10.1.2 FORM OF SEVERANCE AGREEMENT BETWEEN STORAGE USA, INC. AND
XXXXXXXXXXX X. XXXX, CHIEF FINANCIAL OFFICER, EFFECTIVE AS OF
AUGUST 16, 1999
16
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.
17
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
18
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;
19
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 25% 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.
20
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.
21
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:
22
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
a 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 three (3) times the Executive's annual Base Salary in effect on
the Termination Date plus three (3) 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 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
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 (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.
16) CLAIMS. If Executive believes that he is being denied a benefit to which he
is entitled under this Agreement, he may file a written request for such
benefit with the Company at the address specified in Section 9 above setting
forth his claim. The Company shall have the sole discretion and authority to
construe and interpret the provisions of this Agreement and determine the
disposition of the Executive's claim. The Company shall advise the
Executive, in writing, of its decision and if the claim is denied, the
specific reason therefor, with reference to the terms of this Agreement,
describing any additional information that may be necessary, and explaining
the claim review procedure set forth herein. The Executive may then appeal
such denial to a committee appointed by the Chief Executive Officer of the
Company within sixty (60) days, may review any pertinent documents, and
submit issues and comments in writing. The committee shall then render a
decision on review within ninety (90) days of the Executive's appeal, unless
special circumstances require an extension, in which case such decision
shall be rendered within one hundred twenty (120) days. The decision on
review shall be in writing, final, and conclusive.
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:_______________________
