American Home Shield 2008 Annual Report Download - page 162

Table of Contents
directors of Holdings) agree to a higher amount, and Holdings will also pay to CD&R a fee for certain types of future transactions that Holdings or its
subsidiaries complete. If an individual designated by CD&R serves in an executive management position, Holdings will pay CD&R an additional fee to be
reasonably determined by CD&R, but not to exceed the amount of the annual fee then in effect. The Company recorded a management fee of $2 million for
the year ended December 31, 2008 and $0.9 million for the Successor period from July 25, 2007 to December 31, 2007.
In connection with the Merger, Holdings and ServiceMaster entered into a Transaction Fee Agreement, pursuant to which they paid an aggregate fee of
$55 million to the Equity Sponsors and reimbursed certain expenses of the Equity Sponsors and their affiliates.
In connection with the Merger, Holdings and ServiceMaster entered into advisory agreements with the following Equity Sponsors or their affiliates:
Citigroup Private Equity L.P., BAS Capital Funding Corporation, and J.P. Morgan Ventures Corporation. Pursuant to these agreements the Company paid an
aggregate fee of $24 million to Citigroup Private Equity L.P., BAS Capital Funding Corporation, and J.P. Morgan Ventures Corporation and their affiliates
and reimbursed certain expenses of the Equity Sponsors and their affiliates.
Indemnification Agreements
Holdings and ServiceMaster have entered into indemnification agreements with the Equity Sponsors and Holdings stockholders affiliated with the Equity
Sponsors, pursuant to which Holdings and ServiceMaster will indemnify the Equity Sponsors, the Holdings stockholders affiliated with the Equity Sponsors
and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities
arising out of performance of the consulting agreement and transaction fee agreement described above under "—Consulting Agreement; Transaction Fee
Agreement" and certain other claims and liabilities, including liabilities arising out of financing arrangements and securities offerings.
Director Independence
Though not formally considered by our Board because our common stock is no longer registered with the SEC or traded on any national securities
exchange, based upon the listing standards of the NYSE, the national securities exchange upon which our common stock was traded prior to the Merger, we
do not believe that either of our directors would be considered "independent" because of their relationships with CD&R. See "Consulting Agreement;
Transaction Fee Agreement" above.
Debt Purchases
The Company was advised by Holdings that, during the year ended December 31, 2008, Holdings completed open market purchases of $54.0 million in
face value of our Permanent Notes for a cost of $16.9 million. The debt acquired by Holdings has not been retired, and the Company has continued to pay
interest in accordance with the terms of the debt. Interest accrued by the Company and payable to Holdings as of December 31, 2008 amounted to
$0.4 million. There were no interest payments by the Company to Holdings in 2008.
The Company was advised by Holdings that during January 2009, Holdings completed additional open market purchases of $11.0 million in face value
of our Permanent Notes for a cost of $4.5 million.
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