AGREEMENT
This Agreement between UNITED RENTALS, INC., a Delaware corporation ("UR"), and
XXXXXXX X. XXXXX ("Employee") is hereby entered into on November 14, 1997.
Recitals:
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UR and its affiliates (collectively, the "Company") propose to engage in the
business of acquiring, operating and financing companies which rent, operate,
finance, maintain or otherwise deal in or with equipment or similar assets, and
may in the future engage in other businesses which the Company deems to be
related to the foregoing. All such businesses are collectively referred to
herein as the "Business."
Employee is or will be employed by the Company in a confidential relationship
wherein Employee, in the course of his employment with the Company, will become
familiar with and aware of information as to the specific manner of doing
business and the potential acquisition candidates and customers of the Company
and its affiliates and future plans with respect thereto, all of which will be
established and maintained at great expense to the Company; this information is
a trade secret and constitutes the valuable goodwill of the Company.
Employee recognizes that the Company's business is dependent upon a number of
trade secrets, including the identity of customers and potential acquisition
candidates, the analysis of such candidates and financial data of the Company.
The protection of these trade secrets is of critical importance to the Company.
The Company will sustain great loss and damage if during the periods hereinafter
set forth after the termination of Employee's employment, for whatever reason,
Employee should violate the provisions of this Agreement. Further, monetary
damages for such losses would be extremely difficult to measure.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
1. Employment and Duties.
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(a) Upon commencement of and throughout the term of this Agreement, the
Company shall employ Employee on the terms and conditions herein set
forth. Employee's title shall be President and Chief Operating
Officer. Employee shall report to the Chairman and Chief Executive
Officer of the Company. Employee shall perform such duties as are
commensurate with such offices, and shall have such other authority as
shall from time to time be designated by the Board of Directors of the
Company. Employee shall accept this employment upon the terms and
conditions herein contained and agrees to devote his full time,
attention and efforts to promote and further the business and services
of the Company. Employee shall faithfully adhere to, execute and
fulfill all policies established by the Company.
(b) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or
other pecuniary advantage without the prior written consent of the
Company; provided, however, that Employee's service as a member of the
board of directors of not more than two public companies and one
private company, as he may determine but as shall be reasonably
satisfactory to the Company, shall be permitted subject to the
restrictions set forth in Section 5. However, the foregoing
limitations shall not be construed as prohibiting Employee from making
personal investments in such form or manner as will neither require
his services in the operation or affairs of the companies or
enterprises in which such investments are made nor violate the terms
of Section 5; provided that this Section shall not be violated by an
investment representing not more than 1% of the issued and outstanding
equity capital of any publicly traded company which is not in the
equipment rental business and in respect of which Employee does not
render any services.
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(c) The Company will use its best efforts to cause Employee to be elected
to the Company's Board of Directors prior to consummation of its
initial public offering, or at such earlier time as there are
sufficient outside directors on the Board so that the election of
Employee would not violate the rules of the New York Stock Exchange or
the NASDAQ National Market System were the Company's shares of stock
then listed thereon. The Company will thereafter at each annual
meeting during the term of Employee's employment nominate Employee for
election by the shareholders as a director of the Company. Employee
agrees to serve a as a director of the Company as aforesaid.
2. Compensation and Other Benefits. For all services rendered by Employee to
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the Company, the Company shall compensate the Employee as follows:
(a) Base Salary and Bonus. The base salary payable to Employee shall be
$400,000 per year, payable in four quarterly installments in cash on
the 10th day of each calendar quarter commencing April 1998; a pro
rata installment for the period from November 14, 1997 through
December 31, 1997 shall be paid on January 10, 1998. After the Company
shall have completed a public offering as a result of which there
shall have been at least 20 trading days during a calendar quarter,
each installment shall be paid 50% in cash and 50% in shares of the
Company's common stock (the "Shares"). For the purpose of each
installment, the Shares shall be valued at the average closing sales
price of the common stock during all trading days in the calendar
quarter immediately preceding the date of such installment. The Board
of Directors may from time to time award bonuses to Employee based on
such criteria as the Board shall establish in its discretion. The
payment of base salary and bonuses shall be subject to all applicable
federal, state and local withholding taxes, social security deductions
and other general obligations.
(b) Special Provisions Relating to the Shares.
(i) Until the first anniversary of the date on which any Shares are
issued hereunder, Employee shall not, directly or indirectly,
sell, offer to sell, contract to sell, grant any option to
purchase, or otherwise transfer or dispose of (collectively,
"Transfer") such Shares without the prior written consent of the
Company. For purposes of this Agreement, a Transfer of Shares
will be deemed to include any transaction involving the sale or
purchase of common stock of the Company or contracts relating to
the purchase or sale thereof (such as "shorting against the box"
or hedging or using derivative instruments) that is intended to
eliminate or reduce the market risk of owning such Shares.
(ii) Employee understands that the Shares have not been registered
under the Securities Act of 1933, as amended ("the "Act"), or any
state or foreign securities laws. Within 13 months following the
closing of an initial public offering, the Company will file a
registration statement, in accordance with the Securities Act,
registering the resale of the Shares and will use its best
efforts to cause such registration statement to become effective
and the Shares to be qualified under the laws of such States as
Employee requests as soon as practicable thereafter. The Company
will also amend such registration statement or file such
supplemental or additional registration statements as in the
opinion of Company's counsel shall be required to permit the
public sale of Shares issued hereunder in a single transaction
once the restrictions under Section (i) on Transfer of such
Shares have lapsed, and shall use its best efforts to cause such
amendments or additional registration statements to become
effective upon lapse of such restrictions.
(iii) The Company shall take all actions necessary to keep such
registration and qualification effective and the Shares to be
qualified under the laws of such States as the Employee requests
until the undersigned has sold all of the Shares or until such
registration and qualification shall no longer necessary for the
public sale of the Shares in a single transaction. All
registration expenses incurred in connection with the
registration of Shares pursuant to this Agreement shall be borne
by the Company.
(iv) The transfer restrictions until the first anniversary of the date
of issuance described above will continue in effect
notwithstanding any such registration. Without limiting the
restrictions provided for in this Section, Employee agrees not to
Transfer any Shares in the absence of an effective
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registration statement under the Act or an opinion of counsel
satisfactory to the Company that such Transfer does not require
such registration under the Act and will not be in violation of
applicable state securities laws.
(v) The restrictions on Transfer and the registration rights with
respect to the Shares provided for in this Agreement shall apply
to any securities issued in respect of the Shares (by way of
stock split, dividend or otherwise).
(vi) Employee hereby acknowledges, represents and warrants to, and
agrees with, the Company as follows:
(A) Employee is acquiring the Shares for Employee's own account,
for investment purposes only, and not with a view to or for
or in connection with the resale, public distribution or
fractionalization thereof, in whole or in part.
(B) Employee meets the standards of an "Accredited Investor" set
forth under Rule 501(a) of Regulation D under the Act and
has such knowledge and experience in financial and business
matters that Employee with the assistance of Employee's
representatives and/or advisors, is capable of evaluating
the merits and risks of an investment in the Shares.
Employee will promptly notify the Company in the event that
prior to the issuance of the Shares to Employee the
foregoing representation ceases to be accurate.
(vii) Employee:
(A) has received and carefully read the Company's registration
statement on Form S-1 (the "Registration Statement"), has
been advised that the Registration Statement has not been
declared effective, understands and has evaluated the risks
of a purchase of the Shares, including the risks set forth
in the Registration Statement, and has relied solely (except
as indicated in subparagraphs (ii) and (iii) below) on the
information contained in the Registration Statement;
(B) has been given the opportunity to ask questions of, and
receive answers from, the Company concerning the Company and
other matters pertaining to his acquisition of the Shares,
and to obtain any additional information necessary to verify
the accuracy of the information contained in the
Registration Statement or otherwise provided, and has not
been furnished any other offering literature or prospectus
except as mentioned herein or in the Registration Statement;
(C) has been furnished with all additional documents and
information requested by Employee; and
(D) has determined that the Shares are a suitable investment and
that at this time Employee could bear a complete loss of the
investment.
(viii) The certificates representing the Shares will bear a legend in
substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares may
not be offered, sold, transferred, or otherwise disposed of
except pursuant to an effective registration statement under
that Act and under any applicable state securities laws
unless prior to such disposition the issuer is furnished
with an opinion of counsel, in form and substance
satisfactory to the issuer, that the proposed transaction
will be exempt from such registration. The shares are
subject to additional restrictions on transfer contained in
an Employment Agreement dated November 14, 1997, between the
issuer and the holder."
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(ix) The Company represents and warrants that (i) it is duly organized
and in good standing, (ii) it has taken all corporate action
necessary for the authorization, execution, delivery and
performance of this Agreement, and (iii) upon issuance, the
Shares will be duly and validly issued, fully paid and
nonassessable.
(x) No representations not contained herein or in the Registration
Statement have been made to Employee by the Company or any
officer, employee, agent or affiliate thereof.
(xi) Indemnification.
(A) In the event of the registration of Shares under the Act
pursuant to this Agreement, the Company will, and it hereby
does, indemnify and hold harmless, to the extent permitted
by law, Employee, against any and all losses, claims,
damages or liabilities, joint or several, and expenses to
which Employee may become subject under the Act, common law
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement
under which such Shares were registered under the Act, any
preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereto, or (ii) any omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and the Company will
reimburse Employee for any legal or any other expenses
reasonably incurred by him in connection with investigating
or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in
any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect
thereof) or expenses arise out of or are based upon any
untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or
amendment or supplement thereto or in any such preliminary,
final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company
by Employee expressly for use in the preparation thereof.
Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of
Employee.
(B) In the event of the registration of the Shares under the Act
pursuant to this Agreement, Employee will, and he hereby
does, indemnify and hold harmless, to the extent permitted
by law, the Company, its directors and officers and each
other person, if any, who controls the Company within the
meaning of the Act, against any and all losses, claims,
damages or liabilities, joint or several, and expenses to
which the Company, any such director or officer or any such
controlling person may become subject under the Act, common
law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement
under which such securities were registered under the Act,
any preliminary, final or summary prospectus contained
therein, or any amendment or supplement thereto, or (ii) any
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the
extent, but only to the extent, that such loss, claim,
damage, liability (or action or proceeding in respect
thereof) or expenses arise out of or are based upon any
untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or
amendment or supplement thereto or in any such preliminary,
final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company
by Employee expressly for use in the preparation thereof;
and Employee will reimburse the Company and each such
director, officer and
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controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or
proceeding. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by
Employee. In no event shall the liability of Employee
hereunder exceed the proceeds of sale received by Employee
in respect of securities sold by Employee pursuant to such
registration statement.
(C) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or
proceeding involving a claim referred to in the preceding
subsections of this Section, such indemnified party will, if
a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action; provided that the failure of
any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations
under the preceding subsections of this Section, except to
the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in
such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties
may exist in respect of such claim, the indemnifying party
will be entitled to participate in the defense thereof,
jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party. No indemnifying
party will consent to entry of any judgment or enter into
any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
to such claim or litigation.
(c) Vacation. Employee shall be entitled to three (3) weeks of paid
vacation during each 12-month period of his employment hereunder at
times mutually acceptable to Employee and the Company. Unused
vacations can be carried forward for 12 months, and shall thereupon
lapse.
(d) Other Compensation and Benefits. Employee may be entitled to receive
additional compensation from the Company in such form and only to the
extent explicitly set forth below. Employee shall be entitled to
participate upon commencement of the term of this Agreement in the
Company group health insurance plan, group life, group long-term
disability, and any 401(k) plan which is made available, from time to
time, to other senior executives of the Company.
(e) Reimbursement. The Company shall reimburse Employee for properly
documented expenses which are incurred by Employee on behalf of the
Company in accordance with Company policies in effect from time to
time.
(f) Grant and Vesting of Options.
(i) Employee shall receive the option grant set forth in an option
grant letter dated of even date herewith (the "Option Grant
Letter").
(ii) The term "Options" as used herein means the options granted under
the Option Grant Letter and any and all other options to purchase
shares of common stock which are at any time hereafter granted by
the Company to Employee, whether under the Company's 1997 Stock
Option Plan or otherwise. Notwithstanding any other provision to
contrary set forth in the Option Grant Letter or the United
Rentals, Inc. 1997 Stock Option Plan, all unvested Options shall
automatically vest on a Change of Control which occurs while
Employee is employed by the Company.
(iii) A "Change of Control" shall be deemed to have occurred if:
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(A) any "person" is or becomes a "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Act") directly or indirectly, of securities of United
Rentals, Inc. representing 50% or more of the total voting
power represented by then outstanding voting securities of
United Rentals, Inc., or has the power (whether as a result
of stock ownership, revocable or irrevocable proxies,
contract or otherwise) or ability to elect or cause the
election of directors consisting at the time of such
election of a majority of the Board. The term "persons" is
defined in Section 13(d) of the Act, except that the term
"person" shall not include:
(1) any person or an Affiliate of such person who as of the
date of this Agreement owns 10% or more of the total
voting power represented by the outstanding voting
securities of the Company; and
(2) a trustee or other fiduciary holding securities under
any employee benefit plan of the Company or a
corporation which is owned directly or indirectly by
the stockholders of the Company in substantially the
same percentage as their ownership in the Company; or
(B) the stockholders of United Rentals, Inc. approve a merger of
United Rentals, Inc., or a plan of complete liquidation of
United Rentals, Inc., or an agreement for the sale or
disposition by United Rentals, Inc. of all or substantially
all of its assets, or any other business combination of
United Rentals, Inc. with any other corporation, other than
any such merger or business combination which would result
in the voting securities of United Rentals, Inc. outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the
total voting power represented by the voting securities of
United Rentals, Inc. or such surviving entity outstanding
immediately after such merger or business combination.
(iv) An "Affiliate" of a person is a person that controls, is
controlled by, or is under common control with such person.
(g) The Company will directly pay or, upon presentation of appropriate
vouchers or other expense statements, reimburse Employee for the
ordinary and necessary moving, house search, travel, lodging and
similar expenses incurred by him and his family in relocation Employee
and his wife and household effects from his current principal
residence in Boston, Massachusetts to the Greenwich, Connecticut area,
including the cost of temporary housing reasonably necessary to permit
Employee to obtain a suitable permanent residence, all in accordance
with the policy set forth in Exhibit B. The Company's maximum
aggregate liability under this Section (g) and under Exhibit B is
$100,000.
3. Term; Termination; Rights of Termination.
(a) The term of this Agreement shall begin on the date hereof, and shall
continue until the third anniversary of the commencement date. This
Agreement and Employee's employment may terminate in any one of the
following ways:
(i) The death of Employee shall terminate the Agreement;
(ii) A notice of resignation by the Employee presented to the Company
shall terminate the Agreement;
(iii) The Board of Directors of the Company may terminate this
Agreement after ten (10) days' written notice to Employee for
Cause, which shall be defined to mean:
(A) The failure by Employee to substantially perform his duties
hereunder, other than (except as set forth in Section (B))
any such failure resulting from Employee's incapacity due to
physical or mental illness, after being notified in writing
by the
6
Company that he has failed to perform his duties
hereunder and has been given 30 days to cure any such
failure;
(B) If, because of illness or physical or mental disability or
other incapacity which continues for a period in excess of
four months in any consecutive 16-month period, Employee is
unable to perform his duties under this Agreement;
(C) Engaging by Employee in willful misconduct that is
demonstrably and materially injurious to the Company;
(D) The deliberate and intentional violation by Employee of the
provisions of Sections 4 or 5 of this Agreement;
(E) The conviction of Employee for any felony from which all
appeals have been exhausted;
(F) The conviction of Employee for any misdemeanor (other than a
traffic offense) from which all appeals have been exhausted
and which negatively and materially affects the Company's
business or reputation; or
(G) Alcohol or drug abuse by Employee which negatively affects
the Company, or any use of illegal drugs.
It is understood, however, that no failure to achieve financial
or other business results shall be a basis for termination of
Employee for Cause.
(iv) The Company may terminate this Agreement without Cause at any
time or Employee may terminate this Agreement for Good Reason (as
hereinafter defined) at any time, provided that in the event of a
termination of this Agreement by the Company without Cause, or
termination by Employee for Good Reason, Employee shall be
entitled to receive in a lump sum an amount equal to $1,000,000
subject to withholding and social security taxes.
(v) For purposes of this Agreement, Good Reason shall mean:
(A) The assignment to Employee of any duties materially
inconsistent with Employee's positions, duties, authority,
responsibilities or reporting requirements as set forth in
Section 1(a); or
(B) At any time during the term of this Agreement, a reduction or
material delay in payment of Employee's total cash, and (to
the extent in the Company's control) equity-based
compensation and benefits from those required to be provided
in accordance with the provisions of this Agreement, or the
breach of any other material provision of this Agreement;
provided, however, that for purposes of this subparagraph (iv),
Good Reason shall not include any acts which are cured by the
Company in all material respects not later than 30 days from the
date of receipt by the Company of a written notice from Employee
identifying in reasonable detail the act or acts constituting
"Good Reason."
(b) Upon termination of this Agreement or Employee's employment for any
reason whatsoever, Employee shall be entitled to receive all salary
earned under this Agreement to the date of termination. However,
termination of this Agreement shall not accelerate the payment date of
any monies accrued or accruing to the account of Employee as a result
of any bonuses or other compensation, nor shall termination vest in
Employee any right in connection therewith other than as expressly set
forth in the Agreements (as hereinafter defined).
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(c) Effective upon the termination of this Agreement or Employee's
employment for any reason whatsoever, Employee hereby resigns as a
director of the Company.
(d) In the event of termination of this Agreement for any reason provided
in this paragraph or if Employee resigns prior to the expiration of
the term of this Agreement, all rights and obligations of the Company
and Employee under this Agreement, other than those set forth in
Section 11, shall cease immediately, except for those in favor of the
Company which by their terms specifically apply to periods following
the termination of this Agreement, and (if and only if Employee has
not breached any material provision of this Agreement) those in favor
of Employee which by their terms specifically apply to periods
following the termination of this Agreement, including without
limitation the registration rights and the indemnification rights
granted hereunder and all rights provided under the Agreements, and
thereafter Employee shall have no right to receive any compensation
hereunder except as otherwise expressly set forth in the Agreements.
(e) Any termination notice by the Company or Employee shall be
communicated by written "Notice of Termination" to the other party,
and shall include the specific termination provision in this Agreement
that is relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide the basis for termination of
Employee's employment under the provision so indicated.
(f) No termination of Employee's employment shall be treated as for Cause
unless and until there shall have been delivered to Employee a
certified copy of a resolution duly adopted by the affirmative vote of
the Board of Directors of the Company, at a meeting of the Board
called and held for the purpose, finding that in the good-faith
opinion of the Board, conduct of the Employee met the definition of
Cause, and specifying the particulars thereof.
4. Confidentiality
(a) During and at all times after Employee's employment:
(i) Employee will not, except in furtherance of the business of the
Company, disclose to any person or entity, without the Company's
prior consent, any confidential or secret information, whether
prepared by him or others.
(ii) Employee will not, except in furtherance of the business of the
Company, directly or indirectly use any such information other
than as directed by the Company in writing.
(iii) Employee will not, except in the furtherance of the business of
the Company, remove confidential or secret information from the
premises of the Company without the prior written consent of the
Company.
(iv) Upon termination of his employment for whatever reason, with or
without cause, Employee will promptly deliver to the Company all
originals and copies (whether in note, memo or other document
form or on video, audio or computer tapes or discs or otherwise)
of confidential or secret information that is in his possession,
custody or control, whether prepared by him or others.
(b) Confidential information includes, but is not limited to:
(i) the name of any company or business all or any substantial part
of which is or at any time was a candidate for potential
acquisition by the Company, together with all analyses and other
information which the Company has generated, compiled or
otherwise obtained with respect to such candidate, business or
potential acquisition, or with respect to the potential effect of
such acquisition on the Company's business, assets, financial
results or prospects;
(ii) business, pricing and management methods;
(iii) finances, strategies, systems, research, surveys, plans, reports,
recommendations and conclusions;
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(iv) names, arrangements with, or other information relating to, the
Company's customers, suppliers, equipment manufacturers,
financiers, owners or operators, representatives and other
persons who have business relationships with the Company or who
are prospects for business relationships with the Company;
(v) technical information, work products and know-how; and
(vi) cost, operating, and other management information systems, and
other software and programming.
(c) Notwithstanding any other provision of this Agreement, (i)
Confidential information shall not include information that has been
previously disclosed to the public by the Company or that is in the
public domain, other than by reason of Employee's breach of this
Section 4, and (ii) disclosure by Employee of Confidential information
which is required in connection with any judicial or administrative
proceeding or inquiry shall not be treated as a breach of this Section
4, provided Employee has to the extent practicable given the Company
at least 10 days' notice of request therefor (unless otherwise
precluded by law) and has cooperated with the Company in its attempts
to obtain confidential treatment of any request for Confidential
information.
5. Non-Compete Provisions. The following covenants are made by Employee in
partial consideration for the substantial economic investment made by the
Company in the hiring, education and training of Employee and the compensation
and other benefits afforded by the Company to the Employee. Such covenants were
material inducements to the Company in hiring Employee.
(a) During his employment by the Company and for a period of 36 months
immediately following the termination of his employment for any reason
whatsoever, whether or not for cause:
(i) Employee will not in any Restricted Area (as hereinafter defined)
directly or indirectly be employed or retained by any Competitive
Entity, nor will Employee directly or indirectly own any interest
in any Competitive Entity or render to it any consulting,
brokerage, contracting, financial or other services or serve as a
director thereof. Employee shall be deemed to be employed or
retained in the Restricted Area if he has an office in the
Restricted Area or if he performs any duties or renders any
advice with respect to any facility or business activities in the
Restricted Area. The term "Competitive Entity" means a person or
entity who or which competes with the Company to any extent,
except for any such person or entity which competes only with a
discrete business of the Company:
(A) whose aggregate annual revenues are then less than the
lesser of $1,000,000 or 1% of the Company's annual aggregate
revenues; and
(B) which discrete business is engaged in by the Company
exclusively by reason of the acquisition thereof incidental
to the acquisition of another business; and
(C) as to the conduct of which discrete business Employee has
had no material role.
(ii) A "Restricted Area" means each of:
(A) any state in the United States and any province in Canada in
which the Company conducts any equipment rental or other
equipment-related activity, it being agreed that each state
and province is one unitary market for purposes of the
Company's business;
(B) regardless of state, the area within a 200-mile radius of
any office or facility of the Company in which or in
relation to which Employee shall have performed any duties
for the Company during the one year period preceding the
termination of his employment.
(iii) Employee will not anywhere in the United States or Canada
directly or indirectly be employed or retained by a Similar
Entity (as hereinafter defined) nor will Employee directly or
indirectly own
9
any interest in any Similar Entity or render to it any
consulting, brokerage, financing, contracting, or other services.
A "Similar Entity" means each of:
(A) the entities listed in Exhibit A to this Agreement; and
(B) any Competitive Entity; and
(C) any entity which, to Employee's knowledge, at any time during
the term of Employee's employment was a candidate for
acquisition by or merger with the Company; and
(D) any entity which, to Employee's knowledge, was a candidate
for acquisition by the Company at any time during the term of
Employee's employment.
(b) During his employment by the Company and for a period of 36 months
immediately following the termination of his employment for any reason
whatsoever, whether or not for cause, Employee will not anywhere
directly or indirectly (whether as an owner, partner, employee,
consultant, broker, contractor or otherwise, and whether personally or
through other persons):
(i) solicit or accept the business of, or call upon, any person or
entity who or which is or was (i) a customer, supplier,
manufacturer, finder, broker, or other person who had a material
business relationship with the Company, or who was a prospect for
a material business relationship with the Company related to a
material business of the Company, at any time during the period
the period of his employment, or (ii) an affiliate of any such
person;
(ii) approve, solicit or retain, or discuss the employment or
retention (whether as an employee, consultant or otherwise) of
any person who was an employee of the Company at any time during
the one-year period preceding the termination of his employment;
(iii) solicit or encourage any person to leave the employ of the
Company;
(iv) call upon or assist in the acquisition of any company which was,
to Employee's knowledge, during the term of Employee's employment
either called upon by an employee of the Company or by a broker
or other third party, for possible acquisition by the Company or
for which an employee of the Company or other person made an
acquisition analysis for the Company; or
(v) own any interest in or be employed by or provide any services to
any person or entity which engages in any conduct which is
prohibited to Employee under this Section.
(c) All time periods in this Agreement shall be computed by excluding from
such computation any time during which Employee is in violation of any
provision of this Agreement and any time during which there is pending
in any court of competent jurisdiction any action (including any
appeal from any final judgment) brought by any person, whether or not
a party to this Agreement, in which action the Company seeks to
enforce the agreements and covenants in this Agreement or in which any
person contests the validity of such agreements and covenants or their
enforceability or seeks to avoid their performance or enforcement.
(d) Employee understands that the provisions of this Agreement have been
carefully designed to restrict his activities to the minimum extent
which is consistent with law and the Company's requirements. Employee
has carefully considered these restrictions, and Employee confirms
that they will not unduly restrict Employee's ability to obtain a
livelihood. Employee has heretofore engaged in businesses other than
the Business. Before signing this Agreement, Employee has had the
opportunity to discuss this Agreement and all of its terms with his
attorney.
(e) Since monetary damages will be inadequate and the Company will be
irreparably damaged if the provisions of this Agreement are not
specifically enforced, the Company shall be entitled, among other
remedies (i) to an injunction restraining any violation of this
Agreement (without any bond or
10
other security being required) by Employee and by any person or entity
to whom Employee provides or proposes to provide any services in
violation of this Agreement, (ii) to require Employee to hold in a
constructive trust, account for and pay over to the Company all
compensation and other benefits which Employee shall derive as a
result of any action or omission which is a violation of any provision
of this Agreement and (iii) to require Employee to account for and pay
over to the Company:
(i) any net profit earned by the Employee from the exercise, during
the 24-month period prior to the termination of his employment,
of any stock options issued to him by the Company; and
(ii) any bonus received by Employee during the 12-month period
immediately preceding termination of his employment.
(f) If any provision contained in this Agreement is determined to be void,
illegal or unenforceable, in whole or in part, then the other
provisions contained herein shall remain in full force and effect as
if the provision which was determined to be void, illegal, or
unenforceable had not been contained herein.
(g) The courts enforcing this Agreement shall be entitled to modify the
duration and scope of any restriction contained herein to the extent
such restriction would otherwise be unenforceable, and such
restriction as modified shall be enforced.
6. Return of Company Property. All products, records, designs, patents, plans,
--------------------------
manuals, "field guides," memoranda, lists and other property delivered to
Employee by or on behalf of the Company or by its customers (including, but not
limited to, customers obtained for the Company by Employee), and all records
compiled by the Employee which pertain to the business of the Company (whether
or not confidential) shall be and remain the property of the Company and be
subject at all times to its discretion and control. Likewise, all
correspondence with customers or representatives, reports, records, charts,
advertising materials, and any data collected by Employee, or by or on behalf of
the Company or its representatives (whether or not confidential) shall be
delivered promptly to the Company without request by it upon termination of
Employee's employment.
7. Inventions. Employee shall disclose promptly to the Company any and all
----------
conceptions and ideas for inventions, improvements and valuable discoveries,
whether patentable or not, which are conceived or made by Employee solely or
jointly with another during the period of employment or within one (1) year
thereafter and which are related to the business or activities of the Company or
which Employee conceives as a result of his employment by the Company, and
Employee hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein. These obligations shall continue beyond the termination of
employment with respect to inventions, improvements and valuable discoveries,
whether patentable or not, conceived, made or acquired by Employee during the
period of employment or within one (1) year thereafter, and shall be binding
upon Employee's assigns, executors, administrators and other legal
representatives.
8. Suits Against Company.
----------------------
(a) Both during and after the term of employment hereunder, Employee
covenants that Employee will not bring suit or file counterclaims
against the Company for corporate misconduct (which for this purpose
shall not include any action brought by Employee to enforce his rights
under this Agreement, or under the United Rentals, Inc. Subscription
Agreement dated of even date, the United Rentals, Inc. 1997 Stock
Option Plan, or the Option Grant Letter (collectively referred to as
the "Agreements"), or under any Company compensation or benefit plan),
unless both of (i) and (ii) shall have occurred, namely:
(i) Employee shall have first made written demand to the Company's
Board of Directors to investigate and deal with such misconduct,
and
(ii) The Board of Directors shall have failed within 45 days after the
date of receipt of such demand to establish a Special Litigation
Committee, consisting exclusively of outside
11
directors, to investigate and deal with such misconduct.
(b) Without limiting the generality and to further implement the
foregoing, Employee irrevocably and unconditionally consents at the
option of the Company to the entry of temporary restraining orders and
temporary and permanent injunctions (without posting bond or other
security) against the filing of any action or counterclaim which is
prohibited hereunder.
(c) The opinion of the Board of Directors shall be binding and conclusive
on the determination of which directors constitute "outside
directors," and the determination of the Special Litigation Committee
shall be binding and conclusive on all matters relating to the actual
or alleged misconduct which is referred to it as aforesaid.
9. Cooperation in Proceedings. During and after the termination of Employee's
--------------------------
employment, Employee will for reasonable compensation consistent with his
compensation from the Company reasonably cooperate and at reasonable times with
the Company and its subsidiaries in all litigations and regulatory proceedings
on which the Company or any subsidiary seeks Employee's assistance and as to
which Employee has any knowledge or involvement, other than any action or
proceeding brought to enforce the provisions of the Agreements. Without limiting
the generality of the foregoing and except in connection with any action or
proceeding brought to enforce the provisions of the Agreements, subject to his
commitments to other employers Employee will be available to testify at such
litigations and other proceedings, and will cooperate with counsel to the
Company in preparing materials and offering advice in such litigations and other
proceedings. Except as required by law and then only upon reasonable prior
written notice to the Company and except in connection with any action or
proceeding brought to enforce the provisions of the Agreements, Employee will
not in any way cooperate or assist any person or entity in any matter which is
adverse to the Company or to any person who was at any time an officer or
director of the Company.
10. No Derogation. Except as otherwise required by law (and then only upon 10
-------------
days' prior written notice to the other party), neither the Company nor Employee
will from and after the date hereof, whether during Employee's employment or at
any time thereafter, in any way or to any person, denigrate or derogate the
Company or any of its subsidiaries, or any person who was at any time an officer
or director of the Company, or any products, services or procedures, or the
Employee, whether or not such denigrating or derogatory statements shall be true
and are based on acts or omissions which were learned or are learned by the
Company or Employee heretofore or from and after the date hereof or on acts or
omissions which occurred at any time heretofore or which occur at any time from
and after the date hereof, or otherwise.
11. Miscellaneous.
--------------
(a) Complete Agreement. There are no representations, understandings or
-------------------
agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement
other than the Agreements. The Agreements are the final, complete and
exclusive statement and expression of the agreement between the
Company and Employee. The Agreements cancel and supersede all prior
agreements with respect to the subject matter hereof, and cannot be
varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. The Agreements may not be
later modified except by a further writing signed by the Company and
Employee, and no term of the Agreements may be waived except by
writing signed by the party waiving the benefit of such terms.
(b) No Waiver. No waiver by the parties hereto of any default or breach of
---------
any term, condition or covenant of this Agreement shall be deemed to
be a waiver of any subsequent default or breach of the same or any
other term, condition or covenant contained herein.
(c) Costs. In the event that the Employee shall prevail in any legal
------
proceedings between the Company and the Employee as to the
interpretation of this Agreement, including any legal proceedings
instituted by Employee to enforce the terms of this Agreement or to
enforce any rights with respect to the Shares or the Options, and also
including the defense by Employee against legal proceedings
instituted by the Company, the Company shall reimburse Employee for
his out of pocket costs and expenses with respect thereto, including
reasonable attorney's fees and expenses. Employee shall be deemed to
have prevailed only to the extent that a final judgment of a court is
rendered in his favor
12
and such judgment has been affirmed by final appeal or the time for
appeal or further appeal has lapsed.
(d) Notice. Whenever any notice is required hereunder, it shall be given in
------
writing addressed as follows:
To the Company:
Attn: CEO
United Rentals, Inc.
Third Floor
Four Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
24th floor
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
To Employee
Xxxxxxx X. Xxxxx
Marlboro Street, #2
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Notice shall be deemed given and effective (a) five business days
after the deposit in the U.S. mail of a writing addressed as
above and sent first class mail, certified, return receipt
requested, (b) one (1) business day after delivered to a
nationally recognized air courier for next day delivery service,
or (c) upon personal delivery. Either party may change the
address for notice by notifying the other party of such change in
accordance with this paragraph.
(e) Severability; Headings. If any portion of this agreement is held
----------------------
invalid or inoperative, the other portions of this agreement shall be
deemed valid and operative, and so far as it is reasonable and
possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The paragraph headings herein are
for reference purposes only and are not intended in any way to
describe, interpret, define or limit the extent or intent of this
Agreement or any part hereof.
(f) Governing Law; Resolution of Disputes; Service of Process. This
---------------------------------------------------------
Agreement shall in all respects be construed according to the laws of
the State of Delaware. All disputes relating to the interpretation and
enforcement of the provisions of this Agreement shall be resolved and
determined exclusively by the state or federal courts sitting in
Delaware, and such courts are hereby granted exclusive jurisdiction
for such purpose. Employee waives trial by jury. Service of process
shall be effective when given in the manner provided for notices
hereunder.
(g) Mitigation. Employee shall not be obligated to seek other employment
----------
in mitigation of the amounts payable under any provision of this
Agreement. The obtaining of any such other employment shall in no
event effect any reduction of the Company's obligations to make the
payments and arrangements required to be made under this Agreement.
(h) Indemnification.
---------------
(i) The Company shall indemnify Employee to the fullest extent
permitted by Delaware law in
13
effect as of the date hereof against all costs, expenses,
liabilities and losses (including, without limitation, attorneys'
fees, judgments, fines, penalties, ERISA excise taxes, penalties
and amounts paid in settlement) reasonably incurred by Employee
in connection with a Proceeding. For the purposes of this Section
11, a "Proceeding" shall mean any action, suit or proceeding,
whether civil, criminal, administrative or investigative, in
which Employee is made, or is threatened to be made, a party to,
or a witness in, such action, suit or proceeding by reason of the
fact that he is or was an officer, director or employee of the
Company or is or was serving as an officer, director, member,
employee, trustee or agent of any other entity at the request of
the Company.
(ii) The Company shall advance to Employee all reasonable costs and
expenses incurred by him in connection with a Proceeding within
20 days after receipt by the Company of a written request for
such advance. Such request shall include an itemized list of the
costs and expenses and an undertaking by Employee to repay the
amount of such advance if it shall ultimately be determined that
he is not entitled to be indemnified against such costs and
expenses.
(iii) Employee shall not be entitled to indemnification under this
Section 11 unless he meets the standard of conduct specified in
the Delaware General Corporation Law. Notwithstanding the
foregoing, to the extent permitted by law, neither Section 145(d)
of the Delaware General Corporation Law nor any similar provision
shall apply to indemnification under this Section 11, so that if
Employee in fact meets the applicable standard of conduct, he
shall be entitled to such indemnification whether or not the
Company (whether by the board of directors, the shareholders,
independent legal counsel or other party) determines that
indemnification is proper because he has met such applicable
standard of conduct. Neither the failure of the Company to have
made such a determination prior to the commencement by Employee
of any suit or arbitration proceeding seeking indemnification,
nor a determination by the Company that he has not met such
applicable standard of conduct, shall create a presumption that
he has not met the applicable standard of conduct.
(iv) The rights to indemnification conferred under this Agreement
shall not be exclusive of any other rights to indemnification
which Employee may have by law or pursuant to the terms of any
other agreement.
(v) To the extent the Company from time to time provides such
coverage for its other executive officers, the Company agrees to
continue and maintain a directors and officers liability
insurance policy covering Employee both during his employment and
after Employee's termination of his employment with respect to
acts or omissions that occurred prior to his termination of
employment.
(i) Successors; Binding Agreement; Assignment.
-----------------------------------------
(i) The Company may assign this Agreement only to a person or entity
who or which directly or indirectly succeeds to all or any
substantial part of the Company's assets or business.
(ii) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the
Company, 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 had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement
by operation of law.
14
(iii) This Agreement and all rights of Employee hereunder shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributee, devisees and legatees. Employee may not
assign his rights or obligations hereunder.
(j) Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which constitute
one and the same instrument. This Agreement may be delivered by
telecopy of signed documents, and the parties may rely upon such
telecopy counterparts of this Agreement as though they were original.
Without altering the validity of the foregoing, the parties will
exchange executed original counterparts of the Agreement by overnight
courier or as soon thereafter as otherwise practicable.
UNITED RENTALS, INC.
BY:________________________________________
Xxxxxxx Xxxxxx, its Chief Executive Officer
EMPLOYEE:
______________________________________
Xxxxxxx X. Xxxxx
15
EXHIBIT A
----------
American Equipment
Brambles
Brentwood Associates
Caterpillar
Deere
Falconite
GE Capital
Xxxxxx Xxxxx
Xxxxx Equipment Rental Corporation
National Equipment Services
Nations Rent
Xxxx
Prime Services
Rental Service Corp.
RentX
US Rentals
any company on the "RER 100" list
Any affiliate of any of the foregoing.
16
EXHIBIT B
---------
Sale of Old Residence.
---------------------
Reimbursement of reasonable expenses connected with the sale of Boston,
Massachusetts home, including, among other things, broker's fee, real estate
transfer taxes and stamps, recording fees, and legal expenses.
Reimbursement of duplicate home ownership expenses in respect of the Boston,
Massachusetts home if unable to sell the old residence after acquiring new
residence for a period of not more than six months from the commencement of the
term of employment. This would include condominium maintenance fees, real
estate taxes, insurance and utility expenses, etc., on the Boston, Massachusetts
property.
Finding a New Residence.
-----------------------
Reimbursement of reasonable travel, meals, lodging, and related expenses
incurred by the Employee and his wife in connection with looking for housing in
Connecticut.
Reimbursement of interest costs of bridge loan incurred to purchase new
residence if old residence has not been sold before new one is purchased for a
period of up to six months.
Reimbursement for reasonable closing costs, including, among other things, title
insurance, legal fees, survey, inspections, service charges, mortgage points,
recording fees, transfer taxes and stamps.
Reimbursement of reasonable temporary living expenses, for a period of up to
three months from the commencement of the term of employment.
The Physical Move.
-----------------
Payment of reasonable cost of moving household effects from Boston,
Massachusetts home, including, among other things, packing, unpacking,
transportation, appliance disconnect and re-connect.
Reimbursement of reasonable transportation, meals, etc. for move of Employee and
wife to new residence.
18
