American Home Shield 2010 Annual Report Download - page 150

Table of Contents
the consulting agreements, Citigroup, BAS and JPMorgan each provide the Company with on-going consulting and management advisory services through
June 30, 2016 or the earlier termination of the existing consulting agreement between the Company and CD&R. The Company pays annual management fees
of $0.5 million, $0.5 million and $0.25 million to Citigroup, BAS and JPMorgan, respectively. The Company recorded consulting fees relating to these
agreements of $1.25 million for the years ended December 31, 2010 and 2009. On September 30, 2010, Citigroup transferred the management responsibility
for, and its proprietary interests in, certain investment funds that own shares of common stock of Holdings to StepStone and Lexington Partners Advisors LP.
Citigroup also assigned its obligations and rights under its consulting agreement to StepStone, and beginning in the fourth quarter of 2010, the consulting fee
otherwise payable to Citigroup became payable to StepStone.
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 those Equity Sponsors, the Holdings stockholders affiliated with those 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, transaction fee agreement and advisory agreements described above under "Consulting
Agreements; Transaction Fee Agreement; Advisory Agreements" 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 not 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 Agreements" above.
Debt Purchases
Between the Merger and December 31, 2010, Holdings completed open market purchases totaling $65.0 in face value of the Permanent Notes for a cost
of $21.4 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.
During the years ended December 31, 2010, 2009 and 2008, the Company recorded interest expense of $7.0 million, $6.9 million and $0.4 million,
respectively, related to Permanent Notes held by Holdings. During the year ended December 31, 2010 and 2009, the Company made cash payments to
Holdings in the amount of $7.0 million and $6.5 million, respectively. Interest accrued by the Company and payable to Holdings as of December 31, 2010 and
2009 amounted to $3.2 million.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The Board selected Deloitte & Touche LLP as our independent auditors for 2010. The Board pre-approves all audit, audit-related and non-audit related
services to be provided by our independent auditors.
The following table presents, for 2010 and 2009, fees for professional services rendered by Deloitte & Touche LLP for the audit of our annual financial
statements, audit-related services, tax services and all other services rendered by Deloitte & Touche LLP. In accordance with the SEC's
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