUSES This Registration Statement contains two proposed forms of core prospectus. One core prospectus is intended for use with offerings of Debt Securities registered on this Registration Statement. The other core prospectus is intended for use with offerings of equity securities registered on this Registration Statement. DEBT PROSPECTUS SUPPLEMENT This Registration Statement also contains a preliminary Prospectus Supplement which the registrants intend to use together with the prospectus included herein for use with the offerings of Debt Securities in connection with a proposed underwritten offering of $150 million in Notes with a 10-year maturity and $150 million of Notes with a 30-year maturity. The registrants presently intend to consummate the offering described in the Prospectus Supplement as soon as practicable after the Registration Statement becomes effective. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ + + +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS + +SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY + +NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH + +OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR + +QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED AUGUST 6, 1997 PROSPECTUS SUPPLEMENT (To Prospectus dated , 1997) THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP LOGO $150,000,000 % Notes due , 2007 ISSUE PRICE: % $150,000,000 % Notes due , 2027 ISSUE PRICE: % FULLY AND UNCONDITIONALLY GUARANTEED BY SERVICEMASTER LIMITED PARTNERSHIP Interest on the % Notes due , 2007 (the "2007 Notes") and on the % Notes due , 2027 (the "2027 Notes") (collectively, the "Notes") is pay- able semi-annually on and of each year, commencing , 1998. The 2007 Notes and 2027 Notes may be redeemed at any time at the option of The ServiceMaster Company Limited Partnership ("The ServiceMaster Company" or the "Company"), in whole or in part, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the pres- ent values of the Remaining Scheduled Payments (as defined herein) thereon dis- counted to the redemption date, on a semi-annual basis, at the Treasury Yield (as defined herein) plus basis points (for the redemption of the 2007 Notes) or basis points (for the redemption of the 2027 Notes), together with all accrued but unpaid interest, if any, to the date of redemption in ei- ther case. See "Description of Notes--Optional Redemption of 2007 and 2027 Notes" herein. Each series of Notes will be represented by a Registered Global Security (as defined in the Indenture) registered in the name of The Depository Trust Com- pany (the "Depositary") or its nominee. Interest in the Registered Global Secu- rities will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary (with respect to beneficial interests of participants) or by participants or persons that hold interests through partic- ipants (with respect to beneficial interests of beneficial owners). Except as described in the accompanying Prospectus, Notes in certificated form will not be issued. See "Description of Debt Securities--Global Securities" in the ac- companying Prospectus. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC- CURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - --------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO PUBLIC (1) DISCOUNT (2) COMPANY (1)(3) - ------------------------------------------------------------------------------------------------- Per 2007 Note % % % - ------------------------------------------------------------------------------------------------- Total $ $ $ - ------------------------------------------------------------------------------------------------- Per 2027 Note % % % - ------------------------------------------------------------------------------------------------- Total $ $ $ - -------------------------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 1997. (2) The Company has agreed to indemnify the Underwriters against certain liabilities under the Securities Act of 1933, as amended. See "Underwriting" herein. (3) Before deducting expenses of the Company estimated at $860,000. The Notes are offered, subject to prior sale, when, as and if accepted by the Underwriters and subject to approval of certain legal matters by Davis Polk & Wardwell, counsel for the Underwriters. It is expected that delivery of the Notes will be made in book-entry form only on or about , 1997 through the facilities of the Depositary, against payment therefor in immedi- ately available funds. J.P. MORGAN & CO. GOLDMAN, SACHS & CO. BA SECURITIES, INC. FIRST CHICAGO CAPITAL MARKETS, INC. NATIONSBANC CAPITAL MARKETS, INC. August , 1997 CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." No dealer, salesman or any other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or by any Underwriter. This Prospectus Supplement and the accompanying Prospectus do not constitute an offer to sell or the solicitation of an offer to buy the Notes by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder and thereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof or thereof or that the information contained or incorporated by reference herein or therein is correct as of any time subsequent to the date of such information. TABLE OF CONTENTS
PAGE PROSPECTUS SUPPLEMENT ServiceMaster.............................................................. S-3 Recent Developments........................................................ S-5 Capitalization............................................................. S-6 Use of Proceeds............................................................ S-6 Selected Historical Financial Information.................................. S-7 Description of the Notes and Guarantee..................................... S-8 Underwriting............................................................... S-10 Legal Opinions............................................................. S-11 PROSPECTUS Available Information...................................................... 2 Incorporation of Certain Information by Reference.......................... 2 ServiceMaster.............................................................. 4 Ratio of Earnings to Fixed Charges......................................... 5 Summarized Financial Information for The ServiceMaster Company............. 5 Use of Proceeds............................................................ 6 Description of Debt Securities and Guarantee............................... 6 The Reincorporating Merger and the Partnership Liquidations................ 19 Plan of Distribution....................................................... 20 Validity of Debt Securities................................................ 22 Experts.................................................................... 22
S-2 Unless otherwise indicated or the context otherwise requires, all references herein to: (i) the "Parent Partnership" refers to ServiceMaster Limited Partnership; (ii) "The ServiceMaster Company" or the "Company" refer to The ServiceMaster Company Limited Partnership; and (iii) "ServiceMaster" refers to the Parent Partnership and The ServiceMaster Company, together with all entities affiliated with these two limited partnerships and their respective predecessors. As described in this Prospectus Supplement and the attached Prospectus, the shareholders of the Parent Partnership have approved a Reincorporating Merger, which is scheduled to occur on or before December 31, 1997. The Reincorporating Merger will install ServiceMaster Incorporated of Delaware as the ultimate parent in the ServiceMaster enterprise, and the term "ServiceMaster" as used in this Prospectus Supplement with respect to periods at and after the Reincorporating Merger refers to ServiceMaster Incorporated of Delaware and its subsidiaries. SERVICEMASTER ServiceMaster provides a range of services to individual consumers, businesses and institutions in the United States and over 30 other countries throughout the world. ServiceMaster is functionally divided into three operating units: Consumer Services, Management Services and International. Consumer Services and Management Services are the principal operating units. CONSUMER SERVICES ServiceMaster Consumer Services provides specialty services to homeowners and commercial facilities through seven market-leading companies. The services provided by these companies include: lawn care, tree and shrub services and indoor plant maintenance services under the "TruGreen-ChemLawn" and "Barefoot" service marks; termite and pest control services under the "Terminix" service mark; home systems and appliance warranty contracts under the "American Home Shield" service mark; residential and commercial cleaning and disaster restoration services under the "ServiceMaster" service mark; domestic housekeeping services under the "Merry Maids" service mark; home inspection services under the "AmeriSpec" service mark; and on-site furniture repair and restoration under the "Furniture Medic" service mark. ServiceMaster focuses on providing easy access to its various services and establishing relationships to provide one or more of these services on a repetitive basis to customers. Since 1986, the number of domestic customers served by ServiceMaster Consumer Services has increased from fewer than one million customers to more than 6,500,000 customers. The International unit is primarily responsible for overseeing the Consumer Services businesses that are conducted in foreign markets. The services provided by the seven Consumer Services companies are part of the ServiceMaster "Quality Service Network" and can be accessed by calling a single toll-free telephone number: 1-800-WE SERVE or by contacting the individual companies directly. TruGreen-ChemLawn. As of March 21, 1997, TruGreen-ChemLawn (following the acquisition of Barefoot) was operating in 47 states through 198 company-owned branches and 126 franchised branches. With over 3 million residential and commercial customers, TruGreen-ChemLawn is the leading provider of lawn care services in the United States and also provides interior plantscape services to commercial customers. TruGreen-ChemLawn also provides lawn, tree and shrub care services in Saudi Arabia through a licensing arrangement and in Canada through an affiliate. The TruGreen-ChemLawn businesses are seasonal in nature. In February 1997, ServiceMaster, for the benefit of TruGreen-ChemLawn, completed the acquisition of Barefoot Inc. ("Barefoot") for aggregate consideration having a value of approximately $237,000,000. At the time of the transaction, Barefoot was the second largest provider of professional lawn care services in the United States. Terminix. With over 3 million residential and commercial customers, Terminix is the leading provider of termite and pest control services in the United States. As of December 1996, Terminix was providing these services in 45 states and in Mexico through 316 company-owned branches and 250 franchised branches. Terminix also provides termite and pest control services through subsidiaries in Belgium, The Netherlands, Norway, Sweden, Ireland, the United Kingdom, Germany and Mexico and through local licensees in 11 other countries. The Terminix business is seasonal in nature. American Home Shield. American Home Shield ("AHS") is a leading provider of home service warranty contracts in the United States. AHS warranty contracts cover the repair or replacement of built-in appliances, hot water heaters S-3 and electrical, plumbing, central heating, and central air conditioning systems that malfunction by reason of normal wear and tear. Service contracts are sold through participating real estate brokerage offices in conjunction with resales of single-family residences to homeowners. AHS also sells service warranty contracts directly to non-moving homeowners by renewing existing contracts and through various other distribution channels which are currently being expanded. As of December 31, 1996, AHS was providing services to approximately 503,000 homes through approximately 13,000 independent repair maintenance contractors in 49 states and the District of Columbia. AHS also provides home service warranty contracts through licensing arrangements with local service providers in three other countries. ServiceMaster Residential/Commercial Services ("Res/Com"). ServiceMaster, through Res/Com, is the leading franchiser in the United States in the residential and commercial cleaning field. Res/Com provides carpet and upholstery cleaning and janitorial services, disaster restoration services and window cleaning services to over 1.6 million residential and commercial customers worldwide through a network of over 4,500 independent franchisees. Res/Com provides its services through subsidiaries in Germany, Ireland and the United Kingdom, through an affiliate in Canada, and through licensees in 13 other countries. Merry Maids. Merry Maids provides domestic house cleaning services. With approximately 225,000 customers, Merry Maids is the leading provider of domestic house cleaning services in the United States. As of December 31, 1996, these services were provided through 27 company-owned branches in 18 states and 836 licensees operating in 49 states. Merry Maids also provides domestic housecleaning services in the United Kingdom through a subsidiary, in Canada through an affiliate and in five other countries through licensing arrangements with local service providers. AmeriSpec. AHS acquired AmeriSpec in February 1996. AmeriSpec is a leading provider of home inspection services in the United States. During 1996, AmeriSpec conducted 85,000 home inspections in 41 states and Canada. AmeriSpec provides home inspection services in Canada through licensing arrangements with local service providers. Furniture Medic. ServiceMaster acquired Furniture Medic in July 1996. Furniture Medic provides on-site furniture repair and restoration services in all 50 states. As of December 31, 1996, these services were provided through 549 licensees. Furniture Medic also provides its services in Canada through an affiliate and in two other countries through licensing arrangements with local service providers. MANAGEMENT SERVICES Management Services is organized into three discrete operating units, each providing a separate functional service on a nationwide basis. These units are: Healthcare Services (including Diversified Health Services); Education Management Services; and Business and Industry Management Services. The services provided by the Healthcare Management Services unit and the services provided by ServiceMaster Diversified Health Services have been integrated to provide a coordinated range of services to the health care market. ServiceMaster pioneered the providing of management of support services to health care facilities by instituting housekeeping management services in 1962. Since then, ServiceMaster has expanded its management services business such that it now provides management of a variety of support services including the management of housekeeping, plant operations and maintenance, laundry and linen, grounds and landscaping, clinical equipment maintenance, food service, energy management and total facility management. The Diversified Health Services' portion of Healthcare Services provides management and other services to nursing homes, skilled nursing facilities, assisted living facilities and home health care agencies. ServiceMaster's general programs and systems free the customer to focus on its core business activity with confidence that the support services are being managed and performed in an efficient manner. As of December 31, 1996, ServiceMaster was providing management of support services to approximately 1,800 health care facilities and to approximately 700 educational and commercial facilities. These services were being provided in all 50 states and the District of Columbia. Outside of the United States, ServiceMaster provides management services through a subsidiary in Japan, through affiliated companies in Canada, Japan, Germany, Mexico, and the United Kingdom, and through licensees in 15 other countries. The International unit is responsible for overseeing the management services which are provided in foreign markets. S-4 INTERNATIONAL The International unit oversees the management of support services and consumer services in international markets through licensing arrangements, ownership of foreign operating companies acquired by ServiceMaster and joint ventures. The International unit currently owns controlling interests in Terminix Peter Cox Ltd., a leading pest control and wood preservation company in the United Kingdom; Terminix Protekta B.V. and Riwa B.V., each a leading pest control company in the Netherlands; Anticimex Development AB, a holding company for the leading pest control company in Sweden; and the Stenglein group of pest control companies in Germany. BACKGROUND The Parent Partnership and its immediate subsidiary, The ServiceMaster Company, were formed in December 1986 as limited partnerships to succeed to the business and assets of ServiceMaster Industries, Inc., which began operations in 1947. The principal executive offices of the Parent Partnership and The ServiceMaster Company are located at One ServiceMaster Way, Downers Grove, Illinois 60515- 9969. Their telephone number is (630) 271-1300. RECENT DEVELOPMENTS Second Quarter Operating Results. On July 24, 1997, ServiceMaster reported record revenues for the second quarter of 1997 of $1 billion, up 10.2% over the comparable 1996 period, reflecting solid growth from base operations and acquisitions. This marked the first time in ServiceMaster's 50-year history in which quarterly revenues exceeded $1 billion. Net income of $75.7 million was up 6.2%, with earnings per share increasing 21% to $0.40. Revenues for the six months ended June 30, 1997 rose 10.3% to $1.8 billion. Net income for the six months was $122.6 million, a 9.7% increase over 1996, with earnings per share increasing 18% to $0.60. Share and Option Repurchase. On December 31, 1995, ServiceMaster completed a transaction with WMI Urban Services, Inc. ("WMUS"), a wholly owned subsidiary of WMX Technologies, Inc. ("WMX") in which WMUS contributed its 27.76% interest in ServiceMaster Consumer Services L.P. to ServiceMaster and, in exchange therefor, the Parent Partnership issued to WMUS approximately 40.7 million unregistered limited partner shares of ServiceMaster and an option to purchase approximately 2.8 million additional shares of ServiceMaster's limited partner shares (the "Option"). On April 1, 1997, the Parent Partnership completed the repurchase from WMUS of all the restricted shares of the Parent Partnership owned by WMUS and the Option (the "WMUS Repurchase") for the sum of approximately $626 million. ServiceMaster financed the WMUS Repurchase with short-term bank financing. Share Dividend. On May 9, 1997, ServiceMaster's Board of Directors declared a three-for-two share split effective June 25, 1997. All share and per share data included herein have been restated for all periods presented to reflect this three-for-two split. S-5 CAPITALIZATION The following table sets forth as of June 30, 1997: (a) the actual consolidated capitalization of the Parent Partnership and (b) the consolidated capitalization of the Parent Partnership as adjusted to reflect the sale of the Notes offered hereby and application of net proceeds therefrom as described under "Use of Proceeds." No separate financial information for The ServiceMaster Company has been provided in this Prospectus Supplement because: (i) the Parent Partnership does not itself conduct any operations but rather all operations of the ServiceMaster enterprise are conducted by The ServiceMaster Company and the direct and indirect subsidiaries of The ServiceMaster Company; (ii) the Parent Partnership has no material assets other than substantially all of the ownership interest in The ServiceMaster Company; and (iii) all of the assets and liabilities shown in the consolidated financial statements for the Parent Partnership are located at The ServiceMaster Company and at the direct and indirect subsidiaries of The ServiceMaster Company.
JUNE 30, 1997 --------------------- AS ACTUAL ADJUSTED ---------- ---------- (IN THOUSANDS) Cash and cash equivalents................................ $ 91,047 $ 91,047 ========== ========== Current maturities of long-term debt..................... $ 16,324 $ 16,324 Long-term debt: Notes payable.......................................... 386,001 386,001 Revolving credit facilities............................ 686,915 390,063 Other.................................................. 93,590 93,590 2007 Notes............................................. -- 150,000 2027 Notes............................................. -- 150,000 ---------- ---------- Total long-term debt................................. 1,166,506 1,169,654 Total Debt............................................... $1,182,830 $1,185,978 ========== ========== Total Net Debt........................................... $1,091,783 $1,094,931 ========== ========== Minority interest........................................ 2,939 2,939 Shareholders' equity..................................... 402,559 402,559 Total capitalization (including short-term debt)......... $1,497,281 $1,500,429 ========== ==========
USE OF PROCEEDS The net proceeds from the sale of the Notes are estimated to be approximately $297 million. The Company expects to use the net proceeds from the sale of the Notes to repay a portion of its borrowings incurred to finance the WMUS Repurchase. The indebtedness to be repaid with the proceeds of the Notes was incurred under a five-year revolving bank credit facility, which matures April 1, 2002 and bears interest at floating rates (equal to approximately 6% at June 30, 1997). Affiliates of J.P. Morgan Securities Inc., BA Securities, Inc., First Chicago Capital Markets, Inc. and NationsBanc Capital Markets, Inc. are lenders under the revolving bank credit facility. See "Underwriting." S-6 SELECTED HISTORICAL FINANCIAL INFORMATION The summary of selected historical financial information set forth below as of and for each of the years in the five-year period ended December 31, 1996 has been derived from the consolidated financial statements of ServiceMaster, which statements have been audited by Arthur Andersen LLP, independent public accountants for ServiceMaster. Such information is contained in and should be read in conjunction with the consolidated financial statements and accompanying notes included in ServiceMaster's Annual Reports on Form 10-K for such years, incorporated herein by reference. The historical data as of and for the six months ended June 30, 1996 and 1997 are derived from unaudited financial statements which, in the opinion of ServiceMaster management, reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position and results of operations for such dates and for such periods. Historical results for the interim periods ended June 30 are not necessarily indicative of the results for the full year. No separate financial information for The ServiceMaster Company has been provided in this Prospectus Supplement because: (i) the Parent Partnership does not itself conduct any operations but rather all operations of the ServiceMaster enterprise are conducted by The ServiceMaster Company and the direct and indirect subsidiaries of The ServiceMaster Company; (ii) the Parent Partnership has no material assets other than substantially all of the ownership interest in The ServiceMaster Company; and (iii) all of the assets and liabilities shown in the consolidated financial statements for the Parent Partnership are located at The ServiceMaster Company and at the direct and indirect subsidiaries of The ServiceMaster Company. For certain summarized unaudited financial information for The ServiceMaster Company, see "Summarized Financial Information for The ServiceMaster Company" in the attached Prospectus.
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, -------------- ---------------------------------------------- 1997 1996 1996 1995 1994 1993 1992 ------- ------- ------ ------ ------ ------ ------ (IN MILLIONS, EXCEPT FOR PER SHARE (UNAUDITED) DATA)(1) OPERATING RESULTS Operating revenue....... $ 1,828 $ 1,657 $3,458 $3,203 $2,985 $2,759 $2,489 Cost of services rendered and products sold................... 1,411 1,294 2,681 2,500 2,356 2,193 2,030 Selling and administrative expenses............... 260 230 482 451 415 393 326 Restructuring charges... -- -- -- -- -- -- 70 ------- ------- ------ ------ ------ ------ ------ Operating income(2)..... 157 133 295 252 214 173 63 Non-operating expense... 30 18 43 74 71 55 37 Realized gain on issuance of subsidiary shares................. -- -- -- -- -- (30) (105) Provision for income taxes.................. 4 3 7 6 3 2 1 Cumulative effect of change in accounting for postretirement medical benefits....... -- -- -- -- -- -- 8 ------- ------- ------ ------ ------ ------ ------ Net income(2)........... $ 123 $ 112 $ 245 $ 172 $ 140 $ 146 $ 122 ======= ======= ====== ====== ====== ====== ====== Net income per share(2). $ 0.60 $ 0.51 $ 1.13(3) $ 0.96(3) $ 0.80(3) $ 0.84(3) $ 0.72(3) Cash distributions per share to shareholders.. $ 0.23 $ 0.21 $ 0.44 $ 0.42 $ 0.41 $ 0.40 $ 0.39 FINANCIAL POSITION AT PERIOD END Current assets.......... $ 579 $ 494 $ 499 $ 393 $ 331 $ 291 $ 258 Current liabilities..... 499 403 426 373 304 244 207 Working capital......... 80 91 74 20 27 47 51 Total assets............ 2,200 1,809 1,847 1,650 1,231 1,122 1,006 Non-current liabilities. 1,295 606 608 518 484 471 511 Minority interest....... 3 14 17 13 135 118 78 Shareholders' equity.... 403 787 797 747 307 289 210 Book value per share.... $ 1.97 $ 3.61 $ 3.68 $ 4.18 $ 1.76 $ 1.67 $ 1.23 OTHER DATA Ratio of earnings to fixed charges(4)....... 3.85x 4.76x 5.16x 4.83x 4.72x 4.55x 3.85x
- -------- (1) All per share data reflect the three-for-two share splits in 1992, 1993, 1996 and 1997. (2) Operating results on a basis which excludes restructuring and unusual charges, gains on issuance of subsidiary shares and the change in accounting for postretirement benefits in prior years are as follows (there were no such unusual items in 1994, 1995, 1996 or 1997):
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, -------------- ----------------------------- 1997 1996 1996 1995 1994 1993 1992 ------- ------- ----- ----- ----- ----- ----- (UNAUDITED) Operating income.............. $ 157 $ 133 $ 295 $ 252 $ 214 $ 173 $ 141 Net income.................... 123 112 245 172 140 116 94 Net income per share.......... $ 0.60 $ 0.51 $1.13 $0.96 $0.80 $0.67 $0.55
S-7 (3) Most operations conducted by The ServiceMaster Company and its subsidiary partnerships have been conducted since 1986 free of federal corporate income tax. The Internal Revenue Code as presently constituted will impose federal corporate income tax on ServiceMaster's operations beginning in 1998. In anticipation of this change, in January 1992, ServiceMaster's shareholders approved a Reincorporating Merger the purpose of which is to reorganize the ServiceMaster enterprise so that ServiceMaster Incorporated of Delaware (the "Successor Parent Corporation") will be substituted for the Parent Partnership as the ultimate parent in the ServiceMaster enterprise. See "The Reincorporating Merger and the Partnership Liquidations" in the Prospectus. As a result of the Reincorporating Merger and related transactions (which are collectively referred to herein as the "Reincorporation") and the WMUS Repurchase, ServiceMaster will be entitled to recognize a step-up in the tax basis of its assets, which will be amortized against ServiceMaster's taxable income in future years, resulting in an annual cash benefit currently estimated at between $20 and $25 million. Reincorporation will have no impact on the "book basis" of ServiceMaster's assets reflected in the Selected Historical Financial Information above and in the financial statements from which such information was derived. The tax basis step-up will result in the recognition of a deferred tax asset on ServiceMaster's balance sheet and a corresponding unusual gain in ServiceMaster's income statement in the period of Reincorporation. The exact amount of the tax basis step-up (and the deferred tax asset and unusual gain that will result therefrom) will depend in part on the price and trading volume of the Parent Partnership's shares prior to the Reincorporating Merger. It is currently estimated that the effective book tax rate upon Reincorporation will be approximately 40% of pretax earnings. This estimate is necessarily subject to change based on changes in circumstances, statutory tax rates, etc. Pro forma earnings per share would be $0.69 in 1996, $0.59 in 1995, $0.49 in 1994, $0.51 in 1993, and $0.43 in 1992, assuming Reincorporation had occurred at the beginning of each respective period. (4) In the calculation of the Parent Partnership's ratio of earnings to fixed charges, "earnings" consist of income from continuing operations before income taxes, fixed charges (excluding capitalized interest) and minority interest expense of subsidiaries with fixed charges and "fixed charges" consist of interest and amortization of debt expense, including the interest portion of rental obligations deemed representative of the interest factor. DESCRIPTION OF THE NOTES AND GUARANTEE The following description of the particular terms of the Notes and Guarantee offered hereby supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities and Guarantee set forth in the Prospectus, to which description reference is hereby made. GENERAL The Notes will be issued under the Indenture (the "Indenture") dated as of August 15, 1997 among The ServiceMaster Company, as issuer, the Parent Partnership, as guarantor, and Harris Trust and Savings Bank, as trustee (the "Trustee"). The Notes will be guaranteed by the Parent Partnership and will rank pari passu with all other unsubordinated indebtedness of The ServiceMaster Company. Capitalized terms not defined herein have meanings as set forth in the Indenture. The 2007 Notes will be limited to $150,000,000 aggregate principal amount and will mature on August , 2007 (the "2007 Notes Maturity Date") at 100% of their principal amount, unless earlier redeemed pursuant to the terms thereof. See "Optional Redemption of 2007 Notes and 2027 Notes" below. The 2027 Notes will be limited to $150,000,000 aggregate principal amount and will mature on August , 2027 (the "2027 Notes Maturity Date") at 100% of their principal amount, unless earlier redeemed pursuant to the terms thereof. See "Optional Redemption of 2007 Notes and 2027 Notes" below. The Notes will bear interest at the rate per annum set forth on the cover page of this Prospectus Supplement from , 1997 or from the most recent interest payment date to which interest has been paid or provided for, payable semi-annually on and of each year (an "Interest Payment Date"), beginning , 1998 until the 2007 Notes Maturity Date or the 2027 Notes Maturity Date, as the case may be. Interest will be payable to the persons in whose names the Notes are registered at the close of business on the or , as the case may be, next preceding such Interest Payment Date. The Notes will be issued as Registered Global Securities. See "Book-Entry System" below. Principal of and interest on the Notes will be payable, and the transfer of Notes will be registrable, through the Depository Trust Company, as Depositary (the "Depositary"), as described under "Description of Debt Securities--Global Debt Securities" in the Prospectus. The Notes are not subject to any sinking fund. GUARANTEE The Notes are unconditionally guaranteed as to the payment of principal, premium, if any, and interest in respect thereof by the Parent Partnership, pursuant to the Indenture, as described under "Guarantee" in the accompanying S-8 Prospectus. The Guarantee will constitute an unsecured obligation of the Parent Partnership and will rank equally in right of payment with all existing and future unsubordinated and unsecured indebtedness of the Parent Partnership. OPTIONAL REDEMPTION OF 2007 AND 2027 NOTES The 2007 Notes and the 2027 Notes will be redeemable in whole or in part, at the option of the Company, upon not less than 30 or more than 60 days prior written notice, at any time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as hereinafter defined) thereon discounted to the redemption date, on a semi-annual basis, at the Treasury Yield plus basis points (for the redemption of the 2007 Notes) or basis points (for the redemption of the 2027 Notes), together with all accrued but unpaid interest, if any, to the date of redemption in either case; provided, however, that interest installments due on an Interest Payment Date which is on or prior to the date of redemption will be payable to holders who are holders of record of such 2007 Notes or 2027 Notes, as the case may be, as of the close of business on the fifteenth day next preceding such Interest Payment Date. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by the Independent Investment Banker as having a maturity most comparable to the remaining term of the 2007 Notes or the 2027 Notes, as the case may be, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the 2007 Notes or the 2027 Notes, as the case may be. "Independent Investment Banker" means J.P. Morgan Securities Inc. or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing in the United States appointed by the Board of Directors of the Company in good faith. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, the average of the Reference Treasury Dealer Quotations for such redemption price. "Reference Treasury Dealer" means each of J.P. Morgan Securities Inc. and its respective successors; provided, however, that if such firm ceases to be a primary U.S. Government securities dealer in New York, New York (a "Primary Treasury Dealer") or otherwise fails to provide a Reference Treasury Dealer Quotation, the Company will substitute therefor any other Primary Treasury Dealer. "Reference Treasury Dealer Quotation" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issues (express in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York, New York time, on the third business day preceding such redemption date. "Remaining Scheduled Payments" means, with respect to any Notes, the remaining scheduled payments of the principal thereof to be redeemed and interest thereon that would be due after the related redemption date but for such redemption; provided, however, that, if such redemption date is not an Interest Payment Date with respect to such Note, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such redemption date. BOOK-ENTRY SYSTEM Upon issuance, all 2007 Notes and all 2027 Notes will be represented respectively by one or more Registered Global Securities. Each Registered Global Security representing any of the Notes will be deposited with, or on behalf of, the Depositary and registered in the name of a nominee of the Depositary. The provisions set forth under "Description of S-9 Debt Securities--Global Debt Securities" in the accompanying Prospectus will be applicable to the Notes. Accordingly, beneficial interests in the Notes will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary and its participants. Except as described under "Description of Debt Securities--Global Debt Securities" in the accompanying Prospectus, owners of beneficial interests in the Registered Global Security will not be entitled to receive Notes in certificated form and will not be considered holders of Notes. Ownership of beneficial interests in the Registered Global Security will be limited to institutions that have accounts with the Depositary or its nominee ("participants") or persons that may hold interests through participants. Payments of principal, premium, if any, and interest will be made in immediately available funds to the Depositary's nominee as the registered owner of the Registered Global Security. Under the terms of the Indenture, the Company and the Trustee will treat the person in whose name the Registered Global Security is registered as the owner of the Notes for the purpose of receiving payments of principal, premium, if any, and interest and for all other purposes. Therefore, neither the Company, the Trustee nor any other agent will have any direct responsibility or liability for the payment of principal, premium, if any, or interest to owners of beneficial interests in the Registered Global Security. UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, dated the date hereof (the "Underwriting Agreement"), the Company has agreed to sell to each of the underwriters named below (the "Underwriters"), and each of the Underwriters has severally agreed to purchase, the principal amount of Notes set forth opposite its name below:
PRINCIPAL AMOUNT OF NOTES ------------------------- NAME 2007 NOTES 2027 NOTES ---- ------------ ------------ J.P. Morgan Securities Inc.................... $ $ Goldman, Sachs & Co........................... BA Securities, Inc............................ First Chicago Capital Markets, Inc............ NationsBanc Capital Markets, Inc.............. ------------ ------------ Total..................................... $150,000,000 $150,000,000 ============ ============
Under the terms and conditions of the Underwriting Agreement, the Underwriters are obligated to take and pay for all of the Notes if any are taken. The Underwriters propose to offer the Notes directly to the public initially at the initial public offering price set forth on the cover page of this Prospectus Supplement and to certain dealers at such price less a concession not in excess of % of the principal amount of the 2007 Notes and % of the principal amount of the 2027 Notes. The Underwriters may allow, and such dealers may re-allow, a concession not in excess of % of the principal amount of the 2007 Notes or % of the principal amount of the 2027 Notes to certain other dealers. After the initial public offering, the public offering price and such concessions may be changed by the Underwriters. The Notes are new issues of securities with no established trading market and will not be listed on any national securities exchange. The Company has been advised by the Underwriters that the Underwriters intend to make a market for the Notes, but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Notes. In connection with this offering, the Underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Notes. Specifically, the Underwriters may overallot the offering, creating a syndicate short position. In addition, the Underwriters may bid for, and purchase, Notes in the open market to cover the syndicate short position or to stabilize the price of the Notes. Finally, the underwriting syndicate may reclaim selling concessions allowed for distributing the Notes in the offering if the syndicate repurchases previously distributed Notes in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the Notes above independent market levels. The Underwriters are not required to engage in these activities, and may end these activities at any time. S-10 The Company and the Parent Partnership have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or contribute to payments which the Underwriters may be required to make in respect thereof. When more than 10% of the proceeds of a public offering of certain securities are to be paid to members of the National Association of Securities Dealers, Inc. ("NASD") participating in such public offering or to affiliates of such members, Rule 2710(c)(8) of the NASD's Rules of Fair Practice requires disclosure of such fact. Each of J.P. Morgan Securities Inc., BA Securities, Inc., First Chicago Capital Markets, Inc. and NationsBanc Capital Markets, Inc. and/or certain affiliates thereof is a member of the NASD. The Underwriters and/or their affiliates may indirectly receive more than 10% of the net proceeds from the offering of the Notes as a result of the use of such proceeds to repay borrowings by the Company under a five-year revolving bank credit facility. See "Use of Proceeds." In the ordinary course of their respective businesses, the Underwriters and their affiliates have engaged and may in the future engage in commercial banking and investment banking transactions with ServiceMaster and its affiliates. LEGAL OPINIONS Certain legal matters in connection with the Notes will be passed upon for the Company by Vernon T. Squires, Esq., Senior Vice President and General Counsel of the Company, and for the Underwriters by Davis Polk & Wardwell, New York, New York. As of the date of this Prospectus Supplement, Mr. Squires holds 255,887 shares and options to acquire 54,000 shares of limited partnership interests of the Parent Partnership. S-11 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED AUGUST 6, 1997 PROSPECTUS THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP DEBT SECURITIES The ServiceMaster Company Limited Partnership ("The ServiceMaster Company") may offer from time to time in one or more series its debt securities consisting of debentures, notes or other evidence of indebtedness (the "Debt Securities," which term shall include any guarantees thereof), in amounts as may be sold for an aggregate public offering price of up to $950,000,000 on terms to be determined at the time of each offering. The Debt Securities may be issued as unsecured Debt Securities that will not be subordinated to other obligations of The ServiceMaster Company. The payment of principal and interest with respect to such Debt Securities will be unconditionally guaranteed by ServiceMaster Limited Partnership (the "Parent Partnership"). The Parent Partnership holds the entire limited partnership interest in The ServiceMaster Company, which interest represents 99% of the entire equity interest in The ServiceMaster Company. See "Description of Debt Securities--Guarantee." The Debt Securities may be offered separately or together, in separate series, in amounts, at prices and on terms determined by market conditions at the time of sale and to be set forth in one or more supplements to this Prospectus (each, a "Prospectus Supplement"). The specific terms of the Debt Securities for which this Prospectus is being delivered will be set forth in the applicable Prospectus Supplement, which will include, where applicable: the specific title, aggregate principal amount, authorized denominations, maturity (which may be fixed or extendible), interest rate or rates (which may be fixed or variable) (or manner of calculation thereof), if any, the time of payment of interest, if any, any terms of redemption at the option of The ServiceMaster Company or repayment at the option of the holder, any terms for sinking fund payments, additional covenants, initial public offering price, purchase price and other terms with respect to the Debt Securities. The Debt Securities may be issued as Original Issue Discount Securities to be sold at a substantial discount below their principal amount and, if issued, certain terms thereof will be set forth in the Prospectus Supplement related thereto. The Debt Securities will be represented by global notes registered in the name of a nominee of The Depository Trust Company, as Depositary. Beneficial interests in the Debt Securities will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary (with respect to participants' interests) and its participants. Except as described in this Prospectus, Debt Securities in certificated form will not be issued in exchange for the global notes. See "Description of Debt Securities--Global Debt Securities." The applicable Prospectus Supplement will also contain information, where applicable, about certain United States federal income tax considerations relating to, and any listing on a securities exchange of, the Debt Securities covered by such Prospectus Supplement. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- The Debt Securities may be offered directly to one or more purchasers, through agents designated from time to time by The ServiceMaster Company or to or through underwriters or dealers. If any agents or underwriters are involved in the sale of the Debt Securities, their names, and any applicable purchase price, fee, commission or discount arrangement between or among them, will be set forth, or will be calculable from the information set forth, in the applicable Prospectus Supplement. See "Plan of Distribution." No Debt Securities may be sold without delivery of a Prospectus Supplement describing the method and terms of the offering of such Debt Securities. ----------- The date of this Prospectus is AVAILABLE INFORMATION The Parent Partnership, The ServiceMaster Company and ServiceMaster Incorporated of Delaware have filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"), for the registration of, among other things, the Debt Securities offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain items of which are contained in exhibits and schedules to, or incorporated by reference in, the Registration Statement as permitted by the rules and regulations of the Commission. For further information with respect to the Parent Partnership, The ServiceMaster Company, ServiceMaster Incorporated of Delaware, and the Debt Securities offered hereby, reference is made to the Registration Statement, including the exhibits thereto, and financial statements and notes filed as a part thereof or incorporated by reference therein. Statements made in this Prospectus concerning the contents of any document referred to herein are not necessarily complete. With respect to each such document filed with the Commission as an exhibit to, or incorporated by reference in, the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. The Parent Partnership is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance therewith, the Parent Partnership files consolidated reports, proxy statements and other information with the Commission. Upon consummation of the Reincorporating Merger described in this Prospectus (which is scheduled to occur on or before December 31, 1997), ServiceMaster Incorporated of Delaware will become the successor to the Parent Partnership and The ServiceMaster Company and will become subject to the informational requirements identified in the preceding sentence. Reports, proxy statements and other information filed by the Parent Partnership may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material may be obtained by mail from the Public Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding the Parent Partnership, The ServiceMaster Company and ServiceMaster Incorporated of Delaware. In addition, such material may also be inspected and copied at the offices of the New York Stock Exchange. Partnership shares issued by the Parent Partnership are listed on the New York Stock Exchange. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents have been filed with the Commission and are incorporated by reference in this Prospectus: (i) the Annual Report on Form 10-K of the Parent Partnership (File No. 1-9378) for the year ended December 31, 1996 (the "1996 Form 10-K") and (ii) the Parent Partnership's Quarterly Report on Form 10-Q for the period ended March 31, 1997. All documents filed by the Parent Partnership pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Debt Securities and the other securities registered on the Registration Statement shall be deemed to be incorporated herein by reference and to be a part hereof from the respective dates of filing of such documents. As indicated in this Prospectus, the Parent Partnership, The ServiceMaster Company and ServiceMaster Incorporated of Delaware are parties to a Merger and Reorganization Agreement, which provides for a Reincorporating Merger that is scheduled to occur on or before December 31, 1997. Upon consummation of the Reincorporating Merger, ServiceMaster Incorporated of Delaware will (i) assume the obligations of The ServiceMaster Company on all Debt Securities issued prior to the Reincorporating Merger and the obligations of the Parent Partnership under its Guarantees of those Debt Securities and (ii) become the successor to the Parent Partnership as the ultimate parent in the ServiceMaster enterprise. All documents filed by ServiceMaster 2 Incorporated of Delaware after the Reincorporating Merger pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Debt Securities and other securities registered on the Registration Statement shall be deemed to be incorporated herein by reference and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Copies of all documents which are incorporated herein by reference (not including the exhibits to such information, unless such exhibits are specifically incorporated by reference in such information) will be provided without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request. Copies of this Prospectus, as amended or supplemented from time to time, and any other documents (or parts of documents) that constitute part of the Prospectus under Section 10(a) of the Securities Act will also be provided without charge to each such person, upon written or oral request. Requests should be directed to ServiceMaster at One ServiceMaster Way, Downers Grove, Illinois 60515-9969, Attention: Investor Relations (telephone number: (630) 271-1300). NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SERVICEMASTER COMPANY, THE PARENT PARTNERSHIP OR SERVICEMASTER INCORPORATED OF DELAWARE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE DEBT SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. 3 Unless otherwise indicated or the context otherwise requires, all references herein to: (i) the "Parent Partnership" refers to ServiceMaster Limited Partnership; (ii) "The ServiceMaster Company" or the "Company" refer to The ServiceMaster Company Limited Partnership; and (iii) "ServiceMaster" refers to the Parent Partnership and The ServiceMaster Company, together with all entities affiliated with these two limited partnerships and their respective predecessors. As described under"The Reincorporating Merger and the Partnership Liquidations" below, the shareholders of the Parent Partnership have approved a Reincorporating Merger, which is scheduled to occur on or before December 31, 1997. The Reincorporating Merger will install a corporation as the ultimate parent in the ServiceMaster enterprise and that corporation is called the "Successor Parent Corporation" in this Prospectus. The term "ServiceMaster" as used in this Prospectus with respect to periods at and after the Reincorporating Merger refers to ServiceMaster Incorporated of Delaware and its subsidiaries. SERVICEMASTER The Parent Partnership and The ServiceMaster Company were formed in December 1986 as limited partnerships to succeed to the business and assets of ServiceMaster Industries Inc., which began its operation in 1947. The Parent Partnership is a holding company whose limited partnership shares are listed on the New York Stock Exchange and whose principal asset consists of all of the common limited partner interest of The ServiceMaster Company. The actual operations of the ServiceMaster enterprise are conducted by The ServiceMaster Company and its subsidiaries. Accordingly, The ServiceMaster Company has essentially the same degree of ownership of the businesses which make up the ServiceMaster enterprise as does the Parent Partnership and the descriptions of those businesses incorporated into this Prospectus are essentially the same with respect to The ServiceMaster Company as they are for the Parent Partnership. The Debt Securities will be issued by The ServiceMaster Company. The Debt Securities will be guaranteed by the Parent Partnership. ServiceMaster, through its subsidiaries, provides a range of services to individual consumers, businesses and institutions in the United States and 30 other countries throughout the world. ServiceMaster is divided into three operating units: Consumer Services, Management Services and International. Consumer Services and Management Services are the principal operating units. ServiceMaster Consumer Services L.P. is a wholly owned first-tier subsidiary of The ServiceMaster Company and provides services to over 6,500,000 residential and commercial customers through seven market leading companies: TruGreen L.P., which provides lawn care, tree and shrub services and indoor plant maintenance under the "TruGreen," "ChemLawn," "TruGreen-ChemLawn" and "Barefoot" service marks; The Terminix International Company, L.P., which provides termite and pest control services under the "Terminix" service mark; American Home Shield Corporation, which provides home system and appliance warranty contracts and home inspection services under the "American Home Shield" and "AmeriSpec" service marks; ServiceMaster Residential/Commercial Services L.P., which provides residential and commercial cleaning and disaster restoration services under the "ServiceMaster" service mark; Merry Maids L.P., which provides domestic housekeeping services under the "Merry Maids" service mark; and Furniture Medic L.P., which provides in-home furniture repair and restoration services under the "Furniture Medic" service mark. These services are part of the "ServiceMaster Quality Network" and may be accessed by calling a single toll-free telephone number: 1-800-WE SERVE. ServiceMaster Management Services L.P. is a wholly owned first-tier subsidiary of The ServiceMaster Company and is organized into three discrete operating units: ServiceMaster Healthcare Management Services, Education Management Services and Business and Industry Management Services. Each of these three units provides to its respective customers a variety of supportive management services, including the management of housekeeping, plant operations and maintenance, clinical equipment maintenance, laundry and linen, grounds and landscaping, energy management services and food service. In addition, Healthcare Management Services provides management and other services to the long-term care, assisted living and home health care markets. 4 On January 13, 1992, the Parent Partnership's limited partners approved a Reincorporating Merger. The purpose of the Reincorporating Merger is to install ServiceMaster Incorporated of Delaware as the ultimate parent in the ServiceMaster enterprise. The Reincorporating Merger is scheduled to be consummated on or before December 31, 1997. When and if the Reincorporating Merger consummates: a subsidiary of the Successor Parent Corporation will be merged into the Parent Partnership; as a result of the merger, each outstanding limited partnership share issued by the Parent Partnership will be converted into one share of common stock issued by the Successor Parent Corporation; and the Parent Partnership will become wholly owned by the Successor Parent Corporation. ServiceMaster expects that after the Reincorporating Merger, the Parent Partnership and The ServiceMaster Company will be merged or liquidated into the Successor Parent Corporation. Upon consummation of these actions, the Successor Parent Corporation will become the successor to both the Parent Partnership and The ServiceMaster Company Limited Partnership. ServiceMaster intends to change the name of the Successor Parent Corporation to "The ServiceMaster Company" not later than the time the Partnership Liquidations (as defined) are completed. Upon consummation of the Partnership Liquidations, the Successor Parent Corporation will assume all obligations of The ServiceMaster Company on the Debt Securities and will become the primary obligor on the Debt Securities. See "The Reincorporating Merger and the Partnership Liquidations." RATIO OF EARNINGS TO FIXED CHARGES The following are the consolidated ratios of earnings to fixed charges for the Parent Partnership for the six months ended June 30, 1996 and 1997 and each of the fiscal years 1992 through 1996:
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, --------------- ----------------------------- 1997 1996 1996 1995 1994 1993 1992 ------- ------- ----- ----- ----- ----- ----- Consolidated ratios of earnings to fixed charges... 3.85x 4.76x 5.16x 4.83x 4.72x 4.55x 3.85x
The Parent Partnership's consolidated ratios of earnings to fixed charges were computed by dividing earnings by fixed charges. For this purpose, "earnings" consist of income from continuing operations before income taxes, fixed charges (excluding capitalized interest) and minority interest expenses of subsidiaries with fixed charges and "fixed charges" consist of interest and amortization of debt expense, including the interest portion of rental obligations deemed representative of the interest factor. SUMMARIZED FINANCIAL INFORMATION FOR THE SERVICEMASTER COMPANY The Debt Securities being offered hereby will be issued by The ServiceMaster Company. The ServiceMaster Company is the only direct subsidiary of the Parent Partnership. Set forth below is summarized unaudited financial information for The ServiceMaster Company as of and for each of the three years in the period ended December 31, 1996. Such information should be read in conjunction with the consolidated financial statements and accompanying notes included in the Parent Partnership's Annual Reports on Form 10-K for such years, incorporated herein by reference. This information is substantially the same as the corresponding information reported for the Parent Partnership because: (i) the Parent Partnership does not itself conduct any operations but rather operations of the ServiceMaster enterprise are conducted by The ServiceMaster Company and the direct and indirect subsidiaries of The ServiceMaster Company; (ii) the Parent Partnership has no material assets other than substantially all of the ownership interest in The ServiceMaster Company; and (iii) substantially all of the assets and liabilities shown in the consolidated financial statements for the Parent Partnership are located at The ServiceMaster Company and at the direct and indirect subsidiaries of The ServiceMaster Company. 5
YEAR ENDED DECEMBER 31, -------------------- 1996 1995 1994 ------ ------ ------ (IN MILLIONS) BALANCE SHEET DATA: Current assets......................................... $ 499 $ 393 $ 331 Noncurrent assets...................................... 1,348 1,257 900 Current liabilities.................................... 426 373 304 Noncurrent liabilities................................. 651 561 527 Minority interests..................................... 16 12 134 INCOME STATEMENT DATA: Operating revenue...................................... $3,458 $3,203 $2,985 Cost of sales.......................................... 2,681 2,500 2,356 Selling and administrative............................. 482 451 415 ------ ------ ------ Total operating costs.................................. 3,163 2,951 2,771 ------ ------ ------ Operating income....................................... 295 252 214 Income from continuing operations...................... 247 174 141 Net income............................................. 247 174 141
USE OF PROCEEDS The ServiceMaster Company (and the Successor Parent Corporation after the Reincorporating Merger) intend to use the net proceeds from the sale of the Debt Securities for general business purposes, which may include, but are not limited to, repayment, redemption or repurchase of outstanding indebtedness; repurchase of outstanding shares issued by the Parent Partnership (or the Successor Parent Corporation after the Reincorporating Merger); acquisitions, capital expenditures and working capital requirements; and such other purposes as may be specified in the relevant Prospectus Supplement. A description of any indebtedness to be refinanced with the proceeds from the sale of the Debt Securities will be set forth in the applicable Prospectus Supplement. DESCRIPTION OF DEBT SECURITIES AND GUARANTEE The Debt Securities will be issued under an Indenture (the "Indenture") dated as of August 15, 1997 among The ServiceMaster Company, as issuer, the Parent Partnership, as guarantor, and Harris Trust and Savings Bank, as trustee (the "Trustee"). The following description of certain provisions of the Indenture and the Debt Securities summarizes the material terms thereof but does not purport to be complete, and such summary is subject to the detailed provisions of the Indenture to which reference is hereby made, including the definition of certain terms used herein, and for other information regarding the Debt Securities. The Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Numerical references in parentheses below are to sections in the Indenture. Wherever particular sections or defined terms of the Indenture are referred to, such sections or defined terms are incorporated herein by reference as part of the statement made, and the statement is qualified in its entirety by such reference. Any Debt Securities offered by this Prospectus and the accompanying Prospectus Supplement are referred to herein as the "Offered Debt Securities." GENERAL The Indenture provides for issuance of Debt Securities by The ServiceMaster Company in an unlimited amount from time to time in one or more series. Debt Securities may be denominated and payable in foreign currencies or units based on or relating to foreign currencies. Special United States federal income tax considerations applicable to any Debt Securities so denominated will be described in the relevant Prospectus Supplement. 6 The Debt Securities will be unsecured obligations of The ServiceMaster Company and will be guaranteed by the Parent Partnership. The Indenture does not limit the amount of additional indebtedness that The ServiceMaster Company or the Parent Partnership may incur and does not contain provisions which would afford the holders (the "Holders") of the Debt Securities protection in the event of a decline in The ServiceMaster Company's or the Parent Partnership's credit quality resulting from highly leveraged or other transactions involving The ServiceMaster Company or the Parent Partnership, as the case may be. Reference is made to the Prospectus Supplement for the following terms of and information relating to the Offered Debt Securities (to the extent such terms are applicable to such Offered Debt Securities): (i) the specific designation, aggregate principal amount, purchase price and denomination; (ii) currency or units based on or relating to currencies in which such Offered Debt Securities are denominated and in which principal of, premium, if any, and any interest on such Offered Debt Securities will or may be payable; (iii) any date of maturity; (iv) interest rate or rates, which may be fixed or variable, and the method by which such rate or rates will be determined, if any; (v) the dates on which any such interest will be payable; (vi) the place or places where the principal of, premium, if any, and any interest on the Offered Debt Securities will be payable; (vii) any redemption, repayment or sinking fund provisions; (viii) whether the Offered Debt Securities will be issuable in registered form or bearer form ("Bearer Securities") or both and, if Bearer Securities are issuable, any restrictions applicable to the exchange of one form for another and to the offer, sale and delivery of Bearer Securities; (ix) any applicable United States federal income tax consequences, including whether and under what circumstances The ServiceMaster Company will pay additional amounts on Offered Debt Securities held by a person who is not a U.S. person (as defined in the Prospectus Supplement) in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether The ServiceMaster Company will have the option to redeem such Offered Debt Securities rather than pay such additional amounts; and (x) any other specific terms of the Offered Debt Securities, including any additions to or modifications or deletions of any events of default or covenants provided for with respect to such Offered Debt Securities, and any terms which may be required by or be advisable under applicable laws or regulations (Section 2.03). Debt Securities may be presented for exchange and registered Debt Securities may be presented for transfer in the manner, at the places and subject to the restrictions set forth in the Debt Securities and the Prospectus Supplement. Subject to the limitations provided in the Indenture, such services will be provided without charge, other than any tax or other governmental charge payable in connection therewith. Debt Securities in bearer form and the coupons, if any, appertaining thereto will be transferable by delivery. Debt Securities will bear interest at a fixed rate (a "Fixed Rate Security") or a floating rate (a "Floating Rate Security"). Debt Securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate will be sold at a discount below their stated principal amount. Special United States federal income tax considerations applicable to any such discounted Debt Securities or to certain Debt Securities issued at par which are treated as having been issued at a discount for United States federal income tax purposes will be described in the relevant Prospectus Supplement. Debt Securities may be issued, from time to time, with the principal amount payable on any principal payment date, or the amount of interest payable on any interest payment date, to be determined by reference to one or more currency exchange rates, commodity prices, equity indices or other factors. Holders of such Debt Securities may receive a principal amount on any principal payment date, or a payment of interest on any interest payment date, that is greater than or less than the amount of principal or interest otherwise payable on such dates, depending upon the value on such dates of the applicable currency, commodity, equity index or other factors. Information as to the methods for determining the amount of principal or interest payable on any date, the currencies, commodities, equity index, or other factors to which the amount payable on such date is linked and certain additional tax considerations will be set forth in the applicable Prospectus Supplement. RANKING The Debt Securities, when issued, will rank pari passu in right of payment with all other unsecured and unsubordinated indebtedness of The ServiceMaster Company (Section 2.03). 7 The Debt Securities may, under certain circumstances, be equally and ratably secured with other senior indebtedness of The ServiceMaster Company. See "-- Certain Covenants of the Company--Restrictions on Liens." GLOBAL DEBT SECURITIES The registered Debt Securities of a series may be issued in the form of one or more fully registered global Debt Securities (a "Registered Global Security") that will be deposited with a depository (a "Depositary") or with a nominee for a Depositary identified in the Prospectus Supplement relating to such series and registered in the name of the Depositary or a nominee thereof. In such case, one or more Registered Global Securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate principal amount of outstanding registered Debt Securities of the series to be represented by such Registered Global Security or Registered Global Securities. Unless and until it is exchanged in whole or in part for Debt Securities in debenture registered form, a Registered Global Security may not be transferred except as a whole by the Depositary for such Registered Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to any portion of a series of Debt Securities to be represented by a Registered Global Security will be described in the Prospectus Supplement relating to such series. The ServiceMaster Company anticipates that the following provisions will apply to all depositary arrangements. Ownership of beneficial interests in a Registered Global Security will be limited to persons that have accounts with the Depositary for such Registered Global Security ("participants") or persons that may hold interests through participants. Upon the issuance of a Registered Global Security, the Depositary for such Registered Global Security will credit, on its book-entry registration and transfer systems the participants' accounts with the respective principal amounts of the Debt Securities represented by such Registered Global Security beneficially owned by such participants. The accounts to be credited will be designated by any dealers, underwriters or agents participating in the distribution of such Debt Securities. Ownership of beneficial interests in such Registered Global Security will be shown on, and the transfer of such ownership interests will be effected only through, records maintained by the Depositary for such Registered Global Security (with respect to interests of participants) and on the records of participants (with respect to interests of persons holding through participants). The laws of some states may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to own, transfer or pledge beneficial interests in registered Global Securities. So long as the Depositary for a Registered Global Security, or its nominee, is the owner of record of such Registered Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Registered Global Security for all purposes under the Indenture. Except as set forth below, owners of beneficial interests in a Registered Global Security will not be entitled to have the Debt Securities represented by such Registered Global Security registered in their names, and will not receive or be entitled to receive physical delivery of such Debt Securities in definitive form and will not be considered the owners or holders thereof under the Indenture. Accordingly, each person owning a beneficial interest in a Registered Global Security must rely on the procedures of the Depositary for such Registered Global Security and, if such person is not a participant, on the procedures of the participant through which such person owns its interest to exercise any rights of a holder of record under the Indenture. The ServiceMaster Company understands that under existing industry practices, if The ServiceMaster Company requests any action of holders or if any owner of a beneficial interest in a Registered Global Security desires to give or take any action which a holder is entitled to give or take under the Indenture, the Depositary for such Registered Global Security would authorize the participants holding the relevant beneficial interests to give or take such action, and such participants would authorize beneficial owners owning through such participants to give or take such action or would otherwise act upon the instruction of beneficial owners holding through them. 8 Payments of principal of, premium, if any, and any interest on Debt Securities represented by a Registered Global Security registered in the name of a Depositary or its nominee will be made to such Depositary or its nominee, as the case may be, as the registered owner of such Registered Global Security. None of The ServiceMaster Company, the Trustee or any other agent of The ServiceMaster Company or agent of the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in such Registered Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The ServiceMaster Company expects that the Depositary for any Debt Securities represented by a Registered Global Security, upon receipt of any payment of principal, premium, if any, or interest in respect of such Registered Global Security, will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in such Registered Global Security as shown on the records of such Depositary. The ServiceMaster Company also expects that payments by participants to owners of beneficial interests in such Registered Global Security held through such participants will be governed by standing customer instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participants. If the Depositary for any Debt Securities represented by a Registered Global Security notifies The ServiceMaster Company that it is at any time unwilling or unable to continue as Depositary or ceases to be eligible under applicable law, and a successor Depositary eligible under applicable law is not appointed by The ServiceMaster Company within 90 days, The ServiceMaster Company will issue such Debt Securities in definitive form in exchange for such Registered Global Security. In addition, The ServiceMaster Company may at any time and in its sole discretion determine not to have any of the Debt Securities of a series represented by one or more Registered Global Securities and, in such event, will issue Debt Securities of such series in definitive form in exchange for all of the Registered Global Security or Registered Global Securities representing such Debt Securities. Any Debt Securities issued in definitive form in exchange for a Registered Global Security will be registered in such name or names as the Depositary shall instruct the Trustee (Section 2.07). It is expected that such instructions will be based upon directions received by the Depositary from participants with respect to ownership of beneficial interests in such Registered Global Security. The Debt Securities of a series may also be issued in the form of one or more bearer global Debt Securities (a "Bearer Global Security") that will be deposited with a common depositary for Euroclear and CEDEL, or with a nominee for such depositary identified in the Prospectus Supplement relating to such series. The specific terms and procedures, including the specific terms of the depositary arrangement, with respect to any portion of a series of Debt Securities to be represented by a Bearer Global Security will be described in the Prospectus Supplement relating to such series. CERTAIN COVENANTS OF THE COMPANY The following restrictions apply to each series of Debt Securities unless the terms of such series of Debt Securities provide otherwise. Restrictions on Liens. The Indenture provides that the ServiceMaster Company and the Parent Partnership will not, and will not permit any Significant Subsidiary to, create, incur or suffer to exist any lien on any Equity Interests (as defined in the Indenture), indebtedness or other obligations of a Significant Subsidiary held by the Parent Partnership, the Company or any Subsidiary or any Principal Property of The ServiceMaster Company or a Significant Subsidiary, whether such Equity Interests, indebtedness or other obligations of a Significant Subsidiary or Principal Property are owned at the date of this Indenture or hereafter acquired, unless The ServiceMaster Company secures or causes such Significant Subsidiary to secure the outstanding Debt Securities equally and ratably with all indebtedness secured by such Lien, so long as such indebtedness shall be so secured; provided, however, that this covenant shall not apply in the case of: (i) the creation of any Lien on any Equity Interests, indebtedness or other obligations of a Significant Subsidiary or any Principal Property hereafter acquired (including acquisitions by way of merger or consolidation) by The ServiceMaster Company or a Significant Subsidiary contemporaneously with such acquisition, or within 180 days thereafter, to secure or provide for the payment or financing of any part of the purchase price thereof, or the assumption of any Lien 9 upon any Equity Interests, indebtedness or other obligations of a Significant Subsidiary or any Principal Property hereafter acquired (including acquisition by way of merger or consolidation) existing at the time of such acquisition, provided that every such Lien referred to in this clause (i) shall not attach to the Equity Interests, indebtedness or other obligations of a Significant Subsidiary or any Principal Property other than the Equity Interests, indebtedness or other obligations of the Significant Subsidiary or any Principal Property other than the Equity Interests, indebtedness or other obligations of the Significant Subsidiary or any Principal Property so acquired and fixed improvements thereon; (ii) any Lien on any Equity Interests, indebtedness or other obligations of a Significant Subsidiary or any Principal Property existing at the date of this Indenture; (iii) any Lien on any Equity Interests, indebtedness or other obligations of a Significant Subsidiary or any Principal Property in favor of The ServiceMaster Company or any Significant Subsidiary; (iv) any Lien on any Principal Property being constructed or improved securing loans to finance such construction or improvements; (v) any Lien on Equity Interests, indebtedness or other obligations of a Significant Subsidiary or any Principal Property incurred in connection with the issuance of tax-exempt governmental obligations; (vi) Liens on any Principal Property for taxes not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves, to the extent required by GAAP, have been made; (vii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens on any Principal Property arising in the ordinary course of business and securing obligations that are not due and payable or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves, to the extent required by GAAP, have been made; (viii) zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of business of any of the Company, the Parent Partnership or any Significant Subsidiary; (ix) any Lien on Equity Interests, indebtedness or other obligations of a Non-U.S. Subsidiary held by a Non-U.S. Subsidiary or any Principal Property of a Non-U.S. Subsidiary; provided that at the time of the creation or incurrence of any such Lien the aggregate book value of the total assets of the Non-U.S. Subsidiaries then subject to Liens securing indebtedness for borrowed money (and after giving effect to the proposed Lien), shall not exceed 25% of the Total Assets of the Parent Partnership and its Subsidiaries; (x) any Lien on Equity Interests, indebtedness or other obligations of a Securitization Subsidiary created, incurred, assumed or suffered to exit in connection with Permitted Receivables Financing; (xi) Liens arising by reason of any attachment, judgment, decree or order of any court or other governmental authority, so long as any appropriate legal proceedings which may have been initiated for review of such attachment, judgment, decree or order shall not have been finally terminated or so long as the period within which such proceedings may be initiated shall not have expired; (xii) any Lien on Equity Interests, indebtedness or other obligations of a Significant Subsidiary that was not a Significant Subsidiary at the time such Lien was created or incurred; and (xiii) any renewal of or substitution for any Lien permitted by any of the preceding clauses (i), (ii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) or (xii), provided, that the indebtedness secured is not increased (except for increases in the amount of premiums or fees payable in connection with such renewal or substitution) nor the Lien extended to any additional assets (other than assets as to which the creation, incurrence or existence of Liens is not governed by this clause). (Section 5.03(a)) Notwithstanding the foregoing, The ServiceMaster Company or any Significant Subsidiary may create, incur, assume or suffer to exist Liens in addition to those permitted above and renew, extend or replace such Liens, provided that at the time of such creation, incurrence, assumption, renewal, extension or replacement, and after giving effect thereto, the aggregate outstanding principal or face amount of all indebtedness secured by Liens not permitted by clauses (i) through (xiii) above does not exceed 10% of Consolidated Net Worth. (Section 5.03(b)) Restrictions on Sale and Lease-Back Transactions. The Indenture provides that The ServiceMaster Company will not, and will not permit any Significant Subsidiary to, sell or transfer, directly or indirectly, except to The ServiceMaster Company or a Significant Subsidiary, any Principal Property as an entirety, or any substantial portion thereof, with the intention of taking back a lease of such property, except a lease for a period of three years or less at the end of which it is intended that the use of such property by the lessee will be discontinued and any transaction for the sale and lease-back of any property if such lease is entered into within 10 180 days after the later of the acquisition, completion of construction or commencement of operation of such property; provided that, notwithstanding the foregoing, The ServiceMaster Company or any Significant Subsidiary may sell any such Principal Property and lease it back for a period longer than three years if The ServiceMaster Company or such Significant Subsidiary would be entitled to create a Lien on the property to be leased securing indebtedness in an amount equal to the Attributable Debt with respect to such sale and lease-back transaction without equally and ratably securing the outstanding Debt Securities or The ServiceMaster Company promptly informs the Trustee of such transaction, the net proceeds of such transaction are at least equal to the fair value (as determined by Board Resolution of The ServiceMaster Company) of such property and The ServiceMaster Company causes an amount equal to the net cash proceeds of the sale to be applied to the retirement, within 120 days after receipt of such proceeds, of Funded Debt incurred or assumed by The ServiceMaster Company or a Significant Subsidiary (including the Debt Securities); provided further that, in lieu of applying all of or any part of such net cash proceeds to such retirement, The ServiceMaster Company may, within 75 days after such sale, deliver or cause to be delivered to the applicable trustee for cancellation either debentures or notes evidencing Funded Debt of The ServiceMaster Company (which may include the Debt Securities) or of a Significant Subsidiary previously authenticated and delivered by the applicable trustee, and not theretofore tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such notes or debentures, and an Officers' Certificate (which shall be delivered to the Trustee and which need not contain the statements prescribed by Section 11.04) stating that The ServiceMaster Company elects to deliver or cause to be delivered such debentures or notes in lieu of retiring Funded Debt as hereinabove provided. If The ServiceMaster Company shall so deliver debentures or notes to the applicable trustee and the ServiceMaster Company shall duly deliver such Officers' Certificate, the amount of cash which The ServiceMaster Company shall be required to apply to the retirement of Funded Debt shall be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of such debentures or notes, or, if there are no such redemption prices, the principal amount of such debentures or notes; provided, that in the case of debentures or notes which provide for an amount less than the principal amount thereof to be due and payable upon a declaration of the maturity thereof, such amount of cash shall be reduced by the amount of principal of such debentures or notes that would be due and payable as of the date of such application upon a declaration of acceleration of the maturity thereof pursuant to the terms of the indenture pursuant to which such debentures or notes were issued. (Section 5.04) CERTAIN DEFINITIONS The term "Attributable Debt" as defined in the Indenture means when used in connection with a sale and lease-back transaction referred to above under "-- Restrictions on Sale and Lease-Back Transactions," on any date as of which the amount thereof is to be determined, the product of (a) the net proceeds from such sale and lease-back transaction multiplied by (b) a fraction, the numerator of which is the number of full years of the term of the lease relating to the property involved in such sale and lease-back transaction (without regard to any options to renew or extend such term) remaining on the date of the making of such computation and the denominator of which is the number of full years of the term of such lease measured from the first day of such term. The term "Consolidated Net Worth" as defined in the Indenture means, at any date of determination, the consolidated stockholders' equity of the Parent Partnership, as set forth on the then most recently available consolidated balance sheet of the Parent Partnership and its consolidated Subsidiaries. The term "Funded Debt" as defined in the Indenture involves all indebtedness for money borrowed, including purchase money indebtedness, and indebtedness pursuant to a mandatory sinking fund or prepayment provision or otherwise, having a maturity of more than one year from the date of its creation or having a maturity of less than one year but by its terms being renewable or extendible, at the option of the obligor in respect thereof, beyond one year from the date of its creation. 11 The term "Holder" or "Securityholder" as defined in the Indenture means the registered holder of any Security with respect to registered Debt Securities and the bearer of any Unregistered Security or any coupon appertaining thereto, as the case may be. "Non-U.S. Subsidiary" as defined in the Indenture means any Subsidiary that is not a corporation, partnership or other entity created or organized in or under the laws of the United States of America or any state thereof. "Original Issue Discount Security" as defined in the Indenture means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof. "Permitted Receivables Financing" as defined in the Indenture means a transaction or series of transactions (including amendments, supplements, extensions, renewals, replacements, refinancings or modifications thereof) pursuant to which a Securitization Subsidiary purchases Receivables and Related Assets from the Company or any Subsidiary and finances such Receivables and Related Assets through the issuance of Equity Interests or indebtedness (either directly or through a trust) or through the sale of the Receivables and Related Assets or a fractional undivided interest in the Receivables and Related Assets; provided that (i) the Board of Directors of the Company or the Parent Partnership, as the case may be, shall have determined in good faith that such Permitted Receivables Financing is economically fair and reasonable to the Company, (ii) all sales of Receivables and Related Assets to the Securitization Subsidiary are made at fair market value (as determined in good faith by the Board of Directors of the Company or the Parent Partnership), (iii) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Board of Directors of the Company or the Parent Partnership), (iv) no portion of the indebtedness of a Securitization Subsidiary will be guaranteed by or will be recourse to the Company, the Parent Partnership or any Significant Subsidiary (other than recourse for customary representations, warranties, covenants and indemnities, none of which shall relate to the collectibility (as opposed to the status) of the Receivables and Related Assets) and (v) neither the Company, the Parent Partnership nor any Subsidiary shall have any obligation to maintain or preserve the Securitization Subsidiary's financial condition. The term "Principal Property" as defined in the Indenture means The ServiceMaster Company's principal office building and any manufacturing plant or principal research facility of any of The ServiceMaster Company, the Parent Partnership or any Significant Subsidiary which is located within the United States of America, except any such principal office building, plant or facility which the Board of Directors by resolution declares is not of material importance to the total business conducted by The ServiceMaster Company, the Parent Partnership and their respective Subsidiaries as an entirety. "Receivables and Related Assets" means accounts receivable and instruments, chattel paper, obligations, general intangibles and other similar assets, in each case, relating to such receivables, including interest in merchandise or goods, the sale or lease of which gave rise to such receivables, related contractual rights, guarantees, insurance proceeds, collections, other related assets, and proceeds of all of the foregoing. "Securitization Subsidiary" as defined in the Indenture means a Wholly Owned Subsidiary which is established for the limited purpose of acquiring and financing Receivables and Related Assets and engaging in activities ancillary thereto. The term "Significant Subsidiary", as defined in the Indenture means at any time, any Subsidiary that would be a Significant Subsidiary at such time, as such term is defined in Regulation S-X promulgated by the Commission, as in effect on the date of the Indenture. The term "Subsidiary" as defined in the Indenture means with respect to any Person, any corporation, association or other business entity of which more than 50% of the outstanding Voting Stock (as defined in the Indenture) or other ownership interest is owned directly or indirectly, by such Person and one or more other Subsidiaries of such Persons. The term "Total Assets" as defined in the Indenture means, at any date of determination, the total assets of the Parent Partnership and its Subsidiaries on a consolidated basis as set forth on the then most recently available consolidated balance sheet of the Parent Partnership and its consolidated Subsidiaries. "Wholly Owned Subsidiary" as defined in the Indenture means a Subsidiary all of the Equity Interests of which (except directors' qualifying shares) is at the time owned directly or indirectly by the Company. 12 RESTRICTIONS ON MERGERS AND SALES OF ASSETS Under the Indenture, The ServiceMaster Company shall not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially as an entirety in one transaction or a series of related transactions) to, any Person or permit any Person to merge with or into The ServiceMaster Company unless: (i) either (x) The ServiceMaster Company shall be the continuing Person or (y) the Person (if other than The ServiceMaster Company) formed by such consolidation or into which The ServiceMaster Company is merged or that acquired or leased such property and assets of The ServiceMaster Company shall be a corporation, partnership or limited liability company organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of The ServiceMaster Company on all of the Debt Securities and under this Indenture and, if the successor corporation or partnership is not the Parent Partnership (unless such successor is also the successor to the Parent Partnership under Section 6.04 of the Indenture), the Parent Partnership shall unconditionally guarantee the successor corporation's or partnership's obligations on all of the Debt Securities and under this Indenture and The ServiceMaster Company shall have delivered to the Trustee an Opinion of Counsel stating that such consolidation, merger or transfer and such supplemental Indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with and that such supplemental indenture constitutes the legal, valid and binding obligation of The ServiceMaster Company or such successor enforceable against such entity in accordance with its terms, subject to customary exceptions; and (ii) immediately after giving effect to such transaction, no Default shall have occurred and be continuing. The Indenture also provides that the Parent Partnership shall not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially as an entirety in one transaction or a series of related transactions) to, any Person or permit any Person to merge with or into the Parent Partnership unless: (i) either (x) the Parent Partnership shall be the continuing Person or (y) the Person (if other than the Parent Partnership) formed by such consolidation or into which the Parent Partnership is merged or that acquired or leased such property and assets of the Parent Partnership shall be a corporation, partnership or limited liability company organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental Indenture, executed and delivered to the Trustee, the due and punctual performance of the Guarantees, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture and the Debt Securities and the Guarantee to be performed by the Parent Partnership; and (ii) immediately after giving effect to such transaction, no Default shall have occurred and be continuing. (Sections 6.01 and 6.03) EVENTS OF DEFAULT Events of Default defined in the Indenture with respect to the Debt Securities of any series are: (a) The ServiceMaster Company defaults in the payment of the principal of any Debt Securities of such series when the same becomes due and payable at maturity, upon acceleration, redemption or mandatory repurchase, including as a sinking fund installment, or otherwise; (b) The ServiceMaster Company defaults in the payment of interest on any Debt Securities of such series when the same becomes due and payable, and such default continues for a period of 30 days; (c) The ServiceMaster Company or the Parent Partnership defaults in the performance of or breaches any other covenant or agreement of The ServiceMaster Company or the Parent Partnership in the Indenture with respect to any Security of such series or in the Debt Securities of such series and such default or breach continues for a period of 60 consecutive days after written notice to The ServiceMaster Company by the Trustee or to The ServiceMaster Company and the Trustee by the Holders of 25% or more in aggregate principal amount of the Debt Securities of all series then outstanding affected thereby; (d) an involuntary case or other proceeding shall be commenced against The ServiceMaster Company, the Parent Partnership or any Significant Subsidiary with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against The ServiceMaster Company, the Parent Partnership or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect; 13 (e) The ServiceMaster Company, the Parent Partnership or any Significant Subsidiary (i) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (ii) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, Trustee, sequestrator or similar official of The ServiceMaster Company, the Parent Partnership or any Significant Subsidiary or for all or substantially all of the property and assets of The ServiceMaster Company, the Parent Partnership or any Significant Subsidiary or (iii) effects any general assignment for the benefit of creditors; or (f) any other Event of Default established with respect to any series of Debt Securities issued pursuant to the Indenture occurs. (Section 7.01) The Indenture provides that if an Event of Default described in clauses (a) or (b) of the immediately preceding paragraph with respect to the Debt Securities of any series then outstanding occurs and is continuing, then, and in each and every such case, except for any series of Debt Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Debt Securities of any such affected series then outstanding under the Indenture (each such series treated as a separate class) by notice in writing to The ServiceMaster Company or the Parent Partnership (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Debt Securities of any such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series established pursuant to the Indenture) of all Debt Securities of such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default described in clauses (c) or (f) of the immediately preceding paragraph with respect to the Debt Securities of one or more but not all series then outstanding or with respect to the Debt Securities of all series then outstanding occurs and is continuing, then, and in each and every such case, except for any series of Debt Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Debt Securities of all such affected series then outstanding under the Indenture (treated as a single class) by notice in writing to The ServiceMaster Company (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Debt Securities of any such series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series established pursuant to the Indenture) of all Debt Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default described in clause (d) or (e) of the immediately preceding paragraph occurs and is continuing, then the principal amount (or, if any Debt Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to the Indenture) of all the Debt Securities then outstanding and interest accrued thereon, if any, shall be and become immediately due and payable, without any notice or other action by any Holder or the Trustee to the full extent permitted by applicable law. Upon certain conditions such declarations may be rescinded and annulled and past defaults may be waived by the Holders of a majority in principal of the then outstanding Debt Securities of all such series that have been accelerated (voting as a single class). (Section 7.02) The Indenture contains a provision under which, subject to the duty of the Trustee during a default to act with the required standard of care, (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, officers' certificate, opinion of counsel (or both), statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons and the Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (ii) before the Trustee acts or refrains from acting, it may require an officers' certificate and/or an opinion of counsel, which shall conform to the requirements of the Indenture and the Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion; subject to the terms of the Indenture, whenever in the administration of the trusts of the Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action under the Indenture, such matter (unless other evidence in respect thereof be specifically prescribed in the Indenture) may, in the absence 14 of wilful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an officers' certificate delivered to the Trustee, and such certificate, in the absence of wilful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of the Indenture upon the faith thereof; (iii) the Trustee may act through its attorneys and agents not regularly in its employ and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care; (iv) any request, direction, order or demand of The ServiceMaster Company mentioned in the Indenture shall be sufficiently evidenced by an officers' certificate (unless other evidence in respect thereof be specifically prescribed in the Indenture); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of The ServiceMaster Company; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request, order or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (vi) the Trustee shall not be liable for any action it takes, or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with the Indenture relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under the Indenture; (vii) the Trustee may consult with counsel and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it under the Indenture in good faith and in reliance thereon; (viii) prior to the occurrence of an Event of Default under the Indenture and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, officers' certificate, opinion of counsel, Board Resolution, statement, instrument, opinion, report, notice, request, consent order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Debt Securities of all series affected then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of the Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; (ix) the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder; (x) the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Company, except as otherwise set forth herein, but the Trustee may require of the Company reasonable information and advice as to the performance of the covenants, conditions and agreements contained herein and shall be entitled in connection herewith to examine the books, records and premises of the Company; (xi) the permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful misconduct; (xii) except for any event of which the Trustee has "actual knowledge" and which event, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Indenture, the Trustee shall not be deemed to have notice of any default or event unless specifically notified in writing of such event by the Company or the Holders of not less than 25% of the Outstanding Securities; as used herein, the term "actual knowledge" means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto. (Section 8.02) Subject to such provisions in the Indenture for the indemnification of the Trustee and certain other limitations, the Holders of at least a majority in aggregate principal amount (or, if any Debt Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to the Indenture) of the outstanding Debt Securities of all series affected (voting as a single class) may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on this Trustee with respect to the Debt Securities of such series by the Indenture; provided, that the Trustee may refuse to follow any direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction, it being understood that the Trustee shall have no duty to ascertain whether or not such actions or forbearance are unduly prejudicial to 15 such Holders and provided further, that the Trustee may take any other action it deems proper that is not inconsistent with any directions received from Holders of Debt Securities pursuant to this paragraph. (Section 7.05) Subject to various provisions in the Indenture, the Holders of at least a majority in principal amount (or, if the Debt Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof established pursuant to the Indenture) of the outstanding Debt Securities of all series affected (voting as a single class), by notice to the Trustee, may waive an existing Default or Event of Default with respect to the Debt Securities of such series and its consequences, except a Default in the payment of principal of or interest on any Security as specified in clauses (a) or (b) of Section 6.1 of the Indenture or in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the Holder of each outstanding Security affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default with respect to the Debt Securities of such series arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. (Section 7.04) The Indenture provides that no Holder of any Debt Securities of any series may institute any proceeding, juridical or otherwise, with respect to the Indenture or the Debt Securities of such series, or for the appointment of a receiver or trustee, or for any other remedy under the Indenture, unless: (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Debt Securities of such series; (ii) the Holders of at least 25% in aggregate principal amount of outstanding Debt Securities of all such series affected shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under the Indenture; (iii) such Holder or Holders have offered to The Trustee indemnity reasonably satisfactory to the Trustee against any costs, liabilities or expenses to be incurred in compliance with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (v) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Debt Securities of all such affected series have not given the Trustee a direction that is inconsistent with such written request. A Holder may not use the Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. (Section 7.06) The Indenture provides that each of The ServiceMaster Company and the Parent Partnership will file with the Trustee, within 15 days after The ServiceMaster Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports which The ServiceMaster Company and the Parent Partnership, as the case may be, may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act. (Sections 5.06 and 5.09) DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE The Indenture provides with respect to each series of Debt Securities that The ServiceMaster Company may terminate its obligations under the Debt Securities of a series and the Indenture with respect to Debt Securities of such series if: (i) all Debt Securities of such series previously authenticated and delivered, with certain exceptions, have been delivered to the Trustee for cancellation and The ServiceMaster Company has paid all sums payable by it under the Indenture; or (ii) (A) the Debt Securities of such series mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption, (B) The ServiceMaster Company irrevocably deposits in trust with the Trustee, as trust funds solely for the benefit of the Holders of such Debt Securities, for that purpose, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee), without consideration of any reinvestment, to pay principal of and interest on the Debt Securities of such series to maturity or redemption, as the case may be, and to pay all other sums payable by it under the Indenture, and (C) The ServiceMaster Company delivers to the Trustee an officers' certificate and an opinion of counsel in each case stating that all conditions precedent provided for in The 16 ServiceMaster Company's Indenture relating to the satisfaction and discharge of the Indenture with respect to the Debt Securities of such series have been complied with. With respect to the foregoing clause (i), only The ServiceMaster Company 's obligations to compensate and indemnify the Trustee under the Indenture shall survive. With respect to the foregoing clause (ii), only The ServiceMaster Company's obligations to execute and deliver Debt Securities of such series for authentication, to set the terms of the Debt Securities of such series, to maintain an office or agency in respect of the Debt Securities of such series, to have moneys held for payment in trust, to register the transfer or exchange of Debt Securities of such series, to deliver Debt Securities of such series for replacement or to be canceled, to compensate and indemnify the Trustee and to appoint a successor trustee, and its right to recover excess money held by the Trustee shall survive until such Debt Securities are no longer outstanding. Thereafter, only The ServiceMaster Company's obligations to compensate and indemnify the Trustee, and its right to recover excess money held by the Trustee shall survive. (Section 9.01) The Indenture provides that The ServiceMaster Company (i) will be deemed to have paid and will be discharged from any and all obligations in respect of the Debt Securities of any series, and the provisions of the Indenture will, except as noted below, no longer be in effect with respect to the Debt Securities of such series ("legal defeasance") and (ii) may omit to comply with any term, provision or condition of the Indenture described above under "--Certain Covenants" (or any other specific covenant relating to such series provided for in a Board Resolution or supplemental indenture which may by its terms be defeased pursuant to the Indenture), and such omission shall be deemed not to be an Event of Default under clauses (c) or (f) of the first paragraph of "--Events of Default" with respect to the outstanding Debt Securities of a series ("covenant defeasance"); provided that the following conditions shall have been satisfied: (A) The ServiceMaster Company has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Debt Securities of such series, for payment of the principal of and interest on the Debt Securities of such series, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the principal of and accrued interest on the outstanding Debt Securities of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the Trustee), as the case may be; (B) such deposit will not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement or instrument to which The ServiceMaster Company is a party or by which it is bound; (C) no Default with respect to such Debt Securities of such series shall have occurred and be continuing on the date of such deposit; (D) The ServiceMaster Company shall have delivered to the Trustee an opinion of counsel that (1) the Holders of the Debt Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of The ServiceMaster Company's exercise of its option under this provision of the Indenture and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred and (2) the Holders of the Debt Securities of such series have a valid security interest in the trust funds subject to no prior liens under the Uniform Commercial Code; and (E) The ServiceMaster Company has delivered to the Trustee an officers' certificate and an opinion of counsel, in each case stating that all conditions precedent provided for in the Indenture relating to the defeasance contemplated have been complied with. In the case of legal defeasance under clause (i) above, the opinion of counsel referred to in clause (D)(1) above may be replaced by a ruling directed to the Trustee received from the Internal Revenue Service to the same effect. Subsequent to legal defeasance under clause (i) above, The ServiceMaster Company's obligations to execute and deliver Debt Securities of such series for authentication, to set the terms of the Debt Securities of such series, to maintain an office or agency in respect of the Debt Securities of such series, to have moneys held for payment in trust, to register the transfer or exchange of Debt Securities of such series, to deliver Debt Securities of such series for replacement or to be canceled, to compensate and indemnify the Trustee and to appoint a successor trustee, and its right to recover excess money held by the Trustee shall survive until such Debt Securities are no longer outstanding. After such Debt Securities are no longer outstanding, in the case of legal defeasance under clause (i) above, only The ServiceMaster Company's obligations to compensate and indemnify the Trustee and its right to recover excess money held by the Trustee shall survive. (Sections 9.02 and 9.03) 17 MODIFICATION OF THE INDENTURE The Indenture provides that The ServiceMaster Company, the Parent Partnership and the Trustee may amend or supplement the Indenture or the Debt Securities of any series without notice to or the consent of any Holder: (1) to cure any ambiguity, defect or inconsistency in the Indenture; provided that such amendments or supplements shall not materially and adversely affect the interests of the Holders; (2) to comply with Article 6 of the Indenture; (3) to comply with any requirements of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act; (4) to evidence and provide for the acceptance of appointments under the Indenture with respect to the Debt Securities of any or all series by a successor Trustee; (5) to establish the form or forms or terms of Debt Securities of any series or of the coupons appertaining to such Debt Securities as permitted under the Indenture or the Guarantees; (6) to provide for uncertificated or Unregistered Securities and to make all appropriate changes for such purpose; and (7) to make any change that does not materially and adversely affect the rights of any Holder. (Section 10.01) The Indenture also contains provisions whereby The ServiceMaster Company, the Parent Partnership and the Trustee, subject to certain conditions, without prior notice to any Holders, may amend the Indenture, the outstanding Debt Securities of any series and the Guarantees with the written consent of the Holders of a majority in principal amount of the Debt Securities then outstanding of all series affected by such supplemental indenture (all such series voting as one class), and the Holders of a majority in principal amount of the outstanding Debt Securities of all series affected thereby (all such series voting as one class) by written notice to the Trustee may waive future compliance by The ServiceMaster Company with any provision of the Indenture or the Debt Securities of such series. Notwithstanding the foregoing provisions, without the consent of each Holder affected thereby, an amendment or waiver, including a waiver pursuant to Section 7.04 of the Indenture, may not: (i) extend the stated maturity of the principal of, or any sinking fund obligation or any installment of interest on, such Holder's Security, or reduce the principal amount thereof or the rate of interest thereon (including any amount in respect of original issue discount), or any premium payable with respect thereto, or adversely affect the rights of such Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of such Holder, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof or the amount thereof provable in bankruptcy, or change any place of payment where, or the currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the due date therefor; (ii) reduce the percentage in principal amount of outstanding Debt Securities of the relevant series the consent of whose Holders is required for any such supplemental indenture, for any waiver of compliance with certain provisions of the Indenture of certain Defaults and their consequences provided for in the Indenture; (iii) waive a Default in the payment of principal of or interest on any Security of such Holder; or (iv) modify any of the provisions of this section of the Indenture, except to increase any such percentage or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of the Indenture which has expressly been included solely for the benefit of one or more particular series of Debt Securities, or which modifies the rights of Holders of Debt Securities of such series with respect to such covenant or provision, shall be deemed not to affect the rights under the Indenture of the Holders of Debt Securities of any other series or of the coupons appertaining to such Debt Securities. It shall not be necessary for the consent of any Holder under this section of the Indenture to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this section of the Indenture becomes effective, The ServiceMaster Company shall give to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. The Company will mail supplemental indentures to Holders upon request. Any failure of The ServiceMaster Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. (Section 10.02) GUARANTEE The Parent Partnership will irrevocably and unconditionally guarantee the payment of all obligations of The ServiceMaster Company under the Debt Securities. If The ServiceMaster Company defaults in the payment of 18 the principal of, premium if any, or interest on such Debt Securities when and as the same shall become due, whether upon maturity, acceleration, call for redemption or otherwise, without the necessity of action by the Trustee or any Holder of such Debt Securities, the Parent Partnership shall be required promptly to make such payment. As explained in more detail under "The Reincorporating Merger and The Partnership Liquidations" below, upon consummation of the Partnership Liquidations, the Successor Parent Corporation will assume the obligations of both The ServiceMaster Company and the Parent Partnership on the Debt Securities and both The ServiceMaster Company and the Parent Partnership will be merged or liquidated into the Successor Parent Corporation. The Parent Partnership conducts all of its business through The ServiceMaster Company and Subsidiaries of The ServiceMaster Company and does not own any material assets other than all of the limited partnership interest of The ServiceMaster Company. The Parent Partnership's obligations under the Guarantee are as a secondary obligor. The Parent Partnership is presently dependent on the receipt of dividends or other payments from The ServiceMaster Company to make payments on the Guarantee of the Debt Securities. CONCERNING THE TRUSTEE Harris Trust and Savings Bank is the Trustee under the Indenture. The Trustee performs services for ServiceMaster in the ordinary course of business. THE REINCORPORATING MERGER AND THE PARTNERSHIP LIQUIDATIONS The Parent Partnership was organized as a limited partnership at the end of 1986 to enable the parent entity in the ServiceMaster enterprise to function free of the federal corporate income tax. In 1987, the Internal Revenue Code was amended to reimpose federal corporate income tax on publicly traded partnerships like ServiceMaster beginning January 1, 1998. On December 11, 1991, the Parent Partnership issued a proxy statement/prospectus (the "Reincorporation Proxy Statement") in which the board of directors of ServiceMaster's Managing General Partner recommended that the holders of the outstanding partnership shares approve, among other things, a merger (the "Reincorporating Merger") having the characteristics described in the Reincorporation Proxy Statement. The limited partners approved and authorized the Reincorporating Merger at a special meeting held on January 13, 1992. The purpose of the Reincorporating Merger is to substitute a corporation for the Parent Partnership as the ultimate parent in the ServiceMaster enterprise before the Parent Partnership becomes subject to federal corporate income tax. The Reincorporating Merger is scheduled to be consummated on or before December 31, 1997. ServiceMaster Incorporated of Delaware has been organized to serve as the ultimate parent in the ServiceMaster enterprise after the Reincorporating Merger and is herein called the "Successor Parent Corporation." The Successor Parent Corporation is at present a wholly owned subsidiary of the Parent Partnership. The Reincorporating Merger will be accomplished by merging a subsidiary of the Successor Parent Corporation (which subsidiary was organized to serve as the vehicle for the merger) into the Parent Partnership. Upon consummation of the Reincorporating Merger: (i) each share of limited partnership interest issued prior to that time by the Parent Partnership will be converted into one share of common stock issued by the Successor Parent Corporation and (ii) each share of common stock issued by the disappearing subsidiary corporation will be converted into a limited partnership interest in the Parent Partnership. Upon consummation of the Reincorporating Merger, the Parent Partnership will be a wholly owned subsidiary of the Successor Parent Corporation. ServiceMaster expects that after the Reincorporating Merger, the Parent Partnership and The ServiceMaster Company will be merged or liquidated into the Successor Parent Corporation (such transactions are called the 19 "Partnership Liquidations" in this Prospectus). Upon consummation of the Partnership Liquidations, the Successor Parent Corporation will become the successor to both the Parent Partnership and The ServiceMaster Company and will own all businesses previously owned (directly or indirectly) by the Parent Partnership and The ServiceMaster Company. ServiceMaster intends to change the name of the Successor Parent Corporation to "The ServiceMaster Company" not later than the time the Partnership Liquidations are completed. Upon consummation of the Partnership Liquidations, the Successor Parent Corporation will assume all obligations of The ServiceMaster Company Limited Partnership and the Parent Partnership on the Debt Securities and will become the primary obligor on the Debt Securities. The term "Reincorporation" is used in this Prospectus to refer to the Reincorporating Merger and the Partnership Liquidations and related actions. The Board of Directors of the Successor Parent Corporation immediately after the Reincorporation will be comprised of the same individuals who served as members of the Board of Directors of the Managing General Partner of the Parent Partnership immediately prior to the Reincorporation. Each of the terms "Board" and "Board of Directors" is used in this Prospectus to mean (i) the Board of Directors of ServiceMaster Management Corporation (i.e., ServiceMaster's Managing General Partner) when it refers to any time prior to the consummation of the Reincorporating Merger and (ii) the Board of Directors of the Successor Parent Corporation when it refers to any time after consummation of the Reincorporation. Each individual who held a management or other employment position with the Parent Partnership or The ServiceMaster Company immediately prior to the Reincorporation will hold the same position with the Successor Parent Corporation immediately after the Reincorporation. No payment or equity issuance will be made to the ServiceMaster Management Corporation in its capacity as Managing General Partner of either the Parent Partnership or The ServiceMaster Company in connection with Reincorporation except for the pay out of any income allocated its capital account prior to Reincorporation. The Board of Directors has the right to elect not to consummate the Reincorporating Merger. After Reincorporation, ServiceMaster's operations will become subject to federal income tax. ServiceMaster's management currently estimates that the effective tax rate reflected in ServiceMaster's income statement after Reincorporation will be approximately 40 percent. Pro forma earnings per share would have been $0.69 in 1996 (contrasted with $1.13 reported by ServiceMaster), $0.59 in 1995 (contrasted with $0.96 reported by ServiceMaster), and $0.49 in 1994 (contrasted with $0.80 reported by ServiceMaster) if the Reincorporation had occurred at the beginning of each of those periods. These estimates are necessarily subject to change based on changes in circumstances, statutory tax rates, and other relevant factors. PLAN OF DISTRIBUTION ServiceMaster may sell the Debt Securities in or outside the United States through underwriters or dealers, directly to one or more purchasers, or through agents. The Prospectus Supplement with respect to the Debt Securities will set forth the terms of the offering of the Debt Securities, including the name or names of any underwriters, dealers or agents, the purchase price of the Debt Securities and the proceeds to ServiceMaster from such sale, any delayed delivery arrangements, any underwriting discounts and other items constituting underwriters' compensation, the initial public offering price, any discounts or concessions allowed or re-allowed or paid to dealers, and any securities exchanges on which the Debt Securities may be listed. If underwriters are used in the sale, the Debt Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Debt Securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. The underwriter or underwriters with respect to a particular underwritten offering of Debt Securities will be named in the Prospectus Supplement relating to such offering, 20 and, if an underwriting syndicate is used, the managing underwriter or underwriters will be set forth on the cover of such Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement relating thereto, the obligations of the underwriters or agents to purchase the Debt Securities will be subject to conditions precedent, and the underwriters will be obligated to purchase all the Debt Securities if any are purchased. The initial public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may be changed from time to time. If dealers are used in the sale of Debt Securities with respect to which this Prospectus is delivered, ServiceMaster will sell such Debt Securities to the dealers as principals. The dealers may then resell such Debt Securities to the public at varying prices to be determined by such dealers at the time of resale. The names of the dealers and the terms of the transaction will be set forth in the Prospectus Supplement relating thereto. Debt Securities may be sold directly by ServiceMaster or through agents designated by ServiceMaster from time to time at fixed prices, which may be changed, or at varying prices determined at the time of sale. Any agent involved in the offer or sale of the Debt Securities with respect to which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement relating thereto. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. Debt Securities may be sold directly by ServiceMaster to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. The terms of any such sales will be described in the Applicable Prospectus Supplement. In connection with the sale of the Debt Securities, underwriters or agents may receive compensation from ServiceMaster or from purchasers of Offered Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters, agents and dealers participating in the distribution of the Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from The ServiceMaster Company and any profit on the resale of the Debt Securities by them may be deemed to be underwriting discounts or commissions under the Securities Act. If so indicated in the Prospectus Supplement, ServiceMaster will authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase Debt Securities from ServiceMaster at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement, and the Prospectus Supplement will set forth the commission payable for solicitation of such contracts. Agents, dealers and underwriters may be entitled under agreements entered into with ServiceMaster to indemnification by ServiceMaster against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments that such agents, dealers, or underwriters may be required to make with respect thereto. Agents, dealers, and underwriters may be customers of, engage in transactions with or perform services for ServiceMaster and its subsidiaries in the ordinary course of business. Some or all of the Debt Securities may be new issues of securities with no established trading market. Any underwriters to whom Debt Securities are sold by ServiceMaster for public offering and sale may make a market in such Debt Securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of or the trading markets for any Debt Securities. Certain of the underwriters, dealers or agents and their affiliates may be customers of, engage in transactions with and perform services for ServiceMaster and its subsidiaries in the ordinary course of business. 21 VALIDITY OF DEBT SECURITIES The validity of the Debt Securities will be passed upon for the ServiceMaster Companies by Vernon T. Squires, Esq., Senior Vice President and General Counsel of ServiceMaster. As of July 22, 1997, Vernon T. Squires owned 255,887 shares and options to acquire 54,000 shares of limited partnership interests of the Parent Partnership. EXPERTS The financial statements and schedule of the Parent Partnership incorporated by reference in this Prospectus and elsewhere in the registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference in reliance upon the authority of said firm as experts in giving said reports. 22 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED AUGUST 6, 1997 PROSPECTUS SERVICEMASTER LIMITED PARTNERSHIP PARTNERSHIP SHARES ServiceMaster Limited Partnership ("ServiceMaster") may offer from time to time shares of limited partnership interest issued by ServiceMaster ("Partnership Shares"). ServiceMaster is a publicly traded limited partnership and its Partnership Shares are listed on the New York Stock Exchange. The Partnership Shares may be sold in one or more offerings. The terms for each offering will be determined at the time the offering occurs. The alternative means potentially available to ServiceMaster for sale of the Partnership Shares in offerings effected with this Prospectus include: sales to underwriters under firm commitment underwriting arrangements; sales through agents, underwriters or dealers; and sales directly by ServiceMaster. The terms of each offering of the Partnership Shares will be described in a supplement to this Prospectus (a "Prospectus Supplement") including the initial offering price and the net proceeds to ServiceMaster from the sale of the Shares to be sold in that offering. If any agents for ServiceMaster, underwriters or dealers are involved in the sale of any Partnership Shares in respect of which this Prospectus is being delivered, the names of such agents, underwriters or deals and any applicable commissions or discounts and the net proceeds to ServiceMaster will be set forth in the applicable Prospectus Supplement. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- The Date of this Prospectus is AVAILABLE INFORMATION ServiceMaster, The ServiceMaster Company Limited Partnership (in which ServiceMaster owns directly the entire limited partnership interest ("The ServiceMaster Company")), and ServiceMaster Incorporated of Delaware have filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), for the registration of, among other things, the Partnership Shares offered hereby and Common Stock issuable by ServiceMaster Incorporated of Delaware. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain items of which are contained in exhibits and schedules to, or incorporated by reference in, the Registration Statement as permitted by the rules and regulations of the Commission. For further information with respect to ServiceMaster, The ServiceMaster Company, ServiceMaster Incorporated of Delaware and the Partnership Shares and other securities offered hereby, reference is made to the Registration Statement, including the exhibits thereto, and financial statements and notes filed as a part thereof or incorporated by reference therein. Statements made in this Prospectus concerning the contents of any document referred to herein are not necessarily complete. With respect to each such document filed with the Commission as an exhibit to, or incorporated by reference in, the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. ServiceMaster is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance therewith, ServiceMaster files consolidated reports, proxy statements and other information with the Commission. Upon consummation of the Reincorporating Merger described in this Prospectus (which is scheduled to occur on or before December 31, 1997), ServiceMaster Incorporated of Delaware will become the successor to ServiceMaster and The ServiceMaster Company and will become subject to the informational requirements identified in the preceding sentence. Reports, proxy statements and other information filed by ServiceMaster may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material may be obtained by mail from the Public Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding ServiceMaster, The ServiceMaster Company and ServiceMaster Incorporated of Delaware. In addition, such material may also be inspected and copied at the offices of the New York Stock Exchange. Partnership Shares issued by ServiceMaster are listed on the New York Stock Exchange. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents have been filed with the Commission and are incorporated by reference in this Prospectus: (i) the Annual Report on Form 10-K of ServiceMaster (File No. 1-9378) for the year ended December 31, 1996 (the "1996 Form 10-K") and (ii) ServiceMaster's Quarterly Report on Form 10-Q for the period ended March 31, 1997. All documents filed by ServiceMaster pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Partnership Shares and other securities registered on the Registration Statement shall be deemed to be incorporated herein by reference and to be a part hereof from the respective dates of filing of such documents. As indicated in this Prospectus, ServiceMaster, The ServiceMaster Company and ServiceMaster Incorporated of Delaware are parties to a Merger and Reorganization Agreement, which provides for a Reincorporating Merger and other related transactions that are scheduled to occur on or before December 31, 1997. Upon consummation of the Reincorporating Merger, ServiceMaster Incorporated of Delaware will become the successor to ServiceMaster as the ultimate parent in the ServiceMaster enterprise. All documents filed by ServiceMaster Incorporated of Delaware after the Reincorporating Merger pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the securities 2 registered on the Registration Statement shall be deemed to be incorporated herein by reference and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Copies of all documents which are incorporated herein by reference (not including the exhibits to such information, unless such exhibits are specifically incorporated by reference in such information) will be provided without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request. Copies of this Prospectus, as amended or supplemented from time to time, and any other documents (or parts of documents) that constitute part of the Prospectus under Section 10(a) of the Securities Act will also be provided without charge to each such person, upon written or oral request. Requests should be directed to ServiceMaster at One ServiceMaster Way, Downers Grove, Illinois 60515-9969, Attention: Investor Relations (telephone number: (630) 271-1300). NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SERVICEMASTER, THE SERVICEMASTER COMPANY OR SERVICEMASTER INCORPORATED OF DELAWARE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE PARTNERSHIP SHARES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. 3 Unless otherwise indicated or the context otherwise requires, all references herein to: (i) "ServiceMaster" refers to ServiceMaster Limited Partnership and its subsidiaries and predecessors; and (ii) "The ServiceMaster Company" refers to The ServiceMaster Company Limited Partnership. As described under "The Reincorporating Merger and the Partnership Liquidations" below, the shareholders of ServiceMaster have approved a Reincorporating Merger, which is scheduled to occur on or before December 31, 1997. The Reincorporating Merger will install a corporation as the ultimate parent in the ServiceMaster enterprise and that corporation is called the "Successor Parent Corporation" in this Prospectus. The term "ServiceMaster" as used in this Prospectus with respect to periods at and after the Reincorporating Merger refers to ServiceMaster Incorporated of Delaware and its subsidiaries. SERVICEMASTER ServiceMaster was formed in December 1986 as a limited partnership to succeed to the business and assets of ServiceMaster Industries Inc., which began its operation in 1947. ServiceMaster is a holding company whose Partnership Shares are listed on the New York Stock Exchange and whose principal asset consists of all of the common limited partner interest of The ServiceMaster Company. The actual operations of the ServiceMaster enterprise are conducted by The ServiceMaster Company and its subsidiaries. ServiceMaster, through its subsidiaries, provides a range of services to individual consumers, businesses and institutions in the United States and 30 other countries throughout the world. ServiceMaster is divided into three operating units: Consumer Services, Management Services and International. Consumer Services and Management Services are the principal operating units ServiceMaster Consumer Services L.P. provides services to over 6,500,000 residential and commercial customers through seven market leading companies: TruGreen L.P., which provides lawn care, tree and shrub services and indoor plant maintenance under the "TruGreen," "ChemLawn," "TruGreen-ChemLawn" and "Barefoot" service marks; The Terminix International Company, L.P., which provides termite and pest control services under the "Terminix" service mark; American Home Shield Corporation, which provides home system and appliance warranty contracts and home inspection services under the "American Home Shield" and "AmeriSpec" service marks; ServiceMaster Residential/Commercial Services L.P., which provides residential and commercial cleaning and disaster restoration services under the "ServiceMaster" service mark; Merry Maids L.P., which provides domestic housekeeping services under the "Merry Maids" service mark; and Furniture Medic L.P., which provides in-home furniture repair and restoration services under the "Furniture Medic" service mark. These services are part of the "ServiceMaster Quality Network" and may be accessed by calling a single toll-free telephone number: 1-800-WE SERVE. ServiceMaster Management Services L.P. is organized into three discrete operating units: ServiceMaster Healthcare Management Services, Education Management Services and Business and Industry Management Services. Each of these three units provides to their respective customers a variety of supportive management services, including the management of housekeeping, plant operations and maintenance, clinical equipment maintenance, laundry and linen, grounds and landscaping, energy management services and food service. In addition, Healthcare Management Services provides management and other services to the long-term care, assisted living and home health care markets. USE OF PROCEEDS ServiceMaster intends to use the net proceeds from the sale of the Partnership Shares for general business purposes, which may include, but are not limited to, repayment, redemption or repurchase of outstanding indebtedness; acquisitions, capital expenditures and working capital requirements; and such other purposes as may be specified in the relevant Prospectus Supplement. A description of any indebtedness to be refinanced with the proceeds from the sale of the Partnership Shares will be set forth in the applicable Prospectus Supplement. 4 DESCRIPTION OF PARTNERSHIP SHARES ServiceMaster is a publicly traded limited partnership formed under the Delaware Revised Uniform Limited Partnership Act. ServiceMaster Management Corporation serves as ServiceMaster's Managing General Partner. The Board of Directors of ServiceMaster Management Corporation serves as the Board of Directors for the ServiceMaster enterprise. ServiceMaster Management Corporation holds a 1% carried interest in both ServiceMaster and its principal subsidiary partnership, and these two interests together provide ServiceMaster Management Corporation with approximately 2% of the income earned and distributions made by the ServiceMaster enterprise. All other income and distributions attributable to ServiceMaster are allocated to the holders of the outstanding Partnership Shares. Each Partnership Share represents an ownership interest in ServiceMaster equal to the interest represented by every other Partnership Share. Distributions are made pro rata with the same amount distributed with respect to each outstanding Partnership Share. Taxable income is allocated to the owners of Partnership Shares based on the time at which the shares were acquired and the price paid for the shares and other factors; various tax consequences of investment in Partnership Shares are described in the 1996 Form 10-K, which is incorporated into this Prospectus by reference. As of June 30, 1997, an aggregate of 182,784,000 Partnership Shares were outstanding (before giving effect to any issuances of Partnership Shares which may be sold in offerings made by means of this Prospectus). Partnership Shares are listed on the New York Stock Exchange and are freely transferable. THE REINCORPORATING MERGER AND PARTNERSHIP LIQUIDATIONS ServiceMaster was organized as a limited partnership at the end of 1986 to enable the parent entity in the ServiceMaster enterprise to function free of the federal corporate income tax. In 1987, the Internal Revenue Code was amended to reimpose federal corporate income tax on publicly traded partnerships like ServiceMaster beginning January 1, 1998. On December 11, 1991, ServiceMaster issued a proxy statement/prospectus (the "Reincorporation Proxy Statement") in which the board of directors of ServiceMaster's Managing General Partner recommended that the holders of the outstanding partnership shares approve, among other things, a merger (the "Reincorporating Merger") having the characteristics described in the Reincorporation Proxy Statement. The limited partners approved and authorized the Reincorporating Merger at a special meeting held on January 13, 1992. The purpose of the Reincorporating Merger is to substitute a corporation for ServiceMaster as the ultimate parent in the ServiceMaster enterprise before ServiceMaster becomes subject to federal corporate income tax. The Reincorporating Merger is scheduled to be consummated on or before December 31, 1997. ServiceMaster Incorporated of Delaware has been organized to serve as the ultimate parent in the ServiceMaster enterprise after the Reincorporating Merger and is hereinafter called the "Successor Parent Corporation." The Successor Parent Corporation is at present a wholly owned subsidiary of ServiceMaster. The Reincorporating Merger will be accomplished by merging a subsidiary of the Successor Parent Corporation (which subsidiary was organized to serve as the vehicle for the merger) into ServiceMaster. Upon consummation of the Reincorporating Merger (i) each Partnership Share issued prior to that time by ServiceMaster will be converted into one share of common stock issued by the Successor Parent Corporation (a "Corporate Share") and (ii) ServiceMaster will become a wholly owned subsidiary of the Successor Parent Corporation. Each of the terms "ServiceMaster Shares" and "Shares" is used in this Prospectus to mean (i) shares of limited partnership interest in ServiceMaster when it refers to any time prior to the consummation of the Reincorporating Merger and (ii) shares of common stock issued or issuable by the Successor Parent Corporation when it refers to any time after consummation or the Reincorporating Merger. 5 No federal income tax will be imposed on ServiceMaster shareholders as a result of the Reincorporating Merger. ServiceMaster expects that after the Reincorporating Merger, ServiceMaster and The ServiceMaster Company (which is the sole subsidiary of the ServiceMaster) will be merged or liquidated into the Successor Parent Corporation (such transactions are called the "Partnership Liquidations" in this Prospectus). Upon consummation of the Partnership Liquidations, the Successor Parent Corporation will become the successor to both ServiceMaster and The ServiceMaster Company and will own all businesses previously owned (directly or indirectly) by ServiceMaster or The ServiceMaster Company. ServiceMaster intends to change the name of the Successor Parent Corporation to "The ServiceMaster Company" not later than the time the Partnership Liquidations are completed. The term "Reincorporation" is used in this Prospectus to refer to the Reincorporating Merger and the Partnership Liquidations and related actions. The Board of Directors of the Successor Parent Corporation immediately after the Reincorporation will be comprised of the same individuals who served as members of the Board of Directors of the Managing General Partner of ServiceMaster immediately prior to the Reincorporation. Each of the terms "Board" and "Board of Directors" is used in this Prospectus to mean (i) the Board of Directors of ServiceMaster Management Corporation (i.e., ServiceMaster's Managing General Partner) when it refers to any time prior to the consummation of the Reincorporating Merger and (ii) the Board of Directors of the Successor Parent Corporation when it refers to any time after consummation of the Reincorporation. Each individual who held a management or other employment position with ServiceMaster or The ServiceMaster Company immediately prior to the Reincorporation will hold the same position with the Successor Parent Corporation immediately after the Reincorporation. No payment or equity issuance will be made to the ServiceMaster Management Corporation in its capacity as Managing General Partner of either ServiceMaster or The ServiceMaster Company in connection with Reincorporation except for the pay out of any income allocated its capital account prior to Reincorporation. The Board of Directors has the right to elect not to consummate the Reincorporating Merger. After Reincorporation, ServiceMaster's operations will become subject to federal income tax. ServiceMaster's management currently estimates that the effective tax rate reflected in ServiceMaster's income statement after Reincorporation will be approximately 40 percent. Pro forma earnings per share would have been $0.69 in 1996 (contrasted with $1.13 reported by ServiceMaster), $0.59 in 1995 (contrasted with $0.96 reported by ServiceMaster), and $0.49 in 1994 (contrasted with $0.80 reported by ServiceMaster) if the Reincorporation had occurred at the beginning of each of those periods. These estimates are necessarily subject to change based on changes in circumstances, statutory tax rates, and other relevant factors. 6 SUMMARY COMPARISON OF PARTNERSHIP SHARES AND CORPORATE SHARES As described in greater detail above, the holders of ServiceMaster's Partnership Shares have approved a Reincorporating Merger which is scheduled to occur on or before December 31, 1997. Upon consummation of the Reincorporating Merger, (i) the Successor Parent Corporation will replace ServiceMaster as the ultimate parent entity in the ServiceMaster enterprise and (ii) each Partnership Share outstanding immediately prior to the Reincorporating Merger will be converted into one share of common stock issuable by the Successor Parent Corporation. The following summary compares various characteristics of the Partnership Shares and the Corporate Shares. This summary is qualified in its entirety by the more complete description of the tax and other characteristics of investment in ServiceMaster contained in the 1996 Form 10-K, by other information filed by ServiceMaster or the Successor Parent Corporation with the Commission and incorporated into this Prospectus by reference and by other information in and exhibits to the Registration Statement of which this Prospectus is a part, including the Agreement of Limited Partnership for ServiceMaster as Amended and Restated on January 31, 1992. PARTNERSHIP SHARES CORPORATE SHARES ------------------ ---------------- TAXATION Under the Internal Revenue Code of The Successor Parent Corporation 1986 as amended (the "Code"), will be obligated to pay federal ServiceMaster is not currently ob- income tax on the taxable income ligated to pay federal income tax. realized from its operations. The Code was amended in 1987 to im- pose federal corporate income tax Holders of Corporate Shares gener- on operations of publicly traded ally will not be required to in- partnerships like ServiceMaster be- clude their share of the Successor ginning January 1, 1998. It does Parent Corporation's taxable income not appear likely that any change in computing their own taxable in- in the law will become effective come. which would cause ServiceMaster not to proceed with the Holders of Corporate Shares gener- Reincorporation, which is scheduled ally will be required to include to occur on or before December 31, any dividends received from the 1997. Successor Parent Corporation in computing their own taxable income Under the federal income law appli- except that stockholders which are cable for the balance of 1997, each corporations generally will be al- holder of Partnership Shares is al- lowed a dividend-received deduction located a share of the taxable in- equal to 70% of the amount of divi- come attributable to dends received from the Successor ServiceMaster's operations; the Parent Corporation. amount of the taxable income allo- cable to each shareholder is vari- The earnings of, or any dividends able and is dependent upon when the received from, the Successor Parent shareholder acquired the shares in- Corporation generally will not con- volved, the price paid for those stitute unrelated business taxable shares and other factors. Partner- income to tax-exempt shareholders, ship income allocable to Partner- except in cases where shareholder's ship shareholders who are otherwise investment in the Corporate Shares tax exempt organizations is gener- is debt-financed (within the mean- ally treated as unrelated business ing of section 514 of the Code). taxable income and accordingly may be subject to federal income tax In the event of a sale of a Corpo- despite the fact that such share- rate Share, the selling stockholder holders are generally tax exempt. generally will recognize capital However, ServiceMaster anticipates gain or loss equal to the amount of that the depreciation and other de- the difference between the amount ductions attributable to persons realized and the stockholder's ba- who purchase Partnership Shares be- sis in the Corporate Share. tween the date of this Prospectus and the end of 1997 (whether or not tax exempt) will exceed the income allocable to those shares with the result that no taxable income should be realized in 1997 by rea- son of such purchases. 7 Cash distributions received from ServiceMaster by a holder of its shares are not taxable to that holder except to the extent such distributions exceed the holder's adjusted tax basis in the holder's shares. For purposes of computing gain or loss on the sale of a Part- nership Share, a shareholder's ini- tial tax basis is increased by in- come allocated to the holder and decreased by losses and distribu- tions allocated to the holder. Gen- erally, any gain or loss realized on the sale of a Partnership Share is treated as a capital gain or loss, but some ordinary income may be realized (even if there is no overall gain). No gain or loss will be recognized by reason of the con- version of Partnership Shares into Corporate Shares in the Reincorpo- rating Merger, and each holder's basis in the holder's Partnership Shares will carry over to the Cor- porate Shares such holder receives in exchange. CASH DISTRIBUTIONS AND DIVIDENDS ServiceMaster and its predecessors have paid a cash distribution to It is the present intention of the shareholders every year since 1962. ServiceMaster Board to continue to ServiceMaster has increased the manage the quarterly distribution amount of the distribution paid per process after Reincorporation with share every year since 1970. essentially the same approach and ServiceMaster's Board of Directors philosophy used to determine the intends to continue to pay quar- amount of quarterly distributions terly dividends to the extent prior to Reincorporation. The Board ServiceMaster's operations in the expects that the Reincorporation by future continue to generate avail- itself will not cause a diminution able cash in a manner consistent in the amount of quarterly distri- with past performance. There can of butions paid. The Board reserves course be no guarantee as to what the right to change the approach to the future results will actually be dividend distributions based on or that the pattern of past distri- relevant criteria, including the butions will be continued in the results of ServiceMaster's opera- future. tions and the relative merits of competing opportunities for employ- ment of available cash which may present themselves in the future. ServiceMaster paid cash distribu- tions for 1996 equal to $0.44 per share and paid distributions at- tributable to the first and second quarters of 1997 in the amount of $0.1133 per share per quarter which were paid on January 31 and April 30 1997, respectively. ServiceMaster's Board of Directors expects to authorize cash distribu- tions of $0.12 per share for each of the two remaining calendar quar- ters in 1997. LIQUIDITY AND MARKETABILITY The Partnership Shares are freely After the Reincorporation, the Cor- transferrable and are listed on the porate Shares will be freely New York Stock Exchange. After the transferrable. The Corporate Shares Reincorporation, the Partnership have been approved for listing on Shares will cease to be outstand- the New York Stock Exchange and ing. will be listed on that Exchange from the time of Reincorporation. 8 MANAGEMENT; VOTING RIGHTS ServiceMaster Management Corpora- tion serves as the Managing General The Board of Directors of the Suc- Partner for the ServiceMaster Part- cessor Parent Corporation is di- nership and is authorized by the vided into three classes exactly governing like the Board of ServiceMaster Agreement of Limited Partnership to Management Corporation; one class exercise all management powers over of directors comes up for election the business and affairs of each year, and members of each ServiceMaster and the businesses it class serve a three year term on owns. the Board. ServiceMaster Management Corpora- Immediately after the tion is in turn governed by a Board Reincorporation, the individuals of Directors. The Board appoints who served as directors of officers of ServiceMaster and its ServiceMaster Management Corpora- principal subsidiaries and invests tion immediately prior to the those officers with the same au- Reincorporation will become members thority and responsibility gener- of the Board of the Successor Par- ally exercised by corporate offi- ent Corporation and will serve in cers. the same class on that Board as the class in which they last served on the Partnership's Board. Each indi- vidual who served as an officer of ServiceMaster Partnership immedi- ately prior to the Reincorporation will be appointed by the Board to the same officership position with the Successor Parent Corporation immediately after the Reincorporation. The Board's membership is divided into three classes; one class of directors comes up for election each year, and members of each class serve a three-year term on the Board. The Board itself is re- sponsible for determining the indi- viduals to be elected to the Board in each class every year subject to a requirement in the Certificate of Incorporation that a majority of the positions on the Board are re- served for independent directors as defined in the Certificate. After the Reincorporation, one of the three classes of directors of the Successor Parent Corporation will come up for election each year. The holders of Corporate Shares will have the right to vote on the Board candidates each year. The candidates for whom the highest number of shares are voted will be elected. Each Corporate Share will carry one vote, and each share- holder will have the right to cast a number of votes for each Board position equal to the number of Corporate Shares such shareholder has the power to vote. Holders of Partnership Shares do not vote for members of the Board. Those holders do however have the right to replace ServiceMaster Man- agement Corporation and thereby re- place the entire Board if they de- termine such action to be in their best interests. Such replacement would require the vote of two- thirds of the outstanding Partner- ship Shares and the satisfaction of certain other requirements. If more than 20% of the outstanding Part- nership Shares were owned by a sin- gle shareholder or group working in concert, then removal would also require the approval of two-thirds of the outstanding Partnership Shares that are not so held. Corporate shareholders have the right to remove directors of the Successor Parent Corporation pro- vided that such removal may only be for cause and provided that a supermajority vote is required for such removal. SPECIAL MEETINGS Meetings of the holders of Partner- Special meetings of the holders of ship Shares may be called by the the Corporate Shares may be called Managing General Partner or by only by the Successor Parent Corpo- Shareholders holding at least 20% ration's Chairman or chief execu- of the outstanding shares, provid- tive officer or by a majority of ed, however, that the right of the Corporation's Board of Direc- Shareholders to call a meeting does tors. not include the right to propose amendments to the Partnership Agreement governing ServiceMaster. 9 REDEMPTION The Partnership Shares are gener- ally not subject to mandatory re- The Corporate Shares are not sub- demption. ject to mandatory redemption. LIQUIDATION RIGHTS The holders of the Partnership The ServiceMaster Board has no in- Shares are entitled to share rata- tention of liquidating the Succes- bly in any assets distributable sor Parent Corporation. If such a (after satisfaction of creditors liquidation were to occur, the and the holders of any senior eq- holders of the Corporate Shares uity securities that might hereaf- would be entitled to share ratably ter be issued by the Partnership) in any assets remaining after sat- in liquidation. Because the Part- isfaction of amounts owed creditors nership Shares will be converted and on any preferred stock that the into Corporate Shares prior to the Board of the Successor Parent Cor- liquidation to be accomplished in poration might hereafter elect to connection with the issue. Reincorporation, the holders of the Partnership Shares will not be en- titled to any distribution by rea- son of the liquidation of ServiceMaster into the Successor Parent Corporation as part of the Reincorporation. LIMITED LIABILITY Holders of Partnership Shares gen- erally do not have personal liabil- The Corporate Shares will be fully ity for obligations of paid and nonassessable. Ownership ServiceMaster. of Corporate Shares will not cause the owner to have personal liabil- ity for any obligations of the Suc- cessor Parent Corporation. CONTINUITY OF EXISTENCE Section 1.5 of the Partnership The Successor Parent Corporation's Agreement provides that the Part- Certificate of Incorporation pro- nership shall continue in existence vides that the Corporation will until December 31, 2036 provided have perpetual existence. that such date can be changed if the change is approved by the Man- aging General Partner and the hold- ers of a majority of the outstand- ing Partnership Shares. FEDERAL SECURITIES REPORTING ServiceMaster is subject to the re- porting requirements of the Ex- After the Reincorporation, the Suc- change Act and files annual, quar- cessor Parent Corporation will be terly and other reports thereunder. subject to the reporting require- ServiceMaster also provides annual ments of the Exchange Act and will reports to Partnership sharehold- file annual and quarterly reports ers. thereunder and will also file other reports when required or when it otherwise decides additional re- ports should be filed. The Succes- sor Parent Corporation will also issue to its shareholders an annual proxy statement and an annual re- port to shareholders. 10 PLAN OF DISTRIBUTION ServiceMaster may sell the ServiceMaster Shares in or outside the United States through underwriters or dealers, directly to one or more purchasers, or through agents. The Prospectus Supplement with respect to the ServiceMaster Shares will set forth the terms of the offering of the ServiceMaster Shares, including the name or names of any underwriters, dealers or agents, the purchase price of the ServiceMaster Shares and the proceeds to ServiceMaster from such sale, any delayed delivery arrangements, any underwriting discounts and other items constituting underwriters' compensation, the initial public offering price, and any discounts or concessions allowed or re-allowed or paid to dealers. If firm commitments arrangements with underwriters are used in the sale, the ServiceMaster Shares will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The ServiceMaster Shares may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. The underwriter or underwriters with respect to a particular underwritten offering of ServiceMaster Shares will be named in the Prospectus Supplement relating to such offering, and, if an underwriting syndicate is used, the managing underwriter or underwriters will be set forth on the cover of such Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement relating thereto, the obligations of the underwriters or agents to purchase the ServiceMaster Shares will be subject to conditions precedent, and the underwriters will be obligated to purchase all the ServiceMaster Shares if any are purchased. The initial public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may be changed from time to time. If dealers are used in the sale of ServiceMaster Shares with respect to which this Prospectus is delivered, ServiceMaster will sell such ServiceMaster Shares to the dealers as principals. The dealers may then resell such ServiceMaster Shares to the public at varying prices to be determined by such dealers at the time of resale. The names of the dealers and the terms of the transaction will be set forth in the Prospectus Supplement relating thereto. ServiceMaster Shares may be sold directly by ServiceMaster or through agents designated by ServiceMaster from time to time at fixed prices, which may be changed, or at varying prices determined at the time of sale. Any agent involved in the offer or sale of the ServiceMaster Shares with respect to which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement relating thereto. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. ServiceMaster Shares may be sold directly by ServiceMaster to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. The terms of any such sales will be described in the applicable Prospectus Supplement. In connection with the sale of the ServiceMaster Shares, underwriters or agents may receive compensation from ServiceMaster or from purchasers of ServiceMaster Shares for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters, agents and dealers participating in the distribution of the ServiceMaster Shares may be deemed to be underwriters, and any discounts or commissions received by them from The ServiceMaster Company and any profit on the resale of the ServiceMaster Shares by them may be deemed to be underwriting discounts or commissions under the Securities Act. If so indicated in the Prospectus Supplement, ServiceMaster will authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase ServiceMaster Shares from ServiceMaster at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement, and the Prospectus Supplement will set forth the commission payable for solicitation of such contracts. 11 Agents, dealers and underwriters may be entitled under agreements entered into with ServiceMaster to indemnification by ServiceMaster against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments that such agents, dealers, or underwriters may be required to make with respect thereto. Agents, dealers, and underwriters may be customers of, engage in transactions with or perform services for the ServiceMaster and its subsidiaries in the ordinary course of business. Certain of the underwriters, dealers or agents and their affiliates may be customers of, engage in transactions with and perform services for the ServiceMaster and/or its subsidiaries in the ordinary course of business. VALIDITY OF SERVICEMASTER SHARES The validity of the Partnership Shares and Corporate Shares issuable in the offerings registered on the Registration Statement of which this Prospectus is a part will be passed upon for ServiceMaster by Vernon T. Squires, Esq., Senior Vice President and General Counsel of ServiceMaster. As of July 22, 1997, Vernon T. Squires owned 255,887 shares and options to acquire 54,000 shares of limited partnership interests of ServiceMaster. EXPERTS The financial statements and schedule of the Parent Partnership incorporated by reference in this Prospectus and elsewhere in the registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and incorporated by reference in reliance upon the authority of said firm as experts in giving said reports. 12 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the issuance and distribution of the securities being registered, other than underwriting compensation, are: S.E.C. Registration Fee........................................ $287,879* Legal Fees and Expenses........................................ 100,000 Accounting Fees and Expenses................................... 30,000 Trustee's Fees and Expenses.................................... 10,000 Rating Agency Fees............................................. 300,000 Blue Sky Fees and Expenses..................................... 15,000 Printing and Engraving Fees.................................... 100,000 Miscellaneous.................................................. 17,121 -------- Total...................................................... $860,000 ========
- -------- *Actual. All other amounts are estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. ServiceMaster Management Corporation (the "Managing General Partner") and ServiceMaster Incorporated of Delaware (the "Successor Parent Corporation") are incorporated under the laws of the State of Delaware. Section 145 of the DGCL, inter alia ("Section 145") provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer, director, employee or agent is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses that such officer or director has actually and reasonably incurred. The Certificate of Incorporation for the Managing General Partner and the Certificate of Incorporation for the Successor Parent Corporation each provides that, to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended, a director of the Managing General Partner or the Successor Parent Corporation shall not be liable to the Managing General Partner or the Successor Parent Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. II-1 ServiceMaster Limited Partnership (the "Parent Partnership") and The ServiceMaster Company Limited Partnership ("The ServiceMaster Company") are limited partnerships formed under the laws of the State of Delaware. Section 108 of the Delaware Revised Uniform Limited Partnership Act provides that a Delaware partnership may, subject to such standards and restrictions, if any, as are set forth in its partnership agreement, may and shall have the power to, indemnify and hold harmless any partner or other person from and against any and all claims and demands whatsoever. Article 7.9 of the ServiceMaster Limited Partnership Agreement of Limited Partnership ("Article 7.9") obligates the Parent Partnership to indemnify to the fullest extent allowable by law any person who at any time serves as a director or executive officer of the Parent Partnership, The ServiceMaster Company, ServiceMaster Management Services, Inc. or ServiceMaster Consumer Services, Inc., against any claim which arises in connection with his or her service with the Parent Partnership, including any subsidiary, any ServiceMaster employee benefit plan, or in any other capacity in which he or she is asked to serve by the Managing General Partner's Board of Directors or Chief Executive Officer. The Board of Directors of the Managing General Partner or its Chief Executive Officer may extend the indemnification protections to any other person to the extent they deem appropriate. Article 7.9 is intended to allow indemnification in accordance with and subject to Article 7.9 and to the fullest extent permitted by applicable law, including but not limited to the Delaware Revised Uniform Limited Partnership Act. Article 7.9(c) provides that, except to the extent that ServiceMaster otherwise expressly agrees in writing, the Parent Partnership will not be obligated to reimburse any person for or otherwise indemnify any person against: (a) any obligation such person may have under any written contract except to the extent such obligation arises by reason of any action taken by such person to satisfy, settle or otherwise deal with any claim against which such person is entitled to indemnification; (b) except as otherwise expressly provided by a separate written agreement, any income taxes payable by reason of salary, bonus or other income or gain actually realized by such person; (c) any liability imposed by contract or applicable law resulting from such person's competition against the ServiceMaster enterprise; and (d) any obligation to pay an amount up to the value personally realized by such person by stealing or by any other action which constitutes a criminal felony. With certain exceptions, the Parent Partnership will not be obligated to indemnify any person in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Managing General Partner's Board of Directors. Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145. Article 7.9(o) of the Parent Partnership's Partnership Agreement further provides that ServiceMaster may purchase and maintain insurance on behalf of any person who is or was a director or executive officer of the Parent Partnership, The ServiceMaster Company, ServiceMaster Management Service, Inc. or ServiceMaster Consumer Services, Inc. or is or was serving in any other capacity with the Parent Partnership or any other corporation at the request of the Managing General Partner's Board of Directors or Chief Executive Officer against any expense, liability or loss, whether or not ServiceMaster would have the power to indemnify such person against such liability under Article 7.9. All of the Managing General Partner's directors and the officers of the Parent Partnership, The ServiceMaster Company, and the Successor Parent Partnership are covered by insurance policies maintained and held in effect by the Parent Partnership against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act of 1933. The Certificate of Incorporation for the Successor Parent Corporation contains indemnification provisions substantially identical to those in Article 7.9 of the Parent Partnership's Partnership Agreement. II-2 ITEM 16. EXHIBITS. *1.1 Form of Underwriting Agreement for the Debt Securities. **4.1 Indenture, dated as of August 15, 1997, among The ServiceMaster Company, as issuer, ServiceMaster, as guar- antor, and Harris Trust and Savings Bank, as Trustee. **4.2 Form of Debt Securities relating to Senior Debt Securities (included in Exhibit 4.1). **5.1 Opinion of Vernon T. Squires, Senior Vice President and General Counsel of ServiceMaster. **12.1 Statement and Computation of ratio of earnings to fixed charges. **23.1 Consent of Vernon T. Squires (included in Exhibit 5.1). *23.2 Consent of Arthur Andersen LLP. **24.1 Power of Attorney. **25.1 Form T-1 Statement of Eligibility of the Trustee.
- -------- *Filed herewith. **Previously filed. ITEM 17. UNDERTAKINGS. (A) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 (B) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act that is incorporated by reference in the registration statement) shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (C) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S- 3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DOWNERS GROVE, ILLINOIS, ON THE DAY OF AUGUST 6, 1997. The ServiceMaster Company Limited Partnership, As Registrant By: ServiceMaster Management Corporation Its Managing General Partner /s/ Vernon T. Squires By: _________________________________ Vernon T. Squires Senior Vice President and General Counsel PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SERVICEMASTER LIMITED PARTNERSHIP CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DOWNERS GROVE, ILLINOIS, ON THE DAY OF AUGUST 6, 1997. ServiceMaster Limited Partnership, As Registrant By: ServiceMaster Management Corporation Its Managing General Partner /s/ Vernon T. Squires By: _________________________________ Vernon T. Squires Senior Vice President and General Counsel PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON AUGUST 6, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
SIGNATURE TITLE --------- ----- * Chairman of ServiceMaster Limited ___________________________________________ Partnership, The ServiceMaster Company C. William Pollard Limited Partnership, and ServiceMaster Management Corporation and Director of ServiceMaster Management Corporation * President and Chief Executive Officer of ___________________________________________ ServiceMaster Limited Partnership, The Carlos H. Cantu ServiceMaster Company Limited Partnership, and ServiceMaster Management Corporation and Director of ServiceMaster Management Corporation
II-5
SIGNATURE TITLE --------- ----- * Vice Chairman of ServiceMaster Limited ___________________________________________ Partnership, The ServiceMaster Company Charles W. Stair Limited Partnership, and ServiceMaster Management Corporation and Director of ServiceMaster Management Corporation * Vice Chairman of ServiceMaster Limited ___________________________________________ Partnership, The ServiceMaster Company Philip B. Rooney Limited Partnership, and ServiceMaster Management Corporation and Director of ServiceMaster Management Corporation * Director of ServiceMaster Management ___________________________________________ Corporation Paul W. Berezny, Jr. * Director of ServiceMaster Management ___________________________________________ Corporation Henry O. Boswell * Director of ServiceMaster Management ___________________________________________ Corporation Brian Griffiths * Director of ServiceMaster Management ___________________________________________ Corporation Sidney E. Harris * Director of ServiceMaster Management ___________________________________________ Corporation Herbert P. Hess * Director of ServiceMaster Management ___________________________________________ Corporation Michele M. Hunt * Director of ServiceMaster Management ___________________________________________ Corporation Gunther H. Knoedler * Director of ServiceMaster Management ___________________________________________ Corporation James D. McLennan * Director of ServiceMaster Management ___________________________________________ Corporation Vincent C. Nelson * Director of ServiceMaster Management ___________________________________________ Corporation Kay A. Orr * Director of ServiceMaster Management ___________________________________________ Corporation Dallen W. Peterson
II-6
SIGNATURE TITLE --------- ----- * Director of ServiceMaster Management ___________________________________________ Corporation Burton E. Sorensen * Director of ServiceMaster Management ___________________________________________ Corporation David K. Wessner
*The undersigned, by signing his name hereto, does sign and execute this Amendment No. 1 to the Registration Statement pursuant to the Powers of Attorney executed by the above-named officers and directors of ServiceMaster Incorporated of Delaware and filed with the Securities and Exchange Commission on behalf of such officers and directors. /s/ Vernon T. Squires _____________________________________ Vernon T. Squires Attorney in fact PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SERVICEMASTER INCORPORATED OF DELAWARE CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DOWNERS GROVE, ILLINOIS, ON THE DAY OF AUGUST 6, 1997. ServiceMaster Incorporated of Delaware, As Registrant /s/ Vernon T. Squires By: _________________________________ Vernon T. Squires Senior Vice President and Secretary PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON AUGUST 6, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED: * Vice President, Treasurer and Director of ___________________________________________ ServiceMaster Incorporated of Delaware Ernest J. Mrozek (Principal Executive Officer) /s/ Vernon T. Squires Vice President and Director of ___________________________________________ ServiceMaster Incorporated of Delaware Vernon T. Squires * Vice President, Assistant Treasurer and ___________________________________________ Director of ServiceMaster Incorporated of Bruce T. Duncan Delaware (Principal Financial and Accounting Officer)
*The undersigned, by signing his name hereto, does sign and execute this Amendment No. 1 to the Registration Statement pursuant to the Powers of Attorney executed by the above-named officers and directors of ServiceMaster Incorporated of Delaware and filed with the Securities and Exchange Commission on behalf of such officers and directors. /s/ Vernon T. Squires _____________________________________ Vernon T. Squires Attorney in fact II-7 EXHIBIT INDEX
SEQUENTIAL EXHIBIT PAGE NUMBER DOCUMENT DESCRIPTION NUMBER ------- -------------------- ---------- *1.1 Form of Underwriting Agreement for the Debt Securities. **4.1 Indenture, dated as of August 15, 1997, among The ServiceMaster Company, as issuer, ServiceMaster, as guarantor, and Harris Trust and Savings Bank, as Trust- ee. **4.2 Form of Debt Securities relating to Senior Debt Securi- ties (included in Exhibit 4.1). **5.1 Opinion of Vernon T. Squires, Senior Vice President and General Counsel of ServiceMaster. **12.1 Statement and Computation of ratio of earnings to fixed charges. **23.1 Consent of Vernon T. Squires (included in Exhibit 5.1). *23.2 Consent of Arthur Andersen LLP. **24.1 Power of Attorney. **25.1 Form T-1 Statement of Eligibility of the Trustee.
- -------- * Filed herewith. ** Previously filed. EX-1.1 2 UNDERWRITING AGREEMENT THE SERVICEMASTER COMPANY LIMITED PARTNERSHIP [DEBT SECURITIES] Underwriting Agreement [DATE] To the Representatives named in Schedule I hereto of the Underwriters named in Schedule II hereto Ladies and Gentlemen: The ServiceMaster Company Limited Partnership, a Delaware limited partnership (the "Company"), proposes to issue and sell to the underwriters named in Schedule II hereto (the "Underwriters"), for whom you are acting as representatives (the "Representatives"), the principal amount of its debt securities identified in Schedule I hereto (the "Securities"), to be issued under the indenture specified in Schedule I hereto (the "Indenture") between the Company, ServiceMaster Limited Partnership, a Delaware limited partnership (the "Guarantor") and the Trustee identified in such Schedule (the "Trustee"). The Securities are to be unconditionally guaranteed (the "Guarantees") as to payment of principal, premium, if any, and interest by the Guarantor upon the basis and on the terms specified in the Indenture. If the firm or firms listed in Schedule II hereto include only the firm or firms listed in Schedule I hereto, then the terms "Underwriters" and "Representatives", as used herein, shall each be deemed to refer to such firm or firms. The Company and the Guarantor have prepared and filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Securities Act"), a registration statement (the file number of which is set forth in Schedule I hereto) on Form S-3, relating to certain debt securities (the "Shelf Securities") to be issued from time to time by the Company. The Company and the Guarantor also have filed with, or propose to file with, the Commission pursuant to Rule 424 under the Securities Act a prospectus supplement specifically relating to the Securities. The registration statement as amended to the date of this Agreement is hereinafter referred to as the "Registration Statement" and the related prospectus covering the Shelf Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Basic Prospectus". The Basic Prospectus as supplemented by the prospectus supplement specifically relating to the Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Prospectus". If the Company and the Guarantor have filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"), then any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462 Registration Statement. Any reference in this Agreement to the Registration Statement, the Basic Prospectus, any preliminary form of Prospectus (a "preliminary prospectus") previously filed with the Commission pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act which were filed under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Exchange Act") on or before the date of this Agreement or the date of the Basic Prospectus, any preliminary prospectus or the Prospectus, as the case may be; and any reference to "amend", "amendment" or "supplement" with respect to the Registration Statement, the Basic Prospectus, any preliminary prospectus or the Prospectus shall be deemed to refer to and include any documents filed under the Exchange Act after the date of this Agreement, or the date of the Basic Prospectus, any preliminary prospectus or the Prospectus, as the case may be, which are deemed to be incorporated by reference therein. The Company and the Guarantor hereby agree with the Underwriters as follows: 1. The Company agrees to issue and sell the Securities to the several Underwriters, and the Guarantor agrees to guarantee the Securities, as hereinafter provided, and each Underwriter, on the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated agrees to purchase, severally and not jointly, from the Company the respective principal amount of Securities set forth opposite such Underwriter's name in Schedule II hereto at the purchase price set forth in Schedule I hereto plus accrued interest, if any, from the date specified in Schedule I hereto to the date of payment and delivery. 2. Each of the Company and the Guarantor understand that the several Underwriters intend (i) to make a public offering of their respective portions of the Securities and (ii) initially to offer the Securities upon the terms set forth in the Prospectus. 3. Payment for the Securities shall be made by wire transfer in immediately available funds to the account specified by the Company to the Representatives, no later than noon the Business Day (as defined below) prior to the Closing Date (as defined below), on the date and at the time and place set forth in Schedule I hereto (or at such other time and place on the same or such other date, not later than the fifth Business Day (as defined below) thereafter, as you and the Company may agree in writing). As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. The time and date of such payment and delivery with respect to the Securities are referred to herein as the "Closing Date". Payment for the Securities shall be made against delivery to the nominee of The Depository Trust Company for the respective accounts of the several Underwriters of the Securities of one or more global notes (the "Global Note") representing the Securities, with any transfer taxes payable in connection with the transfer to the Underwriters of the Securities duly paid by the Company. The Global Note will be made available for inspection by the Representatives at the office of_________________________________________ not later than 1:00 P.M., New York City time, on the Business Day prior to the Closing Date. 2 4. The Company and the Guarantor jointly and severally represent and warrant to each Underwriter that: (a) the Registration Statement has been declared effective by the Commission under the Securities Act; no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or, to the knowledge of the Company and the Guarantor, threatened by the Commission; and the Registration Statement and Prospectus (as amended or supplemented if the Company or the Guarantor shall have furnished any amendments or supplements thereto) comply, or will comply, as the case may be, in all material respects with the Securities Act and the Trust Indenture Act of 1939, as amended and the rules and regulations of the Commission thereunder (collectively, the "Trust Indenture Act"), and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the date of the Prospectus and any amendment or supplement thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Prospectus, as amended or supplemented at the Closing Date, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties shall not apply to (i) that part of the Registration Statement which constitutes the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of the Trustee, and (ii) statements or omissions in the Registration Statement or the Prospectus made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company and the Guarantor in writing by such Underwriter through the Representatives expressly for use therein; (b) the documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (c) the financial statements, and the related notes thereto, included or incorporated by reference in the Registration Statement and the Prospectus present fairly the consolidated financial position of the Guarantor and its consolidated subsidiaries as of 3 the dates indicated and the results of their operations and the changes in their consolidated cash flows for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, and the supporting schedules included or incorporated by reference in the Registration Statement present fairly the information required to be stated therein; and the pro forma financial information, and the related notes thereto, included or incorporated by reference in the Registration Statement and the Prospectus has been prepared in accordance with the applicable requirements of the Securities Act and the Exchange Act, as applicable and is based upon good faith estimates and assumptions believed by the Company to be reasonable; (d) since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in any equity interest or long-term debt of the Guarantor or any of its subsidiaries, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business, prospects, management, financial position, shareholders' equity or results of operations of the Guarantor and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Prospectus; and except as set forth or contemplated in the Prospectus neither the Guarantor nor any of its subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) material to the Guarantor and its subsidiaries taken as a whole; (e) each of the Company and the Guarantor has been duly organized and is validly existing as a limited partnership in good standing under the laws of the State of Delaware with power and authority to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign limited partnership for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, other than where the failure to be so qualified or in good standing would not have a material adverse effect on the Guarantor and its subsidiaries taken as a whole; (f) each of the Guarantor's significant subsidiaries (as defined in the Commission's Regulation S-X) has been duly organized and is validly existing as a corporation or limited partnership under the laws of its jurisdiction of organization with power and authority to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation or limited partnership for the transaction of business and is in good standing under the laws of each jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, other than where the failure to be so qualified or in good standing would not have a material adverse effect on the Guarantor and its subsidiaries taken as a whole; and all the outstanding partnership interests or shares of capital stock, as the case may be, of each subsidiary of the Guarantor is owned as indicated in Schedule III. The partner-ship interests that are owned by the Guarantor, directly or indirectly, have been duly authorized and validly issued, are fully-paid and non-assessable, and (except as described 4 in the Prospectus) are owned by the Guarantor, directly or indirectly, free and clear of all liens, encumbrances, security interests and claims; (g) this Agreement has been duly authorized, executed and delivered by each of the Company and the Guarantor; (h) the Securities have been duly authorized, and, when executed, authenticated and issued under the Indenture and delivered to and paid for in accordance with this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and binding obligations of the Company entitled to the benefits provided by the Indenture; the Guarantees have been duly authorized, and, upon due execution, authentication and delivery of the Securities and the placement of the Guarantees thereon, the Guarantees will have been duly executed, issued and delivered and will constitute valid and binding obligations of the Guarantor entitled to the benefits provided by the Indenture; the Indenture has been duly authorized and upon effectiveness of the Registration Statement will have been duly qualified under the Trust Indenture Act and, when executed and delivered by the Company and the Trustee, the Indenture will constitute a valid and binding instrument; and the Securities, the Guarantees and the Indenture will conform to the descriptions thereof in the Prospectus; (i) neither the Guarantor nor any of its subsidiaries, is, or with the giving of notice or lapse of time or both would be, in violation of or in default under its charter or Certificate of Incorporation or By-Laws or agreement of limited partnership, as the case may be, or any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Guarantor or any of its subsidiaries, is a party or by which it or any of them or any of their respective properties is bound, except for violations and defaults which individually and in the aggregate would not reasonably be expected to have a material adverse effect on the Guarantor and its subsidiaries, taken as a whole; the issue and sale of the Securities and the Guarantees and the performance by each of the Company and the Guarantor of all its obligations under the Securities, the Guarantees, the Indenture and this Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Guarantor or any of its subsidiaries is a party or by which the Guarantor or any of its subsidiaries is bound or to which any of the property or assets of the Guarantor or any of its subsidiaries, is subject that is material to the Guarantor and its subsidiaries taken as a whole, nor will any such action result in any violation of the provisions of the agreement of limited partnership of the Company or the Guarantor or any applicable law or statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Guarantor or any of its subsidiaries, or any of their respective properties; and no consent, approval, authorization, order, license, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities and the Guarantees or the consummation by the Company or the Guarantor of the transactions contemplated by this Agreement or the Indenture, except such consents, 5 approvals, authorizations, orders, licenses, registrations or qualifications as have been obtained under the Securities Act, the Trust Indenture Act and as may be required under state securities or Blue Sky Laws in connection with the purchase and distribution of the Securities and the Guarantees by the Underwriters; (j) other than as set forth or contemplated in the Prospectus, there are no legal or governmental investigations, actions, suits or proceedings pending or, to the knowledge of the Company and the Guarantor, threatened against or affecting the Guarantor or any of its subsidiaries, or any of their respective properties or to which the Guarantor or any of its subsidiaries, is or may be a party or to which any property of the Guarantor or any of its subsidiaries, is or may be the subject which, if determined adversely to the Guarantor or any of its subsidiaries, could individually or in the aggregate have, or reasonably be expected to have, a material adverse effect on the general affairs, business, prospects, management, financial position, shareholders' equity or results of operations of the Guarantor and its subsidiaries taken as a whole and, to the best of the Company's and the Guarantor's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; and there are no statutes, regulations, contracts or other documents that are required to be filed as an exhibit to the Registration Statement or required to be described in the Registration Statement or the Prospectus which are not filed or described as required; (k) immediately after any sale of Securities by the Company hereunder, the aggregate amount of Securities which have been issued and sold by the Company hereunder and of any securities of the Company (other than the Securities) that shall have been issued and sold pursuant to the Registration Statement will not exceed the amount of securities registered under the Registration Statement; (l) Arthur Andersen LLP, who have certified certain financial statements of the Guarantor and its subsidiaries, are independent public accountants as required by the Securities Act; (m) the Guarantor and its subsidiaries, have good and marketable title in fee simple to all items of real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described or referred to in the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made or proposed to be made of such property by the Guarantor and its subsidiaries, and any real property and buildings held under lease by the Guarantor and its subsidiaries, are held by them under valid, existing and enforceable leases with such exceptions as are not material and do not interfere with the use made or proposed to be made of such property and buildings by the Guarantor or its subsidiaries; (n) neither the Company nor the Guarantor is and, after giving effect to the offering and sale of the Securities, neither the Company nor the Guarantor will be an "investment company" or, to the Company's and the Guarantor's knowledge, an entity 6 "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (o) each of the Company and the Guarantor has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government of Cuba or with any person or affiliate located in Cuba; (p) the Guarantor and its subsidiaries have filed all federal, state, local and foreign tax returns which have been required to be filed and have paid all taxes shown thereon and all assessments received by them or any of them to the extent that such taxes have become due and are not being contested in good faith; and, except as disclosed in the Registration Statement and the Prospectus, there is no tax deficiency which has been or might reasonably be expected to be asserted or threatened against the Guarantor or any subsidiary; (q) each of the Guarantor and its subsidiaries, owns, possesses or has obtained all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all federal, state, local and other governmental authorities (including foreign regulatory agencies), all self-regulatory organizations and all courts and other tribunals, domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof, and neither the Guarantor nor any subsidiary has received any actual notice of any proceeding relating to revocation or modification of any such license, permit, certificate, consent, order, approval or other authorization, except as described in the Registration Statement and the Prospectus; and each of the Guarantor and its subsidiaries, is in compliance with all laws and regulations relating to the conduct of its business as conducted as of the date hereof; (r) there are no existing or, to the best knowledge of the Company and the Guarantor, threatened labor disputes with the employees of the Guarantor or any of its subsidiaries, which would reasonably be expected to have a material adverse effect on the Guarantor and its subsidiaries taken as a whole; (s) the Guarantor and its subsidiaries, (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the Guarantor and its subsidiaries taken as a whole; 7 (t) in the ordinary course of its business, the Guarantor conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Guarantor and its subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review and except as disclosed in the Guarantor's Form 10-K for the year ended December 31, 1996, the Guarantor has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the Guarantor and subsidiaries taken as a whole; (u) each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA") that is maintained, administered or contributed to by the Guarantor or any of its affiliates for employees or former employees of the Guarantor and its affiliates has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended ("Code"). No prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code has occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption. For each such plan which is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA no "accumulated funding deficiency" as defined in Section 412 of the Code has been incurred, whether or not waived, and the fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid contributions) exceeded the present value of all benefits accrued under such plan determined using reasonable actuarial assumptions. (v) Each of the Guarantor and its subsidiaries owns or possesses, or can acquire, or reasonably believes it can acquire, on reasonable terms, rights adequate to the present operations of the businesses now operated by it under the patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, the "Intellectual Property") presently employed by it in connection with the businesses now operated by it, except to the extent that the failure to own, possess or acquire such rights would not, singly or in the aggregate, reasonably be expected to have a material adverse effect on the Guarantor and its subsidiaries taken as a whole, and, neither the Guarantor nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing. 5. Each of the Company and the Guarantor jointly and severally covenants and agrees with each of the several Underwriters as follows: 8 (a) to file the Prospectus in a form approved by you pursuant to Rule 424 under the Securities Act not later than the Commission's close of business on the second Business Day following the date of determination of the offering price of the Securities or, if applicable, such earlier time as may be required by Rule 424(b); (b) to furnish to each Representative and counsel for the Underwriters, a signed copy of the Registration Statement (as originally filed) and each amendment thereto, in each case including exhibits and documents incorporated by reference therein and, during the period mentioned in paragraph (e) below, to furnish each of the Underwriters as many copies of the Prospectus (including all amendments and supplements thereto) and documents incorporated by reference therein as you may reasonably request; (c) from the date hereof and prior to the Closing Date, to furnish to you a copy of any proposed amendment or supplement to the Registration Statement or the Prospectus, for your review, and not to file any such proposed amendment or supplement to which you reasonably object; (d) to file promptly all reports and any definitive proxy or information statements required to be filed by the Company or the Guarantor with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of the Securities, and during such same period, to advise you promptly, and to confirm such advice in writing, (i) when any amendment to the Registration Statement shall have become effective, (ii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation or threatening of any proceeding for that purpose, and (iv) of the receipt by the Company or the Guarantor of any notification with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and to use its best efforts to prevent the issuance of any such stop order or notification and, if issued, to obtain as soon as possible the withdrawal thereof; (e) if, during such period after the first date of the public offering of the Securities as in the opinion of counsel for the Underwriters a prospectus relating to the Securities is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with law, forthwith to prepare and furnish to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Securities may have been sold by you on behalf of the Underwriters and to any other dealers upon request, such amendments or supplements to the Prospectus as may be necessary so that the statements in the 9 Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law; (f) to endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request and to continue such qualification in effect so long as reasonably required for distribution of the Securities; provided that neither the Company nor the Guarantor shall be required to file a general consent to service of process in any jurisdiction; (g) to make generally available to its security holders and to you as soon as practicable an earnings statement which shall satisfy the provisions of Section 11 (a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Guarantor and its subsidiaries occurring after the "effective date" (as defined in Rule 158) of the Registration Statement; (h) so long as the Securities are outstanding, to furnish to you upon request copies of all reports or other communications (financial or other) furnished to holders of Securities, and copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange; (i) during the period beginning on the date hereof and continuing to and including the Business Day following the Closing Date, not to offer, sell, contract to sell or otherwise dispose of any debt securities of or guaranteed by the Company or the Guarantor which are substantially similar to the Securities or the Guarantees; (j) to use the net proceeds received by the Company from the sale of the Securities pursuant to this Agreement in the manner specified in the Prospectus under the caption "Use of Proceeds"; (k) whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without limiting the generality of the foregoing, all costs and expenses (i) incident to the preparation, issuance, execution, authentication and delivery of the Securities and the Guarantees, including any expenses of the Trustee, (ii) incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Prospectus and any preliminary prospectus (including in each case all exhibits, amendments and supplements thereto), (iii) incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities and the Guarantees under the laws of such jurisdictions as the Underwriters may designate (including reasonable fees of counsel for the Underwriters and their disbursements), (iv) related to any filing with National Association of Securities Dealers, Inc., (v) in connection with the printing (including word processing and duplication costs) and delivery of this Agreement, the 10 Indenture, the Preliminary and Supplemental Blue Sky Memoranda and any Legal Investment Survey and the furnishing to Underwriters and dealers of a reasonable number of copies of the Registration Statement and the Prospectus, (vi) payable to rating agencies in connection with the rating of the Securities and (vii) the cost and charges of any transfer agent. 6. The several obligations of the Underwriters hereunder shall be subject to the following conditions: (a) the representations and warranties of the Company and the Guarantor contained herein are true and correct on and as of the Closing Date as if made on and as of the Closing Date and each of the Company and the Guarantor shall have complied with all agreements and all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; (b) the Prospectus shall have been filed with the Commission pursuant to Rule 424 within the applicable time period prescribed for such filing by the rules and regulations under the Securities Act; no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the Commission, and all requests for additional information on the part of the Commission shall have been complied with to your satisfaction; (c) subsequent to the execution and delivery of this Agreement, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any downgrading, (ii) any intended or potential downgrading or (iii) any review or possible change that does not indicate an improvement in the rating accorded any securities of or guaranteed by the Company or the Guarantor by any "nationally recognized statistical rating organization", as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; (d) since the respective dates as of which information is given in the Prospectus there shall not have been any change in any equity interest or long-term debt of the Guarantor or any of its subsidiaries, or any material adverse change, or any development involving a material adverse change, in or affecting the general affairs, business, prospects, management, financial position, shareholders' equity or results of operations of the Guarantor and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus, the effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in the Prospectus; and neither the Guarantor nor any of its subsidiaries, has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court 11 or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; (e) the Representatives shall have received from each of the Company and the Guarantor, on and as of the Closing Date, a certificate of an authorized officer of the Company and the Guarantor, holding the office or title equal or more senior in rank to that of vice president, with specific knowledge about the financial matters of the Company and the Guarantor satisfactory to you to the effect set forth in subsections (a) through (c) (with respect to the respective representations, warranties, agreements and conditions of the Company and the Guarantor) of this Section and to the further effect that there has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, business, prospects, management, financial position, shareholders' equity or results of operations of the Guarantor and its subsidiaries, taken as a whole from that set forth or contemplated in the Registration Statement. (f) Vernon T. Squires, Esq., Senior Vice President and General Counsel of the Company and the Guarantor, shall have furnished to you his written opinion, dated the Closing Date, in form and substance satisfactory to you, to the effect as set forth in Exhibit A hereto. (g) Kirkland & Ellis, counsel for the Company and the Guarantor, shall have furnished to you their written opinion, dated the Closing Date, in form and substance satisfactory to you, to the effect as set forth in Exhibit B hereto. (h) on the date hereof and on the Closing Date, Arthur Andersen LLP shall have furnished to you letters, dated such date, in form and substance satisfactory to you, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus; (i) you shall have received on and as of the Closing Date an opinion of Davis Polk & Wardwell, counsel to the Underwriters, with respect to the validity of the Indenture, the Securities, the Guarantees, the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; and (j) on or prior to the Closing Date, the Company shall have furnished to the Representatives such further certificates and documents as the Representatives shall reasonably request. 7. The Company and the Guarantor will jointly and severally indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and 12 against any and all losses, claims, damages and liabilities (including without limitation the legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Company and/or the Guarantor shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company or the Guarantor in writing by such Underwriter through the Representatives expressly for use therein; provided that the foregoing indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter (or to the benefit of any person controlling such Underwriter) from whom the person asserting any such losses, claims, damages or liabilities purchased Securities if such untrue statement or omission or alleged untrue statement or omission made in such preliminary prospectus is eliminated or remedied in the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) and if a copy of the Prospectus (as so amended or supplemented, but excluding the documents incorporated by reference therein), if required by law to have been furnished to such person at or prior to the written confirmation of the sale of such Securities to such person, shall not have been so furnished. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantor and the directors and officers of each who sign the Registration Statement and each person who controls the Company or the Guarantor within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Guarantor to each Underwriter, but only with reference to information relating to such Underwriter furnished to the Company or the Guarantor in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any preliminary prospectus. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "Indemnified Person") shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the 13 Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for the Underwriters and such control persons of Underwriters shall be designated in writing by the first of the named Representatives on Schedule I hereto and any such separate firm for the Company, the Guarantor and the directors and officers of each who sign the Registration Statement and such control persons of the Company, the Guarantor or authorized representatives shall be designated in writing by the Company or the Guarantor. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there shall be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement (or delivered a notice to such Indemnified Person setting forth its good faith objection to such request's conformity to the provisions of this Section. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding. If the indemnification provided for in the first and second paragraphs of this Section 7 is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor on the one hand and the Underwriters on the other hand from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantor on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantor on the one hand and the Underwriters on the other shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Securities (before deducting expenses) received by the Company and the total underwriting discounts and the commissions received by the Underwriters 14 bear to the aggregate public offering price of the Securities. The relative fault of the Company and the Guarantor on the one hand and the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantor or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantor and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 7 are several in proportion to the respective principal amount of the Securities set forth opposite their names in Schedule I hereto, and not joint. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company and the Guarantor set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Securities. 8. Notwithstanding anything herein contained, this Agreement may be terminated in the absolute discretion of the Representatives, by notice given to the Company or the Guarantor, if after the execution and delivery of this Agreement (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of or guaranteed by the Company or the Guarantor shall have 15 been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in the judgment of the Representatives, is material and adverse and which, in the judgment of the Representatives, makes it impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus. 9. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Securities which it or they have agreed to purchase under this Agreement, and the aggregate principal amount of Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of the Securities, the other Underwriters shall be obligated severally in the proportions that the principal amount of Securities set forth opposite their respective names in Schedule I hereto bears to the aggregate principal amount of Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Representatives may specify, to purchase the Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the principal amount of Securities that any Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9 by an amount in excess of one-tenth of such principal amount of Securities without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Securities and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased, and arrangements satisfactory to the Representatives and the Company for the purchase of such Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company or the Guarantor. In any such case either the Representatives or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company or the Guarantor to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company or the Guarantor shall be unable to perform its obligations under this Agreement or any condition of the Underwriters' obligations cannot be fulfilled, each of the Company and the Guarantor jointly and severally agrees to reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and expenses of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering of Securities and the Guarantees. Notwithstanding the foregoing, neither the Company nor the Guarantor shall be liable for the expenses of the Underwriters if the Underwriters terminate this Agreement pursuant to Section 8(i), 8(iii) or 8(iv). 16 11. This Agreement shall inure to the benefit of and be binding upon the Company, the Guarantor, the Underwriters, any controlling persons referred to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. 12. Any action by the Underwriters hereunder may be taken by you jointly or by the first of the named Representatives set forth in Schedule I hereto alone on behalf of the Underwriters, and any such action taken by you jointly or by the first of the named Representatives set forth in Schedule I hereto alone shall be binding upon the Underwriters. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be given at the address set forth in Schedule II hereto. Notices to the Company and/or the Guarantor shall be given to it at One ServiceMaster Way, Downers Grove, Illinois 60515; Attention: Vernon T. Squires, Esq., Senior Vice President and General Counsel and Attention: Eric R. Zarnikow, Vice President and Treasurer. 13. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 17 14. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof. Very truly yours, The ServiceMaster Company Limited Partnership By Service Master Management Corporation its Managing General Partner By: ----------------------------------- Name: Title: ServiceMaster Limited Partnership By Service Master Management Corporation its Managing General Partner By: ----------------------------------- Name: Title: Accepted:________, 199__ [LEAD MANAGER] [CO-MANAGER] Acting severally on behalf of [itself/themselves] and the several Underwriters listed in Schedule II hereto. By: [LEAD MANAGER] By: ------------------- Name: Title: 18 SCHEDULE I
Representatives: Underwriting Agreement dated: _________, ____ Registration Statement No: [333- ] Title of Securities: [__ %] [Floating Rate] [Zero Coupon] [Notes] [Debentures] due __. Aggregate principal amount: $ --------------------------------------------- Price to Public [__% of the principal amount of the Securities, plus accrued interest, if any, from ______, 19__, to the Closing Date. Indenture: Indenture dated as of July __, 1997 between the Company, ServiceMaster Limited Partnership, as Guarantor, and __________ as Trustee. Maturity: ----------------------------------------------- Interest Rate: [__%] [Zero Coupon] [See Floating Rate Provisions] Interest Payment Dates: [months and dates] Optional Redemption Provisions: [No provisions for redemption] [The Securities may be redeemed, otherwise than through the sinking fund, in whole or in part at the option of the Company, [in the amount of [$] or an integral multiple thereof,] [on or after , at the following redemption prices (expressed in percentages of principal amount). If [redeemed on or before , %, and if] redeemed during the 12-month period beginning , Redemption Year Price ---- -----------
19 and thereafter] at 100% of their principal amount, together in each case with accrued interest to the redemption date] [on any interest payment date falling in or after , , at the election of the Company, at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption.] [Other possible redemption provisions, such as mandatory redemption upon occurrence of certain events or redemption for changes in tax law] [Restriction on refunding] Sinking Fund Provisions: [No sinking fund provisions] [The Securities are entitled to the benefit of a sinking fund to retire [$] principal amount of Securities on in each of the years through at 100% of their principal amount plus accrued interest] [,together with [cumulative] [noncumulative] redemptions at the option of the Company to retire an additional [$] principal amount of Securities in the years through at 100% of their principal amount plus accrued interest]. Other Provisions: [For floating rate securities, initial annual interest rate will be % through [and thereafter will be adjusted [monthly] [on each , , and ] [to an annual rate of % above the average rate for -year [month] [securities] [certificates of deposit] issued by and [insert names of banks].] [and the annual interest rate [thereafter] [from through ] will be the interest yield equivalent of the weekly average per annum market discount rate for -month Treasury bills plus % of Interest Differential (the excess, if any, of (i) then current weekly average per annum secondary market yield for -month certificates of deposit over (ii) then current interest yield equivalent of the weekly average per annum market discount rate for -month Treasury bills); [from and thereafter the rate will be the then current interest yield equivalent plus % of Interest Differential].] 20 Closing Date and Time of Delivery: ----------------------------------------- Closing Location: ----------------------------------------- Address for Notices to Underwriters: 21 SCHEDULE II
Principal Amount of Securities To Be Purchased ------------------------------ Underwriter Total...................................... $
22 SCHEDULE III Subsidiaries - ------------ 23 EXHIBIT A Form of ServiceMaster General Counsel Opinion [Lead Manager] [Co-Manager] As Representatives of the Underwriters named in Schedule II c/o [Lead Manager] [address] Ladies/Gentlemen: I am rendering this opinion in my capacity as Senior Vice President and General Counsel of The ServiceMaster Company Limited Partnership (the "Company") and ServiceMaster Limited Partnership (the "Guarantor") in response to the requirement in Section 6(f) of the Underwriting Agreement dated August ___, 1997 (the "Underwriting Agreement") between the Company, the Guarantor and the underwriters named in Schedule II thereto (the "Underwriters"). Every term which is defined or given a special meaning in the Underwriting Agreement and which is not given a different meaning in this letter has the same meaning whenever it is used in this letter as the meaning it is given in the Underwriting Agreement. Together, the Underwriting Agreement, the Indenture, the Securities and the Guarantees are sometimes referred to herein as the "Transaction Documents." In connection with the preparation of this letter, I have, among other things, read: (a) the registration statement on Form S-3 (Registration No. 333-_____________) filed by the Company and the Guarantor with the Securities and Exchange Commission (the "Commission") on July 28, 1997 for the purpose of registering the offering of the shelf securities under the Securities Act of 1933, as amended (the "Securities Act") (which registration statement, as amended by pre-effective Amendment No. 1, including the information incorporated therein by reference, and as constituted at the time it became effective is herein called the "Registration Statement"); (b) the Company's Prospectus Supplement dated ___________________, 1997 (the "Prospectus Supplement") to the Core Prospectus for Debt Securities dated ______________________, 1997 (the "Debt Core Prospectus") covering the offering of the Securities through the Underwriters, in the form which includes the initial offering price and related terms (which Debt Core Prospectus, as supplemented by the Prospectus Supplement, including the information incorporated therein by reference, is herein called the "Prospectus"); (c) an executed copy of the Underwriting Agreement; (d) an executed copy of the Indenture, the Securities and the Guarantees to be delivered on the date hereof; (e) A certified copy of resolutions (the "Board Resolutions") adopted on May 9, 1997 by the Board of Directors of ServiceMaster Management Corporation (the "ServiceMaster Board"), a certified copy of resolutions adopted on August _____, 1997 by the Finance Committee of the ServiceMaster Board, and a certified copy of an Implementing Authorization executed by certain officers appointed in the Board Resolutions; and (f) Copies of all certificates and other documents delivered today at the closing of the purchase and sale of the Securities under the Underwriting Agreement. Subject to the assumptions, qualifications and limitations which are identified in this letter, I advise you that: 1. Each of the Company and the Guarantor is a limited partnership duly formed, existing and in good standing under the Delaware Revised Uniform Limited Partnership Act (the "Delaware Partnership Act"). Each of the Company and the Guarantor is qualified to do business and is in good standing in the State of Illinois. The Guarantor is not required to qualify to do business under the laws of any other jurisdiction other than where the failure to be so qualified would not have a material adverse effect on the Guarantor. 2. Each of the significant subsidiaries of the Company (the "Subsidiaries") is a limited partnership or corporation existing and in good standing under the laws of its respective jurisdiction of organization. Each of the Company and each Subsidiary is qualified to do business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business, so as to require such qualification, other than where the failure to be so qualified would not have a material adverse effect on the Company and its subsidiaries taken as a whole. The equity of each of the Subsidiaries is owned as indicated in Schedule A attached hereto. The term "significant subsidiaries" means the subsidiaries listed as significant subsidiaries in Schedule B attached hereto. The Company's Treasurer has advised me that he has determined that the subsidiaries listed on Schedule B are the only subsidiaries of the Guarantor which constitute "significant subsidiaries" of the Guarantor within the meaning of that term under the Commission's Regulation S-X. 3. Each of the Company, the Guarantor and each of the Subsidiaries has the power to own and lease its properties and to conduct its business as described in the Prospectus. 4. The execution of the Transaction Documents by the Company and the Guarantor has been duly authorized by all necessary actions by the ServiceMaster Board, the Finance Committee of the ServiceMaster Board and by Authorized Officers qualified to act under the resolutions relevant to the issuance and sale of the Securities pursuant to the Underwriting Agreement. No other approval is required under the Certificate of Limited Partnership or the A-2 Amended and Restated Partnership Agreement of the Company or the Guarantor or under the Delaware Partnership Act. 5. Neither the Guarantor nor any of its Subsidiaries is, or with the giving of notice or lapse of time or both would be, in violation of or in default under, its charter or Certificate of Incorporation or By-Laws or agreement of limited partnership, as the case may be. The execution and delivery of the Underwriting Agreement by the Company and the Guarantor, the performance of their respective obligations under the Underwriting Agreement, the Indenture, the Securities and the Guarantees and the Company's sale of the Securities to you in accordance with the Underwriting Agreement do not (i) violate the applicable Certificate of Limited Partnership or Amended and Restated Partnership Agreement of the Company or the Guarantor or (ii) constitute a violation by the Company or the Guarantor of any applicable provision of any law, statute, rule, regulation or court order (except that I express no opinion in this paragraph as to (A) any prohibition against fraud or misrepresentation or (B) whether performance of the indemnification or contribution provisions in the Underwriting Agreement would be permitted or (C) compliance with any disclosure requirement, but I refer you to the third paragraph following clause (d) of numbered paragraph 9 hereof, or (iii) breach, or result in a default under, any existing obligation of the Company or Guarantor or any of its subsidiaries under any of the agreements with which I am familiar. 6. After due inquiry, I have no knowledge about any legal or governmental proceeding that is pending or threatened against the Company or the Guarantor or any of its subsidiaries that has caused me to conclude that such proceeding is required by Item 103 of Regulation S-K to be described in the Prospectus but that is not so described. I have no knowledge of any contract, document, or court order to which the Company or the Guarantor is a party or to which any of their respective properties is subject that has caused me to conclude that such contract, document or court order is required to be described in the Prospectus or Registration Statement but is not so described or is required to be filed as an exhibit to the Registration Statement but has not been so filed. 7. The Company or the Guarantor was not required to obtain any consent, approval, authorization or order of governmental agency for the issuance, delivery and sale of the Securities or Guarantees under the Underwriting Agreement except for the order by the Commission declaring the Registration Statement effective. 8. The statements under Item 3 in the Guarantor's Form 10-K Annual Report for the fiscal year ended December 31, 1996 were correct in all material respects on the date that the Annual Report was filed with the Commission. Insofar as the statements constitute a summary of the legal matters, documents or proceedings referred to therein, such statements adequately present the information called for with respect to such legal matters, documents or proceedings. 9. Nothing has come to my attention that has caused me to conclude that any of the Guarantor or any of its subsidiaries: A-3 (a) does not own or have the rights under any license, permit, certificate, consent, order, approval or other authorization from or has not made any declaration or filing with, any federal, state, local or other governmental authority (including foreign regulatory agencies) or any court or tribunal, domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof; or (b) has received any actual notice of any proceeding relating to revocation or modification of any license, permit, certificate, consent, order, approval or other authorization cited in immediately preceding clause (a); or (c) does not have any material right required to use the Intellectual Property employed by it in connection with the business conducted by it as of the date hereof. (d) is, or with the giving of notice or lapse of time or both would be, in violation of or in default under any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument known to me to which the Guarantor or any of its subsidiaries, is a party or by which it or any of them or any of them or any of their respective subsidiaries is bound, I make no representation that I have independently verified the accuracy, completeness or fairness of the Prospectus or Registration Statement or that the actions taken in connection with the preparation of the Registration Statement or Prospectus (including the actions described in the next paragraph) were sufficient to cause the Prospectus or Registration Statement to be accurate, complete or fair. I am not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the Prospectus or the Registration Statement except to the extent otherwise explicitly indicated in numbered paragraph 8 above. I can however confirm that I have participated in conferences with representatives of the Company, representatives of the Underwriters, counsel for the Underwriters and representatives of the independent accountants for the Company during which disclosures in the Registration Statement and Prospectus and related matters were discussed. In addition, I have reviewed certain records maintained by the Company. Based upon my participation in the conferences and my document review identified in the preceding paragraph, my understanding of applicable law and the experience I have gained in my practice thereunder, I can, however, advise you that nothing has come to my attention that has caused me to conclude that (i) the Registration Statement at its effective date contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Debt Core Prospectus on the date it bears or on the date of this letter or the Prospectus Supplement on the date it bears or on the date of this letter contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (iii) the Registration Statement or the Debt Core Prospectus, each as of the effective date of the Registration Statement, or the Prospectus A-4 Supplement on the date it bears, did not comply in all material respects with the form and the requirements of Form S-3 or the Trust Indenture Act, or that Form S-3 is not the proper form for registration of the Securities under the Securities Act (iv) any of the periodic reports incorporated by reference into the Registration Statement as of the date of the filing of such report with the Commission appeared on its face not to comply as to form in all material respects with the Exchange Act, and the rules and regulations of the Commission thereunder. Except for the activities described in the immediately preceding section of this letter, I have not undertaken any investigation to determine the facts upon which the advice in this letter is based. I have not undertaken any investigation or search of court records for purposes of this letter. I have assumed for purposes of this letter; each document I have reviewed for purposes of this letter is accurate and complete, each such document that is an original is authentic, each such document that is a copy conforms to an authentic original, and all signatures on each such document are genuine; that the Underwriting Agreement and every other agreement I have examined for purposes of this letter constitutes a valid and binding obligation of each party to that document and that each such party has satisfied all legal requirements that are applicable to such party to the extent necessary to entitle such party to enforce such agreement (except that I make no such assumption with respect to the Company); and that you have acted in good faith and without notice of any fact which has caused you to reach any conclusion contrary to any of the conclusions provided in this letter. I have also made other assumptions which I believe to be appropriate for purposes of this letter. In preparing this letter I have relied without independent verification upon: (i) information contained in certificates obtained from governmental authorities; (ii) factual information represented to be true in the Underwriting Agreement and other documents specifically identified at the beginning of this letter as having been read by me; (iii) factual information provided to me by the other representatives of the Company; and (iv) factual information I have obtained from such other sources as I have deemed reasonable. I have assumed that the information upon which I have relied is accurate and does not omit disclosures necessary to prevent such information from being misleading. For purposes of numbered paragraphs 1 and 2 (other than the last sentence of paragraph 2), I have relied exclusively upon certificates issued by governmental authorities in the relevant jurisdictions and such opinion is not intended to provide any conclusion or assurance beyond that conveyed by those certificates. I confirm that I do not have knowledge that has caused me to conclude that my reliance and assumptions cited in the two immediately preceding paragraphs are unwarranted. Whenever this letter provides advice about (or based upon) my knowledge of any particular information or about any information which has or has not come to my attention such advice is based entirely on my conscious awareness at the time this letter is delivered on the date it bears. My advice on every legal issue addressed in this letter is based exclusively on the internal law of Illinois, the Delaware Partnership Law, or the federal law of the United States, and represents my opinion as to how that issue would be resolved were it to be considered by the A-5 highest court in the jurisdiction which enacted such law. I express no opinion with respect to any state securities (or "blue sky") laws or regulations or any laws, statutes governmental rules or regulations which in my experience are not applicable generally to transactions of the kind covered by the Underwriting Agreement. None of the opinions or other advice contained in this letter considers or covers (i) any financial statements or supporting schedules (or any notes to any such statements or schedules) or other financial or statistical information set forth or incorporated by reference in (or omitted from) the Registration Statement or the Prospectus or (ii) any rules and regulations of the National Association of Securities Dealers, Inc. relating to the compensation of underwriters. My advice on each legal issue addressed in this letter represents my opinion as to how that issue would be resolved were it to be considered by the highest court of the jurisdiction upon whose law my opinion on that issue is based. The manner in which any particular issue would be treated in any actual court case would depend in part on facts and circumstances particular to the case, and this letter is not intended to guarantee the outcome of any legal dispute which may arise in the future. This letter speaks as of the time of its delivery on the date it bears. I do not assume any obligation to provide you with any subsequent opinion or advice by reason of any fact about which I did not have knowledge at that time, by reason of any change subsequent to that time in any law other governmental requirement or interpretation thereof covered by any of my opinions or advice, or for any other reason. This letter may be relied upon by the Underwriters only for the purpose served by the provision in the Underwriting Agreement cited in the initial paragraph of this letter in response to which it has been delivered. Without my written consent: (i) no person other than the Underwriters may rely on this letter for any purpose; (ii) this letter may not be cited or quoted in any financial statement, prospectus, private placement memorandum or other similar document; (iii) this letter may not be cited or quoted in any other document or communication which might encourage reliance upon this letter by any person or for any purpose excluded by the restrictions in this paragraph; and (iv) copies of this letter may not be furnished to anyone for purposes of encouraging such reliance. Sincerely, Vernon T. Squires Senior Vice President and General Counsel A-6 EXHIBIT B Form of Kirkland & Ellis Opinion [Lead Manager] [Co-Manager] As Representatives of the Underwriters named in Schedule II c/o [Lead Manager] [address] Ladies/Gentlemen: We are issuing this letter in our capacity as special counsel for The ServiceMaster Company Limited Partnership (the "Company") and ServiceMaster Limited Partnership (the "Guarantor") in response to the requirement in Section 6(g) of the Underwriting Agreement dated August __, 1997 (the "Underwriting Agreement") between the Company, the Guarantor and the underwriters named in Schedule II thereto (the "Underwriters"). Every term which is defined or given a special meaning in the Underwriting Agreement and which is not given a different meaning in this letter has the same meaning whenever it is used in this letter as the meaning it is given in the Underwriting Agreement. Together, the Underwriting Agreement, the Indenture and the Securities are sometimes referred to herein as the "Transaction Documents". In connection with the preparation of this letter, we have, among other things, read: (a) the registration statement on Form S-3 (Registration No. 333-_______) filed by the Company and the Guarantor with the Securities and Exchange Commission (the "Commission") on July 28, 1997 for the purpose of registering the offering of the Shelf Securities under the Securities Act of 1933, as amended (the "Securities Act") (which registration statement, as amended by pre-effective Amendment No. 1, including the information incorporated therein by reference, and as constituted at the time it became effective is herein called the "Registration Statement"); (b) the Company's Prospectus Supplement dated _________, 1997 (the "Prospectus Supplement") to the Core Prospectus for Debt Securities dated ______, 1997 (the "Debt Core Prospectus") covering the offering of the Securities through the Underwriters, in the form which includes the initial offering price and related terms (which Debt Core Prospectus, as supplemented by the Prospectus Supplement, including the information incorporated therein by reference is herein called the "Prospectus"); (c) an executed copy of the Underwriting Agreement; (d) an executed copy of the Indenture, the Securities and the Guarantees to be delivered on the date hereof; (e) A certified copy of resolutions adopted on May 9, 1997 by the Board of Directors of ServiceMaster Management Corporation (the "ServiceMaster Board"), a certified copy of resolutions adopted on August __, 1997 by the Finance Committee of the ServiceMaster Board, and a certified copy of an Implementing Authorization executed by certain Authorized Officers appointed in those Board resolutions; and (f) Copies of all certificates and other documents delivered today at the closing of the purchase and sale of the Securities under the Underwriting Agreement. Subject to the assumptions, qualifications and limitations which are identified in this letter, we advise you that: 1. Each of the Company and the Guarantor is a limited partnership duly formed, existing and in good standing under the Delaware Revised Uniform Limited Partnership Act (the "Delaware Partnership Act"). 2. With respect to each of the Company and the Guarantor, the Delaware Partnership Act and the Certificate of Partnership and the Amended and Restated Partnership Agreement in effect for that partnership grants to that partnership the power necessary to own and lease its properties and to conduct its business as described in the Prospectus. 3. The Underwriting Agreement has been duly authorized, executed and delivered on behalf of the Company and the Guarantor. 4. The Indenture has been duly executed and delivered on behalf of the Company and the Guarantor. The Indenture is a valid and binding obligation of the Company and the Guarantor, and (assuming the due authorization, execution and delivery thereof by the other parties thereto) is enforceable against the Company and the Guarantor in accordance with its terms. 5. The Securities have been duly executed and delivered by the Company and, when paid for by the Underwriters in accordance with the terms of the Underwriting Agreement (assuming the due authorization, execution and delivery of the Indenture by the Trustee and due authentication and delivery of the Securities by the Trustee in accordance with the Indenture), will constitute Securities under the terms of the Indenture, will constitute the valid and binding obligations of the Company, and will be enforceable against the Company in accordance with B-2 their terms; and the Guarantees have been duly executed and delivered by the Guarantor and, when the Securities have been paid for by the Underwriters in accordance with the terms of the Underwriting Agreement (assuming the due authorization, execution and delivery of the Indenture by the Trustee and due authentication and delivery of the Securities by the Trustee in accordance with the Indenture), will constitute Guarantees under the terms of the Indenture, will constitute the valid and binding obligations of the Guarantor and will be enforceable against the Guarantor in accordance with their terms. 6. The execution and delivery of the Underwriting Agreement on behalf of the Company and the Guarantor, the performance of the respective obligations of the Company and the Guarantor under the Underwriting Agreement, the Indenture, the Securities and the Guarantees and the Company's sale of the Securities to you in accordance with the Underwriting Agreement do not (i) violate the applicable Certificate of Limited Partnership or Amended and Restated Partnership Agreement of the Company or the Guarantor or (ii) constitute a violation by the Company or the Guarantor of any applicable provision of any law, statute, rule or regulation (except that we express no opinion in this paragraph as to compliance with any disclosure requirement or any prohibition against fraud or misrepresentation or as to whether performance of the indemnification or contribution provisions in the Underwriting Agreement would be permitted) or (iii) breach, or result in a default under, any existing obligation of the Company or Guarantor or any of its subsidiaries under any of the agreements set forth on Schedule A attached hereto which, representatives of the Company have advised us, include all material debt agreements and instruments of or binding on the Company or the Guarantor or any of the Guarantor's subsidiaries. 7. We have no knowledge about any legal or governmental proceeding that is pending or threatened against the Company or the Guarantor or any of its subsidiaries that has caused us to conclude that such proceeding is required by Item 103 of Regulation S-K to be described in the Prospectus but that is not so described. We have no knowledge about any contract, document or court order to which the Company or the Guarantor is a party or to which any of their respective properties is subject that has caused us to conclude that such contract, document or court order is required to be described in the Prospectus or the Registration Statement but is not so described or is required to be filed as an exhibit to the Registration Statement but has not been so filed. 8. Neither the Company nor the Guarantor is, or immediately after the sale of the Securities to the Underwriters and application of the net proceeds therefrom as described in the Prospectus Supplement under the caption "Use of Proceeds") will be, an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. 9. Neither the Company nor the Guarantor was required to obtain any consent, approval, authorization or order of governmental agency for the issuance, delivery and sale of the B-3 Securities of Guarantees under the Underwriting Agreement except for the order by the Commission declaring the Registration Statement effective. 10. The statements in the Prospectus and Registration Statement under the heading "Description of Securities" and in the Registration Statement in Item 15, to the extent that such statements summarize legal matters, documents or proceedings are correct in all material respects and adequately present the information called for with respect to such legal matters, documents or proceedings. *** The purpose of our professional engagement was not to establish factual matters, and preparation of the Registration Statement involved many determinations of a wholly or partially nonlegal character. We make no representations that we have independently verified the accuracy, completeness or fairness of the Prospectus or Registration Statement or that the actions taken in connection with the preparation of the Registration Statement or Prospectus (including the actions described in the next paragraph) were sufficient to cause the Prospectus or Registration Statement to be accurate, complete or fair. We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the Prospectus or the Registration Statement except to the extent otherwise explicitly indicated in numbered paragraph 10 above. We can however confirm that we have participated in conferences with representatives of the Company, representatives of the Underwriters, counsel for the Underwriters and representatives of the independent accountants for the Company during which disclosures in the Registration Statement and Prospectus and related matters were discussed. In addition, we have reviewed certain corporate records furnished to us by the Company. We were not retained by the Company to prepare the periodic reports, proxy statements, or other materials incorporated in the Prospectus or Registration Statement, and our knowledge about these materials is limited. We were not present at any meeting of the ServiceMaster Board or its Finance Committee at which any resolution relevant to this letter was discussed or adopted. Based upon our participation in the conferences and our document review identified in the preceding paragraph, our understanding of applicable law and the experience we have gained in our practice thereunder and relying as to materiality to a large extent upon the opinions and statements of officers of the Company, we can, however, advise you that nothing has come to our attention that has caused us to conclude that (i) the Registration Statement at its effective date contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Debt Core Prospectus on the date it bears or on the date of this letter contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or (iii) the Registration B-4 Statement or the Debt Core Prospectus, each as of the effective date of the Registration Statement, or the Prospectus Supplement on the date it bears did not comply in all material respects with the form and the requirements of Form S-3 or the Trust Indenture Act, or that Form S-3 is not the proper form for registration of the Securities under the Securities Act. Except for the activities described in the immediately preceding section of this letter, we have not undertaken any investigation to determine the facts upon which the advice in this letter is based. We have not undertaken any investigation or search of court records for purposes of this letter. We have assumed for purposes of this letter: each document we have reviewed for purposes of this letter is accurate and complete, each such document that is an original is authentic, each such document that is a copy conforms to an authentic original, and all signatures on each such document are genuine; that the Underwriting Agreement and every other agreement we have examined for purposes of this letter constitutes a valid and binding obligation of each party to that document and that each such party has satisfied all legal requirements that are applicable to such party to the extent necessary to entitle such party to enforce such agreement (except that we make no such assumption with respect to the Company); and that you have acted in good faith and without notice of any fact which has caused you to reach any conclusion contrary to any of the conclusions provided in this letter. We have also made other assumptions which we believe to be appropriate for purposes of this letter. In preparing this letter we have relied without independent verification upon: (i) information contained in certificates obtained from governmental authorities dated on or after the day prior to the date of this letter; (ii) factual information represented to be true in the Underwriting Agreement and other documents specifically identified at the beginning of this letter as having been read by us; (iii) factual information provided to us by the company or its representatives as of the date of this letter; and (iv) factual information we have obtained on or after the day prior to the date of this letter from such other sources as we have deemed reasonable. We have assumed that there has been no relevant change or development between the dates as of which the information cited in the preceding sentence was given and the date of this letter and that the information upon which we have relied is accurate and does not omit disclosures necessary to prevent such information from being misleading. For purposes of numbered paragraph 1, we have relied exclusively upon certificates issued by governmental authorities in the relevant jurisdictions and such opinion is not intended to provide any conclusion or assurance beyond that conveyed by those certificates. We confirm that nothing has come to our attention that has caused us to conclude that our reliance and assumptions cited in the two immediately preceding paragraphs are unwarranted. Whenever this letter provides advice about (or based upon) our knowledge of any particular information or about any information which has or has not come to our attention such advice is based entirely on the conscious awareness at the time this letter is delivered on the date it bears B-5 by the lawyers with Kirkland & Ellis at that time who spent substantial time representing the Company in connection with the offering effected pursuant to the Prospectus. Each opinion in this letter that any particular agreement is a valid and binding obligation or is enforceable in accordance with its terms is subject to: (i) the effect of bankruptcy, insolvency, fraudulent conveyance and other similar laws and judicially developed doctrines in this area such as substantive consolidation and equitable subordination; (ii) the effect of general principles of equity; and (iii) other commonly recognized statutory and judicial constraints on enforceability including statutes of limitations. "General principles of equity" include but are not limited to: principles limiting the availability of specific performance and injunctive relief; principles which limit the availability of specific performance and injunctive relief; principles which limit the availability of a remedy under certain circumstances where another remedy has been elected; principles requiring reasonableness, good faith and fair dealing in the performance and enforcement of an agreement by the party seeking enforcement; principles which may permit a party to cure a material failure to perform its obligations; and principles affording equitable defenses such as waiver, laches and estoppel. Our advice on every legal issue addressed in this letter is based exclusively on the internal law of New York, the Delaware Partnership Act, or the federal law of the United States, and represents our opinion as to how that issue would be resolved were it to be considered by the highest court in the jurisdiction which enacted such law. We express no opinion with respect to any state securities (or "blue sky") laws or regulations or any laws, statutes governmental rules or regulations which in our experience are not applicable generally to transactions of the kind covered by the Underwriting Agreement. None of the opinions or other advice contained in this letter considers or covers (i) any financial statements or supporting schedules (or any notes to any such statements or schedules) or other financial or statistical information set forth or incorporated by reference in (or omitted from) the Registration Statement or the Prospectus or (ii) any rules and regulation of the National Association of Securities Dealers, Inc. relating to the compensation or underwriters. Our advice on each legal issue addressed in this letter represents our opinion as to how that issue would be resolved were it to be considered by the highest court of the jurisdiction upon whose law our opinion on that issue is based. The manner in which any particular issue would be treated in any actual court case would depend in part on facts and circumstances particular to the case, and this letter is not intended to guarantee the outcome of any legal dispute which may arise in the future. It is possible that some terms of the Transaction Documents may not prove enforceable for reasons other than those cited in this letter should an actual enforcement action be brought, but (subject to all the exceptions, qualifications, exclusions and other limitations contained in this letter) such unenforceability would not in our opinion prevent you from realizing the principal benefits purported to be provided by the those terms. B-6 This letter speaks as of the time of its delivery on the date it bears. We do not assume any obligation to provide you with any subsequent opinion or advice by reason of any fact about which we did not have knowledge at that time, by reason of any change subsequent to that time in any law other governmental requirement or interpretation thereof covered by any of our opinions or advice, or for any other reason. This letter may be relied upon by the Underwriters only for the purpose served by the provision in the Underwriting Agreement cited in the initial paragraph of this letter in response to which it has been delivered. Without our written consent: (i) no person other than the Underwriters may rely on this letter for any purpose; (ii) this letter may not be cited or quoted in any financial statement, prospectus, private placement memorandum or other similar document; KIRKLAND & ELLIS B-7 EX-23.2 3 CONSENT OF ARTHUR ANDERSEN LLP Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Amendment No. 1 to the Registration Statement 333-32167 of our report dated January 22, 1997 (February 24, 1997 as to the pending transaction with WMX Technologies, Inc. and the acquisition of Barefoot, Inc., which are discussed in the footnotes in the financial statements) incorporated by reference in the ServiceMaster Limited Partnership's Form 10-K for the year ended December 31, 1996 and to all references to our firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP August 6, 1997 -----END PRIVACY-ENHANCED MESSAGE-----