EXHIBIT 10.1
June 1, 2001
Xx. Xxxxxx Xxxxx
[Home Address]
Dear Xxxxxx:
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 June 1, 2001 (the "Effective
Date"), as follows:
1. SERVICES. On and after the Effective Date and until the date of your
death, you shall provide consulting services to ServiceMaster and its
subsidiaries. Such services shall be related to the operation, administration or
management of ServiceMaster and its subsidiaries and shall be furnished for not
more than 80 hours per month, as and when the Board of Directors, Chairman, or
President and CEO may reasonably request and subject to your reasonable
availability, giving due consideration to your other responsibilities.
2. COMPENSATION FOR SERVICES. In consideration of your providing the
services described in paragraph 1, ServiceMaster shall pay you in equal
semi-monthly installments in accordance with the payroll practices of
ServiceMaster, commencing in June 2001 and ending on the last day of the
calendar month during which services pursuant to paragraph 1 cease or your death
occurs or the parties agree to terminate this Agreement, the semi-monthly amount
of $12,500.
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. STATUS. ServiceMaster agrees that you shall be designated a
Corporate Officer of ServiceMaster during any period you serve as a Director of
ServiceMaster.
5. 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.
6. 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 date of your death, ServiceMaster shall 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.
7. OFFICE SPACE AND SECRETARY. On and after the Effective Date, as long
as you are providing the services pursuant to paragraph 1, and until the earlier
of (1) November 9, 2008 and (2) the date of your death, ServiceMaster shall
provide to you, for your exclusive use, 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 a
site agreed upon by you and the Chairman or President and Chief Executive
Officer of ServiceMaster. During the period you are providing services,
ServiceMaster shall also make available to you, on a full-time basis, the
services of a secretary who is reasonably acceptable to you. ServiceMaster shall
pay, on a current basis, all rents and other reasonable costs and expenses
relating to the operation of such office and all salary, benefits and other
costs and expenses relating to such secretarial service.
8. OTHER BENEFITS.
(a) Automobile. On or after the Effective Date, as long as you are
providing the services pursuant to paragraph 1, and until the date of your
death, ServiceMaster shall provide you with the use of an automobile in
accordance with ServiceMaster's Executive Company Vehicle Policy. ServiceMaster
shall reimburse you for your expenses relating to the operation and maintenance
of such vehicle in accordance with such Policy.
(b) Club Membership. On and after the Effective Date, as long as you
are providing the services pursuant to paragraph 1, and until the date of your
death, ServiceMaster shall pay, or reimburse you for, the annual dues of one
club membership designated by you and approved by the Chairman or President and
Chief Executive Officer of ServiceMaster.
9. STOCK OPTIONS. As of the Effective Date, each option to purchase
ServiceMaster common stock held by you shall (1) to the extent not exercisable
on the Effective Date, become fully exercisable at the exercise price set forth
in such option, and (2) expire at 5:00 p.m., Central time, on November 9, 2008.
In the event of your death prior to November 9, 2008, your executor,
administrator or similar person, or beneficiary pursuant to any beneficiary
designation procedures approved by ServiceMaster, shall have the right to
exercise each such option prior to the expiration of such option. In accordance
with the foregoing, ServiceMaster and you agree that, as of the Effective Date,
your options to purchase ServiceMaster common stock are as follows:
2
No. of Options
Grant Date Outstanding at 5/1/01 Exercise Price Expiration Date
---------- --------------------- -------------- ---------------
10/3/96 168,750 $10.7778 11/9/08
2/13/97 225,000 11.2222 11/9/08
2/16/98 150,000 18.2583 11/9/08
1/29/99 150,000 18.0750 11/9/08
Your options to purchase ServiceMaster common stock shall be modified only to
the extent set forth in this paragraph 9.
10. PAYMENTS UPON A CHANGE IN CONTROL. In the event a Change in Control
(as defined in the 2001 Directors Stock Plan) occurs while payments are being
made pursuant to paragraph 2 or paragraph 16, then ServiceMaster shall pay to
you, or to Xxxxxx Xxxxx if you predecease Xxxxxx Xxxxx, within 30 days after the
date of the Change in Control, a cash, lump sum amount that is the actuarial
equivalent of the aggregate amount payable pursuant to paragraph 2 and/or
paragraph 16 had the Change in Control not occurred. Actuarial equivalency shall
be determined using the 1983 Group Annuity Mortality Table and the annual rate
of interest on 10-year U. S. Treasury securities for the month preceding the
month in which the Change in Control occurs.
11. NON-COMPETITION COVENANT. (a) On and after the Effective Date and
until the date of your death (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.
(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 11(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 11 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 11, 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
3
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.
12. 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.
13. COVERED SERVICE. In accordance with Article Eleven of
ServiceMaster's Certificate of Incorporation (the "Charter"), the services
provided and to be provided by you under this Agreement, shall be deemed to be a
"Covered Service" within the meaning of subsection 11.1.1 of the Charter and, to
the extent any services are not covered by any of subsection 11.1.1(a), (b) or
(c) of the Charter, this paragraph and the signature of the Chief Executive
Officer on this Agreement shall constitute a designation in writing as required
by Article Eleven of the Charter.
14. 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.
15. REMEDIES. You acknowledge that ServiceMaster would be irreparably
injured by a violation of paragraph 11 or paragraph 12 of this Agreement, and
you agree that ServiceMaster shall be entitled to an injunction restraining you
from any actual or threatened breach of paragraph 11 or paragraph 12 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 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.
16. SURVIVOR BENEFITS. In the event you predecease Xxxxxx Xxxxx,
ServiceMaster shall pay Xxxxxx Xxxxx in equal semi-monthly installments,
commencing in the first calendar month after the calendar month during which
your death occurs and ending on the last day of the calendar month during which
the death of Xxxxxx Xxxxx occurs, the
4
semi-monthly amount of $8,333.34.
17. 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 Director, Corporate Officer or other employee of
ServiceMaster. Notwithstanding the foregoing, this paragraph 17 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 or any
similar plan providing for the payment of deferred compensation.
18. ARBITRATION. Except as provided in paragraph 15 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 Memphis, Tennessee, 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.
19. 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 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.
20. 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 Xxxxxx Xxxxx, [home address], and
if to ServiceMaster, to The
5
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.
21. 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 Tennessee 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.
22. 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.
23. 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.
24. ENTIRE AGREEMENT. Except as otherwise specified herein, this
Agreement and your stock option agreements referred to in paragraph 9 constitute
the entire agreement and understanding between the parties with respect to the
subject matter hereof and supersede and preempt 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.
25. NONALIENATION. Benefits payable under this Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by you, Xxxxxx Xxxxx,
your estate or a beneficiary, as applicable, and any such attempt to dispose of
any right to benefits payable hereunder shall be void.
26. TERMINATION. This Agreement may not be terminated except pursuant
to a writing signed by ServiceMaster and you or, in the event you predecease
Xxxxxx Xxxxx, a writing signed by ServiceMaster and Xxxxxx Xxxxx.
6
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/ XXXXX X. XXXXXXX
--------------------
Xxxxx X. Xxxxxxx
Chairman of the Compensation Committee
of the Board of Directors
By: /s/ XXXXXXXX X. XXXX
--------------------
Xxxxxxxx X. Xxxx
President and Chief Executive Officer
CONFIRMED AND AGREED TO:
By: /s/ XXXXXX XXXXX
Xxxxxx Xxxxx
7
