Exhibit 10.13
EXECUTION COPY
This CONSULTING
AGREEMENT, dated as of July 24, 2007 (this “ Agreement
”), is entered into by and among ServiceMaster Global
Holdings, Inc., a Delaware corporation (the “ Company
”), The ServiceMaster Company, a Delaware corporation
(“ ServiceMaster ”) and Clayton, Dubilier &
Rice, Inc, a Delaware corporation (“ Manager
”).
W I T N
E S S E T H :
WHEREAS,
Manager organized the Company in connection with the acquisition of
all of the outstanding shares of capital stock of ServiceMaster
(the “ Merger ”), pursuant to, and on the terms
and subject to the conditions set forth in, a certain Agreement and
Plan of Merger, dated as of March 18, 2007 (as the same may be
amended from time to time in accordance with its terms and the
Stockholders Agreement (as defined below), the “ Merger
Agreement ”)), by and among the Company, CDRSVM
Acquisition Co., Inc., a Delaware corporation, and
ServiceMaster.
WHEREAS, the Company,
Clayton, Dubilier & Rice Fund VII, L.P. (“ Fund
VII ”), Clayton, Dubilier & Rice Fund VII
(Co-Investment), L.P. (“ Fund VII (Co-Investment)
”) and certain other parties have entered into a Stockholders
Agreement, dated as of the date hereof (as the same may be amended
from time to time in accordance with its terms, the “
Stockholders Agreement ”);
WHEREAS,
concurrently with the execution and delivery of this Agreement, the
Company, Manager, Fund VII, Fund VII (Co-Investment) and certain
other parties are entering into an Indemnification Agreement, dated
as of the date hereof (as the same may be amended from time to time
in accordance with its terms and the Stockholders Agreement, the
“ Indemnification Agreement ”); and
WHEREAS, the
Company desires that it and its subsidiaries (together, the “
Company Group ”) receive future financial, investment
banking, management advisory and other services from Manager, and
Manager desires to provide such services to the members of the
Company Group;
NOW, THEREFORE, in
consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
1.
Engagement . The Company hereby engages Manager (on
behalf of the members of the Company Group) as a consultant, and
Manager hereby agrees to provide Consulting Services (as defined
below) and Transaction Services (as defined below) to the Company
and the other members of the Company Group on the terms and subject
to the conditions set forth below.
2.
Scope
of Future Services .
(a)
Consulting
Services . Manager hereby agrees, during the term
of this Agreement, to provide the members of the Company
Group with such financial, investment banking, management,
advisory and other services in connection with the operations
of the Company as may reasonably be requested from time to
time by the board of directors (the “
Board
”) of the Company (collectively, the “
Consulting
Services ”), including assistance (
i
) developing and implementing corporate and business strategy
and planning for the Company Group, including plans and
programs for improving operating, marketing and financial
performance, ( ii
) recruiting key management employees, ( iii
) establishing and maintaining banking, legal and other
business relationships, ( iv
) arranging future debt and equity financings and
refinancings for corporate purposes and ( v
) providing professional employees to serve as directors or
officers of the members of the Company Group (“
Manager
Designees ”), as permitted pursuant to the
Stockholders Agreement.
(b)
Transaction Services . In addition to, and without
duplication of, the Consulting Services, Manager hereby agrees,
during the term of this Agreement, to provide the members of the
Company Group with financial, investment banking, management
advisory and other services as may reasonably be agreed from time
to time by the Company (subject to Unanimous Board Approval (as
defined in the Stockholders Agreement) if required pursuant to
Section 2.3(c)(iii) of the Stockholders Agreement) and Manager with
respect to proposed transactions, including, without limitation,
any proposed acquisition, merger (other than to effect the sale of
the Company), full or partial recapitalization, structural
reorganization (including any divestiture of one or more
subsidiaries or operating divisions of any member of the Company
Group), reorganization of the shareholdings or other ownership
structure of the Company Group, sales or dispositions of assets or
any other similar transaction, in each case other than the sale of
all or substantially all of the assets of the Company (each, a
“ Transaction ”) directly or indirectly
involving the members of the Company Group (collectively, the
“ Transaction Services ”). For the
avoidance of doubt, the Transaction Services shall not include the
Initial Services, as defined and provided for under the Transaction
Fee Agreement, dated as of the date hereof, among the Company,
ServiceMaster, Manager and the other Equity Sponsors named
therein.
3.
Compensation; Reimbursement of Expenses .
(a)
Compensation for Consulting Services . As
compensation for the Consulting Services, the Company shall,
or shall cause one or more other members of the Company Group
to, on behalf of the members of the Company Group, pay
Manager a fee of $2,000,000 per year (together, the “
Consulting Fee ”), one quarter of which shall be
payable quarterly in advance on the first day of each
January, April, July and October (each, a “
Consulting Services Payment Date ”). The
Consulting Fee shall begin accruing immediately following the
consummation of the Merger, and the amount of the
2
Consulting Fee accrued prior to the next
succeeding Consulting Services Payment Date shall be payable on
such Consulting Services Payment Date, together with the regular
installment of the Consulting Fee payable on such Consulting
Services Payment Date. If an employee of Manager or any of
its Affiliates is appointed to an executive management position (or
a position of comparable responsibility) with the Company or any
other member of the Company Group, then, for the period of such
employee’s service in such position, the Consulting Fee shall
be increased by an amount to be reasonably determined by Manager
but not to exceed 100% of the Consulting Fee then in effect.
The Consulting Fee may otherwise be increased only by the Company,
subject to ( i ) Unanimous Board Approval if required
pursuant to Section 2.3(c)(iii) of the Stockholders Agreement or (
ii ) if Unanimous Board Approval is not required pursuant to
Section 2.3(c)(iii) of the Stockholders Agreement, ( x ) the
approval of a majority of the members of the Board who are not
employees of the Company, Manager, Fund VII, Fund VII
(Co-Investment) or their respective Affiliates (“
Disinterested Directors ”) or ( y ) if there
are no Disinterested Directors serving on the Board, the approval
of a nationally recognized expert with expertise in appraising the
terms and conditions of the fee for which approval is required
(each of clauses (x) and (y), a “ Disinterested
Approval ”). The Consulting Fee may not be
decreased without the prior written consent of Manager.
(c)
Compensation for Transaction Services . As
compensation for the Transaction Services, in connection with each
Transaction that is consummated, the Company shall, or shall cause
one or more of its Affiliates to, on behalf of the members of the
Company Group, pay Manager a fee (a “ Transaction Fee
”) equal to 1.0% of the Transaction Value, or such lesser
amount as Manager and the Company, on behalf of the members of the
Company Group, may agree. The Company, on behalf of the
members of the Company Group, may agree to pay a Transaction Fee in
excess of 1.0% of the Transaction Value of a Transaction, subject
to Unanimous Board Approval if required pursuant to Section
2.3(c)(iii) of the Stockholders Agreement or, if not required
thereunder, Disinterested Approval. As used herein, “
Transaction Value ” means the total value of the
applicable Transaction, including, without limitation, the
aggregate amount of the cash funds and the aggregate value of the
other securities or obligations required to complete such
Transaction (excluding any fees payable pursuant to this Section
3(c)), including any indebtedness, guarantees, capital stock or
similar items issued or made to facilitate, and the amount of any
revolving credit or other liquidity facilities or arrangements
established in connection with, su
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