INDEMNIFICATION AGREEMENT
TABLE OF CONTENTS
Page
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1. Definitions............................................................. 1
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2. Indemnification......................................................... 2
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2.1 Indemnification in Third Party Actions............................ 2
2.2 Indemnification in Proceedings By or In the Name of the Company... 2
2.3 Partial Indemnification........................................... 2
2.4 Indemnification Hereunder Not Exclusive........................... 3
2.5 Indemnification of Indemnified Costs of Successful Party.......... 3
2.6 Indemnified Costs Advanced........................................ 3
2.7 Limitations on Indemnification.................................... 3
3. Presumptions............................................................ 4
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3.1 Presumption Regarding Standard of Conduct......................... 4
3.2 Determination of Right to Indemnification......................... 4
3.2.1 Burden.................................................... 4
3.2.2 Standard.................................................. 4
4. Other Agreements........................................................ 4
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4.1 Change in Control................................................. 4
4.2 Maintenance of Liability Insurance................................ 5
4.2.1 Affirmative Covenant of the Company....................... 5
4.2.2 Indemnitee Named as Insured............................... 5
4.3 Agreement to Serve................................................ 5
4.4 Effect of this Agreement on Employment Agreement.................. 5
4.5 Nature of Rights; Separability.................................... 6
4.6 Savings Clause.................................................... 6
4.7 Repayment of Indemnified Costs.................................... 6
4.8 Repayment......................................................... 6
5. Indemnification Procedure............................................... 6
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5.1 Notice............................................................ 6
5.2 Company Participation............................................. 6
5.3 Settlement........................................................ 7
5.4 Subrogation....................................................... 7
6. Miscellaneous Provisions................................................ 7
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6.1 Amendments; Waivers............................................... 7
6.2 Integration....................................................... 7
6.3 Interpretation; Governing Law..................................... 7
6.4 Headings.......................................................... 8
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6.5 Counterparts.................................................... 8
6.6 Successors and Assigns.......................................... 8
6.7 Expenses; Legal Fees............................................ 8
6.8 Representation by Counsel; Interpretation....................... 8
6.9 Specific Performance............................................ 8
6.10 Time is of the Essence.......................................... 8
6.11 Notices......................................................... 8
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U.S. RENTALS, INC.
INDEMNIFICATION AGREEMENT
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This Indemnification Agreement (this "AGREEMENT") is made as of __________,
1997, by and between U.S. Rentals, Inc., a Delaware corporation (the "COMPANY"),
and the individual whose name appears below the word "Indemnitee" on the
signature page (the "INDEMNITEE"). In consideration of the services of the
Indemnitee, and to induce the Indemnitee to continue to serve as a director
and/or officer, the Company and the Indemnitee agree as follows:
R E C I T A L S
A. The Indemnitee has agreed to serve as a director and/or officer of the
Company and in such capacity will render valuable services to the
Company.
B. The Company has concluded that insurance and statutory indemnity
provisions may provide inadequate protection to individuals requested
to serve as its directors and officers.
C. To induce and encourage the Indemnitee to serve as a director and/or
officer of the Company, the Company's Board of Directors has decided
that this Agreement is not only reasonable and prudent, but necessary,
to promote and ensure the best interests of the Company and its
stockholders.
1. DEFINITIONS
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As used in this Agreement:
"AGENT" means a director, officer, employee or agent of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan, or
other enterprise that the Indemnitee served in any of such capacities at the
request of the Company.
"CHANGE IN CONTROL" has the meaning set forth in the Company's 1997 Performance
Award Plan.
"EXPENSES" includes, but is not limited to, attorneys' fees, disbursements and
retainers, accounting and witness fees, travel and deposition costs, expenses of
investigations and amounts paid in settlement by or on behalf of the Indemnitee,
and any expenses of establishing a right to indemnification pursuant to this
Agreement, to the extent actually and reasonably incurred by the Indemnitee in
connection with any Proceeding. "EXPENSES" does not include the amount of
judgments, fines, penalties or ERISA excise taxes actually levied against the
Indemnitee.
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"INDEMNIFIED COSTS" means all Expenses, judgments, fines, penalties and ERISA
excise taxes actually and reasonably incurred by the Indemnitee in connection
with the investigation, defense, appeal, or settlement of any Proceeding.
A "POTENTIAL CHANGE IN CONTROL" will be deemed to have occurred if:
(a) the Company enters into an agreement or arrangement that would
constitute a Change in Control if consummated;
(b) any person (including the Company) publicly announces an intention to
take or to consider taking actions that would constitute a Change in
Control if consummated; or
(c) the Board of Directors adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
"PROCEEDING" means any threatened, pending or completed action, suit or
proceeding (including appeals thereof), whether brought by or in the name of the
Company or otherwise and whether of a civil, criminal or administrative or
investigative nature, in which the Indemnitee is or will be a party at the time
because the Indemnitee is or was an Agent, whether or not the Indemnitee is
serving in such capacity at the time any liability or Expense is incurred for
which indemnification or reimbursement is to be provided under this Agreement.
2. INDEMNIFICATION
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2.1 INDEMNIFICATION IN THIRD PARTY ACTIONS. The Company will indemnify the
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Indemnitee if the Indemnitee becomes a party to, is threatened to be made a
party to, is a witness or other participant in, or is otherwise involved in
any Proceeding (other than a Proceeding by or in the name of the Company to
procure a judgment in its favor), because the Indemnitee is or was an
Agent, against all Indemnified Costs, to the fullest extent permitted by
applicable law. Any settlement must be approved in writing by the Company.
2.2 INDEMNIFICATION IN PROCEEDINGS BY OR IN THE NAME OF THE COMPANY. The
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Company will indemnify the Indemnitee if the Indemnitee is a party to, is
threatened to be made a party to, is a witness or other participant in, or
is otherwise involved in any Proceeding by or in the name of the Company to
procure a judgment in its favor because the Indemnitee was or is an Agent
of the Company against all Expenses in connection with the defense or
settlement of the Proceeding, to the fullest extent permitted by applicable
law.
2.3 PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any provision
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of this Agreement to indemnification by the Company for some or a portion
of, but not the total
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amount of, the Indemnified Costs, the Company will nevertheless indemnify
the Indemnitee for the portion of the Indemnified Costs to which the
Indemnitee is entitled.
2.4 INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification provided by
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this Agreement is not exclusive of any other rights to which the Indemnitee
may be entitled under the Certificate of Incorporation, the Bylaws, any
agreement, any vote of stockholders or disinterested directors, applicable
law, or otherwise, both as to action in the Indemnitee's official capacity
and as to action in another capacity on behalf of the Company.
2.5 INDEMNIFICATION OF INDEMNIFIED COSTS OF SUCCESSFUL PARTY. Notwithstanding
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any other provisions of this Agreement, to the extent that the Indemnitee
has been successful in defense of any Proceeding or in defense of any
claim, issue or matter in the Proceeding, on the merits or otherwise,
including, but not limited to, the dismissal of a Proceeding without
prejudice, the Indemnitee will be indemnified against all Indemnified Costs
incurred in connection therewith to the fullest extent permitted by
applicable law.
2.6 INDEMNIFIED COSTS ADVANCED. The Indemnified Costs incurred by the
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Indemnitee in any Proceeding will be paid promptly by the Company in
advance of the final disposition of the Proceeding at the written request
of the Indemnitee to the fullest extent permitted by applicable law. The
advances to be made will be paid by the Company to the Indemnitee within
(30) days following delivery of the written request by Indemnitee to the
Company, accompanied by substantiated documentation.
2.7 LIMITATIONS ON INDEMNIFICATION. The Company is not required to make
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payments to:
(a) indemnify or advance Indemnified Costs with respect to Proceedings
initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to Proceedings brought to establish or
enforce a right to indemnification under this Agreement or any other
statute or law or otherwise as required under applicable law;
(b) indemnify the Indemnitee for any Indemnified Costs for which payment
is actually made to the Indemnitee under an insurance policy, except
for any excess beyond the amount of payment under the policy;
(c) indemnify the Indemnitee for any Indemnified Costs sustained in any
Proceeding for an accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company pursuant to Section
16(b) of the Securities Exchange Act of 1934, as amended, the rules
and regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state or local law;
(d) indemnify the Indemnitee for any Indemnified Costs resulting from
Indemnitee's conduct that is finally adjudged by a court of competent
jurisdiction to have been willful misconduct, knowingly fraudulent or
deliberately dishonest; or
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(e) indemnify the Indemnitee if a court of competent jurisdiction finally
determines that such payment is unlawful.
3. PRESUMPTIONS
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3.1 PRESUMPTION REGARDING STANDARD OF CONDUCT. The Indemnitee will be
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conclusively presumed to have met the relevant standards of conduct as
defined by applicable law for indemnification pursuant to this Agreement
unless a determination that the Indemnitee has not met the relevant
standards is made by (a) the Board of Directors of the Company by a
majority vote of a quorum consisting of directors who are not parties to
the Proceeding, (b) the stockholders of the Company by majority vote, or
(c) in a written opinion by independent legal counsel, selection of whom
has been made by the Company's Board of Directors and approved by the
Indemnitee.
3.2 DETERMINATION OF RIGHT TO INDEMNIFICATION.
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3.2.1 BURDEN. If a claim under this Agreement is not paid by the Company
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within 30 days of receipt of written notice, the right to
indemnification as provided by this Agreement will be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of
proving by clear and convincing evidence that indemnification or
advances are not appropriate will be on the Company. Neither the
failure of the directors, stockholders, or independent legal counsel
to have made a determination prior to the commencement of the action
that indemnification or advances are proper in the circumstances
because the Indemnitee has met the applicable standard of conduct,
nor an actual determination by the directors, stockholders or
independent legal counsel that the Indemnitee has not met the
applicable standard of conduct, will be a defense to the action or
create a presumption that the Indemnitee has not met the applicable
standard of conduct.
3.2.2 STANDARD. The Indemnitee's Expenses incurred in connection with any
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Proceeding concerning the Indemnitee's right to indemnification or
advances in whole or in part pursuant to this Agreement will also be
indemnified by the Company regardless of the outcome of the
Proceeding, unless a court of competent jurisdiction determines that
each of the material assertions made by the Indemnitee in the
Proceeding was not made in good faith or was frivolous.
4. OTHER AGREEMENTS
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4.1 CHANGE IN CONTROL. If there is a Change in Control or a Potential Change
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in Control of the Company (other than a Change in Control or Potential
Change in Control that has been approved by a majority of the Company's
Board of Directors who were directors immediately prior to the Change in
Control or Potential Change in Control), then with
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respect to all matters thereafter arising concerning the rights of the
Indemnitee to be indemnified for Indemnified Costs, the Company will seek
legal advice only from independent counsel selected by the Indemnitee, and
reasonably satisfactory to the Company, and who has not otherwise performed
other services for the Company or the Indemnitee within the last three
years ("SPECIAL INDEPENDENT COUNSEL"). The Special Independent Counsel,
among other things, will render its written opinion to the Company and the
Indemnitee as to whether and to what extent the Indemnitee would be
permitted to be indemnified under applicable law. The Company will pay the
reasonable fees and expenses of the Special Independent Counsel.
4.2 MAINTENANCE OF LIABILITY INSURANCE.
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4.2.1 AFFIRMATIVE COVENANT OF THE COMPANY. While the Indemnitee continues
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to serve as a director or officer of the Company, and thereafter
while the Indemnitee is subject to any possible Proceeding, the
Company will promptly obtain and maintain in full force and effect
directors' and officers' liability insurance ("D&O INSURANCE") in
reasonable amounts from reputable insurers. The Company has no
obligation, however, to obtain or maintain D&O Insurance if it
determines in good faith that insurance is not reasonably available,
the premium costs for insurance are disproportionate to the amount
of coverage provided, the coverage provided by insurance is so
limited by exclusions that it provides an insufficient benefit, or
the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company. If at the time it receives a notice a
Proceeding has commenced the Company has D&O Insurance, the Company
will give prompt notice of such commencement to the insurers as
required by the respective policies. The Company will thereafter
take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.
4.2.2 INDEMNITEE NAMED AS INSURED. In all D&O Insurance policies, the
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Indemnitee will be named as an insured in a manner that provides the
Indemnitee the same rights and benefits accorded to the most
favorably insured of the Company's directors and officers.
4.3 AGREEMENT TO SERVE. Indemnitee will serve or continue to serve as an Agent
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of the Company for so long as the Indemnitee is duly elected or appointed
or until the Indemnitee voluntarily resigns. Indemnitee will give notice
to the Company at least thirty (30) days prior to voluntarily resigning.
4.4 EFFECT OF THIS AGREEMENT ON EMPLOYMENT AGREEMENT. Any present or future
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employment agreement between the Indemnitee and the Company is not modified
by this Agreement. Nothing contained in this Agreement creates in the
Indemnitee any right of continued employment.
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4.5 NATURE OF RIGHTS; SEPARABILITY. The rights afforded to the Indemnitee by
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this Agreement are contract rights and may not be diminished, eliminated or
otherwise affected by amendments to the Company's Certificate of
Incorporation, Bylaws or agreements, including D&O Insurance policies.
Each provision of this Agreement is a separate and distinct agreement and
independent of the others, so that if any provision of this Agreement is
held to be invalid or unenforceable for any reason, the invalidity or
unenforceability will not affect the validity or enforceability of the
other provisions. To the extent required, any provision of this Agreement
may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable law.
4.6 SAVINGS CLAUSE. If this Agreement or any portion of it is invalidated on
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any ground by any court of competent jurisdiction, then the Company will
nevertheless indemnify the Indemnitee as to Indemnified Costs with respect
to any Proceeding to the full extent permitted by any applicable portion of
this Agreement that is not invalidated, or by any applicable law.
4.7 REPAYMENT OF INDEMNIFIED COSTS. The Indemnitee will reimburse the Company
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for all Indemnified Costs paid by the Company in defending any Proceeding
against the Indemnitee if and only to the extent that a court of competent
jurisdiction finally decides that the Indemnitee is not entitled to be
indemnified by the Company for such Indemnified Costs under the provisions
of applicable law, the Company's Bylaws, Certificate of Incorporation, this
Agreement, or otherwise. The Indemnitee will repay such amounts advanced
only if, and to the extent that, it is ultimately determined that
Indemnitee is not entitled to be indemnified for such Indemnified Costs by
the Company pursuant to this Agreement.
4.8 REPAYMENT. The Indemnitee will promptly repay to the Company any amounts
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paid to the Indemnitee pursuant to other rights of indemnification or under
any insurance policy, to the extent those payments are duplicative of
payments under this Agreement.
5. INDEMNIFICATION PROCEDURE
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5.1 NOTICE. Promptly after receipt of notice that a Proceeding has commenced,
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the Indemnitee will, if a claim is to be made under this Agreement, notify
the Company of that fact. The failure to notify the Company will not
relieve it from any liability that it may have to the Indemnitee except to
the extent of the Company's material damage resulting from such failure.
5.2 COMPANY PARTICIPATION. The Company will be entitled to participate in any
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Proceeding at its own expense and, except as otherwise provided below, to
the extent that it may wish, the Company may assume the defense of any
Proceeding for which indemnification is sought hereunder, with counsel
reasonably satisfactory to the Indemnitee. After the Company notifies the
Indemnitee of the Company's election to assume the defense of a
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Proceeding, during the Company's good faith active defense the Company will
not be liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the
defense of the Proceeding, other than reasonable costs of investigation or
as otherwise provided below. The Indemnitee will have the right to employ
the Indemnitee's counsel in any Proceeding, but the fees and expenses of
the counsel incurred after the Company assumes the defense of the
Proceeding will be at the expense of the Indemnitee, unless (a) the
employment of counsel by the Indemnitee has been authorized by the Company,
(b) the Indemnitee has reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of the
defense of a Proceeding, or (c) the Company has not in fact employed
counsel to assume the defense of a Proceeding. In each of the foregoing
cases the fees and expenses of the Indemnitee's counsel will be at the
expense of the Company. The Company will not be entitled to assume the
defense of any Proceeding brought by or on behalf of the Company or as to
which the Indemnitee has made the conclusion that there may be a conflict
of interest between the Company and the Indemnitee.
5.3 SETTLEMENT. The Company will not settle or compromise any Proceeding in
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any manner that would impose any penalty or limitation on the Indemnitee
without the Indemnitee's consent. The Indemnitee will not settle or
compromise any Proceeding without the Company's consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent or
approval under this Agreement.
5.4 SUBROGATION. If the Company pays Indemnified Costs, the Company will be
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subrogated to the extent of such payment to all of the rights of recovery
of the Indemnitee against third parties. The Indemnitee will do all things
reasonably necessary to secure such rights, including the execution of
documents necessary to enable the Company effectively to bring suit to
enforce such rights.
6. MISCELLANEOUS PROVISIONS
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6.1 AMENDMENTS; WAIVERS. Amendments, waivers, consents and approvals under
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this Agreement must be in writing and designated as such. No failure or
delay in exercising any right will be deemed a waiver of such right.
6.2 INTEGRATION. This Agreement is the entire agreement between the parties
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pertaining to its subject matter, and supersedes all prior agreements and
understandings of the parties in connection with such subject matter.
6.3 INTERPRETATION; GOVERNING LAW. This Agreement is to be construed as a
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whole and in accordance with its fair meaning. This Agreement is to be
interpreted in accordance with the laws of the State of Delaware relating
to indemnification of Agents.
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6.4 HEADINGS. Headings of Sections and subsections are for convenience only
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and are not a part of this Agreement.
6.5 COUNTERPARTS. This Agreement may be signed in one or more counterparts,
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all of which constitute one agreement.
6.6 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and inures to the
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benefit of each party and such party's respective heirs, personal
representatives, successors and assigns. Nothing in this Agreement,
express or implied, is intended to confer any rights or remedies upon any
other person.
6.7 EXPENSES; LEGAL FEES. Each party will pay its own expenses in the
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negotiation, preparation and performance of this Agreement. The prevailing
party in any action relating to this Agreement will be entitled to
reasonable legal fees, costs and expenses incurred in such action.
6.8 REPRESENTATION BY COUNSEL; INTERPRETATION. Each party acknowledges that it
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has been given an opportunity to be represented by counsel in connection
with this Agreement. Any rule of law, including, but not limited to,
Section 1654 of the California Civil Code, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against
the party that drafted it, has no application and is expressly waived.
6.9 SPECIFIC PERFORMANCE. The Company acknowledges that in view of the
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uniqueness of the matters contemplated by this Agreement, the Indemnitee
would not have an adequate remedy at law for money damages if this
Agreement is not being performed in accordance with its terms. The Company
therefore agrees that the Indemnitee will be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which
the Indemnitee may be entitled.
6.10 TIME IS OF THE ESSENCE. Time is of the essence in the performance of each
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provision of this Agreement.
6.11 NOTICES. Any notice to be given hereunder must be in writing and delivered
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as follows (or to another address designated in writing):
IF TO U.S. RENTALS, INC.: IF TO THE INDEMNITEE:
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0000 Xxxxxxx Xxxxx, Xxxxx 000 At the Indemnitee's most recent address
Xxxxxxx, Xxxxxxxxxx 00000 on the books and records of the Company
Attention: President
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The parties have signed this Agreement as of the date on page one.
INDEMNITEE
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Print Name:
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U.S. RENTALS, INC.
By:
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Title:
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