SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into as of
the 14 day of May, 1999, by and between Xxxx Corp., a Delaware company
(the "Company"), and Xxxx Xxxxx, an individual (the "Executive")
(hereinafter collectively referred to as the "Parties").
WHEREAS, the Company recognizes the valuable services the Executive
has rendered to the Company as Chief Financial Officer of Xxxx Rental,
Inc., a wholly-owned subsidiary of the Company, and desires assurance that
Executive will continue to provide his services to the Company as Chief
Financial Officer of the Company;
WHEREAS, the Executive is willing to continue to serve the Company,
but desires assurance that in the event of any Change in Control of the
Company he will continue to have the responsibilities and privileges he now
has;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the best interests of the Company would be served by
providing Executive with certain protections and benefits following any
Change in Control of the Company.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. Change in Control. No benefits shall be payable under this Agreement
unless there shall have occurred a Change in Control of the Company, as defined
below, and Executive's employment by the Company shall have been terminated
thereafter in accordance with Section 2. For purposes of this Agreement, a
"Change in Control" shall mean any of the following events:
(a) An acquisition (other than directly from Xxxx Corp. (the
(Company")) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, that Beneficial Ownership by any of Xxxxx Mas, Xxxx
Xxxxxx Mas, Xxxx Xxxxx Mas, or aggregate Beneficial Ownership by General
Electric Capital Corporation and any of its 100% Affiliates (as defined),
of thirty percent (30%) or more of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting Securities
shall not constitute a Change in Control; provided further, however, in
determining whether a Change in Control has occurred, Shares or Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause
a Change in Control. A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other Person of
which a majority of its voting power or its voting equity securities or
equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Subsidiary"), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(b) The individuals who, as of the date of this Agreement are members
of the Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board of Directors of the Company;
provided, however, that if the election, or nomination for election by the
Company's common stockholders, of any new director was approved by a vote
of at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office
as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization of the Company where:
(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own directly or
indirectly immediately following such merger, consolidation or
reorganization, at least fifty percent (50%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of the
Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust forming
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a part thereof) that, immediately prior to such merger,
consolidation or reorganization, was maintained by the Company,
or any Subsidiary, or (iv) any Person who, immediately prior to
such merger, consolidation or reorganization had Beneficial
Ownership of fifty percent (50%) or more of the then outstanding
Voting Securities or Shares, has Beneficial Ownership of fifty
percent (50%) or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities or its
common stock.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of the
assets of the Company to any Person (other than a transfer to a
Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
For the purposes of this Agreement, "100% Affiliate" means with respect to
any Person, (i) each other Person that, directly or indirectly, owns or controls
one hundred percent (100%) of the stock having ordinary voting power in the
election of directors of such Person, (ii) each other Person of which the stock
having ordinary voting power in the election of its directors is owned or
controlled one hundred percent (100%) by such Person, or (iii) each other Person
of which the stock having ordinary voting power in the election of its directors
is owned or controlled one hundred percent (100%) by any Person defined in
clause (i) above or any of its 100% Affiliates.
2. Termination of Employment Following Change in Control.
(a) If a Change in Control of the Company occurs, the Executive shall
be entitled to the benefits provided in Section 3 upon (i) the subsequent
termination by the Company of Executive's employment with the Company for
any reason other than for Cause (as defined), Disability (as defined) or
due to the Executive's death, during the two year period following the
Change in Control or (ii) the subsequent termination by the Executive of
his employment with the Company for Good Reason (as defined) during the two
year period following the Change in Control.
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If the Executive's employment is terminated by the Company without
Cause prior to the date of a Change in Control but the Executive reasonably
demonstrates that the termination (i) was at the request of a third party
who has indicated an intention or taken steps reasonably calculated to
effect a change in control or (ii) otherwise arose in connection with, or
in anticipation of, a Change in Control which has been threatened or
proposed, such termination shall be deemed to have occurred after a Change
in Control for purposes of this Agreement provided a Change in Control
shall actually have occurred.
(b) For purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs the Executive's ability to perform
substantially his duties for a period of one hundred eighty (180)
consecutive days. A determination of Disability shall be made by a
physician satisfactory to both the Executive and the Company, which
physician's determination as to Disability shall be made within 10 days of
the request therefor and shall be binding on all parties; provided,
however, that if the Executive and the Company do not agree on a physician,
the Executive and the Company shall each select a physician and these two
together shall select a third physician, which third physician's
determination as to Disability shall be binding on all parties.
(c) The Company shall be deemed to have terminated the Executive's
employment for "Cause" in the event that the Executive's employment is
terminated for any of the following reasons: (i) the commission of an act
of fraud or intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the Company;
(ii) dishonesty or willful misconduct in the performance of duties; or
(iii) willful violation of any law, rule or regulation in connection with
the performance of duties (other than traffic violations or similar
offenses); provided, that no act or failure to act shall be considered
willful unless done or omitted to be done in bad faith and without
reasonable belief that the action or omission was in the best interests of
the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after Notice of
Termination (as defined) is given by the Company shall constitute Cause for
purposes of this Agreement.
(d) For purposes of this Agreement, Good Reason shall mean the
occurrence of any of the events or conditions described in Subsections (i)
through (viii) hereof:
(i) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, does not represent a promotion from
his status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Executive of any
duties or responsibilities which, in the Executive's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Executive from or failure to
reappoint or reelect his to any of such positions, except in
connection with the termination of his employment for Disability,
Cause, as a result of his death or by the Executive other than for
Good Reason;
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(ii) a reduction in the Executive's base salary or any failure to
pay the Executive any compensation or benefits to which he is entitled
within five (5) days of the date due;
(iii) a failure by the Company to increase the Executive's base
salary at least annually at a percentage of base salary no less than
the average percentage increases granted to the Executive during the
three most recent full years ended prior to a Change in Control;
(iv) the failure by the Company to (A) continue in effect
(without reduction in benefit level and/or reward opportunities) any
material compensation or benefit plan in which the Executive was
participating at the time of the Change in Control, including, but not
limited to, the Company's 401(k) Plan, the Company's 1998 Stock
Incentive Plan, the Company's 1999 Stock Incentive Plan, or (B)
provide the Executive with compensation and benefits at least equal
(in terms of benefit levels and/or reward opportunities) to those
provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Change in Control (or as in effect
following the Change in Control, if greater).
(v) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy, of the Company;
(vi) any material breach by the Company of any provision of this
Agreement;
(vii) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any successor or assign of the
Company to assume and agree to perform this Agreement, as contemplated
in Section 4 hereof; or
(viii) the Company requires the Executive to be based at any
office located more than fifty (50) miles from the office where the
Executive is currently based without the Executive's consent;
(e) The Executive's right to terminate his employment for Good Reason
shall not be affected by his incapacity due to physical or mental illness
if such incapacity occurs after the event or condition giving rise to
Executive's right to terminate his employment for Good Reason.
(f) Any purported termination by the Company or by the Executive shall
be communicated by written Notice of Termination to the other. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which
indicates the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
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under the provision so indicated. For purposes of this Agreement, no such
purported termination of employment shall be effective without such Notice
of Termination.
(g) For purposes of this Agreement, "Termination Date" shall mean the
date specified in the Notice of Termination; provided, that: if the
Executive's employment is terminated for Good Reason, the date specified in
the Notice of Termination shall not be more than sixty (60) days from the
date the Notice of Termination is given to the Company.
3. Compensation Upon Termination. If, after a Change in Control has
occurred and Executive's employment with the Company is terminated during the
two years following such Change in Control by the Company other than for Cause
or Disability or due to the Executive's death, or by the Executive for Good
Reason, then the Company shall pay to Executive the following benefits:
(a) The Company shall pay the Executive all amounts earned or accrued
hereunder through the Termination Date but not paid as of the Termination
Date, including (i) base salary, (ii) reimbursement for any and all monies
advanced or expenses incurred in connection with the Executive's employment
for reasonable and necessary expenses incurred by the Executive on behalf
of the Company for the period ending on the Termination Date, (iii)
vacation pay, (iv) any bonuses or incentive compensation and(v) any
previous compensation which the Executive has previously deferred
(including any interest earned or credited thereon) (collectively, "Accrued
Compensation");
(b) the Company shall pay the Executive as severance pay and in lieu
of any further salary for periods subsequent to the Termination Date, in a
single payment an amount in cash equal to one-half (.5) times the
Executive's base salary at the highest rate in effect at any time within
the ninety (90) day period ending on the date the Notice of Termination is
given (or the Executive's base salary immediately prior to the Change in
Control, if greater);
(c) for a period of six (6) months following such termination, the
Company shall at its expense continue on behalf of the Executive and his
dependents and beneficiaries the life insurance, disability, medical,
dental and hospitalization benefits which were being provided to the
Executive at the time Notice of Termination is given (or the benefits
provided to the Executive at the time of the Change in Control, if
greater). The benefits provided in this Section 3(c) shall be no less
favorable to the Executive, in terms of amounts and deductibles and costs
to him, than the coverage provided the Executive under the plans providing
such benefits at the time Notice of Termination is given (or at the time of
the Change in Control if more favorable to the Executive). The Company's
obligation hereunder with respect to the foregoing benefits shall be
limited to the extent that the Executive obtains any such benefits pursuant
to a subsequent employer's benefit plans, in which case the Company may
reduce the coverage of any benefits it is required to provide the Executive
hereunder as long as the aggregate coverage of the combined benefit plans
is no less favorable to the Executive, in terms of amounts and deductibles
and costs to him, than the coverage required to be provided hereunder. This
Subsection (c) shall not be interpreted so as to limit any benefits to
which the Executive or his dependents may be entitled under any of the
Company's employee benefit plans, programs or practices following the
Executive's termination of employment, including, without limitation,
retiree medical and life insurance benefits; and
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(d) all restrictions on any outstanding award (including restricted
stock and performance stock awards) granted to the Executive shall lapse
and such awards shall become fully (100%) vested immediately, assuming all
performance targets and goals (if applicable) had been fully met by the
Company and by the Executive, as applicable, for such year, and all stock
options and stock appreciation rights granted to the Executive shall become
fully (100%) vested and shall become immediately exercisable.
(e) The amounts provided for in Sections 3(a) and 3(b) shall be paid
within ten (10) days after the Executive's Termination Date.
(f) The Executive shall not be required to mitigate the amount of any
payment, benefit or other Company obligation provided for in this Agreement
by seeking other employment or otherwise and no such payment, benefit or
other Company obligation shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent
employment.
4. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall
require any successor or assign to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had
taken place. The term "the Company" as used herein shall include such
successors and assigns. The term "successors and assigns" as used herein
shall mean a corporation or other entity acquiring all or substantially all
the assets and business of the Company (including this Agreement) whether
by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
5. Covenant Not to Compete
(a) The Executive agrees that during his employment with the
Company and for six(6) months subsequent to termination of Executive's
employment with the Company following a Change in Control (the
"Non-Compete Term") the Executive shall not:
(i) Either directly or indirectly, for himself or on behalf
of or in conjunction with any other person, persons, company,
firm, partnership, corporation, business, group or other entity
(each, a "Person"), engage in any business or activity, whether
as an employee, consultant, partner, principal, agent,
representative, stockholder or other individual, corporate, or
representative capacity, or render any services or provide any
advice or substantial assistance to any business, person or
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entity, if such business, person or entity, directly or
indirectly will in any way compete with the Company (a "Competing
Business"). Without limiting the generality of the foregoing, for
purposes of this Section 5, it is understood that Competing
Businesses shall include any business which rents or sells
construction or industrial equipment or engages in the sale of
maintenance, repair or operating supplies for such equipment;
provided, however, that notwithstanding the foregoing, the
Executive may make passive investments in up to 2% of the
outstanding publicly traded common stock of an entity which
operates a Competing Business.
(ii) Either directly or indirectly, for himself or on behalf
of or in conjunction with any other Person, solicit, hire or
divert any Person who is, or who is, at the time of termination
of the Executive's employment, or has been within six (6) months
prior to the time of termination of Executive's employment, an
employee of the Company or any of its subsidiaries for the
purpose or with the intent of enticing such employee away from
the employ of the Company or any of its subsidiaries.
(iii) Either directly or indirectly, for himself or on
behalf of or in conjunction with any other Person, solicit, hire
or divert any Person who is, or who is, at the time of
termination of the Executive's employment, or has been within six
(6) months prior to the time of termination of Executive's
employment, a customer or supplier of the Company or any of its
subsidiaries for the purpose or with the intent of (A) inducing
or attempting to induce such Person to cease doin business with
the Company or (B) in any way interfering with the relationship
between such Person and the Company.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenants, and because of
the immediate and irreparable damage that could be caused to the Company
for which it would have no other adequate remedy, the Executive agrees (i)
that the foregoing covenants, in addition to and not in limitation of any
other rights, remedies or damages available to the Company at law, in
equity or under this Agreement, may be enforced by the Company in the event
of the breach or threatened breach by the Executive, by injunctions and/or
restraining orders and (ii) to pay the sum of one thousand dollars ($1,000)
per day for each day during which the Executive is in breach of such
covenants as liquidated damages or, if greater, the amount of damages the
Company can reasonably demonstrate it incurred as a result of such breach.
The Company and Executive agree that the dollar amount in clause (ii) of
the preceding sentence represents the product of their good faith
negotiations. If the Company is involved in court or other legal
proceedings to enforce the covenants contained in this Section 5, then in
the event the Company prevails in such proceedings, the Executive shall be
liable for the payment of reasonable attorneys' fees, costs and ancillary
expenses incurred by the Company in enforcing its rights hereunder.
(c) The covenants in this Section 5 are severable and separate, and
the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth herein are unreasonable, then it is the intention of
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the parties that such restrictions be enforced to the fullest extent that
such court deems reasonable, and the Agreement shall thereby be reformed to
reflect the same.
(d) All of the covenants in this Section 5 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Executive against the
Company whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by the Company of such covenants.
It is specifically agreed that the period following the termination of the
Executive's employment with the Company during which the agreements and
covenants of the Executive made in this Section 5 shall be effective, shall
be computed by excluding from such computation any time during which the
Executive is in violation of any provision of this Section 5.
(e) Notwithstanding any of the foregoing, if any applicable law,
judicial ruling or order shall reduce the time period during which the
Executive shall be prohibited from engaging in any competitive activity
described in Section 5 hereof, the period of time for which the Executive
shall be prohibited pursuant to Section 5 hereof shall be the maximum time
permitted by law.
6. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the President. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third business day
after the mailing thereof, except that notice of change of address shall be
effective only upon receipt.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiaries and for which the Executive may qualify, nor shall anything herein
limit or reduce such rights as the Executive may have under any other agreements
with the Company or any of its subsidiaries. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be payable in accordance
with such plan or program, except as explicitly modified by this Agreement.
8. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
9. Federal Income Tax Withholding. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
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10. Pooling Transactions. Notwithstanding anything to the contrary, in the
event of a Change in Control which is also intended to constitute a pooling
transaction, the Company shall take such actions, if any, as specifically
recommended by an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the pooling transaction will
qualify as such, including, without limitation, (i) deferring the vesting,
exercise, payment, settlement or lapsing restrictions with respect to any
payments of base salary, other payments or benefits, allowances, awards,
reimbursements or perquisites that are provided for hereunder, (ii) providing
that the payment or settlement be made in the form of cash, Voting Securities or
securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (iii) providing for the extension of the term of any option to
the extent necessary to accommodate the foregoing, but not beyond the maximum
term of such option.
11. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
12. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida, without giving
effect to the conflict of law principles thereof.
13. Jurisdiction and Venue. Each of the parties to this Agreement hereby
(a) consents to personal jurisdiction in any suit, claim, action or proceeding
relating to or arising under this Agreement which is brought in any local or
federal court in the State of Florida, (b) consents to service of process upon
such party in the manner set forth in Section 6 hereof, and (c) waives any
objection such party may have to venue in any such Florida court or to any claim
that any such Florida court is an inconvenient forum.
14. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
XXXX CORP.
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer and President
XXXX XXXXX
/s/ Xxxx Xxxxx
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