November 30, 2007
VIA HAND
DELIVERY
Re: Separation and Release
Agreement
Dear
Keith A. Sawottke:
On
behalf of RSC Holdings Inc. (the “ Company ”), I
am writing to set forth the terms and conditions of the Separation
and Release Agreement (the “ Separation Agreement
”) that the Company is offering to you with respect to your
employment transition. As set forth below, this Separation
Agreement is intended to modify, supplement and enhance the Amended
and Restated Executive Employment and Noncompetition Agreement that
you entered into with the Company effective as of November 28,
2006 (the “ Employment Agreement ”), which is
attached hereto as Exhibit A.
1. Employment Status, Final Payments,
Transition .
(a) Resignation. You acknowledge and agree that,
effective November 30, 2007 (the “ Resignation
Date ”), you will resign from your position as Chief
Financial Officer (“ CFO ”) of the Company and
from any other office or position you may hold with the Company or
with any of the Company’s affiliated entities. Following the
Resignation Date, you will not be employed in any position with the
Company or its affiliated entities.
(b) Accrued Salary and Vacation. On the Resignation
Date, the Company will pay you all salary earned through the
Resignation Date, subject to standard payroll deductions and
withholdings. No later than the next regular payroll date after the
Resignation Date, the Company will pay you all of your accrued and
unused vacation, subject to standard deductions and withholdings.
You are entitled to these payments by law and pursuant to the
Company’s policies and practices.
(c) Expense Reimbursements. Within thirty
(30) days after the Resignation Date, you shall submit expense
reports to the Company seeking reimbursement for any business
expenses incurred through the Resignation Date. The Company will
reimburse you for these business expenses, pursuant to its standard
policies and practices, within fifteen (15) business days
after the submission of your expense report.
(d) Transition Duties. In consideration for the
Severance Benefits (defined in Section 2 herein) provided in
this Resignation Agreement, you agree to provide transition support
(“ Transition Duties ”) through the later of
March 1, 2008 or the date (the “ 10-K Date
”) the Company files its next form 10-K (currently projected
to occur on or about February 27, 2008). Your Transition
Duties shall include but not be limited to: (i) performing any
and all duties requested of you by the Company’s Chief
Executive Officer (“ CEO ”) and/or the successor
CFO; (ii) taking all steps satisfactory to the Company to
ensure the orderly transition
of all
matters that you have handled during the course of your employment
with the Company; and (iii) providing transition briefing
information as requested by the Company (the “ Transition
Duties ”). Such Transition Duties shall not, in any week,
exceed 20% of the average weekly time that you previously devoted
to performance of your duties for the Company.
2. Severance Benefits. If you
sign, date and return this fully executed Separation Agreement to
the Company’s CEO and allow it to become effective, the
Company will provide you with the following severance benefits (the
“ Severance Benefits ”):
(a) Severance Payments. Following the Resignation Date,
the Company will pay you severance in the form of continuation of
your base salary in effect on the Resignation Date ( i.e. ,
at the rate of $249,100 per annum) for thirty
(30) months (the “ Severance Payments
”). The Severance Payments will be subject to standard
payroll deductions and withholdings. Except as otherwise set forth
below, the Severance Payments will be paid in substantially equal
installments on the Company’s normal payroll schedule over
the thirty (30) month period following the Resignation Date
(the “ Severance Period ”).
The
Company has determined that you are a “specified
employee” of the Company as defined in Section
409A(a)(2)(B)(i) of the Internal Revenue Code (“
Section 409A ”) and that the Severance Payments
are subject to a six month delay of payment. Accordingly, to avoid
imposition of taxes under Section 409A, on the first business day
after the sixth month following your Resignation Date (the “
Six Month Date ”), the Company will pay you a lump
sum of $124,550 (which is six months of your base salary),
subject to standard payroll deductions and withholdings.
Thereafter, the Company will pay the remaining twenty-four
(24) months of Severance Payments ($498,200) in substantially
equal installments on the Company’s normal payroll schedule,
subject to standard payroll deductions and withholdings. The total
amount of Severance Payments is Six Hundred Twenty Two Thousand,
Seven Hundred Fifty Dollars ($622,750 ), subject to standard
payroll deductions and withholdings.
(b) Severance Bonus. Within five (5) business days
after the Effective Date of this Resignation Agreement (as defined
in Section 10(d)), the Company will pay you a lump sum of
$100,000 , subject to standard payroll deductions and
withholdings (the “ Severance Bonus ”). This
Severance Bonus is in lieu of any 2007 pro-rated bonus you would
have received pursuant to the Company’s Variable Compensation
Plan. The Severance Bonus payment set forth in this Section 2(b) is
intended to be a separate payment (as defined in Treasury
Regulation 1.409A-2(b)(2)) from the payments described in
Section 2(a) above for purposes of the “short term deferral
rule” under Treasury Regulations
Section 1.409A-1(b)(4).
(c) Health Insurance. As an additional severance
benefit, the Company will pay continued health insurance coverage
premiums for medical, dental and vision coverage (at the same level
of coverage and paid in the same manner and amount as during your
active employment) for up to thirty (30) months or until the
date that you become eligible for group health insurance coverage
through a new employer. You agree to provide prompt written notice
to the Company in the event that you become eligible for group
health insurance coverage through a new employer. The thirty
(30) months of continued health insurance coverage will be
provided as follows: (i) for the initial twelve (12) months,
you will receive continued health insurance coverage through the
Company’s regular payroll process (the “ Initial
Healthcare
Period ”); (ii) thereafter, on or after the
Initial Healthcare Period, if you timely elect continued group
health insurance coverage pursuant to COBRA, the Company agrees to
pay directly to the appropriate insurance company(ies) (or to
reimburse you for) your COBRA premiums sufficient to continue your
group health insurance coverage for up to an additional eighteen
(18) months.
(d) Stock Vesting and Exercise. Upon the Effective Date
(as defined in Section 10(d)), you will (retroactive to the
Resignation Date) no longer be required to provide services as an
employee or consultant, other than that provided for herein, to the
Company in order to become eligible for vesting of 100,000 of your
time-based option shares (the “ Unvested Shares
”) which were unvested as of the Resignation Date. Your
Unvested Shares will not become vested or exercisable unless and
until the later of March 1, 2008 or the date the Company files
its next form 10-K (the “ 10-K Date ”)
(currently projected to occur on or about February 27, 2008)
and you have not breached any of the terms of this Separation
Agreement. You acknowledge that the Company makes no representation
with respect to when the 10-K Date will actually occur. All other
unvested stock options or restricted stock which you may have been
granted will be forfeited as of the Resignation Date (including but
not limited to your approximate 200,000 plus performance-based
option shares). Your exercise period on all vested shares will be
determined by the terms of your applicable grant agreements and the
Company’s equity incentive plan.
(e) Subscription Agreement Waiver. In the event that
the Company files its next 10-K (currently projected to occur on or
about February 27, 2008) and you have not breached any of the
terms of this Separation Agreement, then on the later of
March 1, 2008 or the 10-K Date, the Company will waive its
right to enforce the restrictions set forth in the first sentence
of Section 4(a) (Restriction of Transfer of Shares) of the Employee
Stock Subscription Agreement which you entered into with the
Company (attached hereto as Exhibit B ).
(f) Financial Planning Allowance . The Company will pay
any amount of your 2007 $2,500 financial planning services
allowance that has not been used as of your Resignation Date. This
amount will be paid on the Six Month Date.
(g) Outplacement Services. The Company will provide you
with outplacement services comparable to that provided to similarly
situated executives (for a maximum period of nine (9) months),
having a maximum cost to the Company of $9,500. If you choose to
utilize such services, payments will be made to the Company’s
ordinary outplacement services provider. The Company will not make
any cash payments directly to you.
(h) Professional Association Fees. The Company will
continue to pay (or to reimburse you for) your professional
association fees for up to thirty (30) months after the
Resignation Date, but only with respect to such fees that were paid
or reimbursed by the Company prior to the Resignation Date. These
fees will be paid, beginning with a “catch-up” payment
on the Six Month Date.
(i) Life Insurance Continuation. The Company will pay
the premiums for the continuation of your life insurance coverage
during the Severance Period either : (i) under the
Company’s group life insurance policy, if such conversion or
continuation is permitted; or (ii) if such conversion or
continuation is not permitted, then it will pay the premiums for a
term
life
insurance policy with a comparable benefit. You are not entitled to
a cash payment in substitution for the life insurance premiums to
be paid by the Company. As a condition to your obtaining benefits
pursuant to this Section 2(i), you must comply with reasonable
requests for medical information or physical examination from any
insurance company prospectively issuing a policy for the coverage
under this
Section 2(i).
3. Other Compensation Or
Benefits. You acknowledge that, except as expressly
provided in this Separation Agreement, you have not earned and will
not receive from the Company any additional compensation (including
base salary, bonus, incentive compensation, or equity), severance,
or benefits after the Resignation Date (including without
limitation any severance benefits set forth in your Employment
Agreement), with the exception of any vested rights you may have
under the express terms of a written ERISA-qualified benefit
plan
(e.g., 401(k) account) or any vested stock options.
4. Return Of Company
Property. By the Resignation Date, or earlier if
requested by the Company, you shall return to the Company all
Company documents (and all copies thereof) and other Company
property which you have in your possession or control, including,
but not limited to, Company files, notes, drawings, records, plans,
forecasts, reports, studies, compilations of data, analyses,
proposals, agreements, financial information, research and
development information, sales and marketing information, customer
lists, prospect information, pipeline reports, sales reports,
operational and personnel information, specifications, code,
software, databases, computer-recorded information, tangible
property and equipment (including, but not limited to, computers,
facsimile machines, mobile telephones, servers), credit cards,
entry cards, identification badges and keys; and any materials of
any kind which contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof, in whole
or in part). You agree that you will make a diligent search to
locate any such documents, property and information. If you have
used any personally owned computer, server, or e-mail system to
receive, store, review, prepare or transmit any Company
confidential or proprietary data, materials or information, by the
Resignation Date, you shall provide the Company with a
computer-useable copy of such information and then permanently
delete and expunge such Company confidential or proprietary
information from those systems; and you agree to provide the
Company access to your system as requested to verify that the
necessary copying and/or deletion is done. Your timely compliance
with this paragraph is a condition precedent to your receipt of the
Severance Benefits provided under this Resignation Agreement.
5. Other Obligations. You
hereby acknowledge and agree to abide by your continuing
obligations under Article III (Confidential Information),
Article IV (Covenant Not to Compete and No Solicitation of
Customers or Employees) and Section 5.7 (Duration of
Obligations) of the Employment Agreement (attached hereto as
Exhibit A ).
6. Mutual Nondisparagement.
You agree that you will not make any disparaging remarks, or any
remarks that could reasonably be construed as disparaging, whether
orally or in writing, regarding the Company or its officers,
directors, employees, or affiliated entities (including but not
limited to the sponsors) that could reasonably be harmful to them
or their reputations. The Company agrees that its officers and
directors will not make any disparaging remarks, or any remarks
that could reasonably be construed as disparaging, whether orally
or in writing, regarding you that could reasonably be harmful to
your business or personal
reputation. Nothing in this section shall prohibit you or the
Company or any of its officers or directors from testifying or
responding truthfully in response to any court order, arbitral
order, subpoena or government investigation, or in connection with
any legal proceeding brought by one party against the other.
7. Cooperation and Assistance
. You agree that you will not voluntarily provide
assistance, information or advice, directly or indirectly
(including through agents or attorneys), to any person or entity in
connection with any claim or cause of action of any kind brought
against the Company or its officers, directors, or affiliated
entities, nor shall you induce or encourage any person or entity to
bring such claims. It will not violate this Separation Agreement if
you testify truthfully when required to do so by a valid subpoena
or under similar compulsion of law. Further, you agree to
voluntarily cooperate with the Company if you have knowledge of
facts relevant to any threatened or pending litigation or other
claim against the Company or its officers, directors, or affiliated
entities, or any actual or potential claim by the Company or its
affiliated entities against any third party, by making yourself
reasonably available without further compensation for interviews
with the Company’s counsel, for preparing for and providing
deposition testimony, and for preparing for and providing trial
testimony.
8. No Admissions. You
understand and agree that the promises and payments in
consideration of this Separation Agreement shall not be construed
to be an admission of any liability or obligation by the Company to
you or to any other person, and that the Company makes no such
admission.
9. Job Reference . You agree
to inform all prospective employers that requests for references
should be directed in writing to the Company’s Senior Vice
President for Human Resources at 6929 East Greenway Parkway,
Scottsdale, Arizona 85254. In response to any such requests for a
reference, the Company will confirm your period of employment,
position held and last rate of pay.
10. Release of Claims .
(a) General Release . In exchange for the consideration
under this Separation Agreement to which you would not otherwise be
entitled, you hereby generally and completely release the Company
and its directors, officers, employees, shareholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, affiliates, and assigns (collectively, the
“ Released Parties ”) of and from any and all
claims, liabilities and obligations, both known and unknown, that
arise out of or are in any way related to events, acts, conduct, or
omissions occurring prior to the time you execute this Separation
Agreement (collectively, the “ Released Claims
”).
(b) Scope of Release. The Released Claims include, but
are not limited to: (a) all claims arising from or in any way
related to the Employment Agreement, your employment with the
Company, or the termination of that employment; (b) all claims
related to your compensation or benefits from the Company,
including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock
options, or any other ownership interests in the Company;
(c) all claims for breach of contract, wrongful termination,
and breach of the implied covenant of good faith and fair dealing;
(d) all tort claims,
including claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (e) all federal,
state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or
other claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the
federal Age Discrimination in Employment Act of 1967 (as amended)
or the Older Workers Benefit Protection Act (collectively, “
ADEA ”), and the Arizona Civil Rights Act.
(c) Excluded Claims. Notwithstanding the foregoing, the
following are not included in the Released Claims (the “
Excluded Claims ”): (a) any rights or claims for
indemnification you may have pursuant to any written
indemnification agreement with the Company to which you are a
party, the charter, bylaws, or operating agreements of the Company,
or under applicable law; (b) any rights which are not waivable
as a matter of law; or (c) any claims arising from the breach
of this Separation Agreement. In addition, nothing in this
Separation Agreement prevents you from filing, cooperating with, or
participating in any proceeding before the Equal Employment
Opportunity Commission, the Department of Labor, or the Arizona
Civil Rights Division, except that you hereby waive your right to
any monetary benefits in connection with any such claim, charge or
proceeding. You hereby represent and warrant that, other than the
Excluded Claims, you are not aware of any claims you have or might
have against any of the Released Parties that are not included in
the Released Claims.
(d) ADEA
Waiver . In exchange for the consideration under
this Separation Agreement to which you would not otherwise be
entitled, you hereby acknowledge that you are knowingly and
voluntarily waiving and releasing any rights you may have under the
ADEA, and that the consideration for the waiver and release you
have given in this Separation Agreement is in addition to anything
of value to which you were already entitled. You further
acknowledge that you have been advised by this writing, as required
by the ADEA, that: (a) your waiver and release do not apply to
any rights or claims that may arise after the date you sign this
Separation Agreement; (b) you should consult with an attorney prior
to signing this Separation Agreement (although you may voluntarily
decide not to do so); (c) you have twenty-one (21) days
to consider this Separation Agreement (although you may choose
voluntarily to sign it earlier); (d) you have seven
(7) days following the date you sign this Separation Agreement
to revoke this Separation Agreement (in a written revocation
received by the Company’s Chief Executive Officer); and
(e) this Separation Agreement will not be effective until the
date upon which the revocation period has expired, which will be
the eighth day after you sign this Separation Agreement (the
“ Effective Date ”).
11. Dispute Resolution. You
and the Company agree that any and all disputes, claims, or causes
of action, in law or equity, arising from or relating to the
enforcement, breach, performance, interpretation, or execution of
this Separation Agreement, shall be resolved solely and exclusively
in accordance with the arbitration procedures set forth in
Section 5.10 of the Employment Agreement (attached hereto as
Exhibit A). Nothing herein shall prevent you or the Company
from seeking injunctive relief in court to prevent irreparable harm
pending completion of any arbitration proceeding.
12. Breach of the Separation
Agreement . It is expressly understood and agreed that
your rights to the Severance Benefits provided for in
Section 2 herein are contingent upon your continued compliance
with the express terms and conditions of this Separation
Agreement, and all obligations under your Employment Agreement
which survive its termination including but not limited to, your
continued compliance with Article III (Confidential
Information), Article IV (Covenant Not to Compete and No
Solicitation of Customers or Employees) and Section 5.7
(Duration of Obligations) of the Employment Agreement (which is
incorporated by reference herein). Any material breach of this
Separation Agreement (including but not limited to the provisions
of the Employment Agreement referenced in the preceding sentence)
will result in immediate cessation of the Company’s
obligation to provide any further Severance Benefits.
13. Miscellaneous. This
Separation Agreement, together with all exhibits, constitutes the
complete, final and exclusive embodiment of the entire agreement
between you and the Company with regard to its subject matter. It
supersedes any and all agreements entered into by and between you
and the Company; provided, however , that all of your
obligations under the Employment Agreement referenced in
Section 12 hereof shall remain in full force and effect and
are considered a material part hereof. This Separation Agreement is
entered into without reliance on any promise or representation,
written or oral, other than those expressly contained herein. It
may not be modified or amended except in a writing signed by both
you and a duly authorized officer of the Company. Each party has
carefully read this Separation Agreement, has been afforded the
opportunity to be advised of its meaning and consequences by an
attorney, and signed the same of his or its free will.
14. Severability . If
any provision of this Separation Agreement is determined to be
invalid or unenforceable, in whole or in part, this determination
will not affect any other provision of this Separation Agreement
and the provision in question will be modified so as to be rendered
enforceable insofar as possible consistent with applicable
law.
15. Applicable Law .
This Separation Agreement will be deemed to have been entered into
and shall be construed and enforced in accordance with the laws of
the State of Arizona without regard to conflict of laws
principles.
16. No Tax, Legal or Financial
Advice. You acknowledge that you are not relying on the
Company for (nor have you received) any tax, legal or financial
advice in connection with this Separation Agreement. You further
acknowledge that you will be solely responsible for any taxes
incurred by you with respect to the payments hereunder, including
any taxes incurred pursuant to Section 409A of the Internal
Revenue Code. You are strongly encouraged to consult with your tax,
legal and financial advisors with respect to the tax, legal and
financial consequences to you of this Separation Agreement.
17. Execution and Effective
Date . This Resignation Agreement may be executed
in counterparts and facsimile signatures or PDF transmissions will
suffice as original signatures.
If this
Separation Agreement is acceptable to you, please sign below and
return the original to me.
We wish
you the best in your future endeavors.
Sincerely,
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RSC Holdings Inc.
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| By: |
/S/ Erik Olsson |
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Erik Olsson
Chief Executive Officer |
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I understand and agree
fully to the foregoing Agreement:
Exhibit A
Amended and Restated Executive Employment and Noncompetition
Agreement
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT
AND NONCOMPETITION AGREEMENT
This Amended and Restated Employment
and Noncompetition Agreement (“Agreement”) is entered
into between Rental Service Corporation, (the “Company”
or “Rental Service Corporation”) and Keith A. Sawottke
(“Executive”), effective as of November 28
th ,
2006.
RECITALS
WHEREAS, the Company operates
its equipment rental business which has store locations throughout
North America (such business as operated by the Company is referred
to herein as the “Business”).
WHEREAS, the Company’s
life-blood is its Confidential Information, including but not
limited to customer databases, marketing and sales objectives and
strategies, customer lists, information regarding existing customer
preferences, habits, and needs, information regarding prospective
customers, details of past, pending and contemplated transactions,
price lists, pricing policies, sales data, training materials, and
customer proposals, information developed about the Company’s
competitors, systems, strategies, designs, processes, procedures,
market data, know-how, compilations of technical and non-technical
data, advertising and promotional plans, and financial and other
projections, which information has been collected over a
significant amount of time and at great effort and expense.
WHEREAS, the Company would be
placed at an unfair competitive disadvantage if Employee were able
to use the Company’s Confidential Information and goodwill
for his or her own benefit, or for the benefit of anyone other than
the Company.
WHEREAS, with the assurances
contained in the agreement, the Company desires to employ Executive
as Senior Vice President and Chief Financial Officer, in which
position he will not only have access to the Company’s
Confidential Information but also will have the duty to expand and
improve such information.
WHEREAS, Executive desires to
be employed by the Company in this position and is willing to do so
upon the terms contained herein.
WHEREAS, the Company and
Executive are currently parties to the Executive Employment and
Noncompetition Agreement, dated as of February 18 th , 2005 which
the parties desire to amend and restate effective as of the date
hereof.
AGREEMENT
NOW, THEREFORE, as a
condition of employment, and for other good and valuable
consideration, including without limitation continued employment
and/or promotion or advancement, which Executive agrees is
sufficient consideration for this Agreement, and in consideration
of the mutual promises and covenants set forth below, the Company
and Executive agree as follows:
ARTICLE I
EMPLOYMENT
Section 1.1
. Employment & Position . The
Company shall employ Executive as Senior Vice President and Chief
Financial Officer at the Company’s location in Scottsdale,
AZ. Executive shall report to the President and Chief Executive
Officer, or another Senior Executive as deemed appropriate by the
Company. During Executive’s employment hereunder, Executive
shall devote all necessary energies, experience, skills, abilities,
knowledge and productive time to the performance of duties under
this Agreement and shall not render to others services that
interfere with the performance of his duties with the Company under
this Agreement. The rendering of services to others shall be
subject to the approval of the Board.
Section 1.2
. Duties . Executive’s primary
responsibilities shall be those customarily performed by an
Executive in the position of Senior Vice President and Chief
Financial Officer.
Section 1.3
. Term of Employment . Executive shall
be employed as herein set forth, commencing on the date set forth
above and continuing until terminated by either party in accordance
with section 2.5 below (the “Employment Term”).
ARTICLE II
COMPENSATION
Section 2.1
. Base Salary . Executive’s
salary (the “Base Salary”) shall be $249,100 per annum
for the term of this Agreement and/or as increased, after review by
the Board at the time and in accordance with Company policies as in
effect from time to time. Base Salary shall be payable in
accordance with the standard payroll practices of the
Company.
Section 2.2
. Variable Compensation . In addition
to his Base Salary, Executive will be eligible to receive Variable
Compensation, in accordance with the Company’s Variable
Compensation Plan as in effect from time to time, and which
will
2
provide
him with additional incentive opportunity with a target of 75% of
his Base Salary and a maximum of 150% of his Base Salary.
Section 2.3
. Equity Incentive . Executive will be
offered the opportunity to participate in the Company’s Stock
Incentive Plan at such level and on such terms as the Board
determines appropriate.
Section 2.4
. Other Benefits . During the
Employment Term, Executive shall be entitled to all benefits and
conditions of employment generally provided to other RSC Company
executives, subject to the same eligibility and other reasonable
conditions of Company benefit programs and to country related
differences, including, but not limited to, medical, dental, life
insurance, non-qualified deferred compensation programs, sick
leave, disability, automobile allowance ($1,200 per month), and
participation in any retirement plan. In addition, benefits shall
include, but not be limited to not less than five (5) weeks
vacation per year and an annual tax and financial planning services
allowance of up to $2,500.
Section 2.5
. Employment Separation .
(a) Severance Benefits :
The Company may, at its sole discretion, terminate
Executive’s employment at any time, provided however, that if
the Company severs Executive’s employment for any reason
other than For Cause or if Executive terminates his employment for
Good Reason, the Company shall provide the following severance
payments and benefits (collectively “Severance
Benefits”), less all applicable federal and state income and
withholding taxes, in exchange for a full and complete release of
all claims against the Company, in the form customarily used by the
Company, executed by Executive:
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Twenty-four (24) months of Base Salary (the
“Severance Period”), plus a pro-rata portion of
variable compensation for the calendar year, or if variable
compensation is to be paid quarterly then for the calendar quarter,
in which the severance occurs up to the separation date, such pro
rata bonus to be equal to the variable compensation Executive would
have earned had Executive remained employed through the end of the
applicable period (pro rated based on the number of days employed
in such period). Executive’s entitlement to and the amount of
any variable compensation under this Section 2.5(a)
(1) shall be determined at the sole discretion of the Company.
The Base Salary shall be payable in accordance with the
Company’s regular payroll practices, and the pro rata
variable compensation payments shall be payable at the time that
other variable compensation payments are made under the applicable
Variable Compensation Plan. Notwithstanding anything to the
contrary, prior to the expiration of |
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the first anniversary of this Agreement, the Severance Period
shall be thirty (30) months. Further, notwithstanding the payment
schedule described in this paragraph, if Executive is a Specified
Employee (as defined in Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”)) and becomes
entitled to the payment described in this Section 2.5 as a
result of a separation of service as defined by Section
409A(a)(2)(i) of the Code, then the portion of such payment treated
as “separation pay” for purposes of Section 409A
shall not be paid prior to the date which is six (6) months
after the date of the Executive’s separation of service with
the Company if such payment would result in the imposition of an
excise tax under Section 409A of the Code. Any amount
described in the preceding sentence otherwise payable during the
first six months following Executive’s separation from
service shall be accumulated and paid to Executive in a lump sum
amount on the first date of the seventh month following the date of
separation from service. |
Executive’s entitlement to the foregoing severance payments
is contingent on his continued compliance with the confidentiality,
non-competition and non-solicitation provisions outlined in
Sections 3.1, 3.2, 4.2 and 4.3 herein. Executive understands
that if the Company determines that he has violated the
confidentiality provisions, covenant not to compete or
non-solicitation provisions, the Company will not make any further
severance payments, and will be entitled to reimbursement from
Executive of any severance amounts already paid to him, all in
addition to any other remedy to which the Company may.
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Upon his separation from service, if Executive is eligible and
enrolled in the Company’s medical and dental benefit
programs, the Company will provide the necessary forms, including
COBRA notifications, to transfer the responsibility and right to
continue those benefits to Executive, which under COBRA are
typically at his expense, for the time period allowed by law or
under the applicable programs. However, assuming Executive is
eligible and elects to continue those benefits, the Company will
continue to pay the same proportion of Executive’s medical
and dental insurance premiums under COBRA as during active
employment (for Executive and eligible dependents) until the
earlier of: (1) the expiration of the Severance Period; or
(2) the date Executive is eligible for medical and dental
insurance benefits by another employer. |
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3. |
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Upon termination of employment, Executive is not eligible to
continue participation in the Company group life insurance program.
The Company will therefore pay, at the Company’s option, the
premiums during the Severance Period that are either
(i) applicable to a conversion of the coverage (equal to the
amount normally provided to an employee without payment by the
employee) from group to individual coverage; or (ii) that will
support the same level of coverage in a term life policy. The
company’s obligation under this sub-section is to provide the
required insurance and Executive is not entitled to a cash payment
in substitution thereof. |
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4. |
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If Executive is not fully vested in the Company’s 401 (k)
and/or other retirement/pension plan on the date of separation, the
Company shall pay Executive an amount equal to the unvested portion
of such account(s). |
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5. |
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The Company on the date of separation will provide professional
outplacement counseling and services consistent with other
Executives at similar compensation levels. No cash lump sum payment
in lieu of outplacement services will be provided to
Executive. |
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6. |
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During the Severance Period the Company will continue to pay
for Executive’s reasonable association fees related to
Executive’s former duties and responsibilities if and to the
extent previously paid by the Company. |
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7. |
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The Company shall, except in the case of any termination of
Executive’s employment for Cause, give the Executive no less
than 30 days’ prior written notice of termination of
employment. In the event the Company gives such notice, the
Executive shall be under no obligation to render additional
services and shall be allowed to seek other employment,
provided that the Severance Period shall be reduced
accordingly if Executive so ceases to provide services to the
Company. |
“Good Reason” shall mean the occurrence, without
Executive’s consent, of any of the following: (i) a material
diminution in, or assignment of duties material inconsistent with
Executive’s position (including status, offices, titles and
reporting relationships), (ii) a reduction in Base Salary that
is not part of across-the-board reduction, (iii) a relocation
of Executive’s principal place of business to a location that
is greater than fifty (50) miles from its current location or
(iv) the Company’s material breach of the Agreement.
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(b) For Cause . The
Company may, at its sole discretion, terminate Executive’s
employment at any time during the Employment Term “For
Cause”. The term “For Cause” means: (1) the
failure of Executive to implement or adhere to material policies,
practices, or directives of the Company, including of the Board;
(2) conduct of a fraudulent and/or criminal nature;
(3) any action of Executive outside the scope of his
employment duties that results in material financial harm to the
Company, (4) conduct that is in violation of any provision of
this Agreement or any other agreement between the Company or any of
its affiliates and Executive (including any noncompetition,
noninterference, nonsolicitation or confidentiality agreement); or
(5) solely for purposes of this Section 2.5 , death or
disability as defined hereinafter.
(c) Disability . Within
the parameters allowed by federal and state law, the Company
reserves the right to terminate Executive’s employment or
place him on unpaid leave if Executive is incapacitated due to
physical or mental illness and cannot perform the essential
functions of his job with or without a reasonable
accommodation.
(d) Voluntary Resignation by
Executive . Executive shall have the right to terminate this
Agreement at any time. Executive agrees to provide the Company with
thirty (30) days prior written notice of any such intended
resignation. The Company’s obligation to pay
Executive’s Base Salary, variable compensation and other
benefits shall cease as of Executive’s date of separation.
Executive shall not be entitled to any Severance Benefits if he
resigns (other than for Good Reason).
ARTICLE III
CONFIDENTIAL INFORMATION
Section 3.1
. Confidential Information .
Executive’s position with the Company will, and have,
necessarily give him access to, contact with and knowledge of
certain trade secrets, and confidential and proprietary business
information of the Company. This information includes but is not
limited to employee information, union information, employment and
union litigation and claim information, marketing and sales
objectives and strategies, customer lists, information regarding
existing customer preferences, habits and needs, information
regarding prospective customers, details of past, pending and
contemplated transactions, price lists, pricing policies, sales
data, training materials, customer proposals, information developed
about Company’s competitors, systems, strategies, designs,
processes, procedures, growth plans, market data, know-how,
compilations of technical and non-technical data, advertising and
promotional plans and strategies, and financial and other
projections relating to the Business, which are not generally known
to or readily ascertainable through legitimate means by the public
or by competitors of the Company (hereinafter collectively referred
to as “Confidential Information”). Executive shall not
at any time disclose the Confidential Information to anyone, except
on a need-to-know basis in connection with Executive’s duties
in carrying out the business of the Company. Executive shall not
use
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any
Confidential Information for his own benefit, or for the benefit of
anyone other than the Company or its affiliates.
Section 3.2
. Ownership of Records, Etc . All
records, reports, notes, compilations or other recorded matter, and
copies or reproductions thereof, in whatever media form, relating
to the Confidential Information of the Company, operations,
activities or business, made or received by Executive during any
past employment or future period of employment with the Company are
and shall be the exclusive property of the Company. Executive shall
keep the same at all times in his custody, subject to control by
the Company and Executive shall surrender the same at the end of
his employment, if not before. Failure to return such property upon
the request of the Company during Executive’s Employment Term
or thereafter shall be a material breach of this Agreement.
Section 3.3
. Injunctive Relief . Executive
acknowledges that (a) the provisions of Section 3.1 and
Section 3.2 are reasonable and necessary to protect the
legitimate interests of the Company, and (b) any violation of
Section 3.1 or Section 3.2 will result in irreparable
injury to the Company, the exact amount of which will be difficult
to ascertain, and that the remedies at law for any such violation
would not be reasonable or adequate compensation to the Company for
such a violation. Accordingly Executive agrees that if he violates,
or under the then existing circumstances it seems reasonable likely
that there may occur a violation of, the provisions of
Section 3.1 or Section 3.2, in addition to any other
remedy which may be available at law or in equity, the Company
shall be entitled to specific performance and injunctive relief,
without posting bond or other security, and without the necessity
of proving actual damages.
ARTICLE IV
COVENANT NOT TO COMPETE
Section 4.1
. Recitals . Executive acknowledges and
agrees that he has technical and other extensive expertise
associated with the Business and is well known in the equipment
rental industry. In addition, Executive has valuable business
contacts with employees, potential employees, clients, and
potential clients of the Business and with professionals in the
equipment rental industry. Furthermore, Executive’s
reputation and goodwill are an integral part of the Company’s
success throughout the areas where the Business is an
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