May 16, 2006

 

Mr. J. Patrick Spainhour

2267 Waverly Drive

West Point, MS 39773

 

 

Re:

Employment as Interim Chairman and Chief Executive Officer of The ServiceMaster
Company

 

Dear Mr. Spainhour:

 

On behalf of the Board of Directors of The ServiceMaster Company (the
“Company”), I am pleased to offer you employment with the Company as its Interim
Chairman and Chief Executive Officer.

 

1. Your employment with the Company will commence as of May 16, 2006 (the
“Effective Date”).

2. As Interim Chairman and Chief Executive Officer, you will report to the Board
of Directors of the Company (the “Board”), and perform the duties customarily
associated with such position, including such specific duties as the Board may
from time to time assign to you. You will be expected to perform faithfully and
loyally and to the best of your abilities the duties assigned to you and to
devote your full business time, attention and effort to the affairs of the
Company and its subsidiaries, and use your reasonable best efforts to promote
the interests of the Company and its subsidiaries.

 

 

3. Your base salary will be paid, in accordance with the Company’s regular
payroll practices, at an initial annual rate of $800,000 (less any withholdings
and deductions required by law or authorized by you). Your base salary will be
reviewed by the Compensation and Leadership Development Committee and the Board
at the end of each calendar year.

 

4. You will be paid a guaranteed bonus for your service as Interim Chairman and
Chief Executive Officer during 2006 in an amount equal to 150% of any salary
paid for service in 2006; provided, that any such bonus would be paid when paid
to other executive officers of the Company (but not later than March 15, 2007)
and such bonus would not be payable by the Company if you terminate your
employment for any reason other than death or disability or if the Board
terminates your employment for cause. For purposes of this letter agreement,
“cause” means: (a) a material breach by you of your duties and responsibilities
(other than as a result of incapacity due to physical or mental illness) which
is willful and deliberate on your part, which is committed in bad faith or
without reasonable belief that such breach is in the best interests of the
Company and which is not remedied within 30 days after receipt of written notice
from the Board specifying such breach; (b) the commission by you of a felony or
misdemeanor involving any act of fraud, embezzlement or dishonesty or any other
intentional misconduct by you that adversely and significantly affects the
business affairs or reputation of the Company or an affiliated company; or (c)
any failure to cooperate with any investigation or inquiry into your business
practices, whether internal or external, including, but not limited to your
refusal to be deposed or to provide testimony at any trial or inquiry. You may
elect to defer the receipt of salary and/or bonus by completing the appropriate
documents under the ServiceMaster Deferred Compensation Plan

 

 

 

 

 

 

5. You will be entitled to those employee benefits and perquisites which the
Company from time to time generally makes available to its executive officers
(“Benefits”) subject to the terms and conditions of such benefit plans or
programs; provided that, subject to Section 9 below, you do not have the right
to participate in the Company’s equity incentive plan in 2006 or the right to
enter into a change in control severance agreement. The Benefits include,
without limitation, 401(k), deferred compensation plan, employee stock purchase
plan, medical insurance, dental insurance, life insurance, accidental death and
dismemberment insurance, vision insurance, disability insurance, flexible
spending account, four-weeks of paid annual vacation and such other benefits as
the Board or Compensation and Leadership Development Committee may determine
from time to time. The Company reserves the right to modify, amend, suspend, or
terminate any or all such employee benefit plans and policies at any time.

6. You will be reimbursed for all proper and reasonable expenses incurred by you
in the performance of your duties in accordance with the policies of the
Company.

7. Your employment by the Company will terminate following the appointment by
the Board of a new Chief Executive Officer, and at the request of the Board you
will be expected to cooperate in the transition of your duties and
responsibilities to the new Chief Executive Officer.

8. Subject to the approval of the Board of Directors, you will be appointed to
serve on the Executive Committee of the Board.

9. Under the federal securities laws and the listing standards of the New York
Stock Exchange, at the Effective Date you will become ineligible to serve on the
Audit and Finance Committee of the Board of Directors. Accordingly, by your
execution of this letter agreement, you are resigning from service on the Audit
and Finance Committee as of the Effective Date. Notwithstanding your appointment
as Interim Chairman and Chief Executive Officer, the parties agree that it is
their intention that you would continue to serve on the Board of Directors after
you cease to serve as Interim Chairman and Chief Executive Officer.

10. From and after the Effective Date and through and including the date that is
one year after the effective date of your termination of employment, you will
not do any of the following, directly or indirectly, without the prior written
consent of the Board:

 

(a) 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 directly or indirectly 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 the Company or any
subsidiary of the Company; or

(b) directly or indirectly attempt to induce any employee of the Company or a
subsidiary of the Company to terminate or abandon his or her employment for any
purpose whatsoever or any attempt directly or indirectly to solicit the trade or
business of any current customer, supplier or partner of the Company; or

 

 

 

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(c) directly or indirectly engage in any activity which is contrary, inimical or
harmful to the interests of the Company, including but not limited to (i)
violations of Company policies, (ii) disclosure or misuse of any confidential
information or trade secrets of the Company or a subsidiary of the Company,
(iii) participation in any activity not approved by the Board which could
reasonably be foreseen as contributing to or resulting in a Change in Control
(as defined in the Company’s 2003 Equity Incentive Plan) and (iv) conduct
related to employment for which either criminal or civil penalties may be
sought.

You acknowledge that any breach of this Section will result in serious and
irreparable injury to the Company for which the Company cannot be adequately
compensated by monetary damages alone. You agree, therefore, that, in addition
to any other remedy the Company may have, the Company will be entitled to seek
both preliminary and permanent injunctive relief (to the extent permitted by
law) without the necessity of proving actual damages and/or the posting of a
bond.

 

11. We are extending this offer to you on the condition that you not use or
disclose to the Company any confidential information of anyone that you
previously worked for, and with the understanding that your employment with the
Company will not violate or be restricted by any noncompetition or other
agreement with anyone else. If this is not the case, please inform us
immediately.

12. During your employment with the Company as Interim Chairman and Chief
Executive Officer, you will continue to earn any fees for your service on the
Board. You may engage in charitable, civic or community activities and, with the
prior approval of the Board, may serve as a director of any other business
corporation, provided that such activities or service does not interfere with
your duties to the Company or violate the terms of any of the covenants
contained in this letter agreement; it being understood that your current
service as a director at Circuit City Stores, Inc. and Tupperware Corporation
has been approved by the Board.

13. This letter 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.

14. No provision of this letter agreement may be modified or waived unless such
modification or waiver is agreed to in writing and signed by you and by a member
of the Board. 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
letter 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 the Company to insist upon strict compliance
with any provision of this letter agreement or to assert any right which you or
the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this letter agreement

 

 

 

 

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15. The interpretation, construction and performance of this letter 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 enforceability of any provision of this letter agreement
shall not affect the validity or enforceability of any of the other provisions
of this letter agreement, which other provisions shall remain in full force and
effect.

16. Please note that the purpose of this letter is merely to describe the terms
of your employment. This letter does not constitute a contract of employment and
does not create any right to continued employment for any period of time. Your
employment with the Company at all times will be “at will.” This means that
either you or the Company may end your employment at any time for any or no
reason.

The Board is deeply appreciative of your agreement to serve in this interim
position. To indicate your acceptance, please sign this letter in the space
below and return it to me. In the meantime, please do not hesitate to call me
should you have any questions.

 

Very truly yours,

 

/s/ Sidney E. Harris

Sidney E. Harris

Presiding Director of the Board,

The ServiceMaster Company

 

 

 

AGREED TO AND ACCEPTED:

 

 

/s/ J. Patrick Spainhour

J. Patrick Spainhour

 

Dated: May 15, 2006

 

 

 

 

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