Exhibit 10.2
THE SERVICEMASTER COMPANY
RESTRICTED STOCK UNIT AWARD AGREEMENT
November 1, 2004
The ServiceMaster Company (the "Company") hereby grants to Xxxxxxxx X.
Xxxx (the "Holder") as of November 1, 2004 (the "Grant Date"), pursuant to the
provisions of the ServiceMaster 2003 Equity Incentive Plan (the "Plan"), a
restricted stock unit award of 367,826 restricted stock units (the "Restricted
Stock Units") (the "Award"), each representing the right to receive one share of
the Company's common stock, $.01 par value ("Stock"), upon and subject to the
restrictions, terms and conditions set forth below. Capitalized terms not
defined herein shall have the meanings specified in the Plan. For purposes of
this Agreement, the Award shall be treated as a Restricted Stock Award within
the meaning of the Plan. "Stock Unit" means a Restricted Stock Unit that is no
longer subject to forfeiture or a stock unit that is granted or credited without
being subject to forfeiture.
1. Award Subject to Acceptance of Agreement. The Award shall be null and
------------------------------------------
void unless the Holder shall accept this Agreement by executing it in the space
provided below and returning it to the Company.
2. Restriction Period and Vesting.
------------------------------
(a) The Award shall vest (1) with respect to 91,956 Restricted Stock
Units on November 1, 2007; (2) with respect to 91,956 Restricted Stock Units on
November 1, 2009; (3) with respect to 183,914 Restricted Stock Units on (i) the
termination of the Holder's employment with the Company on or after May 6, 2012
for any reason other than for Cause (as defined in the Employment Agreement
between the Holder and the Company of even date herewith (the "Employment
Agreement")) and (ii) the Holder's delivery to the Board after May 6, 2009 and
prior to May 6, 2010 of a CEO succession plan that is approved by the Board
(which approval shall not be unreasonably withheld), or (4) earlier pursuant to
Section 2(b) or 2(c) hereof or Section 5.8 of the Plan.
(b) If the Holder's employment by the Company terminates by reason of
Disability or death, all Restricted Stock Units shall be or become fully vested
as of the effective date of the Holder's termination of employment or the date
of death, as the case may be.
(c) If the Holder's employment by the Company is terminated prior to
May 6, 2012 (1) by the Company for any reason other than for Disability or Cause
(as defined in the Employment Agreement) or (2) by the Holder for Good Reason
(as defined in the Employment Agreement), the number of Restricted Stock Units
that shall be or become fully vested as of the effective date of the Holder's
termination of employment shall equal 367,826 multiplied by a fraction, the
numerator of which is the number of full and partial completed calendar months
from and including the Grant Date through and including the effective date of
the Holder's termination of employment and the denominator of which is 91.
(d) Subject to Section 2(a), if the Holder's employment by the Company
is terminated (1) by the Holder for any reason other than Good Reason, (2) for
any reason other than Disability or death, or (3) by the Company for Cause, the
portion of the Award which is not vested as of the effective date of the
Holder's termination of employment shall be forfeited by the Holder and such
portion shall be cancelled by the Company.
3. Reinvestment of Dividend Equivalents. On each date the Company pays a
-------------------------------------
cash dividend to record owners of shares of Stock (a "Payment Date"), the Holder
shall be credited on the Payment Date, with additional Stock Units equal to (i)
the product of the total number of Restricted Stock Units and Stock Units
credited to Holder under this Award immediately prior to such Payment Date
multiplied by the dollar amount of the cash dividend paid per share of Stock by
the Company on such Payment Date, divided by (ii) the Fair Market Value of a
share of Stock on such Payment Date. Any such Stock Units shall be credited
without being subject to forfeiture.
4. Delivery of Certificates Representing Stock Units.
-------------------------------------------------
(a) The Company shall hold the Restricted Stock Units and Stock Units
subject to the Award in book-entry form. Subject to Section 6.2, after the
termination of the Holder's employment with the Company for any reason, the
Company shall issue to the Holder a stock certificate representing a number of
shares of Stock equal to the number of Stock Units credited to Holder under this
Award upon the later of (1) six months after the termination of Holder's
employment with the Company for any reason other than death or disability or (2)
between January 1 and January 31 of the year after which the Holder ceases to be
a "covered employee" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986 (the "Issuance Date"); provided, that if there is a record
date for determining the record owners of shares of Stock for the purpose of
paying a cash dividend during the January in which the issuance occurs, the
Holder shall have the right to receive on the related Payment Date either (i) in
the event the Holder is a record owner as of the record date of the shares of
Stock to be issued on the Issuance Date, a cash dividend in an amount equal to
the product of the total number of shares of Stock to be issued under this Award
multiplied by the dollar amount of the cash dividend paid per share of Stock by
the Company or (ii) in the event the Holder is not such a record owner, an
amount in cash equal to the amount of the cash dividend determined under the
foregoing clause (i); and provided, further, that in the event of a Change in
Control and regardless of whether the Holder's employment by the Company has
terminated, the Issuance Date shall be within 10 days of the occurrence of the
Change in Control. The Company shall not be required to issue fractional shares
of Stock upon settlement of the Award.
(b) The Holder shall have no direct or secured claim in any specific
assets of the Company or the shares of Stock to be issued on the Issuance Date
and will have the status of a general unsecured creditor of the Company.
5. Recapture Payment; Forfeiture of Restricted Stock Units.
-------------------------------------------------------
(a) Notwithstanding any provision of this Agreement, if at any time
prior to the date that is one year after the date of vesting of all or any
portion of the Restricted Stock Units, the Holder:
2
(1) directly or indirectly (whether as owner, stockholder,
director, officer, employee, principal, agent, consultant, independent
contractor, partner or otherwise), in North America or any other
geographic area in which the Company is then conducting business,
owns, manages, operates, controls, participates in, performs services
for, or otherwise carries on, a business similar to or competitive
with the business conducted by the Company or any Subsidiary; or
(2) directly or indirectly attempts to induce any employee of the
Company or any Subsidiary to terminate his or her employment with
ServiceMaster or any Subsidiary of ServiceMaster for any purpose
whatsoever, or attempts directly or indirectly, in connection with any
business to which subsection (a)(1) applies, to solicit the trade or
business of any current or prospective customer, supplier or partner
of the Company or any Subsidiary; or
(3) directly or indirectly (i) discloses or misuses any
confidential information or trade secrets of the Company or a
Subsidiary of the Company, or (ii) engages in any material activity
not known by the Board which could reasonably be foreseen as resulting
in a Change in Control,
then the Holder shall pay the Company, within five business days of receipt by
the Holder of a written demand therefor, an amount in cash determined by
multiplying the number of Restricted Stock Units subject to the Award which
vested within the one-year period described above by the Fair Market Value of a
share of Stock, determined as of the date of vesting.
(b) The Holder may be released from the Holder's obligations under
Section 5(a) only if and to the extent the Board or the Committee determines in
its sole discretion that such a release is in the best interests of the Company.
(c) The Holder agrees that by executing this Agreement the Holder
authorizes the Company and its Subsidiaries to deduct any amount or amounts owed
by the Holder pursuant to Section 5(a) from any amounts payable by the Company
or any Subsidiary to the Holder, including, without limitation, any amount
payable to the Holder as salary, wages, vacation pay or bonus. This right of
setoff shall not be an exclusive remedy and the Company's or a Subsidiary's
election not to exercise this right of setoff with respect to any amount payable
to the Holder shall not constitute a waiver of this right of setoff with respect
to any other amount payable to the Holder or any other remedy.
(d) In the event that the Holder shall forfeit all or a portion of the
Restricted Stock Units subject to the Award, the Holder shall, upon the
Company's request, promptly return this Agreement to the Company for full or
partial cancellation, as the case may be. Such cancellation shall be effective
regardless of whether the Holder returns this Agreement.
6. Additional Terms and Conditions of Award.
----------------------------------------
6.1 Nontransferability of Award. Prior to the Issuance Date, the Stock
---------------------------
Units and Restricted Stock Units may not be transferred by the Holder other than
(i) by will or the laws of descent and distribution or (ii) pursuant to
beneficiary designation procedures approved by the Company. Except to the extent
permitted by the foregoing sentence prior to the Issuance Date,
3
the Stock Units and Restricted Stock Units may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate or
encumber, or otherwise dispose of such Stock Units or Restricted Stock Units,
the Award shall immediately become null and void.
6.2 Withholding Taxes.
-----------------
(a) As a condition precedent to the delivery to the Holder of any
shares of Stock subject to the Award, the Holder shall, upon request by the
Company, pay to the Company such amount of cash as the Company may be required,
under all applicable federal, state, local or other laws or regulations, to
withhold and pay over as income or other withholding taxes (the "Required Tax
Payments") with respect to the Award. If the Holder shall fail to advance the
Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company or a Subsidiary to the Holder.
(b) The Holder may elect to satisfy the obligation to advance the
Required Tax Payments by any of the following means: (1) a cash payment to the
Company pursuant to Section 6.2(a), (2) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of previously
owned whole shares of Stock (which the Holder has good title, free and clear of
all liens and encumbrances) having a Fair Market Value, determined as of the
date the obligation to withhold or pay taxes first arises in connection with the
Award (the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
Company to withhold from the shares of Stock otherwise to be delivered to the
Holder pursuant to the Award, a number of whole shares of Stock having a Fair
Market Value, determined as of the Tax Date, equal to the Required Tax Payments,
(4) a cash payment by a broker-dealer acceptable to the Company through whom the
Holder has sold the shares with respect to which the Required Tax Payments have
arisen, except as prohibited by Section 402 of the Xxxxxxxx-Xxxxx Act of 2002 or
(5) any combination of (1), (2) and (3). The Committee shall have sole
discretion to disapprove of an election pursuant to any of clauses (2)-(5).
Shares of Stock to be delivered or withheld may not have a Fair Market Value in
excess of the minimum amount of the Required Tax Payments. Any fraction of a
share of Stock which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the Holder. No
certificate representing a share of Stock shall be delivered until the Required
Tax Payments have been satisfied in full.
6.3 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Award shall be
appropriately adjusted by the Committee. The decision of the Committee regarding
any such adjustment shall be final, binding and conclusive.
6.4 Compliance with Applicable Law. The Award is subject to the
---------------------------------
condition that if the listing, registration or qualification of the shares of
Stock to be issued under the Award upon any securities exchange or under any
law, or the consent or approval of any governmental
4
body, or the taking of any other action is necessary or desirable as a condition
of, or in connection with, the vesting or delivery of shares hereunder, such
shares of Stock shall not be delivered, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company agrees to use reasonable efforts to effect or obtain any such listing,
registration, qualification, consent or approval.
6.5 Original Issue or Transfer Taxes. The Company shall pay all
-----------------------------------
original issue or transfer taxes and all fees and expenses incident to such
delivery, except as otherwise provided in Section 6.2.
6.6 No Voting Rights. The Holder shall not have any voting rights
-----------------
unless and only to the extent shares of Stock are issued on the Issuance Date.
6.7 Award Confers No Rights to Continued Employment. In no event shall
-----------------------------------------------
the granting of the Award or its acceptance by the Holder give or be deemed to
give the Holder any right to continued employment by the Company or any
affiliate of the Company.
6.8 Decisions of Board or a Committee of the Board. The Board or the
----------------------------------------------
Committee shall have the right to resolve all questions which may arise in
connection with the Award. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.
6.9 Agreement Subject to the Plan. This Agreement is subject to the
------------------------------
provisions of the Plan and shall be interpreted in accordance therewith. The
Holder hereby acknowledges receipt of a copy of the Plan.
7. Miscellaneous Provisions.
------------------------
7.1 Meaning of Certain Terms.
------------------------
(a) As used herein, the term "vest" shall mean no longer subject to
forfeiture.
(b) As used herein, "Disability" shall mean Holder's absence from
Holder's duties with the Company or its affiliated companies on a full-time
basis for at least 180 consecutive days as a result of Holder's incapacity due
to physical or mental illness.
(c) As used herein, employment by the Company shall include employment
by a corporation which is a "subsidiary corporation" of the Company, as such
term is defined in section 424 of the Code. References in this Agreement to
sections of the Code shall be deemed to refer to any successor section of the
Code or any successor internal revenue law.
7.2 Modification, Waiver and Invalidity. The parties may modify this
------------------------------------
Agreement only by written instrument signed by each of the parties hereto.
Failure by either party to enforce a provision of this Agreement shall not
constitute a waiver of that or any provision of this Agreement. The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
5
7.3 Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Holder, acquire any rights hereunder in
accordance with this Agreement or the Plan.
7.4 Notices. All notices, requests or other communications provided
-------
for in this Agreement shall be made, if to the Company, to the Corporate
Secretary at The ServiceMaster Company, 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxx
Xxxxx, Xxxxxxxx 00000, and if to the Holder, to the address of the Holder
contained in the Company's records. All notices, requests or other
communications provided for in this Agreement shall be made in writing either
(a) by personal delivery, (b) by facsimile with confirmation of receipt, (c) by
mailing in the United States mails to the last known address of the party
entitled thereto, (d) by express courier service or (e) electronic mail delivery
system. The notice, request or other communication shall be deemed to be
received upon personal delivery, upon confirmation of receipt of facsimile
transmission, or upon receipt by the party entitled thereto if by United States
mail, express courier service or return receipt of electronic delivery system;
provided, however, that if a notice, request or other communication sent to the
Company is not received during regular business hours, it shall be deemed to be
received on the next succeeding business day of the Company.
7.5 Governing Law. This Agreement, the Award and all determinations
-------------
made and actions taken pursuant hereto and thereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Delaware and construed in accordance therewith without giving effect to
conflicts of laws principles.
7.6 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
THE SERVICEMASTER COMPANY
By:/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Corporate Secretary
Accepted this 1st day of November, 2004
/s/ Xxxxxxxx X. Xxxx
-------------------------------------------
Xxxxxxxx X. Xxxx
- Xxxxxx -
6
