UNITED RENTALS, INC. SEPARATION AGREEMENT AND GENERAL RELEASE
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UNITED RENTALS, INC. SEPARATION AGREEMENT AND GENERAL RELEASE
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UNITED RENTALS, INC.
SEPARATION AGREEMENT AND GENERAL RELEASE
SEPARATION AGREEMENT and GENERAL RELEASE (“Agreement”) made on the date indicated below between United Rentals, Inc. (“United Rentals”) (United Rentals, together with all of its subsidiaries, parents, and any other affiliates shall herein be referred to as the “Company”), and Joseph Ehrenreich (“Employee”) (the Company and Employee shall collectively be referred to as the “Parties”). The Parties hereby agree as follows:
1. Termination of Employment . Except as otherwise provided in this Section 1, Employee’s employment with the Company shall terminate on September 1, 2006. The last day of Employee’s employment as provided in this Section 1 shall be deemed the “Termination Date.”
(a) Notwithstanding the foregoing, the Company may terminate Employee’s employment at any time for Cause (as such term is defined in Paragraph 5(d) of the Employment Agreement entered into between the Company and Employee on July 20, 2004, as amended by the Parties as of August 22, 2005 (the “Employment Agreement”)), provided that the Company may not terminate Employee for Cause based upon any act or omission by Employee prior to the execution of this Agreement unless such act or omission constitutes fraudulent, criminal or other willful misconduct of Employee of which the Company is not aware on the date the Parties execute this Agreement (the “Execution Date”) and which has an adverse effect on the Company (the Cause definition as modified, “Modified Cause”).
(b) Notwithstanding the foregoing, if on or before September 1, 2006, the Company shall have entered into an agreement that, upon consummation of the transactions contemplated therein, would trigger a Change of Control as defined in the Employment Agreement, then Employee’s term of employment hereunder shall continue from September 1 through the earlier of (i) the closing of the transactions contemplated by such agreement and (ii) the Company’s announcement that such transactions have been abandoned. During such period, Employee shall continue to have and exercise the duties provided for herein, including without limitation those duties prescribed under Section 2(a) below.
2. Duties Through Termination Date; Base Salary and Benefits Through Termination Date; Other Business Activities .
(a) Duties Through Termination Date . As of the Execution Date, Employee shall cease to be Vice President and General Counsel of the Company. Beginning on the Execution Date and continuing through the Termination Date, as and to the extent requested by the Company from time to time, Employee shall perform the following duties: (a) act as a historical and knowledge resource to Company employees in connection with matters related to the Company, including legal matters, as requested by the Company, (b) train and transition his responsibilities to other Company employees, (c) cooperate with the Company in connection with ongoing investigations and litigations, including appearing (if requested) before the Special Committee and/or the SEC and consulting with counsel and/or management, and (d) other duties related to the duties set forth in (a), (b) an (c) above. The work to be performed by Employee pursuant to the foregoing sentence shall generally be limited to not more than one day per week. Employee shall vacate the Company’s Greenwich, Connecticut office as of the Effective Date (as defined in Section 11 below) and perform the duties described herein generally from an office he shall establish. In connection with such duties, the Company will provide a non-accountable expense allowance of $4,000 per month through the Termination Date, but shall otherwise have no obligation or liability in respect of such office.
(b) Base Salary and Benefits Through Termination Date . Between the Effective Date and the Termination Date, Employee shall continue to be paid a base salary at the annual rate of $435,000. Notwithstanding the foregoing, if Employee’s employment hereunder shall be extended beyond September 1, 2006 pursuant to Section 1(b) above, the compensation provided for in the first sentence of this Section 2(b) shall cease and Employee shall be compensated at the rate of $1,673 per week, payable in accordance with the Company’s
standard payroll practices. As of the Effective Date, Employee shall cease to be eligible for benefits under any Company benefits plan or program or otherwise, except (i) as expressly provided in this Agreement, or (ii) as otherwise required under (A) the terms of a Company benefits plan or program or (B) applicable law.
(c) Other Business Activities . Employee shall be permitted to engage in other business activities (including employment) during his remaining period of employment with the Company, provided that such activities do not otherwise violate the terms of this Agreement or the Employment Agreement or impair his ability to perform his duties hereunder or comply with other obligations Employee may have to the Company.
3. Consideration . Although, in the absence of this Agreement, the Company is not required to provide any of the following consideration to Employee, the Company, in exchange for promises made herein by Employee, shall provide Employee with the following benefits:
(a) Severance Payment . The Company agrees to pay Employee a lump sum of $968,450. Such payment shall be made on or before the fifth business day following the Effective Date. Such payment date shall be deemed the “Initial Payment Date.”
(b) LTIP . During his employment with the Company, Employee was awarded 25,000 units under the United Rentals, Inc. Long-Term Incentive Plan (such units, the “LTIP Units,” and such plan, the “LTIP”). In lieu of any payment of the LTIP Units or under the LTIP, the Company agrees to pay Employee a lump sum of $1,212,500, which represents the Maximum Cumulative Unit Value (as defined in the LTIP) for such Units. Such payment shall be made on the Initial Payment Date.
(c) Restricted Stock . Employee was granted 60,000 shares of restricted stock (the “Shares”) on September 1, 2004 pursuant to a 2001 Senior Stock Plan (the “Plan”) and a Restricted Stock Agreement entered into by and between the Company and Employee as of September 1, 2004, as amended by the Parties as of August 22, 2005 (the “Restricted Stock Agreement”). Such Shares shall continued to be governed by the Plan and the Restricted Stock Agreement, such that (without limiting any of the other vesting events provided for in the Restricted Stock Agreement except as expressly provided herein): (i) 15,000 Shares shall vest on April 1, 2006, provided that Employee remains employed through such date (the “First Tranche”), and (ii) 15,000 Shares shall vest on September 1, 2006, provided that Employee remains employed through such date (the “Second Tranche”). Unless they shall have vested by reason of a Change of Control (as defined in the Employment Agreement), the Parties hereby agree that the remaining 30,000 Shares shall be forfeited as of the Termination Date (such shares, the “Forfeited Shares”).
Employee shall have the following put rights (the “Put Rights”) to sell and require the Company to purchase Shares: (i) following vesting of the First Tranche, Employee shall have a put right to sell all but not less than all such Shares to the Company on one occasion during the thirty day period beginning on the earlier of the date the Company is no longer subject to a blackout period as defined in Regulation BTR and May 1, 2006 (the “First Put Period”) and (ii) during the thirty day period beginning on date of vesting of the Second Tranche (the “Second Put Period” and with the First Put Period, the “Put Periods”), Employee shall have a put right to sell all but not less than all of the Second Tranche to the Company on one occasion. The terms and conditions of any such sale are set forth in Annex A.
(d) Lump Sum Payments in Lieu of Bonus Payments . In lieu of any bonuses for 2005 (the “2005 Bonus”) or 2006 (the “2006 Bonus”) under the United Rentals, Inc. Annual Incentive Compensation Plan (the “Annual Incentive Plan”) or otherwise, Employee shall receive two lump sum payments as follows. In lieu of the 2005 Bonus, the Company shall make a lump sum payment to Employee of $327,800. Such payment shall be made on the earlier of April 15, 2006 and the time the 2005 Bonus, if any, would have been paid to Employee under the Annual Incentive Plan, provided that in no event shall such payment be due to be paid prior to the Initial Payment Date. In lieu of the 2006 Bonus, the Company shall make a lump sum payment to Employee of $200,000. Such payment shall be made on the Initial Payment Date.
(e) Lump Sum Payment in Lieu of Benefits . In lieu of benefits subsequent to the Effective Date (as described in Section 2(b) of this Agreement), the Company agrees to pay Employee a lump sum of $13,000. Such payment shall be made on the Initial Payment Date.
(f) COBRA . The Company agrees that it will instruct its applicable employees and/or agents not to challenge Employee’s right to continue welfare benefits coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) based upon the circumstances that led to the modification of Employee’s duties as provided herein. The Company reserves the right to challenge or deny continuing coverage for other reasons, as appropriate. Provided that Employee timely elects COBRA continuation coverage (and the Company has no such grounds to challenge or deny such coverage), the Company will pay through the COBRA Payment End Date (as defined below) for the monthly premiums for the level of coverage Employee maintained on the Effective Date. The “COBRA Payment End Date” shall be the earlier of (i) 18 months following the Effective Date of this Agreement and (ii) the date Employee becomes employed by a third party and is eligible for coverage under the group benefits plan of the new employer. If during the period Employee is receiving this benefit, Employee obtains new employment and becomes eligible for coverage under the group benefits plan of the new employer, Employee must notify the Company in writing of such new employment so that the Company receives such notification prior to the commencement of this employment.
(g) Accrued, Unused Vacation . The Company shall also make a lump sum payment to Employee equal to 130.156 hours of base salary pay. Such pay represents the number of accrued, but unused, vacation hours as of the Effective Date, such number determined in accordance with Company policy. Such payment shall be made by the Company following the Termination Date in accordance with its standard payroll practices. The Parties expressly agree that Employee shall not be entitled to the accrual of any vacation days subsequent to the Effective Date.
(h) Taxes and Withholdings . The payments and benefits to be made pursuant to this Section 3 and in Section 2 shall be subject to all applicable withholdings for federal, state and local income taxes, Social Security, and all other customary withholdings. The Company makes no representations regarding the tax implications of the compensation, payments and benefits to be paid to Employee under this Agreement.
(i) Effect of Modified Cause or Material Breach on Section 3 Payments and Benefits . In the event the Company terminates Employee’s employment for Modified Cause, Employee shall forfeit (i) any amounts or benefits provided for under Section 3 of this Agreement and not yet paid (excluding any payments due under this Agreement, but not yet paid, as of the Termination Date), (ii) any unvested Shares, and (iii) any rights he otherwise would have had in connection with a Change of Control.
4. Non-Admission of Liability . The Company is providing Employee with the consideration described in this Agreement in exchange for Employee’s agreement to undertake certain obligations, as described herein. The fact that the Company is offering this consideration to Employee should not be understood as an admission that the Company has violated Employee’s rights (or the rights of anyone else), any statute or law, or breached any duty or obligation in any manner whatsoever.
5. Release and other Promises . The intent of this section is to secure Employee’s release of claims against the Company or anyone connected with it for any harm Employee may claim to have suffered for any period prior to his execution of this Agreement in connection with Employee’s employment or the termination of Employee’s employment, in return for the benefits described in this Agreement. Accordingly, in exchange for the consideration described above, Employee hereby agrees as follows:
(a) Release . In consideration of the foregoing, Employee hereby releases and forever discharges the Company and all of its present, former and/or future officers, employees, directors, stockholders, agents, representatives, partners, administrators, attorneys, insurers, fiduciaries, subsidiaries, divisions, affiliates, predecessors, successors and assigns, in their individual and/or representative capacities (hereinafter collectively referred to as the “Released Parties”), from any and all liabilities, causes of action, suits, agreements, promises, damages, disputes, controversies, contentions, grievances, differences, judgments, debts, claims and demands of any kind whatsoever, both in law and in equity, known or unknown, fixed or contingent, and whether asserted or unasserted (“Claims”), (i) which Employee may have or claim to have based upon or in any way related to Employee’s employment or termination of employment with the Company, for any period prior to his execution
of this Agreement, (ii) which otherwise involve facts that occurred during any period prior to Employee’s signing of this Agreement, or (iii) with respect to any claimed rights to the LTIP Units or under the LTIP, the Forfeited Shares, or the 2005 Bonus or 2006 Bonus, or otherwise arising under the Employment Agreement.
Such released Claims include, without limitation, any and all Claims under the Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Family and Medical Leave Act of 1993, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974 (including, without limitation, any claim for severance pay), the Connecticut Human Rights Act, Conn. Gen. Stat. §46a-51, et. seq., and any and all other federal, state or local laws, statutes, rules and regulations pertaining to employment, each as amended. This includes but is not limited to any and all Claims growing out of any legal restrictions on the Company’s right to terminate its employees, including specifically the Worker Adjustment and Retraining Notification Act of 1988 (“WARN