Sample Business Contracts


Employment Agreement - ServiceMaster Co. and Ernest J. Mrozek

Employment Forms

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                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of January 1,
2004 (the "Effective Date") by and between ERNEST J. MROZEK ("Executive") and
THE SERVICEMASTER COMPANY, a Delaware corporation ("ServiceMaster").

         WHEREAS, Executive currently serves as President and Chief Operating
Officer of ServiceMaster;

         WHEREAS, ServiceMaster desires that Executive serve as President and
Chief Financial Officer ("CFO") of ServiceMaster;

         WHEREAS,  ServiceMaster  desires to continue to employ  Executive and
Executive  desires to continue to be employed by ServiceMaster; and

         WHEREAS, ServiceMaster and Executive desire to set forth the terms and
conditions upon which Executive shall serve as President and CFO of
ServiceMaster.

         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:

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

     1. Term.  ServiceMaster  shall employ  Executive as President  and CFO, and
        ----
Executive agrees to serve as President and CFO for the period  commencing on the
Effective Date and continuing through and including the earlier of the effective
date of Executive's termination of employment ("Date of Termination"),  the date
of Executive's death, and December 31, 2006 (the "Term").

     2.  Duties.  During the Term,  and subject to the powers,  authorities  and
         ------
responsibilities  vested  in  the  Board  of  Directors  of  ServiceMaster  (the
"Board"),  committees  of the  Board  and  in the  Chief  Executive  Officer  of
ServiceMaster ("CEO"), Executive shall have the authorities and responsibilities
consistent  with his  experience and training and position as President and CFO,
including the authority and  responsibility  for the operation of business units
mutually  agreed  upon by  Executive  and the  CEO,  for the  management  of the
Memphis,  Tennessee  campus,  for the  management of the  financial  accounting,
internal audit,  investor  relations,  tax, treasury and safety  functions,  for
oversight of the branch manager  training  function and technician  compensation
programs, and for the negotiation, review and approval of proposed acquisitions,
investments  and  divestitures.   The  Executive  shall  also  have  such  other
authorities and  responsibilities  as the Board, a committee of the Board or CEO
shall determine from time to time, which duties shall be at least  substantially
equal in  status  and  character  to the  authorities  and  responsibilities  of
Executive on the Effective Date.

     3.  Obligations  of  ServiceMaster  During the Term.  Subject to Section 4,
         -----------------------------------------------
ServiceMaster shall provide the following to Executive during the Term:

<PAGE>
                 (a) Salary. ServiceMaster shall pay Executive an annual base
                     ------
         salary ("Base Salary") in an amount not less than $550,000, payable in
         accordance with the payroll practices of ServiceMaster.

                  (b) Annual Bonus. Executive shall be eligible to participate
                      ------------
         in ServiceMaster's annual bonus plan in respect of each fiscal year of
         ServiceMaster on the same terms and conditions, including performance
         criteria, as other executive officers of ServiceMaster (other than the
         president of a business unit); provided, that Executive's target annual
         bonus shall be not less than 100% of Base Salary.

                  (c) LTPA. Executive shall be eligible to participate in
                      ----
         ServiceMaster's Long-Term Performance Award Plan or any successor plan
         ("LTPA") in respect of each fiscal year of ServiceMaster on the same
         terms and conditions as other executive officers of ServiceMaster;
         provided, that Executive's target payout for any fiscal year shall be
         not less than $595,000 .

                  (d) Equity-Based Compensation. Executive shall be eligible to
                      -------------------------
         be granted stock options, restricted stock and/or other equity-based
         compensation awards on the same terms and conditions as other executive
         officers of ServiceMaster; provided, that Executive's target annual
         value attributed by the Compensation and Leadership Development
         Committee of the Board ("CLDC") to such awards shall be at least
         substantially consistent with Executive's 2003 target value of
         $659,000.

                  (e) Compensation Committee Approval. Notwithstanding Sections
                      -------------------------------
         4(a)-(d), but subject to the definition of Good Reason as set forth in
         Exhibit A, Executive understands and agrees that the CLDC has the
         authority and responsibility to approve Executive's Base Salary, target
         annual bonus, target annual LTPA payout and target annual value
         attributed by the CLDC to equity-based compensation.

                  (f). Benefits. Executive shall be entitled to those employee
                       --------
         benefits and perquisites which ServiceMaster from time to time
         generally makes available to its executive officers ("Benefits")
         subject to the terms and conditions of such benefit plans or programs.
         The Benefits shall include, without limitation, 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,
         including company car and dues payable for club memberships, as the
         Board, CLDC or CEO may determine from time to time. In addition to the
         foregoing Benefits and subject to approval by the CLDC, Executive may
         use the company plane for personal use in accordance with the Policy
         Regarding Use of Company Aircraft.

                  (g) Deferred Compensation Plan. Executive may elect to defer
                      --------------------------
         Base Salary and earned annual bonus and/or LTPA payouts in accordance
         with ServiceMaster's deferred compensation plan.

                                       2
<PAGE>

                  (h) Reimbursement of Expenses. Executive shall be reimbursed
                      -------------------------
         for all proper and reasonable expenses incurred by Executive in the
         performance of his duties hereunder in accordance with the policies of
         ServiceMaster. In addition, during the Term, so long as Executive is
         employed by ServiceMaster and Executive maintains a residence in each
         of the Chicago metropolitan area and the Memphis metropolitan area,
         ServiceMaster shall reimburse Executive, for each night the performance
         of his duties hereunder results in his staying overnight at his
         residence in the Chicago metropolitan area. The amount of the
         reimbursement shall be $150 per night and shall not include any amounts
         incurred by Executive at restaurants, which amounts shall be reimbursed
         to Executive in accordance with the first sentence of this Section
         3(h). In addition, ServiceMaster shall reimburse Executive, in
         accordance with its Relocation Policy for Tier IV employees, for the
         costs of moving his residence while Executive is employed by
         ServiceMaster from the Memphis metropolitan area to the Chicago
         metropolitan area; provided, that any such costs paid by ServiceMaster
         shall be repaid to ServiceMaster by Executive if Executive's employment
         with ServiceMaster is terminated on or prior to December 31, 2006 and
         ServiceMaster would be obligated to make payments to Executive under
         Section 4(a).

4.       Termination.
         -----------
         (a) In the event that Executive's employment hereunder is terminated
(i) during the period beginning on and including the Effective Date and ending
on and including June 30, 2005 by ServiceMaster without Cause or by Executive
for Good Reason or (ii) during the period beginning on and including July 1,
2005 and ending on and including December 31, 2006 by ServiceMaster without
Cause or by Executive for any reason (including for Good Reason or by reason of
retirement), but excluding by reason of death or Disability, then ServiceMaster
shall pay to Executive within 60 days after the Date of Termination, as
compensation for services rendered to ServiceMaster and its affiliated
companies, a lump sum cash amount equal to the sum of subsections (1)-(4) below
and, in addition, the amount determined under subsection (5) below, in each case
subject to any applicable payroll or other taxes required to be withheld:

               (1)  Executive's  full  annual  Base  Salary  through 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) two (2)  times  Executive's  highest  annual  Base  Salary in
          effect during the Term; plus

               (3) two (2) times Executive's  highest target annual bonus during
          the Term; plus

               (4)  reimbursement  of Executive's  expenses  pursuant to Section
          3(h); plus

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<PAGE>

               (5) any restriction  period applicable to shares of ServiceMaster
          restricted stock held by you as of the Date of Termination will lapse,
          and all such  shares  shall  vest,  as of the close of business on the
          Date of Termination;

         provided, that Executive understands and agrees that any amount payable
         and any restricted stock that vests pursuant to Section 4(a)(2), (3) or
         (5) by reason of a termination by Executive of Executive's employment
         shall be conditioned upon Executive giving notice in accordance with
         Section 8 to ServiceMaster not less than 45 days prior to the Date of
         Termination.

                  (b) In the event that Executive's employment hereunder is
         terminated (i) during the period beginning on and including the
         Effective Date and ending on and including June 30, 2005 by
         ServiceMaster for Cause or by Executive without Good Reason or by
         reason of retirement, death or Disability or (ii) during the period
         beginning on and including July 1, 2005 and ending on and including
         December 31, 2006 by ServiceMaster for Cause or by reason of
         Executive's death or Disability, then ServiceMaster shall pay to
         Executive (or Executive's executors, legal representatives or
         administrators in the event of Executive's death) within 60 days after
         the Date of Termination or date of death, as compensation for services
         rendered to ServiceMaster and its affiliated companies, a lump sum cash
         amount (subject to any applicable payroll or other taxes required to be
         withheld) equal to the sum of:

                  (1) Executive's full annual Base Salary 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) reimbursement of Executive's expenses pursuant to Section
         3(h).

                  (c) Exclusive Severance. Subject to Section 6, any amount paid
                      -------------------
         pursuant to Section 4(a) or (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.

                   (d) Stock Options. Each option to purchase shares of
                       -------------
         ServiceMaster's common stock held by Executive on the Date of
         Termination or date of death shall continue in accordance with its
         terms. For purposes of each such option, a termination of Executive's
         employment for any reason shall be treated as a "retirement" after a
         minimum of 15 years of employment and, to the extent each such option
         shall be or become exercisable on or after the Date of Termination or
         date of death, may thereafter be exercised by you until the applicable
         expiration date of the option.


                                       4
<PAGE>

                  (e) Restricted Stock. Each restricted stock award held by
                      ----------------
         Executive shall be subject to the terms and conditions of the
         applicable restricted stock award agreement and corresponding
         ServiceMaster plan, including, without limitation, the restriction
         periods, vesting schedules and termination provisions.

                  (f) Continuation of Benefits. In the event that Executive's
                      ------------------------
         employment hereunder is terminated (i) during the period beginning on
         and including the Effective Date and ending on and including June 30,
         2005 by ServiceMaster without Cause or by Executive for Good Reason or
         (ii) during the period beginning on and including July 1, 2005 and
         ending on and including December 31, 2006 by ServiceMaster without
         Cause or by Executive for any reason (including for Good Reason or by
         reason of retirement), but excluding by reason of death or Disability,
         then for a period of two years commencing on the Date of Termination,
         ServiceMaster and its subsidiaries shall continue to provide all
         Benefits, as then generally made available to executive officers, with
         respect to Executive and Executive's dependents. After the expiration
         of such two-year period, Executive shall be entitled to continue
         Executive's medical coverage under Federal law (COBRA).


                  (g) PSRP and ESPP. Executive's participation, if any, in the
                      -------------
         ServiceMaster Profit Sharing and Retirement Plan ("PSRP") and Employee
         Stock Purchase Plan ("ESPP") shall end as the Date of Termination or
         date of death, if applicable.

                  (h) 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.

5.       Covenants.
         ---------

               (a) Non-Competition,  Non-Solicitation and Confidentiality.  From
                   ------------------------------------------------------
          and after the Effective  Date and through and  including  December 31,
          2007 (or,  if  earlier,  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:

                  (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 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; or


                                       5
<PAGE>


                  (2) directly or indirectly attempt to induce any employee of
                  ServiceMaster 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 or
                  prospective customer, supplier or partner of ServiceMaster; or

                  (3) directly or indirectly engage in any activity which is
                  contrary, inimical or harmful to the interests 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.

                           Executive acknowledges and agrees that each stock
                  option agreement and restricted stock award held by Executive
                  contains covenants of Executive relating to competition
                  against ServiceMaster and its subsidiaries, confidentiality
                  and non-solicitation of employees and customers and similar
                  obligations of Executive. Executive agrees that such covenants
                  are separate from this Agreement, shall continue in accordance
                  with their respective terms and shall survive the termination
                  of this Agreement.

                   (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 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 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 5(b).

6. Effect of Change in Control Agreement.
   -------------------------------------

                  (a) Executive and ServiceMaster are parties to a Change in
         Control Severance Agreement dated as of October 31, 2001 (the "CIC
         Agreement"). Pursuant to Section 8 of the CIC Agreement, ServiceMaster
         shall have the right prior to a Change in Control, in its sole
         discretion, pursuant to action by the Board, a committee thereof or the
         CEO, to approve the termination of the CIC Agreement;

                                       6
<PAGE>

         provided, that no
         such action shall be taken by the Board, a committee thereof or the CEO
         during any period of time when the Board has knowledge that any Person
         (as defined in the CIC Agreement) has taken steps reasonably calculated
         to effect a Change in Control until, in the opinion of the Board, such
         Person has abandoned or terminated its efforts to effect a Change in
         Control; and provided, further, that in no event shall the CIC
         Agreement be terminated after a Change in Control.

                  (b) If, during the Term, (1) a Change in Control of
         ServiceMaster occurs and (2) the CIC Agreement is in effect on the date
         of the Change in Control, this Agreement shall be terminated and
         superseded by the CIC Agreement, as such agreement may be amended,
         modified or superseded from time to time.

     7. 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.

     8. Notice. 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  (a) if to  Executive,  to Ernest J. Mrozek,  9 South Bodin,
Hinsdale, Illinois 60521, and if to ServiceMaster, to The ServiceMaster Company,
3250 Lacey Road,  Downers Grove,  Illinois 60515,  attention  General Counsel or
Corporate  Secretary,  or (b) 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.

     9. Entire Agreement; Amendments. Except as otherwise specified herein, this
        ----------------------------
Agreement  and  Exhibit A  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.

     10.  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 by the Chairman,  Chief Executive  Officer,  any Executive Vice
President,  Treasurer or General Counsel of ServiceMaster or any successor under
this  Agreement.  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

                                       7
<PAGE>

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.


     11.  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 Illinois 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.


     12. 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.


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

                                THE SERVICEMASTER COMPANY


                                By: /s/ Jonathan P. Ward
                                    ---------------------
                                Name:  Jonathan P. Ward
                                Title:  Chairman and Chief Executive Officer

                                /s/ Ernest J. Mrozek
                                --------------------
                                ERNEST J. MROZEK




                                      8
<PAGE>



                                    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 30 days after receipt of written notice
         from ServiceMaster specifying such breach; or

                           (2) the commission by Executive of a felony or
         misdemeanor involving any act of fraud, embezzlement or dishonesty or
         any other intentional misconduct by Executive that substantially and
         adversely affects the business affairs or reputation of ServiceMaster
         or an affiliated company.

                  (b) "Change in Control" shall have the meaning set forth in
                       -----------------
         the CIC Agreement; provided, that in the event such definition shall be
         modified or revised in the CIC Agreement, then the definition of Change
         in Control for purposes of this Agreement shall be so modified or
         revised.

                  (c) "Disability" means Executive's absence from Executive's
                       ----------
         duties with ServiceMaster or its affiliated companies on a full-time
         basis for at least 180 consecutive days as a result of Executive's
         incapacity due to physical or mental illness.

                  (d) "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, (ii) an adverse change in Executive's reporting
         relationships, or (iii) any failure to re-elect Executive to any
         executive officer position with ServiceMaster held by the Executive;

                           (2) a reduction in Executive's Base Salary, target
         annual bonus, target annual LTPA payout or target annual value
         attributed by the CLDC to equity-based compensation, each as in effect
         on the Effective Date or as the same may be increased from time to time
         thereafter; provided, that it shall not constitute Good Reason if any
         reduction is approved by the CLDC and the percentage reduction is equal
         to or less than the corresponding percentage reduction in compensation
         or target compensation of the CEO; or

                           (3) the failure of ServiceMaster to (i) provide
         Executive and Executive's dependents Benefits substantially comparable
         to the plans, practices, programs and policies of ServiceMaster and its
         subsidiaries in effect for Executive on the Effective Date, (ii)
         provide fringe benefits substantially comparable to the



<PAGE>

         plans, practices, programs and policies of ServiceMaster and its
         subsidiaries in effect for Executive on the Effective Date, (iii)
         provide an office, together with secretarial and other assistance,
         substantially comparable to that provided to Executive by
         ServiceMaster on the Effective Date, or (iv) provide Executive with
         four weeks annual paid vacation.

                           For purposes of this Agreement, an isolated,
         insubstantial and inadvertent action taken in good faith and which is
         remedied by ServiceMaster after receipt of notice thereof given by
         Executive shall not constitute Good Reason.



                                      A-2


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