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EXHIBIT 10.3
SERVICES AGREEMENT
This SERVICES AGREEMENT (the "Agreement") is made as of June 30, 1998
by and between Republic Industries, Inc., a Delaware corporation ("Parent") and
Republic Services, Inc., a Delaware corporation ("Company").
WHEREAS, the Board of Directors of Parent has determined that it is in
the best interests of Parent and its stockholders to separate the Company, which
comprises the Parent's solid waste services businesses and operations, from
Parent (the "Separation");
WHEREAS, in order to effectuate the Separation, Parent and Company have
entered into a Separation and Distribution Agreement, dated as of the date
hereof (the "Separation and Distribution Agreement"), which provides, among
other things, subject to the terms and conditions thereof, for the Separation,
the initial public offering of the common stock of the Company and the
distribution of all shares of common stock of the Company held by Parent to the
stockholders of Parent; and
WHEREAS, in order to ensure an orderly transition under the Separation
and Distribution Agreement it will be necessary for Parent to provide to Company
certain services described herein at various levels throughout the term of this
Agreement.
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants contained herein, it is agreed by and between the parties as follows:
ARTICLE I
FEES AND TERM
1.1 PRICE/PAYMENT. As consideration for the services to be provided to
Company by Parent under the terms of this Agreement, Company shall initially pay
to Parent a fee (the "Services Fee") of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00) per month. The Services Fee shall be payable by Company
to Parent in arrears 15 days after the close of each month (prorated for any
partial month) during the term of this Agreement. Any services provided by
Parent to Company beyond the services covered by the Services Fee shall be
billed to Company on a cost basis, or on such other basis as the parties may
agree from time to time. The Services Fee shall be reviewed and reduced from
time to time in accordance with Section 2.3.
1.2 TERM. The term of this Agreement (the "Term") shall commence on the
date hereof and shall expire one year after the closing of the initial public
offering of the Company.
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ARTICLE II
SERVICES
2.1 SERVICES. Parent agrees to provide the following services (subject
to such modification or adjustment as may be mutually agreed upon by the
parties) to Company during the Term:
(a) CORPORATE COMMUNICATIONS DEPARTMENT: The corporate
communications department of Parent shall develop and
implement strategic internal and external communication
programs for Company, including investor assistance and
communications;
(b) CORPORATE DEVELOPMENT DEPARTMENT. The corporate development
department of Parent shall assist Company to develop,
negotiate and close on acquisition and disposition
opportunities.
(c) CORPORATE FINANCE DEPARTMENT: The corporate finance department
of Parent shall provide corporate accounting, financial
planning and financial reporting systems, processing of
Company accounts payable, processing of Company payroll, cash
management and treasury functions, and internal audit
supervision.
(d) HUMAN RESOURCES DEPARTMENT: The human resources department of
Parent shall provide and administer for certain employees, as
agreed upon by the parties, all benefit plans and a 401(k)
plan consistent with the current plans maintained by Parent,
provide salary administration, maintain affirmative
action/EEOC programs and compliance, assist in the recruiting
and selection of employees, and administer employee relations
programs.
(e) LEGAL DEPARTMENT: The legal department of Parent shall provide
all legal services requested by Company, including but not
limited to: advice and counsel on legal matters, governmental
affairs, employee termination issues, Fair Labor Standards Act
matters and Service Contract Act matters; preparation, review
and negotiation of acquisition agreements and other material
contracts; direction and coordination of labor relations and
worker's compensation cases and claims; performing corporate
secretary functions; preparation and filing of all
information, reports and registration statements with the
Securities and Exchange Commission and any exchange on which
the Company's common stock may be listed; and assisting in any
applicable licensing and intellectual property matters.
(f) PURCHASING DEPARTMENT: The purchasing department of Parent
shall provide central purchasing programs for Parent and
Company and shall provide Company assistance in negotiating
contracts with vendors.
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(g) RISK MANAGEMENT DEPARTMENT: The risk management department of
Parent shall direct and coordinate all risk management
activities of the Company, including insurance and surety and
general risk management services such as insurance procurement
and claims administration.
(h) TAX DEPARTMENT: The tax department of Parent shall provide tax
compliance, reporting and planning services for federal, state
and local tax matters.
2.2 DETAILS OF PERFORMANCE. Reasonable details of Parent's performance
of services hereunder may be specified in one or more memoranda signed by the
parties and such memoranda shall be deemed incorporated in this Agreement by
reference as if recited herein in their entirety.
2.3 PHASE OUT OF SERVICES; REDUCTION OF SERVICES FEE. The parties
hereby acknowledge that Company will promptly take all steps to internalize the
services to be provided herein by acquiring its own staff or outsourcing to
third parties. The parties agree to periodically review the level of services
being utilized by the Company, and from time to time shall reduce the Service
Fee proportionately to account for reductions in the level of services being
provided hereunder.
ARTICLE III
MISCELLANEOUS
3.1 CONFIDENTIALITY. Parent shall not use or disclose to any other
person at any time, any confidential or proprietary information or trade secrets
of Company, including, without limitation, its customer lists, programs, pricing
and strategies except to those of its employees and those other persons who need
to know such information to fulfill Parent's obligations hereunder. Parent shall
provide to Company semi-annually upon Company's written request, a list of all
employees of Parent whose duties have required access to such information, and
any other employees who to the actual knowledge of Parent's officers have had
access to such information during the preceding six (6) month period, in each
case, designating whether such employees are in the employ of Parent as of the
date such list is provided. Parent agrees that all drawings, specifications,
data, memoranda, calculations, notes and other materials, including, without
limitation, any materials containing confidential or proprietary information or
trade secrets of Company, furnished by Company to Parent in connection with this
Agreement and any copies thereof are and shall remain the sole and exclusive
property of Company and shall be delivered to Company upon its request.
3.2 NO AGENCY. Parent shall perform its services under this Agreement
as an independent contractor. Each party acknowledges and agrees that it is not
granted any express or implied authority to assume or create any obligation or
responsibility on behalf of the other party, or to bind the other party with
regard to third parties in any manner.
3.3 NOTICES. Any notices required or permitted to be provided pursuant
to this Agreement shall be provided in writing and be deemed received upon
delivery by hand or five days after mailing
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by certified mail, return receipt requested, addressed to the recipient party at
its address set forth above.
3.4 FORCE MAJEURE. In the event that either party is prevented from
performing, or is unable to perform, any of its obligations under this Agreement
due to any act of God, fire, casualty, flood, war, strike, lock out, failure of
public utilities, injunction or any act, exercise, assertion or requirement of
governmental authority, epidemic, destruction of production facilities,
insurrection, inability to procure materials, labor, equipment, transportation
or energy sufficient to meet manufacturing needs, or any other cause beyond the
reasonable control of the party invoking this provision, and if such party shall
have used its best efforts to avoid such occurrence and minimize its duration
and has given prompt written notice to the other party, then the affected
party's performance for the period of delay or inability to perform due to such
occurrence shall be suspended. Should Parent fail to perform hereunder and shall
have provided proper notice to Company that it is unable to perform on account
of one or more reasons set forth in this section, Company may obtain replacement
services from a third party for the duration of such delay or inability to
perform, or for such longer period as Company shall be reasonably required to
commit to in order to obtain such replacement services and the Services Fee
shall be reduced accordingly.
ARTICLE IV
GENERAL PROVISIONS
4.1 ENTIRE AGREEMENT. Except as contemplated in Section 2.2, this
Agreement embodies the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings relative to said subject matter.
4.2 BINDING EFFECT. This Agreement shall be binding upon, and shall
inure to the benefit of, Parent, Company and their respective successors and
assigns.
4.3 ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder shall be assignable by either party without the prior written consent
of the other party hereto, which consent shall not be unreasonably withheld.
4.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of Florida applicable to contracts to be
performed entirely in that State.
4.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
4.6 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the date first above written.
REPUBLIC INDUSTRIES, INC.
By: /s/ James O. Cole
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Name: James O. Cole
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Title: Senior Vice President
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REPUBLIC SERVICES, INC.
By: /s/ Harris W. Hudson
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Name: Harris W. Hudson
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Title: Vice Chairman
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