EXECUTIVE EMPLOYMENT AND NONCOMPETITION AGREEMENT
Exhibit 10.1
EXECUTIVE EMPLOYMENT
AND NONCOMPETITION AGREEMENT
AND NONCOMPETITION AGREEMENT
This Executive Employment and Noncompetition Agreement (“Agreement”) is entered into between
RSC Holdings Inc. and RSC Equipment Rental, Inc. (the “Company” or “RSC”) and Xxxxxxxx X. Xxxxxx
(“Executive”), effective as of October 1, 2010 (the “Effective Date”).
RECITALS
WHEREAS, the Company operates its equipment rental business which has store locations
throughout North America (such business as operated by the Company is referred to herein as the
“Business”).
WHEREAS, the Company’s life-blood is its Confidential Information, including but not limited
to customer databases, marketing and sales objectives and strategies, customer lists, information
regarding existing customer preferences, habits, and needs, information regarding prospective
customers, details of past, pending and contemplated transactions, price lists, pricing policies,
sales data, training materials, and customer proposals, information developed about the Company’s
competitors, systems, strategies, designs, processes, procedures, market data, know-how,
compilations of technical and non-technical data, advertising and promotional plans, and financial
and other projections, which information has been collected over a significant amount of time and
at great effort and expense.
WHEREAS, the Company would be placed at an unfair competitive disadvantage if Executive were
able to use the Company’s Confidential Information and goodwill for her own benefit, or for the
benefit of anyone other than the Company.
WHEREAS, with the assurances contained in the agreement, the Company desires to employ
Executive as a Senior Vice President, Chief Financial Officer, in which position she will not only
have access to the Company’s Confidential Information but also will have the duty to expand and
improve such information.
WHEREAS, Executive desires to be employed by the Company in this position and is willing to do
so upon the terms contained herein.
AGREEMENT
NOW, THEREFORE, as a condition of employment, and for other good and valuable consideration,
including without limitation continued employment and/or promotion or advancement, which Executive
agrees is sufficient consideration for this Agreement, and in consideration of the mutual promises
and covenants set forth below, the Company and Executive agree as follows:
ARTICLE I
EMPLOYMENT
Section 1.1. Employment & Position. The Company shall employ Executive as
Senior Vice President, Chief Financial Officer at the Company’s location in Scottsdale, AZ.
Executive shall report to the President and Chief Executive Officer, and the Board of Directors of
the Company. During Executive’s employment hereunder, Executive shall devote all necessary
energies, experience, skills, abilities, knowledge and productive time to the performance of duties
under this Agreement and shall not render to others services that interfere with the performance of
her duties with the Company under this Agreement. The rendering of services to others shall be
subject to the approval of the Board.
Section 1.2. Duties. Executive will be responsible for the full range of
responsibility customarily performed by an Executive in the position of Senior Vice President,
Chief Financial Officer of the Company and render such services as are from time to time necessary
or requested in connection with the affairs of the Company. Executive’s duties also includes the
obligation to maintain the highest level of integrity and report and (when appropriate) address
violations of the Company’s policies and procedures, and hereby acknowledges, represents and
warrants that there are no such violations as of the date hereof.
Section 1.3. Term of Employment. Executive shall be employed as herein set
forth, commencing on the date set forth above and continuing until terminated by either party in
accordance with section 2.5 below (the “Employment Term”).
ARTICLE II
COMPENSATION
Section 2.1. Base Salary. Executive’s salary (the “Base Salary”) shall be
three hundred sixty five thousand dollars ($365,000) per annum for the term of this Agreement
and/or as increased, after review by the Board at the time and in accordance with Company policies
as in effect from time to time. Base Salary shall be payable in accordance with the standard
payroll practices of the Company.
Section 2.2. Variable Compensation. In addition to her Base Salary, Executive
will be eligible to receive Variable Compensation, in accordance with the Company’s Variable
Compensation Plan as in effect from time to time, and which will provide her with additional
incentive opportunity with a target of seventy-five percent (75%) of her Base Salary and a maximum
of one-hundred fifty percent (150%) of her Base Salary.
Section 2.3. Equity Incentive. Executive will be eligible to participate in
the Company’s discretionary long term incentive plan during the course of employment with the
Company, subject to the discretion of the Compensation Committee and/or the Board of Directors and
the terms and conditions of the applicable plan. Awards will be determined utilizing the valuation
methodology used for other similarly situated executive officers of the Company.
2
Section 2.4. Other Benefits. During the Employment Term, Executive shall be
entitled to all benefits and conditions of employment generally provided to other RSC Company
executives, subject to the same eligibility and other reasonable conditions of Company benefit
programs and to country related differences, including, but not limited to, medical, dental, life
insurance, non-qualified deferred compensation programs, sick leave, disability, automobile
allowance ($1,200 per month) and participation in any retirement plan. In addition, benefits shall
include, but not be limited to five (5) weeks vacation per year and an annual tax and financial
planning services allowance of up to two thousand five hundred dollars ($2,500).
Section 2.5. Employment Separation.
(a) Severance Benefits: The Company may, at its sole discretion, terminate
Executive’s employment at any time, provided however, that if the Company xxxxxx Executive’s
employment for any reason other than For Cause or if Executive terminates her employment for Good
Reason the Company shall provide the following severance payments and benefits (collectively
“Severance Benefits”), less all applicable federal and state income and withholding taxes, in
exchange for a full and complete release of all claims against the Company, in the form customarily
used by the Company, executed by Executive, and Executive allows such release to become effective:
| 1. | Eighteen (18) months of Base Salary (the “Severance Period”),
plus a pro-rata portion of variable compensation for the calendar year, or if
variable compensation is to be paid quarterly then for the calendar quarter, in
which the severance occurs up to the separation date, such pro rata bonus to be
equal to the variable compensation Executive would have earned had Executive
remained employed through the end of the applicable period (pro rated based on
the number of days employed in such period). Executive’s entitlement to and
the amount of any variable compensation under this Section 2.5(a) (1) shall be
determined at the sole discretion of the Company. The Base Salary shall be
payable in accordance with the Company’s regular payroll practices, and the pro
rata variable compensation payments shall be payable at the time that other
variable compensation payments are made under the applicable Variable
Compensation Plan. Notwithstanding the payment schedule described in this
paragraph, if Executive is a Specified Employee (as defined in Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”)) and becomes
entitled to the payment described in this Section 2.5 as a result of a
separation of service as defined by Section 409A(a)(2)(i) of the Code, then the
portion of such payment treated as “separation pay” for purposes of Section
409A shall not be paid prior to the date which is six (6) months after the date
of the Executive’s separation of service with the Company if such payment would
result in the imposition of an excise tax under Section 409A of the Code. Any
amount described in the preceding sentence over the applicable threshold, that is otherwise payable during the
first six months following Executive’s separation from service shall be
accumulated and paid to Executive in a lump sum amount on the first date of
the seventh month following the date of separation from service. |
3
Executive’s entitlement to the foregoing severance payments is contingent on
her continued compliance with the confidentiality, non-competition and
non-solicitation provisions outlined in Sections 3.1, 3.2, 4.2 and 4.3
herein. Executive understands that if the Company determines that she has
violated the confidentiality provisions, covenant not to compete or
non-solicitation provisions, the Company will not make any further severance
payments, and will be entitled to reimbursement from Executive of any
severance amounts already paid to her, all in addition to any other remedy
to which the Company may have.
| 2. | Upon her separation from service, if Executive is eligible and
enrolled in the Company’s medical and dental benefit programs, the Company will
provide the necessary forms, including COBRA notifications, to transfer the
responsibility and right to continue those benefits to Executive, which under
COBRA are typically at her expense, for the time period allowed by law or under
the applicable programs. However, assuming Executive is eligible and elects to
continue those benefits, the Company will continue to pay the same proportion
of Executive’s medical and dental insurance premiums under COBRA as during
active employment (for Executive and eligible dependents) until the earlier of:
(1) the expiration of the Severance Period; or (2) the date Executive is
eligible for medical and dental insurance benefits by another employer. |
||
| 3. | Upon termination of employment, Executive is not eligible to
continue participation in the Company group life insurance program. The
Company will therefore pay, at the Company’s option, the premiums during the
Severance Period that are either (i) applicable to a conversion of the coverage
(equal to the amount normally provided to an employee without payment by the
employee) from group to individual coverage; or (ii) that will support the same
level of coverage in a term life policy. The company’s obligation under this
sub-section is to provide the required insurance and Executive is not entitled
to a cash payment in substitution thereof. |
||
| 4. | The Company on the date of separation will provide professional
outplacement counseling and services consistent with other Executives at
similar compensation levels. No cash lump sum payment in lieu of outplacement
services will be provided to Executive. |
4
| 5. | During the eighteen (18) month period during which Severance
Benefits under this Section 2.5 are paid, the Company will continue to pay for
Executive’s reasonable and necessary association fees related to Executive’s duties and responsibilities as contemplated in Section 1.2, and
only to the extent previously paid by the Company. However, the payment of
the fees within this paragraph shall cease upon the earlier of: (1) the
expiration of the Severance Period; or (2) the date Executive is employed
whether consulting, self employed or employed by another employer. |
||
| 6. | The Company may give the Executive 30 days’ prior written
notice of termination of employment for the purposes of providing transition
services. In the event the Company gives such notice, the Executive shall be
under no obligation to render additional services and shall be allowed to seek
other employment, provided that the Severance Period shall be reduced
accordingly if Executive so ceases, for any reason, to provide services to the
Company. |
“Good Reason” shall mean the occurrence, without Executive’s consent, of any of the following: (i)
a material diminution in, or assignment of duties material inconsistent with Executive’s position
(including status, offices, titles and reporting relationships), (ii) a reduction in Base Salary
that is not part of across-the-board reduction, (iii) a relocation of Executive’s principal place
of business to a location that is greater than fifty (50) miles from its current location or (iv)
the Company’s material breach of the Agreement.
(b) For Cause. The Company may, at its sole discretion, terminate Executive’s
employment at any time during the Employment Term “For Cause”. The term “For Cause” means: (1)
the failure of Executive to implement or adhere to material policies, practices, or directives of
the Company, including of the Board; (2) conduct of a fraudulent and/or criminal nature; (3) any
action of Executive outside the scope of her employment duties that results in material financial
harm to the Company, (4) conduct that is in violation of any provision of this Agreement or any
other agreement between the Company or any of its affiliates and Executive (including any
noncompetition, noninterference, nonsolicitation or confidentiality agreement); or (5) solely for
purposes of this Section 2.5, death or disability as defined hereinafter.
(c) Disability. Within the parameters allowed by federal and state law, the Company
reserves the right to terminate Executive’s employment or place her on unpaid leave if Executive is
incapacitated due to physical or mental illness and cannot perform the essential functions of her
job with or without a reasonable accommodation.
(d) Voluntary Resignation by Executive. Executive shall have the right to terminate
this Agreement at any time. Executive agrees to provide the Company with thirty (30) days prior
written notice of any such intended resignation. The Company’s obligation to pay Executive’s Base
Salary, variable compensation and other benefits shall cease as of Executive’s date of separation.
Executive shall not be entitled to any Severance Benefits if she resigns other than for Good
Reason.
5
Section 2.6 Limitation on Payments. In the event that the payments or other
benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute
payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits
under this Agreement shall be either (a) delivered in full, or (b) delivered to such lesser extent
which would result in no portion of such benefits being subject to the Excise Tax, whichever of the
foregoing amounts, taking into account the applicable federal, state and local income taxes and the
Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of
benefits, notwithstanding that all or some portion of such benefits may be taxable under Section
4999 of the Code. If a reduction in payments or benefits constituting “parachute payments” is
necessary pursuant to the foregoing provision, reduction shall occur in the following order unless
the Executive elects in writing a different order (provided, however, that such election shall be
subject to Company approval if made on or after the date on which the event that triggers the
parachute payment occurs): reduction of cash payments; cancellation of accelerated vesting of stock
awards; reduction of employee benefits. If acceleration of vesting of stock award compensation is
to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of
grant of the Executive’s stock awards unless the Executive elects in writing a different order for
cancellation.
Unless the Company and Executive otherwise agree in writing, any determination required under
this Section 2.6 shall be made in writing by the Company’s independent public accountants (the
“Accountants”), whose determination shall be conclusive and binding upon Executive and the Company
for all purposes and may be relied upon by the Company. For purposes of making the calculations
required by this Section 2.6, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the
application of Section 280G and 4999 of the Code. The Company and Executive shall further to the
Accountants such information and documents as the Accountants may reasonably request in order to
make a determination under this Section 2.6. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this Section 2.6.
ARTICLE III
CONFIDENTIAL INFORMATION
Section 3.1. Confidential Information. Executive’s position with the Company
will, and have, necessarily give her access to, contact with and knowledge of certain trade
secrets, and confidential and proprietary business information of the Company. This information
includes but is not limited to employee information, union information, employment and union
litigation and claim information, marketing and sales objectives and strategies, customer lists,
information regarding existing customer preferences, habits and needs, information regarding
prospective customers, details of past, pending and contemplated transactions, price lists, pricing
policies, sales data, training materials, customer proposals, information developed about Company’s
competitors, systems, strategies, designs, processes, procedures, growth plans, market data,
know-how, compilations of technical and non-technical data, advertising and promotional plans and
strategies, and financial and other projections relating to the business of the Company, which are
not generally known to or readily ascertainable through legitimate means by the public or by
competitors of the Company (hereinafter collectively referred to as “Confidential Information”).
Executive shall not at any time disclose the Confidential Information to anyone, except on a
need-to-know basis in connection with Executive’s duties in carrying out the business of the Company. Executive shall not use any Confidential Information for her own benefit, or for the
benefit of anyone other than the Company or its affiliates.
6
Section 3.2. Ownership of Records, Etc. All records, reports, notes,
compilations or other recorded matter, and copies or reproductions thereof, in whatever media form,
relating to the Confidential Information of the Company, operations, activities or business, made
or received by Executive during any past employment or future period of employment with the Company
are and shall be the exclusive property of the Company. Executive shall keep the same at all times
in her custody, subject to control by the Company and Executive shall surrender the same at the end
of her employment, if not before. Failure to return such property upon the request of the Company
during Executive’s Employment Term or thereafter shall be a material breach of this Agreement.
Section 3.3. Injunctive Relief. Executive acknowledges that (a) the
provisions of Section 3.1 and Section 3.2 are reasonable and necessary to protect the legitimate
interests of the Company, and (b) any violation of Section 3.1 or Section 3.2 will result in
irreparable injury to the Company, the exact amount of which will be difficult to ascertain, and
that the remedies at law for any such violation would not be reasonable or adequate compensation to
the Company for such a violation. Accordingly Executive agrees that if she violates, or under the
then existing circumstances it seems reasonable likely that there may occur a violation of, the
provisions of Section 3.1 or Section 3.2, in addition to any other remedy which may be available at
law or in equity, the Company shall be entitled to specific performance and injunctive relief,
without posting bond or other security, and without the necessity of proving actual damages.
ARTICLE IV
COVENANT NOT TO COMPETE
Section 4.1. Recitals. Executive acknowledges and agrees that she has or will
have technical and other extensive expertise associated with the business of the Company. In
addition, Executive has or will develop valuable business contacts with employees, potential
employees, clients, and potential clients of the Company and with professionals in the equipment
rental industry. Furthermore, Executive’s reputation and goodwill are or will be an integral part
of the Company’s success throughout the areas where the business of the Company is and will be
conducted. If Executive deprives the Company of any of her goodwill or in any manner uses her
reputation and goodwill in competition with the Company, the Company will be deprived of the
benefits it has bargained for pursuant to this Agreement. Since Executive has the ability to
compete with the Company in the operation of the business of the Company, the Company therefore
desires that Executive enter into this Covenant Not To Compete.
Section 4.2. Covenant Not to Compete. Executive agrees that during her
employment with RSC and for a period of twenty-four (24) months commencing immediately after the end
of her employment (the “Time Period”), she shall not, unless acting with the Company’s prior
written consent (which may be withheld at the Company’s sole discretion), directly or indirectly
own, manage, join, operate or control, participate in the ownership, operation or control of, or be
connected as a director, officer, partner, or consultant, or permit her name to be used in
connection with any competing business, including but not limited to any of the
7
following businesses or organizations that rent or lease construction or construction-related
equipment within the United States, Canada, Mexico or other country the Company plans to expand
into that Executive has been involved with (collectively “the Territory”): Caterpillar, United
Rentals, Sunbelt Rentals and its parent Ashtead Group plc, Xxxx Rental, Hertz, Volvo, National
Equipment Services and Xxxxx Xxxxx Works or, in the alternative, any business or organization not
listed above that rents or leases construction or construction-related equipment or that has plans
to enter into the construction-related equipment rental or leasing business in the Territory.
The parties agree that if a court of competent jurisdiction determines that the Time Period for
purposes of this Section 4.2 is unreasonably long and found to be an unenforceable term, the Time
Period for purposes of this Section 4.2 shall be shortened to the maximum duration enforceable
under applicable law.
If a court of competent jurisdiction determines that the Territory is an unreasonable geographic
scope for this provision, the Territory shall be deemed reformed to include the United States and
Canada, excluding Mexico. If a court of competent jurisdiction determines that the Territory of
the United States and Canada is an unreasonable geographic scope for this provision, the Territory
shall be deemed reformed to include the United States.
Section 4.3. No Solicitation of Customers or Employees. Executive agrees
that:
(a) During her employment with RSC and for the Time Period, she shall not, directly or
indirectly, call on or solicit or divert or take away from RSC or any of its affiliates (including
by divulging to any competitor or potential competitor of RSC) any person, firm, corporation, or
other entity who is a customer of RSC or its affiliates and whom Executive had contact with through
any of her employment with RSC.
(b) During her employment with RSC and for the Time Period, she shall not, directly or
indirectly, solicit employment of any employee of RSC or any employee of any affiliate of RSC for
employment with any entity that rents or leases construction or construction-related equipment in
the Territory as defined in Section 4.2.
(c) The parties agree that if a court of competent jurisdiction determines that the Time
Period is unreasonably long and deemed unenforceable as defined herein in Sections 4.3(a) or (b),
the Time Period for purposes of Sections 4.3(a) or (b), as applicable, shall be shortened to the
maximum duration enforceable under applicable law.
Section 4.4. Severability of Provisions. In the event that the provisions of
this Section should ever be adjudicated by a court of competent jurisdiction to exceed the time or
geographic or other limitations permitted by applicable law, then such provisions shall be deemed
reformed to the maximum time or geographic or other limitations permitted by applicable law, as
determined by such court in such action. Each breach of the covenants set forth herein shall give
rise to a separate and independent cause of action.
8
Section 4.5. Injunctive Relief. Executive acknowledges that (a) the
provisions of Section 4.2 and Section 4.3 are reasonable and necessary to protect the legitimate
interests of the Company, and (b) any violation of Section 4.2 or Section 4.3 will result in irreparable injury
to the Company, the exact amount of which will be difficult to ascertain, and that the remedies at
law for any such violation would not be reasonable or adequate compensation to the Company for such
a violation. Accordingly, Executive agrees that if she violates, or under the then existing
circumstances it seems reasonable likely that there may occur a violation of, the provisions of
Section 4.2 or Section 4.3, in addition to any other remedy which may be available at law or in
equity, the Company shall be entitled to specific performance and injunctive relief, without
posting bond or other security, and without the necessity of proving actual damages.
Section 4.6. Equitable Tolling. The restrictive time periods referred to in
Sections 4.2 and 4.3 shall be tolled and extended by one month for each month or portion of each
month during which Employee is in violation of the restrictions. If Company initiates legal action
to enforce the restrictions and obtains an injunction against Employee; then the appropriate
restrictive time period(s) will begin to run on the date that the injunction is entered.
ARTICLE V
GENERAL PROVISIONS
Section 5.1. Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written consent of the other
parties except that the Company may, without such consent, assign all such rights and obligations
to a wholly-owned subsidiary or newly created legal entity (or a partnership controlled by the
Company) or subsidiaries of the Company or to a successor in interest to the Company which shall
assume all obligations and liabilities hereunder.
Section 5.2. Sole and Entire Agreement. This Agreement constitutes the entire
existing agreement between the parties with respect to the subject matter hereof, and completely
and correctly expresses all of the rights and obligations of the parties. All prior agreements
including but not limited to prior employment agreements, severance agreements and/or change in
control agreements, are completely superseded and revoked. Executive expressly agrees that
reliance on any oral representation(s) is unreasonable.
Section 5.3. Waivers. The waiver in any particular instance or series of
instances of any term or condition of this Agreement or any breach hereof by any party shall not
constitute a waiver of such term or condition or of any breach thereof in any other instance.
Section 5.4. Amendment. This Agreement is subject to amendment only by
subsequent written agreement between, and executed by, the parties hereto.
Section 5.5. Separability. If any one or more provisions, clauses,
paragraphs, subclauses or subparagraphs contained in this Agreement shall for any reason be held to
be invalid, illegal, void or unenforceable, the same shall not affect any other provision, clause,
paragraph, subclause or subparagraph of this Agreement, but this Agreement shall be construed as if
such invalid, illegal, void or unenforceable provision, clause, paragraph, subclause or
subparagraph had never been contained herein.
9
Section 5.6. Time Is of the Essence. Time is of the essence in this
Agreement. Any time limit mentioned herein has been carefully considered and represents the agreed
absolute outside limit of time within which the applicable right must be exercised. The parties
may extend such time limit only by mutual agreement in writing.
Section 5.7. Duration of Obligations. Executive’s obligations under Article
III and Article IV of this Agreement (especially those relating to confidentiality, non-competition
and non-solicitation) shall continue after her employment with the Company is ended, regardless of
the nature or reason for such termination.
Section 5.8. Attorneys’ Fees. In the event of a dispute, a court or an
arbitrator may award attorneys’ fees to the prevailing party.
Section 5.9. Captions; Definitions. Any captions of articles, sections,
subsections or paragraphs of this Agreement are solely for the convenience of the parties and are
not a part of this Agreement or to be used for the interpretation of this Agreement or any
provision hereof.
Section 5.10. Applicable Law. This Agreement shall be construed and
interpreted in accordance with the internal substantive laws, and not the choice of law rules of
the State of Arizona. Except where this Agreement provides for injunctive relief, all disputes
arising out of or in connection with this Agreement shall be finally settled under the Rules of
Arbitration of the American Arbitration Association by a single arbitrator appointed in accordance
with the said Rules.
Section 5.11. Confidentiality. The parties agree that the terms of this
Agreement are to be held confidential and shall not be disclosed to any other person or entity,
except as required by law or legal process, and except that either party may disclose the terms
thereof to its or her legal counsel or tax advisors.
Section 5.12. Voluntary Agreement and Legal Counsel. Executive has been
encouraged to review this Agreement with her legal and other expert counsel and has freely entered
into this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement or caused this
Agreement to be duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all effective as of the day and year first above written.
| RSC HOLDINGS INC. AND | EXECUTIVE: Xxxxxxxx X. Xxxxxx | |||||
| RSC EQUIPMENT RENTAL, INC. | ||||||
By:
|
/s/ Xxxx Xxxxxx | /s/ Xxxxxxxx X. Xxxxxx | ||||
| Xxxx Xxxxxx | Xxxxxxxx X. Xxxxxx | |||||
| President and CEO | ||||||
10
