EXHIBIT 10.2
July 1, 2001
Xx. Xxxxxxx X. Xxxxx
[Home Address]
Dear Xxxxx:
On behalf of The ServiceMaster Company and its Board of Directors, we
are writing to you to set forth the understanding between ServiceMaster and you
regarding the terms of ServiceMaster's retention of your services.
In consideration of the mutual promises and agreements contained in
this Agreement, ServiceMaster and you agree, as of July 1, 2001 (the "Effective
Date"), as follows:
1. SERVICES. On and after the Effective Date and until the date you
cease service as a director of ServiceMaster, you shall provide consulting
services to ServiceMaster and its subsidiaries. Such services shall be related
to the management of ServiceMaster and its subsidiaries. Such services shall be
furnished in connection with your duties as a director of ServiceMaster and as
and when the Board of Directors, Chairman, or President and CEO may reasonably
request, subject to your reasonable availability and giving due consideration to
your other responsibilities.
2. COMPENSATION FOR SERVICES. In consideration of your providing the
services described in paragraph 1, ServiceMaster shall compensate you at the
same level and in the same manner as ServiceMaster compensates individuals for
service as non-employee directors of ServiceMaster, commencing on the Effective
Date and ending on the date services pursuant to paragraph 1 cease or the
parties agree to terminate this Agreement.
3. REIMBURSEMENT OF EXPENSES. ServiceMaster shall reimburse you for all
unreimbursed expenses properly incurred by you in the course of the performance
of your duties pursuant to this Agreement.
4. FEDERAL AND STATE DEDUCTIONS. ServiceMaster shall deduct from the
amounts payable by ServiceMaster pursuant to paragraph 2, the amount of all
required federal and state withholding deductions.
5. INSURANCE BENEFITS.
(a) Group Health, Dental, Life, Accidental Death and Dismemberment,
Short-Term Disability and Long-Term Disability Insurance. On and after the
Effective Date and until the later of the date of your death or Xxxxxxxx Xxxxx'x
death, ServiceMaster shall
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provide to you and your dependents group health, dental, life, accidental death
and dismemberment, short-term disability and long-term disability insurance on
the same terms as such insurance is provided to active executive officers of
ServiceMaster and their dependents.
(b) Compensation Plans. On and after the Effective Date, you shall be
eligible to participate in ServiceMaster's Employee Share Purchase Plan, Profit
Sharing and Retirement Plan and other ServiceMaster plans in accordance with the
terms of those plans.
6. OFFICE SPACE. On and after the Effective Date, as long as you are
providing the services pursuant to paragraph 1, and until the date you cease
service as a director of ServiceMaster, ServiceMaster shall provide to you
office space of size and character, and furnished in a manner, comparable to the
office space provided to you immediately prior to the Effective Date. Such
office space shall be located at the principal executive office of ServiceMaster
located in Downers Grove, Illinois.
7. OTHER BENEFITS.
(a) Automobile. On the Effective Date, you shall have the option to
purchase your Company automobile in accordance with terms offered to other
executives under ServiceMaster's Executive Company Vehicle Policy. Should you
choose not to purchase the vehicle, the vehicle should be turned in at
ServiceMaster's Downers Grove headquarters.
(b) Club Membership. On the Effective Date, ServiceMaster shall cease
to pay, or reimburse you for, the fees and annual dues of any club membership.
8. STOCK OPTIONS. As of the Effective Date, options to purchase
ServiceMaster common stock held by you shall continue in accordance with its
terms. Your outstanding options to purchase ServiceMaster common stock are as
follows:
No. of Options
Grant Date Outstanding at 5/21/01 Exercise Price Expiration Date
---------- ---------------------- -------------- ---------------
1/29/99 25,000 $18.0750 1/28/09
4/27/01 15,000 $10.0200 4/26/08
9. NON-COMPETITION COVENANT. (a) On and after the Effective Date and
until the date you cease service as a director of ServiceMaster (the
"Non-Competition Period"), you shall not in any manner, directly or indirectly
(whether as owner, stockholder, director, officer, employee, principal, agent,
consultant, independent contractor, partner or otherwise), in any geographic
area in which ServiceMaster or any subsidiary of ServiceMaster is then
conducting business, own, manage, operate, control, participate in, perform
services for, or otherwise carry on, a business similar to or competitive with
the business conducted by ServiceMaster or any subsidiary of ServiceMaster.
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(b) You further agree that during the Noncompetition Period you shall
not (i) in any manner, directly or indirectly, induce or attempt to induce any
employee of ServiceMaster or any subsidiary of ServiceMaster to terminate or
abandon his or her employment for any purpose whatsoever, or (ii) in connection
with any business to which paragraph 9(a) applies, call on, service, solicit or
otherwise do business with any current or prospective customer of ServiceMaster
or any subsidiary of ServiceMaster.
(c) Nothing in this paragraph 9 shall prohibit you from being (i) a
stockholder in a mutual fund or a diversified investment company or (ii) a
passive owner of not more than one percent (1%) of the outstanding stock of any
class of a corporation, any securities of which are publicly traded, so long as
you have no active participation in the business of such corporation.
(d) If, at any time of enforcement of this paragraph 9, a court or an
arbitrator holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court or
arbitrator shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law.
10. CONFIDENTIALITY. You shall not, at any time, make use of or
disclose, directly or indirectly, any (i) trade secret or other confidential or
secret information of ServiceMaster or any subsidiary of ServiceMaster or (ii)
other technical, business, proprietary or financial information of ServiceMaster
or any subsidiary of ServiceMaster not available to the public generally or to
the competitors of ServiceMaster or any subsidiary of ServiceMaster
("Confidential Information"), except to the extent that such Confidential
Information (a) becomes a matter of public record or is published in a
newspaper, magazine or other periodical available to the general public, other
than as a result of any act or omission of you or (b) is required to be
disclosed by any law, regulation or order of any court or regulatory commission,
department or agency.
11. DEFENSE OF CLAIMS. You shall cooperate with ServiceMaster in the
defense of any claims that may be made against ServiceMaster, to the extent that
such claims may relate to services performed by you for ServiceMaster or its
subsidiaries. ServiceMaster shall reimburse you for all reasonable expenses in
connection therewith, including travel expenses.
12. REMEDIES. You acknowledge that ServiceMaster would be irreparably
injured by a violation of paragraph 9 or paragraph 10 of this Agreement, and you
agree that ServiceMaster shall be entitled to an injunction restraining you from
any actual or threatened breach of paragraph 9 or paragraph 10 of this Agreement
or to any other appropriate equitable remedy without any bond or other security
being required. If you shall be the prevailing party in case of any dispute or
disagreement arising out of or connected with any provision of this Agreement,
you shall be entitled to recover your reasonable attorneys' and all reasonable
expenses incurred in connection with any related proceeding (whether in court or
occurring pursuant to arbitration) including, without
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limitation, any and all charges which may be made for the cost of arbitration
and the fees of any arbitrators, together with interest at the statutory rate
from the date on which such obligation shall have arisen.
13. NO OTHER COMPENSATION. You agree that all compensation and other
benefits payable by ServiceMaster under this Agreement shall be in lieu of any
and all compensation otherwise payable to you for service on and after the
Effective Date as a Corporate Officer or other employee of ServiceMaster.
Notwithstanding the foregoing, this paragraph 13 shall not affect any amounts
payable to you or your estate on or after the Effective Date pursuant to the
exercise of any option or under the terms of ServiceMaster's 401(k) and Deferred
Compensation Plans, Long-Term Performance Award Plan, your Salary Continuation
Agreement dated December 30, 1977 ("Salary Continuation Agreement") or any
similar plan providing for the payment of deferred compensation.
14. SALARY CONTINUATION AGREEMENT. Pursuant to paragraph 1 of your
Salary Continuation Agreement, ServiceMaster shall pay you $500.00 per month
commencing on July 1, 2001, for a period of 180 consecutive months. In the event
of your death, payments will continue to your designated beneficiary, Xxxxxxxx
Xxxxx or her estate, until the expiration of the 180 month period.
15. ARBITRATION. Except as provided in paragraph 12 of this Agreement,
any dispute or controversy between ServiceMaster and you, whether arising out of
or relating to this Agreement, the breach of this Agreement, or otherwise, shall
be settled by arbitration in Downers Grove, Illinois, administered by the
American Arbitration Association, with any such dispute or controversy arising
under this Agreement being so administered in accordance with its Commercial
Rules then in effect, and judgment on the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The arbitrator shall have
the authority to award any remedy or relief that a court of competent
jurisdiction could order or grant, including, without limitation, the issuance
of an injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, or to obtain interim relief, neither a
party nor an arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of ServiceMaster and
you. ServiceMaster and you acknowledge that this Agreement evidences a
transaction involving interstate commerce. Notwithstanding any choice of law
provision included in this Agreement, the United States Federal Arbitration Act
shall govern the interpretation and enforcement of this arbitration provision.
16. SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the
benefit of and be enforceable by ServiceMaster and its successors and assigns
and by you and by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. This
Agreement shall not be terminated by any
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merger or consolidation of ServiceMaster whereby ServiceMaster is or is not the
surviving or resulting corporation or as a result of any transfer of all or
substantially all of the assets of ServiceMaster. In the event of any such
merger, consolidation or transfer of assets, the provisions of this Agreement
shall be binding upon the surviving or resulting corporation or the person or
entity to which such assets are transferred.
17. NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or five days after deposit in the United States mail,
postage prepaid, addressed (1) if to you, to Xxxxxxx Xxxxx, [home address], and
if to ServiceMaster, to The ServiceMaster Company, Xxx XxxxxxxXxxxxx Xxx,
Xxxxxxx Xxxxx, XX 00000, attention General Counsel, or (2) to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
18. GOVERNING LAW; VALIDITY. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any of the other provisions of this Agreement, which other provisions shall
remain in full force and effect.
19. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
20. MODIFICATION OR WAIVER. No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by you and by the Chairman, President and CEO, or any Executive Vice
President or Senior Vice President of ServiceMaster. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. Failure by you or ServiceMaster
to insist upon strict compliance with any provision of this Agreement or to
assert any right which you or ServiceMaster may have hereunder shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
21. ENTIRE AGREEMENT. Except as otherwise specified herein, this
Agreement constitutes the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related in any manner to the subject matter hereof.
22. NONALIENATION. Benefits payable under this Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance,
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charge, garnishment, execution or levy of any kind, either voluntary or
involuntary, prior to actually being received by you, your estate or a
beneficiary, as applicable, and any such attempt to dispose of any right to
benefits payable hereunder shall be void.
23. TERMINATION. This Agreement may not be terminated except pursuant
to a writing signed by ServiceMaster and you.
If you are in agreement with this letter, please sign each of the two
copies and return one copy to my attention.
Very truly yours,
THE SERVICEMASTER COMPANY
By: /s/ X. XXXXXXX XXXXXXX
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X. Xxxxxxx Xxxxxxx
Chairman
CONFIRMED AND AGREED TO:
By: /s/ XXXXXXX X. XXXXX
--------------------
Xxxxxxx X. Xxxxx
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 2001
THE SERVICEMASTER COMPANY
(Registrant)
By: /s/Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Executive Vice President and Chief Financial Officer
