UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X( Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended: March 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File Number: 001-14145
NEFF CORP.
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(Exact Name of registrant as specified in its charter)
DELAWARE 65-0626400
--------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) I.D. No.)
3750 N.W. 87th Avenue, Miami, Florida 33178
--------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 513-3350
--------------
(Registrant's telephone number, including area code)
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. There were 16,065,000 shares of
Class A Common Stock, $.01 par value and 5,100,000 shares of Class B Common
Stock, $.01 par value, outstanding at April 30, 1999.
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
1999 1998
---------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents ..................................... $ 5,523 $ 4,340
Accounts receivable, net of allowance for doubtful accounts of
$3,775 in 1999 and $3,229 in 1998 ........................... 53,972 59,022
Inventories ................................................... 26,527 29,164
Rental equipment, net ........................................ 329,110 321,220
Property and equipment, net .................................. 47,071 45,114
Goodwill, net ................................................ 101,629 96,722
Prepaid expenses and other assets ............................. 17,377 16,787
---------- ------------
Total assets ...................................... $ 581,209 $ 572,369
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable ......................................... $ 32,163 $ 24,405
Accrued expenses and other ............................... 33,020 28,577
Credit facility .......................................... 183,072 191,189
Senior subordinated notes ................................ 198,559 198,522
Notes payable ............................................ 20,891 17,282
---------- ------------
Total liabilities ............................... 467,705 459,975
=========== ============
Commitments and contingencies ................................. -- --
----------- -------------
Minority interest ............................................. 13,471 13,034
----------- -------------
Stockholders' equity
Preferred Stock; $.01 par value; 18,350 shares authorized;
none issued and outstanding ............................. -- --
Series B Junior Participating Preferred Stock; $.01 par
value; 1,000 shares authorized, none issued and
outstanding ............................................. -- --
Class A Common Stock, $.01 par value; 100,000 shares
authorized; 16,065 shares issued and outstanding ........ 161 161
Class B Special Common Stock, $.01 par value, liquidation
preference $11.67; 20,000 shares authorized; 5,100
shares issued and outstanding ........................... 51 51
Additional paid-in capital ................................... 127,764 127,765
Accumulated deficit .......................................... (27,943) (28,617)
----------- -------------
Total stockholders' equity ...................... 100,033 99,360
----------- -------------
Total liabilities and stockholders' equity ...... $ 581,209 $ 572,369
=========== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
For the Three Months Ended
March 31,
---------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues
Rental revenues ..................................... $ 49,008 $ 30,662
Equipment sales ..................................... 31,698 23,448
Parts and service ................................... 10,914 7,736
----------- -----------
Total revenues ................................. 91,620 61,846
----------- -----------
Cost of revenues
Cost of equipment sold .............................. 25,799 16,718
Depreciation of rental equipment .................... 13,142 11,321
Maintenance of rental equipment ..................... 15,173 9,041
Cost of parts and service ........................... 6,835 4,796
----------- -----------
Total cost of revenues ......................... 60,949 41,876
----------- -----------
Gross profit ................................................ 30,671 19,970
----------- -----------
Other operating expenses
Selling, general and administrative expenses ........ 17,143 11,937
Other depreciation and amortization ................. 2,399 1,726
----------- -----------
Total other operating expenses ................. 19,542 13,663
----------- -----------
Income from operations ...................................... 11,129 6,307
----------- -----------
Other expense
Interest expense .................................... 9,152 7,556
Amortization of debt issue costs .................... 257 1,865
----------- -----------
Total other expense ............................ 9,409 9,421
----------- -----------
Income (loss) before income taxes and minority interest 1,720 (3,114)
(Provision for) benefit from income taxes ................... (608) 1,168
----------- -----------
Income (loss) before minority interest ...................... 1,112 (1,946)
Minority interest ........................................... (438) --
----------- -----------
Net income (loss) ........................................... $ 674 $ (1,946)
=========== ===========
Basic and diluted earnings (loss) per common share .......... $ 0.03 $ (0.46)
=========== ===========
Weighted average common shares outstanding
Basic ............................................... 21,165 8,865
=========== ===========
Diluted ............................................. 21,599 8,865
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
unaudited, in thousands)
Additional
Common Stock A Common Stock B Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 ................... 16,065 $ 161 5,100 $ 51 $ 127,765 $ (28,617) $ 99,360
Net income ................................... -- -- -- -- -- 674 674
Other ........................................ -- -- -- -- (1) -- (1)
------ ------ ------ ------ ---------- ----------- --------
Balance, March 31, 1999 ...................... 16,065 $ 161 5,100 $ 51 $ 127,764 $ (27,943) $100,033
====== ====== ====== ====== ========== ========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
For the Three Months Ended
March 31,
1999 1998
------------ ----------
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) .......................................................... $ 674 $ (1,946)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities, net of acquisitions ........................................... 26,263 15,691
------------ ----------
Net cash provided by operating activities ......................... 26,937 13,745
------------ ----------
Cash Flows from Investing Activities
Purchases of equipment ..................................................... (41,911) (52,393)
Proceeds from sale of equipment ............................................ 31,698 23,448
Purchases of property and equipment ........................................ (3,656) (2,118)
Cash paid for acquisitions ................................................. (7,146) (100,000)
------------ ----------
Net cash used in investing activities ............................. (21,015) (131,063)
------------ ----------
Cash Flows from Financing Activities
Debt issue costs ........................................................... -- (2,325)
Net borrowings (repayments) under Credit Facility .......................... (8,117) 69,880
Net repayments under capitalized lease obligations ......................... (231) (174)
Net borrowings (repayments) under term loan ................................ -- 50,084
Net borrowings (repayments) under notes payable ........................... 3,609 (412)
------------ ----------
Net cash provided by (used in) financing activities ............... (4,739) 117,053
------------ ----------
Net increase (decrease) in cash and cash equivalents ....................... 1,183 (265)
Cash and cash equivalents, beginning of period ............................ 4,340 2,885
------------ ----------
Cash and cash equivalents, end of period .................................. $ 5,523 $ 2,620
============ ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying interim consolidated financial data are unaudited;
however, in the opinion of management, the interim data include all adjustments
necessary for a fair presentation of the results for the interim periods. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting periods. Actual results could differ from those estimates.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999.
The interim unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended December 31, 1998 appearing in the Company's Form 10-K filed with the
Securities and Exchange Commission.
NOTE 2 - RECLASSIFICATIONS
Certain amounts for the prior year have been reclassified to conform with
the current year presentation.
NOTE 3 - CHANGES IN ACCOUNTING POLICIES
During the first quarter of 1999, the Company made certain changes to its
depreciation assumptions to recognize extended estimated service lives and
increased residual values of its rental equipment. The Company believes that
these changes in estimates will more appropriately reflect its financial results
by better allocating the cost of its rental equipment over the service life of
these assets. This change in accounting estimate reduced depreciation of rental
equipment by approximately $3.3 million and increased net income by
approximately $2.0 million or $0.09 per diluted share for the quarter ended
March 31, 1999.
6
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
NOTE 4 -EARNINGS PER SHARE
The treasury stock method was used to determine the dilutive effect of
options on earnings per share data. Net loss and weighted average number of
shares outstanding used in the computations are summarized as follows (in
thousands, except per share data):
Three Months Ended
March 31,
--------------------
1999 1998
--------- --------
<S> <C> <C>
Net income (loss) ............................... $ 674 $(1,946)
Deduct:
Preferred stock dividend ................... -- 906
Accretion of preferred stock ............... -- 1,236
--------- --------
Net income (loss) (basic and diluted) ........... $ 674 $(4,088)
========== ========
Number of shares:
Weighted average common shares oustanding - Basic 21,165 8,865
Employee stock options(1) ................. 434 --
--------- --------
Weighted average common shares - Diluted(2) ..... 21,599 8,865
========== ========
Net income (loss) per common share - Basic ...... $ 0.03 $ (0.46)
========== ========
Net income (loss) per common share - Diluted .... $ 0.03 $ (0.46)
========== ========
</TABLE>
- ----------
(1) Assumes exercise of outstanding options at the beginning of the period.
(2) The incremental shares resulting from the assumed exercise of options for
the three months ended 1998 would be antidilutive and are therefore,
excluded from the computation of diluted earnings (loss) per share.
NOTE 5 -SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------- --------
(in thousands)
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information
Cash paid for interest ................... $ 4,545 $ 6,752
======= ========
Cash paid for taxes ...................... $ 146 $ --
======= ========
</TABLE>
7
<PAGE>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
NOTE 6 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION
Neff Corp. ("Parent") issued $100 million of senior subordinated unsecured
notes in May 1998 and an additional $100 million of senior subordinated
unsecured notes in December 1998. On June 30, 1998, Neff Corp. acquired 65% of
Sullair Argentina Sociedad Anonima ("S.A. Argentina"). S.A. Argentina is not a
guarantor of the unsecured notes of the Parent and financial information for
this subsidiary is presented separately. All of the Parent's direct and indirect
subsidiaries other than S.A. Argentina are wholly owned. Parent and its
subsidiaries other than S.A. Argentina have fully and unconditionally guaranteed
the unsecured notes on a joint and several basis. The subsidiaries' financial
information is presented on a combined basis and Parent is shown separately.
Separate financial statements and other disclosures for the individual guarantor
subsidiaries are not presented because, in the opinion of management, such
information is not material to investors. Prior to June 30, 1998, there were no
non-guarantor subsidiaries and therefore, separate comparative statements are
not presented for periods prior to July 1, 1998.
8
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 1999
(in thousands)
Guarantor Non-Guarantor
Subsidiaries Subsidiary Parent Eliminations Consolidated
------------ ------------- --------- ------------ ------------
Assets
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents .......................... $ 4,972 $ 538 $ 13 $ -- $ 5,523
Accounts receivable, net ........................... 39,485 14,487 -- -- 53,972
Inventories ........................................ 12,447 14,080 -- -- 26,527
Rental equipment, net .............................. 295,095 34,015 -- -- 329,110
Property and equipment, net ........................ 26,121 11,694 9,256 -- 47,071
Goodwill, net ...................................... 87,733 -- -- 13,896 101,629
Prepaid expenses and other assets .................. 1,455 3,552 86,497 (74,127) 17,377
(Due to) from affiliates ........................... (255,115) -- 255,115 -- --
------------ ------------- --------- ------------ ------------
Total assets ............................ $ 212,193 $ 78,366 $350,881 $ (60,231) $ 581,209
============ ============ ======== ============ ============
Liabilities and Stockholders' Equity
Liabilities
Accounts payable ............................. $ 13,608 $ 18,415 $ 140 $ -- $ 32,163
Accrued expenses and other ................... 16,964 1,220 14,836 -- 33,020
Credit facility .............................. 145,759 -- 37,313 -- 183,072
Senior subordinated notes .................... -- -- 198,559 -- 198,559
Notes payable ................................ 650 20,241 -- -- 20,891
------------ ------------- --------- ------------ ------------
Total liabilities ....................... 176,981 39,876 250,848 -- 467,705
------------ ------------- --------- ------------ ------------
Commitments and contingencies ...................... -- -- -- -- --
------------ ------------- --------- ------------ ------------
Minority interest .................................. -- -- -- 13,471 13,471
------------ ------------- --------- ------------ ------------
Stockholders' equity
Class A Common stock; $.01 par value; 100,000
shares authorized; 16,065 shares issued and
outstanding ................................. -- -- 161 -- 161
Class B special common stock; $.01 par value;
20,000 shares authorized; 5,100 shares issued
and outstanding ............................. -- -- 51 -- 51
Capital stock ...................................... -- 90 -- (90) --
Additional paid-in capital ......................... 37,077 3,009 127,764 (40,086) 127,764
Retained earnings (accumulated deficit) ............ (1,865) 35,391 (27,943) (33,526) (27,943)
------------ ------------- --------- ------------ -------------
Total stockholders' equity .............. 35,212 38,490 100,033 (73,702) 100,033
------------ ------------- --------- ------------ -------------
Total liabilities and stockholders' equity $ 212,193 $ 78,366 $350,881 $ (60,231) $ 581,209
============ ============ ======== ============ =============
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
Guarantor Non-Guarantor
Subsidiaries Subsidiary Parent Eliminations Consolidated
------------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues
Rental revenue ..................................... $ 42,291 $ 6,717 $ -- $ -- $ 49,008
Equipment sales .................................... 27,611 4,087 -- -- 31,698
Parts and service .................................. 9,636 1,278 -- -- 10,914
------------ ------------ ------- ------------ ------------
Total revenues .................................. 79,538 12,082 -- -- 91,620
------------ ------------ ------- ------------ ------------
Cost of revenues
Cost of equipment sold ............................. 22,442 3,357 -- -- 25,799
Depreciation of rental equipment ................... 11,562 1,580 -- -- 13,142
Maintenance of rental equipment .................... 13,130 2,043 -- -- 15,173
Cost of parts and service .......................... 6,057 778 -- -- 6,835
------------ ------------ ------- ------------ ------------
Total cost of revenues .......................... 53,191 7,758 -- -- 60,949
------------ ------------ ------- ------------ ------------
Gross profit ........................................... 26,347 4,324 -- -- 30,671
------------ ------------ ------- ------------ ------------
Other operating expenses
Selling, general and administrative expenses ....... 14,893 1,517 733 -- 17,143
Other depreciation and amortization ................ 2,100 153 146 -- 2,399
------------ ------------ ------- ------------ ------------
Total other operating expenses .................. 16,993 1,670 879 -- 19,542
------------ ------------ ------- ------------ ------------
Income from operations ................................ 9,354 2,654 (879) -- 11,129
------------ ------------ ------- ------------ ------------
Other expense
Interest expense ................................... 7,739 700 713 -- 9,152
Amortization of debt issue costs ................... 64 -- 193 -- 257
------------ ------------ ------- ------------ ------------
Total other expense ............................. 7,803 700 906 -- 9,409
------------ ------------ ------- ------------ ------------
Income (loss) before income taxes and minority interest 1,551 1,954 (1,785) -- 1,720
(Provision for) benefit from income taxes ............. (634) (704) 730 -- (608)
------------ ------------ ------- ------------ ------------
Income (loss) before minority interest ................ 917 1,250 (1,055) -- 1,112
Minority interest ..................................... -- -- -- (438) (438)
------------ ------------ ------- ------------ ------------
Net income (loss) ..................................... $ 917 $ 1,250 $ (1,055) $ (438) $ 674
============ ============ ======== ============ ============
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in thousands)
Guarantor Non-Guarantor
Subsidiaries Subsidiary Parent Eliminations Consolidated
------------ ------------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) ..................................... $ 917 $ 1,250 $ (1,055) $ (438) $ 674
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities,
net of acquisitions .................................. 24,647 2,595 (1,417) 438 26,263
------------ ------------- -------- ------------ -------------
Net cash provided by (used in) operating activities 25,564 3,845 (2,472) -- 26,937
------------ ------------- -------- ------------ -------------
Cash Flows from Investing Activities
Purchases of equipment ................................ (30,784) (11,127) -- -- (41,911)
Proceeds from sale of equipment ....................... 27,611 4,087 -- -- 31,698
Purchases of property and equipment ................... (2,998) (658) -- -- (3,656)
Cash paid for acquisitions ............................ (7,146) -- -- -- (7,146)
------------ ------------- -------- ------------ -------------
Net cash used in investing activities ............ (13,317) (7,698) -- -- (21,015)
------------ ------------- -------- ------------ -------------
Cash Flows from Financing Activities
Net repayments under Credit Facility .................. (7,830) -- (287) -- (8,117)
Net repayments under capitalized lease obligations .... (231) -- -- -- (231)
Net borrowings (repayments) under notes payable ....... (91) 3,700 -- -- 3,609
Due to (from) affiliates .............................. (2,772) -- 2,772 -- --
------------ ------------- -------- ------------ -------------
Net cash provided by (used in) financing activities (10,924) 3,700 2,485 -- (4,739)
------------ ------------- -------- ------------ -------------
Net (decrease) increase in cash and cash equivalents . 1,323 (153) 13 -- 1,183
Cash and cash equivalents, beginning of period ....... 3,649 691 -- -- 4,340
------------ ------------- -------- ------------ -------------
Cash and cash equivalents, end of period ............. $ 4,972 $ 538 $ 13 $ -- $ 5,523
============ ============= ======== ============ =============
</TABLE>
11
<PAGE>
NEFF CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(unaudited)
NOTE 7- SEGMENT INFORMATION
The Company has three segments: Neff Rental, Inc. ("Rental"), Neff
Machinery, Inc. ("Machinery") and S.A. Argentina. These segments are a result of
the historical organization of the Company and the management of its
subsidiaries. All of these segments rent and sell industrial and construction
equipment, sell spare parts and merchandise and provide ongoing repair and
maintenance services and have therefore been aggregated for disclosure purposes.
Rental and Machinery's operations are conducted in the United States and S.A.
Argentina's operations are conducted in South America. The information contained
in Note 6 under Non-Guarantor Subsidiary represents S.A. Argentina operations.
All other information in Note 6 represents operations conducted in the United
States.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis compares the quarter ended March 31,
1999 to the quarter ended March 31, 1998 and should be read in conjunction with
the Company's consolidated financial statements and notes thereto appearing
elsewhere in this Form 10-Q and in conjunction with the Company's Form 10-K for
the year ended December 31, 1998.
The matters discussed herein may include forward-looking statements that
involve risks and uncertainties which could result in operating performance that
is materially different from that implied in the forward-looking statements.
Risks that could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, risks inherent in
the Company's growth strategy, such as the uncertainty that the Company will be
able to identify, acquire and integrate attractive acquisition candidates; the
Company's dependence on additional capital for future growth; and the high
degree to which the Company is leveraged. Additional information concerning
these and other risks and uncertainties is contained from time-to-time in the
Company's filings with the Securities and Exchange Commission.
Overview
Since 1995, the Company has pursued an aggressive growth strategy,
increasing its number of equipment rental and sales locations to 89, as of March
31, 1999. The Company has achieved this growth through the addition of 55
equipment rental locations as a result of acquisitions, and the opening of 26
new equipment rental locations primarily throughout the southeast and southwest
regions of the United States. The Company intends to continue to pursue its
aggressive growth strategy by (i) making additional acquisitions of equipment
rental companies; (ii) increasing fleet at its existing equipment rental
locations in both existing and new product lines; (iii) continuing to open new
equipment rental locations; and (iv) expanding its dealership operations.
The Company primarily derives revenue from (i) the rental of equipment,
(ii) sales of new and used equipment and (iii) sales of parts and service. The
Company's primary source of revenue is the rental of equipment to construction
and industrial customers. Growth in rental revenue is dependent upon several
factors, including the demand for rental equipment, the amount of equipment
available for rent, rental rates and the general economic environment. The level
of new and used equipment sales is primarily a function of the supply and demand
for such equipment, price and general economic conditions. The age, quality and
mix of the Company's rental fleet also affect revenues from the sale of used
equipment. Revenues derived from the sale of parts and service are generally
correlated with sales of new equipment.
Costs of revenues include cost of equipment sold, depreciation and
maintenance costs of rental equipment and cost of parts and service. Cost of
equipment sold consists of the net book value of rental equipment at the time of
sale and cost for new equipment sales. Depreciation of rental equipment
represents the depreciation costs attributable to rental equipment. Maintenance
of rental equipment represents the costs of servicing and maintaining rental
equipment on an ongoing basis. Cost of parts and service represents costs
attributable to the sale of parts directly to customers and service provided for
the repair of customer owned equipment.
Depreciation of rental equipment is calculated on a straight-line basis
over the estimated service life of the asset (generally two to eight years with
13
<PAGE>
a residual value up to 20%, depending on the nature of the asset). Since January
1, 1996, the Company has made certain changes to its depreciation assumptions to
recognize extended estimated service lives and increased residual values of its
rental equipment. The Company believes that these changes in estimates will more
appropriately reflect its financial results by better allocating the cost of its
rental equipment over the service lives of these assets. In addition, the new
lives and residual values more closely conform to those prevalent in the
industry.
Selling, general and administrative expenses include sales and marketing
expenses, payroll and related costs, professional fees, property and other taxes
and other administrative overhead. Other depreciation and amortization
represents the depreciation associated with property and equipment (other than
rental equipment) and the amortization of goodwill and intangible assets.
Results of Operations
In view of the Company's growth, management believes that the
period-to-period comparisons of its financial results are not necessarily
meaningful and should not be relied upon as an indication of future performance.
In addition, the Company's results of operations may fluctuate from period to
period in the future as a result of the cyclical nature of the industry in which
the Company operates.
First Quarter Ended March 31, 1999 Compared to First Quarter Ended March 31,
1998
Revenues. Total revenues for the quarter ended March 31, 1999 increased
48.2% to $91.6 million from $61.8 million for the quarter ended March 31, 1998.
This growth in revenues is primarily attributable to an increase in revenues
from the maturation of the 26 rental locations opened since March 1995 of
approximately $9.0 million and approximately $17.8 million attributable to
revenues generated by acquisitions.
Gross Profit. Gross profit for the quarter ended March 31, 1999 increased
53.5% to $30.7 million or 33.5% of total revenues from $20.0 million or 32.3% of
total revenues for the quarter ended March 31, 1998. This increase is primarily
attributable to an increase in gross profit of approximately $4.9 million
associated with the maturation of the 26 rental locations opened since March
1995 and approximately $4.3 million associated with the growth in revenues
arising from acquisitions. These increases in gross profit include approximately
$3.3 million related to the change in the Company's depreciation policy to
recognize extended service levels and increased salvage value of its assets. The
increase in gross profit as a percentage of revenue is primarily attributable to
improved rental revenue margins coupled with a larger mix of rental revenues.
The Company had 89 rental locations at March 31, 1999, compared to 70 at March
31, 1998.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the quarter ended March 31, 1999 increased 43.7% to
$17.1 million or 18.7% of total revenues from $11.9 million or 19.3% of total
revenues for the quarter ended March 31, 1998. The increase in selling, general
and administrative expenses is primarily attributable to the increase in the
number of locations operated by the Company and increased regional and corporate
personnel to support the continued growth of the Company.
Other Depreciation and Amortization. Other depreciation and amortization
expense for the quarter ended March 31, 1999 increased 39.0% to $2.4 million or
2.6% of total revenues from $1.7 million or 2.8% of total revenues. The increase
is primarily attributable to amortization of goodwill resulting from additional
acquisitions.
14
<PAGE>
Interest Expense. Interest expense for the quarter ended March 31, 1999
increased 21.1% to $9.2 million from $7.6 million in 1998. The increase is
primarily attributable to the Company's borrowings related to acquisitions and
to additional borrowings related to the Company's continued investment in rental
equipment.
Liquidity and Capital Resources
During the first quarter of 1999, the Company financed its growth and made
net repayments from cash flow generated by operations.
For the three months ended March 31, 1999, net cash flows provided by
operating activities was $26.9 million, compared to net cash provided by
operating activities of $13.7 million for the three months ended March 31, 1998.
This increase is primarily attributable to the growth in the Company's
operations resulting from an increase in the number of rental locations operated
by the Company.
Net cash used in investing activities for the three months ended March 31,
1999 was $21.0 million as compared to $131.1 million for the same period of the
prior year. This decrease is primarily attributable to a decrease in the amount
expended for acquisitions.
Net cash used in financing activities was $4.7 million for the three months
ended March 31, 1999, as compared to net cash provided of $117.1 million for the
same period in the prior year. The net cash used in financing activities is
primarily attributable to repayments of borrowings under the Company's Credit
Facility. As of March 31, 1999, the Company had approximately $117.9 million
available under its Credit Facility.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits:
Exhibit Description
- ------- -----------
10.1 Employment agreement by and between Neff Corp. and Peter G. Gladis,
Senior Vice President, Neff Rental, Inc.
10.2 Form of employment agreement by and between Neff Corp. and Vice
President of Neff Rental, Inc.
27 Financial Data Schedule
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEFF CORP.
Registrant
Date: May 6, 1999 /s/Bonnie S. Biumi
-------------------------------------------
BONNIE S. BIUMI
Chief Financial Officer
On behalf of the registrant and as
Principal Financial and Accounting Officer
17
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
31st day of March, 1999, by and between Neff Corp., a Delaware Company (the
"Company"), and Peter G. Gladis, an individual (the "Executive") (hereinafter
collectively referred to as the "Parties").
WHEREAS, the Executive commenced employment with Neff Rental, Inc., a
wholly-owned subsidiary of the Company in September, 1995;
WHEREAS, the Company continues to desire to employ the Executive as Senior
Vice President of Neff Rental, Inc. and the Executive continues to desire to
serve Neff Rental, Inc. as its Senior Vice President;
WHEREAS, the Company and the Executive desire to set forth the terms of the
Executive's continued employment with Neff Rental, Inc.:
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. Term. Subject to the provisions for termination set forth in Section 8,
the initial term of employment under this Agreement shall be for a period of
three (3) years commencing on the date hereof and shall be automatically
extended for additional one (1) year periods, unless one of the Parties shall
give written notice to the other on or before the date which is six (6) months
prior to the expiration of the current term of the Agreement of such Party's
election not to so extend this Agreement.
2. Employment. (a) The Executive shall be employed as Senior Vice President
of Neff Rental, Inc. or in such other senior executive capacity as may be
mutually agreed to in writing by the Parties. The Executive shall perform the
duties, undertake the responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a similar executive
capacity. The Executive shall report to the President of the Company.
(b) Excluding periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time during
the usual business hours to the business and affairs of the Company to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder. Subject to the foregoing, the Executive may (i) serve on corporate,
trade group, civic or charitable boards or committees, (ii) manage his personal,
financial and legal affairs, (iii) deliver lectures, fulfill speaking
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engagements or teach at educational institutions or programs, and (iv) Subject
to Section 15, invest personally in any business in a private capacity where no
actual conflict of interest exists between such investment and the business of
the Company.
3. Base Salary and Bonus. The Company agrees to pay or cause to be paid to
the Executive during the term of this Agreement a base salary at the rate of
$225,000 per annum or such larger amount as the Board of Directors of the
Company (the "Board") may from time to time determine (hereinafter referred to
as the "Base Salary"). Such Base Salary shall be payable in accordance with the
Company's customary practices applicable to its senior executives. In addition
to the Base Salary, Executive shall be eligible annually for the term of his
employment under this Agreement to receive a cash bonus in the discretion of the
Board.
4. Employee Benefits. The Executive shall be entitled to participate in all
employee benefit plans, practices and programs maintained by the Company and
made available to employees generally including, without limitation all pension,
retirement, profit sharing, savings, medical, hospitalization, disability,
dental, life or travel accident insurance benefit plans. The Executive's
participation in such plans, practices and programs shall be on the same basis
and terms as are applicable to senior executives of the Company generally.
5. Executive Benefits. The Executive shall be entitled to participate in
all executive benefit or incentive compensation plans now maintained or
hereafter established by the Company for the purpose of providing compensation
and/or benefits to executives of the Company including, but not limited to, the
Company's 401(k) Plan, the Company's Phantom Stock Plan, the Company's 1998
Stock Incentive Plan and any supplemental retirement, salary continuation, stock
option, deferred compensation, supplemental medical or life insurance or other
bonus or incentive compensation plans. Unless otherwise provided herein, or in
the terms of such executive benefit or incentive compensation plans, the
Executive's participation in such plans shall be on the same basis and terms as
other similarly situated executives of the Company, but in no event on a basis
less favorable in terms of benefit levels or reward opportunities applicable to
the Executive as in effect on the date hereof. No additional compensation
provided under any of such plans shall be deemed to modify or otherwise affect
the terms of this Agreement or any of the Executive's entitlements hereunder.
6. Other Benefits.
(a) Fringe Benefits and Perquisites. The Executive shall be entitled
to receive all fringe benefits and perquisites generally made available by
the Company to its executives.
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(b) Expenses. The Executive shall be entitled to receive prompt
reimbursement of all expenses reasonably incurred by him in connection with
the performance of his duties hereunder.
(c) Office and Facilities. Consistent with his senior executive status
hereunder, the Executive shall be provided with an appropriate office at
the Company's executive offices.
7. Vacation and Sick Leave. At such reasonable times as the Board shall in
its discretion permit, the Executive shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, in accordance with the following:
(a) The Executive shall be entitled to annual vacation in accordance
with the policies as periodically established by the Board for similarly
situated executives of the Company.
(b) In addition to the aforesaid paid vacations, the Executive shall
be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment for such additional periods of time and for
such valid and legitimate reasons as the Board in its discretion may
determine. Further, the Board shall be entitled to grant to the Executive a
leave or leaves of absence with or without pay at such time or times and
upon such terms and conditions as the Board in its discretion may
determine.
(c) The Executive shall be entitled to sick leave (without loss of
pay) in accordance with the Company's policies as in effect from time to
time.
8. Termination. The Executive's employment hereunder may be terminated
under the following circumstances:
(a) Disability. The Company may terminate the Executive's employment
after having established the Executive's Disability. For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs
the Executive's ability to perform substantially his or her duties for a
period of one hundred eighty (180) consecutive days. A determination of
Disability shall be made by a physician satisfactory to both the Executive
and the Company, which physician's determination as to Disability shall be
made within 10 days of the request therefor and shall be binding on all
parties; provided, however, that if the Executive and the Company do not
agree on a physician, the Executive and the Company shall each select a
physician and these two together shall select a third physician, which
third physician's determination as to Disability shall be binding on all
parties. The Executive shall be entitled to the compensation and benefits
provided for under this Agreement for any period during the term of this
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Agreement and prior to the establishment of the Executive's Disability
during which the Executive is unable to work due to a physical or mental
infirmity. Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of Termination
(as each term is hereinafter defined) relating to the Executive's
Disability, the Executive shall be entitled to return to his position with
the Company as set forth in this Agreement in which event no Disability of
the Executive will be deemed to have occurred.
(b) Cause. The Company may terminate the Executive's employment for
"Cause." The Company shall be deemed to have terminated the Executive's
employment for "Cause" in the event that the Executive's employment is
terminated for any of the following reasons: (i) the commission of an act
of fraud or intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the Company;
(ii) dishonesty or willful misconduct in the performance of duties; or
(iii) willful violation of any law, rule or regulation in connection with
the performance of duties (other than traffic violations or similar
offenses); provided, that no act or failure to act shall be considered
willful unless done or omitted to be done in bad faith and without
reasonable belief that the action or omission was in the best interests of
the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after Notice of
Termination is given by the Company shall constitute Cause for purposes of
this Agreement.
(c) (i) Good Reason. The Executive may terminate his employment for
"Good Reason." For purposes of this Agreement, Good Reason shall mean the
occurrence of any of the events or conditions described in Subsections (i)
through (ix) hereof:
(A) during the two (2) year period following a Change in Control
(as defined):
(1) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, does not represent a
promotion from his status, title, position or responsibilities as
in effect immediately prior thereto; the assignment to the
Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with such
status, title, position or responsibilities; or any removal of
the Executive from or failure to reappoint or reelect him to any
of such positions, except in connection with the termination of
his employment for Disability, Cause, as a result of his death or
by the Executive other than for Good Reason;
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(2) a reduction in the Executive's Base Salary or any
failure to pay the Executive any compensation or benefits to
which he is entitled within five (5) days of the date due;
(3) a failure by the Company to increase the Executive's
Base Salary at least annually at a percentage of Base Salary no
less than the average percentage increases granted to the
Executive during the three most recent full years ended prior to
a Change in Control;
(4) the failure by the Company to (i) continue in effect
(without reduction in benefit level and/or reward opportunities)
any material compensation or benefit plan in which the Executive
was participating at the time of the Change in Control,
including, but not limited to, the Company's 401(k) Plan, the
Company's 1998 Stock Incentive Plan, or (ii) provide the
Executive with compensation and benefits at least equal (in terms
of benefit levels and/or reward opportunities) to those provided
for under each employee benefit plan, program and practice as in
effect immediately prior to the Change in Control (or as in
effect following the Change in Control, if greater).
(5) the insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy, of the Company;
(6) any material breach by the Company of any provision of
this Agreement;
(7) any purported termination of the Executive's employment
for Cause by the Company which does not comply with the terms of
Section 8 of this Agreement;
(8) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any successor or assign of
the Company to assume and agree to perform this Agreement, as
contemplated in Section 13 hereof; or
(9) the Company requires the Executive to be based at any
office located more than fifty (50) miles from the office where
the Executive is currently based without the Executive's consent;
(B) the nature of Executive's duties or the scope of Executive's
responsibilities (including reporting responsibilities) is materially
modified by the Company without Executive's written consent where such
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<PAGE>
material modification constitutes a demotion of Executive or a
substantial reduction in Executive's responsibilities;
(C) a reduction in the Executive's Base Salary;
(D) any material breach by the Company of any provision of this
Agreement that has not been cured within thirty (30) days following
receipt by the Company of written notice thereof from the Executive
specifically identifying such material breach; or
(E) this Agreement is not assumed by any successor to the Company
pursuant to Section 13 hereof in a situation other than a Change in
Control.
(ii) The Executive's right to terminate his employment pursuant
to this Section 8(c) shall not be affected by his incapacity due to
physical or mental illness if such incapacity occurs after the event
or condition giving rise to Executive's right to terminate his
employment pursuant to this Section 8(c).
(d) Voluntary Termination. The Executive may voluntarily
terminate his employment hereunder at any time.
(e) For purposes of this Agreement, a "Change in Control" shall
mean any of the following events:
(i) An acquisition (other than directly from Neff Corp. (the
(Company")) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), immediately after
which such Person has "Beneficial Ownership" (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of thirty
percent (30%) or more of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that Beneficial Ownership by any
of Jorge Mas, Juan Carlos Mas, Jose Ramon Mas, or aggregate
Beneficial Ownership by General Electric Capital Corporation and
any of its 100% Affiliates (as defined), of thirty percent (30%)
or more of the then outstanding Shares or the combined voting
power of the Company's then outstanding Voting Securities shall
not constitute a Change in Control; provided further, however, in
determining whether a Change in Control has occurred, Shares or
Voting Securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (A) an employee benefit
plan (or a trust forming a part thereof) maintained by (1) the
Company or (2) any corporation or other Person of which a
majority of its voting power or its voting equity securities or
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equity interest is owned, directly or indirectly, by the Company
(for purposes of this definition, a "Subsidiary"), (B) the
Company or its Subsidiaries, or (C) any Person in connection with
a "Non-Control Transaction" (as hereinafter defined);
(ii) The individuals who, as of the date of this Agreement
are members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the members of the
Board of Directors of the Company; provided, however, that if the
election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(iii) The consummation of:
(A) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean
a merger, consolidation or reorganization of the Company where:
(1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own directly
or indirectly immediately following such merger,
consolidation or reorganization, at least fifty percent
(50%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board
of directors of the Surviving Corporation, or a corporation
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beneficially directly or indirectly owning a majority of the
Voting Securities of the Surviving Corporation, and
(3) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained by
the Company, or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty percent
(50%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its
common stock.
(B) A complete liquidation or dissolution of the Company;
or
(C) The sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
If the Executive's employment is terminated by the Company without Cause
prior to the date of a Change in Control but the Executive reasonably
demonstrates that the termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
change in control or (ii) otherwise arose in connection with, or in anticipation
of, a Change in Control which has been threatened or proposed, such termination
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shall be deemed to have occurred after a Change in Control for purposes of this
Plan provided a Change in Control shall actually have occurred.
For the purposes of this Agreement, "100% Affiliate" means with respect to
any Person, (i) each other Person that, directly or indirectly, owns or controls
one hundred percent (100%) of the stock having ordinary voting power in the
election of directors of such Person, (ii) each other Person of which the stock
having ordinary voting power in the election of its directors is owned or
controlled one hundred percent (100%) by such Person, or (iii) each other Person
of which the stock having ordinary voting power in the election of its directors
is owned or controlled one hundred percent (100%) by any Person defined in
clause (i) above or any of its 100% Affiliates.
(f) Notice of Termination. Any purported termination by the Company or
by the Executive shall be communicated by written Notice of Termination to
the other. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which indicates the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. For purposes of
this Agreement, no such purported termination of employment shall be
effective without such Notice of Termination.
(g) Termination Date, Etc. "Termination Date" shall mean in the case
of the Executive's death, his date of death, or in all other cases, the
date specified in the Notice of Termination subject to the following:
(i) If the Executive's employment is terminated by the Company for
Cause or due to Disability, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination
is given to the Executive, provided that in the case of Disability the
Executive shall not have returned to the full-time performance of his
duties during such period of at least thirty (30) days; and
(ii) If the Executive's employment is terminated for Good Reason, the
date specified in the Notice of Termination shall not be more than sixty
(60) days from the date the Notice of Termination is given to the Company.
9. Compensation Upon Termination. Upon termination of the Executive's
employment during the term of this Agreement (including any extensions thereof),
the Executive shall be entitled to the following benefits:
(a) If the Executive's employment is terminated by the Company for
Cause or Disability or by the Executive (other than for Good Reason), or by
reason of the Executive's death, the Company shall pay the Executive all
amounts earned or accrued hereunder through the Termination Date but not
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paid as of the Termination Date, including (i) Base Salary, (ii)
reimbursement for any and all monies advanced or expenses incurred in
connection with the Executive's employment for reasonable and necessary
expenses incurred by the Executive on behalf of the Company for the period
ending on the Termination Date, (iii) vacation pay, (iv) any bonuses or
incentive compensation and (v) any previous compensation which the
Executive has previously deferred (including any interest earned or
credited thereon) (collectively, "Accrued Compensation"). In addition to
the foregoing, if the Executive's employment is terminated by the Company
for Disability or by reason of the Executive's death, the Company shall pay
to the Executive or his beneficiaries as severance pay each month for the
two (2) years immediately following the date of termination an amount in
cash equal to the difference, if any, between (i) the sum of (y) the amount
of payments Executive receives or will receive during that month pursuant
to the disability insurance policies maintained by the Company for
Executive's benefit and (z) the adjustment described in the next sentence
and (ii) Executive's base monthly salary on the date of termination due to
Disability. The adjustment referred to in clause (z) of the preceding
sentence is the amount by which any tax-exempt payments referred to in
clause (y) would need to be increased if such payments were subject to tax
in order to make the after-tax proceeds of such payments equal to the
actual amount of such tax-exempt payments. The Executive's entitlement to
any other compensation or benefits shall be determined in accordance with
the Company's employee benefit plans and other applicable programs and
practices then in effect.
(b) If the Executive's employment by the Company shall be terminated
(1) by the Company other than for Cause, death or Disability or (2) by the
Executive for Good Reason, then the Executive shall be entitled to the
benefits provided below:
(i) the Company shall pay the Executive all Accrued Compensation;
(ii) the Company shall pay the Executive as severance pay and in
lieu of any further salary for periods subsequent to the Termination
Date, in a single payment an amount in cash equal to three (3) times
the sum of (A) the Executive's Base Salary at the highest rate in
effect at any time within the ninety (90) day period ending on the
date the Notice of Termination is given (or if the Executive's
employment is terminated after a Change in Control, the Executive's
Base Salary immediately prior to the Change in Control, if greater)
and (B) the "Bonus Amount." The term "Bonus Amount" shall mean the
greatest amount of the cash awards received by the Executive during
any of the three fiscal years immediately preceding the Termination
Date;
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(iii) for a period of thirty-six (36) months following such
termination, the Company shall at its expense continue on behalf of
the Executive and his dependents and beneficiaries the life insurance,
disability, medical, dental and hospitalization benefits which were
being provided to the Executive at the time Notice of Termination is
given (or, if the Executive is terminated following a Change in
Control, the benefits provided to the Executive at the time of the
Change in Control, if greater). The benefits provided in this Section
9 (b) (iii) shall be no less favorable to the Executive, in terms of
amounts and deductibles and costs to him, than the coverage provided
the Executive under the plans providing such benefits at the time
Notice of Termination is given (or, if the Executive is terminated
following a Change in Control, at the time of the Change in Control if
more favorable to the Executive). The Company's obligation hereunder
with respect to the foregoing benefits shall be limited to the extent
that the Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide the Executive
hereunder as long as the aggregate coverage of the combined benefit
plans is no less favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage required to be
provided hereunder. This Subsection (iii) shall not be interpreted so
as to limit any benefits to which the Executive or his dependents may
be entitled under any of the Company's employee benefit plans,
programs or practices following the Executive's termination of
employment, including, without limitation, retiree medical and life
insurance benefits; and
(iv) all restrictions on any outstanding award (including
restricted stock and performance stock awards) granted to the
Executive shall lapse and such awards shall become fully (100%) vested
immediately, assuming all performance targets and goals (if
applicable) had been fully met by the Company and by the Executive, as
applicable, for such year, and all stock options and stock
appreciation rights granted to the Executive shall become fully (100%)
vested and shall become immediately exercisable.
(c) The amounts provided for in Sections 9(a) and 9(b)(i), (ii) and
(iv) shall be paid within ten (10) days after the Executive's Termination
Date.
(d) The Executive shall not be required to mitigate the amount of any
payment, benefit or other Company obligation provided for in this Agreement
by seeking other employment or otherwise and no such payment, benefit or
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other Company obligation shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent
employment.
10. Excise Tax Payments
(a) In the event that any payment or benefit (within the meaning of
Section 280G(b) (2) of the Internal Revenue Code of 1986, as amended (the
"Code")), to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or of
a substantial portion of its assets (a "Payment" or "Payments"), would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive will be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties, other than interest and
penalties imposed by reason of the Executive's failure to file timely a tax
return or pay taxes shown due on his return, imposed with respect to such
taxes and the Excise Tax), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) An initial determination as to whether a Gross-Up Payment is
required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made at the Company's expense by an accounting firm selected by
the Company and reasonably acceptable to the Executive which is designated
as one of the five largest accounting firms in the United States (the
"Accounting Firm"). The Accounting Firm shall provide its determination
(the "Determination"), together with detailed supporting calculations and
documentation to the Company and the Executive within five days of the
Termination Date if applicable, or such other time as requested by the
Company or by the Executive (provided the Executive reasonably believes
that any of the Payments may be subject to the Excise Tax) and if the
Accounting Firm determines that no Excise Tax is payable by the Executive
with respect to a Payment or Payments, it shall furnish the Executive with
an opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Payment or Payments. Within ten days of
the delivery of the Determination to the Executive, the Executive shall
have the right to dispute the Determination (the "Dispute"). The Gross-Up
Payment, if any, as determined pursuant to this Paragraph 10(b) shall be
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paid by the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. The existence of the Dispute shall not in
any way affect the Executive's right to receive the Gross-Up Payment in
accordance with the Determination. If there is no Dispute, the
Determination shall be binding, final and conclusive upon the Company and
the Executive subject to the application of Paragraph 10(c) below.
(c) As a result of the uncertainty in the application of Sections 4999
and 280G of the Code, it is possible that a Gross-Up Payment (or a portion
thereof) will be paid which should not have been paid (an "Excess Payment")
or a Gross-Up Payment (or a portion thereof) which should have been paid
will not have been paid (an "Underpayment"). An Underpayment shall be
deemed to have occurred (i) upon notice (formal or informal) to the
Executive from any governmental taxing authority that the Executive's tax
liability (whether in respect of the Executive's current taxable year or in
respect of any prior taxable year) may be increased by reason of the
imposition of the Excise Tax on a Payment or Payments with respect to which
the Company has failed to make a sufficient Gross-Up Payment, (ii) upon a
determination by a court, (iii) by reason of determination by the Company
(which shall include the position taken by the Company, together with its
consolidated group, on its federal income tax return) or (iv) upon the
resolution of the Dispute to the Executive's satisfaction. If an
Underpayment occurs, the Executive shall promptly notify the Company and
the Company shall promptly, but in any event, at least five days prior to
the date on which the applicable government taxing authority has requested
payment, pay to the Executive an additional Gross-Up Payment equal to the
amount of the Underpayment plus any interest and penalties (other than
interest and penalties imposed by reason of the Executive's failure to file
timely a tax return or pay taxes shown due on the Executive's return)
imposed on the Underpayment. An Excess Payment shall be deemed to have
occurred upon a "Final Determination" (as hereinafter defined) that the
Excise Tax shall not be imposed upon a Payment or Payments (or portion
thereof) with respect to which the Executive had previously received a
Gross-Up Payment. A "Final Determination" shall be deemed to have occurred
when the Executive has received from the applicable government taxing
authority a refund of taxes or other reduction in the Executive's tax
liability by reason of the Excise Payment and upon either (x) the date a
determination is made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally and conclusively
binds the Executive and such taxing authority, or in the event that a claim
is brought before a court of competent jurisdiction, the date upon which a
final determination has been made by such court and either all appeals have
been taken and finally resolved or the time for all appeals has expired or
(y) the statute of limitations with respect to the Executive's applicable
tax return has expired. If an Excess Payment is determined to have been
made, the amount of the Excess Payment shall be treated as a loan by the
Company to the Executive and the Executive shall pay to the Company on
demand (but not less than 10 days after the determination of such Excess
Payment and written notice has been delivered to the Executive) the amount
of the Excess Payment plus interest at an annual rate equal to the
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Applicable Federal Rate provided for in Section 1274(d) of the Code from
the date the Gross-Up Payment (to which the Excess Payment relates) was
paid to the Executive until the date of repayment to the Company.
(d) Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Determination, an Excise Tax
will be imposed on any Payment or Payments, the company shall pay to the
applicable government taxing authorities as Excise Tax withholding, the
amount of the Excise Tax that the Company has actually withheld from the
Payment or Payments.
11. Unauthorized Disclosure. The Executive shall not make any Unauthorized
Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean
disclosure by the Executive without the consent of the Board to any person,
other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company or as may be legally
required, of any confidential information obtained by the Executive while in the
employ of the Company (including, but not limited to, any confidential
information with respect to any of the Company's customers or methods of
distribution) the disclosure of which he knows or has reason to believe will be
materially injurious to the Company; provided, however, that such term shall not
include the use or disclosure by the Executive, without consent, of any
information known generally to the public (other than as a result of disclosure
by him in violation of this Section 11) or any information not otherwise
considered confidential by a reasonable person engaged in the same business as
that conducted by the Company.
12. Indemnification.
(a) General. The Company agrees that if the Executive is made a party
or threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that the Executive is or was a director or officer of
the Company or any subsidiary thereof or is or was serving at the request
of the Company or any subsidiary thereof as a director, officer, member,
employee or agent of another corporation or a partnership, joint venture,
trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a director,
officer, member, employee or agent while serving as a director, officer,
member, employee or agent, the Executive shall be indemnified and held
harmless by the Company to the fullest extent authorized by Florida law, as
the same exists or may hereafter be amended, against all Expenses (as
hereinafter defined) incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even
if the Executive has ceased to be an officer, director, or agent, or is no
longer employed by the Company and shall inure to the benefit of his heirs,
executors and administrators; provided, however, that the Executive shall
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not be so indemnified for any Proceeding which shall have been adjudicated
to have arisen out of or been based upon his willful misconduct, bad faith,
gross negligence or reckless disregard of duty or his failure to act in
good faith in the reasonable belief that his action was in the best
interests of the Company.
(b) Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys' fees,
accountants' investigations, and any expenses of establishing a right to
indemnification under this Agreement.
(c) Enforcement. If a claim or request for indennification under this
Section 12 is not paid by the Company or on its behalf, within thirty (30)
days after a written claim or request has been received by the Company, the
Executive may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim or request and if successful in
whole or in part, the Executive shall be entitled to be paid also the
expenses of prosecuting such suit, in accordance with Section 14 hereof.
All obligations for indemnification hereunder shall be subject to, and paid
in accordance with, applicable Florida law.
(d) Partial Indemnification. If the Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof,
the Company shall nevertheless indemnify the Executive for the portion of
such Expenses to which Executive is entitled.
(e) Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses and upon the
Executive's delivery of an undertaking to reimburse the Company for
Expenses with respect to which the Executive is not entitled to
indemnification.
(f) Notice of Claim. The Executive shall give to the Company notice of
any claim made against him for which indemnification will or could be
sought under this Agreement, but the failure of the Executive to give such
notice shall not relieve the Company of any liability the Company may have
to the Executive except to the extent that the Company is prejudiced
thereby. In addition, the Executive shall give the Company such information
and cooperation as it may reasonably require and as shall be within the
Executive's power and at such time and places as are convenient for the
Executive.
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(g) Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof;
(i) The Company will be entitled to participate therein at
its own expense; and
(ii) Except as otherwise provided below, to the extent that
it may wish, the Company will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to the Executive.
The Executive also shall have the right to employ his own counsel
in such action, suit or proceeding if he reasonably concludes
that failure to do so would involve a conflict of interest
between the Company and the Executive, and under such
circumstances the fees and expenses of such counsel shall be at
the expense of the Company.
(iii) The Company shall not be liable to indemnify the
Executive under this Agreement for any amounts paid in settlement
of any action or claim effected without its written consent. The
Company shall not settle any action or claim in any manner which
would not include a full and unconditional release of the
Executive without the Executive's prior written consent. Neither
the Company nor the Executive will unreasonably withhold or delay
their consent to any proposed settlement.
(h) Non-exclusivity. The right to indemnification and the payment of
Expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Agreement shall not be exclusive of any other
right which the Executive may have or hereafter may acquire under any
statute, provision of the declaration of trust or certificate of
incorporation or by-laws of the Company or any subsidiary, agreement, vote
of shareholders or disinterested directors or otherwise.
13. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall
require any successor or assign to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had
taken place. The term "the Company" as used herein shall include such
successors and assigns. The term "successors and assigns" as used herein
shall mean a corporation or other entity acquiring all or substantially all
the assets and business of the Company (including this Agreement) whether
by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
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This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
14. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Executive as they become due as a result of (a) the Company and the Executive
entering into this Agreement, (b) the Executive's termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment) or (c) the Executive's seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
without limitation, any such fees and expenses incurred in connection with (x)
the Dispute and (y) the Gross-Up Payment, whether as a result of any applicable
government taxing authority, proceeding, audit or otherwise) or by any other
plan or arrangement maintained by the Company under which the Executive is or
may be entitled to receive benefits.
15. Covenant Not to Compete
(a) The Executive agrees that during the term of this Agreement and
for one (1) year subsequent to termination of Executive's employment with
the Company for any reason (the "Non-Compete Term") the Executive shall
not:
(i) Either directly or indirectly, for himself or on behalf
of or in conjunction with any other person, persons, company,
firm, partnership, corporation, business, group or other entity
(each, a "Person"), engage in any business or activity, whether
as an employee, consultant, partner, principal, agent,
representative, stockholder or other individual, corporate, or
representative capacity, or render any services or provide any
advice or substantial assistance to any business, person or
entity, if such business, person or entity, directly or
indirectly will in any way compete with the Company (a "Competing
Business"). Without limiting the generality of the foregoing, for
purposes of this Section 15, it is understood that Competing
Businesses shall include any business which rents or sells
construction or industrial equipment or engages in the sale of
maintenance, repair or operating supplies; provided, however,
that notwithstanding the foregoing, the Executive may make
passive investments in up to 2% of the outstanding publicly
traded common stock of an entity which operates a Competing
Business.
(ii) Either directly or indirectly, for himself or on behalf
of or in conjunction with any other Person, solicit, hire or
divert any Person who is, or who is, at the time of termination
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of the Executive's employment, or has been within six (6) months
prior to the time of termination of Executive's employment, an
employee of the Company or any of its subsidiaries for the
purpose or with the intent of enticing such employee away from
the employ of the Company or any of its subsidiaries.
(iii) Either directly or indirectly, for himself or on
behalf of or in conjunction with any other Person, solicit, hire
or divert any Person who is, or who is, at the time of
termination of the Executive's employment, or has been within six
(6) months prior to the time of termination of Executive's
employment, a customer or supplier of the Company or any of its
subsidiaries for the purpose or with the intent of (A) inducing
or attempting to induce such Person to cease doin business with
the Company or (B) in any way interfering with the relationship
between such Person and the Company.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenants, and because of
the immediate and irreparable damage that could be caused to the Company
for which it would have no other adequate remedy, the Executive agrees (i)
that the foregoing covenants, in addition to and not in limitation of any
other rights, remedies or damages available to the Company at law, in
equity or under this Agreement, may be enforced by the Company in the event
of the breach or threatened breach by the Executive, by injunctions and/or
restraining orders and (ii) to pay the sum of one thousand dollars ($1,000)
per day for each day during which the Executive is in breach of such
covenants as liquidated damages or, if greater, the amount of damages the
Company can reasonably demonstrate it incurred as a result of such breach.
The Company and Executive agree that the dollar amount in clause (ii) of
the preceding sentence represents the product of their good faith
negotiations. If the Company is involved in court or other legal
proceedings to enforce the covenants contained in this Section 15, then in
the event the Company prevails in such proceedings, the Executive shall be
liable for the payment of reasonable attorneys' fees, costs and ancillary
expenses incurred by the Company in enforcing its rights hereunder.
(c) The covenants in this Section 15 are severable and separate, and
the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth herein are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent that
such court deems reasonable, and the Agreement shall thereby be reformed to
reflect the same.
(d) All of the covenants in this Section 15 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Executive against the
Company whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by the Company of such covenants.
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It is specifically agreed that the period following the termination of the
Executive's employment with the Company during which the agreements and
covenants of the Executive made in this Section 15 shall be effective,
shall be computed by excluding from such computation any time during which
the Executive is in violation of any provision of this Section 15.
(e) Notwithstanding any of the foregoing, if any applicable law,
judicial ruling or order shall reduce the time period during which the
Executive shall be prohibited from engaging in any competitive activity
described in Section 15 hereof, the period of time for which the Executive
shall be prohibited pursuant to Section 15 hereof shall be the maximum time
permitted by law.
16. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the President. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third business day
after the mailing thereof, except that notice of change of address shall be
effective only upon receipt.
17. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiaries and for which the Executive may qualify, nor shall anything herein
limit or reduce such rights as the Executive may have under any other agreements
with the Company or any of its subsidiaries. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be payable in accordance
with such plan or program, except as explicitly modified by this Agreement.
18. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
19. Survival. The agreements and obligations of the Company and the
Executive made in Sections 9, 10, 11, 12, 14, 15, 19, and 20 of this Agreement
shall survive the expiration or termination of this Agreement.
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20. Federal Income Tax Withholding. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
21. Pooling Transactions. Notwithstanding anything to the contrary, in the
event of a Change in Control which is also intended to constitute a pooling
transaction, the Company shall take such actions, if any, as specifically
recommended by an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the pooling transaction will
qualify as such, including, without limitation, (i) deferring the vesting,
exercise, payment, settlement or lapsing restrictions with respect to any
payments of base salary, other payments or benefits, allowances, awards,
reimbursements or perquisites that are provided for hereunder, (ii) providing
that the payment or settlement be made in the form of cash, Voting Securities or
securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (iii) providing for the extension of the term of any option to
the extent necessary to accommodate the foregoing, but not beyond the maximum
term of such option.
22. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
23. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida, without giving
effect to the conflict of law principles thereof.
24. Jurisdiction and Venue. Each of the parties to this Agreement hereby
(a) consents to personal jurisdiction in any suit, claim, action or proceeding
relating to or arising under this Agreement which is brought in any local or
federal court in the State of Florida, (b) consents to service of process upon
such party in the manner set forth in Section 16 hereof, and (c) waives any
objection such party may have to venue in any such Florida court or to any claim
that any such Florida court is an inconvenient forum.
25. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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26. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
NEFF CORP.
By: /s/ PETER G. GLADIS
----------------------
Title: Senior Vice President,
Neff Rental, Inc.
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
__ day of ____, 1999, by and between Neff Corp., a Delaware Company (the
"Company"), and ________, an individual (the "Executive") (hereinafter
collectively referred to as the "Parties").
WHEREAS, the Executive commenced employment with Neff Rental, Inc., a
wholly-owned subsidiary of the Company in ____________;
WHEREAS, the Company continues to desire to employ the Executive as
____________ of Neff Rental, Inc. and the Executive continues to desire to serve
Neff Rental, Inc. as its ____________;
WHEREAS, the Company and the Executive desire to set forth the terms of the
Executive's continued employment with Neff Rental, Inc.:
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. Term. Subject to the provisions for termination set forth in Section 8,
the initial term of employment under this Agreement shall be for a period of
three (3) years commencing on the date hereof and shall be automatically
extended for additional one (1) year periods, unless one of the Parties shall
give written notice to the other on or before the date which is six (6) months
prior to the expiration of the current term of the Agreement of such Party's
election not to so extend this Agreement.
2. Employment. The Executive shall be employed as ___________ of Neff
Rental, Inc. or in such other senior executive capacity as may be mutually
agreed to in writing by the Parties. The Executive shall perform the duties,
undertake the responsibilities and exercise the authority customarily performed,
undertaken and exercised by persons situated in a similar executive capacity.
The Executive shall report to the __________ of the Company.
3. Base Salary and Bonus. The Company agrees to pay or cause to be paid to
the Executive during the term of this Agreement a base salary at the rate of
$______ per annum, which rate shall be reviewed at least annually by the Board
of Directors of the Company (the "Board") and may be changed in the Board's
discretion (hereinafter referred to as the "Base Salary"). Such Base Salary
shall be payable in accordance with the Company's customary practices applicable
to its senior executives. In addition to the Base Salary, Executive shall be
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eligible annually for the term of his employment under this Agreement to receive
a cash bonus in the discretion of the Board.
4. Employee Benefits. The Executive shall be entitled to participate in all
employee benefit plans, practices and programs maintained by the Company and
made available to employees generally including, without limitation all pension,
retirement, profit sharing, savings, medical, hospitalization, disability,
dental, life or travel accident insurance benefit plans. The Executive's
participation in such plans, practices and programs shall be on the same basis
and terms as are applicable to other similarly situated executives of the
Company generally.
5. Executive Benefits. The Executive shall be entitled to participate in
all executive benefit or incentive compensation plans now maintained or
hereafter established by the Company for the purpose of providing compensation
and/or benefits to executives of the Company including, but not limited to, the
Company's 401(k) Plan, the Company's Phantom Stock Plan, the Company's 1998
Stock Incentive Plan and any supplemental retirement, salary continuation, stock
option, deferred compensation, supplemental medical or life insurance or other
bonus or incentive compensation plans. Unless otherwise provided herein, or in
the terms of such executive benefit or incentive compensation plans, the
Executive's participation in such plans shall be on the same basis and terms as
other similarly situated executives of the Company, but in no event on a basis
less favorable in terms of benefit levels or reward opportunities applicable to
the Executive as in effect on the date hereof. No additional compensation
provided under any of such plans shall be deemed to modify or otherwise affect
the terms of this Agreement or any of the Executive's entitlements hereunder.
6. Other Benefits.
(a) Fringe Benefits and Perquisites. The Executive shall be entitled
to receive all fringe benefits and perquisites generally made available by
the Company to similarly situated executives.
(b) Expenses. The Executive shall be entitled to receive prompt
reimbursement of all expenses reasonably incurred by him in connection with
the performance of his duties hereunder.
7. Vacation and Sick Leave. At such reasonable times as the Board shall in
its discretion permit, the Executive shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, in accordance with the following:
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(a) The Executive shall be entitled to annual vacation in accordance
with the policies as periodically established by the Board for similarly
situated executives of the Company.
(b) In addition to the aforesaid paid vacations, the Executive shall
be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment for such additional periods of time and for
such valid and legitimate reasons as the Board in its discretion may
determine. Further, the Board shall be entitled to grant to the Executive a
leave or leaves of absence with or without pay at such time or times and
upon such terms and conditions as the Board in its discretion may
determine.
(c) The Executive shall be entitled to sick leave (without loss of
pay) in accordance with the Company's policies as in effect from time to
time.
8. Termination. The Executive's employment hereunder may be terminated
under the following circumstances:
(a) Disability. The Company may terminate the Executive's employment
after having established the Executive's Disability. For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs
the Executive's ability to perform substantially his or her duties for a
period of one hundred eighty (180) consecutive days. A determination of
Disability shall be made by a physician satisfactory to both the Executive
and the Company, which physician's determination as to Disability shall be
made within 10 days of the request therefor and shall be binding on all
parties; provided, however, that if the Executive and the Company do not
agree on a physician, the Executive and the Company shall each select a
physician and these two together shall select a third physician, which
third physician's determination as to Disability shall be binding on all
parties. The Executive shall be entitled to the compensation and benefits
provided for under this Agreement for any period during the term of this
Agreement and prior to the establishment of the Executive's Disability
during which the Executive is unable to work due to a physical or mental
infirmity. Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of Termination
(as each term is hereinafter defined) relating to the Executive's
Disability, the Executive shall be entitled to return to his position with
the Company as set forth in this Agreement in which event no Disability of
the Executive will be deemed to have occurred.
(b) Cause. The Company may terminate the Executive's employment for
"Cause." The Company shall be deemed to have terminated the Executive's
employment for "Cause" in the event that the Executive's employment is
terminated for any of the following reasons: (i) the commission of an act
of fraud or intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the Company;
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(ii) dishonesty or willful misconduct in the performance of duties; or
(iii) willful violation of any law, rule or regulation in connection with
the performance of duties (other than traffic violations or similar
offenses); provided, that no act or failure to act shall be considered
willful unless done or omitted to be done in bad faith and without
reasonable belief that the action or omission was in the best interests of
the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after Notice of
Termination is given by the Company shall constitute Cause for purposes of
this Agreement.
(c) (i) Good Reason. The Executive may terminate his employment for
"Good Reason." For purposes of this Agreement, Good Reason shall mean the
occurrence of any of the events or conditions described in Subsections (i)
through (ix) hereof:
(A) during the two (2) year period following a Change in Control
(as defined):
(1) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, does not represent a
promotion from his status, title, position or responsibilities as
in effect immediately prior thereto; the assignment to the
Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with such
status, title, position or responsibilities; or any removal of
the Executive from or failure to reappoint or reelect him to any
of such positions, except in connection with the termination of
his employment for Disability, Cause, as a result of his death or
by the Executive other than for Good Reason;
(2) a reduction in the Executive's Base Salary or any
failure to pay the Executive any compensation or benefits to
which he is entitled within five (5) days of the date due;
(3) a failure by the Company to increase the Executive's
Base Salary at least annually at a percentage of Base Salary no
less than the average percentage increases granted to the
Executive during the three most recent full years ended prior to
a Change in Control;
(4) the failure by the Company to (i) continue in effect
(without reduction in benefit level and/or reward opportunities)
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any material compensation or benefit plan in which the Executive
was participating at the time of the Change in Control,
including, but not limited to, the Company's 401(k) Plan, the
Company's 1998 Stock Incentive Plan, or (ii) provide the
Executive with compensation and benefits at least equal (in terms
of benefit levels and/or reward opportunities) to those provided
for under each employee benefit plan, program and practice as in
effect immediately prior to the Change in Control (or as in
effect following the Change in Control, if greater).
(5) the insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy, of the Company;
(6) any material breach by the Company of any provision of
this Agreement;
(7) any purported termination of the Executive's employment
for Cause by the Company which does not comply with the terms of
Section 8 of this Agreement;
(8) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any successor or assign of
the Company to assume and agree to perform this Agreement, as
contemplated in Section 13 hereof; or
(9) the Company requires the Executive to be based at any
office located more than fifty (50) miles from the office where
the Executive is currently based without the Executive's consent;
(B) the nature of Executive's duties or the scope of Executive's
responsibilities (including reporting responsibilities) is materially
modified by the Company without Executive's written consent where such
material modification constitutes a demotion of Executive or a substantial
reduction in Executive's responsibilities;
(C) a reduction in the Executive's Base Salary;
(D) any material breach by the Company of any provision of this
Agreement that has not been cured within thirty (30) days following receipt
by the Company of written notice thereof from the Executive specifically
identifying such material breach; or
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(E) this Agreement is not assumed by any successor to the Company
pursuant to Section 13 hereof in a situation other than a Change in
Control.
(ii) The Executive's right to terminate his employment pursuant to
this Section 8(c) shall not be affected by his incapacity due to physical
or mental illness if such incapacity occurs after the event or condition
giving rise to Executive's right to terminate his employment pursuant to
this Section 8(c).
(d) Voluntary Termination. The Executive may voluntarily terminate his
employment hereunder at any time.
(e) For purposes of this Agreement, a "Change in Control" shall mean any of
the following events:
(i) An acquisition (other than directly from Neff Corp. (the
(Company")) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), immediately after
which such Person has "Beneficial Ownership" (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of thirty
percent (30%) or more of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that Beneficial Ownership by any
of Jorge Mas, Juan Carlos Mas, Jose Ramon Mas, or aggregate
Beneficial Ownership by General Electric Capital Corporation and
any of its 100% Affiliates (as defined), of thirty percent (30%)
or more of the then outstanding Shares or the combined voting
power of the Company's then outstanding Voting Securities shall
not constitute a Change in Control; provided further, however, in
determining whether a Change in Control has occurred, Shares or
Voting Securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (A) an employee benefit
plan (or a trust forming a part thereof) maintained by (1) the
Company or (2) any corporation or other Person of which a
majority of its voting power or its voting equity securities or
equity interest is owned, directly or indirectly, by the Company
(for purposes of this definition, a "Subsidiary"), (B) the
Company or its Subsidiaries, or (C) any Person in connection with
a "Non-Control Transaction" (as hereinafter defined);
(ii) The individuals who, as of the date of this Agreement
are members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the members of the
Board of Directors of the Company; provided, however, that if the
election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall,
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<PAGE>
for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(iii) The consummation of:
(A) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean
a merger, consolidation or reorganization of the Company where:
(1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own directly
or indirectly immediately following such merger,
consolidation or reorganization, at least fifty percent
(50%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board
of directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the
Voting Securities of the Surviving Corporation, and
(3) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust
forming a part thereof) that, immediately prior to such
7
<PAGE>
merger, consolidation or reorganization, was maintained by
the Company, or any Subsidiary, or (iv) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty percent
(50%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of fifty percent (50%) or
more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its
common stock.
(B) A complete liquidation or dissolution of the
Company;
or
(C) The sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
If the Executive's employment is terminated by the Company without Cause
prior to the date of a Change in Control but the Executive reasonably
demonstrates that the termination (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
change in control or (ii) otherwise arose in connection with, or in anticipation
of, a Change in Control which has been threatened or proposed, such termination
shall be deemed to have occurred after a Change in Control for purposes of this
Plan provided a Change in Control shall actually have occurred.
For the purposes of this Agreement, "100% Affiliate" means with respect to
any Person, (i) each other Person that, directly or indirectly, owns or controls
one hundred percent (100%) of the stock having ordinary voting power in the
election of directors of such Person, (ii) each other Person of which the stock
having ordinary voting power in the election of its directors is owned or
controlled one hundred percent (100%) by such Person, or (iii) each other Person
8
<PAGE>
of which the stock having ordinary voting power in the election of its directors
is owned or controlled one hundred percent (100%) by any Person defined in
clause (i) above or any of its 100% Affiliates.
(f) Notice of Termination. Any purported termination by the Company or
by the Executive shall be communicated by written Notice of Termination to
the other. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which indicates the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. For purposes of
this Agreement, no such purported termination of employment shall be
effective without such Notice of Termination.
(g) Termination Date, Etc. "Termination Date" shall mean in the case
of the Executive's death, his date of death, or in all other cases, the
date specified in the Notice of Termination subject to the following:
(i) If the Executive's employment is terminated by the
Company for Cause or due to Disability, the date specified
in the Notice of Termination shall be at least thirty (30)
days from the date the Notice of Termination is given to the
Executive, provided that in the case of Disability the
Executive shall not have returned to the full-time
performance of his duties during such period of at least
thirty (30) days; and
(ii) If the Executive's employment is terminated for
Good Reason, the date specified in the Notice of Termination
shall not be more than sixty (60) days from the date the
Notice of Termination is given to the Company.
9. Compensation Upon Termination. Upon termination of the Executive's
employment during the term of this Agreement (including any extensions thereof),
the Executive shall be entitled to the following benefits:
(a) If the Executive's employment is terminated by the Company for
Cause or Disability or by the Executive (other than for Good Reason), or by
reason of the Executive's death, the Company shall pay the Executive all
amounts earned or accrued hereunder through the Termination Date but not
paid as of the Termination Date, including (i) Base Salary, (ii)
reimbursement for any and all monies advanced or expenses incurred in
connection with the Executive's employment for reasonable and necessary
expenses incurred by the Executive on behalf of the Company for the period
ending on the Termination Date, (iii) vacation pay, (iv) any bonuses or
incentive compensation and (v) any previous compensation which the
Executive has previously deferred (including any interest earned or
credited thereon) (collectively, "Accrued Compensation"). In addition to
the foregoing, if the Executive's employment is terminated by the Company
for Disability or by reason of the Executive's death, the Company shall pay
9
<PAGE>
to the Executive or his beneficiaries as severance pay each month for the
eighteen (18) months immediately following the date of termination an
amount in cash equal to the difference, if any, between (i) the sum of (y)
the amount of payments Executive receives or will receive during that month
pursuant to the disability insurance policies maintained by the Company for
Executive's benefit and (z) the adjustment described in the next sentence
and (ii) Executive's base monthly salary on the date of termination due to
Disability. The adjustment referred to in clause (z) of the preceding
sentence is the amount by which any tax-exempt payments referred to in
clause (y) would need to be increased if such payments were subject to tax
in order to make the after-tax proceeds of such payments equal to the
actual amount of such tax-exempt payments. The Executive's entitlement to
any other compensation or benefits shall be determined in accordance with
the Company's employee benefit plans and other applicable programs and
practices then in effect.
(b) If the Executive's employment by the Company shall be terminated
(1) by the Company other than for Cause, death or Disability or (2) by the
Executive for Good Reason, then the Executive shall be entitled to the
benefits provided below:
(i) the Company shall pay the Executive all Accrued
Compensation;
(ii) the Company shall pay the Executive as severance
pay and in lieu of any further salary for periods subsequent
to the Termination Date, in a single payment an amount in
cash equal to one and one-half (1.5) times the sum of (A)
the Executive's Base Salary at the highest rate in effect at
any time within the ninety (90) day period ending on the
date the Notice of Termination is given (or if the
Executive's employment is terminated after a Change in
Control, the Executive's Base Salary immediately prior to
the Change in Control, if greater) and (B) the "Bonus
Amount." The term "Bonus Amount" shall mean the greatest
amount of the cash awards received by the Executive during
any of the three fiscal years immediately preceding the
Termination Date;
(iii) for a period of eighteen (18) months following
such termination, the Company shall at its expense continue
on behalf of the Executive and his dependents and
beneficiaries the life insurance, disability, medical,
dental and hospitalization benefits which were being
provided to the Executive at the time Notice of Termination
is given (or, if the Executive is terminated following a
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<PAGE>
Change in Control, the benefits provided to the Executive at
the time of the Change in Control, if greater). The benefits
provided in this Section 9 (b) (iii) shall be no less
favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage provided the
Executive under the plans providing such benefits at the
time Notice of Termination is given (or, if the Executive is
terminated following a Change in Control, at the time of the
Change in Control if more favorable to the Executive). The
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive
obtains any such benefits pursuant to a subsequent
employer's benefit plans or practices, in which case the
Company may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the
aggregate coverage of the combined benefit plans is no less
favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage required to
be provided hereunder. This Subsection (iii) shall not be
interpreted so as to limit any benefits to which the
Executive or his dependents may be entitled under any of the
Company's employee benefit plans, programs or practices
following the Executive's termination of employment,
including, without limitation, retiree medical and life
insurance benefits;
(iv) for a period of eighteen (18) months following
such termination, the Company shall at its expense continue
on behalf of the Executive the car allowance which was being
provided to the Executive at the time Notice of Termination
is given (or, if the Executive is terminated following a
Change in Control, the car allowance provided to the
Executive at the time of the Change in Control, if greater).
The Company's obligation hereunder with respect to the car
allowance shall terminate if the Executive receives a car
allowance pursuant to a subsequent employer's benefit plans
or practices.
(v) all restrictions on any outstanding award
(including restricted stock and performance stock awards)
granted to the Executive shall lapse and such awards shall
become fully (100%) vested immediately, assuming all
performance targets and goals (if applicable) had been fully
met by the Company and by the Executive, as applicable, for
such year, and all stock options and stock appreciation
rights granted to the Executive shall become fully (100%)
vested and shall become immediately exercisable.
11
<PAGE>
(c) The amounts provided for in Sections 9(a) and 9(b)(i), (ii) and
(iv) shall be paid within ten (10) days after the Executive's Termination
Date.
(d) The Executive shall not be required to mitigate the amount of any
payment, benefit or other Company obligation provided for in this Agreement by
seeking other employment or otherwise and no such payment, benefit or other
Company obligation shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment.
10. Intentionally omitted.
11. Unauthorized Disclosure. The Executive shall not make any Unauthorized
Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean
disclosure by the Executive without the consent of the Board to any person,
other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company or as may be legally
required, of any confidential information obtained by the Executive while in the
employ of the Company (including, but not limited to, any confidential
information with respect to any of the Company's customers or methods of
distribution) the disclosure of which he knows or has reason to believe will be
materially injurious to the Company; provided, however, that such term shall not
include the use or disclosure by the Executive, without consent, of any
information known generally to the public (other than as a result of disclosure
by him in violation of this Section 11) or any information not otherwise
considered confidential by a reasonable person engaged in the same business as
that conducted by the Company.
12. Indemnification.
(a) General. The Company agrees that if the Executive is made a party
or threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that the Executive is or was a director or officer of
the Company or any subsidiary thereof or is or was serving at the request
of the Company or any subsidiary thereof as a director, officer, member,
employee or agent of another corporation or a partnership, joint venture,
trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a director,
officer, member, employee or agent while serving as a director, officer,
member, employee or agent, the Executive shall be indemnified and held
12
<PAGE>
harmless by the Company to the fullest extent authorized by Florida law, as
the same exists or may hereafter be amended, against all Expenses (as
hereinafter defined) incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even
if the Executive has ceased to be an officer, director, or agent, or is no
longer employed by the Company and shall inure to the benefit of his heirs,
executors and administrators; provided, however, that the Executive shall
not be so indemnified for any Proceeding which shall have been adjudicated
to have arisen out of or been based upon his willful misconduct, bad faith,
gross negligence or reckless disregard of duty or his failure to act in
good faith in the reasonable belief that his action was in the best
interests of the Company.
(b) Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys' fees,
accountants' investigations, and any expenses of establishing a right to
indemnification under this Agreement.
(c) Enforcement. If a claim or request for indemnification under this
Section 12 is not paid by the Company or on its behalf, within thirty (30)
days after a written claim or request has been received by the Company, the
Executive may at any time thereafter bring suit against the Company to
recover the unpaid amount of the claim or request and if successful in
whole or in part, the Executive shall be entitled to be paid also the
expenses of prosecuting such suit. All obligations for indemnification
hereunder shall be subject to, and paid in accordance with, applicable
Florida law.
(d) Partial Indemnification. If the Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof,
the Company shall nevertheless indemnify the Executive for the portion of
such Expenses to which Executive is entitled.
(e) Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses and upon the
Executive's delivery of an undertaking to reimburse the Company for
Expenses with respect to which the Executive is not entitled to
indemnification.
(f) Notice of Claim. The Executive shall give to the Company notice of
any claim made against him for which indemnification will or could be
sought under this Agreement, but the failure of the Executive to give such
notice shall not relieve the Company of any liability the Company may have
to the Executive except to the extent that the Company is prejudiced
thereby. In addition, the Executive shall give the Company such information
and cooperation as it may reasonably require and as shall be within the
Executive's power and at such time and places as are convenient for the
Executive.
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<PAGE>
(g) Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof;
(i) The Company will be entitled to participate therein at its
own expense; and
(ii) Except as otherwise provided below, to the extent that it
may wish, the Company will be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the Executive. The Executive
also shall have the right to employ his own counsel in such action,
suit or proceeding if he reasonably concludes that failure to do so
would involve a conflict of interest between the Company and the
Executive, and under such circumstances the fees and expenses of such
counsel shall be at the expense of the Company.
(iii) The Company shall not be liable to indemnify the Executive
under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would not include a
full and unconditional release of the Executive without the
Executive's prior written consent. Neither the Company nor the
Executive will unreasonably withhold or delay their consent to any
proposed settlement.
(h) Non-exclusivity. The right to indemnification and the payment of
Expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Agreement shall not be exclusive of any other
right which the Executive may have or hereafter may acquire under any
statute, provision of the declaration of trust or certificate of
incorporation or by-laws of the Company or any subsidiary, agreement, vote
of shareholders or disinterested directors or otherwise.
13. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall
require any successor or assign to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had
taken place. The term "the Company" as used herein shall include such
successors and assigns. The term "successors and assigns" as used herein
shall mean a corporation or other entity acquiring all or substantially all
the assets and business of the Company (including this Agreement) whether
by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
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<PAGE>
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
14. Covenant Not to Compete
(a) The Executive agrees that during the term of this Agreement
and for one (1) year subsequent to termination of Executive's
employment with the Company for any reason (the "Non-Compete Term")
the Executive shall not:
(i) Either directly or indirectly, for himself or on
behalf of or in conjunction with any other person, persons,
company, firm, partnership, corporation, business, group or
other entity (each, a "Person"), engage in any business or
activity, whether as an employee, consultant, partner,
principal, agent, representative, stockholder or other
individual, corporate, or representative capacity, or render
any services or provide any advice or substantial assistance
to any business, person or entity, if such business, person
or entity, directly or indirectly will in any way compete
with the Company (a "Competing Business"). Without limiting
the generality of the foregoing, for purposes of this
Section 14, it is understood that Competing Businesses shall
include any business which rents or sells construction or
industrial equipment or engages in the sale of maintenance,
repair or operating supplies; provided, however, that
notwithstanding the foregoing, the Executive may make
passive investments in up to 2% of the outstanding publicly
traded common stock of an entity which operates a Competing
Business.
(ii) Either directly or indirectly, for himself or on
behalf of or in conjunction with any other Person, solicit,
hire or divert any Person who is, or who is, at the time of
termination of the Executive's employment, or has been
within six (6) months prior to the time of termination of
Executive's employment, an employee of the Company or any of
its subsidiaries for the purpose or with the intent of
enticing such employee away from the employ of the Company
or any of its subsidiaries.
(iii) Either directly or indirectly, for himself or on
behalf of or in conjunction with any other Person, solicit,
hire or divert any Person who is, or who is, at the time of
termination of the Executive's employment, or has been
within six (6) months prior to the time of termination of
Executive's employment, a customer or supplier of the
Company or any of its subsidiaries for the purpose or with
the intent of (A) inducing or attempting to induce such
Person to cease doin business with the Company or (B) in any
way interfering with the relationship between such Person
and the Company.
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<PAGE>
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenants, and because of
the immediate and irreparable damage that could be caused to the Company
for which it would have no other adequate remedy, the Executive agrees (i)
that the foregoing covenants, in addition to and not in limitation of any
other rights, remedies or damages available to the Company at law, in
equity or under this Agreement, may be enforced by the Company in the event
of the breach or threatened breach by the Executive, by injunctions and/or
restraining orders and (ii) to pay the sum of one thousand dollars ($1,000)
per day for each day during which the Executive is in breach of such
covenants as liquidated damages or, if greater, the amount of damages the
Company can reasonably demonstrate it incurred as a result of such breach.
The Company and Executive agree that the dollar amount in clause (ii) of
the preceding sentence represents the product of their good faith
negotiations. If the Company is involved in court or other legal
proceedings to enforce the covenants contained in this Section 14, then in
the event the Company prevails in such proceedings, the Executive shall be
liable for the payment of reasonable attorneys' fees, costs and ancillary
expenses incurred by the Company in enforcing its rights hereunder.
(c) The covenants in this Section 14 are severable and separate, and
the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth herein are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent that
such court deems reasonable, and the Agreement shall thereby be reformed to
reflect the same.
(d) All of the covenants in this Section 14 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Executive against the
Company whether predicated on this Agreement or otherwise shall not
constitute a defense to the enforcement by the Company of such covenants.
It is specifically agreed that the period following the termination of the
Executive's employment with the Company during which the agreements and
covenants of the Executive made in this Section 14 shall be effective,
shall be computed by excluding from such computation any time during which
the Executive is in violation of any provision of this Section 14.
(e) Notwithstanding any of the foregoing, if any applicable law,
judicial ruling or order shall reduce the time period during which the
Executive shall be prohibited from engaging in any competitive activity
described in Section 14 hereof, the period of time for which the Executive
shall be prohibited pursuant to Section 14 hereof shall be the maximum time
permitted by law.
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<PAGE>
15. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the President. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third business day
after the mailing thereof, except that notice of change of address shall be
effective only upon receipt.
16. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiaries and for which the Executive may qualify, nor shall anything herein
limit or reduce such rights as the Executive may have under any other agreements
with the Company or any of its subsidiaries. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be payable in accordance
with such plan or program, except as explicitly modified by this Agreement.
17. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
18. Survival. The agreements and obligations of the Company and the
Executive made in Sections 9, 11, 12, 14, 15, 18 and 19 of this Agreement shall
survive the expiration or termination of this Agreement.
19. Federal Income Tax Withholding. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
20. Pooling Transactions. Notwithstanding anything to the contrary, in the
event of a Change in Control which is also intended to constitute a pooling
transaction, the Company shall take such actions, if any, as specifically
recommended by an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the pooling transaction will
qualify as such, including, without limitation, (i) deferring the vesting,
exercise, payment, settlement or lapsing restrictions with respect to any
payments of base salary, other payments or benefits, allowances, awards,
reimbursements or perquisites that are provided for hereunder, (ii) providing
17
<PAGE>
that the payment or settlement be made in the form of cash, Voting Securities or
securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (iii) providing for the extension of the term of any option to
the extent necessary to accommodate the foregoing, but not beyond the maximum
term of such option.
21. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
22. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida, without giving
effect to the conflict of law principles thereof.
23. Jurisdiction and Venue. Each of the parties to this Agreement hereby
(a) consents to personal jurisdiction in any suit, claim, action or proceeding
relating to or arising under this Agreement which is brought in any local or
federal court in the State of Florida, (b) consents to service of process upon
such party in the manner set forth in Section 15 hereof, and (c) waives any
objection such party may have to venue in any such Florida court or to any claim
that any such Florida court is an inconvenient forum.
24. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
25. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
NEFF CORP.
By:
Name:
Title:
NAME
19
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001057725
<NAME> Neff Corp.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
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0
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