American Home Shield 2008 Annual Report Download - page 161

Table of Contents
Litigation Program
Hinshaw & Culbertson has served as ServiceMaster's primary counsel in our national litigation program for our general and automobile liability risks
since 2004. Total fees paid to Hinshaw & Culbertson for 2008 in connection with our national litigation program were approximately $5.4 million. Donald
Mrozek, Esq., Chairman of Hinshaw & Culbertson, is the brother of Ernest Mrozek, our former Vice Chairman and Chief Financial Officer. Hinshaw &
Culbertson served as one of our casualty program law firms prior to Ernest Mrozek's becoming employed by ServiceMaster. Ernest Mrozek did not have
management responsibility for our litigation program.
Stockholders Agreement
On the Closing Date of the Merger, Holdings entered into a stockholders agreement (the "Stockholders Agreement") with investment funds associated
with or designated by the Equity Sponsors. The Stockholders Agreement contains agreements that entitle investment funds associated with each of the Equity
Sponsors to elect (or cause to be elected) all of Holdings' directors. The directors include three designees of investment funds associated with CD&R (one of
whom shall serve as the chairman and each of whom is entitled to three votes), one designee of BAS Capital Funding Corporation, and one designee of
investment funds associated with Citigroup Private Equity LP, subject to adjustment in the case investment funds associated with or designated by certain of
the Equity Sponsors sell more than a specified amount of their shareholdings in Holdings. The Stockholders Agreement provides for our chief executive
officer to be a director of Holdings, as well as his successor as chief executive officer, subject to the approval of the Holdings board and Clayton, Dubilier &
Rice Fund VII, L.P. (the "Lead Investor"). The Stockholders Agreement grants to investment funds associated with the Equity Sponsors special governance
rights, including rights of approval over certain corporate and other transactions. The Stockholders Agreement also gives investment funds associated with the
Equity Sponsors preemptive rights with respect to certain issuances of equity securities of Holdings and its subsidiaries, including ServiceMaster, subject to
certain exceptions, and contains restrictions on the transfer of shares of Holdings, as well as tag-along rights and rights of first offer.
Registration Rights Agreement
On the closing date of the Merger, Holdings entered into the Registration Rights Agreement with investment funds associated with or designated by the
Equity Sponsors. The Registration Rights Agreement grants to certain of these investment funds the right, in the case of the Lead Investor at any time and in
the case of the other Equity Sponsors at least 18 months following the initial public offering of Holdings common stock, to cause Holdings, at its own
expense, to use its best efforts to register such securities held by the investment funds for public resale, subject to certain limitations. In the event Holdings
registers any of its common stock following its initial public offering, these investment funds also have the right to require Holdings to use its best efforts to
include shares of common stock of Holdings held by them, subject to certain limitations, including as determined by the underwriters. The Registration Rights
Agreement also provides for Holdings to indemnify the investment funds party to that agreement and their affiliates in connection with the registration of
Holdings' securities.
Consulting Agreement; Transaction Fee Agreement; Advisory Agreement
On the closing date of the Merger, Holdings and the ServiceMaster Company entered into a consulting agreement, or the "Consulting Agreement," with
CD&R, pursuant to which CD&R provides Holdings and its subsidiaries with financial advisory and management consulting services. Pursuant to the
Consulting Agreement, Holdings will pay or cause to be paid to CD&R an annual fee of $2 million for such services, plus expenses, unless the Equity
Sponsors (or the disinterested
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