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Exhibit 10.6(i)
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase, and the Company will sell, 1,000 shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"). All of such shares of Class B Common Stock and all shares of Class B
Common Stock hereafter acquired by Executive are referred to herein as
"Executive Stock." Certain definitions are set forth in paragraph 9 of this
Agreement.
The execution and delivery of this Agreement by the Company and Executive
is a condition to the purchase of shares of Class B Common Stock and Class A
Common Stock, par value $.01 per share (the "Class A Common Stock" and,
together with the Class B Common Stock, the "Common Stock"), by Golder, Thoma,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Fund IV, L. P. or an Affiliate thereof (the "Investor")
pursuant to a purchase agreement between the Company and the Investor dated as
of the date hereof (the "Purchase Agreement"). Certain provisions of this
Agreement are intended for the benefit of, and will be enforceable by, the
Investor.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 12 shares of Class B Common Stock at a price of $10 per
share. The Company will deliver to Executive the certificates representing
such Class B Common Stock, and Executive will deliver to the Company a
promissory note in the form of Exhibit A attached hereto (an "Executive Note")
in an aggregate principal amount of $120. Executive's obligations under such
Executive Note shall be secured by a pledge of all of the shares of Executive
Stock to the Company, and in connection therewith, Executive shall enter into a
pledge agreement in the form of Exhibit B attached hereto (the "Pledge
Agreement").
(b) Upon the purchase from time to time by the Investor or any Seller (as
defined in the Purchase Agreement) of up to 24,250 shares of Class A Common
Stock and up to an additional 45,000 shares of Class B Common Stock pursuant to
subparagraphs 1B(b) or 1B(c) of the Purchase Agreement, Executive will
purchase, and the Company will sell, up to an aggregate of 988
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additional shares of Class B Common Stock at a price of $10 per share (each, a
"Mandatory Purchase"); provided that Executive will have the option to purchase
all or any portion of such 988 additional shares of Class B Common Stock at a
price of $10 per share at such earlier time or times as Executive shall
determine (each, an "Optional Purchase"). The number of shares of Class B
Common Stock to be sold by the Company and purchased by Executive pursuant to
any Mandatory Purchase shall equal (i) 988 multiplied by a fraction (A) the
numerator of which will be the sum of (I) the product of (x) the number of
shares of Class A Common Stock to be concurrently purchased by the Investor or
such Seller multiplied by 1,000 plus (II) the product of (x) the number of
shares of Class B Common Stock to be concurrently purchased by the Investor or
such Seller multiplied by (y) 10 and (B) the denominator of which will be
24,700,000, minus (ii) the number of shares, if any, previously purchased by
Executive in Optional Purchases which have not previously been applied to
reduce Mandatory Purchases pursuant this clause (ii). The Company will deliver
to Executive the certificates representing such Class B Common Stock, and
Executive will deliver to the Company an Executive Note in an aggregate
principal amount of $10 multiplied by the number of shares of Class B Common
Stock so purchased by Executive. Executive's obligations under each Executive
Note shall be secured by a pledge of all of the shares of Executive Stock to
the Company pursuant to the Pledge Agreement.
(c) Within 30 days after Executive purchases any Executive Stock from the
Company, Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of Exhibit C attached hereto.
(d) In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment
in the Executive Stock for an indefinite period of time because the
Executive Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers
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concerning the terms and conditions of the offering of Executive Stock
and has had full access to such other information concerning the Company
as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(e) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive acknowledges and agrees that
neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. Vesting of Executive Stock.
(a) Except as otherwise provided in paragraph 2(b) below, all shares of
Executive Stock will become vested in accordance with the following schedule,
if as of each such date Executive is still employed by the Company or any of
its Subsidiaries:
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Cumulative
Percentage of Executive
Date Stock Vested
------------------------------- ----------------
Closing of the Base Acquisition 15%
1st Anniversary of Closing
of the Base Acquisition 32%
2nd Anniversary of Closing
of the Base Acquisition 49%
3rd Anniversary of Closing
of the Base Acquisition 66%
4th Anniversary of Closing
of the Base Acquisition 83%
5th Anniversary of Closing
of the Base Acquisition 100%
(b) If Executive ceases to be employed by the Company and its Subsidiaries
on any date other than any anniversary date prior to the fifth anniversary of
the Closing, the cumulative percentage of Executive Stock to become vested will
be determined on a pro rata basis according to the number of days elapsed since
the prior anniversary date. Upon the occurrence of a Sale of the Company, all
shares of Executive Stock which have not yet become vested shall become vested
at the time of such event. Shares of Executive Stock which have become vested
are referred to herein as "Vested Shares," and all other shares of Executive
Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company and its
Subsidiaries for any reason (the "Termination"), the Executive Stock (whether
held by Executive or one or more of Executive's transferees, other than the
Company or an Exempt Transferee (as defined in paragraph 4(e) below)) will be
subject to repurchase by the Company and the Investor pursuant to the terms and
conditions set forth in this paragraph 3 (the "Repurchase Option").
(b) In the event of Termination, the purchase price for each Unvested
Share will be Executive's Original Cost for such share, and the purchase price
for each Vested Share will be the Fair Market Value for such share.
(c) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Unvested Shares and the Vested Shares by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Stock within 90 days after the Termination. The Repurchase Notice
will set forth the number of Unvested Shares and Vested Shares to be acquired
from each holder, the aggregate consideration to be paid for such shares and
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the time and place for the closing of the transaction. The number of shares to
be repurchased by the Company shall first be satisfied to the extent possible
from the shares of Executive Stock held by Executive at the time of delivery of
the Repurchase Notice. If the number of shares of Executive Stock then held by
Executive is less than the total number of shares of Executive Stock which the
Company has elected to purchase, the Company shall purchase the remaining
shares elected to be purchased from the other holder(s) of Executive Stock
under this Agreement, pro rata according to the number of shares of Executive
Stock held by such other holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share). The number
of Unvested Shares and Vested Shares to be repurchased hereunder will be
allocated among Executive and the other holders of Executive Stock (if any) pro
rata according to the number of shares of Executive Stock to be purchased from
such person.
(d) If for any reason the Company does not elect to purchase all of the
Executive Stock pursuant to the Repurchase Option, the Investor shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock
the Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within 45 days after the Termination, the Company
shall give written notice (the "Option Notice") to the Investor setting forth
the number of Available Shares and the purchase price for the Available Shares.
The Investor may elect to purchase any or all of the Available Shares by
giving written notice to the Company within one month after the Option Notice
has been given by the Company. As soon as practicable, and in any event within
ten days, after the expiration of the one-month period set forth above, the
Company shall notify each holder of Executive Stock as to the number of shares
being purchased from such holder by the Investor (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Executive Stock, the Company shall also deliver written
notice to the Investor setting forth the number of shares the Investor is
entitled to purchase, the aggregate purchase price and the time and place of
the closing of the transaction. The number of Unvested Shares and Vested
Shares to be repurchased hereunder shall be allocated among the Company and the
Investor pro rata according to the number of shares of Executive Stock to be
purchased by each of them.
(e) The closing of the purchase of the Executive Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or the Investor will pay
for the Executive Stock to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds in the aggregate amount of the
purchase price for such shares. In addition, the Company may pay the purchase
price for such shares by offsetting amounts outstanding under the Executive
Notes issued to the Company hereunder and any other bona fide debts owed by
Executive to the Company. The Company and the Investor will be entitled to
receive representations and warranties from the sellers as to their title to
the Executive Stock being sold and to require all sellers' signatures be
guaranteed.
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(f) The right of the Company and the Investor to repurchase Vested Shares
pursuant to this paragraph 3 shall terminate upon the first to occur of the Sale
of the Company or a Public Offering.
(g) All shares of Executive Stock purchased by the Company pursuant to
this paragraph 3 and pursuant to paragraph 4 shall remain available for
reissuance to new executives as determined by the Board.
4. Restrictions on Transfer of Executive Stock.
(a) Retention of Executive Stock. Until the fifth anniversary of the date
of this Agreement, Executive shall not sell, transfer, assign, pledge or
otherwise dispose of any interest in any shares of Executive Stock, except for
Exempt Transfers (as defined in paragraph 4(b) below) other than sales to the
public pursuant to Rule 144 promulgated under the Securities Act or any similar
rule then in force).
(b) Transfer of Executive Stock. Subject to paragraph 4(a) above,
Executive shall not Transfer any interest in any shares of Executive Stock,
except pursuant to (i) the provisions of paragraph 3 hereof, the provisions of
paragraph 7 of the Stockholders Agreement, a Public Sale or a Sale of the
Company ("Exempt Transfers") or (ii) the provisions of this paragraph 4;
provided that in no event shall any Transfer of Executive Stock pursuant to
this paragraph 4 be made for any consideration other than cash payable upon
consummation of such Transfer or in installments over time. Prior to making
any Transfer other than an Exempt Transfer, Executive will give written notice
(the "Sale Notice") to the Company and the Investor. The Sale Notice will
disclose in reasonable detail the identity of the prospective transferee(s),
the number of shares to be transferred and the terms and conditions of the
proposed transfer. Executive will not consummate any Transfer until 110 days
after the Sale Notice has been given to the Company and to the Investor, unless
the parties to the Transfer have been finally determined pursuant to this
paragraph 4 prior to the expiration of such 110-day period. (The date of the
first to occur of such events is referred to herein as the "Authorization
Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the shares of Executive Stock to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to Executive and the Investor within 60 days
after the Sale Notice has been given to the Company. If the Company has not
elected to purchase all of the Executive Stock to be transferred, the Investor
may elect to purchase all (but not less than all) of the Executive Stock to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by giving written notice of such election to Executive within 90 days
after the Sale Notice has been given to the Investor. If neither the Company
nor the Investor elect to purchase all of the shares of Executive Stock
specified in the Sale Notice, Executive may transfer the shares of Executive
Stock specified in the Sale Notice, subject to the provisions of paragraph 4(d)
below, at a price and on terms no more favorable to the transferee(s) thereof
than
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specified in the Sale Notice during the 60-day period immediately following the
Authorization Date. Any shares of Executive Stock not transferred within such
60-day period will be subject to the provisions of this paragraph 4(c) upon
subsequent transfer. The Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by Executive to
the Company.
(d) Participation Rights. If neither the Company nor the Investor has
elected to purchase all of the Executive Stock specified in the Sale Notice
pursuant to paragraph 4(c) above, the Investor may elect to participate in the
contemplated Transfer by delivering written notice to Executive and the Company
within 100 days after receipt by the Investor of the Sale Notice. If the
Investor has elected to participate in such sale, Executive and the Investor
will be entitled to sell in the contemplated sale, at the same price and on the
same terms, a number of shares of the Company's Class B Common Stock equal to
the product of (i) the quotient determined by dividing the percentage of the
Company's Class B Common Stock (on a fully diluted basis) held by the Investor,
by the aggregate percentage of the Company's Class B Common Stock (on a fully
diluted basis) owned by Executive (including both Vested and Unvested Shares)
and the Investor and (ii) the number of shares of Class B Common Stock to be
sold in the contemplated sale.
For example, if:
(i) the Sale Notice contemplated a sale of 100 shares of Class B
Common Stock and no Class A Common Stock;
(ii) Executive was at such time the owner of 120 shares of Class B
Common Stock (which was equal to 30% of Class B Common Stock on a fully
diluted basis); and
(iii) the Investor elected to participate and the Investor owned 80
shares of Class B Common Stock (which was equal to 20% of Class B Common
Stock on a fully diluted basis) and 250 shares of Class A Common Stock;
then
(A) Executive would be entitled to sell 60 shares of Class B Common
Stock (30% ) 50% x 100 shares); and
(B) the Investor would be entitled to sell 40 shares of Class B
Common Stock (20% ) 50% x 100 shares) and 125 shares of Class A Common
Stock (the same percentage of the Investor's Class A Common Stock as the
percentage of the Investor's Class B Common Stock being sold, i.e., 50%).
Executive will use his best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Investor in the contemplated Transfer
and will not transfer any Executive Stock
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to the prospective transferee(s) if such transferee(s) refuses to allow the
participation of the Investor.
(e) Certain Permitted Transfers. The restrictions contained in this
paragraph 4 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfers
of shares of Executive Stock among Executive's Family Group; provided that such
restrictions will continue to be applicable to the Executive Stock after any
such transfer and the transferees of such Executive Stock have agreed in
writing to be bound by the provisions of this Agreement.
(f) Termination of Restrictions. The restrictions on the Transfer of
shares of Executive Stock set forth in this paragraph 4 will continue with
respect to each share of Executive Stock until the date on which such Executive
Stock has been transferred in a transaction permitted by this paragraph 4
(except in a transaction contemplated by subparagraph 4(e)); provided that in
any event such restrictions will terminate on the first to occur of a Sale of
the Company or a Public Offering.
5. Additional Restrictions on Transfer of Executive Stock.
(a) Legend. The certificates representing the Executive Stock will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF ___________, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY DATED AS OF JUNE 4, 1996. A COPY OF SUCH AGREEMENT
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Executive Stock may sell, transfer
or dispose of any Executive Stock (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such transfer.
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PROVISIONS RELATING TO EMPLOYMENT
6. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to paragraph 6(b) hereof (the "Employment
Period").
(a) Salary, Bonus and Benefits. During the period from the date hereof
until consummation of the Base Acquisition, the Company will pay Executive an
annual base salary (the "Annual Base Salary") of $60,000. Upon consummation of
the Base Acquisition, Executive's Annual Base Salary will be raised to $80,000,
which amount shall be reviewed (but not reduced) annually by the Company's
Chief Executive Officer with the approval of the Board in its sole discretion.
Upon consummation of the Base Acquisition, Executive will also receive a bonus
equal to the amount necessary to raise his effective Annual Base Salary prior
to consummation of the Base Acquisition to $80,000. Executive's Annual Base
Salary for any partial year will be prorated based upon the number of days
elapsed in such year. In addition, during the Employment Period, Executive
will be entitled to all such other benefits as are approved by the Board and
made available to the Company's senior management (including, without
limitation, participation in a Company sponsored 401(k) profit sharing plan).
(b) Termination. The Employment Period will continue until Executive's
resignation (with or without Good Reason), Disability or death or until the
Board determines in its good faith judgment that termination of Executive's
employment is in the best interests of the Company. After the consummation of
the Base Acquisition, if Executive's employment is terminated by the Company
without Cause, by the Executive with Good Reason or as a result of Executive's
Disability or death, until the end of the six-month period commencing on the
date of termination, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. In addition, the Company shall have the option, by delivering
written notice to Executive within 45 days after the date of termination of
Executive's employment, to extend the severance period to the second
anniversary of the date of termination (the "Extended Period"). During the
Extended Period, if any, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. Notwithstanding the foregoing, the severance payments and
rights to benefits set forth in this paragraph 6(b) shall cease and the Company
shall have no further obligation hereunder upon Executive's breach of paragraph
8(a) below.
(c) No Mitigation. The Company agrees that Executive shall not be
required to mitigate the amount of any payment provided for in paragraph 6(b)
by seeking other employment
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or otherwise, and the Company agrees that it is not entitled to any setoff
against such payments for any income earned by Executive after termination.
7. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his performance
under this Agreement concerning the business and affairs of the Company and its
affiliates are the property of the Company. Therefore, Executive agrees that
during the Employment Period and for two years thereafter, he will not disclose
to any unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become publicly available other than as
a result of Executive's wrongful acts or omissions to act or are required to be
disclosed by court order. Executive agrees to deliver to the Company at the
termination of his employment, or at any other time the Company may request in
writing, all memoranda, notes, plans, records, reports and other documents (and
copies thereof) relating to the business of the Company and its affiliates
(including, without limitation, all acquisition prospects, lists and contact
information) which he may then possess or have under his control.
8. Noncompetition and Nonsolicitation
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Employment Period and for six
months thereafter and during the Extended Period, if any (the "Noncompete
Period"), he shall not directly or indirectly own, manage, control, participate
in, consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries or any
businesses in which the company or any of its Subsidiaries has entertained
discussions or has requested and received information relating to the
acquisition of such business by the Company or its Subsidiaries prior to the
termination of the Executive's employment with the Company, in each case as
such businesses exist or are in process on the date of the termination of
Executive's employment, within the United States.
(b) Nonsolicitation. During the two years following the date of
termination of Executive's employment, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier, licensee
or other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary.
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(c) Enforcement. If, at the time of enforcement of paragraph 7 or 8 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
(d) Submission to Jurisdiction. Each of the parties (i) submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois in any
action or proceeding arising out of or relating to paragraphs 7 and/or 8 of
this Agreement, (ii) agrees that all claims in respect of such action or
proceeding may be heard or determined in any such court and (iii) agrees not to
bring any action or proceeding arising out of or relating to paragraphs 7
and/or 8 of this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. Each party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law.
GENERAL PROVISIONS
9. Definitions.
"Affiliate" of the Investor means any direct or indirect general or
limited partner of the Investor, or any employee or owner thereof, or any other
person, entity or investment fund controlling, controlled by or under common
control with the Investor, and will include, without limitation, Golder, Thoma,
Cressey, Rauner, Inc. and its owners and employees.
"Base Acquisition" means the acquisition or series of acquisitions by the
Company of an equipment rental business or businesses which, in the aggregate,
has a 12-month trailing EBITDA of at least $4.5 million.
"Cause"means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other significant act involving dishonesty,
disloyalty or fraud with respect to the Company or any Subsidiary, (ii) conduct
tending to bring the Company or any Subsidiary into substantial public disgrace
or disrepute, (iii) substantial and repeated failure to perform duties as
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reasonably directed by the Board of Directors which is not cured within 30 days
after written notice thereof to Executive, (iv) gross negligence or willful
misconduct with respect to the Company or any of its Subsidiaries which is not
cured within 30 days after written notice thereof to Executive, or (v) any
other material breach of this Agreement by the Executive which is not cured
within 30 days after written notice thereof to Executive.
"Common Equity Value" means the fair market value of the Company's entire
common equity determined on a going concern basis (deducting for such purposes
any preferential amounts accruing to or for the benefit of holders of any class
of such common equity), as between a willing buyer and a willing seller, taking
into account all relevant factors determinative of value, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale, as determined by agreement between the Company and the
Executive. If such agreement is not reached within 30 days after the delivery
of the Repurchase Notice, Common Equity Value shall be determined by an
investment banking firm agreed upon by the Company and the Executive, which
firm shall submit to the Company, the Company and the Executive a report within
30 days of its engagement setting forth such determination. If the parties are
unable to agree on an investment banking firm within 45 days after delivery of
the Repurchase Notice, a firm shall be selected by lot (within seven days) from
the investment banking firms set forth on Exhibit D attached hereto, after the
Company and the Executive have each eliminated one such firm. Such investment
banking firm shall render a determination within 15 days of its engagement.
The expenses of such firm will be borne the Company, and the determination of
such firm will be final and binding upon all parties.
"Disability" means the Executive's inability, due to illness, accident,
injury, physical or mental incapacity or other disability, to carry out
effectively his duties and obligations to the Company hereunder or to
participate effectively and actively in the management of the Company for 100
days in any consecutive period of six months, as determined in the good faith
judgment of the Board. In the event the Executive does not agree with the
Board's determination of Disability, a determination shall be made by a panel
of three doctors. The first shall be chosen by the Company, the second shall
be chosen by the Executive, and the third shall be chosen by the first two.
Any doctor selected by a party will not be affiliated, associated or related to
the party selecting that doctor in any manner whatsoever. The opinion of a
majority of the panel of doctors shall be binding on the parties hereto. The
costs involved in such determination shall be borne by the party against whom
the panel decides.
"EBITDA" means net income plus the sum of (i) interest expense, (ii)
income tax expense, (iii) management fee expense to the Investor or any of its
Affiliates, and (iv) depreciation expense, amortization expense and other
non-cash charges deducted in arriving at such net income, each as calculated in
accordance with generally accepted accounting principles.
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Executive
and/or Executive's spouse and/or
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descendants.
"Executive Stock" will continue to be Executive Stock in the hands of any
holder other than Executive (except for the Company and the Investor and except
for transferees in a Public Sale), and except as otherwise provided herein,
each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or
other recapitalization. Notwithstanding the foregoing, all Unvested Shares
shall remain Executive Stock after any Transfer thereof.
"Fair Market Value" of each share of Common Stock means the composite
closing price of the sales of the Common Stock on the securities exchanges on
which the Common Stock may at the time be listed (as reported in The Wall
Street Journal), or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if the Common Stock is not so listed, the
closing price (or last price, if applicable) of sales of the Common Stock on
The Nasdaq Stock Market (as reported in The Wall Street Journal), or if the
Common Stock is not quoted in The Nasdaq Stock Market but is traded
over-the-counter, the average of the highest bid and lowest asked prices on
such day in the over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If at any time the Common Stock is not listed on any securities
exchange, quoted in the Nasdaq Stock Market, or quoted in the over-the-counter
market, the Fair Market Value shall be equal to the portion of the Common
Equity Value which would be available to the class of Common Stock being valued
upon liquidation of the Company, divided by the total number of shares of
Common Stock of such class outstanding on a fully-diluted basis.
"Good Reason" means (i) any movement of the Company's corporate
headquarters to a location more than 50 miles from its current location, (ii)
any substantial reduction of the Executive's duties and responsibilities to the
Company, (iii) any reduction in the Executive's Base Salary below its then
current level, or (iv) any other material breach of this Agreement by the
Company which is not cured within 30 days after written notice thereof to the
Company.
"Original Cost" means with respect to each share of Class B Common Stock
purchased hereunder, $10 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Permitted Transferee" means any holder of Executive Stock who acquired
such stock pursuant to a transfer permitted by paragraph 4(e).
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board.
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"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) (including any Affiliates of the
Investor) other than the Investor in the aggregate acquire(s) (i) capital stock
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include an
initial Public Offering.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
10. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
If to the Company:
National Equipment Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
If to the Executive:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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If to the Investor:
Golder, Thoma, ▇▇▇▇▇▇▇ Fund IV, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
11. General Provisions.
(a) Expenses. The Company agrees to pay, and hold Executive and all
holders of Executive Stock harmless against liability for the payment of, (i)
the fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement, (ii) the fees and expenses
incurred with respect to any amendments or waivers (whether or not the same
become effective) under or in respect of this Agreement, the agreements
contemplated hereby and the Certificate of Incorporation, (iii) stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement or the issuance, delivery or acquisition of any shares of Common
Stock purchased hereunder, and (iv) the fees and expenses incurred with respect
to the interpretation or enforcement of the rights granted under this
Agreement, the Stockholders Agreement, the other agreements contemplated hereby
and the Certificate of Incorporation and the Company's bylaws.
(b) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject
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matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock
hereunder; provided further that the rights and obligations of the Investor
under this Agreement and the agreements contemplated hereby may be assigned by
the Investor at any time, in whole or in part, to any investment fund managed
by Golder, Thoma, Cressey, Rauner, Inc., or any successor thereto.
(g) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by
and construed in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois.
(h) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused
by any breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion apply to any court
of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, Executive and
the Investor.
(j) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
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(k) Termination. This Agreement (except for the provisions of paragraph
6) shall survive the termination of Executive's employment with the Company and
shall remain in full force and effect after such termination.
* * * * *
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