Item 1.01 Entry into a Material Definitive Agreement
On March 1, 2006 ServiceMaster and Executive Vice President, Steven Preston, entered into a separation agreement approved by our Compensation and Leadership Development Committee. The agreement provides that Mr. Preston’s separation date will be the earlier of June 30, 2006, the acceptance of a fulltime position with another employer, and any mutually agreeable date prior to June 30, 2006. Mr. Preston’s change in control severance agreement (described below) will terminate on the separation date. In exchange for Mr. Preston’s agreement to non-competition and non-solicitation restrictions for a period of two years after the separation date, Mr. Preston will receive an amount equal to two times his current base salary and target bonus, or $2,010,400, less applicable tax withholdings. ServiceMaster will pay for continuation of Mr. Preston’s group medical insurance coverage during the 18-month eligibility period required under the Consolidated Omnibus Budget Reconciliation Act. All stock options and stock appreciation rights held by Mr. Preston on the separation date and which are exercisable on the separation date will remain exercisable for a period of up to six months after the separation date. All other stock options and stock appreciation rights will expire on the separation date. All shares of restricted stock held by Mr. Preston on the separation date will be forfeited on the separation date.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On February 24, 2006, ServiceMaster borrowed $40 million under its $500 million senior unsecured bank revolving credit facility dated as of May 19, 2004 and subsequently amended on May 6, 2005 among ServiceMaster, the lenders, JPMorgan Chase Bank and Bank of America, N.A. as syndication agents, SunTrust Bank, as administrative agent, and U.S. Bank and Wachovia Bank, N.A. as documentation agents (the “Credit Facility”), at an interest rate of 5.17125% with a 30-day term, payable on March 24, 2006.
On February 27, 2006, ServiceMaster borrowed an additional $55 million under the Credit Facility at an interest rate of 5.18063% with a 30-day term, payable on March 27, 2006.
On February 28, 2006, ServiceMaster borrowed an additional $75 million under the Credit Facility at an interest rate of 5.205% with a 30-day term, payable on March 28, 2006.
The interest rates described above exclude the .15% facility fee payable under the Credit Facility. The borrowings under the Credit Facility will be used for general corporate purposes and the closing of the previously announced acquisition of InStar Services Group, Inc.
The outstanding principal balance of ServiceMaster’s Credit Facility subsequent to the transactions described above is $170 million as of February 28, 2006.
Item 9.01. Financial Statements and Exhibits |
(c) | Exhibits. | | |
| 10.1* | Separation Agreement and General Release dated as of March 1, 2006 between The ServiceMaster Company and Steven C. Preston | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 2, 2006 | THE SERVICEMASTER COMPANY |
| By: /s/ Jim L. Kaput |
| Jim L. Kaput |
| Senior Vice President and General Counsel |
EXHIBIT INDEX
Exhibit | |
Number | Description of Exhibit |
| |
10.1* | Separation Agreement and General Release dated as of March 1, 2006 between The ServiceMaster Company and Steven C. Preston. |
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