EXHIBIT 10.2
SEVERANCE AGREEMENT
AGREEMENT effective as of August 1, 2001, 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
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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;
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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
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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.
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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;
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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 August
1, 2001 and shall be extended automatically, for so long as
the Executive remains employed by the Company and/or its
subsidiary(ies) or affiliates(s) hereunder, on January 1 of
each year beginning January 1, 2002 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 (24) 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
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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 one and one-half (1.5) times the
Executive's annual Base Salary in effect on the Termination
Date plus one and one-half (1.5) 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.
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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 Omnibus Stock Plan or any other Award Plan or
otherwise, at a time prior to that provided for herein.
e) 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.
f) 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
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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.
g) 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
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(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 sub item (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
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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 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: General Counsel
To the Executive:
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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.
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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.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
STORAGE USA, INC.
By:
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Name: Xxxx Xxxxxxxx
Title: Chairman of the Board,
Chief Executive Officer and
President
EXECUTIVE:
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Name:
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