One ServiceMaster Way
                          Downers Grove, Illinois 60515

                                 January 7, 2001

Mr. Jonathan P. Ward
425 East Woodlands
Lake Forest, Illinois  60045

Dear Jon:

                  It is my pleasure to extend to you an offer of employment with
The  ServiceMaster  Company  (the  "Company")  upon the  terms  set forth in the
attached term sheet.  This offer has been approved by a special committee of the
Board of Directors of the Company and will remain open for your acceptance until
5:00 p.m.  (C.D.T.)  January 9, 2001.  Please  signify your  acceptance  of such
employment by signing as indicated below.  This letter agreement may be executed
in counterparts.

                                           THE SERVICEMASTER COMPANY

                                           /s/ C. WILLIAM POLLARD
                                               C. William Pollard
                                               Chairman and CEO

                                           ACCEPTED AND AGREED:

                                           /s/ JONATHAN P. WARD

Name:    Jonathan P. Ward

Date:    January 9, 2001


                               Principal Terms For
                                  Employment Of
                        Jonathan P. Ward ("Executive") By
                      The ServiceMaster Company ("Company")

1.   Position:  President and Chief Executive  Officer reporting to the Board of
     Directors.  Executive  will also be elected a director  of the  Company and
     shall serve as a member of the Board's Executive Committee.

2.   Term: Through December 31, 2002.

3.   Annual  Salary:  $700,000 for 2001,  subject to increase (but not decrease)

4.   Bonuses:

(a)  Annual  performance  bonus  based  upon the  terms  and  conditions  of the
     Company's  APC bonus  plan,  with target at 150% of annual  salary.  Unless
     Executive's  employment  is  terminated  for Cause or Executive  terminates
     employment  without  Good Reason prior to the normal  bonus  payment  date,
     minimum bonus for 2001 will be at target.

(b)  Additional bonuses as awarded in the discretion of the Board of Directors.

5.   Long-Term  Performance  Award:  The Company will grant the  Executive  1000
     participation  units under the Company's 2001 Long-Term  Performance  Award
     Plan  for the  performance  period  beginning  January  1,  2001  ("Initial
     Performance Units"). The Initial Performance Units will have a target value
     of $701 per unit.

6.   Group/Executive  Benefits:  Participation  by Executive and his family,  on
     terms no less favorable to Executive than the terms offered to other senior
     executives   of  the  Company,   in  any  group  and/or   executive   life,
     hospitalization  or disability  insurance plan,  health program (with COBRA
     equivalent premiums paid during any waiting period), profit sharing, 401(k)
     and similar benefit plans  (qualified,  non-qualified  and supplemental) or
     other fringe benefits of the Company,  including  automobile  allowance and
     similar programs as in effect from time to time  (collectively  referred to
     as the "Benefits").


7.   Equity-Based Incentive Compensation:

(a)  Initial grant of ten-year  options with respect to 1,630,000 shares to vest
     (i) 380,000 shares on the  commencement of Executive's  employment with the
     Company, and (ii) 250,000 shares on each of the first five anniversaries of
     such commencement.  The exercise price for the options will be equal to the
     average  closing  NYSE price for the 5 trading days  immediately  preceding
     Executivess.s commencement of employment with the Company.

(b)  The Executive  will purchase a ten-year  Convertible  Debenture on the date
     his employment commences with a face value (the "Minimum Face Value") equal
     to (i) 100,000  multiplied  by (ii) the fair market value of a share of the
     Company's  common  stock.  The  Minimum  Face  Value  of  such  Convertible
     Debenture  shall be financed  through a full  recourse note executed by the
     Executive.  Interest on the  principal  balance of the note shall accrue at
     the same rate as under the  Convertible  Debenture  and shall be payable on
     the same interest payment dates as under the Convertible Debenture.

(c)  At the  Executive's  option  pursuant to notice  provided to the Company no
     later than the six-month  anniversary  of the date on which his  employment
     commences,  the face value of the Convertible Debenture may be increased to
     an amount equal to (i) a multiple greater than 100,000 but not greater than
     200,000 times (ii) the fair market value of a share of the Company's common
     stock. Any face value amount above the Minimum Face Value shall be paid 50%
     in cash by the  Executive,  with the  remaining  50%  financed  through  an
     increase in the principal  amount of the full recourse note executed by the
     Executive.  If the Company receives proper notice of the Executive's option
     to increase the face value of the  Convertible  Debenture after the initial
     issuance of the Convertible  Debenture,  then the Company and the Executive
     shall issue,  respectively,  an additional  Convertible  Debenture for such
     increased  amount  and an  additional  full  recourse  note for 50% of such
     increased  amount,  in each case bearing terms identical to those contained
     in the original corresponding instruments.

(d)  Beginning  in 2002,  Executive  will be eligible to receive  future  grants
     under the Company's stock incentive  programs  consistent with  performance
     and competitive pay practices  generally,  with an annual target of 380,000


(e)  All  equity  based  awards  will fully  vest upon a  Change-in-Control  (as
     defined in the Company's 2000 Equity Incentive Plan).

8.   Sign-On Loan:  $500,000 loan to be dispersed  within three business days of
     the day the Executive commences employment with the Company (the "Executive
     Loan"),  to be  due  and  payable  upon  the  earlier  of  five  years  and
     termination  of Executive's  employment for any reason.  The Executive Loan
     shall be full recourse and without interest.

9.   Severance Benefits:  In the event that the Executive's  employment with the
     Company is terminated on or prior to December 31, 2002 by the Executive for
     Good  Reason  or by the  Company  for any  reason  other  than  for  Cause,
     Executive  shall receive  continued  vesting of all equity  awards  through
     December 31, 2002 (with stock options being  exercisable in accordance with
     stock options granted generally to executives of the Company,  but the date
     of  termination of employment  being deemed to be December 31, 2002),  full
     vesting of his  deferred  compensation  benefit,  and shall be  entitled to
     receive as  severance  benefits  (a) the  Executive's  then-current  annual
     salary  through  December 31, 2002,  (b) the 2001 bonus shall be payable in
     accordance with Section 4(a) above, (c) a bonus in respect of 2002 shall be
     payable to the Executive on the dates of payment to other executives of the
     Company,  but only to the  extent  earned  (it  being  understood  that the
     Executive  does not need to be employed by the Company on December 31, 2002
     or on any date of payment in order for any such bonus to have been earned),
     and (d) continuation of employee benefits and perquisites  through December
     31,  2002;  provided,  however,  that if  Executive's  employment  with the
     Company is  terminated  on or prior to December 31, 2002 by the Company for
     any reason other than for Cause, Executive shall be entitled to receive the
     Executive's  then-current annual salary for a period of 24 months beginning
     on the date of such  termination of  employment.  "Cause" and "Good Reason"
     are defined in the attached Appendix A.

10.  Use and Ownership of Proprietary  Information:  Executive acknowledges that
     during Executive's  period of employment by the Company,  Executive has had
     and will have access to proprietary  information and materials owned by the
     Company.  Except to the extent authorized by the Company,  Executive agrees
     that  Executive  will  not at any  time,  from and  after  the date of this
     agreement,  use,  divulge,  furnish  or  make  accessible  to  any  person,
     enterprise,   business  or  institution  any  confidential  or  proprietary
     information of the Company. Confidential and proprietary information of the
     Company  includes (and Executive so acknowledges)  information  relating to
     products, methods, processes,  improvements,  formulas, designs and methods
     of  distribution  and/or  manufacture  of the Company  which are


not in the public domain; all manuals, materials, and information of the
Company marked oConfidentialo; the Companyss.s methods and formulas for
calculating costs; the customers of the Company (actual and potential); and the
business and marketing strategies of the Company. Executive acknowledges
that said confidential and proprietary information, whether in written or
other physical form (including computer materials), is the sole and
exclusive property of the Company and Executive agrees prior to termination
of employment to return to the Company all such confidential and
proprietary information and all copies thereof.

11.  Restrictions on Employment and Other Activities after Termination:

(a)  Executive  acknowledges that his employment with the Company enables him to
     develop specialized  knowledge,  goodwill,  and valuable relationships with
     the Companyss.s  customers,  which would be of great value to the Company's
     competitors.  Executive  further  acknowledges  that in his  position  as a
     corporate officer of the Company,  Executive is in a unique relationship to
     the Company  wherein  Executive is privy to the present  operations  of the
     Company and its  subsidiaries as well as the short and long range plans and
     programs of the Company.  Therefore,  Executive agrees that during the term
     of his employment,  and for twenty four (24) months thereafter, he will not
     directly or indirectly own, manage,  operate,  control,  serve, be employed
     by, participate in, or be connected in any way with any person, enterprise,
     business or institution, whether a competitor or customer of the Company or
     a subsidiary of the Company,  which offers or performs  services similar to
     those  performed by the Company or a subsidiary of the Company whether such
     services  are  performed  on a  contract  or other  basis or  whether  such
     services are licensed to be performed by others.

(b)  Executive  also  agrees  that for a period of  eighteen  months  (18) after
     termination  of this  agreement,  Executive  will  not  approach,  counsel,
     solicit,  or attempt to induce any then present  employee of the Company or
     affiliate,  or any  subsidiary  thereof,  to  terminate  and/or  leave such

12.  Fees and Expenses:  The Company will pay all reasonable  professional  fees
     and  related  expenses   incurred  by  Executive  in  connection  with  the
     negotiation and preparation of these terms of employment.


13.  Successor; Coordination: The Company will be required to have any successor
     to all or substantially  all of its business and/or assets expressly assume
     and agree to fulfill the terms of Executive's employment in the same manner
     and to the same extent  that the  Company  would be required to do so if no
     such succession had taken place.  These terms of employment shall supersede
     any inconsistent terms of any Company plan, document, or award agreement.

                                     * * * *

                                   Appendix A

Termination for "Cause" means: a termination by the Company,  within one hundred
twenty  (120) days of the  Chairman  of the Board  becoming  aware of the event,
resulting from  Executive's  (i) conviction  (including a plea of guilty or nolo
contendere) of any felony of any kind (other than Limited Vicarious Liability or
a routine traffic infraction) or any other crime (whether it is a felony or not)
involving  securities fraud or theft of substantial assets of the Company,  (ii)
willful  misconduct with regard to the Company,  or gross neglect or dereliction
of duty  resulting  in either case in material  economic  harm to the Company or
significant damage to the Company's reputation;  (iii) failure to follow in good
faith the reasonable  lawful direction of the Board despite written  instruction
to do so; or (iv) a violation of his  statutory or common law duty of loyalty to
the  Company.  Limited  Vicarious  Liability,  as used  above,  shall  mean  any
liability  which is (x)  based on acts of the  Company  for which  Executive  is
charged solely as a result of his offices with the Company and (y) provided that
(1) he was not directly  involved in such acts and either had no prior knowledge
of such  intended  actions or  promptly  acted  reasonably  and in good faith to
attempt to prevent  the acts  causing  such  liability  or (2) he did not have a
reasonable basis to believe that the law was being violated by such acts.

Notwithstanding  the  foregoing,  Executive  shall  not be  deemed  to have been
terminated for Cause unless he has (i) had ten (10) days' written notice setting
forth the reasons for the Company's  intention to terminate for Cause,  (ii) had
an  opportunity  to be heard  before the Board,  and (iii)  received a notice of
termination from the Board stating that in the opinion of a majority of the full
Board  that  Executive  is  guilty  of  conduct  of a type set  forth  above and
specifying the particulars thereof.

"Good Reason" means: (i) diminution in Executive's  titles,  (ii) the assignment
of duties to Executive  that are  materially  and  adversely  inconsistent  with
Executive's  positions,  (iii) any material diminution in Executive's authority,
responsibility or reporting lines,  including,  but not limited to,  maintaining
Executive's  then  positions in the Company and the Company  becoming  more than
fifty  percent  (50%) owned by another  entity and Executive not having the same
titles,  responsibilities  and duties in the parent  entity,  (iv)  reduction in
Executive's annual salary, (v) removal from, or failure to reelect Executive to,
the Board or the Executive Committee thereof,  or (vi) a  Change-in-Control  (as
defined in the Company's 2000 Equity  Incentive  Plan). If Executive  determines
that Good Reason exists,  Executive  must notify the Company in writing,  within
one hundred eighty (180) days following Executive's knowledge of the first event
which  Executive  determines  constitutes  Good Reason,  or such event shall not
constitute Good Reason under the terms of Executive's employment. If the Company
remedies  such event within thirty (30) days  following  receipt of such notice,
the Executive may not terminate  employment  for Good Reason as a result of such


Source: OneCLE Business Contracts.