Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS
AGREEMENT (the “Agreement”), made in Greenwich,
Connecticut as of August 22, 2008, between United Rentals, Inc., a
Delaware corporation (the “Company”), and Michael J.
Kneeland (“Executive”).
WHEREAS,
the Company has employed Executive as its Executive Vice President,
Chief Operating Officer;
WHEREAS,
Executive was appointed interim Chief Executive Officer of the
Company effective as of June 4, 2007; and
WHEREAS,
the Company desires to continue to employ Executive as its
President and Chief Executive Officer, and Executive desires to
accept such continued employment on the terms and conditions
hereinafter set forth;
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants and agreements
hereinafter set forth, the Company and Executive agree as
follows:
1.
At Will Employment .
Executive
will be employed by the Company at will, which means that either
Executive or the Company may terminate the employment relationship
at any time and for any reason or no reason. Notwithstanding the
foregoing, following the termination of Executive’s
employment, Executive shall be entitled to the compensation and
benefits provided for in Section 4 of this Agreement, as applicable
depending on the circumstances of such termination, in accordance
with such provisions.
2.
Employment .
(a)
Employment by the Company . Executive agrees to be employed
by the Company upon the terms and subject to the conditions set
forth in this Agreement. Executive shall serve as President and
Chief Executive Officer of the Company and shall report to the
Board of Directors of the Company and the Chairman thereof. In
addition, throughout Executive’s employment hereunder, the
Company shall cause Executive to be nominated to be a director of
the Company.
(b)
Performance of Duties . During his employment, Executive
shall faithfully and diligently perform Executive’s duties in
conformity with the directions of the Board of Directors of the
Company and the Chairman and serve the Company to the best of
Executive’s ability. Executive shall devote his full business
time and best efforts to the business and affairs of the Company.
In his capacity as President and Chief Executive Officer, shall
have such duties and responsibilities as are customary for
Executive’s position and any other duties and
responsibilities he may be assigned by the Board of Directors of
the Company or the Chairman.
(c)
Place of Performance . Executive shall be based at the
Company’s offices in Greenwich, Connecticut. Executive
recognizes that his duties will require, at the Company’s
expense, travel to domestic and international locations.
3.
Compensation and Benefits .
(a)
Base Salary . The Company agrees to pay to Executive a base
salary (“Base Salary”) at the annual rate of $750,000.
The Compensation Committee of the Board of Directors of the Company
may determine in its sole discretion to increase, but not decrease,
the Base Salary. Payments of the Base Salary shall be payable in
equal installments in accordance with the Company’s standard
payroll practices.
(b)
Annual Incentive Bonus Plan . With respect to each year
during Executive’s employment hereunder, Executive shall be
eligible to receive an annual cash incentive bonus (the
“Annual Bonus”) pursuant to the terms of the United
Rentals, Inc. Annual Incentive Compensation Plan or any successor
thereto, as it may be amended from time to time (the “Annual
Incentive Plan”). Executive’s target incentive
opportunity under such plan shall be 125% of Base Salary (as at the
beginning of the applicable performance period) and
Executive’s maximum incentive opportunity shall be 150% of
Base Salary (as at the beginning of the applicable performance
period). Executive has been determined by the Committee (as defined
in the Annual Incentive Plan) to be a Covered Employee (as defined
in the Annual Incentive Plan) under the Annual Incentive Plan, and
Executive’s Performance Goals (as defined in the Annual
Incentive Plan) shall be determined by the Committee (as defined in
the Annual Incentive Plan) in accordance with Section 2.11.1 and
Article V of the Annual Incentive Plan. The Annual Bonus for a year
shall be paid to Executive in the year following such year at such
times and in such amounts as provided in the Annual Incentive Plan,
provided that in no event shall such payment be paid later than
December 31 of the following year.
(c)
Restricted Stock Unit Grant . On or after January 1, 2009
and on or before March 31, 2009, the Company shall award to
Executive a grant of 90,000 restricted stock units (which shall
vest upon the achievement of certain performance objectives; 45,000
shall vest upon meeting target performance objectives and up to an
additional 45,000 shall vest upon achievement in excess of target
performance objectives) in accordance with and subject to the
provisions of the United Rentals, Inc. 2001 Comprehensive Stock
Plan, as it may be amended from time to time, and a 2001
Comprehensive Stock Plan Restricted Stock Unit Agreement in
substantially the form attached hereto as Exhibit A (the “RSU
Agreement”).
(d)
Benefits and Perquisites . Executive shall be entitled to
participate in, to the extent Executive is otherwise eligible under
the terms thereof, the benefit plans and programs, and receive the
benefits and perquisites, generally provided by the Company to
executives of the Company, including without limitation family
medical insurance (subject to applicable employee contributions).
Executive shall be entitled to not less than 20 vacation days per
year, such days to be accrued in accordance with Company
policy.
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(e)
Business Expenses . The Company agrees to reimburse
Executive for all reasonable and necessary travel, business
entertainment and other business expenses incurred by Executive in
connection with the performance of his duties under this Agreement
in accordance with, and subject to, the Company’s standard
policies. Such reimbursements shall be made by the Company on a
timely basis upon submission by Executive of vouchers in accordance
with the Company’s standard procedures.
(f)
Indemnification . The Company shall indemnify Executive in
accordance with, and subject to, the terms of the Indemnification
Agreement between the Company and Executive entered into as of
August 3, 2004 as may be amended by the Company and the Executive
from time to time (the “Indemnification Agreement”).
Notwithstanding anything in this Agreement to the contrary, the
rights and obligations of the parties with respect to
indemnification (including dispute resolution, governing law and
notice) shall be governed by the Indemnification
Agreement.
(g)
Reimbursement of Compensation . In the event that payment of
any compensation to Executive is predicated upon the achievement of
certain financial results that subsequently are the subject of a
Mandatory Restatement (as defined below) and a lower payment (or no
payment) would have been made to Executive based upon the restated
financial results, Executive shall reimburse to the Company the
difference between the amount actually paid and the amount that
would have been payable to Executive reduced by the Net Tax Costs
(as defined below), based upon the restated financial results.
Executive’s reimbursement to the Company shall be made within
30 business days after receiving written notice of the amount owed
and the calculations thereof. A “Mandatory Restatement”
shall mean a restatement of the Company’s financial statement
which, in the good faith opinion of the Company’s public
accounting firm, is required to be implemented pursuant to
generally accepted accounting principles, but excluding (i) any
restatement which is required with respect to a particular year as
a consequence of a change in generally accepted accounting rules
effective after the publication of the financial statements for
such year, or (ii) any restatement that (A) in the good faith
judgment of the Audit Committee of the Board (“Audit
Committee”), is required due to a change in the manner in
which the Company’s auditors interpret the application of
generally accepted accounting principles (as opposed to a change in
a prior accounting conclusion due to a change in the facts upon
which such conclusion was based), or (B) is otherwise required due
to events, facts or changes in law or practice that the Board of
Directors concludes were beyond the control and responsibilities of
Executive and that occurred regardless of Executive’s
diligent and thorough performance of his duties and
responsibilities. “Net Tax Costs” shall mean the net
amount of any federal, foreign, state or local income and
employment taxes paid by Executive in respect of the portion of the
compensation subject to reimbursement, after taking into account
any and all available deductions, credits or other offsets
allowable to Executive (including without limit, any deductions
permitted under the claim of right doctrine), and regardless of
whether Executive would be required to amend any prior income or
other tax returns.
(h)
No Other Compensation or Benefits; Payment; Withholdings .
The compensation and benefits specified in this Section 3 and in
Section 4 of this Agreement shall be in lieu of any and all other
compensation and benefits. Payment of all compensation and benefits
to Executive specified in this Section 3 and in Section 4 of this
Agreement (i) shall be made in accordance with the relevant Company
policies in effect from time to time to the extent the same are
consistently applied, including normal payroll practices, and (ii)
shall be subject to all legally required and customary
withholdings.
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(i)
Cessation of Employment . In the event Executive shall cease
to be employed by the Company for any reason, then
Executive’s compensation and benefits shall cease on the date
of such event, except as otherwise specifically provided herein or
in any applicable employee benefit plan or program or as required
by law.
4.
Compensation Following Termination . Executive shall be
entitled only to the following compensation and benefits upon
termination of employment:
(a)
General . On any termination of Executive’s
employment, he shall be entitled to:
(i)
any accrued but unpaid Base Salary for services rendered through
the date of termination;
(ii)
any vacation accrued but unused as of the date of
termination;
(iii)
any accrued but unpaid expenses required to be reimbursed in
accordance with Section 3(e) of this Agreement;
(iv)
receive any benefits to which he may be entitled upon termination
pursuant to the plans and programs referred to in Section 3(d)
hereof or as may be required by applicable law;
(v)
receive any amounts or benefits to which he may be entitled upon
termination pursuant to the plans and agreement referred to in
Sections 3(b) and 3(c) hereof in accordance with the terms of such
plans and agreements; and
(vi)
such rights as he has under the terms of the Indemnification
Agreement.
(b)
Termination by the Company for Cause; Termination by Executive
Without Good Reason . In the event that Executive’s
employment is terminated (i) by the Company for Cause (as defined
below) or (ii) by Executive without Good Reason (as defined below),
Executive shall be entitled only to those items identified in
Section 4(a).
(c)
Termination by Reason of Death or Disability . In the event
that Executive’s employment is terminated by reason of
Executive’s death or Disability (as defined below), Executive
(or his estate, as the case may be) shall be entitled only to the
following:
(i)
those items identified in Section 4(a); and
(ii)
if Executive (or, following his death, his spouse) timely elects
COBRA continuation coverage, the Company will pay through the COBRA
Payment End Date (as defined below) the monthly premiums for the
level of coverage Executive maintained on the date of termination.
The “COBRA Payment End Date” shall be the earlier of
(A) eighteen months following the date of termination and (B)
the date Executive becomes employed by a third party and is
eligible for coverage under the group health plan of the new
employer. If during the period Executive is receiving this benefit,
Executive obtains new employment and becomes eligible for coverage
under the group benefits plan of the new employer, Executive shall
promptly notify the Company in writing of such
eligibility.
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(d)
Termination by the Company Without Cause or by Executive for
Good Reason Not in Connection with a Change of Control . In the
event that Executive’s employment is terminated (i) by the
Company without Cause or (ii) by Executive for Good Reason, in
either event not within twelve months following a Change of Control
(as defined below), Executive shall be entitled only to the
following:
(i)
those items identified in Section 4(a);
(ii)
if Executive timely elects COBRA continuation coverage, the Company
will pay through the COBRA Payment End Date the monthly premiums
for the level of coverage Executive maintained on the date of
termination, provided that if during the period Executive is
receiving this benefit, Executive obtains new employment and
becomes eligible for coverage under the group benefits plan of the
new employer, Executive must promptly notify the Company in writing
of such eligibility; and
(iii)
an amount equal to 450% of Executive’s Base Salary as of the
date of termination, payable in substantially equal installments
during the two year period following the date of termination in
accordance with the Company’s normal payroll practices (the
“Severance Pay”); provided, however, that if necessary
to comply with Section 409A(a)(2)(B)(i) of the Internal Revenue
Code of 1986, as amended (the “Code”), and applicable
administrative guidance and regulations, the payment of the
Severance Pay such sums shall be made as follows: (A) no payments
shall be made for a six-month period following the date of
termination, (B) an amount equal to six months of Severance Pay
shall be paid in a lump sum six months and one day following the
date of termination with interest at the applicable federal rate
pursuant to Section 1274 of the Code, and (C) during the
period beginning six months and one day following the date of
termination through the remainder of the two-year period, payment
of the Severance Pay shall be made in accordance with the
Company’s normal payroll practices.
(e)
Termination by the Company Without Cause or by Executive for
Good Reason in Connection With a Change of Control . In the
event that Executive’s employment is terminated (i) by the
Company without Cause or (ii) by Executive for Good Reason, in
either event within twelve months following a Change of Control,
Executive shall be entitled only to the following:
(i)
those items identified in Section 4(a);
(ii)
if Executive timely elects COBRA continuation coverage, the Company
will pay through the COBRA Payment End Date the monthly premiums
for the level of coverage Executive maintained on the date of
termination, provided that if during the period Executive is
receiving this benefit, Executive obtains new employment and
becomes eligible for coverage under the group health plan of the
new employer, Executive shall promptly notify the Company in
writing of such eligibility; and
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(iii)
the payment of 2.99 times the sum of (x) Executive’s Base
Salary as of the date of termination and (y) the target incentive
opportunity pursuant to Section 3(b) for the current fiscal year,
payable in a lump sum within fourteen days after the date of such
termination; provided, however, that if necessary to comply with
Section 409A(a)(2)(B)(i) of the Code and applicable administrative
guidance and regulations, the payment of such sums shall instead be
made in a lump sum six months and one day following the date of
termination with interest at the applicable federal rate pursuant
to Section 1274 of the Code.
(f)
Definitions of Cause, Good Reason, Disability, and Change of
Control .
(i)
Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the Nominating and Corporate Governance
Committee of the Board of Directors of the Company finding that in
the good faith opinion of such committee, Executive, after giving
effect to any applicable cure period described below, was guilty of
conduct set forth in this Section 4(f)(i) and that reasonably
identifies the reason(s) for such opinion provided, however, that
no such action based upon Cause as described in clauses (C) through
(K) of the next sentence may be taken prior to giving Executive an
opportunity to address the Nominating and Corporate Governance
Committee with his counsel present if he so elects upon 72 hours
advance notice from the Committee of the scheduled Committee
meeting. For purposes of this Agreement, the term
“Cause” shall mean any of the following: (A) Executive
has willfully misappropriated any funds or property of the Company
or its affiliates, or has willfully destroyed property of the
Company or its affiliates; (B) Executive has committed (1) a
felony or (2) any crime (x) involving fraud, material dishonesty or
moral turpitude or (y) that materially impairs Executive’s
ability to perform his duties and responsibilities with the Company
or that causes material damage to the Company or its affiliates or
their operations or reputation; (C) Executive has (1) obtained
personal profit from any transaction of or involving the Company or
an affiliate of the Company (or engaged in any activity with the
intent of obtaining such a personal profit) without the prior
approval of the Company or (2) engaged in any other willful
misconduct which constitutes a breach of fiduciary duty or the duty
of loyalty to the Company or its affiliates and which has resulted
or is reasonably likely to result in material damage to the Company
or its affiliates; (D) Executive’s willful and material
failure to perform his duties with the Company (other than as a
result of total or partial incapacity due to physical or mental
illness), provided, however, that, if susceptible of cure, a
termination by the Company for Cause under this Section 4(f)(i)(D)
shall be effective only if, within 20 days following delivery of a
written notice by the Company to Executive that Executive has
materially failed to perform his duties and that reasonably
identifies the reason(s) for such determination, Executive has
failed to cure such failure to perform (nothing herein being
intended to eliminate the requirement included in the first
sentence of this Section 4(f)(i)); (E) Executive’s use
of alcohol or drugs has materially interfered with his ability to
perform his duties and responsibilities with the Company; (F)
Executive has knowingly made any untrue statement or omission of a
material nature to the Company or an affiliate of the Company which
causes material damage to the Company; (G) Executive has
knowingly falsified Company records (or those of one of its
affiliates); (H) Executive has willfully committed any act (1)
which is intended to materially damage the reputation of the
Company or an affiliate of the Company or (2) which in fact
materially damages the reputation of the Company or an affiliate;
(I) Executive (1) has willfully violated the Company’s
material policies or rules (including, but not limited to, the
Company’s equal employment opportunity policies), which
violation has resulted or is reasonably likely to result in damage
to the Company or its affiliates, or (2) is guilty of gross
negligence or willful misconduct in the performance of his duties
with the Company, which has resulted or is reasonably likely to
result in material damage to the Company or its affiliates;
(J) Executive has materially breached a covenant set forth in
Section 5 or otherwise materially violated any confidentiality,
non-competition or non-solicitation prohibitions imposed on
Executive under common law or under the terms of any agreement with
the Company; or (K) Executive has willfully obstructed or attempted
to obstruct, or has willfully failed to cooperate with, any
investigation authorized by the Board of Directors of the Company
or any governmental or self-regulatory authority regarding a
Company matter. No act or failure to act on Executive part shall be
deemed “willful” unless done, or omitted to be done, by
Executive not in good faith and without reasonable belief that the
Executive’s act, or failure to act, was in the best interest
of the Company.
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(ii)
For purposes of this Agreement, the term “Good Reason”
shall mean any of the following: (A) the Company removes Executive
from the position of President or Chief Executive Officer or
Executive ceases to be a director of the Company other than due to
his resignation or failure to be reelected by the Company’s
shareholders; (B) the Company decreases or fails to pay the
compensation described in Section 3 of this Agreement (in
accordance with, and subject to, such provisions); (C) a material
breach of this Agreement by the Company; (D) Executive’s job
site is relocated to a location which is more than fifty (50) miles
from Greenwich, Connecticut, unless the parties mutually agree in
writing to such relocation; (E) material diminution of
Executive’s duties or responsibilities or (f) the failure by
the Company to obtain the express written assumption of this
Agreement by any successor to all or substantially all of the
Company’s business or operations; provided, however, that a
termination by Executive for Good Reason under this Section
4(f)(ii) shall be effective only if, within 20 days following
delivery of a written notice by Executive to the Company that
Executive is terminating his employment for Good Reason and that
reasonably identified the reason(s) for such determination, such
notice to be given not later than 90 days after the occurrence (or,
if later, the date that Executive becomes aware or reasonably
should have become aware of such occurrence) of the event(s)
claimed to constitute Good Reason, the Company has failed to cure
the circumstances giving rise to Good Reason.
(iii)
For purposes of this Agreement, a “Disability” shall
occur in the event Executive is unable to perform the duties and
responsibilities contemplated under this Agreement for a period of
either (A) 90 consecutive days or (B) 6 months in any 12-month
period due to physical or mental incapacity or impairment. During
any period that Executive fails to perform Executive’s duties
hereunder as a result of incapacity or impairment due to physical
or mental illness (the “Disability Period”), Executive
shall continue to receive the compensation and benefits provided by
Section 3 of this Agreement until Executive’s employment
hereunder is terminated; provided, however, that the amount of base
compensation and benefits received by Executive during the
Disabil
