On September 16, 2001, the Company’s Board of Directors authorized the purchase of up to 2,000,000 shares of the Company’s outstanding stock at any time through December 31, 2001. On December 17, 2001, the Board of Directors extended this authorization until December 31, 2002. On December 10, 2002, the Board of Directors extended this authorization through January 31, 2003. As of October 31, 2002, the Company had purchased 1,400,000 shares at a cost of $23,632,000 (an average price per share of $16.88). In the three months ended January 31, 2003, the Company purchased the remaining 600,000 shares at a cost of $9,297,000 (an average price per share of $15.50).

     On March 11, 2003, the Company’s Board of Directors further authorized the purchase of up to 2,000,000 shares of the Company’s outstanding stock at any time through December 31, 2003.

     In January 2002, the Emerging Issues Task Force (EITF) released Issue No. 01-14, “Income Statement Characterization of Reimbursements Received for Out-of-Pocket Expenses Incurred,” which the Company adopted in fiscal 2002. For the Company’s Parking segment this pronouncement requires both revenues and expenses be recognized, in equal amounts, for costs directly reimbursed from its managed parking lot clients. Previously, expenses directly

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     For purposes of computing diluted net income per common share, weighted average common share equivalents do not include stock options with an exercise price that exceeds the average fair market value of the Company’s common stock for the period (i.e., “out-of-the-money” options). On January 31, 2003 and 2002, options to purchase common shares of 3,061,000 and 2,223,000 at a weighted average exercise price of $16.29 and $16.09, respectively, were excluded from the computation.

     The Company has a $150,000,000 syndicated line of credit which will expire July 1, 2005. Under the terms of this unsecured revolving credit facility, no compensating balances are required and the interest rate is determined at the time of borrowing based on the London interbank offered rate (LIBOR) plus a spread of .875% to 1.25% or, for overnight borrowings, at the prime rate plus a spread of .00% to .25%. The spread for LIBOR and prime borrowings is based on the Company’s leverage ratio. The facility calls for a commitment fee payable quarterly, in arrears, of .175% based on the average, daily, unused portion. For purposes of this calculation, irrevocable standby letters of credit issued in conjunction with the Company’s self-insurance program and parking business plus cash borrowings are considered to be outstanding amounts. As of January 31, 2003, the total outstanding amount under this facility was $120,507,000 in the form of standby letters of credit. The provisions of the credit facility require the Company to maintain certain financial ratios and limit outside borrowings. The Company was in compliance with all covenants as of January 31, 2003.

     Comprehensive income consists of net income and other related gains and losses affecting stockholders’ equity that, under generally accepted accounting principles, are excluded from net

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     Additionally, the Company has the following commercial commitments:

Acquisitions

     The operating results of businesses acquired have been included in the accompanying consolidated financial statements from their respective dates of acquisition. Acquisitions made during the first quarter of 2003 are discussed in Note 9 to the consolidated financial statements.

Results of Operations

     The following discussion should be read in conjunction with the consolidated financial statements of the Company. All information in the discussion and references to the years and quarters are based on the Company’s fiscal year and first quarter which ended on October 31 and January 31, respectively.

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Three Months Ended January 31, 2003 vs. Three Months Ended January 31, 2002

     Net income for the first quarter of 2003 was $4.3 million ($0.09 per diluted share), a decrease of $3.7 million or 45.7% from the net income of $8.0 million ($0.16 per diluted share) for the first quarter of 2002. Declines in operating profits from the Janitorial segment, primarily the Northeast region, Lighting, Parking and Engineering segments as well as higher Corporate expenses accounted for the decrease in net income. The pretax operating loss from the Northeast region for the first quarter of 2003 was $4.6 million, compared to $0.4 million of operating profit for the same period last year. Operating profits for Lighting were $0.7 million and $1.9 million for the first quarter of 2003 and 2002, respectively. Partially offsetting the declines were operating profits totaling $2.8 million from acquisitions that did not impact results until after January 31, 2002, namely: Lakeside Building Maintenance, Triumph Security Corporation, Triumph Cleaning Corporation and Foulke Associates, Inc.

     Sales and other income (hereinafter called sales) for the first quarter of 2003 of $580.6 million increased by $53.0 million or 10.1% from $527.6 million for the first quarter of 2002. The increase is primarily due to $50.0 million in sales from acquisitions that did not impact results until after January 31, 2002. The remainder of the increase was attributable to new business, partially offset by the impact of contract terminations and declines in sales due to increased vacancies.

     As a percentage of sales, operating expenses and cost of goods sold were 90.7% for the first quarter of 2003, compared to 90.0% for the first quarter of 2002. Consequently, as a percentage of sales, the Company’s gross profit (sales minus operating expenses and cost of goods sold) of 9.3% in the first quarter of 2003 was lower than the gross profit of 10.0% for the first quarter of 2002. The decline was due primarily to lower margins on new business, delays in planned terminations of unprofitable contracts in the Northeast region of Janitorial, higher labor costs in Lighting, decline in sales from higher margin business due to increased vacancies, and higher reimbursements for out-of-pocket expenses from existing managed parking lot clients for which Parking had no margin benefit. Additionally, operating expenses for the first quarter of 2003 included higher insurance costs which could not be fully absorbed through increased pricing.

     Selling, general and administrative expenses for the first quarter of 2003 were $47.6 million compared to $39.6 million for the corresponding three months of 2002. The increase in selling, general and administrative expenses was due primarily to $3.3

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million of selling, general and administrative expenses related to acquisitions that did not impact results until after the first quarter of 2002. The Northeast region of Janitorial contributed $1.0 million to the increase primarily as a result of higher legal expenses and costs associated with implementing management changes in the region. Additionally, the first quarter of 2003 reflects a $1.0 million increase in bad debt expense as well as higher employer contributions to the Company’s 401(k) plan which was enhanced effective January 1, 2002. Furthermore, corporate expenses for the first quarter of 2003 included higher directors and officers’ insurance costs and professional fees. As a percentage of sales, selling, general and administrative expenses increased to 8.2% for the three months ended January 31, 2003 from 7.5% for the same period in 2002.

     Interest expense, which includes loan amortization and commitment fees for the revolving credit facility, was $0.1 million for the first quarter of 2003 compared to $0.3 million for the same period in 2002. The decrease was primarily due to lower borrowings and interest rates during the first quarter of 2003, compared to the same period in 2002.

     The effective federal and state income tax rate was 33.4% for the first quarter of 2003, compared to 38.0% for the first quarter of 2002. The lower effective tax rate was mostly due to the impact of a lower estimated state tax rate and a higher proportional benefit from the same level of estimated federal tax credits applied to a lower level of pretax income.

Segment Information

     The results of operations from the Company’s segments for the three months ended January 31, 2003, compared to the same period in 2002, are more fully described below. The sales and operating profits of the segments are set forth in Note 10 to the consolidated financial statements.

     Sales for Janitorial were $44.1 million or 15.4% higher in the first quarter of 2003 than the same quarter of 2002, primarily due to the $43.1 million contribution from Lakeside Building Maintenance acquired in July 2002. The remainder of the increase was attributable to new business, partially offset by declines in sales from higher margin contracts due to increased vacancies. Operating profits in the first quarter of 2003 were $3.0 million or 28.0% lower than the same period in 2002 primarily due to the $5.0 million decline in operating profits in the Northeast region, which was partially offset by $2.6 million of operating profit from Lakeside Building Maintenance. Additionally, operating expenses included higher insurance costs which could not be fully absorbed through increased pricing.

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     The Northeast region of Janitorial, especially New York City, was primarily impacted by higher labor costs, delays in planned terminations of unprofitable contracts and bad weather in the first quarter of 2003. Further, first quarter 2002 results for New York City operations benefited from the extra clean-up work performed following the September 11 attacks. While such additional work has substantially diminished, higher labor costs continued in the first quarter of 2003 as displaced senior workers from the World Trade Center related accounts replaced less senior lower wage employees assigned to existing jobs. Additionally, the region’s operating profits for the first quarter of 2003 included higher unused sick leave payments, legal fees related to a lawsuit in connection with the collection of outstanding amounts from a large former customer, and costs associated with implementing management changes in this region.

     Parking sales increased by $4.9 million or 5.5%, while its operating profits decreased by $0.5 million or 43.7% during the first quarter of 2003 compared to the first quarter of 2002 primarily due to increased insurance costs which could not be fully absorbed through increased pricing. Of the $4.9 million sales increase, $2.1 million represented higher reimbursements for out-of-pocket expenses from existing managed parking lot clients for which Parking had no margin benefit. The remainder of the sales increase was generated by net new business that commenced after January 31, 2002, partially offset by the decline in sales from the hi-tech areas of San Francisco and Seattle where the economic downturn resulted in high office building vacancies. Although the new contracts generated higher sales, due to competitive pressures, they were priced at lower margins which further contributed to the reduced operating profits.

     Sales for Engineering increased $2.0 million or 4.5% from the first quarter of 2002 to the first quarter of 2003 due to new business. Operating profits decreased by $0.3 million or 12.5% from the first quarter of 2002 to the first quarter of 2003, primarily due to a settlement with a competitor firm on a bid-related issue and consulting costs associated with a study to assist Engineering to expand into new markets and broaden the scope of its services.

     Security sales increased $5.6 million or 17.5% primarily due to the sales contributed by the acquisitions of Triumph Security on January 26, 2002 and Foulke Security on February 28, 2002 totaling $6.6 million. Partially offsetting the sales from acquisitions was the decrease in tag sales, or sales in addition to the contractual fees, in the first quarter of 2003 compared to the first quarter of 2002, which experienced unusually high tag sales due to heightened security after the September 11 terrorist attack. Operating profits increased by only $0.1 million or 12.3% despite the significant increase in sales due to higher labor and insurance costs.

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     Lighting sales increased $0.6 million or 1.8% during the first quarter of 2003 compared to the first quarter of 2002, with a $1.2 million or 64.4% decrease in operating profits primarily due to higher labor costs in the Northeast and North Central regions. Sales were about flat as contracts lost were replaced by contracts with much lower margins further contributing to the reduced operating profits. A number of newer national contracts in fact operated at a loss as a result of aggressive pricing which did not take into account higher labor costs demanded by covering a wider geographic area of service. These contracts are currently being reviewed for a price adjustment negotiation or a thirty-day cancellation. The Northeast and North Central regions changed the management of several branches and incurred higher labor-related costs due to training and double management during the transition. Decline in operating profits was partially offset by a $0.3 million gain recognized in the first quarter of 2003 related to the early termination of a contract.

     Sales for Elevator increased by $1.7 million or 6.4% in the first quarter of 2003 compared to the same period in 2002, and operating profits increased by $35,000 or 3.8% for the first quarter of 2003, compared to the corresponding quarter of 2002, primarily due to increased repair and modernization business. Partially offsetting the operating profits from new business was the labor cost for an extra work week in Elevator’s accounting cycle for the first quarter of 2003.

     Sales for the Other segment, which is comprised of CommAir Mechanical Services and ABM Facility Services, were down $5.7 million or 35.1% for the first quarter. The Other segment produced a loss of $0.1 million in the first quarter of 2003 compared to a profit of $0.7 million in the same period last year. The lower revenues and operating profits for the quarter were primarily due to fewer projects and ABM Facility Services’ loss of the Consolidated Freightways account in September 2002 after it declared bankruptcy.

     The increase in Corporate expenses amounted to $0.9 million in the first quarter of 2003 compared to the same period of 2002. The increase was due to higher premiums paid for directors and officers’ liability insurance, as well as increased expenses related to the use of outside counsel while in the process of hiring a Corporate General Counsel.

Recent Accounting Pronouncements

     In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are

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incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS No.146 replaces EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. Management does not expect this statement to have a material effect on the Company’s results of operations or financial condition.

     In November 2002, FASB issued Financial Interpretation No. (FIN) 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires that upon issuance of a guarantee, the guarantor must disclose and recognize a liability for the fair value of the obligation it assumes under that guarantee. The initial recognition and measurement requirement of FIN 45 is effective for guarantees issued or modified after December 31, 2002 while the disclosure requirements are effective for interim and annual periods ending after December 15, 2002. At January 31, 2003, the Company has no guarantees to disclose under FIN 45.

Critical Accounting Policies and Estimates

     The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses. On an ongoing basis, the Company evaluates its estimates, including those related to self-insurance reserves, allowance for doubtful accounts, valuation allowance for the net deferred income tax asset, contingencies and litigation liabilities. The Company bases its estimates on historical experience, independent valuations, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

     Self-Insurance Reserves: Certain insurable risks such as general liability, automobile property damage and workers’ compensation are self-insured by the Company. However, the Company has umbrella insurance coverage for certain risk exposures subject

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to specified limits. Accruals for claims under the Company’s self-insurance program are recorded on a claim-incurred basis. The Company uses an independent actuarial firm to annually evaluate and estimate the range of the Company’s claim costs and liabilities. The Company accrues the minimum amount of the actuarial range of exposure. Using the annual actuarial report, management develops annual insurance costs for each division, expressed as a rate per $100 of exposure (labor and revenue) to estimate insurance costs on a quarterly basis. Additionally, management monitors new claims and claim development to assess the adequacy of the insurance reserves. The estimated future charge is intended to reflect the recent experience and trends. If the number of claims incurred were to increase, or the severity of the claims were to increase, the Company may be required to record an additional expense for self-insurance liabilities.

     Allowance for Doubtful Accounts: The Company’s accounts receivable arise from services provided to its customers and are generally due and payable on terms varying from the receipt of invoice to net thirty days. The Company estimates an allowance for accounts it does not consider collectible. Changes in the financial condition of the customer or adverse development in negotiations or legal proceedings to obtain payment could result in the actual loss exceeding the estimated allowance.

     Deferred Income Tax Asset Valuation Allowance: Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. If management determines it is more likely than not that the net deferred tax asset will be realized, no valuation allowance is recorded. At January 31, 2003, the net deferred tax asset was $64.3 million and no valuation allowance was recorded. Should future income be less than anticipated, the net deferred tax asset may not be recoverable.

     Contingencies and Litigation: ABM and certain of its subsidiaries have been named defendants in certain litigation arising in the ordinary course of business including certain environmental matters. When a loss is probable and estimable the Company records the estimated loss. The actual loss may be greater than estimated or litigation where the outcome was not considered probable may result in a loss.

Environmental Matters

     The nature of the Company’s operations, primarily services, would not ordinarily involve it in environmental contamination. However, the Company’s operations are subject to various federal, state and/or local laws regulating the discharge of materials into

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the environment or otherwise relating to the protection of the environment, such as discharge into soil, water and air, and the generation, handling, storage, transportation and disposal of waste and hazardous substances. These laws generally have the effect of increasing costs and potential liabilities associated with the conduct of the Company’s operations, although historically they have not had a material adverse effect on the Company’s financial position, cash flows or its results of operations.

     The Company is currently involved in five proceedings relating to environmental matters: one involving alleged potential soil and groundwater contamination at a Company facility in Florida; one involving alleged potential soil contamination at a former Company facility in Arizona; one involving alleged potential soil and groundwater contamination at a former dry-cleaning facility leased by the Company in Nevada; one involving alleged potential soil contamination at a former parking facility leased by the Company in Washington; and one involving alleged potential soil and groundwater contamination at a third party recycling center in Southern California. While it is difficult to predict the ultimate outcome of these matters, based on information currently available, management believes that none of these matters, individually or in the aggregate, are reasonably likely to have a material adverse effect on the Company’s financial position, cash flows, or results of operations. Three of the five proceedings are subject to ongoing settlement negotiations and a reserve of $0.5 million has been set aside for the potential liability. The liability related to the other two claims is neither probable nor estimable, hence no accruals have been made related to these matters.

Safe Harbor Statement

     Cautionary Safe Harbor Disclosure for Forward Looking Statements under the Private Securities Litigation Reform Act of 1995: Because of the factors set forth below, as well as other variables affecting the Company’s operating results, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. The statements contained herein which are not historical facts are forward-looking statements that are subject to meaningful risks and uncertainties, including but not limited to: (1) significant decreases in commercial real estate occupancy, resulting in reduced demand and pricing pressures on building maintenance and other facility services in the Company’s major markets, (2) inability to pass through cost increases in a timely manner, or at all, or to reduce expenses when sales decline, (3) loss or bankruptcy of one or more of the Company’s major customers, which could adversely affect the Company’s ability to collect its accounts receivable or recover its deferred costs, (4) major collective bargaining issues that may

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cause loss of revenues or cost increases that non-union companies can use to their advantage in gaining market share, (5) significant shortfalls in adding additional customers in existing and new territories and markets, (6) a protracted slowdown in the Company’s acquisition activities, (7) legislation or other governmental action that severely impacts one or more of the Company’s lines of business, such as price controls that could restrict price increases, or the unrecovered cost of any universal employer-paid health insurance, as well as government investigations that adversely affect the Company, (8) reduction or revocation of the Company’s line of credit, which would increase interest expense or the cost of capital, (9) cancellation or nonrenewal of the Company’s primary insurance policies, as many customers contract out services based on the contractor’s ability to provide adequate insurance coverage and limits, (10) catastrophic uninsured or underinsured claims against the Company, the inability of the Company’s insurance carriers to pay otherwise insured claims, or inadequacy in the Company’s reserve for self-insured claims, (11) inability to employ entry level personnel due to labor shortages, (12) resignation, termination, death or disability of one or more of the Company’s key executives, which could adversely affect customer retention and day-to-day management of the Company, (13) inability to successfully integrate acquisitions into the Company, and (14) other material factors that are disclosed from time to time in the Company’s public filings with the United States Securities and Exchange Commission, such as reports on Forms 8-K, 10-K and 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     The Company does not issue or invest in financial instruments or their derivatives for trading or speculative purposes. The operations of the Company are conducted primarily in the United States, and, as such, are not subject to material foreign currency exchange rate risk. The Company has no outstanding debt. Although the Company had over $11 million in cash and cash equivalents at January 31, 2003, market rate risk associated with falling interest rates in the United States is not material.

Item 4. Controls and Procedures

     (a)   Evaluation of disclosure controls and procedures. ABM’s chief executive officer and ABM’s chief financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c) as of a date (the “Evaluation Date”) within 90 days prior to the filing date of this Form 10-Q, have concluded that as of the Evaluation Date the Company’s disclosure controls and procedures were adequate and designed to ensure that material information relating to the Company including its

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consolidated subsidiaries would be made known to them by others within those entities.

     (b)   Changes in internal controls. There were no significant changes in the Company’s internal controls or, to the Company’s knowledge, in other factors that could significantly affect these controls subsequent to the Evaluation Date.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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CERTIFICATIONS

I, Henrik C. Slipsager, certify that:

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I, George B. Sundby, certify that:

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EXHIBIT INDEX

EXHIBIT 10.78                                                       Page 1 of 10

                    CORPORATE EXECUTIVE EMPLOYMENT AGREEMENT

THIS CORPORATE EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of
November 1, 2002, by and between JAMES P. McClure ("Executive"), and ABM
INDUSTRIES INCORPORATED ("Company") for itself and on behalf of its subsidiary
corporations as applicable herein.

WHEREAS, Company is engaged in the building maintenance and related service
businesses, and

WHEREAS, Executive is experienced in the administration, finance, marketing,
and/or operation of such services, and

WHEREAS, Company has invested significant time and money to develop proprietary
trade secrets and other confidential business information, as well as invaluable
goodwill among its customers, sales prospects and employees, and

WHEREAS, Executive wishes to, or has been and desires to remain employed by
Company, and to utilize such proprietary trade secrets, other confidential
business information and goodwill, and

WHEREAS, Company has disclosed or will disclose to Executive such proprietary
trade secrets and other confidential business information which Executive will
utilize in the performance of this Agreement;

NOW THEREFORE, Executive and Company agree as follows:

A.       EMPLOYMENT: Company hereby agrees to employ Executive, and Executive
         hereby accepts such employment, on the terms and conditions set forth
         in this Agreement.

B.       TITLE: Executive's title shall be Executive Vice President of Company
         and President of the Company's janitorial services subsidiaries,
         subject to modification as mutually agreed upon by both Company and
         Executive.

C.       DUTIES & RESPONSIBILITIES: Executive shall be expected to assume and
         perform such executive or managerial duties and responsibilities as are
         assigned from time-to-time by the Chief Executive Officer of the
         Company, or his or her designee, to whom Executive shall report and be
         accountable.

D.       TERM OF AGREEMENT: Employment hereunder shall be deemed effective as of
         November 1, 2002, for a term of one year ("Initial Term"), unless
         sooner terminated pursuant to Paragraph O hereof, or later extended
         pursuant to Paragraph N hereof ("Extended Term").

E.       PRINCIPAL OFFICE: During the Initial Term and any Extended Term, as
         applicable, of this Agreement, Executive shall be based at a Company
         office located in San Francisco in the state of California ("State of
         Employment"), or such other location as shall be mutually agreed upon
         by Company and Executive.

F.       COMPENSATION: Company agrees to compensate Executive, and Executive
         agrees to accept as compensation in full, for Executive's assumption
         and performance of duties and responsibilities pursuant to this
         Agreement:

         1.       SALARY: A salary paid in equal installments of no less
                  frequently than semi-monthly at the annual rate set forth in
                  Paragraph X.1 hereof ("Base Salary").

         2.       BONUS: A bonus or other incentive or contingent compensation,
                  if any, pursuant to Paragraph X.2. hereof.

         3.       FRINGE BENEFITS: Executive shall receive the then current
                  fringe benefits generally provided by Company to all of its
                  Executives. Such benefits may include but not be limited to
                  the use of a

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 2 of 10

                  Company-leased car or a car allowance, group health benefits,
                  long-term disability benefits, group life insurance, sick
                  leave and vacation. Each of these fringe benefits is subject
                  to the applicable Company policy at all times. Executive
                  expressly agrees that should he or she terminate employment
                  with Company for the purpose of being re-employed by a Company
                  affiliate, he or she shall "carry-over" any accrued but unused
                  vacation balance to the books of the affiliate.

                  Company reserves the right to add, increase, reduce or
                  eliminate any fringe benefit at any time, but no such benefit
                  or benefits shall be reduced or eliminated as to Executive
                  unless generally reduced or eliminated as to comparable
                  executives within the Company.

         4.       LIMIT: To the extent that any compensation to be paid to
                  Executive under this Agreement would be non-deductible by the
                  Company as a result of the $1 million compensation limit
                  provisions of Section 162(m) of the Internal Revenue Code of
                  1986, as amended, (the "Code"), then such compensation shall
                  not be paid out to Executive at that time but shall instead be
                  deferred and paid without interest to Executive (subject to
                  applicable withholding and only to the extent that payment of
                  such deferred amount is fully deductible under Code Section
                  162(m)) in the first month of the taxable year following the
                  taxable year of the deferral. If the subsequent payment of the
                  deferral is itself subject to further deferral pursuant to
                  this Paragraph F.4, then such further deferred amount shall
                  instead be paid in the first month of the next following
                  taxable year.

G.       PAYMENT OR REIMBURSEMENT OF BUSINESS EXPENSES: Company shall pay
         directly or reimburse Executive for reasonable business expenses of
         Company incurred by Executive in connection with Company business, and
         approved in writing by the person(s) with the title set forth in
         Paragraph C hereof, upon presentation to such person(s) by Executive
         within sixty (60) days after incurring such expense of an itemized
         request for payment including the date, nature, recipient, purpose and
         amount of each such expense, accompanied by receipts for all such
         expenses in excess of Twenty-Five Dollars ($25) each.

H.       BUSINESS CONDUCT: Executive shall comply with all applicable laws
         pertaining to the performance of this Agreement, and with all lawful
         and ethical rules, regulations, policies, codes of conduct, procedures
         and instructions of Company, including but not limited to the
         following:

         1.       GOOD FAITH: Executive shall not act in any way contrary to the
                  best interest of Company.

         2.       BEST EFFORTS: During all full-time employment hereunder,
                  Executive shall devote full working time and attention to
                  Company, and shall not at any time be directly or indirectly
                  employed by, own, operate, assist or otherwise be involved,
                  invested or associated in any business that is similar or
                  competitive to any business of Company; except that Executive
                  may own up to five percent (5%) of any such publicly-held
                  business(es), provided that Executive: (a) shall give Company
                  notice(s) of such ownership in accordance with Paragraph W
                  hereof, and (b) shall not at any time be directly or
                  indirectly employed by or operate, assist, or otherwise be
                  involved or associated with any such business(es).

         3.       VERACITY: Executive shall make no claims or promises to any
                  employee, supplier, contractor, customer or sales prospect of
                  Company that are unauthorized by Company or are in any way
                  untrue.

         4.       DRIVER'S LICENSE: Executive shall have and carry a valid
                  driver's license issued by his or her state of domicile or the
                  State of Employment hereunder and a driver's permit issued by
                  the Company whenever Executive is driving any motor vehicle in
                  connection with Company business. Executive agrees to
                  immediately notify Company in writing if Executive's driver's
                  license is lost, expired, restricted, suspended or revoked for
                  any reason whatsoever.

I.       NO CONFLICT: Executive represents to Company that Executive is not
         bound by any contract with a previous employer or with any other
         business that might prevent Executive from entering into this
         Agreement. Executive further represents that he or she is not bound by
         any other contracts or covenants

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 3 of 10

         that in any way restrict or limit Executive's activities in relation to
         his or her employment with Company that have not been fully disclosed
         to Company prior to the signing of this Agreement.

J.       COMPANY PROPERTY: Company shall, from time to time, entrust to the
         care, custody and control of Executive certain of Company's property,
         such as motor vehicles, equipment, supplies, passwords and documents.
         Such documents may include, but shall not be limited to customer lists,
         financial statements, cost data, price lists, invoices, forms,
         electronic files and media, mailing lists, contracts, reports, manuals,
         personnel files or directories, correspondence, business cards, copies
         or notes made from Company documents and documents compiled or prepared
         by Executive for Executive's use in connection with Company business.
         Executive specifically acknowledges that all such passwords and
         documents are the property of Company, notwithstanding their
         preparation, care, custody, control or possession by Executive at any
         time(s) whatsoever.

K.       GOODWILL & PROPRIETARY INFORMATION: In connection with Executive's
         employment hereunder:

         1.       Executive agrees to utilize and further Company's goodwill
                  ("Goodwill") among its customers, sales prospects and
                  employees, and acknowledges that Company may disclose to
                  Executive and Executive may disclose to Company, proprietary
                  trade secrets and other confidential information not in the
                  public domain ("Proprietary Information") including but not
                  limited to specific customer data such as: (a) the identity of
                  Company's customers and sales prospects, (b) the nature,
                  extent, frequency, methodology, cost, price and profit
                  associated with its services and products purchased from
                  Company, (c) any particular needs or preferences regarding its
                  service or supply requirements, (d) the names, office hours,
                  telephone numbers and street addresses of its purchasing
                  agents or other buyers, (e) its billing procedures, (f) its
                  credit limits and payment practices, and (g) its organization
                  structure.

         2.       Executive agrees that such Proprietary Information and
                  Goodwill have unique value to Company, are not generally known
                  or readily available to Company's competitors, and could only
                  be developed by others after investing significant time and
                  money. Company would not make such Proprietary Information and
                  Goodwill available to Executive unless Company is assured that
                  all such Proprietary Information and Goodwill will be held in
                  trust and confidence by Executive. Executive hereby
                  acknowledges that to use this Proprietary Information and
                  Goodwill except for the benefit of Company would be a breach
                  of such trust and confidence and in violation of Executive's
                  common law Duty of Loyalty to the Company.

L.       RESTRICTIVE COVENANTS: In recognition of Paragraph K, above, Executive
         hereby agrees that during the Initial Term and the Extended Term, if
         any, of this Agreement, and thereafter as specifically agreed herein:

         1.       Except in the proper performance of this Agreement, Executive
                  shall at no time directly or indirectly solicit or otherwise
                  encourage or arrange for any employee to terminate employment
                  with Company.

         2.       Except in the proper performance of this Agreement, Executive
                  shall not directly or indirectly disclose or deliver to any
                  other person or business, any Proprietary Information obtained
                  directly or indirectly by Executive from, or for, Company.

         3.       Executive agrees that at all times after the termination of
                  this Agreement, Executive shall not seek, solicit, divert,
                  take away, obtain or accept the patronage of any customer or
                  sales prospect of Company through the direct or indirect use
                  of any Proprietary Information of Company, or by any other
                  unfair or unlawful business practice.

         4.       Executive agrees that for a reasonable time after the
                  termination of this Agreement, which Executive and Company
                  hereby agree to be one (1) year, Executive shall not directly
                  or indirectly, for Executive or for any other person or
                  business, seek, solicit, divert, take away, obtain or accept

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 4 of 10

                  any customer account or sales prospect with which Executive
                  had direct business involvement on behalf of Company within
                  the one (1) year period prior to termination of this
                  Agreement.

         5.       Nothing in this Agreement shall be binding upon the parties to
                  the extent it is void or unenforceable for any reason in the
                  State of Employment, including, without limitation, as a
                  result of any law regulating competition or proscribing
                  unlawful business practices.

M.       MODIFICATION OF EMPLOYMENT: At any time during the then current Initial
         or Extended Term, as applicable, of this Agreement, a majority of the
         Board of Directors of Company shall have the absolute right, with or
         without cause and without terminating this Agreement or Executive's
         employment hereunder, to modify the nature of Executive's employment
         for the remainder of the then current Initial or Extended Term, as
         applicable, of this Agreement, from that of a full-time employee to
         that of a part-time employee ("Modification Period"). The Modification
         Period shall commence immediately upon Company giving Executive written
         notice of such change.

         1.       Upon commencement of the Modification Period: (a) Executive
                  shall immediately resign as a full-time employee of Company
                  and as an officer and/or director of Company, as applicable,
                  (b) Executive shall promptly return all Company property in
                  Executive's possession to Company, including but not limited
                  to any motor vehicles, equipment, supplies and documents set
                  forth in Paragraph J hereof, and (c) Company shall pay
                  Executive all previously earned and vested but as yet unpaid,
                  salary, prorated bonus or other contingent compensation,
                  reimbursement of business expenses and fringe benefits.

         2.       During the Modification Period: (a) Company shall continue to
                  pay Executive's monthly salary pursuant to Paragraph F.1
                  hereof, and to the extent available under the Company's group
                  insurance policies, continue to provide Executive with the
                  same group health and life insurance (subject to Executive
                  continuing to pay the employee portion of any such premium) to
                  which Executive would be entitled as a full-time employee,
                  with the understanding and agreement that such monthly salary
                  and group insurance, if available, shall constitute the full
                  extent of Company's obligation to compensate Executive, (b)
                  Executive shall not be eligible or entitled to receive or
                  participate in any bonus or fringe benefits other than the
                  aforementioned group insurance, if available, (c) in the
                  alternative, Executive may exercise rights under COBRA to
                  obtain medical insurance coverage as may be available to
                  Executive, (d) Executive shall be deemed a part-time employee
                  and not a full-time employee of Company, (e) Executive shall
                  provide Company with such occasional executive or managerial
                  services as reasonably requested by the person(s) with the
                  title set forth in Paragraph C hereof, except that failure to
                  render such services by reason of any physical or mental
                  illness or disability other than Total Disability or death as
                  set forth in Paragraph O.2 hereof, or unavailability because
                  of absence from the State of Employment hereunder, shall not
                  affect Executive's right to receive such salary and (f)
                  Company shall pay directly or reimburse Executive in
                  accordance with the provisions of Paragraph G hereof for
                  reasonable business expenses of Company incurred by Executive
                  in connection with such services requested by the person(s)
                  with the title set forth in Paragraph C hereof.

         3.       The Modification Period shall continue until the earlier of:
                  (a) Total Disability or death as set forth in Paragraph O.2
                  hereof, (b) termination of this Agreement by Company for "just
                  cause" as hereinafter defined, (c) Executive accepting
                  employment or receiving any other compensation from operating,
                  assisting or otherwise being involved, invested or associated
                  with any business that is similar to or competitive with any
                  business in which Company is engaged on the commencement date
                  of the Modification Period, or (d) expiration of the then
                  current Term of this Agreement.

N.       EXTENSION OF EMPLOYMENT:

         1.       Absent at least ninety (90) days written Notice of Termination
                  of Employment or Notice of Non-Renewal from Company to
                  Executive prior to expiration of the then current Initial or
                  Extended Term, as applicable, of this Agreement, employment
                  hereunder shall continue for an Extended

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 5 of 10

                  Term (or another Extended Term, as applicable) of one year, by
                  which Executive and Company intend that all terms and
                  conditions of this Agreement shall remain in full force and
                  effect for another twelve (12) months, except that the highest
                  base salary specified in Paragraph X.1.a shall be increased
                  annually as set forth in Paragraph X.1.b for each year of the
                  Extended Term.

         2.       In the event that Notice of Non-Renewal is given ninety (90)
                  days prior to the expiration of the then Initial or Extended
                  Term, as applicable, of this Agreement, employment shall
                  continue on an "at will" basis. In such event, Company shall
                  have the right to change the terms and conditions of
                  Executive's employment, including but not limited to
                  Executive's position and/or compensation.

O.       TERMINATION OF EMPLOYMENT:

         1.       a.       Subject to at least ninety (90) days prior written
                           Notice of Termination of Employment, Executive's
                           employment shall terminate, with or without cause, at
                           the expiration of the then current Initial or
                           Extended Term. Company has the option, without
                           terminating this Agreement, of placing Executive on a
                           leave of absence at the full compensation set forth
                           in Paragraph F hereof, for any or all of such notice
                           period.

                  b.       Except as provided in Paragraph O.1.a, the Company
                           shall have the right to terminate Executive's
                           employment hereunder at any time during the then
                           current Initial or Extended Term, as applicable, of
                           this Agreement, without notice subject only to a good
                           faith determination by a majority of the Board of
                           Directors of Company of "just cause." "Just cause"
                           includes but is not limited to any (i) theft or other
                           dishonesty, (ii) neglect of or failure to perform
                           employment duties, (iii) inability or unwillingness
                           to perform employment duties, (iv) insubordination,
                           (v) abuse of alcohol or other drugs or substances,
                           (vi) breach of this Agreement; (vii) other
                           misconduct, unethical or unlawful activity, or for
                           (viii) a conviction of or plea of "guilty" or "no
                           contest" to a felony under the laws of the United
                           States or any state thereof.

                  c.       At any time during the then current Initial or
                           Extended Term, as applicable, of this Agreement, with
                           or without cause, Executive may terminate employment
                           hereunder by giving Company ninety (90) days prior
                           written notice.

         2.       Employment hereunder shall automatically terminate upon the
                  total disability ("Total Disability") or death of Executive.
                  Total Disability shall be deemed to occur on the ninetieth
                  (90th) consecutive or non-consecutive calendar day within any
                  twelve (12) month period that Executive is unable to perform
                  the duties set forth in Paragraph C hereof because of any
                  physical or mental illness or disability. Company shall pay
                  when due to Executive or, upon death, Executive's designated
                  beneficiary or estate, as applicable, all prorated salary,
                  bonus or other contingent compensation, reimbursement of
                  business expenses and fringe benefits which would have
                  otherwise been payable to Executive under this Agreement,
                  through the end of the month in which Total Disability or
                  death occurs.

         3.       Upon termination of employment hereunder, Executive shall
                  immediately resign as an employee of Company and as an officer
                  and/or director of Company, as applicable. Executive shall
                  promptly return and release all Company property in
                  Executive's possession to Company, including but not limited
                  to, any motor vehicles, equipment, supplies, passwords and
                  documents set forth in Paragraph J hereof. Company shall pay
                  Executive, when due, all previously earned and vested but as
                  yet unpaid, salary, bonus or other contingent compensation,
                  reimbursement of business expenses and fringe benefits.

P.       GOVERNING LAW: This Agreement shall be interpreted and enforced in
         accordance with the laws of the State of Employment hereunder.

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 6 of 10

Q.       ARBITRATION CLAUSE:

         1.       Except for the interpretation and enforcement of injunctive
                  relief pursuant to Paragraph R hereof (which shall be subject
                  to litigation in any court having proper jurisdiction), any
                  claim or dispute related to or arising from this Agreement
                  (whether based in contract or tort, in law or equity)
                  including, but not limited to, claims or disputes between
                  Executive and Company or its directors, officers, employees
                  and agents regarding Executive's employment or termination of
                  employment hereunder, or any other business of Company, shall
                  be resolved by a neutral arbitrator agreed upon by both
                  parties, through mandatory, final, binding arbitration in
                  accordance with the procedural and discovery rules of the
                  American Arbitration Association.

         2.       The cost of such arbitration shall be borne by the Company.
                  Any such arbitration must be requested in writing within one
                  (1) year from the date the party initiating the arbitration
                  knew or should have known about the claim or dispute, or all
                  claims arising from that dispute are forever waived. Any such
                  arbitration (or court proceeding as applicable hereunder)
                  shall be held in the city and/or county of employment
                  hereunder. Judgment upon the award rendered through such
                  arbitration may be entered and enforced in any court having
                  proper jurisdiction.

R.       REMEDIES & DAMAGES:

         1.       The parties agree that, in the event of a material breach or
                  threatened material breach of Paragraphs K and/or L hereof,
                  the damage or imminent damage to the value of Company's
                  business shall be impractical and/or impossible to estimate or
                  ascertain, and therefore any remedy at law or in damages shall
                  be inadequate. Accordingly, the parties hereto agree that
                  Company shall be entitled to the immediate issuance of a
                  restraining order or an injunction against Executive in the
                  event of such breach or threatened breach, in addition to any
                  other relief available to Company pursuant to this Agreement
                  or under law.

         2.       Executive agrees that the actual amount of damages resulting
                  from any material breach of any of the provisions of
                  Paragraphs K and/or L hereof would be impractical or
                  impossible to estimate or ascertain. It is therefore agreed
                  that the damages resulting from any such breach which involves
                  any customer of Company shall be liquidated damages, not a
                  penalty, in an amount equal to four (4) times the lost monthly
                  revenue to the Company based on the average monthly revenue
                  which was payable by that customer to Company during the four
                  (4) months immediately preceding such breach. This provision
                  for liquidated damages is in addition to any other relief
                  available to Company pursuant to this Agreement or under law.

         3.       To the full extent permitted under the laws of the State of
                  Employment hereunder, Executive authorizes Company to withhold
                  from Executive's compensation and from any other funds held
                  for Executive's benefit by Company, any damages or losses
                  sustained by Company as a result of any material breach or
                  other material violation of this Agreement by Executive,
                  pending arbitration between the parties as provided for
                  herein.

S.       NO WAIVER: Failure by either party to enforce any term or condition of
         this Agreement at any time shall not preclude that party from enforcing
         that provision, or any other provision of this Agreement, at any later
         time.

T.       SEVERABILITY: The provisions of this Agreement are severable. If any
         arbitrator (or court as applicable hereunder) rules that any portion of
         this Agreement is invalid or unenforceable, the arbitrator's or court's
         ruling shall not affect the validity and enforceability of other
         provisions of this Agreement. It is the intent of the parties that if
         any provision of this Agreement is ruled to be overly broad, the
         arbitrator or court shall interpret such provision with as much
         permissible breadth as is allowable under law rather than to consider
         such provision void.

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 7 of 10

U.       SURVIVAL: All terms and conditions of this Agreement which by
         reasonable implication are meant to survive the termination of this
         Agreement, including but not limited to the Restrictive Covenants and
         Arbitration Clause herein, shall remain in full force and effect after
         the termination of this Agreement.

V.       CONSTRUCTION: This Agreement was negotiated in good faith by the
         parties hereto, who hereby agree to share the responsibility for any
         ambiguities, uncertainties or inconsistencies herein. Paragraph
         headings are used herein only for ease of reference, and shall not in
         any way affect the interpretation or enforcement of this Agreement.

W.       NOTICES:

         1.       Any notice required or permitted to be given pursuant to this
                  Agreement shall be in writing and delivered in person, or sent
                  prepaid by certified mail, bonded messenger or overnight
                  express, to the party named at the address set forth below or
                  at such other address as either party may hereafter designate
                  in writing to the other party:

                  EXECUTIVE:        JAMES P. McClure
                                    78 Van Tassel Lane
                                    Orinda, CA 94563

                  COMPANY:          ABM INDUSTRIES INCORPORATED
                                    160 Pacific Avenue, Suite 222
                                    San Francisco, CA 94111
                                    Attention: President & CEO

                  COPY:             ABM INDUSTRIES INCORPORATED
                                    160 Pacific Avenue, Suite 222
                                    San Francisco, CA 94111
                                    Attention: Chief Employment Counsel

         2.       Any such Notice shall be assumed to have been received when
                  delivered in person, or forty-eight (48) hours after being
                  sent in the manner specified above.

X.       SPECIAL PROVISIONS:

         1.       SALARY:

                  a.       Four Hundred Twenty Two Thousand, Four Hundred
                           Fifteen Dollars ($422,415) per year effective
                           November 1, 2002 through October 31, 2003 at the
                           monthly rate of $35,201.25 payable semi-monthly.

                  b.       For any Extended Term hereafter, the Salary in
                           Paragraph X.1.a. will be adjusted upward to reflect
                           the percentage increase change in the WorldatWork
                           (TM)/(formerly, the American Compensation
                           Association) Total Salary Increase Budget Survey for
                           the Western Region ("ACA Index") with a six percent
                           (6%) maximum increase. The adjustment, if any, shall
                           be based upon the projected ACA Index as published
                           for the current year, immediately preceding the
                           effective date of the proposed increase hereunder.
                           Notwithstanding the foregoing, there shall be no
                           annual increase in Salary for such year unless the
                           Company's net earnings per share ("EPS"), excluding
                           WTC Related Gain (as defined below) for the fiscal
                           year of the Company, commencing November 1 and ending
                           October 31 ("Fiscal Year"), then ending are equal to
                           or greater than the Company's EPS for the previous
                           Fiscal Year.

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 8 of 10

         2.       BONUS: Subject to proration in the event of modification or
                  termination of employment hereunder and further subject to the
                  potential prospective re-set provisions set forth in
                  Subparagraph c, below ("Reset"), Executive shall be paid a
                  bonus ("Bonus") based on the profit ("Profit") for each Fiscal
                  Year, or partial Fiscal Year, of employment hereunder during
                  the Initial Term, and during the Extended Term, if any, of
                  this Agreement, as follows:

                  a.       Subject to the maximum bonus payable under
                           subparagraph c., such Bonus for each Fiscal Year
                           shall be 0.23747% of the Company's Profit on a
                           pro-rata basis.

                  b.       Profit for purposes of determining such Bonus, shall
                           be defined as the consolidated income (in accordance
                           with generally accepted accounting principles) before
                           income taxes of the Company, excluding: (i) gains or
                           losses on sales or exchanges of real property or on
                           sales or exchanges of all or substantially all of the
                           stock or assets of a subsidiary corporation or any
                           other business unit of Company, (ii) gains or losses
                           on the discontinuation of any business unit of
                           Company, and (iii) WTC Related Gain. At any time the
                           Board of Directors of the Company (the "Board")
                           reserves the right to further adjust Profit for
                           purposes of determining a Bonus in the event of a
                           Significant Transaction (as defined below) during a
                           Fiscal Year and/or for any unanticipated and material
                           events that are beyond the control of the Company,
                           including but not limited to acts of god, nature, war
                           or terrorism, or changes in the rules for financial
                           reporting set forth by the Financial Accounting
                           Standards Board, the Securities and Exchange
                           Commission, and/or the New York Stock Exchange or for
                           any other reason which the Board determines, in good
                           faith, to be appropriate.

                           Notwithstanding the foregoing, Profit for purposes of
                           determining the Bonus in any Fiscal Year during the
                           Initial or Extended Term of this Agreement, shall
                           include WTC Related Gain and WTC Related Carry-Over
                           Gain in an aggregate amount not to exceed a maximum
                           of $10 million per Fiscal Year. For purposes of this
                           Agreement, the term "WTC Related Gain" shall mean the
                           total amount of all items of income included in the
                           Company's audited consolidated financial statements
                           for any Fiscal Year that result from the Company's
                           receipt of insurance proceeds or other compensation
                           or damages due to the Company's loss of property,
                           business or profits as a result of the destruction of
                           the World Trade Center on September 11, 2001. Also,
                           for purposes of this Agreement, the term "WTC Related
                           Carry-Over Gain" shall mean the aggregate amount of
                           WTC Related Gain not previously taken into account in
                           determining a Bonus for a prior Fiscal Year. Finally,
                           for purposes of this Agreement, the term "Significant
                           Transaction" shall mean the Company's acquisition or
                           disposition of a business or assets which the Company
                           is required to report under Item 2 of the SEC Form
                           8-K.

                  c.       Subject to proration in the event of modification or
                           termination of employment under this Agreement, and
                           further subject to a Reset in the event Executive's
                           Bonus for Fiscal Year 2002 has been limited as
                           hereinafter provided, Executive's maximum Bonus for
                           each Fiscal Year shall be fifty percent (50%) of the
                           Base Salary for that year set forth in this
                           Agreement. If, however, in Fiscal Year 2002 the Bonus
                           which might have been earned by Executive for that
                           year exceeds said fifty percent (50%) maximum,
                           Executive's Base Salary and Bonus percentage for
                           Fiscal Year 2003 shall be Reset as follows: (i)
                           notwithstanding the six percent (6%) maximum set
                           forth in paragraph X.1.b. of the Agreement, the
                           Executive's Salary shall be adjusted to equal
                           seventy-five percent (75%) of the prior Fiscal Year's
                           combined Salary and Bonus, plus an amount equal to
                           the increase, if any, set forth in Paragraph X.1.b of
                           the Agreement based upon said ACA Index; and (ii) the
                           Bonus percentage set forth in Subparagraph a (above)
                           shall be adjusted by multiplying the prior Fiscal
                           Year's combined Salary and Bonus by twenty-five
                           percent (25%), and dividing that product by the
                           actual Profit earned in the prior Fiscal Year.

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                       Page 9 of 10

                  d.       The Chief Financial Officer of the Company shall
                           calculate the Profit and Bonus for purposes of this
                           Agreement. Company shall pay Executive the Bonus for
                           the Fiscal Year following completion of the audit of
                           the Company's financial statements, but no later than
                           seventy-five (75) days after the end of each Fiscal
                           Year. The Company in its sole discretion may pay any
                           Bonus earlier. The Bonus for any partial Fiscal Year
                           shall be prorated for the fraction of the Fiscal Year
                           for which such Bonus is payable. Absent bad faith or
                           material error, any calculations of the Chief
                           Financial Officer and any conclusions of the Board,
                           with respect to the amounts of the Profit or Bonus,
                           shall be final and binding upon Executive and
                           Company.

                  e.       Notwithstanding the foregoing, no Bonus for any
                           Fiscal Year of the Company shall be payable unless
                           the Company's EPS for the Fiscal Year then ending is
                           equal to or greater than eighty percent (80%) of the
                           Company's EPS for the previous Fiscal Year of the
                           Company, in each case excluding any WTC Related Gain.

                  f.       Nothing contained in this Agreement shall entitle
                           Executive to receive a bonus or other incentive or
                           contingent compensation from Company based on any
                           sales or profits made (including but not limited to
                           any WTC Related Gain or WTC Related Carry-Over Gain
                           realized) by Company after termination of the Initial
                           or Extended Term of this Agreement or of employment
                           hereunder.

                  g.       Notwithstanding any other provision hereof, the Board
                           may, prior to the beginning of any Fiscal Year,
                           approve and notify the Executive of a modification to
                           the Bonus percentage determined hereunder (either
                           higher or lower), based on such performance and
                           financial measures and other factors as the Board
                           shall determine in its sole discretion. The Board's
                           decision in this regard shall be deemed final and
                           binding on Executive regardless of the amount of
                           Bonus otherwise calculated pursuant to the foregoing
                           provisions. In addition, the Board reserves the
                           option at any time to grant a discretionary incentive
                           bonus, which shall not be subject to the maximum
                           Bonus or Reset provisions described in paragraph
                           X.2.c. above.

                  h.       Executive herein acknowledges receipt of Bonus for
                           Fiscal Year 2001 and agrees that he or she is not
                           entitled to any further bonus for that year, for any
                           reason whatsoever.

         3.       SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ("SERP") Following
                  Executive's retirement, resignation and/or termination from
                  employment with Company (but commencing no earlier than what
                  is or would have been Executive's sixty-fifth (65th) birthday
                  and concluding no later than ten (10) years thereafter),
                  Company shall pay to Executive: 120 equal monthly installments
                  each of 1/120th of the Supplemental Benefit accrued, pursuant
                  to the terms of the Plan Document, provided herewith.

Y.       SCOPE OF CERTAIN PROVISIONS: All references to Company in Paragraphs H,
         J, K, L, O.3 and R in this Agreement shall include Company, and its
         subsidiary corporations and other Company affiliates.

Z.       ENTIRE AGREEMENT: Unless otherwise specified herein, this Agreement
         sets forth every contract, understanding and arrangement as to the
         employment relationship between Executive and Company, and may only be
         changed by a written amendment signed by both Executive and Company.

         1.       The parties intend that this Agreement speak for itself, and
                  that no evidence with respect to its terms and conditions
                  other than this Agreement itself may be introduced in any
                  arbitration or judicial proceeding to interpret or enforce
                  this Agreement.

         2.       It is specifically understood and accepted that this Agreement
                  supersedes all oral and written employment agreements between
                  Executive and Company prior to the date hereof, as well as all
                  conflicting provisions of Company's Guidelines for Corporate
                  Approval and its Human Resources

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD



EXHIBIT 10.78                                                      Page 10 of 10

                  Manual, including but not limited to the termination,
                  discipline and discharge provisions contained therein.

         3.       This Agreement may not be amended except in a writing signed
                  by the Executive and two (2) officers of the Company, and
                  approved by the Company's Board of Directors.

FULL KNOWLEDGE & UNDERSTANDING: Executive and Company hereby acknowledge that
they have carefully read and fully understand all terms and conditions of this
Agreement, that they have been given an opportunity to review all aspects of
this Agreement with an attorney if they so choose, and that they are voluntarily
entering into this Agreement with full knowledge of the benefits and burdens,
and the risks and rewards, contained herein.

IN WITNESS WHEREOF, Executive and two (2) officers of the Company have executed
this Agreement as of the date set forth above:

         EXECUTIVE:     Signature:      /s/ James P. McClure
                                        ---------------------------------------

                        Date:           2/20/03
                                        ---------------------------------------
         COMPANY:                       ABM INDUSTRIES INCORPORATED

                        Date:           3/4/03
                                        ---------------------------------------
                        Signature:      /s/ Henrik C. Slipsager
                                        ---------------------------------------

                        Title:          President and Chief Executive Officer

                        Signature:      /s/ Donna M. Dell
                                        ---------------------------------------
                        Title:          Senior Vice President of Human Resources
                                        and Chief Employment Counsel

                                     INITIALS: EXECUTIVE /s/JPMcC COMPANY /s/DMD

EXHIBIT 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTON 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of ABM Industries Incorporated
(the "Company") on Form 10-Q for the period ended January 31, 2003, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Henrik C. Slipsager, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1)      The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Company.

March 12, 2003                               /s/ Henrik C. Slipsager
- --------------                               -----------------------------------
                                             Henrik C. Slipsager
                                             Chief Executive Officer
                                             (Principal Executive Officer)

EXHIBIT 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTON 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of ABM Industries Incorporated
(the "Company") on Form 10-Q for the period ended January 31, 2003, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, George B. Sundby, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1)      The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2)      The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Company.

March 12, 2003                               /s/ George B. Sundby
- --------------                               -----------------------------------
                                             George B. Sundby
                                             Chief Financial Officer
                                             (Principal Financial Officer)