10.1.3 FORM OF SEVERANCE AGREEMENT BETWEEN STORAGE USA, INC. AND EACH OF: (I)
XXXX X. XXXXXXXX, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY; (II) XXXX X. XXXX, EXECUTIVE VICE PRESIDENT OPERATIONS; (III)
XXXXXX X. XXXXXX, EXECUTIVE VICE PRESIDENT ACQUISITIONS; (IV) XXXXXXX X.
("BUCK") XXXXX, III, SENIOR VICE PRESIDENT HUMAN RESOURCES; (V) XXXXXXX
X. XXXXX, SENIOR VICE PRESIDENT DEVELOPMENT; (VI) XXXXX X. XXXX, SENIOR
VICE PRESIDENT, CAPITAL MARKETS; (VII) XXXXXXX X. XXXXXXXX, SENIOR VICE
PRESIDENT SALES AND MARKETING; AND (VIII) XXXX X. XXXX, SENIOR VICE
PRESIDENT FINANCIAL REPORTING; EFFECTIVE AS OF AUGUST 16, 1999
SEVERANCE AGREEMENT
AGREEMENT effective as of August 16, 1999, by and between Storage
USA, Inc., a Tennessee corporation (the "Company"), and _________________ (the
"Executive").
WITNESSETH:
WHEREAS, the Company considers it essential to the best interest of its
stockholders to xxxxxx the continuous employment of key management personnel;
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change of Control may exist and that
such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of the Company's and its
affiliates' management personnel to the detriment of the Company and its
stockholders; and
WHEREAS, the Board has determined that it is in the best interest of
the Company and its stockholders to enter into this Agreement in order to
reinforce and encourage the continued attention and dedication of Executive to
his assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change of Control.
NOW, THEREFORE, in consideration of the premises and mutual obligations
hereinafter set forth the parties agree as follows:
1) DEFINITIONS. For purposes of this Agreement, the following terms shall have
the following definitions:
A) "1993 OMNIBUS STOCK PLAN" means the Company's 1993 Omnibus Stock Plan, as
amended.
B) "1995 EMPLOYEE STOCK PURCHASE AND LOAN PLAN" means the Company's 1995
Employee Stock Purchase and Loan Plan, as amended.
C) "1996 OFFICERS' STOCK OPTION LOAN PROGRAM" means the Company's 1996
Officers' Stock Option Loan Program, as amended.
D) "ADDITIONAL AMOUNT" means the amount the Company shall pay to the
Executive in order to indemnify the Executive against all claims, losses,
damages, penalties, expenses, interest, and Excise Taxes (including
additional taxes on such Additional Amount) incurred by Executive as a
result of Executive receiving Change of Control Benefits as further
described in Section 6 of this Agreement.
E) "ARBITRATORS" means the arbitrators selected to conduct any arbitration
proceeding in connection with any disputes arising out of or relating to
this Agreement.
F) "AWARD PERIOD" means any period in which the Company's performance is
measured in connection with its Shareholder Value Plan.
G) "AWARD PLANS" mean each and every plan or program in which Executive
receives compensation in the form of a cash bonus, shares of stock in the
Company, Partnership Units, or Options, including, without limitation,
compensation received pursuant to the Company's 1993 Omnibus Stock Plan,
1995 Employee Stock Purchase and Loan Plan, 1996 Officers' Stock Option
Loan Program, Shareholder Value Plan, and any other stock option,
incentive compensation, profit participation, bonus or extra compensation
plan that is adopted by the Company and in which the Company's executive
officers generally participate.
H) "BASE SALARY" means the annual salary paid to Executive by the Company.
I) "BENEFIT PLANS" mean each and every health, life, medical, dental,
disability, insurance and welfare plan maintained by the Company that are
maintained from time to time by the Company for the benefit of Executive,
the executives of the Company generally or for the Company's employees
generally, provided that Executive is eligible to participate in such plan
under the eligibility provisions thereof that are generally applicable to
the participants thereof.
J) "BOARD" means the Board of Directors of the Company.
K) "CHANGE OF CONTROL" means any of the following events which occur during
the Term of this Agreement:
i) any "person", as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes, is discovered to be, or files a report on Schedule 13D or
14D-1 (or any successor schedule, form or report) disclosing that such
person is a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act or any successor rule or regulation), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities entitled to vote
generally in the election of directors, without the approval of the Board
of the acquisition of such securities by the acquiring person;
ii) any "person", as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes, is discovered to be, or files a report on Schedule 13D or
14D-1 (or any successor schedule, form or report) disclosing that such
person is a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act or any successor rule or regulation), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities entitled to vote
generally in the election of directors, regardless of whether or not the
Board shall have approved the acquisition of
such securities by the acquiring person; if, at any time within three (3)
years after the acquisition of such securities, those individuals who
constituted the Board at the time of the acquisition of such securities
cease for any reason to constitute at least a majority of the Board of
Directors of the Company;
iii) any "person", as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), becomes, is discovered to be, or files a report on Schedule 13D or
14D-1 (or any successor schedule, form or report) disclosing that such
person is a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act or any successor rule or regulation), directly or indirectly, of
securities of the Company representing 49.9% or more of the combined
voting power of the Company's then outstanding securities entitled to vote
generally in the election of directors, regardless of whether or not the
Board shall have approved the acquisition of such securities by the
acquiring person;
iv) individuals who, as of the effective date of this Agreement,
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
unless any such change is approved by the vote of at least 80% of the
members of the Board of Directors of the Company in office immediately
prior to such cessation;
v) the Company is merged, consolidated or reorganized into or with another
corporation or other legal person, or securities of the Company are
exchanged for securities of another corporation or other legal person, and
immediately after such merger, consolidation, reorganization or exchange
less than 75% of the combined voting power of the then-outstanding
securities of such corporation or person immediately after such
transaction are held, directly or indirectly, in the aggregate by the
holders of securities entitled to vote generally in the election of
directors of the Company immediately prior to such transaction;
vi) the Company in any transaction or series of related transactions,
sells all or substantially all of its assets to any other corporation or
other legal person and less than 75% of the combined voting power of the
then-outstanding securities of such corporation or person immediately
after such sale or sales are held, directly or indirectly, in the
aggregate by the holders of securities entitled to vote generally in the
election of directors of the Company immediately prior to such sale;
vii) the Company and its affiliates shall sell or transfer (in a single
transaction or series of related transactions) to a non-affiliate business
operations or assets that generated at least two-thirds of the
consolidated revenues (determined on the basis of the Company's four most
recently completed fiscal quarters for which reports have been filed under
the Exchange Act) of the Company and its subsidiaries immediately prior
thereto;
viii) the Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K (or any successor, form or report or item therein)
that a change in control of the Company has occurred;
ix) the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company;
x) the Company ceases to be the general partner of the Partnership or in
any transaction or a series of transactions sells or transfers Partnership
Units owned by the Company to a third party constituting at least 49.9% of
the limited partnership interests in the Partnership; or
xi) any other transaction or series of related transactions occur that
have substantially the effect of the transactions specified in any of the
preceding clauses in this sentence.
L) "CHANGE OF CONTROL BENEFITS" means the Executive's receipt of the
Termination Payment or any other payment, benefit or compensation
(except for the Additional Amount) which the Executive receives or has
the right to receive from the Company or any of its affiliates as a
result of a Change of Control Termination.
M) "CHANGE OF CONTROL TERMINATION" means (i) a Termination Without Cause
of the Executive's employment by the Company, (a) within three (3)
months prior to a Change of Control and in anticipation of such Change
of Control; (b) on the date of the Change of Control; or (c) within two
(2) years after a Change of Control or (ii) the Executive's resignation
for Good Reason on or within two (2) years after a Change of Control.
N) "CODE" means the Internal Revenue Code of 1986, as amended.
O) "COMPANY" means Storage USA, Inc., a Tennessee corporation, and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
P) "COMPANY SHARES" means the shares of common stock of the Company or
any securities of a successor company which shall have replaced such
common stock.
Q) "EXCESS PARACHUTE PAYMENTS" has the meaning set forth in section 280G
of the Code.
R) "EXCISE TAX" means a tax on Excess Parachute Payments imposed pursuant
to Code section 4999.
S) "EXECUTIVE" means the person identified in the preamble paragraph of
this Agreement.
T) "FAIR MARKET VALUE" means, on any give date, the closing sale price of
the common stock of the Company on the New York Stock Exchange on such
date, or, if the New York Stock Exchange shall be closed on such date,
the next preceding date on which the New York Stock Exchange shall have
been open.
U) "GOOD REASON" means any of the following:
i) a change in the Executive's status, position or responsibilities
(including reporting relationships and responsibilities) which, in the
Executive's reasonable judgment and without Executive's consent,
represents a reduction in or demotion of the Executive's status,
position or responsibilities as in effect immediately prior to a Change
of Control; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment, are
inconsistent with such status, position or responsibilities; or any
removal of the Executive from or failure to reappoint or reelect the
Executive to any of such positions;
ii) the relocation of the Company's principal executive offices to a
location outside a thirty-mile radius of Memphis, Tennessee or the
Company's requiring the Executive to be based at any place other than a
location within a thirty-mile radius of Memphis, Tennessee, except for
reasonably required travel on the Company's business;
iii) the failure by the Company to continue to provide the Executive
with compensation and benefits provided to Executive prior to the
Change of Control or benefits substantially similar to those provided
to the Executive under any of the employee benefit plans in which the
Executive is or becomes a participant, or the taking of any action by
the Company which would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Change of Control;
iv) any material breach by the Company of any provision of this
Agreement; or
v) the failure of the Company to obtain an agreement reasonably
satisfactory to Executive from any successor or assign of the Company
to assume and agree to perform this Agreement.
V) "OPTION(S)" means any options issued pursuant to the Company's 1993
Omnibus Stock Plan, or any other stock option plan adopted by the
Company, any option granted with respect to Partnership Units, or any
option granted under the plan of any successor company that replaces or
assumes the Company's or the Partnership's options.
W) "PARTNERSHIP" means SUSA Partnership, L.P.
X) "PARTNERSHIP UNIT(S)" means limited partnership interests of the
Partnership. The holder has the option of requiring the Company to
redeem such interests. The Company may
elect to effectuate such redemption by either paying cash or exchanging
Company Shares for such interests.
Y) "PERMANENT DISABILITY" means a complete physical or mental inability,
confirmed by a licensed physician, to perform the Executive's duties
that continues for a period of six (6) consecutive months.
Z) "PLAN LOAN(S)" means any loan extended by the Company to Executive
pursuant to the 1995 Employee Stock Purchase and Loan Plan, the 1996
Officers' Stock Option Loan Program, or any other similar plan or
program adopted by the Company during the Term of this Agreement.
AA) "RESTRICTED STOCK" means any restricted stock issued pursuant to the
Company's 1993 Omnibus Stock Plan, or any other Award Plan adopted by
the Company, or any restricted stock issued under the plan of any
successor company that replaces or assumes the Company's grants of
restricted stock.
BB) "SELF STORAGE BUSINESS" means the business of acquiring, developing,
constructing, franchising, owning or operating self-storage facilities.
CC) "SELF STORAGE PROPERTY" means any real estate upon which the
Self-Storage Business is being conducted.
DD) "SHAREHOLDER VALUE PLAN" means the Company's Shareholder Value Plan, as
amended.
EE) "SVU GRANT" means the total number of shareholder value units granted to
the Executive pursuant to the Company's Shareholder Value Plan.
FF) "SVU VALUE" means the value of each shareholder value unit based upon
certain performance measures as set forth in the Company's Shareholder
Value Plan.
GG) "TERM" has the meaning assigned to it in Section 2 of this Agreement.
HH) "TERMINATION DATE" means the date employment of Executive is terminated,
which date shall be the date specified as the Termination Date in the
Termination Notice, which date shall not be less than thirty nor more
than sixty days from the date the Termination Notice is given.
II) "TERMINATION NOTICE" means a written notice of termination of employment
by Executive or the Company.
JJ) "TERMINATION PAYMENT" has the meaning set forth in Section 3(b) of this
Agreement.
KK) "TERMINATION WITH CAUSE" means the termination of the Executive's
employment by the Company for any of the following reasons:
i) the Executive's conviction for a felony;
ii) the Executive's theft, embezzlement, misappropriation of or
intentional infliction of material damage to the Company's property
or business opportunity; or
iii) the Executive's ongoing willful neglect of or failure to perform
his duties hereunder or his ongoing willful failure or refusal to
follow any reasonable, unambiguous duly adopted written direction
of the Company that is not inconsistent with the Executive's
duties, if such willful neglect, failure or refusal is materially
damaging or materially detrimental to the business and operations
of the Company; provided that Executive shall have received written
notice of such failure and shall have continued to engage in such
failure after 30 days following receipt of such notice from the
Company, which notice specifically identifies the manner in which
the Company believes that Executive has engaged in such failure.
For purposes of this subsection, no act, or failure to act, shall be deemed
"willful" unless done, or omitted to be done, by Executive not in good faith,
and without reasonable belief that such action or omission was in the best
interest of the Company.
LL) "TERMINATION WITHOUT CAUSE" means the termination of the Executive's
employment by the Company for any reason other than Termination With
Cause, or termination by the Company due to Executive's death or
Permanent Disability.
MM) "UNIFORM ARBITRATION ACT" means the Uniform Arbitration Act, Tennessee
Code Annotated ss. 29-5-391 et seq., as amended.
2) TERM; TERMINATION.
------------------
a) The term of this Agreement hereunder shall commence on ________1, 1999 and
shall be extended automatically, for so long as the Executive remains
employed by the Company hereunder, on January 1 of each year beginning
January 1, 2000 for an additional one year period (such period, as it may
be extended from time to time, being herein referred to as the "Term"),
unless, not later than September 30 of the preceding year, the Company
shall have given notice that it does not wish to extend this Agreement;
provided, further, if a Change of Control of the Company shall have
occurred during the original or extended term of this Agreement, this
Agreement shall automatically continue in effect for a period of
twenty-four months beyond the month in which such Change of Control
occurred. This Agreement shall automatically terminate upon the
termination of Executive's employment other than by reason of a Change in
Control Termination.
b) Any purported termination of employment by Executive or the Company (i)
within three (3) months prior to a Change of Control; , (ii) on the date
of the Change of Control; or (iii) within two (2) years after a Change of
Control shall be communicated by a Termination Notice. The Termination
Notice shall indicate the specific termination provision in this Agreement
relied upon and set forth the facts and circumstances claimed to provide a
basis for termination. If the party receiving the Termination Notice
notifies the other party prior to the Termination Date that a dispute
exists concerning the termination, the Termination Date shall be extended
until the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction. The
Termination Date shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to pay Executive
his full compensation in effect when the notice giving rise to the dispute
was given and Executive shall continue as a participant in all Award Plans
and Benefit Plans in which Executive participated when the Termination
Notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this subsection. Amounts paid under this
subsection are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
3) SEVERANCE BENEFIT IN CONNECTION WITH A CHANGE OF CONTROL TERMINATION.
----------------------------------------------------------------------
a) In the event of a Change of Control Termination, the Company shall, on the
Termination Date, pay the Executive in addition to any Base Salary earned
but not paid through the Termination Date and any amounts due pursuant to
Award Plans and Benefit Plans including, without limitation, the pro rata
amount of Executive's anticipated bonus for the fiscal year in which
Executive is terminated, the compensation and benefits set forth in this
Section 3.
b) The Company shall pay Executive a Termination Payment which is equal to
the sum of two (2) times the Executive's annual Base Salary in effect on
the Termination Date plus two (2) times the amount of the highest annual
cash bonus paid to the Executive for the previous five fiscal years (but
not including compensation under the Company's Shareholder Value Plan)
("Termination Payment"). The Termination Payment shall be calculated and
paid immediately prior to the closing of the transactions constituting a
Change of Control if the Executive receives notice prior to the Change of
Control that his employment will be terminated on or after the Change of
Control.
c) Executive shall be permitted to participate in, and have all rights and
benefits provided by, all Benefit Plans which Executive was eligible to
participate in immediately prior to the Termination Date (to the extent
such participation is possible under the laws then pertaining to such
Benefit Plans), for two years following the Termination Date. If Executive
is no longer eligible to participate in one or more of the Benefit Plans
because
of such termination, Executive shall be entitled to, and the Company shall
provide to Executive at the Company's sole expense, benefits substantially
equivalent to those Benefit Plans to which Executive was entitled
immediately prior to such termination for two (2) years after the
Termination Date.
d) All restrictions upon any Restricted Stock which may have been awarded to
Executive shall expire and be removed and such Restricted Stock shall be
fully vested at the Termination Date (unless otherwise previously expired
and removed and vested pursuant to the terms of any Restricted Stock award
pursuant to the 1993 Omnibus Stock Plan or any other Award Plan), and such
Stock shall be delivered to Executive. All Options granted to Executive
shall become fully vested at the Termination Date (unless otherwise
previously vested pursuant to the 1993 Omnibus Stock Plan or any other
Award Plan). In lieu of Company Shares issuable upon exercise of any
outstanding and unexercised Options granted to Executive, Executive may,
at Executive's option, receive an amount in cash equal to the product of
(i) the excess of the higher of the Fair Market Value of Company Shares on
the Termination Date, or the highest per share price for Company Shares
actually paid in connection with any Change of Control of the Company,
over the per share exercise price of each Option held by Executive, times
(ii) the number of Company Shares covered by each such Option. In the
event Executive does not elect to receive a cash payment for any
outstanding and unexercised Options granted to Executive, Executive shall
have the right to otherwise exercise such Options in accordance with the
terms and conditions of the 1993 Omnibus Stock Plan or any other
applicable Award Plan. This Agreement shall not prevent Restricted Stock
or Options from vesting pursuant to the terms of the 1993
e) Omnibus Stock Plan or any other Award Plan or otherwise, at a time prior
to that provided for herein.
f) If Executive has any Plan Loans outstanding to the Company immediately
prior to the effective date of a Change of Control Termination, the
Company shall, prior to the effective date of such Change of Control
Termination discharge and cancel the amount of principal and interest due
with respect to such Plan Loans which exceeds the Fair Market Value of
Company Shares securing the Plan Loans. The Executive shall pay the Plan
Loans in full (less the amount discharged) within ninety (90) days
following the Termination Date, and shall have the option of repaying all
amounts due with respect to the Plan Loans by the transfer of the Company
Shares securing the Plan Loans, or by the payment, in cash, of the amounts
due with respect to the Plan Loans. Except as otherwise set forth herein,
Executive shall remain subject to all terms and conditions set forth in
the Loan Agreements and Promissory Notes until the Plan Loans are paid in
full.
g) With respect to Executive's participation in the Company's Shareholder
Value Plan, the Award Periods in connection with all of Executive's
outstanding SVU Grants shall be accelerated such that each Award Period is
deemed to have ended upon the effective date of a Change of Control
Termination. At such time, the Company shall pay Executive an
amount equal to the SVU Value multiplied by the number of Executive's
outstanding SVU Grants. The SVU Value shall be reduced by 66% for all SVU
Grants which were granted less than twelve months prior to the effective
date of a Change of Control Termination and the SVU Value shall be reduced
by 33% for all SVU Grants which were granted less than twenty-four months
but more than twelve months prior to the effective date of a Change of
Control Termination. No adjustments shall be made to the SVU Value for SVU
Grants which were granted more than twenty-four months prior to the
effective date of the Change of Control Termination. All payments made to
Executive after a Change in Control Termination in connection with
outstanding SVU Grants shall be made solely in cash.
h) The Company shall also pay to Executive all legal fees and expenses
incurred by Executive as a result of a Change of Control Termination
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application of
Section 4999 of the Code to any payment or benefit provided hereunder).
4) CERTAIN TRANSACTIONS. Notwithstanding the provisions of Sections 1(k)(i),
(ii), (iii) or (viii), unless otherwise determined in a specific case by
majority vote of the Board, a Change of Control shall not be deemed to have
occurred for purposes of this Agreement solely because (i) an entity in
which the Company directly or indirectly
beneficially owns 50% or more of the voting securities or (ii) any
Company-sponsored employee stock ownership plan, or any other employee
benefit plan of the Company, either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule 13D, Schedule
14D-l, Form 8-K or Schedule 14A (or any successor schedule, form or report
or item thereon) under the Exchange Act, disclosing beneficial ownership by
it of shares of stock of the Company, or because the Company reports that a
Change of Control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership.
5) ESCROW ARRANGEMENT. If within thirty (30) days after the effective date of a
Change of Control, Executive's employment has not been terminated, the
Company shall, at the request of Executive, deposit with an escrow agent,
pursuant to an escrow agreement between the Company and such escrow agent, a
sum of money, or other property permitted by such escrow agreement, which is
substantially sufficient in the opinion of the Company's management to fund
the amounts due to Executive set forth in Section 3 of this Agreement. The
escrow agreement shall provide that such agreement may not be terminated
until the earlier of (i) Executive's employment has terminated and all
amounts due to Executive as set forth in this Agreement have been paid to
Executive or (ii) two (2) years after the effective date of the Change of
Control.
6) TAX MATTERS. If the Excise Tax on Excess Parachute Payments will be imposed
on the Executive under Code section 4999 as a result of the Executive's
receipt of the Change of Control Benefits, the Company shall indemnify the
Executive and hold him harmless against
all claims, losses, damages, penalties, expenses, interest, and Excise
Taxes. To effect this indemnification, the Company shall pay to the
Executive the Additional Amount which is sufficient to indemnify and hold
the Executive harmless from the application of Code sections 280G and
4999, including the amount of (i) the Excise Tax that will be imposed on
the Executive under section 4999 of the Code with respect to the Change of
Control Benefits; (ii) the additional (A) Excise Tax under section 4999 of
the Code, (B) hospital insurance tax under section 3111(b) of the Code and
(C) federal, state and local income taxes for which the Executive is or
will be liable on account of the payment of the amount described in
subitem (i); and (iii) the further excise, hospital insurance and income
taxes for which the Executive is or will be liable on account of the
payment of the amount described in subitem (ii) and this subitem (iii) and
any other indemnification payment under this Section 6. The Additional
Amount shall be calculated and paid to the Executive at the time that the
Termination Payment is paid to the Executive. In calculating the
Additional Amount, the highest marginal rates of federal and applicable
state and local income taxes applicable to individuals and in effect for
the year in which the Change of Control occurs shall be used. Nothing in
this paragraph shall give the Executive the right to receive
indemnification from the Company for federal, state or local income taxes
or hospital insurance taxes payable solely as a result of the Executive's
receipt of (a) the Change in Control Benefits, or (b) any additional
payment, benefit or compensation other than the Additional Amount. As
specified in items (ii) and (iii), above, all income, hospital insurance
and additional Excise Taxes resulting from additional compensation in the
form of the Excise Tax payment specified in item (i), above, shall be paid
to the Executive.
The provisions of this Section 6 are illustrated by the following example:
Assume that the Termination Payment and all other Change of Control
Benefits result in a total federal, state and local income tax and hospital
insurance tax liability of $180,000; and an Excise Tax liability under Code
section 4999 of $70,000. Under such circumstances, the Executive is solely
responsible for the $180,000 income and hospital insurance tax liability; and
the Company must pay to the Executive $70,000, plus an amount necessary to
indemnify the Executive for all federal, state and local income taxes, hospital
insurance taxes, and Excise Taxes that will result from the $70,000 payment to
the Executive and from all further indemnification to the Executive of taxes
attributable to the initial $70,000 payment.
7) EMPLOYMENT STATUS. The parties acknowledge and agree that Executive is an
employee of the Company or of one of its affiliates, not an independent
contractor. Any payments made to Executive by the Company pursuant to this
Agreement shall be treated for federal and state payroll tax purposes as
payments made to a Company employee, irrespective whether such payments are
made subsequent to the Termination Date.
8) NONCOMPETITION; NONSOLICITATION. For a period of two (2) years after
Executive receives Change of Control Benefits pursuant to the terms of this
Agreement, Executive shall not
solicit any employee of the Company to leave the service of the Company or
own any interest in any Self-Storage Property (other than any permissible
interest acquired while Executive was employed by the Company) as partner,
shareholder or otherwise; or directly or
indirectly, for his own account or for the account of others, either as an
officer, director, promoter, employee, consultant, advisor, agent,
manager, or in any other capacity, engage in the Self-Storage Business.
The nonsolicitation provision shall apply to any Company employee
during the period of such Company employee's employment with the Company and for
a period of 30 days after such employee's termination of employment with the
Company. The Executive agrees that damages at law for violation of the
restrictive covenant contained herein would not be an adequate or proper remedy
to the Company, and that should the Executive violate or threaten to violate any
of the provisions of such covenant, the Company, its successors or assigns,
shall be entitled to obtain a temporary or permanent injunction, as appropriate,
against the Executive in any court having jurisdiction over the person and the
subject matter, prohibiting any further violation of any such covenants. The
injunctive relief provided herein shall be in addition to any award of damages,
compensatory, exemplary or otherwise, payable by reason of such violation.
Furthermore, the Executive acknowledges that this Agreement has been
negotiated at arms' length by the parties, neither being under any compulsion to
enter into this Agreement, and that the foregoing restrictive covenant does not
in any respect inhibit his ability to earn a livelihood in his chosen profession
without violating the restrictive covenant contained herein. The Company by this
Agreement has attempted to limit the Executive's right to compete only to the
extent necessary to protect the Company from unfair competition. The Company
recognizes, however, that reasonable people may differ in making such a
determination. Consequently, the Company agrees that if the scope or
enforceability of the restricted covenant contained herein is in any way
disputed at any time, a court or other trier of fact may modify and enforce the
covenant to the extent that it believes to be reasonable under the circumstances
existing at the time.
9) NOTICES. All notices or deliveries authorized or required pursuant to this
Agreement shall be deemed to have been given when in writing and personally
delivered or when deposited in the U.S. mail, certified, return receipt
requested, postage prepaid, addressed to the parties at the following
addresses or to such other addresses as either may designate in writing to
the other party:
To the Company: 000 Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: General Counsel
To the Executive: ________________________
________________________
________________________
10) ENTIRE AGREEMENT. This Agreement contains the entire understanding between
the parties hereto with respect to the subject matter hereof and shall not
be modified in any manner except by instrument in writing signed, by or on
behalf of, the parties hereto. This Agreement
shall be binding upon and inure to the benefit of the heirs, successors
and assigns of the parties hereto.
11) ARBITRATION. Any controversy concerning or claim arising out of or relating
to this Agreement shall be settled by final and binding arbitration in
Memphis, Shelby County, Tennessee at a location specified by the party
seeking such arbitration.
A) THE ARBITRATORS. Any arbitration proceeding shall be conducted by three
(3) Arbitrators and the decision of the Arbitrators shall be binding on
all parties. Each Arbitrator shall have substantial experience and expert
competence in the matters being arbitrated. The party desiring to submit
any matter relating to this
Agreement to arbitration shall do so by written notice to the other party,
which notice shall set forth the items to be arbitrated, such party's choice
of Arbitrator, and such party's substantive position in the arbitration. The
party receiving such notice shall, within fifteen (15) days after receipt of
such notice, appoint an Arbitrator and notify the other party of its
appointment and of its substantive position. The Arbitrators appointed by
the parties to the Arbitration shall select an additional Arbitrator meeting
the aforedescribed criteria. The Arbitrators shall be required to render a
decision in accordance with the procedures set forth in Subparagraph (b)
below within thirty (30) days after being notified of their selection. The
fees of the Arbitrators shall be equally divided amongst the parties to the
arbitration.
B) ARBITRATION PROCEDURES. Arbitration shall be conducted in accordance with
the Uniform Arbitration Act, except to the extent the provisions of such
Act are modified by this Agreement or the subsequent mutual agreement of
the parties. Judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof. Any party hereto may
bring an action, including a summary or expedited proceeding, to compel
arbitration of any controversy or claim to which this provision applies
in any court having jurisdiction over such action in Shelby County,
Tennessee, and the parties agree that jurisdiction and venue in Shelby
County, Tennessee are appropriate and approved by such parties.
12) APPLICABLE LAW. This Agreement shall be governed and construed in accordance
with the laws of the State of Tennessee.
13) ASSIGNMENT. The Executive acknowledges that his services are unique and
personal. Accordingly, the Executive may not assign his rights or delegate
his duties or obligations under this Agreement.
14) HEADINGS. Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions.
15) SUCCESSORS; BINDING AGREEMENT. The Company will require any successor to all
or substantially all of the business and/or assets of the Company 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 had taken place.
Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a beach of this
Agreement and shall entitle Executive to compensation from the Company in
the same amount and on the same terms as Executive would be entitled to
hereunder if Executive terminates his employment for Good Reason on or
within three (3) years after a Change of Control. The Company's rights and
obligations under this Agreement shall inure to the benefit of and shall
be binding upon the Company's successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
STORAGE USA, INC.
By:_______________________________
Name: Xxxx Xxxxxxxx
Title: Chairman of the Board
And Chief Executive Officer
EXECUTIVE:
____________________________
Name:_______________________
