EMPLOYMENT AGREEMENT
Exhibit 10.20
This Employment Agreement (this “Agreement”) is entered into as of December 31, 2006
by and among Xxxxxx X. Xxxxx (“Executive”), Mobile Storage Group, Inc., a Delaware
corporation (“Company”), and Mobile Services Group, Inc., a Delaware corporation
(“Mobile Services”).
NOW, THEREFORE, in consideration of the agreements and covenants contained herein, Executive,
Company and Mobile Services hereby agree as follows:
ARTICLE 1
Employment
Employment
Section 1.1 Position; Term; Condition Precedent; Responsibilities. Company and Mobile
Services shall employ Executive as the Vice President of Sales and Marketing for a term commencing
on January 1, 2007 (the “Commencement Date”) and ending on the date that the term of
employment is terminated pursuant to Article 3 (the “Termination Date”). The term of
employment as prescribed in this Section 1.1 is hereinafter called the “Employment
Period”. Subject to the powers, authorities and responsibilities vested in the Board of
Directors of Company and Mobile Services (collectively, the “Boards”) and in duly
constituted committees of the Boards under the Delaware General Corporation Law and the Certificate
of Incorporation and Bylaws of Company and Mobile Services, Executive shall have the
responsibilities assigned to him by the Boards, including the execution of the business plans.
Executive shall report directly to Xxxxxxx X. Xxxxxxxx, the President and Chief Executive Officer
of Mobile Services and Company, or his successor. Executive shall also perform such other
executive and administrative duties as Executive may reasonably be expected to be capable of
performing on behalf of Company and its subsidiaries, as may from time to time be authorized or
requested by the Boards. Executive agrees to be employed by Company in all such capacities for the
Employment Period, subject to all the covenants and conditions hereinafter set forth.
Section 1.2 Faithful Performance. During the Employment Period, Executive shall
perform faithfully the duties assigned to him hereunder to the best of his abilities and devote
substantially all of his business time and attention to the transaction of the business of Company
and its subsidiaries and not engage in any other business activities except with the approval of
the Boards. Executive covenants, warrants and represents to Company that he shall: (i) devote his
best efforts to the fulfillment of his employment obligations; (ii) exercise the highest degree of
loyalty and the highest ethical standards of conduct in the performance of his duties; and (iii) do
nothing which Executive knows or should know will harm, in any way, the business or reputation of
Company or Mobile Services or any of their subsidiaries.
ARTICLE 2
Compensation
Compensation
Section 2.1 Basic Compensation. As compensation for his services hereunder, Company
shall pay to Executive during the Employment Period an annual salary of $250,000 (the “Base Salary”), payable in installments in accordance with Company’s normal
payment schedule for senior management of Company, subject to payroll deductions as may be
necessary or customary in respect of Company’s salaried employees and five percent of which is paid
in consideration for Executive having signed and being bound by the Employee Proprietary
Information and Inventions Agreement. Executive’s annual salary in effect from time to time under
this Section 2.1 is hereinafter called his “Basic Compensation”. Such Basic
Compensation shall be determined on a pro rata basis for any period described in Article 3
that is not equal to 12 months.
Section 2.2 Discretionary Incentive Compensation. Beginning with the 2007 fiscal year, an
additional discretionary bonus of up to 50% of Base Salary may be paid to Executive upon the
achievement of certain targeted financial results and operational and strategic objectives as
determined by the compensation committee of the board of directors of Company (the
“Compensation Committee”) as part of each annual budget. Such targets and objectives shall
be established in Company’s annual budget process, and any discretionary bonus payable hereunder
shall be payable within 30 days after finalization of Company’s audited financial statements for
the fiscal year with respect to which such targets or objectives relate, subject to final
Compensation Committee approval. The Discretionary Bonus shall be determined on a pro rata basis
for any period described in Article 3 that is not equal to 12 months. Subject to the
fiduciary duties of the board of directors of MSG WC Holdings Corporation, a Delaware corporation
(“Holdings”), under applicable law as advised by counsel and the execution by Executive of
a Non-Qualified Stock Option Agreement, the board of directors of Holdings shall grant Executive
options to acquire 1,724 shares of common stock not later than its next regularly scheduled meeting
pursuant to the Holdings 2006 Stock Option Plan. The initial grant of options to acquire 1,724
shares of common stock shall have an exercise price of $1,255.59 per share.
Section 2.3 Other Employee Benefits. Executive shall be entitled to participate in
all employee benefit plans, including group health care plan of Company, to take up to three weeks
of paid time off for vacation and to receive all such fringe benefits (including the Company 401(k)
savings plan commencing 30 days after the Commencement Date) as are from time to time made
generally available to the senior management of Company. Executive shall be eligible to
participate in the group health care plan of Company on the first day of the month following 60
days of employment. Company shall pay all costs of the participation of Executive and the
immediate family of Executive in the group health care plan and dental plan of Company, except for
payment of co-payments and deductibles, which shall be paid by Executive. Company shall either (i)
pay Executive a car allowance of $450 per month, subject to applicable withholding, or (ii) lease,
at Company expense, an automobile for Executive’s use in Southern California.
Section 2.4 Expense Reimbursements. Company shall reimburse Executive for all proper
expenses reasonably incurred by him in the performance of his duties hereunder in accordance with
the policies and procedures established by the board of directors of Company, including, without
limitation, reasonable travel and lodging expenses incurred by Executive during the Employment
Period in connection with commuting between his residence in Seattle, Washington and the executive
offices of Company. Company shall reimburse Executive for reasonable relocation expenses incurred
in connection with the relocation of Executive’s primary residence to Southern California at a
mutually agreed upon date.
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ARTICLE 3
Termination of Employment
Termination of Employment
Section 3.1 Events of Termination.
(a) Termination for Cause, Breach of Article 4 or Voluntary Termination. In the event
during the Employment Period there should occur any of the following: (i) “Cause” (as
hereinafter defined) of Executive, (ii) the breach by Executive of Article 4 (as determined by
either of the Boards) or (iii) Executive chooses to terminate his employment with Company, either
of the Boards or Executive, as applicable, may elect to terminate Executive’s employment by written
notice to the other party.
In the event either of the Boards or Executive exercises its election to terminate Executive’s
employment with Company pursuant to this Section 3.1(a), the Employment Period shall
terminate effective with such notice, and Executive shall be entitled to receive: (1) any accrued
but unpaid amounts under Section 2.1 (“Accrued Salary”), (2) a pro rata portion,
based on the number of days worked in the year in which Executive’s employment is terminated, of
the discretionary bonus, as contemplated by Section 2.2 (the “Discretionary
Bonus”), for the year in which Executive’s employment is terminated based upon Company’s actual
performance relative to the specified performance objectives established by the Compensation
Committee for the fiscal year during which the termination of Executive’s employment occurs, such
determination as to whether the specified performance objectives have been satisfied will be (x)
made by the board of directors of Company or the Compensation Committee, (y) based upon Executive’s
achievement of the specified performance objectives for the relevant fiscal year and (z) to the
extent appropriate, based upon Company’s audited financial statements for the relevant fiscal year
(the “Prorated Annual Bonus”) and (3) any incurred but unreimbursed expenses under
Section 2.4, in each case through the Termination Date less standard withholdings for tax
and social security purposes (and except as otherwise provided). To the extent any Prorated Annual
Bonus is payable under this Agreement, such amount will be paid at the same time as the
Discretionary Bonus would have been paid had Executive’s employment not been terminated. Amounts
due and payable to Executive under this Agreement following Executive’s termination of the nature
described in clauses (1) — (3) above shall be paid in accordance with Company’s payroll procedures
for senior management as if Executive’s employment had continued for such period.
(b) Termination for Disability, Without Cause, or for Good Reason. In the event
during the Employment Period there should occur either: (i) a “Disability” (as hereinafter
defined) of Executive or (ii) Good Reason, or the Board shall determine to terminate Executive
without Cause, the Board or the Executive, as applicable, may elect to terminate Executive’s
employment by written notice to the other party.
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In the event the Board or Executive exercises its election to terminate Executive’s employment
with Company pursuant to this Section 3.1(b), the Employment Period shall terminate
effective with such notice, and Executive shall be entitled to: (1) receive any Accrued Salary, (2)
receive the Prorated Annual Bonus, if any, (3) receive any incurred but unreimbursed expenses under Section 2.4, (4) receive payments equal to the Basic Compensation, as
determined pursuant to Section 2.1, payable in monthly installments for a period of 12
months after the Termination Date (“Continuing Salary”) and (5) participate at Executive’s
expense in such benefits as may be required to be provided by Company under Comprehensive Omnibus
Budget Reconciliation Act (“COBRA”) for a period of 18 months commencing on the Termination
Date (“COBRA Benefits”). Amounts due and payable to Executive under this Agreement
following Executive’s termination of the nature described in clause (4) above are paid in partial
consideration for Executive’s compliance with the covenants set forth in Section 4.1.
(c) Termination for Death. In the event of the death of Executive during the
Employment Period, this Agreement shall be deemed immediately terminated and his Designated
Successors shall be entitled to: (1) receive any Accrued Salary, (2) receive the Prorated Annual
Bonus, if any, (3) receive any incurred but unreimbursed expenses under Section 2.4 and (4)
family members of Executive who were participating in any of the insurance benefits described in
Section 2.3 on the Termination Date (the “Eligible Family Members”) may participate
at the Eligible Family Members’ expense in COBRA Benefits.
Section 3.2 Definitions of Certain Terms.
(a) “Cause” used in connection with the termination of employment of Executive shall
mean a termination due to a finding by the Board in good faith that such Executive has (i)
committed a felony or a crime involving moral turpitude, (ii) committed any other act or omission
involving dishonesty of fraud (A) with respect to Company or its subsidiaries or (B) materially
adversely affecting the reputation or standing of Company or its subsidiaries, (iii) engaged in
gross negligence or willful misconduct with respect to Company or its subsidiaries or (iv) in any
manner, breached Company policy established by the Board, which breach, if curable, is not cured
within 15 days after written notice thereof to you.
(b) “Designated Successors” shall mean such person or persons or the executors,
administrators or other legal representatives of such person or persons (and in such order of
priority) as Executive may have designated in a written instrument filed with the General Counsel
of Company.
(c) “Disability” shall mean (i) the inability of Executive to substantially render to
Company the services required by Company under this Agreement for more than 60 days out of any
consecutive 120-day period because of mental or physical illness or incapacity, as determined in
good faith by the Board. The date of such Disability shall be on the last day of such 60-day
period. Disability shall also mean the development of any illness that is likely to result in
either death or Disability, as determined in good faith by the Board.
(d) “Good Reason” used in connection with the termination of employment by Executive
shall mean a termination within 45 days following the date of, as applicable, (A) any of the
following events or (B) the end of any cure period referenced below with respect to any of the
following events:
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(i) the assignment to Executive of any material duties that are materially inconsistent with
Executive’s title and position, authority, duties or responsibilities as contemplated by Section
1.1 of this Agreement;
(ii) a reduction in Executive’s Basic Compensation (provided, that an “across the
board” reduction in Basic Compensation and/or bonus opportunities affecting all senior executive
employees of Company on a substantially similar basis shall not constitute “Good Reason”); or
(iii) a material breach by Company of its obligations under this Agreement and where such
breach, if curable, is not cured within 30 days after written notice thereof is provided by
Executive.
ARTICLE 4
Non-Competition; Confidential Information
Non-Competition; Confidential Information
Section 4.1 Non-Competition.
(a) From the date hereof until the date that is 12 months after the Termination Date (the
“Non-Competition Period”), Executive:
(i) shall not engage, directly or indirectly, in any activities whether as employer,
proprietor, partner, shareholder (other than the holder of less than 5% of the stock of a
corporation, the securities of which are traded on a national securities exchange or in the
over-the-counter market), director, officer, employee or otherwise, with any entity or person
engaged, in competition with Company Business (as defined below) within the Xxxxxx Xxxxxx, xxx
Xxxxxx Xxxxxxx, Xxxxxx and any other country in which Company operates;
(ii) shall not solicit, directly or indirectly, any person who is a customer or supplier of
Company, Mobile Services, Holdings or any of their respective affiliates, Welsh, Carson, Xxxxxxxx &
Xxxxx X, L.P. (“WCAS X”) or WCAS Capital Partners IV, L.P. (together with WCAS X,
“WCAS”) for the purpose of acquiring, marketing, leasing, renting or selling mobile or
fixed storage containers, storage trailers, cartage trailers or modular offices (the “Company
Business”); and
(iii) shall not induce or actively attempt to persuade any employee of Company, Mobile
Services, any of their affiliates or WCAS to terminate his employment relationship in order to
enter into any competitive employment.
(b) Except as required by law, Executive shall not, at any time during the Employment Period,
the Non-Competition Period or thereafter, make use of any confidential information of Company,
Mobile Services, WCAS or any of their respective affiliates, nor divulge any trade secrets or
proprietary or confidential information of Company, WCAS or any of their respective affiliates
(including, without limitation, information relating to customers, suppliers, contracts, business
plans and developments, discoveries, processes, products, systems, know-how, books and records),
except to the extent that such information becomes a matter of public record (other than as a
result of disclosure by Executive), is published in a newspaper, magazine or other periodical
available to the general public or as WCAS may so authorize in writing; provided, however, during the Employment Period Executive shall be
permitted to make use of confidential information in the execution of his duties under this
Agreement. When Executive shall cease to be employed by Company, Executive shall surrender to
Company or WCAS all records and other documents obtained by him or entrusted to him during the
course of his employment hereunder (together with all copies thereof) which pertain to the business
of Company, Mobile Services or WCAS or which were paid for by Company other than Executive’s
counterparts of this Agreement and employment-related documents referred to herein.
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(c) The covenants contained in clauses (i), (ii) and (iii) of Section 4.1(a) shall
apply within all territories in which Company is actively engaged in the conduct of business during
the Non-Competition Period.
(d) It is the desire and intent of the parties that the provisions of Sections 4.1(a)
and 4.1(b) shall be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any
particular provision of Sections 4.1(a) or 4.1(b) shall be adjudicated to be
invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion
thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of Sections 4.1(a) or
4.1(b) shall be unenforceable with respect to scope, duration or geographic area, such
court shall be empowered to substitute, to the extent enforceable, provisions similar hereto or
other provisions so as to provide to Company and WCAS, to the fullest extent permitted by
applicable law, the benefits intended by Sections 4.1(a) and 4.1(b).
(e) The covenants contained in Section 4.1(b) shall survive the conclusion of
Executive’s employment by Company and/or his service as an officer of Company.
(f) If, at any time, Executive sells or transfers any securities of Holdings or any of its
subsidiaries to Holdings or to any then-current stockholder of Holdings or any subsidiary (a
“Repurchase”), such Repurchase shall serve as additional consideration for Executive’s
compliance with the restrictions during the Non-Competition Period provided for under this
Section 4.1;
(g) In the event Executive violates any provision of this Agreement, the running of the time
period of such provisions so violated shall be automatically suspended upon the date of such
violation and shall resume on the date such violation ceases and all appeals, if any, are resolved.
(h) Executive acknowledges and agrees that the covenants, obligations and agreements of
Executive contained herein relate to special, unique and extraordinary matters and that a violation
of any of the terms of such covenants, obligations or agreements shall cause Company and its
successors irreparable injury for which adequate remedies are not available at law. In the event
of a breach or threatened breach by Executive of any provision of this Section 4.1, Company
and its successors, without proving actual damages shall be entitled to seek an injunction (without
the requirement to post bond) restraining Executive from (a) soliciting or interfering with employees, consultants, independent contractors, customers or suppliers of
Company, its affiliates or their respective successors, (b) disclosing, in whole or in part, the
private, secret and confidential information described herein, or from rendering any services to
any person, firm, corporation, association or other entity to whom such information has been
disclosed, or is threatened to be disclosed, (c) engaging, participating or otherwise being
connected with any arrangement in competition with Company’s business of leasing and selling
storage containers, storage trailers, cartage trailers and mobile offices or (d) otherwise
violating the provisions of this Section 4.1. Nothing herein contained shall be construed
as prohibiting Company or its successors from pursuing any other remedies available to it or them
for such breach or threatened breach, including without limitation the recovery of damages from
Executive.
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(i) Executive acknowledges and agrees that (i) he has and will have a prominent role in the
management, and the development of the goodwill, of Company and its affiliates and has and will
establish and develop relations and contacts with the principal customers and suppliers of Company
and its affiliates in the United States and the rest of the world, if any, all of which constitute
valuable goodwill of, and could be used by Executive to compete unfairly with, Company and its
affiliates, (ii) Executive has obtained confidential and proprietary information and trade secrets
concerning the business and operations of Company and its affiliates in the United States and the
rest of the world that could be used to compete unfairly with Company and its affiliates, (iii) the
covenants and restrictions contained herein are intended to protect the legitimate interests of
Company and its affiliates in their respective goodwill, trade secrets and other confidential and
proprietary information and (iv) Executive desires to be bound by such covenants and restrictions.
(j) Executive represents that his economic means and circumstances are such that the
provisions of this Agreement, including the restrictive covenants herein, will not prevent him from
providing for himself and his family on a basis satisfactory to him and them.
(k) If Executive raises any question as to the enforceability of any part or terms of this
Agreement, including, without limitation, the restrictive covenants contained herein, Executive
agrees that he will comply fully with this Agreement unless and until the entry of an award to the
contrary.
ARTICLE 5
Miscellaneous
Miscellaneous
Section 5.1 Notices. Any notice or request required or permitted to be given
hereunder shall be sufficient if in Writing and delivered personally or sent by registered or
certified mail, return receipt requested, as follows: if to Executive, to his address as set forth
in the records of Company, and if to Company, to Company’s address hereinabove set forth, or to any
other address designated by either party by notice similarly given. Such notice shall be deemed to
have been given upon the personal delivery or such mailing thereof, as the case may be.
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Section 5.2 Survival. Sections 3.1 and 4.1 and Article 5 of this
Agreement shall survive and continue in full force in accordance with their respective terms
notwithstanding the expiration or termination of the Employment Period.
Section 5.3 Authority; No Conflict. Executive represents and warrants to Company that
he has full right and authority to execute and deliver this Agreement and to comply with the terms
and provisions hereof and that the execution and delivery of this Agreement and compliance with the
terms and provisions hereof by Executive will not conflict with or result in a breach of the terms,
conditions or provisions of any agreement, restriction or obligation by which Executive is bound.
Section 5.4 Assignment and Succession. The rights and obligations of Company under
this Agreement shall inure to the benefit of and be binding upon its respective successors and
assigns, and Executive’s rights and obligations hereunder shall inure to the benefit of and be
binding upon his Designated Successors. Executive may not assign any obligations or
responsibilities he has under this Agreement.
Section 5.5 Headings. The Article, Section, paragraph and subparagraph headings are
for convenience of reference only and shall not define or limit the provisions hereof.
Section 5.6 Tax Withholding. Company may withhold from any amounts payable under this
Agreement all Federal, state, city or other taxes as may be required pursuant to any law,
regulation or ruling.
Section 5.7 Applicable Law. This Agreement shall at all times be governed by and
construed, interpreted and enforced in accordance with the internal laws (as opposed to conflict or
choice of laws provisions) of the State of Delaware. Each party hereto irrevocably submits to the
exclusive jurisdiction of any state or Federal court located within the State of California for the
purposes of any suit, action or other proceeding arising out of this Agreement or any transaction
contemplated hereby, and agrees to commence any such action, suit or proceeding only in such
courts. Each party further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party’s respective address set forth herein shall be effective service of
process for any such action, suit or proceeding. Each party irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in such courts, and hereby irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient forum.
Section 5.8 Waiver. No waiver of any right or remedy of either party hereto under
this Agreement shall be effective unless in writing, specifying such waiver, executed by such
party. A waiver by either party hereto of any of its rights or remedies under this Agreement on
any occasion shall not be a bar to the exercise of the same right or remedy on any subsequent
occasion or of any other right or remedy at any time.
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Section 5.9 Amendment or Modification. This Agreement may be amended, altered, or
modified only by writing, specifying such amendment, alteration or modification, executed by all of
the parties.
Section 5.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute the same instrument.
Section 5.11 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties regarding the subject matter hereof, and supersedes all prior or
contemporaneous negotiations, understandings or agreements of the parties, whether written or oral,
with respect to such subject matter.
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IN WITNESS WHEREOF, Company has caused this Agreement to be signed by its respective duly
authorized officer and Executive has signed this Agreement as of the day and year first above
written.
| EXECUTIVE | ||||
| Xxxxxx X. Xxxxx | ||||
| COMPANY | ||||
| MOBILE STORAGE GROUP, INC. | ||||
| By: | ||||
| Name: Xxxxxxxxxxx X. Xxxxxx | ||||
| Title: General Counsel & Assistant Secretary | ||||
| MOBILE SERVICES | ||||
| MOBILE SERVICES GROUP, INC. | ||||
| By: | ||||
| Name: Xxxxxxxxxxx X. Xxxxxx | ||||
| Title: General Counsel & Assistant Secretary | ||||
Signature Page to Xxxxxxxx Employment Agreement
