EXHIBIT 10.10
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") made effective as of
the 9th day of October, 1998, between Rental Service Corporation, a Delaware
corporation (the "Company" or the "Employer"), and Xxxxxx X. Xxxx, an employee
of the Company (the "Employee").
WHEREAS, the Compensation Committee of the Company's Board of
Directors (the "Committee") has determined that it would be to the advantage and
best interest of the Company and its stockholders to issue the shares of
restricted stock as provided herein to Employee in consideration of past and
future services to the Employer and other good and valuable consideration
provided for herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever the following terms are used in this Agreement they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1 - Board
-------------------
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
------------------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
-----------------------
"Committee" shall mean the Compensation Committee of the Board.
Section 1.4 - Company Subsidiary
--------------------------------
"Company Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. "Company Subsidiary" shall also
mean any partnership in which the Company and/or any Company Subsidiary owns
more than 50 percent of the capital or profits interests.
Section 1.5 - Employment Agreement
----------------------------------
"Employment Agreement" shall mean the employment agreement between
Company and Employee dated January 14, 1998, as in effect on the date of this
Agreement.
Section 1.6 - Exchange Act
--------------------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.7 - Restricted Stock
------------------------------
"Restricted Stock" shall mean Common Stock of the Company issued under
this Agreement and subject to the Restrictions imposed hereunder.
Section 1.8 - Restrictions
--------------------------
"Restrictions" shall mean the restrictions on sale or other transfer
set forth in Section 4.2 and 4.3 and the exposure to forfeiture or repurchase
set forth in Section 3.1.
Section 1.9 - Rule 16b-3
------------------------
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended from time to time.
Section 1.10 - Secretary
------------------------
"Secretary" shall mean the Secretary of the Company.
Section 1.11 - Securities Act
-----------------------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
ISSUANCE OF RESTRICTED STOCK
----------------------------
Section 2.1 - Issuance of Restricted Stock
------------------------------------------
In consideration of Employee's past services to the Company and for
his agreement to remain in the employ of at least one of such entities and for
other good and valuable consideration, on the date hereof the Company
irrevocably issues to Employee 235,000 shares of its $.01 par value Common Stock
upon the terms and conditions set forth in this Agreement.
Section 2.2 - Consideration to Company
--------------------------------------
As partial consideration for the issuance of Restricted Stock by the
Company, Employee agrees to render faithful and efficient services to the
Company pursuant to his Employment Agreement for a period of at least one (1)
year from the date this Restricted Stock is
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issued. Nothing in this Agreement shall confer upon Employee any right to
continue in the employ of the Company.
Section 2.3 - Adjustments in Restricted Stock
----------------------------------------------
In the event that the outstanding shares of the Company's Common Stock
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, the Committee, subject to the provisions of this
Agreement, shall make an appropriate and equitable adjustment in the number and
kind of shares of Restricted Stock, to the end that after such event Employee's
proportionate interest shall be maintained as before the occurrence of such
event. Any such adjustment made by the Committee shall be final and binding
upon Employee, the Company and all other interested persons.
ARTICLE III
RESTRICTIONS
------------
Section 3.1 - Repurchase of Restricted Stock
--------------------------------------------
Immediately upon the Termination For Cause (as defined in the
Employment Agreement) of Employee or Employee's resignation for other than Good
Reason (as defined in the Employment Agreement), the Company shall have the
right to repurchase from the Employee all shares of Restricted Stock then
subject to Restrictions at a cash price of $.01 per share. No such right of
repurchase shall exist (i) if Employee is Terminated Without Cause (as defined
in the Employment Agreement), (ii) upon Employee's resignation for Good Reason
(as defined in the Employment Agreement) or (iii) upon a Change in Control (as
defined in the Employment Agreement) of the Company.
Section 3.2 - Legend
--------------------
Certificates representing shares of Restricted Stock issued pursuant
to this Agreement shall, until all Restrictions lapse and new certificates are
issued pursuant to Section 3.3, bear the following legend:
"The shares represented by this certificate are subject to
reacquisition by Rental Service Corporation and such shares may not be
sold or otherwise transferred except pursuant to the provisions of the
Restricted Stock Agreement by and between Rental Service Corporation
and the registered owner of such shares."
Section 3.3 - Lapse of Restrictions
-----------------------------------
(a) Subject to Sections 3.3(b), 3.4 and 4.5, the Restrictions shall
lapse as to one-fourth of the Restricted Stock on each of the first, second,
third and fourth anniversaries of the grant of the Restricted Stock.
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(b) The Restrictions shall lapse immediately as to all of the
Restricted Stock (i) if Employee is Terminated Without Cause (as defined in the
Employment Agreement), (ii) upon Employee's resignation for Good Reason (as
defined in the Employment Agreement) or (iii) upon a Change in Control (as
defined in the Employment Agreement) of the Company.
(c) Upon the lapse of the Restrictions, the Company shall cause new
certificates to be issued with respect to such shares and delivered to Employee
or his legal representative, free from the legend provided for in Section 3.2
and any of the other Restrictions. Notwithstanding the foregoing, no such new
certificate shall be delivered to Employee or his legal representative unless
and until Employee or his legal representative shall have paid to the Company
the full amount of all federal and state withholding or other employment taxes
(but not including any interest or penalties thereon) applicable to the taxable
income of Employee resulting from the grant of Restricted Stock or the lapse of
the Restrictions. Any payments owed by Employee pursuant to the preceding
sentence may be made by drawing down on the Promissory Note of even date
herewith issued by Employee to the Company (the "Promissory Note"). The Company
agrees to pay Employee the amount of any such taxes owed by Employee after the
Early Termination Date (as defined in the Promissory Note), if such amount was
not previously borrowed under the Promissory Note.
Section 3.4 - Merger, Consolidation, Exchange, Acquisition,
-----------------------------------------------------------
Liquidation or Dissolution
--------------------------
In the event of the merger or consolidation of the Company into
another corporation, or the exchange of all or substantially all of the assets
of the Company for the securities of another corporation, or the acquisition by
another corporation or person of all or substantially all of the Company's
assets or 80% or more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company (any such event being an
"Acquisition"), the Committee may, in its absolute discretion and on such terms
and conditions as it deems appropriate, provide by resolution adopted prior to
such event that at some time prior to the effective date of such event, the
Restrictions upon some or all shares of Restricted Stock shall immediately lapse
and/or that some or all of such shares shall cease to be subject to repurchase
or forfeiture under Section 3.1 after such event.
The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with such acceleration of the lapse of the Restrictions, including, but not by
way of limitation, provisions to ensure that any such acceleration shall be
conditioned upon the consummation of the contemplated corporate transaction.
Notwithstanding the foregoing, the provisions of the Employment
Agreement dealing with lapse of Restrictions on a Change of Control (as defined
therein) shall govern with respect to an Acquisition that is also a Change of
Control.
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Section 3.5 - Restrictions On New Shares
----------------------------------------
In the event that the outstanding shares of the Company's Common Stock
are changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation pursuant to a merger of the
Company into another corporation, or the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, or the
acquisition by another corporation of 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company, or a
stock split-up or stock dividend, such new or additional or different shares or
securities which are attributable to Employee in his capacity as the owner of
the Restricted Stock then subject to Restrictions, shall be considered to be
Restricted Stock and shall be subject to all of the Restrictions, unless the
Committee provides, pursuant to Section 3.4, for the expiration of the
Restrictions on the shares of Restricted Stock underlying the distribution of
the new or additional shares or securities.
ARTICLE IV
MISCELLANEOUS
-------------
Section 4.1 - Administration
----------------------------
The Committee shall have the power to interpret this Agreement. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon Employee, the Company and all
other interested persons. No member of the Committee shall be personally liable
for any action, determination, or interpretation made in good faith with respect
to the Restricted Stock. In its absolute discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the Committee
under this Agreement except with respect to matters, if any, which under Rule
16b-3 are required to be determined in the sole discretion of the Committee.
Section 4.2 - Restricted Stock Not Transferable
-----------------------------------------------
Restricted Stock (including any shares received by holders thereof
with respect to shares of Restricted Stock as a result of stock dividends, stock
splits or any other form of recapitalization) shall be subject to the following
Restrictions until such Restrictions lapse or expire pursuant to this Agreement:
Neither the Restricted Stock nor any interest or right therein or part
thereof shall be liable for the debts, contracts, or engagements of
Employee or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy) and any attempted disposition thereof shall be
null and void and of no effect; provided, however, that this Section
4.2 shall not prevent transfers by will or by the applicable laws of
descent and distribution.
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Section 4.3 - Conditions to Issuance of Stock Certificates
----------------------------------------------------------
Shares of Restricted Stock may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the Company.
Such shares shall be fully paid and nonassessable. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
pursuant to this Agreement prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations
of the Securities and Exchange Commission or of any other governmental
regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time as the Committee may
from time to time establish for reasons of administrative convenience;
and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
Section 4.4 - Escrow
--------------------
The Secretary or such other escrow holder as the Committee may appoint
shall retain physical custody of the certificates representing the Restricted
Stock, including shares of Restricted Stock issued pursuant to Section 3.5,
until all of the Restrictions expire or shall have been removed; provided,
however, that in no event shall Employee retain physical custody of any
certificates representing Restricted Stock issued to him.
Section 4.5 - Notices
---------------------
Any notice to be given by the Employee under the terms of this
Agreement shall be addressed to the Secretary of the Company or his office. Any
notice to be given to the Employee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section,
either party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to Employee shall, if Employee
is then deceased, be given to Employee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section. Any notice be deemed duly given when
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
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Section 4.6 - Rights as Stockholder
-----------------------------------
Except as otherwise provided herein, upon the delivery of Restricted
Stock to the escrow holder pursuant to Section 4.4, the holder of the Restricted
Stock shall have all the rights of a stockholder with respect to the Restricted
Stock, including the right to vote the Restricted Stock and the right to receive
all dividends or other distributions paid or made with respect to the Restricted
Stock; provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock that is subject to
the Restrictions may also be subject to the Restrictions.
Section 4.7 - Titles
--------------------
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
Section 4.8 - Construction
--------------------------
This Agreement shall be administered, interpreted and enforced under
the internal laws of the State of Delaware.
Section 4.9 - Conformity to Securities Laws
-------------------------------------------
The Employee acknowledges that this Agreement is intended to conform
to the extent necessary with all provisions of all applicable federal and state
laws, rules and regulations (including, but not limited to the Securities Act
and the Exchange Act and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, including without limitation the
applicable exemptive conditions of Rule 16b-3) and to such approvals by any
listing, regulatory or other governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith.
Notwithstanding anything herein to the contrary, the Restricted Stock is
granted, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, this Agreement and the
Restricted Stock shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
Section 4.10 - Amendments
-------------------------
This Agreement may be amended without the consent of the Employee
provided that such amendment would not impair any rights of the Employee under
this Agreement. No amendment of this Agreement shall, without the consent of
the Employee, impair any rights of the Employee under this Agreement.
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IN WITNESS WHEREOF, this Restricted Stock Agreement has been executed
and delivered by the parties hereto.
RENTAL SERVICE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
EMPLOYEE
/s/ Xxxxxx X. Xxxx
-------------------
Xxxxxx X. Xxxx
00000 X. Xxxxx Xxxxxx Xxxx, #00
Xxxxxxxxxx, XX 00000
8
PROMISSORY NOTE
$1,400,000.00 Scottsdale, Arizona
October 9, 1998
FOR VALUE RECEIVED, the undersigned, Xxxxxx X. Xxxx (the "Borrower")
promises to pay to Rental Service Corporation, a Delaware corporation (the
"Company"), or its order, the principal sum of the lesser of (i) one million
four hundred thousand dollars ($1,400,000) or (ii) the aggregate unpaid
principal amount of all advances made by the Company to the Borrower pursuant to
this Note (which aggregate unpaid principal amount shall be equal to the amount
set forth opposite the date last appearing on the Advances and Payments of
Principal Schedule attached to this Note), with interest on the unpaid principal
balance from time to time outstanding, at the rate set forth below. Advances
may be made to Employee under this Note until the earlier of (i) April 15, 1999
or (ii) the Early Termination Date (as defined below). The principal amount of
this Note and any accrued and unpaid interest under this Note, shall be due and
payable on or before the earlier of October 9, 2002, or the date on which the
indebtedness under this Note is accelerated as provided for under this Note.
This Note is given in connection with that certain Restricted Stock Agreement of
even date herewith by and between the Company and Borrower (the "Restricted
Stock Agreement").
Each advance hereunder shall bear interest at a floating rate per
annum (the "Credit Agreement Rate") equal to the lowest interest rate available
from time to time to the Company on revolving loans under that certain Second
Amended and Restated Credit Agreement dated as of December 2, 1997 (as amended
from time to time pursuant to its terms) among the Company and certain of its
subsidiaries, the financial institutions listed on the signature page thereto,
as Lenders, Bankers Trust Company, as Issuing Bank and BT Commercial
Corporation, as Agent (the "Credit Agreement").
Prior to each advance hereunder, Borrower shall deliver to the Company
a certificate stating that the amount to be advanced will be used by Borrower
within ten days to pay income taxes and related amounts (but not including any
interest or penalties thereon) due as a result of the grant of the restricted
stock granted under the Restricted Stock Agreement.
All payments under this Note shall be made to the Company or its
order, in lawful money of the United States of America at the offices of the
Company at its then principal place of business or at such other place as the
Company or any holder hereof shall designate for such purpose from time to time.
This Note is secured pursuant to that certain Pledge Agreement of even date
herewith between Company and Borrower (the "Pledge Agreement"). This Note
requires mandatory prepayments at the times set forth in the Pledge Agreement.
Each payment under this Note shall be applied in the following order:
(i) to the payment of costs and expenses provided for under this Note; (ii) to
the payment of accrued and unpaid interest; and (iii) to the payment of
outstanding principal. The Company and each holder
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hereof shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments under this Note.
This Note may be prepaid in whole or in part at any time, after five
days' written notice of Borrower's intention to make any such prepayment, which
notice shall specify the date and amount of such prepayment. Any prepayment
shall be without penalty except that interest shall be paid to the date of
payment on the principal amount prepaid. After any partial prepayment
hereunder, interest shall be computed on the principal balance due after
deducting the principal portion of such prepayment. Any such partial prepayment
shall be applied against the principal due at maturity and not against any
amount forgiven pursuant to the next paragraph. The aggregate principal amount
of all advances under this Note shall not exceed $1,400,000, regardless of any
prepayments pursuant to this paragraph.
Provided that Borrower has not been Terminated For Cause (as defined
in that certain Employment Agreement dated as of January 14, 1998 by and between
Borrower and the Company (the "Employment Agreement")) and Borrower has not
resigned from the Company for other than Good Reason (as defined in the
Employment Agreement), in the event that: (i) the closing price of the common
stock, par value $.01 per share, of the Company (the "Common Stock") is at or
above $30 per share (as adjusted to reflect any dividends, stock splits or other
subdivision or combination of Common Stock) for a period of 10 consecutive
trading days, then 50% of the then outstanding principal amount under this Note
shall be forgiven and (ii) the closing price of the Common Stock is at or above
$45 per share (as adjusted to reflect any dividends, stock splits or other
subdivision or combination of Common Stock) for a period of 10 consecutive
trading days, then the entire outstanding principal amount, together with all
interest accrued on such principal amount, under this Note shall be forgiven.
The outstanding principal amount of this Note, together with all interest
accrued on such principal amount, shall be forgiven, and Borrower shall have no
further obligations under this Note (i) if Employee is Terminated Without Cause
(as defined in the Employment Agreement), (ii) upon Employee's resignation for
Good Reason (as defined in the Employment Agreement), (iii) upon Employee's
Demise (as defined in the Employment Agreement) prior to October 9, 1999 or (iv)
upon a Change in Control (as defined in the Employment Agreement) of the
Company. The date on which all outstanding amounts under this Note are forgiven
pursuant to this paragraph is the "Early Termination Date."
The occurrence of any of the following events shall constitute an
"Event of Default" hereunder: (a) failure of Borrower to pay when due, whether
at its stated maturity, by declaration, acceleration, demand or otherwise, any
principal or interest due under this Note or under any other note, loan
agreement or obligation for borrowed money or for the unpaid purchase price for
goods or services; (b) (i) a court having jurisdiction in the premises shall
enter a decree or order of relief in respect of Borrower in an involuntary case
under Title 11 of the United State Code entitled "Bankruptcy" (as now or
hereinafter in effect or any successor thereto, the "Bankruptcy Code") or any
applicable bankruptcy, insolvency or similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Borrower under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or the entry of a decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver, interim receiver, liquidator, sequestrator, trustee, custodian or
other
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officer having similar powers over Borrower or over all or a substantial
part of his property shall have been entered; or a warrant of attachment,
execution or similar process shall have been issued against any substantial part
of the property of Borrower and, in the case of any event described in this
clause (ii), such an event shall have continued for thirty (30) days
undismissed, bonded or discharged; or (c) Borrower shall commence a voluntary
case under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or Borrower shall make an assignment for
the benefit of creditors; or Borrower shall be unable or fail, or shall admit in
writing his inability to pay his debts as such debts become due.
Upon the occurrence of an Event of Default under this Note, including,
without limitation, failure to make any principal or interest payment by the
stated maturity (whether by acceleration, notice of prepayment or otherwise) for
such payment, interest shall thereafter accrue on the entire unpaid principal
balance under this Note, including without limitation any delinquent interest
which has been added to the principal amount due under this Note pursuant to the
terms hereof, at the rate set forth herein plus two percent (2%) per annum (on
the basis of a 365-day year and the actual number of days elapsed). In
addition, upon the occurrence of an Event of Default under this Note the holder
of this Note may, at its option, without notice to or demand upon Borrower or
any other party, declare immediately due and payable the entire principal
balance hereof together with all accrued and unpaid interest thereon, plus any
other amounts then owing pursuant to this Note, whereupon the same shall be
immediately due and payable. On each anniversary of the date of any Event of
Default under this Note and while such Event of Default is continuing, all
interest which has become payable and is then delinquent shall, without curing
the default under this Note by reason of such delinquency, be added to the
principal amount due under this Note, and shall thereafter bear interest at the
same rate as is applicable to principal, with interest on overdue interest to
bear interest, in each case to the fullest extent permitted by applicable law,
both before and after default, maturity, foreclosure, judgment and the filing of
any petition in a bankruptcy proceeding. Notwithstanding anything in this Note
to the contrary, in no event shall interest be charged under this Note which
would violate any applicable law, and if the interest set forth in this Note
would violate any law it shall be reduced to an amount which would not violate
any law.
No waiver or modification of any of the terms of this Note shall be
valid or binding unless set forth in a writing specifically referring to this
Note and signed by a duly authorized officer of the Company or any holder of
this Note, and then only to the extent specifically set forth therein.
If any Event of Default occurs under this Note, Borrower and all
guarantors and endorsers hereof, and their successors and assigns, promise to
pay and expenses, including attorneys' fees, incurred by each holder hereof in
collecting or attempting to collect the indebtedness under this Note, whether or
not any action or proceeding is commenced. None of the provisions hereof and
none of the holder's rights or remedies under this Note on account of any past
or future defaults shall be deemed to have been waived by the holder's
acceptance of any past due payments or by any indulgence granted by the holder
to Borrower.
Borrower and all guarantors and endorsers hereof, and their successors
and assigns, hereby waive presentment, demand, diligence, protest and notice of
every kind, and
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agree that they shall remain liable for all amounts due under this Note
notwithstanding any extension of time or change in the terms of payment of this
Note granted by any holder hereof, any change, alteration or release of any
property now or hereafter securing the payment hereof or any delay or failure by
the holder hereof to exercise any rights under this Note. Borrower and all
guarantors and endorsers hereof, and their successors and assigns, hereby waive
the right to plead any and all statutes of limitation as a defense to a demand
under this Note to the full extent permitted by law.
This Note shall inure to the benefit of the Company, its successors
and assigns and shall bind the heirs, executors, administrators, successors and
assigns of Borrower. Each reference herein to powers or rights of the Company
shall also be deemed a reference to the same power or right of such assignees,
to the extent of the interest assigned to them.
In the event that any one or more provisions of this Note shall be
held to be illegal, invalid or otherwise unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.
This Note shall be governed by and construed in accordance with the
laws of the State of Arizona, without giving effect to the principles thereof
relating to conflicts of law.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
as of the day and year first written above.
/s/ Xxxxxx X. Xxxx
------------------
XXXXXX X. XXXX
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ADVANCES AND PAYMENTS OF PRINCIPAL SCHEDULE
PROMISSORY NOTE--XXXXXX X. XXXX
Date of Advance Amount of Advance Interest Rate Aggregate Principal
--------------- ----------------- ------------- -------------------
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PLEDGE AGREEMENT
This Pledge Agreement is made and entered into as of October 9, 1998,
between Xxxxxx X. Xxxx ("Borrower"), and Rental Service Corporation, a Delaware
corporation (the "Company").
RECITALS
--------
A. The Company and the Borrower have entered into a Restricted Stock
Agreement (the "Restricted Stock Agreement") dated as of October 9, 1998,
pursuant to which, the Company has granted Borrower 235,000 shares of common
stock of the Company, par value $.01 per share (the "Pledged Shares"), subject
to certain restrictions contained therein.
B. The Company has agreed to loan to Borrower up to $1,400,000 for
the payment of income taxes in connection with the Pledged Shares, as evidenced
by a promissory note dated October 9, 1998 (the "Note").
C. Borrower desires to grant a security interest in the Pledged
Shares to the Company to secure payment of the Note.
AGREEMENT
---------
Now, therefore, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. Creation of Security Interest. Borrower hereby grants to the
-----------------------------
Company a security interest in all of Borrower's right, title and interest in
and to the collateral described in Section 2 (the "Collateral") in order to
secure the payment and performance of the obligations described in Section 3.
2. Collateral. The Collateral under this Pledge Agreement is:
----------
(a) The Pledged Shares;
(b) All securities, certificates and instruments representing or
evidencing ownership of the Collateral hereunder, and all proceeds and
products of any Collateral hereunder, including without limitation, stock,
cash, property or other dividends, securities, rights and other property
now or hereafter at any time or from time to time received, receivable or
otherwise distributed or distributable in respect of or in exchange for any
or all of such Collateral; and
(c) Any substituted or additional Collateral required to be
supplied under the terms of this Pledge Agreement.
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3. Secured Obligations of Borrower. The Collateral secures and shall
-------------------------------
hereafter secure the payment to the Company of all indebtedness now or hereafter
owed to the Company by Borrower pursuant to the Note, this Agreement and any
extensions, modifications and renewals thereof.
4. Borrower's Representations and Warranties. Borrower represents
-----------------------------------------
and warrants:
(a) Borrower is (or to the extent that this Pledge Agreement
states that the Collateral is to be acquired after the date hereof, will
be) the sole owner of the Collateral; that the security interest hereunder
in the Collateral is a first, prior and perfected security interest; that
there are no security interests, liens or encumbrances upon, or adverse
claims of title to, or any other interest whatsoever in, the Collateral or
any portion thereof except that created by this Pledge Agreement; and that
no financing statement covering the Collateral or any portion thereof
exists or is on file in any public office; and
(b) Borrower has full right, power and authority to enter into
this Pledge Agreement and no consent of, or registration or filing with,
any person or entity, including the Arizona Corporations Commissioner or
any other governmental officer or entity, is required.
5. Covenants of Borrower. Borrower covenants that:
---------------------
(a) Borrower will deliver to the Company each item of Collateral
hereunder immediately upon Borrower's acquisition thereof, and will defend
the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein; and
(b) If, while this Pledge Agreement is in effect, any stock
dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation or other change in the capital structure is declared
or made, or proposed to be declared or made, by the Company or any issuer
of the Collateral, all substituted and additional securities issued with
respect to the Collateral shall be endorsed in blank by Borrower promptly
upon receipt thereof or otherwise appropriately transferred to the Company
in negotiable form, and all certificates or instruments evidencing such
securities shall be delivered to the Company to be held under the terms of
this Pledge Agreement in the same manner as and as part of the Collateral.
Borrower shall have the right to exercise any subscription or other rights
with respect to any Collateral, with the prior written approval of such
exercise by the Company; provided, however, that any securities which may
be issued upon exercise of any such rights shall be delivered to the
Company, with any necessary stock power, endorsed in blank and with
signatures guaranteed, to be included in the Collateral.
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6. Defaults and Remedies.
---------------------
(a) The occurrence of any one or more of the following events or
conditions affecting Borrower shall constitute a default under this Pledge
Agreement:
(i) any Event of Default (as defined in the Note) occurs;
or
(ii) Borrower fails to perform any obligation under this
Agreement.
(b) Upon the occurrence of a default hereunder, the Company may,
at its option, without notice to or demand upon Borrower, do any one or
more of the following:
(i) Exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code, specifically
including, without limitation, the right to recover the attorneys'
fees incurred by the Company in the enforcement of this Pledge
Agreement or in connection with Borrower's redemption of the
Collateral;
(ii) Sell the Collateral, or any portion thereof, at any
public or private sale or on any securities exchange or other
recognized market, for cash, upon credit or for future delivery, as
the Company shall deem appropriate;
(iii) Enforce one or more remedies hereunder, successively
or concurrently, and such action shall not operate to estop or prevent
the Company from pursuing any other or further remedy it may have, and
any repossession or retaking or sale of the Collateral pursuant to the
terms hereof shall not operate to release Borrower until full payment
of any deficiency has been made in cash. Borrower shall reimburse the
Company upon demand for, or the Company may apply any proceeds of
Collateral to, the costs and expenses (including attorneys' fees,
transfer taxes and other charges) incurred by the Company in
connection with any sale, disposition or retention of any Collateral
hereunder.
7. Miscellaneous Provisions.
------------------------
(a) Notices. Notices, requests and other communications
-------
hereunder shall be in writing and may be delivered personally or sent by
telegram, telex or first class mail to the parties addressed as follows:
To Borrower: Xxxxxx X. Xxxx
00000 X. Xxxxx Xxxxxx Xxxx, #00
Xxxxxxxxxx, XX 00000
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To the Company: c/o Rental Service Corporation
0000 X. Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Such notices, requests and other communications sent as provided
hereinabove shall be effective when received by the addressee thereof, but
if sent by registered or certified mail, postage prepaid, shall be
effective exactly three business days after being deposited in the United
States mail. The parties hereto may change their addresses by giving
notice thereof to the other parties hereto in conformity with this section.
(b) Headings. The various headings in this Pledge Agreement are
--------
inserted for convenience only and shall not affect the meaning or
interpretation of this Pledge Agreement or any provision hereof.
(c) Choice of Law. This Pledge Agreement shall be construed in
-------------
accordance with and all disputes hereunder shall be governed by the laws of
the State of Delaware, without giving effect to the conflicts of law
principals thereof.
(d) Amendments. This Pledge Agreement or any provision hereof
----------
may be changed, waived, or terminated only by a statement in writing signed
by the party against which such change, waiver or termination is sought to
be enforced.
(e) No Waiver. No delay in enforcing or failure to enforce any
---------
right under this Pledge Agreement by the Company shall constitute a waiver
by the Company of such right. No waiver by the Company of any default
hereunder shall be effective unless in writing, nor shall any waiver
operate as a waiver of any other default or of the same default on a future
occasion.
(f) Time of the Essence. Time is of the essence of each
-------------------
provision of this Pledge Agreement of which time is an element.
(g) Binding Agreement. All rights of the Company hereunder
-----------------
shall inure to the benefit of its successors and assigns. Borrower shall
not assign any of its interest under this Pledge Agreement without the
prior written consent of the Company. Any purported assignment
inconsistent with this provision shall, at the option of the Company, be
null and void.
(h) Definitions. All terms not defined herein shall have the
-----------
meaning set forth in the applicable Uniform Commercial Code, except where
the context otherwise requires.
(i) Entire Agreement. This Pledge Agreement, together with any
----------------
other agreement executed in connection herewith, is intended by the parties
as a final
17
expression of their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or
acquiescence in a course of performance rendered under this Pledge
Agreement shall not be relevant to determine the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of
the nature of the performance and opportunity for objection.
(j) Attorneys' Fees. If any legal action, arbitration or other
---------------
proceeding, is brought for the enforcement of this Pledge Agreement, or
because of an alleged dispute, breach or default in connection with any of
the provisions of this Pledge Agreement, each of the parties hereto shall
be responsible for payment of any attorneys' fees and other costs incurred
by them in that action or proceeding, without regard to whomever is the
prevailing party in such action or proceeding.
(k) Severability. If any provision of this Pledge Agreement
------------
should be found to be invalid or unenforceable, all of the other provisions
shall nonetheless remain in full force and effect to the maximum extent
permitted by law.
(l) Power of Attorney. Borrower hereby appoints and constitutes
-----------------
the Company as Borrower's attorney-in-fact for purposes of (i) collecting
any Collateral, and (ii) conveying any item of Collateral to any purchaser
thereof. This power of attorney is coupled with an interest and is
irrevocable by Borrower. Notwithstanding the foregoing, the Company agrees
that it shall not exercise its power of attorney granted under this Section
7(l) unless and until there is a default under this Pledge Agreement.
(m) Counterparts. This Pledge Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed an original but all of
which shall together constitute one and the same agreement.
(n) Termination of Pledge. This Pledge Agreement and the
---------------------
security interest and pledge hereunder shall not terminate until the full
and final payment and performance of all indebtedness and obligations
secured hereunder. At such time, the Company shall reassign and deliver to
Borrower all of the Collateral hereunder which has not been sold, disposed
of, retained or applied by the Company in accordance with the terms hereof.
Such reassignment and redelivery shall be without warranty by or recourse
to the Company, and shall be at the expense of Borrower. Without limiting
the generality of the foregoing, the security interest and pledge hereunder
shall not be terminated by the transfer of any of the Collateral hereunder
from the Company to Borrower, or any person designated by Borrower, for the
purpose of ultimate sale, exchange, presentation, collection, renewal or
registration of transfer or for any other purpose.
(o) Release of Collateral. Borrower shall be permitted to sell
---------------------
any of the Collateral and the Company shall release such Collateral from
Borrower's pledge hereunder only if and to the extent that such Collateral
has vested pursuant to the terms of the Restricted Stock Agreement. The
net (after-tax) proceeds from any such sale of Collateral shall be used to
prepay the Note.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed the day and year first above written.
RENTAL SERVICE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
BORROWER
/s/ Xxxxxx X. Xxxx
------------------
Xxxxxx X. Xxxx
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