Document:

Exhibit 10.40

 

SEVERANCE AGREEMENT

 

THIS SEVERANCE AGREEMENT (the “Agreement”) is made as of December 5, 2011, by and between Chuck M. Fallon (“Executive”) and The ServiceMaster Company, a Delaware corporation (“ServiceMaster” or the “Company”).

 

WHEREAS, ServiceMaster desires to employ Executive as its President, Terminix, and Executive desires to be employed by ServiceMaster in such capacities, and in connection therewith both parties desire to set forth certain terms and conditions relating to severance, as contained in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and intending to be legally bound, the parties, subject to the terms and conditions set forth herein, agree as follows:

 

1.             Defined Terms.  Any capitalized terms which are not defined within this Agreement are defined in Exhibit A hereto attached.

 

2.             Severance Benefits.

 

(a)           In the event that Executive’s employment hereunder is terminated at any time by ServiceMaster without Cause or by Executive for Good Reason, then ServiceMaster, subject to Section 2(g), shall pay to Executive, as compensation for services rendered to ServiceMaster and its affiliated companies:

 

(1)           Executive’s then-current base salary (the “Base Salary”) earned through the effective date of termination of Executive’s employment with ServiceMaster (the “Date of Termination”), to the extent not previously paid (but after giving effect to any amounts that would be deferred pursuant to the ServiceMaster deferred compensation plan); plus

 

(2)           (i) Executive’s annual bonus earned with respect to the fiscal year immediately prior to the fiscal year in which the Date of Termination occurs, to the extent not previously paid (but after giving effect to any amounts that would be deferred pursuant to the ServiceMaster deferred compensation plan), plus (ii) if the Date of Termination is on or after July 1 of a fiscal year, the bonus that Executive would have been paid in respect of that fiscal had his employment not terminated, pro rated for the portion of the fiscal year during which Executive was employed elapsed through the Date of Termination (the “Pro Rata Bonus”); plus

 

(3)           continued payment of his monthly Base Salary for 12 months following the Date of Termination; plus

 

 

(4)           an amount equal to Executive’s annual bonus paid or payable to Executive with respect to the fiscal year immediately preceding the Date of Termination (and for this purpose, if Executive has not received an annual bonus for the fiscal year immediately preceding the Date of Termination, such amount shall be calculated by using the target annual bonus for such year).

 

(b)           In the event that Executive’s employment hereunder is terminated at any time by ServiceMaster for Cause or by Executive for any reason other than Good Reason, including by reason of retirement, death or disability, then ServiceMaster shall pay to Executive (or Executive’s executors, legal representatives or administrators in the event of Executive’s death), as compensation for services rendered to ServiceMaster and its affiliated companies:

 

(1)           Executive’s Base Salary earned through the Date of Termination or date of death, to the extent not previously paid (but after giving effect to any amounts that would be deferred pursuant to the ServiceMaster deferred compensation plan); plus

 

(2)           in the event Executive’s employment is terminated by reason of death, disability or retirement, (i) Executive’s annual bonus earned with respect to the fiscal year immediately prior to the fiscal year in which the Date of Termination occurs, to the extent not previously paid (but after giving effect to any amounts that would be deferred pursuant to the ServiceMaster deferred compensation plan), plus (ii) if the Date of Termination is on or after July 1 of a fiscal year, a Pro Rata Bonus.

 

(c)           Payment.  Subject to Section 10, (i) any amount payable pursuant to Section 2(a)(1) or 2(b)(1) above shall be paid in accordance with the payroll practices of ServiceMaster; (ii) any amount payable pursuant to Section 2(a)(2) or 2(b)(2) shall be paid when annual bonuses for the applicable fiscal years are paid to other executive officers of ServiceMaster, but in no event later than March 15 of the year following the year in respect of which such bonuses were earned; and (iii) any amount payable pursuant to Section 2(a)(3) or 2(a)(4) shall be paid in equal monthly installments during the one-year period following the Date of Termination, except that all installments that would have been paid during the first 45 days following the Date of Termination shall be paid on the 45th day following the Date of Termination.  In addition, if on the Date of Termination Executive is a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology selected by the Company from time to time, or if none, the default methodology, any or all amounts payable under this Agreement on account of such termination of employment that would (but for this provision) be payable within six months following the Date of Termination, shall instead be paid in a lump sum on the first day of the seventh month following the Date of Termination or, if earlier, upon Executive’s death, except (i) to the extent of amounts that do not constitute a “deferral of compensation” within the meaning of 

 

 

Treasury Regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (ii) benefits which qualify as excepted welfare benefits pursuant to Treasury Regulation Section 1.409A 1(a)(5); and (iii) other amounts or benefits that are not subject to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(d)           Exclusive Severance.  Any amount paid pursuant to Section 2(a) or 2(b) shall be paid in lieu of any other amount of severance relating to salary or bonus continuation to be received by Executive upon termination of employment of Executive under any severance plan, policy or arrangement of ServiceMaster or its affiliated companies.

 

(e)           PSRP.  Executive’s participation, if any, in the ServiceMaster Profit-Sharing and Retirement Plan shall end as of the Date of Termination or date of death, if applicable.

 

(f)            Deferred Compensation Plan.  Executive’s participation, if any, in the ServiceMaster deferred compensation plan shall end as the Date of Termination or date of death, if applicable.  Any compensation previously deferred by Executive (together with any interest and earnings thereon) under the deferred compensation plan or any successor plan shall be paid or distributed in accordance with the terms of the plan and Executive’s elections under the plan.

 

(g)           Release.  Notwithstanding anything to the contrary in this Section 22, in the event the Company is obligated to make payments pursuant to Sections 2(a)(3) or 2(a)(4), it shall be a condition to such payments that, within thirty (30) days following the Date of Termination, Executive enter into a general release of claims waiving any and all claims against the Company, its subsidiaries, their affiliates and their respective officers, directors, employees, agents, representatives, stockholders, members and partners relating to this Agreement and to his employment during the term hereof; provided that Executive shall not be obligated to release (i) Executive’s rights under this Agreement, (ii) claims in respect to equity awards held by Executive, (iii) Executive’s rights to vested benefits under the Company’s employee benefit plans, or (iv) any rights to indemnification or reimbursement from the Company or any of its subsidiaries pursuant to their organizational documents or any applicable D&O insurance policy.

 

(h)           Notice of Termination.  Each party shall provide the other party with thirty (30) days’ advance written notice of its intention to terminate Executive’s employment for any reason, other than a termination by the Company for Cause or termination by Executive with Good Reason (each of which shall be subject to the time periods set forth in Exhibit A).

 

 

(i)            Recoupment.  Executive acknowledges that he shall be subject to such clawback or recoupment policies as may be adopted by the Company for senior executives or named executive officers generally from time to time.

 

3.             Covenants.

 

(a)           Non-Competition, Non-Solicitation and Confidentiality.  Except as otherwise agreed by ServiceMaster in its discretion, from and after the date hereof and through and including the date that is one year after the Date of Termination, Executive shall not do any of the following, directly or indirectly, without the prior written consent of ServiceMaster’s Board of Directors (the “Board”):

 

(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 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, provided that the foregoing shall not prohibit Executive’s passive ownership of less than 1% of any class of voting securities of a publicly held company which would otherwise be prohibited under this Section 3(a)(1); or

 

(2)           directly or indirectly attempt to induce any employee of ServiceMaster or any subsidiary of ServiceMaster to terminate his or her employment with ServiceMaster or any subsidiary of ServiceMaster for any purpose whatsoever, or attempt directly or indirectly, in connection with any business to which Section 3(a)(1) applies, to solicit the trade or business of any current or prospective customer, supplier or partner of ServiceMaster or any subsidiary of ServiceMaster; or

 

(3)           directly or indirectly engage in any activity which is contrary, inimical or harmful to the interests of ServiceMaster or any subsidiary of ServiceMaster, including but not limited to (i) violations of ServiceMaster policies, (ii) disclosure or misuse of any confidential information or trade secrets of ServiceMaster or a subsidiary of ServiceMaster, (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 and (iv) conduct related to employment for which either criminal or civil penalties may be sought.

 

This Section 3 is in addition to and does not supersede any other agreements prohibiting competition with ServiceMaster.  Failure to abide by this agreement may result in the suspension or cancellation of payments specified in Section 2.

 

 

(b)           Litigation and Regulatory Cooperation.  During and after Executive’s employment, Executive shall cooperate fully with ServiceMaster in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of ServiceMaster or its affiliates that relate to events or occurrences that transpired while Executive was employed by ServiceMaster.  Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of ServiceMaster at mutually convenient times.  During and after Executive’s employment, Executive also shall cooperate fully with ServiceMaster or its affiliates in connection with any investigation or review of any Federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Executive was employed by ServiceMaster.  ServiceMaster shall reimburse Executive for any reasonable out-of-pocket expenses incurred in connection with Executive’s performance of obligations pursuant to this Section 3(b).

 

4.             Successors and Assigns.  This Agreement shall inure to the benefit of and be enforceable by ServiceMaster and its successors and assigns and by Executive and Executive’s 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.

 

5.             Notice.  All notices and other communications required or permitted under this Agreement (including the notice required by the definition of Good Reason as set forth in Exhibit A) shall be in writing, shall be given by personal delivery, overnight delivery by an established courier service, or by certified mail, return receipt required, and shall be deemed to have been duly given when delivered, addressed (a) if to Executive, at his address in the records of the Company, and if to ServiceMaster, to ServiceMaster Global Holdings, Inc., c/o The ServiceMaster Company, 860 Ridge Lake Blvd., Memphis, TN 38120, attention Senior Vice President, Human Resources, or (b) to such other address as either party may have furnished to the other in writing in accordance herewith.

 

6.             Entire Agreement; Amendments.  Except as otherwise specified herein, this Agreement and the Exhibit 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.

 

 

7.             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 Executive and 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 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 Executive or ServiceMaster to insist upon strict compliance with any provision of this Agreement or to assert any right which Executive 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.

 

8.             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 Delaware without regard to the principle of conflicts of laws.  The invalidity or enforceability 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.

 

9.             Withholding.  Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, state or local income or employment tax laws or similar statutes or other provisions of law then in effect.

 

10.          Payments by Subsidiaries.  Executive acknowledges that one or more payments hereunder may be paid by one or more of the Company’s subsidiaries, and Executive agrees that any such payment made by such subsidiary shall satisfy the obligations of the Company hereunder with respect to (but only to the extent of) such payment.

 

11.          No Guaranteed Employment.  This Agreement shall not constitute an employment contract or establish a term of employment, and nothing herein will change Executive’s status as an “at-will” employee.  No provision of this Agreement shall be construed to impair the right of the Company and Executive to elect to terminate Executive’s employment at any time and for any reason or no reason.

 

12.          Section 409A.  To the extent that any reimbursement, fringe benefit, or other similar plan or arrangement in which Executive participates during the term of the Executive’s employment under this Agreement or thereafter provides for a “deferral of compensation” within the meaning of Section 409A of the Code, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit; (ii) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed

 

 

or paid); (iii) subject to any shorter time periods provided in any expense reimbursement policy of the Company, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (iv) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement of expenses.  In addition, with respect to any payments or benefits subject to Section 409A, reference to Executive’s “Date of Termination” (and corollary terms) with the Company shall be construed to refer to Executive’s “separation from service” (as determined under Treas. Reg. Section 1.409A-1(h), as uniformly applied by the Company) with the Company.  Whenever a provision under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.  Executive’s right to receive any installment payments hereunder shall, for purposes of Section 409A, be treated as a right to receive a series of separate and distinct payments.

 

13.          Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first written above.

 

 

	
 
    	
THE SERVICEMASTER COMPANY
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jed L. Norden
    
	
 
    	
 
    	
Name: Jed L. Norden
    
	
 
    	
 
    	
Title:   Senior Vice President - Human Resources 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Charles M. Fallon
    
	
 
    	
Charles M. Fallon
    

 

 

Exhibit A

 

As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

(a)           “Cause” means:

 

(1)           a material breach by Executive of his duties and responsibilities (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on Executive’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of ServiceMaster and which is not remedied within thirty (30) days after receipt of written notice from ServiceMaster specifying such breach; or

 

(2)           the commission by Executive of a felony or misdemeanor (whether or not a felony) involving any act of fraud, embezzlement, or dishonesty, or any other intentional misconduct by Executive that adversely and significantly affects the business affairs or reputation of ServiceMaster or an affiliated company; or

 

(3)           any failure by Executive to cooperate with any investigation or inquiry into Executive’s business practices, whether internal or external, including, but not limited to Executive’s refusal to be deposed or to provide testimony at any trial or inquiry.

 

(b)           “Good Reason” means, without Executive’s written consent, the occurrence of any of the following events:

 

(1)           any of (i) the reduction in any material respect in Executive’s position(s), authorities or responsibilities with ServiceMaster, or (ii) any failure to re-elect Executive to serve as President of a business unit of the Company; or

 

(2)           a reduction in Executive’s Base Salary or target annual bonus percentage, each as in effect on the date hereof or as the same may be increased from time to time thereafter, other than reductions that are proportionate to reductions applicable to other senior executives of the Company

 

If Executive determines that Good Reason exists, Executive must notify ServiceMaster in writing, within ninety (90) days following Executive’s knowledge of the first event which 

 

 

Executive determines constitutes Good Reason, or such event shall not constitute Good Reason under the terms of Executive’s employment.  If ServiceMaster remedies such event within thirty (30) days following receipt of such notice, Executive may not terminate employment for Good Reason as a result of such event.Exhibit 10.52

 

Employee Restricted Stock Unit Agreement

 

This Employee Restricted Stock Unit Agreement, dated as of August 12, 2011 (the “Grant Date”), between ServiceMaster Global Holdings, Inc., a Delaware corporation, and the employee whose name appears on the signature page hereof, is being entered into pursuant to the ServiceMaster Global Holdings, Inc. Stock Incentive Plan.  The meaning of capitalized terms may be found in Section 7.

 

The Company and the Employee hereby agree as follows:

 

Section 1.              Grant of Restricted Stock Units

 

(a)               Confirmation of Grant.  Subject to the terms of this Agreement, the Company hereby evidences and confirms, effective as of the date hereof, its grant to the Employee of Restricted Stock Units representing the right to receive the number of shares of Common Stock specified on the signature page hereof.  This Agreement is entered into pursuant to, and the terms of the Restricted Stock Units are subject to, the terms of the Plan.  If there is any conflict between this Agreement and the terms of the Plan, the terms of the Plan shall govern.

 

(b)               Employee Unit Account.  The Company will establish a separate notional account for the Employee and will record in such account the number of Restricted Stock Units awarded to the Employee pursuant to this Agreement.

 

Section 2.              Vesting and Forfeiture

 

(a)               Based on Continued Employment.  The Employee’s Restricted Stock Units shall vest (i) up to fifty percent (50%) on December 31, 2012 based on the Compensation Committee’s assessment, in its sole discretion, of Employee’s achievement of his annual goals and objectives for 2012 and (ii) up to fifty percent (50%) on December 31, 2013 (the “Second Vesting Date”) based on the Compensation Committee’s assessment, in its sole discretion, of Employee’s achievement of his annual goals and objectives for 2013, subject to the Employee’s continued employment with the Company or any Subsidiary through the applicable vesting date.

 

(b)               Effect of a Change in Control.  In the event of a Change in Control occurring prior to the Second Vesting Date, subject to the Employee’s continued employment with the Company or any Subsidiary from the Grant Date to the date of the Change in Control, any Restricted Stock Units which are unvested shall automatically become vested.

 

 

(c)               Discretionary Acceleration.  The Board, in its sole discretion, may accelerate the vesting of all or a portion of the Restricted Stock Units at any time and from time to time.

 

(d)               Effect of Termination of Employment.  Upon termination of the Employee’s employment with the Company and its Subsidiaries for any reason (whether initiated by the Company or by the Employee), any unvested Restricted Stock Units shall be forfeited.

 

Section 3.              Dividend Equivalents

 

If the Company pays any cash dividend or similar cash distribution on the Common Stock, the Company shall credit to the Employee’s account an amount equal to the product of (x) the number of the Employee’s Restricted Stock Units as of the record date for such distribution times (y) the per share amount of such dividend or similar cash distribution on Common Stock.  Any cash amounts credited to the Employee’s account shall be paid to the Employee on the Settlement Date (as defined below).  If the Company makes any dividend or other distribution on the Common Stock in the form of Common Stock or other securities, the Company will credit the Employee’s account with that number of additional shares of Common Stock or other securities that would have been distributed with respect to that number of shares of Common Stock underlying the Employee’s Restricted Stock Units as of the record date thereof.  Any such additional shares of Common Stock or other securities shall be subject to the same restrictions as apply to the Restricted Stock Units.

 

Section 4.              Settlement

 

Subject to Section 8(a), promptly following the date on which a Restricted Stock Unit becomes vested, and in any event no later than March 15th of the calendar year following the calendar year in which such vesting occurs (the “Settlement Date”), the Employee shall receive, without payment, one Settlement Share in respect of each such Restricted Stock Unit.  On or before any Settlement Date, unless otherwise determined by the Board, the Company and the Employee shall enter into a Subscription Agreement that contains repurchase rights, a voting proxy and transfer and other restrictions on the Settlement Shares in the form then customarily used by the Company for such purpose; provided that, if the Employee has previously entered into a Subscription Agreement containing such restrictions, then the Settlement Shares shall be treated as “Shares” for purposes of that Subscription Agreement and shall be subject to such restrictions.

 

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Section 5.              Employee’s Representations and Warranties

 

(a)               Access to Information, Etc.  The Employee represents and warrants as follows:

 

(i)        the Employee understands the terms and conditions that apply to the Restricted Stock Units and the risks associated with an investment in the Restricted Stock Units;

 

(ii)       the Employee has a good understanding of the English language; and

 

(iii)      the Employee is an officer or employee of the Company or one of its Subsidiaries.

 

(b)               No Right to Awards.  The Employee acknowledges and agrees that the grant of any Restricted Stock Units (i) is being made on an exceptional basis and is not intended to be renewed or repeated, (ii) is entirely voluntary on the part of the Company and its Subsidiaries and (iii) should not be construed as creating any obligation on the part of the Company or any of its Subsidiaries to offer any Restricted Stock Units in the future.

 

(c)               Investment Intention.  The Employee represents and warrants that the Employee has been awarded the Restricted Stock Units and any Settlement Shares delivered in respect thereof for his or her own account for investment and not on behalf of any other person or with a view to, or for sale in connection with, any distribution of the Restricted Stock Units.

 

Section 6.              Restriction on Transfer; Non-Transferability of Restricted Stock Units

 

The Restricted Stock Units are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, but not limited to, by gift, operation of law or otherwise).  Any purported Transfer in violation of this Section 6 shall be void ab  initio.

 

Section 7.              Certain Definitions As used in this Agreement, capitalized terms that are not defined herein have the respective meanings given to them in the Plan, and the following additional terms shall have the following meanings:

 

“Agreement” means this Employee Restricted Stock Unit Agreement, as amended from time to time in accordance with the terms hereof.

 

“Company” means ServiceMaster Global Holdings, Inc., provided that for purposes of determining the status of Employee’s employment with the “Company,” such term shall include the Company and its Subsidiaries.

 

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“Compensation Committee” means the Compensation Committee of the Board of Directors of the Company.

 

“Employee” means the grantee of the Restricted Stock Units, whose name is set forth on the signature page of this Agreement.

 

“Grant Date” has the meaning given in the Preamble.

 

“Plan” means the ServiceMaster Global Holdings, Inc. Stock Incentive Plan, as previously adopted by the Company and as amended from time to time in accordance with its terms.

 

“Restricted Stock Unit” means the contractual entitlement to Common Stock evidenced by (and subject to the terms and conditions of) this Agreement.

 

“Securities Act” means the United States Securities Act of 1933, as amended, or any successor statue, and the rules and regulations thereunder that are in effect at the time, and any reference to a particular section thereof shall include a reference to the corresponding section, if any, of such successor statute, and the rules and regulations.

 

“Settlement Date” has the meaning given in Section 4.

 

“Settlement Share” means a share of Common Stock delivered in respect of a Restricted Stock Unit pursuant to Section 4.

 

“Transfer” has the meaning given in the Subscription Agreement to which the Employee is a party.

 

Section 8.              Miscellaneous

 

(a)               Withholding.  The Company or one of its Subsidiaries shall require the Employee to remit to the Company an amount in cash sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding obligations that may arise in connection with the vesting of the Restricted Stock Units and the related issuance of the Settlement Shares.  Notwithstanding the preceding sentence, if the Employee elects not to remit cash in respect of such obligations, the Company shall retain a number of Settlement Shares subject to the Restricted Stock Units then vesting that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld (and the Employee shall thereupon be deemed to have satisfied his or her obligations under this Section 8(a)); provided that the number of Settlement Shares retained shall not be in excess of the minimum amount required to satisfy the statutory withholding tax obligations (it being understood that the value of any fractional share of Common Stock shall be paid in cash).  The number of Settlement Shares to be issued shall thereupon be reduced by the number of Settlement Shares so retained.  The method of withholding set forth in the immediately preceding sentence shall not be available if withholding in this manner would violate any financing

 

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instrument of the Company or any of its Subsidiaries or to the extent that, following a Public Offering, a facility is in place by which the Employee may sell Settlement Shares in the public market to satisfy such obligations.

 

(b)               Limitation of Benefits.  If, whether as a result of accelerated vesting, the grant of an Alternative Award or otherwise, the Employee would receive any payment, deemed payment or other benefit as a result of the operation of Section 2(b) that, together with any other payment, deemed payment or other benefit the Employee may receive under any other plan, program, policy or arrangement, would constitute an “excess parachute payment” under section 280G of the Code, then, notwithstanding anything in this Agreement to the contrary, the payments, deemed payments or other benefits the Employee would otherwise receive under Section 2(b) shall be reduced to the extent necessary to eliminate any such excess parachute payment and the Employee shall have no further rights or claims with respect thereto.  If the preceding sentence would result in a reduction of the payments, deemed payments or other benefits the Employee would otherwise receive under this Agreement (together with any reductions under any other plan, program, policy or arrangement) on an after-tax basis by more than 5%, the Company will use its commercially reasonable best efforts to seek the approval of the Company’s shareholders in the manner provided for in section 280G(b)(5) of the Code and the regulations thereunder with respect to such reduced payments or other benefits (if the Company is eligible to do so), so that such payments would not be treated as “parachute payments” for these purposes (and therefore would cease to be subject to reduction pursuant to this Section 8(b)); provided, however, that if the Company seeks such approval on behalf of the Employee, the Company’s request for the approval of such payments to the Employee shall be submitted to the shareholders on a single slate with all other persons for whom such approval is being sought, and not individually.  This Section 8(b) shall cease to apply if the stock of the Company or any direct or indirect parent or subsidiary of the Company becomes readily tradable on an established securities market or otherwise within the meaning of 26 CFR 1.280G-1, Q/A-6.

 

(c)               Authorization to Share Personal Data.  The Employee authorizes any Affiliate of the Company that employs the Employee or that otherwise has or lawfully obtains personal data relating to the Employee to divulge such personal data to the Company if and to the extent appropriate in connection with this Agreement or the administration of the Plan.

 

(d)               No Rights as Stockholder; No Voting Rights.  The Employee shall have no rights as a stockholder of the Company with respect to any Restricted Stock Units or Settlement Shares covered by the Restricted Stock Units until the delivery of the Settlement Shares.

 

(e)               No Right to Continued Employment. Nothing in this Agreement shall be deemed to confer on the Employee any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

 

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(f)                Notices.  All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, to the Company or the Employee, as the case may be, at the following addresses or to such other address as the Company or the Employee, as the case may be, shall specify by notice to the other:

 

(i)        if to the Company, to it at:

 

ServiceMaster Global Holdings, Inc.
 c/o The ServiceMaster Company
 860 Ridge Lake Boulevard
 Memphis, Tennessee  38120
  Attention: General Counsel
 Fax: (901) 597-XXXX

 

(ii)       if to the Employee, to the Employee at his or her most recent address as shown on the books and records of the Company or Subsidiary employing the Employee.

 

All such notices and communications shall be deemed to have been received on the date of delivery if delivered personally or on the third business day after the mailing thereof.  Copies of any notice or other communication given under this Agreement shall also be given to:

 

Clayton, Dubilier & Rice, LLC
 375 Park Avenue, 18th Floor
 New York, New York  10152
 Fax:  (212) 407-XXXX
  Attention:  David Wasserman

 

and

 

Debevoise & Plimpton LLP
 919 Third Avenue 
 New York, New York 10022 
 Fax:  (212) 909-XXXX
  Attention:  John M. Allen

 

(g)               Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

 

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(h)               Waiver; Amendment.

 

(i)        Waiver.  Any party hereto or beneficiary hereof may by written notice to the other parties (A) extend the time for the performance of any of the obligations or other actions of the other parties under this Agreement, (B) waive compliance with any of the conditions or covenants of the other parties contained in this Agreement and (C) waive or modify performance of any of the obligations of the other parties under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party or beneficiary, shall be deemed to constitute a waiver by the party or beneficiary taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto or beneficiary hereof of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party or beneficiary to exercise any right or privilege hereunder shall be deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise the same at any subsequent time or times hereunder.

 

(ii)       Amendment.  This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Employee and the Company.

 

(i)                Assignability.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Employee without the prior written consent of the other.

 

(j)                Applicable Law.  This Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.

 

(k)               Section and Other Headings, etc.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

(l)                Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

 

7

 

IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date first above written.

 

 

	
 
    	
SERVICEMASTER GLOBAL HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
/s/ Jed L. Norden
    	
 

	
 
    	
 
    	
Name:
    	
Jed L. Norden
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE EMPLOYEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Thomas G. Brackett
    
	
 
    	
Thomas G. Brackett
    

 

 

Total Number of Shares of Common Stock as to which Restricted Stock Units have been Granted Pursuant Hereto: 20,000

 

8

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