As filed with the Securities and Exchange Commission on October 14, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
The ServiceMaster Company
(Exact name of registrant as specified in its charter)
Delaware 36-3858106
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One ServiceMaster Way
Downers Grove, Illinois 60515-1700
(630) 271-1300
(Address and telephone number of principal executive offices)
ServiceMaster Profit Sharing and Retirement Plan
(Full title of the plan)
Vernon T. Squires
Senior Vice President and General Counsel
The ServiceMaster Company
One ServiceMaster Way
Downers Grove, Illinois 60515-1700
(630) 271-1300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Toni B. Merrick, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601-6636
(312) 861-2000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Title of securities Amount to be Proposed maximum offering Proposed maximum Amount of
to be registered registered (1)(3) price aggregate offering price registration fee
per share (2) (2) (2)
- --------------------------------------------------------------------------------------------------------------------
Common Stock, $.01
par value per share 1,500,000 shares $14.5313 $21,796,950 $5,754.40
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, this
Registration Statement shall be deemed to cover any additional shares
of Common Stock which may be issuable under the plan to reflect stock
splits, stock dividends, mergers and other capital changes.
(2) This calculation is made solely for the purchase of determining the
amount of the registration fee and is made pursuant to Rule 457(h)
based upon the average of the high and low sales prices of the
registrant's Common Stock as reported on the New York Stock Exchange on
October 12, 1999.
(3) In addition, pursuant to Rule 416(c), this registration also covers an
indeterminate amount of interests to be offered or sold pursuant to the
employee benefit plan described herein.
<PAGE>
The purpose of this Registration Statement is to reflect the
registration of shares of Common Stock of the Registrant to be issued pursuant
to the ServiceMaster Profit Sharing and Retirement Plan (the "Plan").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference except to the extent
that any statement or information therein is modified, superseded or replaced by
a statement or information contained in any subsequently filed document
incorporated by reference.
1. Annual Report on Form 10-K for the Fiscal Year ended December 31, 1998.
2. Annual Report on Form 11-K for the Fiscal Year ended December 31, 1998, for
the ServiceMaster Company Master Trust.
3. All other reports filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, since the end of the fiscal period covered
by the Registrant document referred to in 1. above.
4. The description of the Company's Common Stock contained in the Company's
registration statement on Form 8-A.
5. All other reports and documents subsequently filed by the Company pursuant
to Section 13(a), 13(c),14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed
incorporated by reference in this Registration Statement and shall be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
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<PAGE>
Item 6. Indemnification of Directors and Officers
The ServiceMaster Company (the "Company") is incorporated under the
laws of the State of Delaware. Section 145 of the DGCL, inter alia ("Section
145") provides that a Delaware corporation may indemnify any persons who were,
are or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify any persons who are,
were or are threatened to be made, a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the corporation's best
interests, provided that no indemnification is permitted without judicial
approval if the officer, director, employee or agent is adjudged to be liable to
the corporation. Where an officer, director, employee or agent is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director has actually and reasonably incurred.
Article Ten of the Restated Certificate ("Article Ten") provides that
no person shall have any liability of any kind by reason of a Relevant Loss
(defined below) caused in whole or in part by any act or failure to act which
occurred while such person was an officer or director of the Company except: (i)
obligations arising under the express terms of any written contract to which
such person is a party; (ii) the obligation to return to the Company an amount
up to the value actually realized by such person by stealing or by any other
action which constitutes a criminal felony; (iii) any liability imposed by
contract or applicable law which is founded on, arises from or is related to
activities by such person (or such person's agents or affiliates) which are in
competition with any business of the Company or any of its affiliates; and (iv)
any other liability from which it shall not be possible to exempt such person
under applicable law either as constituted on the date on which the Restated
Certificate was filed with the Secretary of State of Delaware (the "Filing
Date") or at any time thereafter. The term "Relevant Loss" designates and
includes any loss, damage or expense of any kind (i) experienced for any reason
by the Company or by any entity controlled by the Company; (ii) which any person
may experience by reason of any purchase (or failure to purchase), maintenance
of an interest in, sale (or failure to sell) or failure to obtain payment of any
amount due on any note, debenture, preferred stock, common stock or other
security issued or issuable by the Company or (iii) which shall otherwise be
caused in whole or in part by or arise in connection with (or would not have
occurred but for) such person's service as a director or officer of the Company.
In addition, Article Ten provides that every director of the Company shall be
exempt (except to the extent expressly set forth therein) from any personal
liability to the Company or any of the Company's stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permitted by (i) Section 102(b)(7) of the DGCL as constituted on the Filing Date
or (ii) any provision of the law of the State of Delaware as constituted at any
time after the December 11, 1991.
Except as otherwise provided in the Restated Certificate, Article
Eleven of the Restated Certificate ("Article Eleven") provides that the Company
shall indemnify any person against, and shall reimburse, such person for any
amount which such person shall pay to satisfy, settle or otherwise deal with,
any attempt to impose any liability or obligation of any kind upon such person
if such attempt or such liability or obligation or both shall arise in
connection with or by reason of, or would not have arisen but for, Covered
Service (defined below) by such person (or any agreement by such person to serve
as a director or officer of the Company or to provide other Covered Service)
including, but not limited to: (i) any claim resulting from any loss, injury,
damage, harm or other disadvantage which the Company, any affiliate, any
employee plan or any person who acquires, holds, or disposes of any interest in
any security issued by the Company suffers or is alleged to have suffered; (ii)
any claim resulting from any act or failure to act by any person which is (or is
alleged to be) beyond the scope of his or her authority, contrary to
instructions or orders or contrary to his or her duties or applicable law; and
(iii) any attempt by any governmental authority or other person to impose any
fine or penalty or to obtain any other recovery by reason of any actual or
alleged breach of any law or other governmental requirement.
3
<PAGE>
The term "Covered Service" designates and includes: (a) service as a
director or officer of the Company; (b) service by a person while he or she is
an officer or director of the Company (i) as an agent or representative of the
Company, (ii) in any other capacity with the Company, (iii) as a director,
officer, employee, agent or representative of, or in any other capacity with,
any affiliate, (iv) in any capacity with any Employee Plan (as defined therein),
and (v) in any other capacity in which such person shall have been asked to
serve by the Company's Board of Directors or Chief Executive Officer; (c) any
services which constituted "Covered Service" under the Amended and Restated
Agreement of United Partnership for ServiceMaster Limited Partnership; and (d)
any other service of any kind by any person with any organization or entity of
any kind (whether or not affiliated with the Company) which shall be designated
in writing as Covered Service by a majority of the members of the Company's
Board of Directors or by the Company's Chief Executive Officer. Service is
deemed to constitute "Covered Service" if it is so designated by the terms in
the preceding sentence regardless of whether it shall have been performed prior
to, at, or after the time Article Eleven became part of the Company's
Certificate of Incorporation. Any person is entitled to rely upon any written
confirmation provided by the Company's Chief Executive Officer or by the
Company's Board of Directors that service by such person in any capacity
specified in such confirmation will constitute Covered Service and to rely upon
the protection afforded by Article Eleven in connection with such service.
Except to the extent the Company shall otherwise expressly agree in
writing, the Company is not obligated under Article Eleven to reimburse any
person for or otherwise indemnify any person against: (a) any obligation the
person may have under any written contract except to the extent such obligation
arises by reason of any action taken by such person to satisfy, settle or
otherwise deal with any claim against which such person is entitled to
indemnification from the Company under Article Eleven or otherwise; (b) any
income taxes payable by reason of salary, bonus or other income or gain actually
realized by such person in connection with any Covered Service; (c) any
liability imposed by contract or applicable law which is founded on, arises from
or is related to activities by such person (or such person's agents or
affiliates) which are in competition with any business of the Company or any of
its affiliates; and (d) any obligation to pay an amount up to the value
personally realized by such person by stealing or by any other action which
constitutes a criminal felony. Except as otherwise provided in the Restated
Certificate, the Company is not obligated under Article Eleven to indemnify any
person in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized by the Board of
Directors of the Company.
Article Eleven provides that each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is or was a director or officer of the
Company, agreed to serve as a director or officer of the Company or is or was
providing any other Covered Service, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer of the Company
or in any other Covered Service position, shall, except as otherwise provided
therein, be indemnified and hold harmless by the Company to the fullest extent
authorized by Delaware law against all expense, liability and loss (including
attorneys' fees, judgments, fines, excise taxes or penalties arising under the
Employee Retirement Income Security Act, as amended from time to time, and
amounts paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director or officer of the Company or to provide any other
Covered Service and shall inure to the heirs, executors and administrators of
such person.
Article Eleven provides that the Company shall reimburse any Covered
Person (as defined therein) for any payment made by such person for any legal
fees or other expenses reasonably incurred by such person in order to
investigate, evaluate, defend against, pay in full, settle or otherwise deal
with (i) any Covered Claim (as defined therein) or (ii) any development or state
of facts which could give rise to a Covered Claim.
Article Eleven also provides that any officer of the Company or any
member of its Board of Directors shall have the right and power to execute on
behalf of the Company any written contract with any other person providing
indemnification or other protection to such other person in connection with
service by such other person as a director or officer of the Company or in
connection with any other Covered Service by such person, and any such contract
shall be legal, valid and binding upon the Company and shall be enforceable
against the Company in accordance with its terms to the maximum extent permitted
by Article Eleven or by applicable law, if it shall be approved by a majority of
the members of the Company's Board of Directors exclusive of the person to whom
indemnification is provided by such contract. The rights of any person under any
particular contract made in accordance with the provisions of the preceding
sentence shall not be impaired or eliminated (i) by reason of the fact that all
or any one or more of the members of the Board who approved such contracts shall
be parties to contracts
4
<PAGE>
affording them similar protection (regardless of when those other contracts
shall have been approved or signed) or shall otherwise have been provided with
protection similar to that provided in the particular contract or shall be
subject to the same claims against which the particular contract is intended to
protect or (ii) for any other reason whatsoever. It is expressly intended that
each person with whom the Company shall enter into a written contract to provide
indemnification or other protection in connection with such person's service as
an officer or director of the Company or in connection with other Covered
Service by such person shall be entitled to rely upon (and shall conclusively be
presumed to have relied upon) the rights which such contract purports to provide
to such person. No separate written contract shall however be necessary in order
for any person to obtain any indemnification or payment to which Article Eleven
purports to entitle such person, and any Covered Person who has no separate
contact of any kind with the Company shall be entitled to receive all
indemnification, payments and other benefits which the provisions in Article
Eleven purport to provide to such Covered Person.
The rights to indemnification and payment provided by Article Eleven
are not exclusive of any other right of any kind which any person may have or at
any time acquire under or by reason of any other provision in the Restated
Certificate, the Company's By-Laws, any agreement, any law or other action by
any governmental authority, or otherwise.
Article Eleven authorizes the Company to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Company, or is or was serving in any other capacity with the Company, any
Employee Plan or any other organization against any expense, liability or loss,
whether or not the Company would have the power to indemnify such person against
such expense, liability or loss under the provisions of Article Eleven, under
applicable law or otherwise.
In addition, Section 145 further authorizes a corporation to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or enterprise, against any liability asserted against him and
incurred by him in any such capacity, arising out of his status as such, whether
or not the corporation would otherwise have the power to indemnify him under
Section 145.
All of the Company's directors and the officers are covered by
insurance policies maintained and held in effect by the Company against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
See Exhibit Index.
The Registrant undertakes to submit the Plan and any amendment thereto
to the Internal Revenue Service ("IRS") in a timely manner and will make all
changes required by the IRS to qualify the Plan.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii)To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement; and
5
<PAGE>
(iii)To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs
(a)(1)(i)and(a)(1)(ii) of this section do not apply
if the information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed with or
furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are
incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing of Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, hereunto
duly authorized, in the Village of Downers Grove, State of Illinois, on October
14, 1999.
THE SERVICEMASTER COMPANY, AS REGISTRANT
By: /s/ VERNON T. SQUIRES
----------------------
Vernon T. Squires
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed on October 14, 1999 by the following
persons in the capacities indicated:
Signature Title
* Chairman, President, Chief Executive Officer and
- ----------------------
C. William Pollard Director of The ServiceMaster Company
* Executive Vice President and Chief Financial Officer
- ----------------------
Steven C. Preston of The ServiceMaster Company
* Vice Chairman and Director of The ServiceMaster Company
- ----------------------
Charles W. Stair
* Vice Chairman and Director of The ServiceMaster Company
- ----------------------
Phillip B. Rooney
* Director of The ServiceMaster Company
- ----------------------
Paul W. Berezny, Jr.
* Director of The ServiceMaster Company
- ----------------------
Henry O. Boswell
* Director of The ServiceMaster Company
- ----------------------
Carlos H. Cantu
Director of The ServiceMaster Company
*
- ----------------------
Brian Griffiths
* Director of The ServiceMaster Company
- ----------------------
Sidney E. Harris
* Director of The ServiceMaster Company
- ----------------------
Herbert P. Hess
* Director of The ServiceMaster Company
- ----------------------
Michele M. Hunt
* Director of The ServiceMaster Company
- ----------------------
Gunther H. Knoedler
* Director of The ServiceMaster Company
- ----------------------
James D. McLennan
* Director of The ServiceMaster Company
- ----------------------
Vincent C. Nelson
7
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* Director of The ServiceMaster Company
- ----------------------
Dallen W. Peterson
* Director of The ServiceMaster Company
- ----------------------
Steven S Reinemund
* Director of The ServiceMaster Company
- ----------------------
Burton E. Sorensen
* Director of The ServiceMaster Company
- ----------------------
David K. Wessner
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed by the
above-named officers and directors of The ServiceMaster Company, which Powers of
Attorney are herewith filed with the Securities and Exchange Commission on
behalf of such officers and directors.
By: /s/ VERNON T. SQUIRES
--------------------------
Vernon T. Squires
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, the administrator of
the Plan has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Village of Downers Grove,
State of Illinois, on October 14, 1999.
PLAN COMMITTEE
SERVICEMASTER PROFIT SHARING AND RETIREMENT PLAN
By: /s/Eric R. Zarnikow
-------------------------------------
Eric R. Zarnikow
Member of Committee
8
<PAGE>
EXHIBIT INDEX
Exhibit Description of Document Sequentially
Number Numbered Page
4.1 Shareholder Rights Agreement between The ServiceMaster
Company and the Harris Trust and Savings Bank as adopted on
December 12,1997 is incorporated by reference to Exhibit 3 to
the Current Report on Form 8-K as filed by ServiceMaster
Limited Partnership on December 29, 1997 (the "SMLP December
29, 1997 8-K" and to Exhibit 3 to the Current Report on Form
8-K as filed by The ServiceMaster Company on Form 8-K on
February 26, 1998 (second of three 8-K reports filed on that
date)(the "Company February 26, 1998 8-K, No. 2").
4.2 The ServiceMaster Company Certificate of Designation,
Preferences and Rights of Junior Participating Preferred
Stock, Series A, is incorporated by reference to Exhibit 4 to
the SMLP December 29, 1997 8-K and to Exhibit 4 to the
Company February 26, 1998 8-K, No. 2.
4.3 Indenture dated as of August 15, 1997 among The ServiceMaster
Company (as successor to ServiceMaster Limited Partnership
and The ServiceMaster Company Limited Partnership) and the
Harris Trust and Savings Bank as trustee is incorporated by
reference to Exhibit 4.1 to Registration Statement on Form
S-3 of the ServiceMaster Limited Partnership and
ServiceMaster Incorporated of Delaware filed with the
Securities and Exchange Commission on July 28, 1997 (the
"July 28, 1997 Registration Statement").
4.4 First Supplemental Indenture dated as of August 15, 1997
among The ServiceMaster Company (as successor to
ServiceMaster Limited Partnership and The ServiceMaster
Company Limited Partnership) and the Harris Trust and Savings
Bank as trustee, is incorporated by reference to Exhibit 4.4
to the Report on Form 10-K as filed by ServiceMaster on May
15, 1998 (the "1998 10-K").
4.5 Second Supplemental Indenture dated as of January 1, 1998
among The ServiceMaster Company (as successor to
ServiceMaster Limited Partnership and The ServiceMaster
Company Limited Partnership) and the Harris Trust and Savings
Bank as trustee is incorporated by reference to Exhibit 2 to
the Current Report on Form 8-K as filed by The ServiceMaster
Company on Form 8-K on February 26, 1998 (first of three 8-K
reports filed on that date).
4.6 Third Supplemental Indenture dated as of March 2, 1998 among
The ServiceMaster Company and the Harris Trust and Savings
Bank as trustee is incorporated by reference to Exhibit 4.3
to the Current Report on Form 8-K as filed by The
ServiceMaster Company on February 27, 1998 (the "Company
February 27, 1998 8-K").
4.7 Fourth Supplemental Indenture dated as of August 10, 1999 by
and between The ServiceMaster Company and Harris Trust and
Savings Bank as trustee is incorporated by reference to
Exhibit 3 to the Current Report on Form 8-K as filed by The
ServiceMaster Company on August 16, 1999 (the "Company August
16, 1999 8-K").
4.8 Form of 6.95% Note due August 14, 2007 is incorporated by
reference to Exhibit 4.1 to the July 28, 1997 Registration
Statement.
4.9 Form of 7.45% Note due August 14, 2027 is incorporated by
reference to Exhibit 4.2 to the July 28, 1997 Registration
Statement.
9
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4.10 Form of 7.10% Note due March 1, 2018 is incorporated by
reference to Exhibit 4.1 to the Company February 27, 1998
8-K.
4.11 Form of 7.25% Note due March 1, 2038 is incorporated by
reference to Exhibit 4.2 to the Company February 27, 1998
8-K.
4.12 Form of $200,000,000 7.875% Global Note due August 15, 2009
is incorporated by reference to Exhibit 4 to the Company
August 16, 1999 8-K.
4.13 Form of $50,000,000 7.875% Global Note due August 15, 2009 is
incorporated by reference to Exhibit 5 to the Company August
16, 1999 8-K.
5 Opinion of General Counsel of the Registrant.
23.1 Consent of General Counsel of the Registrant (included in
Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney.
99.1 ServiceMaster Profit Sharing and Retirement Plan.
99.2 ServiceMaster Press Release on the verdict in Martin v.
ServiceMaster rendered on September 13, 1999.
99.3 Seyfarth, Shaw, Fairweather & Geraldson Press Release on the
verdict in Martin v. ServiceMaster rendered on September 13,
1999.
10
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EXHIBIT 5
Opinion of General Counsel of Registrant
----------------------------------------
October 14, 1999
The ServiceMaster Company
One ServiceMaster Way
Downers Grove, Illinois 60515-1700
Re: The ServiceMaster Company S-8 Registration Statement
I am providing this letter in my capacity as Senior Vice President and
General Counsel of The ServiceMaster Company, a Delaware corporation
("ServiceMaster"), in connection with the filing by ServiceMaster of a
Registration Statement on Form S-8 under the Securities Act of 1933 with the
Securities and Exchange Commission covering the offering of up to 1,500,000
shares of ServiceMaster common stock, $0.01 par value per share (the "Shares"),
pursuant to the ServiceMaster Profit Sharing and Retirement Plan (the "Plan").
For purposes of this letter I have examined such documents, records,
certificates, memoranda and other instruments deemed necessary as a basis for
this opinion.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the other qualifications and limitations set forth below, I
hereby advise you that in my opinion the Shares are duly authorized and, when
(i) the Registration Statement related to the Shares becomes effective under the
Act, (ii) the Shares have been duly issued in accordance with the terms of the
Plan upon receipt of the consideration to be paid therefor and (iii) the
certificates representing the Shares comply as to form with the bylaws of
ServiceMaster and the Delaware General Corporation Law and bear all necessary
signatures and authentications, the Shares will be validly issued, fully paid
and nonassessable.
All of my opinions assume that the Registration Statement related to
the Shares will become effective under the Securities Act before any Shares
covered by such Registration Statement are sold. I have also made other
assumptions which I believe to be appropriate for purposes of this letter.
My advice on every legal issue addressed in this letter is based
exclusively on the internal law of Illinois, the Delaware General Corporation
Law or the federal law of the United States. This letter does not cover any law
which in my experience would generally not be considered by lawyers in Illinois
for purposes of the opinions contained in this letter. Without limiting by
implication the generality of the preceding sentence, this opinion does not
cover the securities laws of the State of Illinois or any other jurisdiction.
I hereby consent to the inclusion of this letter as an exhibit to the
Registration Statement related to the Shares and to the reference in each
prospectus related to such Registration Statement to my having issued the
opinions expressed herein.
Very truly yours,
/s/ Vernon T. Squires
---------------------------
Vernon T. Squires
Senior Vice President and General Counsel
The ServiceMaster Company
11
<PAGE>
EXHIBIT 23.2
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 25, 1999 included (or incorporated by reference) in The ServiceMaster
Company's Form 10-K for the year ended December 31, 1998 and to all references
to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
- -----------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 14, 1999
12
<PAGE>
EXHIBIT 24
Power of Attorney Dated July 22, 1999
Power of Attorney
-----------------
I hereby appoint each of Vernon T. Squires or Steven C. Preston or Eric
R. Zarnikow or any other person occupying the office of General Counsel, Chief
Financial Officer, Treasurer with The ServiceMaster Company ("ServiceMaster") at
the time any action hereby authorized shall be taken to act as my
attorney-in-fact and agent for all purposes specified in this Power of Attorney.
I hereby authorize each person identified by name or office in the preceding
sentence (each of whom is herein called my "authorized representative") acting
alone to sign and file on my behalf in all capacities I may at any time have
with ServiceMaster (including but not limited to the position of director or any
officership position) all or any one or more of the registration statements
prepared under the Securities Act of 1933 identified in this Power of Attorney
and any pre-effective or post-effective amendment to any such registration
statement. I hereby authorize each authorized representative in my name and on
my behalf to execute every document and take every other action which such
authorized representative deems necessary or desirable in connection with any of
the registration statements identified in this Power of Attorney and any sale of
securities or other transaction accomplished by means of any such registration
statement.
This Power of Attorney applies to the following registration statements
which may be filed by ServiceMaster under the Securities Act of 1933: (i) a
registration statement on Form S-8 which registers common stock to be issued
pursuant to the ServiceMaster Profit Sharing and Retirement Plan.
This instrument shall remain in effect until and unless I shall give
written notice to ServiceMaster's President and Chief Executive Officer or
ServiceMaster's General Counsel or ServiceMaster's Chief Financial Officer of my
election to revoke this instrument. No such revocation shall be effective to
revoke the authority for any action taken pursuant to this Power of Attorney
prior to such delivery of such revocation.
This instrument shall be governed by the law of the State of Illinois.
Dated: July 22, 1999.
/s/ C. William Pollard
------------------------
C. William Pollard
/s/ Carlos H. Cantu
------------------------
Carlos H. Cantu
/s/ Phillip B. Rooney
------------------------
Phillip B. Rooney
/s/ Charles W. Stair
-------------------------
Charles W. Stair
/s/ Paul W. Berezny, Jr.
-------------------------
Paul W. Berezny, Jr.
/s/ Henry O. Boswell
-------------------------
Henry O. Boswell
13
<PAGE>
/s/ Brian Griffiths
-------------------------
Brian Griffiths
/s/ Sidney E. Harris
-------------------------
Sidney E. Harris
/s/ Herbert P. Hess
-------------------------
Herbert P. Hess
/s/ Michelle M. Hunt
-------------------------
Michelle M. Hunt
/s/ Gunther H. Knoedler
--------------------------
Gunther H. Knoedler
/s/ James D. McLennan
-------------------------
James D. McLennan
/s/ Vincent C. Nelson
-------------------------
Vincent C. Nelson
/s/ Dallen W. Peterson
-------------------------
Dallen W. Peterson
/s/ Steven S Reinemund
-------------------------
Steven S. Reinemund
/s/ Burton E. Sorensen
-------------------------
Burton E. Sorensen
/s/ David K. Wessner
-------------------------
David K. Wessner
14
<PAGE>
SERVICEMASTER
PROFIT SHARING AND RETIREMENT PLAN
(As Amended and Restated Effective As Of October 1, 1999)
Kirkland & Ellis
Chicago
<PAGE>
CERTIFICATE
I, Sandra L. Groman, Secretary of The ServiceMaster Company,
hereby certify that the attached document is a correct copy of the ServiceMaster
Profit Sharing and Retirement Plan, as in effect on October 1, 1999.
Dated this 14th day of October, 1999.
By /s/ Sandra L.Groman
-----------------------------
Secretary as Aforesaid
(Corporate Seal)
<PAGE>
SERVICEMASTER
PROFIT SHARING AND RETIREMENT PLAN
(Effective As of October 1, 1999)
Table of Contents
-----------------
PAGE
----
ARTICLE 1 - Introduction 1
1.1 Purpose of the Plan, Effective Date 1
1.2 Plan Administrator, Plan Year 1
1.3 The Trust 1
1.4 The Employers 2
1.5 Supplements 3
1.6 Plan Benefits For Participants Who Terminated
Employment Prior to the Effective Date With Respect
to Such Participants 3
ARTICLE 2 - Plan Participation 3
2.1 Eligibility 3
2.2 Years of Service 4
2.3 Hours of Service 6
2.4 Leave of Absence 6
2.5 Cessation of Active Participation 7
2.6 Resumption of Active Participation 7
2.7 Notice of Participation 8
2.8 Military Service 8
2.9 U.S. Foreign Service Employees 8
ARTICLE 3 - Participant Contributions 9
3.1 Participant Elective Contributions 9
3.2 Form of Participant Contributions 10
3.3 Modification, Discontinuance and Resumption of
Elective Contributions 10
3.4 Compensation 10
3.5 Rollover Contributions 11
3.6 Transferred Benefits 12
3.7 Restricted Participation with Respect to Rollover
Contributions and Transferred Benefits 13
ARTICLE 4 - Employers' Contributions 14
4.1 Employers' Contributions 14
4.2 Payment of Employers' Contributions 15
4.3 Allocation of Employer Contributions 15
4.4 Verification of Employers' Contributions 16
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ARTICLE 5 - Plan Accounting and Investment Funds 17
5.1 Participant Account Balances 17
5.2 Accounting Dates 18
5.3 Date of Crediting Contributions and Allocation of
Forfeitures 18
5.4 Investment of Account Balances 19
5.5 Investment Funds 20
5.6 Investment Elections 20
5.7 Manner of Making Investment Elections 21
5.8 Investment Risks 21
5.9 Plan Expenses 22
5.10 Adjustment of Participants' Accounts 22
5.11 Statement of Accounts 23
ARTICLE 6 - Distribution of Account Balances 24
6.1 Retirement, Death or Disability 24
6.2 Resignation or Dismissal 24
6.3 Forfeitures 25
6.4 Method of Benefit Payment 25
6.5 Selection of Time and Manner of Benefit Payment 26
6.6 Designated Beneficiaries 28
6.7 Payment to Substitute Beneficiaries 28
6.8 Payment With Respect to Incapacitated Participants or
Beneficiaries 30
6.9 Final Court Orders 30
6.10 Direct Rollover of Distributions 30
ARTICLE 7 - Withdrawals and Loans During Employment 32
7.2 Age 59 1/2 Withdrawals 32
7.3 After-Tax Withdrawals 32
7.4 Hardship Withdrawals 32
7.5 Loans to Participants 34
7.6 No Representation Regarding Tax Effect of
Withdrawals or Loans 36
ARTICLE 8 - Reemployment 36
8.1 Rehired Employee or Participant 36
8.2 Reinstatement of Forfeitures 37
ARTICLE 9 - Limitations 38
9.1 Contribution Limitations 38
9.2 Participant Covered by Defined Contribution Plan 39
9.3 Participant Covered by Defined Contribution Plan
and Defined Benefit Plan 41
9.4 Distribution of Excess Deferrals 42
9.5 Highly Compensated Employee 43
9.6 Limitations on Elective Contributions 43
9.7 Limitation on Employee and Matching Contributions 47
9.8 Multiple Use Limitation 52
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<PAGE>
ARTICLE 10 - Plan Administrator 53
10.1 Plan Administrator's Duties 53
10.2 Action by Plan Administrator 54
10.3 Information Required for Plan Administration 55
10.4 Decision of Plan Administrator Final 55
10.5 Review of Benefit Determinations 56
10.6 Uniform Rules 56
10.7 Plan Administrator's Expenses 56
10.8 Interested Plan Administrator 57
10.9 Resignation or Removal of Plan Administrative
Committee Members 57
10.10 Indemnification 57
ARTICLE 11 - Relating to the Employers 58
11.1 Action by Employers 58
11.2 Additional Employers 58
11.3 Restrictions on Reversions 58
ARTICLE 12 - Amendment, Termination or Plan Merger 59
12.1 Amendment 59
12.2 Termination 60
12.3 Plan Merger 61
12.4 Continuation by a Successor or Purchaser 61
12.5 Notice to Participants of Amendments, Terminations
or Plan Mergers 61
12.6 Vesting and Distribution on Termination 61
ARTICLE 13 - General Provisions 62
13.1 Examination of Plan Documents 62
13.2 Notices 62
13.3 Nonalienation of Plan Benefits 62
13.4 No Employment Guarantee 62
13.5 Participant Litigation 63
13.6 Successors 64
13.7 Adequacy of Evidence 64
13.8 Gender and Number 64
13.9 Waiver of Notice 64
13.10 Applicable Law 64
13.11 Severability 64
13.12 Fiduciary Responsibilities 64
ARTICLE 14 - Top-Heavy Plan Rules 65
14.1 Key Employees 65
14.2 Top-Heavy Plan 66
14.3 Aggregation Groups 67
14.4 Minimum Contributions and Benefits 68
Exhibit A 69
Supplement 1 70
iii
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SERVICEMASTER
PROFIT SHARING AND RETIREMENT PLAN
(As Amended and Restated Effective As Of October 1, 1999)
ARTICLE 1
Introduction
1.1 Purpose of the Plan, Effective Date. The ServiceMaster
Profit Sharing and Retirement Plan (the "plan") constitutes an amendment,
restatement, continuation and merger of the plans set forth on Appendix A (the
"prior plans"), effective with respect to each of the prior plans as of the
effective date. The "effective date" shall be October 1, 1999. The plan is
maintained by The ServiceMaster Company (the "company") to enable eligible
employees of the company and eligible employees of any subsidiary or related
entity which is not excluded from participation by the company to accumulate
funds and, thereby, assist such employees in providing for their future
security, as set forth herein and in the trust agreement adopted as a part
hereof. The plan is intended to comply with the applicable requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
Sections 401 and 501 of the Internal Revenue Code of 1986, as amended (the
"Code").
1.2 Plan Administrator, Plan Year. The plan is administered by
a plan committee (the "plan administrator") whose members shall be appointed by
the company. Article 10 describes certain powers, duties and responsibilities of
the plan administrator with respect to the administration of the plan. The plan
is administered on the basis of a plan year which begins each year on January 1
and ends on the next following December 31 (the "plan year").
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<PAGE>
1.3 The Trust. The assets of the plan are held and
invested by one or more trustees (the "trustee") acting and appointed for such
purpose by the company in accordance with one or more trust agreements (the
"trust") which implement and form a part of the plan. Reference to the trust
fund shall include all assets held by the trustee or any investment managers
or insurance institutions in accordance with the terms of the trust and this
plan. The trust fund from time to time shall consist of one or more funds
established through one or more trust agreements or through a combination of
insurance contracts and trust agreements, as determined by the company under
the trust or trusts implementing the plan. Such funds shall be maintained for
the purpose of receiving and holding contributions to the plan and the interest
and other income thereon and paying benefits provided under the plan. The
company shall determine the form and terms of each insurance contract and trust
agreement and from time to time may direct the transfer of amounts held in any
such fund to any such other fund in accordance with the provisions of the
applicable trust agreements or insurance contracts. Subject to applicable law,
benefits provided through any insurance contract will be paid in accordance with
its terms and conditions.
1.4 The Employers. The plan is extended to all subsidiaries
of the company that have not been excluded from participation by the documents
governing acquisition of the subsidiary or otherwise by the company. The company
and its related entities whose employees are covered under the plan are referred
to herein collectively as the "employers" and individually as an "employer."
The term "ServiceMaster Companies" includes the employers and all excluded
subsidiaries and related entities (and each such corporation is sometimes
referred to herein individually as a "ServiceMaster Company"). Any business
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<PAGE>
entity which is not an employer under the plan, but is a member of a controlled
group of corporations (within the meaning of Section 1563(a) of the Code,
determined without regard to Sections 1563(a)(4) and 1563(e)(3)(C) thereof) or a
member of a trade or business under common control (within the meaning of
Section 414(c) of the Code) which contains an employer under the plan or a
member of an affiliated service group (as defined in Section 414(m) of the Code)
which contains an employer under the plan shall, for purposes of the plan, be
considered as a subsidiary or related entity that has not adopted the plan.
1.5 Supplements. From time to time supplements may by
amendment be attached to and form a part of this plan and shall be given the
same effect that such provision would have if it was incorporated within the
basic text of the plan. Such supplements may modify or supplement the provisions
of the plan as they apply to particular groups of employees or groups of
participants, shall specify the persons affected by such supplements and shall
supersede the other provisions of the plan to the extent necessary to eliminate
inconsistencies between the plan provisions and the provisions of such
supplements.
1.6 Plan Benefits For Participants Who Terminated Employment
Prior to the Effective Date With Respect to Such Participants. To the extent
permitted by law, the benefits provided hereunder with respect to any
participant who retired or whose employment terminated prior to the effective
date applicable to such participant, will, except as otherwise specifically
provided herein, be governed in all respects by the terms of the prior plan as
in effect on the date of the participant's retirement or other termination of
employment.
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<PAGE>
ARTICLE 2
Plan Participation
2.1 Eligibility. Each employee of an employer who was a
participant in a prior plan immediately prior to the effective date will become
a participant in the plan on such effective date in accordance with the terms of
the plan until such employee's participation ceases in accordance with the terms
of the plan. Each other employee of an employer will become a participant in the
plan as of the later of the effective date, or on the entry date coincident
with or next following the date he meets the following requirements
(for this purpose, the first day of each calendar month or such other period
as the plan administrator establishes is an "entry date"):
(a) He is a covered employee;
(b) He has attained age eighteen years; and
(c) He has completed one year of service (as
defined in section 2.2); and
(d) He has made an election to participate in
the plan by submitting enrollment forms to
the plan administrator or completing
enrollment via a telephonic voice response
system or through such other administrative
procedures required by the plan
administrator.
For purposes of this plan, a "covered employee" shall mean any
employee of an employer excluding (i) any employee who is included in the unit
of employees covered by a negotiated collective bargaining agreement which does
not as of the effective date provide for participation in the plan, (ii) any
non-resident alien (within the meaning of Section 7701(b)(1)(B) of the Code),
who receives no earned income from his employer which constitutes income from
sources within the United States, (iii) any leased employee (as defined in
Section 414(n) of the Code), and (iv) any employee who is or can become eligible
to participate in another tax-qualified defined contribution plan
maintained by a ServiceMaster Company. "Employee" shall mean a
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<PAGE>
person who is receiving remuneration for personal services rendered as a common
law employee of an employer (or who would be receiving such remuneration except
for an authorized leave of absence).
2.2 Years of Service. A participant will be granted "years of
service" equal to his period of employment (in full and fractional years) by the
ServiceMaster Companies commencing with his employment commencement date and
ending with the employee's severance from service date.
(a) An employee's "employment commencement date"
shall be the date the employee first performs an hour of
service (as defined in section 2.3) for a ServiceMaster
Company or a "designated predecessor employer" and his
"severance from service date" shall be the earlier of the date
his employment with all of the ServiceMaster Companies
terminates on account of resignation, retirement, discharge or
death or the first anniversary of the first day of a period
during which the employee is absent from service with the
ServiceMaster Companies (with or without pay) for any reason
other than resignation, retirement, discharge, death or leave
of absence on account of military service (as described in
section 2.4(a)) provided the employee returns to service
within the period provided by applicable law. A "designated
predecessor employer" is a predecessor employer of a
participant, the assets or stock of which have been acquired
by the company in the transaction that resulted in such
participant becoming an employee of an employer.
(b) If an employee terminates his employment with the
ServiceMaster Companies and is later rehired by the
ServiceMaster Companies within one year of his termination of
employment (or earlier absence from service for reasons other
than a termination) he shall not be considered to have
incurred such prior termination of employment for purposes of
determining his years of service under this section 2.2.
(c) Solely for purposes of determining whether an
employee has incurred a break-in-service for purposes of
section 6.3 and 8.1, the severance from service date of an
employee who is on a maternity or paternity leave of absence
(as described in section 2.4(b)) shall be
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<PAGE>
the earlier of the date his employment terminates on account
of resignation, retirement, discharge or death or the second
anniversary of the first day of his absence.
(d) A participant's service shall not be less than
his service determined as of the effective date with respect
to such participant and service performed under a prior plan
shall be determined in accordance with the provisions of such
prior plan on the day prior to the date an employee becomes a
covered employee hereunder.
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<PAGE>
2.3 Hours of Service.
(a) Each hour for which an employee is directly or
indirectly compensated or entitled to be compensated for his
performance of duties for any ServiceMaster Company as an
employee (with each overtime hour being taken into account as
if it were a normal work hour);
(b) Each hour for which an employee is directly or
indirectly compensated or entitled to be compensated by a
ServiceMaster Company with respect to a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacitation (including disability),
layoff, military duty or leave of absence (as defined in
section 2.4); and
(c) Each other hour required by federal law to be
counted as an "hour of service," including each such hour for
which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by a ServiceMaster Company.
2.4 Leave of Absence. A "leave of absence" as used in the plan
means:
(a) A leave of absence required by law or granted by
a ServiceMaster Company on account of service in military or
governmental branches described in any applicable statute
granting reemployment rights to employees who enter such
branches, or any other military or governmental branch
designated by an employer;
(b) A leave of absence for any period the employee is
absent from work by reason of the employee's pregnancy, the
birth of the child of the employee, the placement of a child
with the employee in connection with the adoption of the child
by the employee or the caring for the child for a period
beginning immediately after such birth or placement; and
(c) Any other absence from active employment with an
employer that is approved by such employer and not treated by
it as a termination of employment.
-7-
<PAGE>
Leaves of absence granted by an employer will be governed by rules uniformly
applied to all employees of that employer similarly situated.
2.5 Cessation of Active Participation. Once a covered employee
of an employer has become an active participant in the plan in accordance with
section 2.1 above, such employee shall remain a participant in the plan until
the date that the participant's entire account balances under the plan have been
distributed to him or on his behalf in accordance with the plan. During a period
of employment with an employer while a participant is a covered employee, a
participant shall be considered for all purposes of the plan to be an "active
participant." During all other periods of participation a participant shall be
considered an "inactive participant." Only those participants who are active
participants with respect to a pay period are entitled to share in employer
contributions made with respect to that pay period. Beneficiaries of deceased
participants will be treated as inactive participants for purposes of the plan
(provided that such beneficiaries may not designate additional beneficiaries in
accordance with section 6.6 and, accordingly, any unpaid benefits remaining upon
the death of a designated beneficiary of a deceased participant shall be
distributed in accordance with the provisions of section 6.7).
2.6 Resumption of Active Participation. Any employee of an
employer who was previously an active participant in the plan who ceases to be a
covered employee and who again becomes a covered employee will be eligible to
elect to again become an active participant effective as soon as practicable
after the date he completes and files a written election with the plan
administrator (or completes such other procedures required by the plan
administrator). Any employee of an employer who was previously an active
participant in the plan but who elected to discontinue making salary reduction
contributions in accordance with section 3.3, may elect to again become an
active participant
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<PAGE>
as of the first day of each calendar month (or such other period as the plan
administrator establishes), by properly making an election as described in
section 2.1. Any employee of an employer who was previously an active
participant in the plan but who is precluded from making salary reduction
contributions in accordance with section 7.2 may elect to again become an active
participant as of the first day of the calendar month (or such other period as
the plan administrator establishes) following the date that such employee is no
longer so precluded from making salary reduction contributions, by properly
making an election as described in section 2.1.
2.7 Notice of Participation. Each employee will be notified of
the date he becomes a plan participant and each participant and other person
receiving benefits under the plan will be furnished with a copy of a summary
plan description.
2.8 Military Service. Notwithstanding any provision of the
plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code. Loan repayments will be suspended under this plan as permitted under
Section 414(u)(4) of the Code.
2.9 U.S. Foreign Service Employees. It is intended that a U.S.
foreign service employee (as defined below) may become or continue to be
eligible to participate in the plan to the same extent as if the employee were
employed by an employer. A "U.S. foreign service employee" means a person (i)
who is a citizen of the United States, (ii) who is employed by a subsidiary
incorporated outside the United States that qualifies as a "foreign subsidiary,"
as defined in Section 406 of the Internal Revenue Code, and as to which an
employer has entered into an agreement under Section 3121(l) of the Internal
Revenue Code, and (iii) for whom contributions under a funded plan of deferred
compensation (whether or not a plan described in Section 401(a), 403(a) or
405(a) of the Internal Revenue Code) are not provided by any other person with
respect to remuneration paid to such individual by that subsidiary.
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<PAGE>
ARTICLE 3
Participant Contributions
3.1 Participant Elective Contributions. Subject to the
conditions and limitations of this Article 3 and Article 9, for each plan year
each active participant may elect to reduce his compensation from his employer
by an amount of up to 15 percent, in whole multiples of one percent, of his
compensation for such plan year, and his employer shall, in accordance with
section 4.1(b), contribute the amount of such reduction to the plan on his
behalf as an "elective contribution." The plan administrator, in its discretion,
may at any time and from time to time limit the maximum amount of elective
contributions which may be made by employees and officers who are highly
compensated employees. Notwithstanding any provision contained herein to the
contrary, a participant's elective contributions in any calendar year to this
plan and to any other plan maintained by a ServiceMaster Company in which such
participant participates may not exceed $10,000 (or such other maximum amount as
may be permitted from time to time by the Secretary of the Treasury or the
Secretary's delegate or by law). The elective contributions made on behalf of a
participant and the earnings thereon shall be fully vested and nonforfeitable at
all times. Each participant shall elect his rate of elective contributions
pursuant to administrative procedures required by the plan administrator.
Completion of such administrative procedures shall evidence the participant's
authorization to reduce his compensation and his agreement (until subsequently
modified by such participant as permitted by section 3.3 or until he shall cease
to be an active participant) to have elective contributions made on his behalf
at his chosen rate. Any changes in a participant's compensation will result in
an automatic adjustment in the amount (but not the percentage) of his
compensation on a pre-tax basis which is contributed to the plan.
-10-
<PAGE>
3.2 Form of Participant Contributions. All participant
elective contributions shall be made by payroll deduction (or periodically
corresponding to payroll deduction) or by any other method approved by the plan
administrator. The plan administrator may adopt appropriate regulations,
procedures or forms pertaining to participant contributions. Elective
contributions shall be paid to the trust fund at such times as may be necessary
or appropriate for the proper administration of the plan and in accordance with
applicable law, but no later than the fifteenth business day of the month
following the month in which such amount would otherwise have been payable to
the participant in cash.
3.3 Modification, Discontinuance and Resumption of Elective
Contributions. A participant may elect to increase, reduce or resume his rate of
elective contributions (within the limits specified in section 3.1) that are
made by payroll deduction effective as of the first day of any calendar month
(or such other period as the plan administrator establishes). A participant may
elect to discontinue making all such contributions effective as of any regularly
scheduled payday of his employer. Such elections shall be made by filing an
election form with the plan administrator (or by completing such other
administrative procedures prescribed by the plan administrator) on a timely
basis prior to the date such election is to be effective.
3.4 Compensation. Subject to the exclusions set forth below, a
participant's "compensation" means such participant's earnings for services
rendered to the employers as an employee for the plan year, including bonuses,
commissions and overtime, but excluding:
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<PAGE>
(a) Any amounts contributed by the employer for
the participant's benefit to this plan or any other
profit sharing, pension, stock bonus or other retirement or
benefit plan maintained by the employer; provided, however,
that any salary reduction amounts elected by the participant
and credited on such participant's behalf to a cafeteria plan
(as defined in Section 125(c) of the Code) or a qualified cash
and deferred arrangement (as defined in Section 401(k)(2) of
the Code) shall be included in such participant's
compensation;
(b) Any reimbursements for medical or dental
expenses, travel expenses, automobile allowances, relocation
allowances, educational assistance allowances and awards or
other special allowances;
(c) Any income realized for federal income tax
purposes as a result of (i) group life insurance, (ii) the
personal use of an employer-owned automobile, (iii) the grant
or exercise of an option or options to acquire shares of any
ServiceMaster Company, the receipt of a cash appreciation
payment related to shares of any ServiceMaster Company
(whether or not related to or in lieu of the exercise of such
an option or options), the disposition of shares acquired on
exercise of such an option, or (iv) the transfer of restricted
shares or restricted property of a ServiceMaster Company, or
the removal of any such restrictions;
(d) Any compensation received while on a leave of
absence from active work (other than short term disability
pay) and any severance pay that does not constitute payment
for services rendered to the employers as an employee for the
plan year;
(e) Any compensation paid or payable to the
participant, or to any governmental body or agency on account
of the participant, under the terms of any state, federal or
foreign law requiring the payment of such compensation because
of the participant's voluntary or involuntary termination of
employment with any ServiceMaster Company;
(f) Any compensation paid or payable to the
participant which is in excess of the maximum compensation
that may be considered under a plan pursuant to Section
401(a)(17) of the Code (or such other amount as may be
determined from time to time by the Secretary of the Treasury
or his delegate or by law).
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<PAGE>
3.5 Rollover Contributions. The plan administrator may, in
accordance with Section 402(c) of the Code, permit any employee of an employer
to make a qualifying rollover contribution to the plan. For distributions
received by the employee on and after January 1, 1993, a "qualifying rollover
contribution" means the contribution to the plan by an employee of a portion or
all of an eligible rollover distribution (as defined in Section 402(f)(2)(A) of
the Code or as referred to in Section 401(a)(31)(c) of the Code). (With respect
to distributions received prior to January 1, 1993, a qualifying rollover
distribution means the contribution to the plan by an employee of a portion or
all of a qualifying total distribution (as defined prior to January 1, 1993 in
Section 401(a)(5)(E)(i) of the Code) or a rollover contribution (as defined
prior to January 1, 1993 in Section 408(d)(7) of the Code)). A qualifying
rollover contribution to be made by an employee must be made to the trust fund,
in care of the plan administrator, by not later than the sixtieth day following
the day upon which the employee received the distribution with respect to which
the qualifying rollover contribution is to be made. The plan administrator shall
refuse to permit the contribution to the plan of property other than money (and
shall require instead that the property be sold and the proceeds contributed). A
participant's qualifying rollover contribution shall be credited to the
participant's rollover account (as defined in subsection 5.1(c)) as of the
accounting date that is coincident with or next following the date the
contribution is made. If a participant fails to make a timely election with
respect to the investment of all or a portion of his qualifying rollover
distribution, the portion over which the participant has not directed the
investment shall be invested in such manner as may be directed by the plan
administrator.
3.6 Transferred Benefits. If an employee of an
employer had previously participated in any other qualified
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<PAGE>
pension, profit sharing, stock bonus or other retirement or employee benefit
plan and such other plan permits the transfer to this plan of the vested portion
of such employee's benefits under such other plan and, if so directed by the
plan administrator in its discretion, the trustee shall accept a transfer of
cash to this plan equal to the benefits of such employee under such other plan
which are being transferred to this plan (and such employee shall thereby become
a participant if such employee was not already a participant). A participant
shall be fully vested in all such transferred benefits. No amounts shall be
transferred to this plan from any other plan if the accrued benefit payable to
the employee under such other plan must be provided in the form of a qualified
joint and survivor annuity or if a qualified preretirement survivor annuity must
be provided to the surviving spouse of such employee with respect to such
accrued benefit unless a supplement is adopted for the purpose of accounting for
and preserving the optional forms of payment that are applicable to such
transferred amount. The portion of a participant's transferred benefits
attributable to such employee's nondeductible contributions under such other
plan shall be credited to a special account established in the name of such
employee and entitled "participant contribution account" and the remaining
portion of such employee's transferred benefits shall be credited to such
employee's rollover account (or any other applicable account as designated by
the plan administrator) as of the accounting date that is coincident with or
next following the date the transfer is made.
3.7 Restricted Participation with Respect to Rollover
Contributions and Transferred Benefits. For purposes of the plan, a participant
with respect to whom a qualifying rollover contribution or a transfer of
benefits is made in accordance with section 3.5 or 3.6, respectively, shall not
be eligible to make elective contributions or have employer contributions made
on his behalf before becoming a participant for all purposes of the plan
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in accordance with section 2.1 and shall not be eligible to share in the
allocation of employer contributions before satisfying the eligibility
requirements of section 2.1.
ARTICLE 4
Employers' Contributions
4.1 Employers' Contributions. Subject to the conditions and
limitations of this Article 4 and Article 9, for each plan year each employer
will make contributions under the plan for each participant employed by it
during that plan year in an amount equal to the sum of the following:
(a) Employer Matching Contributions. A matching
contribution on behalf of each participant who is employed by
an employer on the last day of the plan year (including
employees who are on an unpaid leave of absence from such
employer on such date and each participant who ceased
employment with the employer during the plan year on account
of death, disability, early retirement, normal retirement or
transferred to another ServiceMaster Company), and who has
elected to contribute at least 1 percent of such participant's
compensation for such plan year to the plan pursuant to
section 3.1 in the amount, if any, which the company
determines by resolution of its board of directors to
contribute to the plan as a matching contribution for such
plan year. Any such resolution shall specify the amount of the
contribution or a definite basis or formula by which the
contribution can be determined within a reasonable time after
the end of the applicable plan year with respect to each group
of employees entitled to receive matching contributions. Such
contribution shall be allocated to participants' accounts as
of the last day of the plan year for which such contributions
are made in accordance with section 4.3. For purposes of the
plan, "early retirement" shall mean a participant's retirement
from employment with all employers on or after attaining age
55 but prior to attaining age 65 and after completing 10 years
of service. For purposes of the plan, "normal retirement"
shall mean a participant's retirement from employment with all
employers on or after attaining age 65.
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(b) Elective Contributions. 100 percent of the
elective contributions (as defined in section 3.1)
elected by the participant for that plan year.
(c) Supplemental Employer Contributions. That
additional amount, if any, which the company determines by
resolution of its board of directors to contribute to the
plan. Any such resolution shall specify the amount of the
contribution or a definite basis or formula by which the
contribution can be determined with respect to each employer
within a reasonable time after the end of that plan year. Such
contribution shall be allocated to participants' accounts as
of the last day of the benefit computation period (as defined
in section 4.3) for which such contributions are made in
accordance with section 4.3. Each employer will reimburse the
company each plan year for the portion of the supplemental
employer contribution made by the company which is allocable
to participants employed by such employer no later than the
time for filing the employer's federal income tax return for
such taxable year. Such supplemental employer contribution
shall be made solely at the discretion of the company.
4.2 Payment of Employers' Contributions. The employer's
contribution under the plan to be made in accordance with sections 4.1(a) and
4.1(c) above for any plan year shall be paid to the trust (as described in
section 1.3) implementing the plan, without interest, no later than the time for
filing the employer's federal income tax return (including any extensions) for
the taxable year in which such plan year ends and may be paid in the form of
cash or, in the form of qualifying employer securities, property or such other
form as the company may in its discretion elect. Elective contributions under
the plan to be made in accordance with section 4.1(b) for any pay period shall
be paid to the trust fund at such times as may be necessary or appropriate for
the proper administration of the plan and in accordance with applicable law, but
no later than the fifteenth business day of the month following the month in
which such amount would otherwise have been payable to the participant in cash.
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4.3 Allocation of Employer Contributions. Employer matching
contributions and supplemental employer contributions shall be allocated,
respectively, to the employer matching contribution account and supplemental
employer contributions account of each participant who is employed by an
employer as of the last day of the plan year (including those employees who are
on an authorized leave of absence from such employer on such date), and each
participant who ceased employment with the employer during the plan year on
account of death, disability, early retirement (as defined in Section 4.1(a)),
normal retirement (as defined in Section 4.1(a)) or transfer to another
ServiceMaster Company. Employer matching contributions made on behalf of a
participant shall be allocated in proportion to such participant's elective
contributions for the plan year; provided, that no matching contributions shall
be allocated with respect to a participant's elective contributions that exceed
4% of his compensation. Unless otherwise provided by resolution of the company
and subject to the limitations of this Article and Article 9, supplemental
employer contributions made for the benefit of participants employed by each
employer shall be allocated to each participant who is employed by an employer
on the last day of the plan year (including each employee who is on an
authorized leave of absence from such employer on such date and each participant
who ceased employment with the employer during the plan year on account of
death, disability, early retirement (as defined in Section 4.1(a)), normal
retirement (as defined in Section 4.1(a)) or transferred to another
ServiceMaster Company in the ratio which each participant's compensation for the
plan year bears to the aggregate of the compensation for all plan participants
eligible to share in that employer's supplemental contribution for the plan
year.
4.4 Verification of Employers' Contributions. The
certificate of an independent accountant selected by the company
as to the correctness of any amounts or calculations relating to
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the employers' contributions under the plan for any plan year
shall be conclusive on all persons.
ARTICLE 5
Plan Accounting and Investment Funds
5.1 Participant Account Balances. The plan administrator will
establish and maintain the following separate accounts with respect to plan
participants:
(a) Employer Matching Contribution Account. An
"employer matching contribution account" shall be maintained
on behalf of each participant to represent the matching
contributions made on his behalf to the plan and the earnings,
expenses, appreciation and depreciation attributable thereto.
This account will have at least two subaccounts:
(i) Mandatory Company Stock Fund Subaccount.
A "mandatory company stock fund subaccount" shall be
maintained on behalf of each participant to represent
(A) with respect to a participant that was previously
a participant in the ServiceMaster Profit Sharing,
Savings and Retirement Plan or the ServiceMaster
Consumer Services L.P. Profit Sharing Retirement Plan
the lesser of (i) shares of company stock
representing 50% of the value of the employer
matching contribution account for such participant on
the effective date applicable to such participant or
(ii) the total number of shares of company stock in
such participant's account on the effective date and
(B) with respect to all participants, the number of
shares of company stock representing 50% of the value
of employer matching contributions made on his behalf
after the effective date applicable to such
participant, and the earnings, expenses, appreciation
and depreciation attributable to investments in
company stock; provided, that after such participant
attains the age of 55, 50% of such account shall be
transferred to the participant's directed employer
matching subaccount one time during each plan year.
(ii) Directed Employer Matching Contribution
Subaccount. A "directed employer matching
subaccount" shall be maintained on behalf of each
participant to represent matching contributions
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made on behalf of such participant that are not
reflected in the mandatory company stock fund
subaccount and the earnings, expenses, appreciation
and depreciation attributable to the investments
directed by such participant.
(b) Elective Contribution Account. An "elective
contribution account" shall be maintained on behalf of each
participant to represent the elective contributions made to
the plan on the participant's behalf and the earnings,
expenses, appreciation and depreciation attributable to the
investments directed by such participant.
(c) Rollover Account. A "rollover account" shall be
maintained on behalf of a plan participant which shall
represent the rollover contributions and transferred benefits
made to the plan for his benefit in accordance with section
3.5 or 3.6 of the plan.
The plan administrator may maintain such other accounts in the name of
participants as it considers desirable. The maintenance of separate account
balances shall not require physical segregation of plan assets with respect to
each account balance. The accounts maintained hereunder represent the
participants' interests in the plan and trust and are intended as bookkeeping
account records to assist the plan administrator and the trustee in the
administration of this plan. Any reference to a participant's "accounts" or
"account balances" shall refer to all of the accounts maintained in the
participant's name under the plan, and any reference to the participant's
"employer contribution account" shall refer to the employer matching
contribution account and supplemental employer contribution account maintained
in the participant's name under the plan. Participants shall at all times have
100 percent vested and nonforfeitable interests in their elective contribution
account and rollover account and shall have vested and nonforfeitable interests
in the employer contribution account only as provided in section 6.2 of the
plan.
5.2 Accounting Dates. An "accounting date" is each
business day on which a national stock exchange is open.
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5.3 Date of Crediting Contributions and Allocation of
Forfeitures. All employer contributions and participant contributions made for
any plan year will be credited to the proper participants' accounts as of the
last day of the plan year, regardless of when such contributions are actually
paid to the trust; provided, that if the trustee or an investment manager with
respect to an investment fund maintains participants' accounts and credits
contributions received more frequently than quarterly, contributions invested in
that investment fund will be considered made and will be credited as provided in
accordance with the accounting rules in effect with respect to that investment
fund. Forfeitures (as described in section 6.3) shall be used to reinstate the
forfeitures of any reemployed participant (as described in section 8.2) and to
the extent there are any amounts in excess of the amount necessary for
reinstating the forfeitures of reemployed participants for any plan year, such
excess forfeitures shall be allocated to the account of each participant who is
employed by an employer on the last day of the plan year (including each
employee who is on an authorized leave of absence from such employer on such
date and each participant who ceased employment with the employer during the
plan year on account of death, disability, early retirement (as defined in
Section 4.1(a)), normal retirement (as defined in Section 4.1(a)) or transferred
to another ServiceMaster Company) in proportion to such participant's elective
contributions made hereunder for the applicable plan year, provided, however,
that participant contributions in excess of 4% of such participant's
compensation shall not be considered for purposes of this section 5.3.
5.4 Investment of Account Balances. The trustee, the
investment manager and any insurance institution responsible for
investment of trust assets shall be permitted to commingle the
assets of the trust for purposes of investment with the assets of
other plans or trusts which are intended to qualify for a federal
tax exemption under Sections 401(a) and 501(a) of the Code. Any
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documents which are required to be incorporated in the plan and the trust to
permit such commingled investments are hereby so incorporated. Except to the
extent required by section 5.5, segregated investment of plan and trust assets
shall not be required with respect to any one or more plan participants. Each
account invested in a particular investment fund shall represent an undivided
interest in such investment fund which corresponds to the balance of such
account.
5.5 Investment Funds. From time to time the company or its
delegate may cause the trustee or an investment manager to establish one or more
investment funds for the investment and reinvestment of plan assets. The
continued availability of any investment fund is necessarily conditioned upon
the terms and conditions of investment management agreements and other
investment arrangements. While the company or its delegate may arrange with the
trustee and investment managers for the establishment of investment funds, the
continued availability of these funds cannot be assured, nor is it possible to
ensure that the arrangements or the investment funds managed by a particular
investment manager or by the trustee will continue to be available on the same
or similar terms. The company may direct the establishment of additional
investment funds or may terminate any investment fund as it deems appropriate
and in the best interest of plan participants.
Participant loans shall constitute segregated investments on
behalf of the participant to whom such loans are made and shall not be reflected
in any investment fund. Except as provided in this section and sections 5.6 and
5.7, participants' accounts shall be invested in any one or more investment
funds as determined by the plan administrator.
5.6 Investment Elections. Each participant may elect, in
accordance with uniform rules established by the plan adminis trator and on a
form provided by it for this purpose (or in such other manner required by the
plan administrator), to have future
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contributions made by such participant or on his behalf and/or such
participant's account balances (after all adjustments as of such date have been
made) invested in accordance with his elec tion entirely in one of the
investment funds or partially in several of the investment funds (so that a
multiple of one percent of each of his account balances is invested as of such
date in one or more of the investment funds); provided, however, that at least
50% of such participant's employer matching contributions account balance valued
as of the effective date applicable to such participant (or the entire amount of
company stock in such participant's account if less) must remain invested in
company stock until such participant reaches age 55. It is further provided that
50% of employer contributions made to a participant's employer contributions
accounts after the effective date applicable to such participant must be
invested in company stock until such participant reaches age 55. Upon a
participant's attainment of age 55, only 25% of the participant's matching
employer contribution account must remain invested in company stock. Any
election to change the investment allocation of future contributions shall be
effective as of the date set forth in administrative procedures prescribed by
the plan administrator.
5.7 Manner of Making Investment Elections. All
investment elections shall be made in such form and in such
manner as prescribed by the plan administrator. All investment
elections shall continue in force until changed or revoked by the
participant issuing the election. Investment elections shall be
made, changed or revoked at such times as may be permitted by the
plan administrator and shall be implemented as soon as
practicable. If a participant fails to make a timely election
with respect to the investment of all or part of the portion of
his account that is subject to his investment directions
(determined in accordance with section 5.6), the portion over
which the participant has not directed the investment shall be
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invested in such manner as may be directed by the plan
administrator.
5.8 Investment Risks. Completion of any investment election by
a participant shall constitute an agreement by such participant to assume
responsibility for the risk of investment of his account in accordance with such
investment election, it being expressly understood that all of the investment
funds involve some measure of investment risk including the risk of diminution
or loss of the principal amount of any investment. To the maximum extent
permissible under applicable law, all fiduciary responsibility with respect to
the allocation of a participant's accounts between various investments shall be
considered to be delegated to the participant who directs the investment of his
contributions and accounts.
5.9 Plan Expenses. All costs and expenses incurred in
connection with the general administration of the plan and trust shall, to the
extent not paid by the company, be allocated among the investment funds in the
proportion in which the amount invested in each such fund bears to the amount
invested in all funds as of the accounting date preceding the day of allocation,
provided that all costs and expenses directly identifiable to one fund shall be
allocated to that fund.
5.10 Adjustment of Participants' Accounts. As of each
accounting date the plan administrator shall adjust the account balances of plan
participants to reflect payments and withdrawals of benefits, adjustments in the
values of the trust fund and of the investment funds, if any, and employers' and
participants' contributions, as follows:
(a) First, all payments, withdrawals and transfers of
benefits made since the last preceding accounting date that
have not been charged previously shall be charged to the
proper accounts;
(b) Next, the accounts of each participant shall be
credited with his pro rata share of any increase, or charged
with his pro rata share of any decrease, since
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the next preceding accounting date in the value of the
adjusted net worth (as defined below) of the trust or each
investment fund, if any, in the trust in which he has an
interest as of that date (after taking into account any
charges in accordance with subsection (a) next above);
provided that if contributions invested in any particular
investment fund are credited more frequently than quarterly,
each participant's accounts will be credited with increases or
decreases in the adjusted net worth of that investment fund in
accordance with the accounting rules in effect with respect to
that investment fund;
(c) Next, the employers' contributions and
forfeitures that are to be credited as of that date shall be
credited to the proper participants' accounts; and
(d) Finally, participants' elective contributions
that are to be credited as of that date shall be credited to
the elective contribution accounts.
The "adjusted net worth" of the trust fund or an investment fund as of any date
means the then net worth of the trust fund or the investment fund as determined
by the trustee or the investment manager or insurance company with custody of
that investment fund in accordance with the provisions of the applicable
agreement with the trustee or the investment manager or insurance company, less
(i) an amount equal to the sum of any employers' contributions and participants'
contributions (including rollover contributions and transferred benefits) held
in that fund but not yet credited to the accounts of participants and (ii) any
expenses properly chargeable to such fund in accordance with section 5.9. Such
valuation shall be conclusive and binding upon all persons having an interest in
the trust fund.
5.11 Statement of Accounts. As soon as practicable after the
last day of each plan year, and at such other times as the plan administrator
considers desirable, each participant will be furnished with a statement
reflecting the condition of his accounts as of that date. No participant, except
a member of the
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plan administrative committee, shall have the right to inspect the records
reflecting the accounts of any other participant.
ARTICLE 6
Distribution of Account Balances
6.1 Retirement, Death or Disability. If a partici pant's
employment with the ServiceMaster Companies is terminated because of early
retirement (as defined in Section 4.1(a)) or normal retirement (as defined in
Section 4.1(a)), or because of such participant's permanent disability (as
determined by the plan administrator) or death while in the employ of a
ServiceMaster Company, the balance in his accounts as of the accounting date
coincident with or next following his termination date (after all adjustments
required under the plan as of that date have been made, but subject to any
further adjustments required under the plan prior to complete distribution of
his accounts) along with any contributions made previously by or on behalf of
such participant but not credited to his accounts, shall be fully vested and
nonforfeitable and shall be distributable to the participant or, in the event of
the partici pant's death, to his beneficiary, in accordance with section 6.4.
6.2 Resignation or Dismissal. If a participant
resigns or is dismissed from the employ of the ServiceMaster
Companies before incurrence of permanent disability or death, the
balances in such participant's elective contribution account,
rollover account, if any, and his vested and nonforfeitable
interest in his employer contribution account, as of the account
ing date coincident with or next following the date of his
termination of employment (after all adjustments required under
the plan as of that date have been made, but subject to any
further adjustments required under the plan prior to complete
distribution of his accounts), along with any contributions made
by him previously but not credited to an appropriate account,
shall be distributable to him in accordance with section 6.4. A
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participant's vested and nonforfeitable interest in his employer contribution
account shall be the product of the balance of the account and the vested
percentage determined in accordance with the following table based upon the
participant's years of service (as defined in section 2.2):
If the Participant's His Vested and
Number of Full Years Nonforfeitable
of Service Equals: Interest Shall Be:
Less than 1 0%
1 0%
2 25%
3 50%
4 75%
5 or more 100%
6.3 Forfeitures. If a participant resigns or is dis missed
from the employ of the ServiceMaster Companies before he is fully vested (and
before becoming disabled or dying), the portion of his employer contribution
account to which he is not entitled upon resignation or dismissal because of the
provisions of section 6.2 shall be a "forfeiture." Forfeitures shall be used as
described in section 5.3. If the participant with respect to whom a forfeiture
arose is reemployed by a ServiceMaster Company before he incurs five consecutive
one-year breaks in service, the forfeiture shall be reinstated as provided in
section 8.2 out of forfeitures arising in the year of the participant's
re-employment or, if such forfeitures are insufficient for this purpose, out of
a special employer contribution made for this purpose. A "one-year break in
service" shall occur on the last day of a 12-month period commencing on a
participant's severance from service date and ending on the day prior to his
date of reemployment with a ServiceMaster Company. Notwithstanding the above, a
participant who is partially vested and terminates employment without taking a
distribution of his partially vested account, will become fully
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vested in his account if the plan is terminated prior to the participant
incurring five one-year breaks in service.
6.4 Method of Benefit Payment. The portion of a participant's
account balances which are distributable under sections 6.1 or 6.2 shall be paid
to or for the benefit of the participant or the participant's beneficiary
following the participant's termination of employment or death by payment in one
of the following methods:
(a) A participant's account balances may be paid to or
for the benefit of the participant in a single sum; or
(b) A participant's account balances may be paid in the form
of substantially equal monthly, quarterly or annual installment
payments, provided that such installment payments shall not be payable
over a period of time in excess of the maximum installment period
described below.
Payments may be made in cash or property consisting of shares of company stock,
or partly in each, provided that property is distributed at its fair market
value as of the date of distribution as determined by the trustee. A participant
may elect to receive as part of his distribution shares of company stock which
are held by the trust fund. The number of shares which may be distributed to the
participant shall not exceed the number of company shares held by the trust
which have been allocated to the participant's account in the manner prescribed
by the plan administrator. The plan administrator may establish a minimum amount
of any installments under subsection (b) above. A "maximum installment period"
may be determined by the plan administrator with respect to any person and, in
the case of installment payments commencing during the life of the participant,
shall not exceed the greater of the life expectancy of the participant or, if
the participant has designated a beneficiary who is an individual, the joint and
last survivor life expectancy of the participant and the participant's
designated beneficiary (as determined by the plan administrator
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in accordance with the actuarial tables adopted by it for this purpose).
6.5 Selection of Time and Manner of Benefit Payment. Except as
provided below, payment of a participant's benefits normally will be made or
commence within a reasonable period of time after a participant's termination of
employment, provided:
(a) Unless a participant elects to defer payment
until a later date, payment of a participant's benefits under
the plan shall commence not later than 60 days after the end
of the plan year in which the latest of the following events
occurs (i) the participant's attainment of age 65 years, (ii)
the fifth anniversary of the date when the participant last
began to participate in the plan or (iii) the participant's
termination of employment with the ServiceMaster Companies;
(b) Each non-five-percent owner participant must
commence receiving benefits as of the April 1 following the
later of the year he attains age 70 1/2 on or the calendar
year in which he retires and each five-percent owner
participant must commence receiving benefits as of the April 1
following the calendar year in which he attains age 70 1/2;
(c) If a participant's vested account balances exceed
the dollar limit under Section 411(a)(11)(A) of the Code
($5,000 for 1999 and adjusted annually for inflation
thereafter) at the time of distribution (the "dollar limit")
or if, after a participant has begun to receive distributions
pursuant to an optional form of benefit under which at least
one scheduled periodic distribution is still payable, the
vested account balances at the time of the prior distribution
exceeded the dollar limit, then no amount shall be
distributable to the participant prior to the date the
participant attains age 65 without the participant's written
consent;
(d) If distribution of a participant's accounts has
not commenced prior to such participant's death, then the
participant's accounts shall be distributed within five years
of the date of death; and
(e) If a participant's vested account balances do not
exceed the dollar limit, the participant's vested account
balances shall be automatically distributed to
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the participant (or his beneficiary); provided, however, that
if a participant has begun to receive distributions pursuant
to an optional form of benefit under which at least one
scheduled periodic distribution is still payable, and if the
vested account balances, valued at the time of the first
distribution under the optional form of benefit, exceeded the
dollar limit, then the vested account balances are deemed to
continue to exceed the dollar limit even if the vested account
balances at the time of the current distribution are less than
the dollar limit.
6.6 Designated Beneficiaries. A participant may from time to
time designate a beneficiary or beneficiaries to whom the participant's benefits
will be distributed in the event of the participant's death prior to complete
payment of his benefits under the plan. A participant may designate contingent
or successive beneficiaries and may name individuals, legal persons or entities,
trusts, estates, trustees or other legal repre sentatives as beneficiaries. A
beneficiary designation properly completed and filed will cancel all such
designations filed earlier. Notwithstanding the foregoing or any beneficiary
designation filed by a participant, if a participant is married at the date of
his death, the participant's surviving spouse will be his designated beneficiary
for all purposes of the plan unless the surviving spouse consents in writing to
the participant's designation of another beneficiary. Beneficiary designations
must be completed and filed with the plan administrator during the participant's
lifetime, however, his surviving spouse may consent to a designation after his
death. The consent of a surviving spouse to the participant's designation of
another beneficiary must be a writing, must acknowledge the effect of such
designation, and must be witnessed by a plan representative or a notary public.
6.7 Payment to Substitute Beneficiaries. If benefits
remain to be paid with respect to a plan participant at a time
when the plan administrator is unable to locate the participant,
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or his beneficiary or beneficiaries designated in accordance with section 6.6,
or following the death of the participant and such beneficiaries, and if the
participant failed to designate one or more other beneficiaries in the manner
described in section 6.6, then the plan administrator shall cause the benefits
for such participant to be distributed or paid to the person or persons who can
be located and agree to accept such amounts within the applicable priority
classification set forth below. Participants and designated beneficiaries are
required to maintain a current post office address on file with the plan
administrator by notifying the plan administrator of such address in care of the
employer. A substitute beneficiary will not be determined under this section
with respect to a missing participant or missing designated beneficiary unless
the participant or designated beneficiaries, as the case may be, have failed to
claim the participant's account balances or notify the plan administrator of
their whereabouts within three years after the plan adminis trator notifies such
participant or beneficiaries at their last post office addresses filed with the
plan administrator. Such notice shall describe the amounts to which the
participant or the beneficiaries are entitled and shall describe the
substitution procedures of this section. In disposing of a participant's
benefits in accordance with this section, the plan administrator shall cause the
participant's benefits to be distributed in accordance with the following
priority classifications:
(a) First Priority. A participant's benefits, in the
case of a missing plan participant, will first be distributed
to the participant's designated beneficiary or beneficiaries.
(b) Second Priority. A participant's benefits
will next be distributed or paid to the participant's
spouse if the whereabouts of such spouse is known.
(c) Third Priority. The participant's benefits
will next be applied by the payment of the
participant's account balances to one or more of the
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participant's relatives by blood, marriage or adoption in such
proportions as the plan administrator decides.
(d) Fourth Priority. After unsuccessful attempts have
been made by the plan administrator to locate persons
described in the priority categories set forth above, the
benefits of the participant or of any beneficiary will be
disposed of in any manner permitted by law which the plan
administrator considers to be fair and equitable.
6.8 Payment With Respect to Incapacitated Participants or
Beneficiaries. If any person entitled to benefits under the plan is under a
legal disability or in the plan administrator's opinion is incapacitated in any
way so as to be unable to manage his financial affairs, the plan administrator
may direct the payment of such benefits to such person's legal representative or
to a relative or friend of such person for such person's benefit, or the plan
administrator may direct the application of such benefits to the benefit of such
person. Payments made in accor dance with this section shall discharge all
liabilities for such payments under the plan.
6.9 Final Court Orders. Notwithstanding the other provisions
of this Article 6, if the trustee is required by a final court order to
distribute the benefits of a participant other than in the manner required under
the plan, then the trustee shall cause the participant's benefits to be
distributed in a manner consistent with such final court order. The trustee
shall not be required to comply with the requirements of a final court order in
an action in which the trustee, the plan adminis trator, the plan or the trust
was not a party, except to the extent such order is a qualified domestic
relations order (as defined in Section 414(p) of the Code). In the event that
the plan administrator determines that benefits are payable to an alternate
payee pursuant to the terms of a court order determined to be a qualified
domestic relations order, the amounts so payable shall be determined and, with
the consent of the
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alternate payee (if the amount exceeds the dollar limit under Section
411(a)(11)(A) of the Code), shall be paid in a lump sum as soon as practicable
thereafter.
6.10 Direct Rollover of Distributions.
(a) This section applies to distributions made
on or after January 1, 1993. Notwithstanding any provision of
the plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may
elect, at the time and in the manner prescribed by the plan
administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(b) An "eligible rollover distribution" is any
distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribu tion that is one
of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distribu tee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated bene ficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code;
the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities); and any distribution that qualifies as a
"hardship distribution" (as defined in Section
401(k)(2)(B)(i)(IV) of the Code).
(c) An "eligible retirement plan" is an individual
retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of
the Code, an annuity plan described in section 403(a) of the
Code, or a qualified trust described in section 401(a) of the
Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(d) A "distributee" includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or
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former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined
in section 414(p) of the Code, are distributees with regard to
the interest of the spouse or former spouse.
(e) A "direct rollover" is a payment by the plan
to the eligible retirement plan specified by the
distributee."
ARTICLE 7
Withdrawals and Loans During Employment
7.1 Rollover Withdrawals. Subject to the provisions of
section 7.6 below, a participant may request a withdrawal of all or any portion
of such participant's rollover account under the plan.
7.2 Age 59 1/2 Withdrawals. Subject to the provisions of
section 7.6 below, a participant who has attained age 59 1/2 may request a
withdrawal of all or any portion of such participant's vested accounts under the
plan.
7.3 After-Tax Withdrawals. Each participant may
request a withdrawal of all or any portion of such participant's
after-tax account under the plan.
7.4 Hardship Withdrawals. Subject to the provisions of section
7.6 below, an active participant who is experiencing a financial hardship may
request a withdrawal of all or any portion of his rollover account and the
lesser of his elective contributions account or his elective contributions (but
not earnings thereon) by filing a written request with the plan administrator
(or by completing such other administrative procedures required by the plan
administrator). The plan administrator will have discretion to grant or deny any
such requests for hardship withdrawals, subject to the following:
(i) Each request for financial hardship must
describe the hardship for which the withdraw al is requested.
(ii) A withdrawal shall be considered on
account of financial hardship if it is necessary
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in light of the participant's immediate and heavy financial
need as describe in (A) below and it is necessary to satisfy
such financial need, as de scribed in (B) below.
(A) A withdrawal will be on account of
immediate and heavy financial need only if it is on
account of (I) medical expenses de scribed in Section
213(d) of the Code in curred by the participant or
the partici pant's spouse or dependents; (II)
purchase (excluding mortgage payments) of a principal
residence for the participant; (III) payment of
tuition and related educational fees for the next
twelve months of post-secondary education for the
participant or the partici pant's spouse, children or
dependents; (IV) the need to prevent the eviction of
the par ticipant from the participant's principal
residence or the foreclosure on the mortgage of the
participant's principal residence; (V) such other
purpose deemed by the plan administrator to
constitute immediate and heavy financial need; or
(VI) such other purpose deemed by the Commissioner of
the Internal Revenue Service to constitute imme diate
and heavy financial need.
(B) A withdrawal will be necessary to
satisfy the financial need described in (A) above
only if (I) the withdrawal does not exceed the amount
necessary to meet such financial needs (including
amounts necessary to pay any federal, state or local
income taxes or penalties reasonably anticipated to
result from the withdrawal); and (II) the participant
has obtained all distributions, other than hardship
withdrawals, and all nontaxable loans available under
all plans maintained by the ServiceMaster Companies.
(iii) In the event that the plan adminis trator
grants a participant's request for a hard ship withdrawal from
any of his accounts other than his rollover account, such
participant shall not be permitted to make elective
contributions under the plan until the first day of the first
payroll period following twelve months from the date of
withdrawal.
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(iv) Notwithstanding the provisions of section
3.1, the aggregate elective contributions to the plan and to
any other plan maintained by the ServiceMaster Companies for
the calendar year immediately following the calendar year in
which the participant receives the hardship withdrawal from
any of his accounts other than his rollover account shall not
exceed the excess of (A) the maximum amount specified in
section 3.1 for such year over (B) the amount of such
participant's elective contributions to this plan and to any
other plan maintained by the ServiceMaster Companies in the
calendar year in which the participant receives the hardship
withdrawal.
(v) No earnings will accrue for the entire
accounting period with respect to amounts withdrawn at any
time during such accounting period.
7.5 Loans to Participants. While it is the primary purpose of
the plan to provide funds for participants when they leave the ServiceMaster
Companies, it is recognized it would be in the best interests of participants to
permit loans to be made to them. Accordingly, the plan administrator may direct
that a loan be made to a participant, other than a former employee, subject to
the following:
(a) Each request for a loan under this section must
be by written application to the plan administra tor (or by
completing the applicable administrative procedures required
by the plan administrator) on such form or in such manner as
the plan administrator may require pursuant to written loan
procedures.
(b) Each loan must be evidenced by a note on a form
furnished by the plan administrator (or in such other method
required by the plan administrator) and must be secured by a
pledge of 50 percent of the participant's vested account
balances as of the accounting date immediately preceding the
date as of which the loan is made. Only one loan at a time
will be granted to any participant, therefore, a participant
must completely repay an outstanding loan before receiving a
new loan from the plan.
(c) The principal amount of each loan, when added
to any other outstanding loan balances of a participant
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under the plan and all other plans of the ServiceMaster
Companies, may not exceed the lesser of $50,000 or 50 percent
of the participant's vested account balances as of the
accounting date immediately preceding the date as of which the
loan is made. The minimum amount of each loan is $500.
(d) Each loan will be for a term not exceeding
five years.
(e) Each loan will bear interest at a rate equal to
1% over the prime rate listed in the Wall Street Journal on
the first business day of the month in which the loan is made
and must be amortized in level payments, made through regular
payroll deductions (or by any other method permitted by the
plan administra tor), made not less frequently than quarterly,
over the life of the loan.
(f) Each note evidencing a loan to a participant
shall be held on the participant's behalf and shall be
considered an investment of such participant's ac counts.
Accordingly, principal and interest payments on the note shall
be credited to such accounts on the participant's behalf.
(g) Upon default, the plan may foreclose on the loan
at the earliest opportunity permitted by law and the loan will
be treated as a taxable distribution at such time. During the
period, if any, between the date of the event constituting
default and the date of foreclosure, interest on the loan will
continue to accrue and shall be charged to the participant's
ac count. The distribution of evidence of cancellation of a
participant's loan to him (or to his beneficiary in the event
of his death) shall be considered as a payment for purposes of
the plan. The following events will constitute default on a
loan:
(i) the failure to make an installment payment
within 90 days after the payday on which it becomes
due; provided, however, that loan repayments will be
suspended under this plan as permitted under Section
414(u)(4) of the Code with respect to qualified
military service;
(ii) any other person (other than the
plan trustee) acquires an interest in the
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participant's account except as otherwise
required by law;
(iii) the participant dies or becomes
legally incompetent;
(iv) bankruptcy or insolvency proceed
ings are instituted by or against the partic
ipant; or
(v) the participant's employment with the
ServiceMaster Companies is terminated for any reason,
including early or normal retirement, disability,
resignation or discharge.
In the event of (iii) or (v) above, there shall be no
default if, immediately upon the oc currence of (iii) or (v),
the participant (or his estate or legal representative, as the
case may be) pays the remaining balance of the loan togeth er
with accrued interest thereon. Notwithstanding anything in
this section 7.3 to the contrary, in the event of (v) above
there shall be no default if the participant continues to be a
party in interest (as defined in Section 3(14) of ERISA)
following his termination of employment.
(h) A participant on an authorized leave of absence
may request that any installment payments due during such
period of time be suspended. Upon the participant's return to
active employment, the remaining balance of the loan shall be
reammortized over the remaining life of the loan. Under no
circumstances shall the repayment period of any loan exceed
five years.
(i) The plan administrator may establish such other
rules and regulations (which shall be uniformly applicable to
all participants similarly situated) as it may deem necessary
regarding the granting of loans, including loan fees (which
may be charged directly to the participant or to the
participant's account).
7.6 No Representation Regarding Tax Effect of With drawals or
Loans. Neither an employer, the plan administrator, the trustee, nor any other
person shall be construed as repre senting the tax effects of any withdrawals or
loans in accordance
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with this Article 7. It shall be the responsibility of partici pants requesting
withdrawals or loans to consider the tax effects of such withdrawals or loans
requested by such participant.
ARTICLE 8
Reemployment
8.1 Rehired Employee or Participant. If an employee or a
participant who has no vested benefit under the plan termi nates his employment
and is subsequently reemployed by a ServiceMaster Company, his years of service
accrued prior to his termination of employment shall not be reinstated for
purposes of sections 2.1 or 6.2 if the number of consecutive one year breaks in
service (as defined in section 6.3) within such period exceeds five consecutive
one year breaks in service. In all other cases, an employee's or participant's
prior years of service shall be reinstated as of the date he is reemployed by a
ServiceMaster Company. In no event shall years of service occurring after a
participant incurs five consecutive one year breaks in service be used to
determine the vested and nonforfeitable interest of a participant in his
employer contribution account as of his prior termination of employment which
has become a forfeiture. A rehired employee shall become a participant and a
rehired partic ipant shall again become a participant as of the date he meets or
again meets the requirements of section 2.l; provided that such an employee's or
participant's prior service shall be disregarded for purposes of subsection
2.l(b) if he has incurred five con secutive one year breaks in service prior to
his reemployment by an employer.
8.2 Reinstatement of Forfeitures. If a participant whose
employment had terminated because of resignation or dis missal is reemployed by
a ServiceMaster Company prior to having incurred five consecutive one year
breaks in service (as defined in section 6.3), any forfeiture which resulted
from his prior resignation or dismissal shall again be credited to his employer
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contribution account as of the accounting date coincident with or next following
his date of rehire. If such participant subse quently terminates employment
because of resignation or dismissal and the participant is not entitled to the
full balance in his employer contribution account, the amount distributed under
section 6.2 from his employer contribution account will be determined in
accordance with the following:
(a) First, the amount of the distribution re ceived
by the participant from his employer contribu tion account
because of his prior resignation or dis missal shall be added
to the balance in his employer contribution account as of the
accounting date coinci dent with or next preceding his
subsequent employment termination date.
(b) Next, the amount determined under subsection (a)
above shall be multiplied by the vesting percentage applicable
at his subsequent employment termination date under section
6.2.
(c) Finally, the amount determined under subsec tion
(b) above shall be reduced by the amount of the distribution
received by the participant from his employer contribution
account because of his prior resignation or dismissal.
The remaining portion of the participant's employer contribution account will be
treated as a forfeiture and will be subject to the provisions of section 6.3.
ARTICLE 9
Limitations
9.1 Contribution Limitations. Section 415 of the Code imposes
certain limitations on the amount of contributions that may be allocated to a
participant under a defined contribution plan (as defined in Section 414(i) of
the Code) maintained by an employer. If a participant in a defined contribution
plan maintained by his employer also is a participant in a defined benefit plan
(as defined in Section 414(j) of the Code) main tained by such employer, Section
415 of the Code imposes certain
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combined limitations as to the aggregate amount of contributions and benefits
that may be provided for the participant under both types of plans for plan
years beginning prior to January 1, 2000. This plan is a defined contribution
plan and, therefore, each participant in the plan shall be subject to the
maximum benefit limitations set forth in section 9.2 and section 9.3,
irrespective of any other provision of the plan. For purposes of Section 415 of
the Code and this Article 9, the "limitation year" with respect to this plan is
the plan year, and a participant's "total compensation" means, with respect to
any plan year, the total compensation paid to the participant during that year
for services rendered to the ServiceMaster Companies as an employee that is
subject to withholding for federal income tax purposes (before taking into
account any withholding exemptions), but excluding any noncash compensation and
any compensation deferred beyond the participant's termination of employment;
provided, however, that "total compensation" shall include any elective deferral
(as defined in Section 402(g)(3) of the Code) or any amount which is contributed
or deferred by the employer at the election of the participant and which is not
includible in the gross income of the participant by reason of Sections 125 or
457 of the Code. In applying the limitations set forth in sections 9.2 and 9.3,
reference to the plan shall mean the plan and all other defined contribution
plans (whether or not terminated) maintained by the ServiceMaster Companies and
reference to a defined benefit plan maintained by the ServiceMaster Companies
shall mean that plan and all other defined benefit plans (whether or not
terminated) maintained by the ServiceMaster Companies.
9.2 Participant Covered by Defined Contribution Plan. The
annual addition (as defined below) which is allocated to a participant's
accounts under this plan and under any related defined contribution plans
maintained by the ServiceMaster Companies shall not exceed the lesser of $30,000
or 25 percent of the participant's total compensation for such limitation year.
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In applying the preceding limitation, the annual addition to a participant's
accounts under this plan will be limited before the annual addition to his
account under any such related defined contribution plan is limited. Any excess
contributions resulting from the allocation of forfeitures, a reasonable error
in esti mating a participant's annual earnings or such other limited facts and
circumstances as the Commissioner of the Internal Revenue Service may prescribe
and not allocable to a participant's accounts under the plan by reason of the
limita tions on additions under Section 415 of the Code shall be disposed of as
follows:
(a) Any elective contributions described in
subsection 4.1(b) elected by a participant in accordance with
section 3.1 which cannot be credited to a participant's
accounts because of the limitations of this section 9.2 or
section 9.3 shall be returned to the participant along with
earnings accrued thereon;
(b) If after the application of subsection (a) above
an excess amount still exists, the participant's allocable
share of the employer contribution for the plan year ending
within the limitation year shall be reduced. The amount of
such reduction shall be credited to an unallocated employer
contribution account. Such account shall not be subject to
adjustment and shall be deemed an employer contribution for
the succeeding plan year. If further reductions are necessary,
then such participant's allocable share of forfeitures for the
plan year ending within the limitation year shall be reduced.
The amount of such reduction shall be credited to an
unallocated forfeiture account. Such account shall not be
subject to adjustment and shall be deemed a forfeiture for the
succeeding plan year;
(c) If after the application of subsections (a) and
(b) above an excess amount still exists, and if the
participant is covered by the plan at the end of the
limitation year, the excess amount shall be used to reduce
employer contributions for such participant in the next
limitation year, and each succeeding year if necessary; and
(d) If after the application of subsections (a)
and (b) above an excess amount still exists and the
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participant is not covered by the plan at the end of the
limitation year, the excess amount shall be held unallocated
in a suspense account and the suspense account shall be
applied to reduce future employer contributions for all
remaining participants in the next limitation year, and each
succeeding limitation year if necessary.
A participant's "annual addition" for any plan year means the
sum for that year of the following:
(i) Employer Contributions. Employer
contributions (including elective contributions)
credited to the participant's accounts under this
plan and under any related defined contribution
plans;
(ii) Forfeitures. Forfeitures credited
to the participant's accounts under this plan or
under any related defined contribution plans;
(iii) Certain Medical Expenses for Key
Employees. The amounts attributable to medical benefits
allocated to an account of a key employee, as described in
section 419A(d) of the Code; and amounts allocated to an
individual medical account as defined in Section 415(l)(1) of
the Code which is part of a defined benefit plan maintained by
the employer or a related entity; provided, however, that such
amounts shall not be treated as annual additions for purposes
of applying the percentage of compensation test in determining
the maximum allocation to which a participant is entitled.
9.3 Participant Covered by Defined Contribution Plan and
Defined Benefit Plan. For plan years beginning after January 1, 2000, this
section 9.3 shall not apply. With respect to plan years beginning prior to
January 1, 2000, if a participant in the plan also is a participant in a defined
benefit plan maintained by the ServiceMaster Companies, the contributions made
on behalf of the participant and the benefits payable to the participant shall
be determined in a manner consistent with Section 415 of the Code, as follows:
(a) Defined Contribution Fraction. A fraction
shall be determined, the numerator of which shall be
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the participant's annual additions under all related defined
contribution plans for each limitation year (determined in
accordance with the plan provisions as in effect for such
year), and the denominator of which shall be the aggregate of
the "defined contribution limitation amounts" in effect for
each year of the participant's employment by the ServiceMaster
Companies. The "defined contribution limitation amount" for
any limitation year shall be the lesser of (i) 1.25 multiplied
by the dollar limitation in effect under Section 415(c)(1)(A)
of the Code for such year, provided that in any year in which
the plan would be a top-heavy plan if 90 percent were
substituted for 60 percent in section 14.2, 1.0 shall be
substituted for 1.25, except as provided in Code Section
416(h) or (ii) 1.4 multiplied by 25 percent of the
participant's total compensation for such year. The numerator
of this fraction shall be adjusted in accordance with
applicable regulations to preserve the participant's benefits
accrued as of the close of the last limitation year beginning
before December 31, 1986.
(b) Defined Benefit Fraction. A fraction shall also
be determined, the numerator of which shall be the benefits
accrued or payable to or for such participant under the
related defined benefit plans as of the end of the limitation
year, and the denominator of which shall be the "defined
benefit limitation amount" in effect for that year. The
"defined benefit limitation amount" for any limitation year
shall be the lesser of (i) 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code
for such year, provided that in any year in which the plan
would be a top-heavy plan if 90 percent were substituted for
60 percent in section 14.2, 1.0 shall be substituted for 1.25,
except as provided in Code Section 416(h) or (ii) 1.4
multiplied by 100 percent of the participant's average annual
total compensation for the three consecutive plan years during
which the participant actively participated in such a plan and
in which the participant's aggregate total compensation was
the greatest; provided that such amount shall be appropri
ately adjusted if necessary as provided in section 415(b) of
the Code.
(c) Combined Limitation. The contributions under this
plan and under any related defined contribution plans and the
benefits under all related defined bene fit plans will be
adjusted to the extent necessary (by first adjusting the
benefits and contributions under
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such other plans) so that the sum of the fractions determined
with respect to any participant in accor dance with
subsections (a) and (b) above will not exceed 1.0 (or such
other applicable maximum amount permitted by law).
9.4 Distribution of Excess Deferrals. If, not later than the
March 1 next following the end of a calendar year, a participant notifies the
plan administrator that the participant has made elective contributions to this
plan and one or more other plans (whether maintained by a ServiceMaster Company
or an unrelated company) in excess of $10,000 (or such other maximum amount as
may be permitted by law for such calendar year) during such calendar year, and
further notifies the plan administrator of the amount of such excess allocated
to this plan, such excess amount shall be paid to such participant (along with
any income or loss allocable thereto as determined pursuant to the method set
forth in section 9.6(d)) as soon as practicable following such notification, but
in any event by the April 15 following the calendar year with respect to which
such excess deferrals were made. A participant is deemed to notify the plan
administrator of such excess that arises by taking into account only those
elective contributions made to this plan and any other plans of the
ServiceMaster Companies.
9.5 Highly Compensated Employee. The term highly compensated
employee includes highly compensated active employees and highly compensated
former employees. A highly compensated active employee includes any employee who
performs services for the ServiceMaster Companies during the current year and
who (i) received compensation from the ServiceMaster Companies in excess of
$80,000 during the preceding year (as adjusted pursuant to Section 415(d) of the
Code) and, if the company so elects, was in the top-paid group (as defined in
Section 414(q) of the Code) of employees for such preceding year, or (ii) was a
5 percent owner at any time during the current or preceding year. A highly
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compensated former employee includes any employee who was a highly compensated
employee when such employee separated from service or who was a highly
compensated employee at any time after attaining age 55. The determination of
who is a highly compensated employee, including the determination of the number
and identity of the employees in the top-paid group and the compensation that is
considered, will be made in accordance with Section 414(q) of the Code and the
regulations thereunder.
9.6 Limitations on Elective Contributions. Elective
contributions shall be subject to the following nondiscrimination standards and
shall be adjusted, as provided below, to the extent necessary to comply with the
limitations set forth in Section 401(k) of the Code and the regulations
thereunder. For purposes of this section, the term "elective contribution" shall
mean any employer contribution made to the plan that (i) is subject to a cash or
deferred arrangement (as defined in Section 1.401(k)- 1(a)(3) of the Treasury
regulations), including salary reduction contributions, and (ii) is immediately
nonforfeitable. The employer shall maintain records demonstrating compliance
with this section.
(a) Actual Deferral Percentage Limitation. In any
plan year, the actual deferral percentage for the group of
participants who are highly compensated em ployees may not
exceed the greater of the following:
(i) the actual deferral percentage of the
group of eligible employees who are not highly
compensated employees (the "non-highly compensated
group") for the preceding plan year multiplied by
1.25, or
(ii) the lesser of the actual deferral
percentage for the non-highly compensated group for
the preceding plan year multiplied by two or the
actual deferral percentage of the non-highly
compensated group for the preceding plan year plus
two percentage points.
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(b) Actual Deferral Percentage. The actual deferral
percentage for a specified group of eligible employees for any
plan year shall be the average of the ratios (computed, to the
nearest one-hundredth of one percent, separately for each
eligible employee in such group) of the elective
contributions, and amounts treated as elective contributions
(including excess elective contributions of highly compensated
employees), for such employee for such year to the employee's
compensation (as defined at Section 414(s) of the Code, as
modified by Section 414(s)(2) thereof) taken into account for
such plan year during which the employee was an eligible
employee. For purposes of this section the following
additional rules shall apply:
(i) An elective contribution shall be taken
into account only if it relates to compensation that
either (A) would have been received by the
participant in the plan year but for the deferral
election or (B) is at tributable to services
performed by the par ticipant in the plan year and
would have been received by the participant within 2
1/2 months after the close of the plan year but for
the deferral election. An elective contribution that
does not meet the foregoing requirements will not be
tested under Section 401(k) of the Code but must
separately satisfy Section 401(a)(4) of the Code for
the plan year of allocation as if it was the only
nonelective employer contribution for the year.
(ii) In the event this plan satisfies the
requirement of Sections 401(k), 401(a)(4) or 410(b)
of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if
aggregated with this plan, then this section shall be
applied by determining the actual deferral percentage
of employees as if all such plans were a single plan.
In accordance with applicable Treasury regulations,
plans of the employers may be aggregated in order to
satisfy Section 401(k) of the Code but only if such
plans as aggregated satisfy the requirement of
Section 410(b) of the Code and provided that each
plan has the same plan year.
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(iii) Except as provided in applicable Treasury
regulations, the actual deferral percentage of a
highly compensated employee will be determined by
treating all cash or deferred arrangements of the
employer (or an entity that is required to be
aggregated with the employer under Sections 414(b),
(c), (m) or (o) of the Code) under which the highly
compensated employee is eligible as a single
arrangement. If the cash or deferral ar rangements
have different plan years, all such arrangements
ending with or within the same calendar year will be
treated as a sin gle arrangement. Notwithstanding the
forego ing, certain plans shall be treated as sepa
rate if mandatorily disaggregated under ap plicable
Treasury regulations issued pursuant to Section
401(k) of the Code.
(iv) At the discretion of the plan ad
ministrator, and in accordance with applica ble
Treasury regulations, any employer con tributions or
matching contributions credited on a participant's
behalf in the plan year which meet the withdrawal
restrictions and vesting requirements of Sections
401(k)(2)(B) and (C) of the Code ("qualified
nonelective contributions" and "qualified matching
con tributions," respectively) may be added to the
participant's elective contributions in computing the
participant's actual deferral percentage; provided,
that the employer con tributions and matching
contributions made to the plan for such year satisfy
the require ments of Section 401(a)(4) of the Code
with and without the inclusion of the qualified
nonelective contributions and qualified ma tching
contributions used to satisfy this section. Qualified
nonelective contributions and qualified matching
contributions which are used to satisfy this section
cannot be taken into account to satisfy the
requirement of section 9.7.
(v) Elective contributions treated as matching
contributions under section 9.7 shall not be included
in the determination of a participant's actual
deferral percentage.
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(c) Excess Contributions. If in any plan year the
actual deferral percentage for the highly compen sated group
does not satisfy one of the tests in sub section (a) above,
the plan administrator shall reduce the elective contributions
of some or all of the par ticipants in the highly compensated
group until one of the tests is satisfied. Such reduction
shall be made by reducing the elective contributions for the
highly compensated employee with the highest dollar amount of
elective contributions to the lesser of (i) the extent
required to enable the plan to satisfy the actual deferral
percentage test or (ii) the extent required to cause the
dollar amount of such highly compensated employee's elective
contributions equal the dollar amount of the elective
contributions for the highly compensated employee with the
next highest dollar amount of elective contributions. This
procedure shall be repeated until the plan satisfies the
actual deferral percentage test set forth herein. The portion
of any participant's elective contribution which is reduced
pursuant to this procedure shall be referred to as the "excess
contributions."
(d) Distribution of Excess Contributions. If in
any plan year the elective contributions of one or more
of the participants who are highly compensated employ
ees must be reduced in accordance with subsection (c)
above, the plan administrator shall distribute the
amount of the excess contributions, plus the income (or
minus the loss) allocable thereto, as soon as practica
ble following the determination of such excess but in
any event by the last day of the plan year following
the end of the plan year in which the excess contribu
tions were made. Under Section 4979 of the Code a ten
percent tax is imposed on the employer for any such
excess contributions which are distributed more than 2 1/2
months after the last day of the plan year in which the
excess contributions were made. A distribution of the
excess contributions may be made without regard to any
notice or consent otherwise required under the plan.
The income or loss allocable to such excess contribu
tions shall be determined by multiplying the income or
loss allocable to the elective contributions (and, if
applicable, amounts treated as elective contributions
for purposes of the participant's deferral percentage)
for the plan year by a fraction. The numerator of the
fraction is the excess contributions for the plan year.
The denominator is equal to (i) the total account
balance of the participant attributable to elective
contributions (and amounts treated as such for purposes
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of the actual deferral percentage) as of the beginning of the
plan year, plus (ii) the participant's elective contributions
(and amounts treated as such for purposes of the actual
deferral percentage) for the plan year. The amount of excess
contributions distributed under this subsection for a plan
year shall be reduced by any excess deferrals previously
distributed for the employ ee's taxable year ending with or
within the plan year. Excess contributions shall be treated as
annual addi tions for purposes of Section 415 of the Code.
9.7 Limitation on Employee and Matching Contributions.
Employee and matching contributions shall be subject to the following
nondiscrimination standards and such amounts shall be adjusted, as provided
below, to the extent necessary to comply with the limitations set forth in
Section 401(m) of the Code and the regulations thereunder. The term "employee
contributions" shall include any mandatory or voluntary contribution to the plan
that is treated as an after-tax employee contribution and is allocated to a
separate account to which earnings and losses are allocated. The term "matching
contributions" means any employer contribution made to the plan on account of an
elective contribu tion or employee contribution, and any forfeitures that are
allocated to the participant on the basis of employee contribu tions, matching
contributions or elective contributions. The employer shall maintain records
demonstrating compliance with this section.
(a) Contribution Percentage Limitations. In any plan
year, the contribution percentage for the group of eligible
employees who are highly compensated employees may not exceed
the greater of the following:
(i) the actual contribution percentage of the
group of eligible employees who are not highly
compensated employees (the "non- highly compensated
group") for the preceding plan year multiplied by
1.25, or
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(ii) the lesser of the contribution percentage
for the non-highly compensated group for the
preceding plan year multiplied by two or the
contribution percentage of the non-highly compensated
group for the preceding plan year plus two percentage
points.
(b) Contribution Percentage. The contribution
percentage of a specified group of employees shall be the
average of the contribution percentages (computed separately,
to the nearest one-hundredth of one percent) for each employee
in the group. The con tribution percentage for each employee
shall equal the sum of the employee and matching contributions
allocated to the employee's account for the plan year
(excluding qualified matching contributions which are used to
satisfy the actual deferral percentage limitation in
accordance with section 9.6) and the qualified non-elective
and elective contributions treated as matching contributions
for the plan year, divided by the employee's compensation (as
defined in Section 414(s) of the Code) taken into account for
such plan year during which the participant was an eligible
employee. For purposes of this section, the following
additional rules shall apply:
(i) A matching contribution will be taken into
account for purposes of this sec tion for a given
plan year only if (A) it is made on account of the
participant's elective or employee contributions for
that plan year, (B) it is allocated to the
participant's account during that plan year and (C)
it is paid to the trust fund by the end of the
twelfth month following the close of that plan year.
A matching contribution that does not meet the
foregoing requirements will not be tested under
Section 401(m) of the Code but must separately
satisfy Section 401(a)(4) of the Code for the plan
year of allocation as if it were the only employer
allocation for that plan year. An employee
contribution will be taken into account for purposes
of this section only if such contribution is paid to
the trust during the plan year or paid to an agent of
the plan and transmitted to the trust within a
reasonable period after the end of the plan year.
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(ii) In the event this plan satisfies the
requirement of Sections 401(m), 401(a)(4) or 410(b)
of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if
aggregated with this plan, then this section shall be
applied by determining the contribution percentage of
employees as if all such plans were a single plan. In
accordance with applicable Treasury regulations,
plans of the employers may be aggregated in order to
satisfy Section 401(m) of the Code but only if such
plans as aggre gated satisfy the requirement of
Section 410(b) of the Code and provided that each
plan has the same plan year.
(iii) Except as provided in applicable Treasury
regulations, the contribution per centage of a highly
compensated employee who is eligible to participate
in more than one plan of the employer in which
employee or matching contributions are made will be
de termined by treating all the plans of the employer
(or an entity that is required to be aggregated with
the employer under Sections 414(b), (c), (m) or (o)
of the Code) in which the highly compensated employee
is eligible as a single plan. If the highly
compensated employee participates in two or more
plans that have different plan years, all such plans
ending with or within the same calendar year will be
treated as a single plan. Not withstanding the
foregoing, certain plans shall be treated as separate
if mandatorily disaggregated under applicable
Treasury regu lations issued pursuant to Section
401(m) of the Code.
(iv) At the discretion of the plan ad
ministrator, and in accordance with applica ble
Treasury regulations, any qualified non elective
contributions (as defined in Section
1.401(k)-1(g)(13)(ii)) of the Treasury regu lations
and elective contributions made for such plan year
may be taken into account in computing the
participant's contribution percentage; provided, that
the qualified nonelective contributions satisfy the
re quirements of Section 401(a)(4) of the Code
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both with and without inclusion of such con
tributions used to satisfy the requirements of this
section, and provided further, that the elective
contributions satisfy the re quirements of section
401(k)(3) of the code both with and without the
inclusion of con tributions used to satisfy the
requirements of this section. Elective contributions
and qualified nonelective contributions which are
used to satisfy this section cannot be taken into
account to satisfy the requirements of section 9.6.
(v) Matching contributions treated as elective
contributions under section 9.6 shall not be included
in the determination of a participant's contribution
percentage.
(c) Excess Aggregate Contributions. If in any plan
year the contribution percentage for the highly compensated
group does not satisfy one of the tests in subsection (a)
above, the plan administrator shall reduce the employee
contributions and matching contri butions of some or all of
the participants in the highly compensated group until one of
the tests is satisfied. Such reductions shall be made in
accordance with Section 1.401(m)-1(e)(2) of the Treasury
regula tions by reducing the employee and matching
contributions for the highly compensated employee with the
highest dollar amount of employee and matching contributions
to the lesser of (i) the extent required to enable the plan to
satisfy the actual contribution percentage test or (ii) the
extent required to cause the dollar amount of such highly
compensated employee's employee and matching contributions for
the highly compensated employee with the next highest dollar
amount of employee and matching contributions. This procedure
shall be repeated until the plan satisfies the contribution
percentage test set forth herein. The amounts so reduced shall
be referred to as the "excess aggregate contributions." (If
there are employee and matching contributions, the employee
contributions shall be reduced first to the level of such
contribu tions which are matched. If the test is not satisfied
by reducing the employee contributions, then the match ing
contributions and any unreduced employee contribu tions shall
be reduced in tandem.) The determination of excess aggregate
contributions will be made after first determining the excess
deferral amount and the excess contribution amount.
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(d) Distribution of Excess Aggregate Contribu tions.
Except as provided below, if in any plan year the employee or
matching contributions of one or more of the participants in
the highly compensated group must be reduced in accordance
with subsection (c) above, the plan administrator shall
distribute the amount of the excess aggregate contributions,
plus the income (or minus the loss) allocable thereto, as soon
as practicable following the determination of such excess but
in any event by the last day of the plan year following the
end of the plan year for which such contributions were made.
Under Section 4979 of the Code a ten percent tax is imposed on
the employer for any such excess aggregate contribution which
are distributed after more than 2 1/2 months after the last
day of the plan year for which such contributions were made.
In the event the participant is not fully vested in the excess
aggregate contribution, the non-vested portion of such excess
aggregate contribution shall be forfeited by the participant
and shall be allocated among the participants who had matching
contributions credited on their behalf during the plan year
and whose matching contributions were not reduced. Such alloca
tion shall be in accordance with the ratio each such
participant's matching contributions for the plan year bears
to the total amount of matching contributions made by all the
participants whose matching contribu tions were not reduced. A
distribution of the excess aggregate contribution may be made
without regard to any notice or consent otherwise required by
the plan. Excess aggregate contributions, including forfeited
matching contributions, are treated as employer contri butions
for purposes of Sections 404 and 415 of the Code. The income
or loss allocable to such excess aggregate contributions shall
be determined by multi plying the income or loss allocable to
the partici pant's employee and matching contributions (and
amounts, if any, treated as such for purposes of the
contribution percentage, but excluding such matching
contributions used in the actual deferral percentage test for
the plan year) by a fraction. The numerator of the fraction is
the excess aggregate contributions for the plan year. The
denominator is equal to (i) the total account balance of the
participant attributed to employee and matching contributions
as of the beginning of the plan year, plus (ii) the employee
and matching contributions (and amounts, if any, treated as
such for purposes of the contribution percentage, but
excluding such matching contributions used in the actual
deferral percentage test for the plan year).
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9.8 Multiple Use Limitation. Notwithstanding the limitations
required by sections 9.6 and 9.7, a participant's elective contributions,
employee contributions and matching contributions may be limited under this
section in order to prevent "multiple use" under Sections 401(k) and 401(m) of
the Code, as set forth below. The multiple use limitation shall apply if the sum
of the actual deferral percentage and contribu tion percentage for the group of
highly compensated employees (determined after any corrections required under
section 9.6 or 9.7) exceeds the "aggregate limit." The aggregate limit shall be
the greater of (i) and (ii) below:
(i) the sum of (A) 1.25 times the greater of
the actual deferral percentage or the contribution
percentage for nonhighly compensated employees for
the preceding plan year and (B) two percentage points
plus the lesser of the actual deferral percentage or
the contribution percentage for non-highly
compensated employees for the preceding plan year
(which amount shall not exceed twice the lesser of
such percentages),
(ii) the sum of (A) 1.25 times the less er of
the actual deferral percentage or the contribution
percentage for nonhighly compen sated employees for
the preceding plan year and (B) two percentage points
plus the greater of the actual deferral percentage or
the contribution percentage for non-highly
compensated employees for the preceding plan year
(which amount shall not exceed twice the greater of
such percentages).
The application of the multiple use limitation shall be made
in accordance with Section 1.401(m)-2 of the Treasury regulations. If the
multiple use limitation applies, then the actual deferral percentage or
contribution percentage of the highly compensated employees shall be reduced (in
the manner described in sections 9.6 or 9.7) until such limit shall be
satisfied. Alternatively, the employer may satisfy the multiple use limitation
by making qualified nonelective contributions to
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plan participants in accordance with applicable Treasury
regulations.
ARTICLE 10
Plan Administrator
10.1 Plan Administrator's Duties. As provided in section 1.2,
a committee appointed by the company is responsible for the administration of
the plan. Except as otherwise speci fically provided and in addition to the
powers, rights and duties specifically given to the plan administrator elsewhere
in the plan, the plan administrator shall have the following powers, rights and
duties:
(a) To construe and interpret the plan, to decide all
questions of plan eligibility, to determine the amount, manner
and time of payment of any benefits under the plan, and to
remedy ambiguities, inconsistencies or omissions.
(b) To adopt such rules of procedure as may be
necessary for the efficient administration of the plan and as
are consistent with its terms and such rules.
(c) To make determinations as to the right of any
person to a benefit, to afford any person dissatisfied with
such determination the right to a hearing thereon, and to
direct payments or distributions from the trust in accordance
with the provisions of the plan.
(d) To furnish the employers with such informa tion
as may be required by them for tax or other purposes in
connection with the plan.
(e) To enroll participants in the plan, to dis
tribute and receive plan administration forms, and to comply
with all applicable governmental reporting and disclosure
requirements.
(f) To employ agents, attorneys, accountants,
actuaries or other persons (who also may be employed by the
employers, the trustee, or any investment manager or managers)
and to allocate or delegate to them such powers, rights and
duties as the plan administrator considers necessary or
advisable to properly carry out the administration of the
plan, provided that any such
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allocation or delegation and the acceptance thereof
must be in writing.
(g) To report to the company or to such person or
persons as the company designate as to the administra tion of
the plan, any significant problems which have developed in
connection with the administration of the plan and any
recommendations which the plan administra tor may have as to
the amendment of the plan or the modification of plan
administration.
The plan administrator shall have no power to add to, subtract from or modify
any of the terms of the plan, nor to change or add to any benefits provided by
the plan, nor to waive or fail to apply any requirements of eligibility for
benefits under the plan except as expressly provided by appropriate delegation
of any such powers by the employer or the company.
10.2 Action by Plan Administrator. During a period in which
two or more plan administrative committee members are acting, any action by the
plan administrator will be subject to the following provisions:
(a) The committee may act by meeting (including a
meeting from different locations by telephone confer ence) or
by document signed without meeting, and docu ments may be
signed through the use of a single document or concurrent
documents.
(b) A committee member by writing may delegate part
or all of his rights, powers, duties and discre tion to any
other committee member, with such other committee member's
consent.
(c) The committee shall act by a majority deci sion,
which action shall be as effective as if such action had been
taken by all members of the committee; provided that by
majority action one or more committee members or other persons
may be authorized to act with respect to particular matters on
behalf of all committee members.
(d) If there is an equal division among the committee
members with respect to any questions, a disinterested party
may be selected by a majority vote to decide the matter. Any
decision by such disinterested party will be binding.
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(e) The certificate of the secretary of the committee
or the majority of the committee members that the committee
has taken or authorized any action shall be conclusive in
favor or any person relying on such certificate.
(f) Except as required by law, no member of the
committee shall be liable or responsible for an act or
omission of other committee members in which the former has
not concurred.
10.3 Information Required for Plan Administration. The
employers shall furnish the plan administrator with such data and information as
the plan administrator considers necessary or desirable to perform its duties
with respect to plan administration. The records of an employer as to an
employee's or participant's period or periods of employment, termination of
employment and the reason therefor, leaves of absence, reem ployment, and
compensation will be conclusive on all persons unless determined to the plan
administrator's satisfaction to be incorrect. Participants and other persons
entitled to benefits under the plan also shall furnish the plan administrator
with such evidence, data or information as the plan administrator considers
necessary or desirable for the plan administrator to perform his duties with
respect to plan administration.
10.4 Decision of Plan Administrator Final. Subject to
applicable law and the provision of section 10.5, any inter pretation of the
provisions of the plan and any decision on any matter within the discretion of
the plan administrator made by the plan administrator in good faith shall be
binding on all persons. A misstatement or other mistake of fact shall be
corrected when it becomes known, and the plan administrator shall make such
adjustment on account thereof as the plan administrator considers equitable and
practicable.
10.5 Review of Benefit Determinations. If a claim for benefits
made by a participant or his beneficiary is denied, the plan administrator
shall, within 90 days (or 180 days if special
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circumstances require an extension of time) after the claim is made, furnish the
person making the claim with a written notice specifying the reasons for the
denial. Such notice shall also refer to the pertinent plan provisions on which
the denial is based, describe any additional material or information necessary
for properly completing the claim and explain why such material or information
is necessary, and explain the plan's claim review procedures. If requested in
writing, the plan administrator shall afford each claimant whose claim has been
denied a full and fair review of the plan administrator's decision and, within
60 days (120 days if special circumstances require additional time) of the
request for reconsideration of the denied claim, the plan administrator shall
notify the claimant in writing of the plan administrator's final decision.
10.6 Uniform Rules. The plan administrator shall perform his
duties with respect to plan administration on a reasonable and nondiscriminatory
basis and shall apply uniform rules to all participants similarly situated.
10.7 Plan Administrator's Expenses. All costs, charges and
expenses reasonably incurred on behalf of the plan or by the plan administrator
which are not paid by the trust fund will be paid by the employers in such
portions as the company shall direct; provided no compensation will be paid to a
commit tee member as such.
10.8 Interested Plan Administrator. If a member of the plan
committee is also a participant in the plan, he may not decide or determine any
matter or question concerning his bene fits unless such decision or
determination could be made by him under the plan if he were not a committee
member.
10.9 Resignation or Removal of Plan Administrative Committee
Members. A member of the committee may be removed by the company at any time by
ten days' prior notice to him and the other members of the committee. A member
of the committee may resign at any time by giving ten days' prior written notice
to
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the company and the other members of the committee. The company may fill any
vacancy in the membership of the committee; provided, however, that if a vacancy
reduces the membership of the committee to less than three, such vacancy shall
be filled as soon as practicable. The company shall give prompt written notice
thereof to the other members of the committee. Until any such vacancy is filled,
the remaining members may exercise all of the powers, rights and duties
conferred on the plan administra tor.
10.10 Indemnification. To the extent permitted by law, no
person (including a trustee, any present or former plan administrative committee
member, and any present or former director, officer or employee of any employer)
shall be person ally liable for any act done or omitted to be done in good faith
in the administration of the plan or the investment of the trust fund. To the
extent permitted by law, each present or former director, officer or employee of
any employer to whom the plan administrator or an employer has delegated any
portion of its responsibilities under the plan and each present or former plan
administrative committee member shall be indemnified and saved harmless by the
employers (to the extent not indemnified or saved harmless under any liability
insurance or other indemnification arrangement with respect to the plan) from
and against any and all claims of liability to which they are subjected by
reason of any act done or omitted to be done in good faith in connection with
the administration of the plan or the investment of the trust fund, including
all expenses reasonably incurred in their defense if the employers fail to
provide such defense.
ARTICLE 11
Relating to the Employers
11.1 Action by Employers. Any action required or per
mitted of the company or an employer under the plan shall be by
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resolution of its board of directors or by a duly authorized committee of its
board of directors, or by a person or persons authorized by resolution of its
board of directors or such committee.
11.2 Additional Employers. Any subsidiary or other related
company that is not an employer may adopt the plan and become an employer
thereunder by filing with the plan administra tor a certified copy of a
resolution of the board of directors of the subsidiary or other related company
providing for its adop tion of the plan and a certified copy of a resolution of
the directors of the company consenting to such adoption.
11.3 Restrictions on Reversions. The employers shall have no
right, title or interest in the assets of the plan, nor will any part of the
assets of the plan at any time revert or be repaid to an employer, directly or
indirectly, except as follows:
(a) If the Internal Revenue Service initially
determines that the plan, as applied to any employer, does not
meet the requirements of a "qualified plan" under Section
401(a) of the Code, the assets of the plan attributable to
contributions made by that employer under the plan shall be
returned to that employer within one year of the date of
denial of qualification of the plan as applied to that
employer.
(b) If a contribution or a portion of a contribu tion
is made by an employer as a result of a mistake of fact, such
contribution or portion of a contribution shall not be
considered to have been contributed under the plan by that
employer and, after having been re duced by any losses of the
trust fund allocable there to, shall be returned to that
employer within one year of the date the amount is contributed
under the plan.
(c) Each contribution made by an employer is
conditioned upon the continued qualification of the plan and
the deductibility of such contribution as an expense for
federal income tax purposes and, therefore, to the extent that
a contribution is made by an employer under the plan for a
period for which the plan is not a qualified plan or the
deduction for a contribution made by the employer is
disallowed, then such contribution or portion of a
contribution, after having been reduced by any losses of the
trust fund
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allocable thereto, shall be returned to that employer within
one year of the date of determination of the nonqualified
status of the plan or the date of disallowance of the
deduction.
ARTICLE 12
Amendment, Termination or Plan Merger
12.1 Amendment. While the company expects and intends to
continue the plan, the company must necessarily reserve and hereby does reserve
the right, subject to section 11.3, to amend the plan from time to time, except
as follows:
(a) The duties and liabilities of the plan admin
istrator cannot be changed substantially without its
consent; and
(b) No amendment shall reduce the value of a
participant's benefits to less than the amount he had accrued
as of the date of the amendment.
As of the effective date, the company has delegated to the plan administrator
the power to make such minor, technical amendments to the plan as the plan
administrator shall consider necessary or desirable, subject to the preceding
sentence. Each amendment to the plan shall be evidenced by a written instrument
approved by the board of directors of the company or the committee, as
applicable, and delivered to the plan administrator. The foregoing provisions of
this section shall be subject to any applicable collective bargaining
agreements, provided that the company may amend the plan at any time to the
extent necessary in order that the plan shall meet the requirements of a
"qualified plan" under Section 401(a) of the Code and any other requirements of
applicable law.
12.2 Termination. The plan will terminate as to all employers
on any date specified by the company if advance written notice of the
termination is given to the plan administrator and any other employers. The plan
will terminate as to an individual employer on the first to occur of the
following:
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(a) The date it is terminated by that employer, if
ten days' advance written notice of the termination is given
to the company, the plan administrator and the other
employers.
(b)The date that employer is judicially declared
bankrupt or insolvent.
(c) The dissolution, merger, consolidation or
reorganization of that employer, or the sale by that employer
of all or substantially all of its assets, except that:
(i) In any such event arrangements may be made
with the consent of the company whereby the plan will
be continued by any successor to that employer or any
purchaser of all or substantially all of its assets
without a termination thereof, in which case the
successor or purchaser will be substi tuted for that
employer under the plan; and
(ii) If any employer is merged, dis solved or
in any way reorganized into, or consolidated with,
any other employer, the plan as applied to the former
employer will automatically continue in effect
without a termination thereof.
Notwithstanding the foregoing, if any of the events described above should occur
but some or all of the participants employed by an employer are transferred to
employment with one or more of the other employers coincident with or
immediately after the occurrence of such event, the plan as applied to those
partici pants will automatically continue in effect without a termination
thereof. The foregoing provisions of this section shall be subject to any
applicable collective bargaining agreements.
12.3 Plan Merger. In no event shall there by any merger or
consolidation of the plan with, or transfer of assets or liabilities to, any
other plan unless each participant in the plan would (if the plan then
terminated) received a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit the participant would
have
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been entitled to receive immediately before the merger, consoli dation or
transfer (if the plan had then terminated).
12.4 Continuation by a Successor or Purchaser. Not
withstanding section 12.2, the plan and the trust shall not
terminate in the event of dissolution, merger, consolidation or
reorganization of an employer or sale by an employer of its
entire assets or substantially all of its assets if arrangements
are made in writing between the employer and any successor to the
employer or purchaser of all or substantially all of its assets
whereby such successor or purchaser will continue the plan and
the trust. If such arrangements are made, then such successor or
purchaser shall be substituted for the employer under the plan
and the trust agreement.
12.5 Notice to Participants of Amendments, Termina tions or
Plan Mergers. Participants affected thereby shall be notified by the company
within a reasonable time following any amendment, termination, plan merger, or
consolidation.
12.6 Vesting and Distribution on Termination. The date of any
termination or partial termination of the plan as respects all employers (and,
at the discretion of the company, on a termination or partial termination of the
plan as respects any employer that does not result in the termination or partial
termination of the plan as respects all employers), will be an "interim
accounting date," and the benefits of each participant affected by such
termination or partial termination will be fully vested and will be payable to
such participant in a lump sum as soon as practicable unless other arrangements
are previously made pursuant to the provisions of Article 6.
ARTICLE 13
General Provisions
13.1 Examination of Plan Documents. Copies of the
plan and any amendments thereto will be on file at the principal
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office of the company where they may be examined by any parti cipant or any
other person entitled to benefits under the plan.
13.2 Notices. A notice mailed to a participant or beneficiary
at his last address filed with the plan administrator in care of the company
will be binding on the participant or beneficiary for all purposes of the plan.
Any notice or document relating to the plan required to be given to or filed
with the plan administrator or any employer shall be considered as given or
filed if delivered or mailed by registered or certified mail, postage prepaid,
to the plan administrator, in care of the company, at One ServiceMaster Way,
Downers Grove, Illinois 60515.
13.3 Nonalienation of Plan Benefits. The rights or interests
of any participant or any participant's beneficiaries to any benefits or future
payments hereunder shall not be subject to attachment or garnishment or other
legal process by any creditor of any such participant or beneficiary, nor shall
any such participant or beneficiary have any right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits or rights which he may
expect to receive, contingently or otherwise under this plan except as may be
required by the tax withholding provisions of the Code or of a state's income
tax act, pursuant to a qualified domestic relations order, as defined in Section
414(p) of the Code, pursuant to a judgment, order, decree or settlement
agreement described in Section 401(a)(13)(C) of the Code, or as otherwise
permitted by law.
13.4 No Employment Guarantee. None of the establish ment of
the plan, modification thereof, the creation of any fund or account, or the
payment of any benefits shall be construed as giving to any participant or other
person any legal or equitable right against the employers, the plan
administrator or trustee, except as herein provided. Under no circumstances
shall the terms of employment of any participant be modified or in any way
affected hereby. The maintenance of this plan shall not consti tute a contract
of employment, and participation in the plan will
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not give any participant a right to be retained in the employ of the employers.
None of the employers, the plan administrator or the trustee in any way
guarantees any assets of the plan from loss or depreciation or any payment to
any person. The liability of the plan administrator or any employer as to any
payment or distribution of benefits under the plan is limited to the avail able
assets of the trust fund.
13.5 Participant Litigation. In any action or pro ceeding
regarding the plan assets or any property constituting a portion or all thereof
or regarding the administration of the plan, employees or former employees of
the employers or their beneficiaries or any other persons having or claiming to
have an interest in this plan shall not be necessary parties and shall not be
entitled to any notice or process. Any final judgment which is not appealed or
appealable and may be entered in any such action or proceeding shall be binding
and conclusive on the parties hereto and all persons having or claiming to have
any interest in this plan. To the extent permitted by law, if a legal action is
begun against the employers, the plan adminis trator or the trustee by or on
behalf of any person, and such action results adversely to such person, or if a
legal action arises because of conflicting claims to a participant's or other
person's benefits, the costs to the employers, the plan admin istrator or the
trustee of defending the action will be charged to the sums, if any, which were
involved in the action or were payable to the participant or other person
concerned. To the extent permitted by applicable law, acceptance of
participation in this plan shall constitute a release of the employers, the plan
administrator and the trustee and their agents from any and all liability and
obligation not involving willful misconduct or gross neglect.
13.6 Successors. The plan and the trust will be bind
ing on all persons entitled to benefits hereunder and their
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respective heirs and legal representatives, and on the plan
administrator and the trustee and their successors.
13.7 Adequacy of Evidence. Evidence which is required of
anyone under the plan shall be executed or presented by the proper individuals
or parties and may be in the form of certifi cates, affidavits, documents or
other information which the plan administrator, the trustee, the employers or
other persons acting on such evidence considers pertinent and reliable.
13.8 Gender and Number. Words denoting the masculine gender
shall include the feminine and neuter genders and the singular shall include the
plural and the plural shall include the singular wherever required by the
context.
13.9 Waiver of Notice. Any notice required under the plan may
be waived by the person entitled to notice.
13.10 Applicable Law. The plan and the trust shall be
construed in accordance with the provisions of ERISA and other applicable
federal laws. To the extent not inconsistent with such laws, this plan shall be
construed in accordance with the laws of the state of Illinois.
13.11 Severability. If any provision of the plan shall be held
illegal or invalid for any reason, such illegal or invalid provision shall not
affect the remaining provisions of the plan, and the plan shall be construed and
enforced as if such illegal or invalid provisions had never been contained in
the plan.
13.12 Fiduciary Responsibilities. It is specifically intended
that all provisions of the plan shall be applied so that all fiduciaries with
respect to the plan shall be required to meet the prudence and other
requirements and responsibilities of applicable law to the extent such
requirements of responsibili ties apply to them. No provisions of the plan are
intended to relieve a fiduciary from any responsibility, obligation, duty or
liability imposed by applicable law. In general, a fiduciary shall discharge his
duties with respect to the plan solely in the
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interests of participants and other persons entitled to benefits under the plan
and with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of like character and with
like aims.
ARTICLE 14
Top-Heavy Plan Rules
14.1 Key Employees. An employee or former employee shall be a
"key employee" for any plan year if during such plan year or during any of the
four preceding plan years the employee is:
(a) An officer of an employer having an annual
compensation greater than 50 percent of the amount in effect
under Section 415(b)(1)(A) of the Code for any such plan year;
(b) One of the ten employees of an employer having
annual compensation from an employer of more than the
limitation in effect under Section 415(c)(1)(A) of the Code
and owning (or considered as owning within the meaning of
Section 318 of the Code) both more than 1/2 percent interest
and the largest interests in the employer;
(c) Any person who owns (or is considered as owning
within the meaning of Section 318 of the Code) more than five
percent of the outstanding stock of the employer or stock
possessing more than five percent of the total combined voting
power of all the employer's stock; or
(d) Any person having annual compensation in excess
of $150,000 who owns (or is considered as owning within the
meaning of Section 318 of the Code) more than one percent of
the outstanding stock of the em ployer or stock possessing
more than one percent of the total combined voting power of
all the employer's stock.
For purposes of subsection (a) above, if the number of officers exceeds 50, only
the 50 officers with the highest compensation
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shall be considered key employees and if the number of officers is less than 50,
the number of officers considered key employees shall not exceed the greater of
three such officers or ten percent of all employees. For purposes of subsections
(c) and (d) above, Section 318(a)(2)(C) of the Code shall be applied by
substituting "five percent" for the reference to "50 percent" therein and the
rules of Section 414(b), (c) and (m) of the Code shall not apply for determining
ownership in the employer. The term "employer" includes all corporations which
are members of a controlled group of corporations which includes the company
under Section 414(b) of the Code, all trades or businesses (whether or not
incorporated) which are under common control with the company under Section
414(c) of the Code and any service or other organ ization which is a member of
an affiliated service group with the company under Section 414(m) of the Code.
The beneficiary of a key employee shall be considered a key employee.
Compensation for purposes of determining who is a key employee under this
section shall be as set out in Code Section 414(q)(7).
14.2 Top-Heavy Plan. The plan will be considered a "top-heavy
plan" for any plan year if, as of the last day of the preceding plan year (the
last day of the initial plan year, in the case of that year) (the "determination
date"), the sum of (i) the aggregate of the accounts of all key employees under
the plan and all other defined contribution plans in an aggregation group of
plans (as described in section 14.3 below), and (ii) the present value of the
aggregate cumulative accrued benefits for key employees under all defined
benefit plans in an aggregation group of plans, exceeds 60 percent of such sum
determined for all participants under all such plans, excluding participants who
are former key employees. For purposes of making the determination described
above, accounts in a defined contribution plan and benefits under a defined
benefit plan shall be valued as of the accounting date coincident with the
determination date. There shall be included in the determination of a
participant's ac counts and accrued benefit under such plans any amounts distrib
uted to such participant during the preceding five-year period. Notwithstanding
the foregoing, if any individual has not per formed services for the
ServiceMaster Companies at any time during the five-year period ending on the
determination date, any account of such individual (and the accrued benefit for
such individual) shall not be included for purposes of this section.
Furthermore, a rollover contribution initiated by a participant and made to any
plan in an aggregation group of plans shall not be taken into account for
purposes of determining whether the plan is a top-heavy plan.
14.3 Aggregation Groups. All employer plans in a required
aggregation group of plans shall be considered to be top-heavy plans if either
the required or permissive aggregation group of plans is determined to be
top-heavy under section 14.2 above. If the required or permissive aggregation
group of plans is not a top-heavy group, no employer plans in the group shall be
considered to be top-heavy plans. A "required aggregation group of plans" shall
include each employer plan (whether or not terminated) in which a key employee
participates and any other employer plan which enables any plan in which a key
employee participates to meet the coverage and nondiscrimination require ments
of Sections 401(a)(4) or 410 of the Code. A "permissive aggregation group of
plans" shall include all plans in the required aggregation group plus any other
employer plans which satisfy the requirements of Sections 401(a)(4) and 410 of
the Code when considered together with the required aggregation group of plans.
14.4 Minimum Contributions and Benefits. Notwith standing the
provisions of section 4.1 above, for each plan year for which the plan is
considered a top-heavy plan, the amount contributed by an employer in accordance
with section 4.1(c) for each participant (whether active or inactive) shall not
be less than the lesser of (i) three percent of the participant's total
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earnings for that year, or (ii) the highest percentage of earn ings
(disregarding earnings in excess of the maximum compensation that can be
considered for such purpose as set forth in Section 401(a)(17) of the Code or
such other maximum amount as may be permitted from time to time by the Secretary
of the Treasury or the Secretary's delegate or by law) contributed by such
employer for such plan year on behalf of a key employee; provided, however, that
in the case of an employee covered under this plan and a defined benefit plan
maintained by the employer, for each plan year for which this plan and such
defined benefit plans are considered top-heavy plans, if such employee receives
the top-heavy minimum contribution specified in such defined benefit plan, such
employee need not receive the minimum contribution specified in this section.
For purposes of satisfying the minimum top-heavy contribution requirement under
this section, neither elective contributions nor employer matching contributions
shall be taken into account. Compensation for purposes of determining the
minimum benefit of this section will be as described in Treasury regulation
1.415-2(d).
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Exhibit A
to the
ServiceMaster Profit Sharing and Retirement Plan
List of Prior Plans:
1. ServiceMaster Profit Sharing, Savings and Retirement Plan
2. ServiceMaster Consumer Services L.P. Profit Sharing
Retirement Plan
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Supplement 1
to the
ServiceMaster Profit Sharing and Retirement Plan
Employee groups excluded from participation in employer contributions:
DHS of Mississippi LLC
Mississippi State Veterans Home
3261 Highway 49 South
Collins, MS 39428
DHS of Mississippi LLC
Mississippi State Veterans Home
4607 Lindberg Drive
Jackson, MS 39209
DHS of Mississippi LLC
Mississippi State Veterans Home
310 Autumn Ridge Road
Kosciusko, MS 39090
DHS of Mississippi LLC
Mississippi State Veterans Home
120 Veteran's Road
Oxford, MS 38655
DHS of Connecticut, LLC
Countryside Manor
1660 Stafford Avenue
Bristol. CT 06010
DHS of Oregon LLC
Oregon Veterans Home
700 Veterans Drive
The Dalles, OR 97058
DHS of Alabama
Bill Nichols State Veterans Home
1784 Elkahatchee Road
Alexander City, AL 35010
DHS of Alabama
William F. Green State Veterans Home
300 Faulkner Drive
Bay Minette, AL 36507
DHS of Alabama
Floyd E. "Tut" Fann State Veterans Home
2701 Meridan Street
Huntsville, AL 35811
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Exhibit 99.2
News Release
The ServiceMaster Company
One ServiceMaster Way
Downers Grove, IL 60515-1700
630/271-1300
SERVICEMASTER
For further information contact:
Claire E. Buchan, VP Comm. (630)271-2150
FOR IMMEDIATE RELEASE
September 16, 1999
Downers Grove, Illinois
SERVICEMASTER STATEMENT ON ATLANTA VERDICT
------------------------------------------
We will appeal the verdict reached by an Atlanta, Georgia jury in a dispute
about a salesman's commission. The entire award, particularly the award of
punitive damages, is unsupportable as a matter of law. We have proceeded in the
trial of this case in accordance with the advice of our counsel and we are
confident that this award will be reversed on appeal.
<PAGE>
Exhibit 99.3
Seyfarth, Shaw, Fairweather & Geraldson
PRESS RELEASE
FOR IMMEDIATE RELEASE
On September 13, 1999, a jury in Fulton County, Georgia rendered an
adverse verdict against ServiceMaster in connection with claims brought by Ray
D. Martin. The jury's award of $136 million is unjustified under the law,
unsupportable under the trial evidence, and violates various constitutional
protections. In particular, the punitive damages award, which is more than 100
times the amount of actual damages allegedly sustained by Mr. Martin, violates
ServiceMaster's due process rights.
We want to specifically respond to charges that ServiceMaster failed to
comply with its obligations under the law. That charge is false. ServiceMaster
fully complied with all of its obligations under Georgia law, and no relevant
information or witness was withheld. We believe that a reviewing court, when
presented with the full record, will reach that conclusion. Furthermore, all of
ServiceMaster's actions were in full accordance with Mr. Martin's employment
contract. ServiceMaster was not, however, allowed to present such evidence and
we believe the appellate court will find that to be a serious and reversible
error.
The jury's verdict does not conclude the legal proceedings. Based on
numerous and significant legal and factual errors, post-trial motions and
appeals will be filed challenging the jury's award. We are confident that the
award will be overturned.
Gerald D. Skoning
September 16, 1999
(312)269-8844
