SENIOR EXECUTIVE OWNERSHIP ELECTION PLAN


         In  accordance  with  resolutions  adopted by the Board of Directors on
December 10,  1999,  this Senior  Executive  Ownership  Election  Plan is hereby
established to provide for the granting of stock options under the ServiceMaster
1998 Equity  Incentive  Plan (or any plan  intended  as a successor  thereto) to
selected Senior Executive of The ServiceMaster Company or its subsidiaries.

1.       Statement of Purpose

         1.1 The  purpose of the Senior  Executive  Ownership  Election  Plan is
establish a procedure  for  granting  stock  options to Senior  Executive of the
company  which will be in lieu of cash  payments  under certain of the company's
incentive  compensation  plans. This procedure will result in a significant part
of the  compensation  of the Senior  Executive  who elect to  participate  to be
dependent upon the growth and prosperity of the Company and will align such part
of their compensation with the interests of the stockholders of the Company.

2.       Definitions

         As used in this  document,  the  following  terms  have  the  indicated
meanings:

     "Senior Executive  Ownership  Election Plan" means the provisions set forth
in this document.  These provisions are sometimes  referred to as the "Ownership
Election Plan."

     "Compensation  Committee" means the Compensation  Committee of the Board of
Directors of the Company.

         "APC Plan" means the ServiceMaster  Additional Provisional Compensation
Plan or any incentive compensation plan which is intended to be a successor plan
thereto.

         "LTPA Plan" means the ServiceMaster Long-Term Performance Award Plan or
any  incentive  compensation  plan  which is  intended  to be a  successor  plan
thereto.

         "Company" means The ServiceMaster Company.

         "Subsidiary"  means any organization in which the Company is the direct
or indirect  beneficial owner of not less than 50% of all issued and outstanding
equity interests.

         "Electing  Executive"  means an officer of the Company or a  Subsidiary
who makes the election described in Section 4.

         "Election Year" means each of the years 2000, 2001 and 2002.

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         "Principal  Stock  Option  Plan"  means the  ServiceMaster  1998 Equity
Incentive Plan or any stock option plan which is intended to be a successor plan
thereto.

         "Options"  means  options  to  purchase  shares of common  stock of the
Company on the terms and conditions set forth in this Ownership Election Plan

3.       Duration of the Ownership Election Plan

         3.1 The  Ownership  Election  Plan  commenced  on December 10, 1999 and
shall  continue in effect until  terminated by the Board of Directors.  However,
the  termination  of the Ownership  Election Plan shall not affect the status of
Options previously granted under the Ownership Election Plan.

4.       Elections to Purchase Options in Lieu of Certain Cash Payments

         4.1 Election.  With respect to each of the Election Years, a person who
is selected to participate in the Incentive Plan  Alternative  for that year may
elect to receive Options in lieu of a payment in cash of --

         (a)     up to 75% of the amount of his or her APC Plan compensation for
                 that Election Year as projected as set forth in Section 4.2(a);
                 or

         (b)      up to 75% of the  amount of his or her LTPA Plan  compensation
                  for that  Election  Year as  projected as set forth in Section
                  4.2(a); or

         (c)      up to  75%  of  the  total  of the  amount  of  his  APC  Plan
                  compensation  and his or her LTPA Plan  compensation  for that
                  Election Year as projected as set forth in Section 4.2(a).

         4.2 Calculation of Number of Options Granted.  The number of shares for
which  Options will be granted by reason of an election made pursuant to Section
4.1 shall be determined as follows:

         (a) A projection of the Electing  Executive's APC Plan compensation for
the Election Year ("Estimated APC") and a projection of the Electing Executive's
LTPA Plan compensation for the Election Year ("Estimated LTPA") shall be made by
the Chief Executive  Officer and the Chief Financial Officer and, after approval
of such  projections by the Chairman of the Compensation  Committee,  they shall
serve as the basis for the calculations set forth below.1

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         (b) The Electing  Executive  shall specify a percentage,  not to exceed
75%,  of his or her  Estimated  APC and/or his or her  Estimated  LTPA which the
Electing  Executive wishes to utilize under this Ownership Election Plan for the
Election  Year. The dollar  amounts  resulting from applying the  percentages so
specified  to  Estimated  APC  and/or  Estimated  LTPA  are  referred  to as the
"Electing  Executive's  APC  Utilization"  and the  "Electing  Executive's  LTPA
Utilization".

         (c) The number of Options  granted to the Electing  Executive  shall be
referenced to a dollar figure which is  determined by  multiplying  the Electing
Executive's APC Utilization or the Electing  Executive's LTPA Utilization or the
sum of the Electing  Executive's APC  Utilization  and the Electing  Executive's
LTPA  Utilization,  as the case may be, by a multiple derived from the following
table:

    Election                                                            Multiple
    -----------                                                         --------

    The election is to utilize APC Plan compensation but not LTPA
    compensation                                                               4

    The election is to utilize LTPA Plan compensation but not APC
    Plan compensation                                                          4

    The  election  is to  utilize  both APC  Plan  compensation
    and  LTPA  Plan compensation but the full 75% allowable is not
    elected for both plans                                                     4

    The election is to utilize both APC Plan compensation and
    LTPA compensation and the full 75% allowable is elected for                5
    both plans.

         (d) The dollar amount  determined  under paragraph (c) shall be divided
by the closing  price of the  Company's  shares of common  stock on the New York
Stock  Exchange on December 10 of the year  immediately  preceding  the Election
Year (the "Share  Price").  If any  December 10 is not a trading  day,  then the
trading day which most nearly precedes December 10 shall be used.2

         4.3 Example.  The application of the procedure described in Section 4.2
is shown by the following examples.  Assume that at the end of December 1999 the
Election  Officer's  Estimated  APC is  $200,000  and the  Electing  Executive's
Estimated LTPA is $150,000. The Share Price is $11.50.

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                  Example 1. The Electing  Executive  elects to use the full 75%
                  of his  Estimated  APC  but he  does  not  utilize  any of his
                  Estimated LTPA.

                         Estimated APC x 75% = $150,000

                           Option Shares =  150,000 x 4   =   52,173.
                                            -----------
                                            11.50

                  Example 2. The Electing  Executive  elects to use the full 75%
                  of his  Estimated  LTPA  but he does  not  utilize  any of his
                  Estimated APC Base.

                           Estimated LTPA x 75%  =  $112,500

                           Option Shares =  112,500 x 4   =   39,130
                                            -----------
                                            11.50

                  Example 3. The Electing  Executive  elects to use the full 75%
                  of his Estimated APC and his Estimated LTPA.

                           Option Shares = (150,000 + 112,500) x 5  =   114,130
                                           -----------------------
                                                  11.50

                  Example 4. In Example 2,  assume that the  Electing  Executive
                  elected to receive the  portion of his LTPA Plan  compensation
                  not utilized for Options in the form of ServiceMaster  shares.
                  As a result,  the  calculations  in Example 2 are  adjusted as
                  follows:

                           Estimated LPTA x 75% x 1.2 3   = $135,000

                           Option Shares = 135,000 x 4             =   46,956
                                           -----------
                                              11.50

                  A similar  adjustment  would be made in the LTPA  component of
                  Example 3.

         4.4 Effect of a Shortfall in Actual APC Plan Compensation and/or Actual
LTPA  Compensation  Relative  to APC and/or  LTPA  Utilization  Amounts.  If the
Electing  Executive's  actual APC Plan compensation  figure for an Election Year
and/or his or her actual LTPA Plan  compensation  figure for an Election Year is
less  than  the  Electing   Executive's  APC  Utilization  and/or  the  Electing
Executive's LTPA Utilization, a shortfall will exist in the calculations used to
compute the number of Options granted to the Electing Executive.  Such shortfall
must be made up by the  Electing  Executive  through one or the other or both of
the following alternatives:

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         (a)      the Electing Executive may pay the Company cash in the amount
                  of the shortfall; or

         (b)      the Electing Executive may authorize the Company to offset his
                  or her APC  Plan  compensation  and/or  his or her  LTPA  Plan
                  compensation for the next year by the amount of the shortfall.

If the Electing  Executive  selects  alternative  (a), payment shall be made not
later  than 30 days  after he or she has been  notified  by the  Company  of the
existence of a shortfall in the  requisite  coverage for the Options  which were
previously granted.

         4.5  Procedure  for Making an  Election.  Each person who is offered an
opportunity to elect to receive Options under this Ownership Election Plan shall
make his or her participation  decision by signing and delivering to the Company
an election form for the Ownership  Election Plan. This form shall accompany the
LTPA Election Form B (which is needed to cover the portion of LTPA  compensation
not utilized for Options). A copy of these two forms are set forth as Exhibits 1
and 2. The election forms must be delivered to the Vice President,  Compensation
by not later than December 31 of the year immediately  preceding the year to the
elections pertain.

5.       Term of Options; Grant Date; Exercise Price

     5.1 Term.  Each  Option  granted  pursuant to this Plan shall be for a term
which  commences  on the Grant  Date and ends on  December  31 of the tenth year
following  the year in which the Option was  granted.  (Thus,  for  example,  an
option granted on December 10, 1999 will expire on December 31, 2009).

     5.2 Grant Date. Each Option granted under the Ownership Election Plan shall
be deemed granted on the date referred to in Section 4(d).

     5.3. Exercise Price. The price at which the shares subject to an Option may
be purchased shall be the price referred to in Section  4.2(d),  i.e., the Share
Price.

6.   Vesting Schedule

     6.1 Basic  Schedule.  Subject to section 6.2, each Option granted under the
Ownership  Election Plan shall become vested at the rate of 10% per year for the
first  eight  full years of the term of the  Option.  The  remaining  20% of the
Option shall vest at the end of the ninth year.  Vesting  shall  commence on the
31st day of December  of the year  immediately  following  the year in which the
Option  was  granted  and shall  continue  on the 31st day of  December  of each
succeeding year.

     6.2  Acceleration of Vesting in Certain Circumstances.

     (a) For  purposes  of this  Section  6.2,  the term "Base  Year"  means the
calendar year in which an Option is granted.

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     (b) If the  financial  statements  for  the  Company  for  the  third  year
following the Base Year reflect compounded growth in the Company's net income of
at least  15%  relative  to the net  income  for the  Company  for the Base Year
(determined in each case before revenue and expenses  attributable to e-commerce
investments), an additional 50% of all Options granted to the Electing Executive
in the Base Year shall become vested.  If such net income target is not achieved
in the third year (so that  additional  vesting did not occur for that year) but
is achieved in the fourth year, an additional 30% of all Options  granted to the
Electing  Executive  in the Base Year shall  become  vested.  If such net income
target is not  achieved  in either the third  year or the  fourth  year (so that
additional  vesting did not occur for either of those  years) but is achieved in
the fifth  year,  an  additional  20% of all  Options  granted  to the  Electing
Executive in the Base Year shall become vested.  Such  additional  vesting shall
occur on the date on which the Company  releases its  financial  statements  for
such third year, fourth year or fifth year, as appropriate.

     6.3 Illustration of the Vesting Rules. The following table  illustrates the
vesting provisions of Sections 6.1 and 6.2.

     Assume that an  Electing  Executive  has made an election in December  1999
which results in the grant of an Option for 10,000  shares.  Further assume that
the 15% target  growth rate in net income is  satisfied  at the end of the third
year.

                                      Cumulative
                           Normal       Normal       Accelerated       Total
             Date          Vesting      Vesting         Vesting        Vested
          ---------      ---------   -------------   ------------  ------------

         12/31/00         1,000        1,000               -           1,000
         12/31/01         1,000        2,000               -           2,000
         12/31/02         1,000        3,000               -           3,000
           1/25/03                                       5,000         8,000
         12/31/03         1,000        4,000                           9.000
         12/31/04         1,000        5,000                         10,000
         ------------     ---------  -------------  ---------------- -----------

         vesting if accelerated vesting had not occurred:

         12/31/05         1,000        6,000               -           6,000
         12/31/06         1,000        7,000               -           7,000
         12/31/07         1,000        8,000               -           8,000
         12/31/08         2,000       10,000                          10,000

         6.4  Possible   Modification  of  the  Accelerated  Vesting  Rule.  The
Compensation  Committee  may  approve  an  acceleration  in vesting of an Option
following  the third  anniversary  of the Option  even  though  the growth  rate
target(s)  may not have  fully  been met in the third  year if the  Compensation
Committee  considers  acceleration in vesting to be in the best interests of the
Company and appropriate in the light of a Senior Executive's  performance of his
or her responsibilities.

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7.  Term Sheet.

         7.1 Options granted under the Incentive  Alternative shall be evidenced
by delivery to the optionee of a term sheet which shall be  substantially in the
form of Exhibit 2.

8.  Change of Control

         8.1  Change of Control Defined. "Change of Control" of the Company
means:

         (i) the Company is merged or  consolidated  or  organized  into or with
another  corporation  or other legal person (an  "Acquiror")  and as a result of
such merger,  consolidation or  reorganization  less than 75% of the outstanding
voting  securities or other  capital  interests of the  surviving,  resulting or
acquiring  corporation  or other legal person are owned in the  aggregate by the
stockholders of the Company,  directly or indirectly,  immediately prior to such
merger,  consolidation  or  reorganization,  other than by the  Acquiror  or any
corporation  or other legal person  controlling,  controlled  by or under common
control with, the Acquiror; or

         (ii) the Company sells all or substantially  all of its business and/or
assets  to an  Acquiror,  of  which  less  than  75% of the  outstanding  voting
securities  or  other  capital  interests  are  owned  in the  aggregate  by the
stockholders of the Company,  directly or indirectly,  immediately prior to such
sale,  other  than  by  any  corporation  or  other  legal  person  controlling,
controlled by or unde3r common control with the Acquiror; or

         (iii) a report  is filed on  Schedule  13D or  Schedule  14D-1  (or any
successor  schedule,  form or  report),  each  as  promulgated  pursuant  to the
Securities Exchange Act of 1934 (the "Exchange Act"), disclosing that any person
or group  (as the terms  "person"  and  "group"  are used in  Section  13d(3) or
Section  14(d)(2) of the Exchange Act and the rules and regulations  promulgated
thereunder has become the beneficial  owner (as the term  "beneficial  owner" is
defined in Rule 13d-3 or any successor rule or regulation  promulgated under the
Exchange  Act) of 20% or more of the  issued  and  outstanding  shares of voting
securities of the Company; or

         (iv) during any period of two consecutive years, individuals who at the
beginning of any such period  constitute  the directors of the Company cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's  stockholders,  of each new director of
the Company was approved by a vote of at least two-thirds of such directors then
still in office who were  directors of the Company at the  beginning of any such
period.

         8.2 Effect of a Change of Control.  Upon the  occurrence of a Change of
Control,  unless otherwise specifically  prohibited under applicable laws, or by
the rules and  regulations  of any governing  governmental  agencies or national
securities  exchanges,  any and  all  Options  granted  hereunder  shall  become
immediately exercisable and shall remain exercisable through their entire term.

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9.  Relationship to the Principal Stock Option Plan

         9.1 The Ownership  Election Plan constitutes an administrative  feature
of the Principal Stock Option Plan. All provisions of the Principal Stock Option
Plan and such polices which the Compensation Committee has approved with respect
to the  administration of the Principal Stock Option Plan shall apply to Options
granted under the Ownership  Election Plan to the extent not  inconsistent  with
the latter.

         9.2  Section 9.1 is  specifically  intended to apply to cases of death,
disability and retirement  under certain  circumstances  (but Section 9.1 is not
limited to such matters).

 10.  Effect of Termination of Employment

         10.1 If an Electing Executive terminates his or her employment with the
Company or a  Subsidiary,  vested  Options  will  expire  six  months  after the
employment termination date and Options not vested at the employment termination
date  will  expire  at that  date;  provided,  that  this rule does not apply if
termination  of employment  occurs by reason of death or disability or voluntary
retirement  in certain  circumstances.  The latter  situations  are  governed by
Section 9.1.

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                                   Appendix A

This  Appendix A lists the  several  special  rules  which are  involved  in the
application of the  ServiceMaster  Long-Term  Performance  Award Plan. This plan
will be in effect in the year 2000 but will  probably  not be  continued  in its
present  form beyond that date and any  successor  plan is not likely to involve
the  same  special  rules.  Thus,  in  order to  simplify  the main  text of the
Ownership Election Plan, this Appendix will set out the factors to be taken into
account in  applying  the  Long-Term  Performance  Award  Plan to the  Ownership
Election Plan with respect to the year 2000.

1.       If an Electing Executive was a participant in the Long-Term Performance
         Award Plan in the years  1998  and/or  1999,  20% of his award was held
         back for payment at the end of the year 2000, depending upon the extent
         to which the Company met its SMIXX goals.  The Estimated  LTPA for 2000
         will not  include a payout  of any part of the 1998 and 1998  holdbacks
         but will include such portion of the year 2000 holdback amount which is
         expected to be paid out after the close of that year.

2.       The Long-Term  Performance Award Plan provides for a 20% increase in an
         award  if  the  participant   elects  to  take  his  or  her  award  in
         ServiceMaster  shares.  If an Electing  Executive (i) elects to utilize
         the full 75% of his or her Estimated APC and Estimated LPTA for Options
         and (ii)  elects  to take the  remainder  of his  year  2000  Long-Term
         Performance  Award in ServiceMaster  shares,  the Estimated LTPA figure
         will be increased by 20%.


--------
1    The  projections  for  Estimated  LTPA for the year  2000 are  affected  by
     several complex rules in the Long-Term Performance Award Plan. Because that
     plan will  terminate  at the end of the year 2000,  these rules are not set
     out in this Section 4.2 but they are covered in Appendix A.

2    The closing price on the New York Stock  Exchange for December 10, 1999 was
     $11.50.  Accordingly,  that  figure  shall  be  used in  paragraph  (d) for
     elections made in respect of the year 2000.

3   See Appendix A for an explanation of this 1.2 factor.

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