Exhibit 10.4
FORM OF EMPLOYMENT 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 [______] ("Executive"), effective as of
___________, 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 [______________], 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 [_______] 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
[_________________] at the RSC Headquarters location in Scottsdale, AZ.
[Executive shall be a member of, and shall report to, the Board of Directors of
Atlas Copco North America Inc. (to be renamed _________)](1). 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 to
perform those duties customarily performed by the [_______________] of a similar
company.
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
$[Current Base] 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
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(1) For the CEO only.
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Company's Variable Compensation Plan as in effect from time to time, and which
will provide him with additional incentive opportunity with a target of [__%] of
his Base Salary and a maximum of [__%] of his Base Salary.
SECTION 2.3. EQUITY INCENTIVE. Executive will be offered the opportunity to
participate in the Atlas Copco North America Inc. (to be renamed __________)
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 (______ per month) or [company provided vehicle] and participation in
any retirement plan. In addition, benefits shall include, but not be limited to
[a] not less than [______] weeks' vacation per year [and (b) an annual tax and
financial planning services allowance of up to [________].
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 xxxxxx
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:
1. [________] 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.
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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 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.
2. 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.
3. 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
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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.
4. 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).
5. 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.
6. 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.
7. 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.
(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
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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 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
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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 and will be
conducted. If Executive deprives the Company of any of his goodwill or in any
manner uses his reputation and goodwill in competition with the Company, the
Company will be deprived of the benefits it has bargained for pursuant to this
Agreement. Since Executive has the ability to compete with the Company in the
operation of the Business, the Company therefore desires that Executive enter
into this Covenant Not To Compete.
SECTION 4.2. COVENANT NOT TO COMPETE. Executive agrees that during his
employment with Rental Service Corporation and for a period of [_______] months
commencing immediately after the end of his employment (the "Time Period"), he
shall not, unless acting with the Company's prior written consent (which may be
withheld at the Company's sole discretion), directly or indirectly own, manage,
join, operate or control, participate in the ownership, operation or control of,
or be connected as a
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director, officer, partner, or consultant, or permit his name to be used in
connection with the following businesses or organizations that rent or lease
construction or construction-related equipment within the United States, Canada
and Mexico (collectively "the Territory"): Caterpillar, United Rentals, Sunbelt
Rentals and its parent Ashtead Group plc, Xxxx Rental, Hertz, Volvo, National
Equipment Services and Xxxxx Xxxxx Works or, in the alternative, any business or
organization not listed above that rents or leases construction or
construction-related equipment that has gross revenues of $100 million or more,
or has a total employee base of 500 employees or more or that has plans to enter
into the construction-related equipment rental or leasing business in the
Territory.
The parties agree that if a court of competent jurisdiction determines that the
Time Period for purposes of this Section 4.2 is unreasonably long and found to
be an unenforceable term, the Time Period for purposes of this Section 4.2 shall
be shortened to the maximum duration enforceable under applicable law.
If a court of competent jurisdiction determines that the Territory is an
unreasonable geographic scope for this provision, the Territory shall be deemed
reformed to include the United States and Canada, excluding Mexico. If a court
of competent jurisdiction determines that the Territory of the United States and
Canada is an unreasonable geographic scope for this provision, the Territory
shall be deemed reformed to include the United States.
SECTION 4.3. NO SOLICITATION OF CUSTOMERS OR EMPLOYEES. Executive agrees
that:
(a) During his employment with Rental Service Corporation and for the Time
Period, he shall not, directly or indirectly, call on or solicit or divert or
take away from Rental Service Corporation or any of its affiliates (including by
divulging to any competitor or potential competitor of Rental Service
Corporation) any person, firm, corporation, or other entity who is a customer of
Rental Service Corporation or its affiliates and whom Executive had contact with
through any of his employment with Rental Service Corporation.
(b) During his employment with Rental Service Corporation and for the Time
Period, he shall not, directly or indirectly, solicit employment of any employee
of Rental Service Corporation or any employee of any affiliate of Rental Service
Corporation for employment with any entity that rents or leases construction or
construction-related equipment in the Territory as defined in Section 4.2.
(c) The parties agree that if a court of competent jurisdiction determines
that the Time Period is unreasonably long and deemed unenforceable as defined
herein in Sections 4.3(a) or (b), the Time Period for purposes of Sections
4.3(a) or (b), as applicable, shall be shortened to the maximum duration
enforceable under applicable law.
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SECTION 4.4. SEVERABILITY OF PROVISIONS. In the event that the provisions
of this Section should ever be adjudicated by a court of competent jurisdiction
to exceed the time or geographic or other limitations permitted by applicable
law, then such provisions shall be deemed reformed to the maximum time or
geographic or other limitations permitted by applicable law, as determined by
such court in such action. Each breach of the covenants set forth herein shall
give rise to a separate and independent cause of action.
SECTION 4.5. INJUNCTIVE RELIEF. Executive acknowledges that (a) the
provisions of Section 4.2 and Section 4.3 are reasonable and necessary to
protect the legitimate interests of the Company, and (b) any violation of
Section 4.2 or Section 4.3 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 4.2 or Section
4.3, 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.
SECTION 4.6. EQUITABLE TOLLING. The restrictive time periods referred to in
Sections 4.2 and 4.3 shall be tolled and extended by one month for each month or
portion of each month during which Employee is in violation of the restrictions.
If Company initiates legal action to enforce the restrictions and obtains an
injunction against Employee; then the appropriate restrictive time period(s)
will begin to run on the date that the injunction is entered.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1. ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other parties except that the Company may, without such consent,
assign all such rights and obligations to a wholly-owned subsidiary or newly
created legal entity (or a partnership controlled by the Company) or
subsidiaries of the Company or to a successor in interest to the Company which
shall assume all obligations and liabilities hereunder.
SECTION 5.2. SOLE AND ENTIRE AGREEMENT. This Agreement constitutes the
entire existing agreement between the parties with respect to the subject matter
hereof, and completely and correctly expresses all of the rights and obligations
of the parties, except that the parties acknowledge that a special severance
benefit and a special retention benefit have been offered and accepted by
Executive contemporaneously with the Prior Agreement. It is the intent of the
parties that if the conditions set forth in the
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General Terms applicable to the special severance benefit and the special
retention benefit have been fulfilled, Executive shall become entitled to the
benefits set forth in the letters offering the same to him, and such letters,
together with the said General Terms shall supersede this Agreement, but only to
the extent that the same are inconsistent herewith. All prior agreements
including but not limited to prior employment agreements, severance agreements
and/or change in control agreements, are completely superseded and revoked.
Executive expressly agrees that reliance on any oral representation(s) is
unreasonable.
SECTION 5.3. WAIVERS. The waiver in any particular instance or series of
instances of any term or condition of this Agreement or any breach hereof by any
party shall not constitute a waiver of such term or condition or of any breach
thereof in any other instance.
SECTION 5.4. AMENDMENT. This Agreement is subject to amendment only by
subsequent written agreement between, and executed by, the parties hereto.
SECTION 5.5. SEPARABILITY. If any one or more provisions, clauses,
paragraphs, subclauses or subparagraphs contained in this Agreement shall for
any reason be held to be invalid, illegal, void or unenforceable, the same shall
not affect any other provision, clause, paragraph, subclause or subparagraph of
this Agreement, but this Agreement shall be construed as if such invalid,
illegal, void or unenforceable provision, clause, paragraph, subclause or
subparagraph had never been contained herein.
SECTION 5.6. TIME IS OF THE ESSENCE. Time is of the essence in this
Agreement. Any time limit mentioned herein has been carefully considered and
represents the agreed absolute outside limit of time within which the applicable
right must be exercised. The parties may extend such time limit only by mutual
agreement in writing.
SECTION 5.7. DURATION OF OBLIGATIONS. Executive's obligations under Article
III and Article IV of this Agreement (especially those relating to
confidentiality, non-competition and non-solicitation) shall continue after his
employment with the Company is ended, regardless of the nature or reason for
such termination.
SECTION 5.8. ATTORNEYS' FEES. In the event of a dispute, a court or an
arbitrator may award attorneys' fees to the prevailing party.
SECTION 5.9. CAPTIONS; DEFINITIONS. Any captions of articles, sections,
subsections or paragraphs of this Agreement are solely for the convenience of
the parties and are not a part of this Agreement or to be used for the
interpretation of this Agreement or any provision hereof.
SECTION 5.10. APPLICABLE LAW. This Agreement shall be construed and
interpreted in accordance with the internal substantive laws, and not the choice
of law
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rules of the State of Arizona. Except where this Agreement provides for
injunctive relief, all disputes arising out of or in connection with this
Agreement shall be finally settled under the Rules of Arbitration of the
[American Arbitration Association] by a single arbitrator appointed in
accordance with the said Rules.
SECTION 5.11. CONFIDENTIALITY. The parties agree that the terms of this
Agreement are to be held confidential and shall not be disclosed to any other
person or entity, except as required by law or legal process, and except that
either party may disclose the terms thereof to its or his legal counsel or tax
advisors.
SECTION 5.12. VOLUNTARY AGREEMENT AND LEGAL COUNSEL. Executive has been
encouraged to review this Agreement with his legal and other expert counsel and
has freely entered into this Agreement.
The signature page follows
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement or
caused this Agreement to be duly executed on their respective behalf, by their
respective officers thereunto duly authorized, all effective as of the day and
year first above written.
Rental Service Corporation: Employee:
By: By:
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