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EXHIBIT 10.5
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this
day of August, 1999, at Cleveland, Ohio, by and between LIBERTY SELF-STOR, INC.,
a Maryland corporation (hereinafter referred to as "Employer"), and XXXXXX X.
XXXXX (hereinafter referred to as "Employee").
RECITALS:
Employer desires to offer Employee an opportunity to work for Employer as
President and Chief Operating Officer, upon the terms and conditions hereinafter
set forth, and Employee desires to accept such offer. Accordingly, the parties
agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee agrees to be
employed by Employer as President and Chief Operating Officer, for a term of two
(2) years, commencing on the date that the reincorporation of Meridian Point
Realty Trust '83 into Liberty Self-Stor, Inc. is approved by the shareholders of
Meridian Point Realty Trust '83 and terminating two years from that date
(hereinafter referred to as the "Employment Period"). Thereafter, the Employment
Period shall be automatically renewed for additional, subsequent and consecutive
one (1) year terms, unless either Employer or Employee gives written notice to
the other of the intent to terminate this Agreement at least sixty (60) days
prior to the end of the then current term, in which event the Employment Period
shall end at the end of the then current term.
2. COMPENSATION. During the Employment Period, Employee shall receive as
compensation:
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(a) Salary at the annual rate of $125,000, payable not less frequently
than semi-monthly;
(b) The right to participate in all corporate employee benefit
programs offered to employees by Employer;
(c) Bonuses as determined in the sole discretion of Employer's Board
of Directors;
(d) Two weeks vacation each calendar year, commensurate with
Employer's vacation policy; and
(e) Use of a company car of Employee's choosing, including all
expenses related to the use of such car with the exception of gasoline.
3. DUTIES. During the Employment Period, the Board of Directors of Employer
shall be entitled to establish the business hours, conditions of employment, job
assignments, duties and responsibilities of Employee hereunder, and to modify
the foregoing from time to time. Employee shall devote all of his business
efforts to Employer.
4. EXPENSES. Employer shall reimburse Employee for all reasonable and
necessary business expenses incurred by Employee on behalf of Employer during
the Employment Period.
5. DEATH OF EMPLOYEE. If Employee should die during the Employment Period,
Employer shall continue to pay compensation to Employee's wife (or if at the
time of Employee's decease Employee has no wife, then to his beneficiaries) for
a period of ninety days at the rate of compensation earned by Employee
immediately prior to his death. The amount of the bonus, if any, which Employee
is to receive under paragraph 2 for such year shall be prorated
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for the portion of the year beginning on the first day of the Employment Period
(or the most recent anniversary thereof) and ending upon the date of Employee's
death.
6. DISABILITY OF EMPLOYEE.
(a) In the event that Employee shall become mentally or physically disabled
(as hereinafter defined) during the Employment Period, Employer shall continue
to pay compensation to Employee, at the rate of compensation earned by Employee
immediately prior to his disability, for a period of six months after the onset
of such disability. If, at the end of such period, Employee shall continue to be
so disabled Employer may elect, upon ten days prior written notice, to
discontinue payments of compensation. Employer shall have no further duties or
obligations hereunder. The amount of the bonus, if any, which Employee is to
receive under paragraph 2 for such year shall be prorated for the portion of the
year ending upon the end of the period described in this paragraph.
(b) If Employee, within six months after he had initially become mentally
or physically disabled, shall recover from such mental or physical disability so
as to be able to again perform the duties required of him hereunder, he shall be
entitled to return to work. Upon such return to work, all of the terms and
conditions hereof shall be reinstituted and shall continue in full force and
effect as if no such disability had occurred. However, if following such return
to work, Employee shall once again become mentally or physically disabled so as
to be unable to perform the duties required of him hereunder, and such
disability shall continue for a period of ninety consecutive days, Employer may,
upon ten days prior written notice, terminate this Agreement. Upon such
termination, Employer shall have no further obligations to Employee hereunder.
The amount of the bonus, if any, which Employee is to receive under paragraph 2
for
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such year shall be prorated for the portion of the year ending upon the end of
the period described in this paragraph.
(c) For purposes of this paragraph 6, Employee shall become "mentally
or physically disabled" if (i) Employee has been declared legally incompetent by
a final court decree, (ii) Employee receives disability insurance benefits from
any disability income insurance policy maintained by Employer for a period of
six (6) consecutive months, or (iii) the Board shall find, on the basis of
medical evidence satisfactory to the Board, that as a result of a mental or
physical condition Employee is unable to perform his normal duties of employment
hereunder or is prevented from engaging in the same level of performance as he
engaged in prior to the onset of such condition, and that such disability is
likely to continue for a substantial period of time. Such decision of the Board
shall be referred to hereinafter as a "Disability Determination."
(d) The date on which the disability will be deemed to have occurred
shall be the day after Employee last performed the services for Employer which
are required of him pursuant to this Agreement, which performance of services
was discontinued because of the condition which gave rise to the court decree of
legal incompetence, the payment of disability insurance benefit, or the
Disability Determination, whichever is applicable.
(e) In the event that Employee disagrees with the Disability
Determination, Employee shall be entitled to request that the Board reconsider
its decision. Such request shall be in writing, shall be delivered within thirty
(30) days of the date on which the Board advised Employee of the Disability
Determination, and shall be supported by medical evidence from a physician
selected and paid for by Employee. If the Board does not grant Employee's
request for reconsideration, Employee may advise the Board, in writing within
thirty (30) days, of his desire to appeal. At that time, a physician selected by
the Board and the physician who supported
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Employee's request for reconsideration shall choose a third consulting physician
to decide the dispute. Such physician (hereinafter, the "Arbitrator") must be
board-certified in the specialty most closely related to the nature of the
disability alleged to exist. The expenses of the Arbitrator shall be borne
equally by Employer and Employee. The decision of the Arbitrator shall be final
and binding and shall be conclusive on the issue of the disability of the
Employee (or lack thereof).
7. TERMINATION.
(a) TERMINATION FOR CAUSE. Employer may terminate Employee's
employment hereunder at any time for cause, which shall be deemed to include but
not be limited to the following:
(i) Employee's engaging in fraud, misappropriation of funds,
embezzlement or like conduct committed against Employer.
(ii) Employee's conviction of a felony.
(iii) Employee's material violation of a generally recognized
policy of Employer.
(iv) Employee's material violation of any provision of this
Agreement. In the event of such a termination for cause, Employer
shall have no further obligation to Employee pursuant to this
Agreement after the date of termination.
(b) TERMINATION WITHOUT CAUSE. Employer may elect to terminate
Employee's employment for any reason other than for cause (pursuant to
subparagraph (a) above) prior to the expiration of the Employment Period. In the
event of a termination without cause, Employer shall be obligated (i) to
continue to pay the salary amount set forth in paragraph 2(a) above for one year
following the date of termination, and (ii) to pay to Employee any bonus earned
but not
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yet paid on the date of termination, prorated to reflect the portion of the
bonus computation period during which Employee actually worked; provided however
that all other employment benefits such as use of a company car shall
immediately cease. The amounts to be paid to Employee pursuant to this
subparagraph are intended by the parties to be in settlement of any and all
claims of Employee arising out of or related to Employee's employment with
Employer, including, without limitation, the termination of such employment, any
express or implied employment agreement, this Agreement, or the breach thereof
(collectively, "Employment Claims"). In consideration of such payment, Employee
hereby releases and waives any and all Employment Claims against Employer, and
covenants not to xxx Employer in connection with any Employment Claim. In
further consideration for such release and waiver, it is agreed that Employee
shall not be required to mitigate damages, by seeking other employment or
otherwise, and Employer shall not be entitled to set off against amounts payable
to Employee pursuant to this subparagraph any amounts earned by Employee from
other employment during the balance of the Employment Period.
8. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. As a material inducement to
Employer to enter into this Agreement, Employee represents and warrants as
follows:
(a) Neither Employee, nor any member of Employee's immediate family,
nor any entity in which Employee has a substantial interest (i) has any direct
or indirect ownership interest in any entity with which Employer or any
affiliate of Employer has a business relationship or which competes with
Employer or any affiliate of Employer, except that the ownership of 1% or less
of any class of securities of a publicly-held corporation shall not constitute a
breach of this representation and warranty, and (ii) is, and will not become
during the
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term of this Agreement, directly or indirectly, interested in any material
contract with Employer or any affiliate of Employer (other than this Agreement).
(b) Neither Employee's execution of this Agreement nor Employee's
employment by Employer hereunder will breach any agreement or covenant entered
into by Employee that is currently in effect.
9. COVENANTS AGAINST COMPETITION. Employee recognizes and acknowledges that
(i) the principal business of Employer will be the operation, management,
development, expansion, ownership and acquisition of self-storage facilities
(the "Company Business"); and (ii) the work of Employee for Employer has brought
Employee and will continue to bring him into close contact with many
confidential affairs not readily available to the public. Accordingly, Employee
covenants and agrees that:
(a) NON-COMPETE. During the Employment Period and for two (2) years
following the termination of Employee's employment hereunder, however caused
(the "Restricted Period"), Employee shall not, directly or indirectly, (A)
within the State of Ohio, (B) in any other state in which Employer has actively
engaged in the Company Business during any part of the term of Employee's
employment with Employer, and (C) with respect to any customer or supplier with
whom Employer has had material dealings during any part of the term of
Employee's employment with Employer, compete with Employer in any manner, on
behalf of himself or any other person, firm, business, corporation or other
entity (each such other person, firm, business or other entity being referred to
hereinafter as a "Person"), including, without limitation, that Employee shall
not (i) engage in the Company Business for his own account; (ii) except for
employment of Employee by Employer or an affiliate of Employer, enter the employ
of, or render any services to, any Person engaged in the Company Business; (iii)
request or
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instigate any account or customer of Employer to withdraw, diminish, curtail or
cancel any of its business with Employer, or (iv) become interested in any
Person engaged in the Company Business as an owner, partner, shareholder,
officer, director, licensor, licensee, principal, agent, employee, trustee,
consultant or in any other relationship or capacity; provided, however, that
Employee may own, directly or indirectly, solely as an investment, securities of
any corporation which are publicly-traded if he (A) is not a controlling person
of, or a member of a group which controls, such corporation, or (B) does not,
directly or indirectly, own 1% or more of any class of securities of such
corporation. In the event of Employee's breach of any provision of this
paragraph 9, the running of the Restricted Period shall be automatically tolled
(i.e., no part of the Restricted Period shall expire) from and after the date of
the first such breach.
(b) CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges
that confidential information, including, without limitation, information,
knowledge or data (i) of a technical nature such as but not limited to methods,
know-how, formulae, compositions, processes, discoveries, machines, inventions,
products, product specifications, computer programs and similar items or
research projects; (ii) of a business nature such as but not limited to
information about cost, purchasing, profits, market, sales or customers,
including lists of customers, and the financial condition of Employer; (iii)
pertaining to future developments such as but not limited to research and
development or future marketing or merchandising, and trade secrets of Employer;
and (iv) all other matters which Employer treats as confidential (the items
described above being referred to collectively hereinafter as "Confidential
Information"), are valuable, special and unique assets of Employer. During and
after the Restricted Period, Employee shall keep secret and retain in strictest
confidence, and shall not use for the benefit of himself or others except in
connection with the business and affairs of Employer, any and all
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Confidential Information learned by Employee before or after the date of this
Agreement, and shall not disclose such Confidential Information to anyone
outside of Employer either during or after employment by Employer, except as
required in the course of performing duties of his employment with Employer,
without the express written consent of Employer or as required by law.
(c) PROPERTY OF EMPLOYER. Employee agrees to deliver promptly to
Employer all drawings, blueprints, manuals, letters, notes, notebooks, reports,
sketches, formulae, computer programs and files, memoranda, customer lists and
all other materials relating in any way to the Company Business and in any way
obtained by Employee during the period of his employment with Employer which are
in his possession or under his control, and all copies thereof, (i) upon
termination of Employee's employment with Employer, or (ii) at any other time at
Employer's request. Employee further agrees he will not make or retain any
copies of any of the foregoing and will so represent to Employer upon
termination of his employment.
(d) EMPLOYEES OF EMPLOYER. During the Restricted Period, Employee
shall not, directly or indirectly, hire, solicit or encourage to leave the
employment of Employer or its affiliates any employee of Employer or its
affiliates or hire any such employee who has left the employment of Employer or
its affiliates within one year of the termination of such Employee's employment
with Employer or its affiliates.
(e) CONSULTANTS OF THE EMPLOYER. During the Restricted Period,
Employee shall not, directly or indirectly, hire, solicit or encourage to cease
to work with Employer or its affiliates any consultant then under contract or
under contract within the prior year with Employer or its affiliates.
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10. RIGHTS AND REMEDIES UPON BREACH. Both parties recognize that the
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character. If Employee breaches, or threatens to commit a
breach of, any of the provisions of paragraph 9 (the "Restrictive Covenants"),
then Employer shall have the following rights and remedies, each of which shall
be independent of the other and severally enforceable, and all of which rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to Employer under law or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have the Restrictive
Covenants specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to Employer and that money damages will not provide
adequate remedy to Employer. As to the covenants contained in paragraph 9,
specific performance shall be for a period of time equal to the unexpired
portion of the Restricted Period, giving full effect to the tolling provision of
paragraph 9, and beginning on the earlier of the date on which the court's order
becomes final and non-appealable, and the date on which all appeals have been
exhausted.
(b) ACCOUNTING. The right and remedy to require Employee to account
for and pay over to Employer all compensation, profits, monies, accruals,
increments or other benefits (collectively, "Benefits") derived or received by
him as the result of any transactions constituting a breach of any of the
Restrictive Covenants, and Employee shall account for and pay over such Benefits
to Employer.
(c) BLUE-PENCILLING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
scope, duration and/or geographical area covered by such provision, such court
shall have the power to reduce the
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scope, duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
11. LIMITATIONS ON AUTHORITY. Notwithstanding anything else herein
contained, Employee, without the consent and direction of the Board of Directors
of Employer, may not on behalf of Employer:
(a) Borrow or loan money, except as required by his duties in the
ordinary course of business.
(b) Assign, transfer, pledge, compromise, or release any claims or
debts of Employer, except in the ordinary course of business.
(c) Make, execute or deliver any assignment for the benefit of
creditors, any bond, confession of judgment, chattel mortgage, deed, guaranty,
indemnity bond, contract to sell or contract of sale of any of the assets of
Employer.
(d) Lease or mortgage with respect to any of Employer's corporate real
property or any interest therein, or enter into any such contract for such
purposes, except in the ordinary course of business.
(e) Pledge or hypothecate or in any manner whatsoever transfer any
interest in the assets of Employer.
(f) Materially change or alter Employer's present lines of business.
(g) Do any act outside of the normal course of business which could
have a materially adverse effect on the business and/or financial condition of
Employer. Any violation of the terms of this paragraph shall be deemed to be a
material violation of a provision of this Agreement.
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12. INDEMNIFICATION. Employer shall indemnify Employee (and his legal
representatives or other successors) to the extent permitted by law and Employee
shall be entitled to the protection of any insurance policies which Employer may
elect to maintain generally for the benefit of its directors or officers against
all costs, charges and expenses whatsoever incurred or sustained by Employee in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been an employee, director or officer of
Employer or any other corporation that he served in any such capacity at the
request of Employer.
13. NON-ASSIGNMENT. This Agreement is a personal services contract and it
is expressly agreed that the rights and interests of Employee and Employer
hereunder may not be sold, transferred, assigned, pledged or hypothecated;
provided, however, that Employer may assign its rights and obligations hereunder
to a wholly-owned subsidiary of Employer, whether presently existing or formed
after the date hereof.
14. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their heirs, representatives and successors.
15. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
16. EFFECT OF CAPTIONS. The captions in this Agreement are included for
convenience only and shall not in any way effect the interpretation or
construction of any provision hereof.
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17. REMEDIES CUMULATIVE; NO WAIVER. ALl remedies specified herein or
otherwise available shall be cumulative and in addition to any and every other
remedy provided hereunder or now or hereafter available. No waiver or failure
(intentional or unintentional) to act with respect to any breach or default
hereunder shall be deemed to be a waiver with respect to any subsequent breach
or default, whether of a similar or different nature.
18. NOTICES. All notices, requests, demands or other communications
hereunder shall be sent by registered or certified mail to:
To Employer: Meridian Point Realty Trust '83
0000 Xxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxx 00000
Copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
20th floor, One Cleveland Centre
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
To Employee: Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxx
Xxxxxx-xx-xxx-Xxxx, Xxxx 00000
or to such other address as a party may designate by notice in accordance with
this paragraph.
19. GOVERNING LAW; JURISDICTION; LIMITATIONS ON FILING ACTIONS. This
Agreement shall be governed by and construed in accordance with the substantive
law of the State of Ohio. The parties intend to and hereby do confer
jurisdiction upon the courts of any jurisdiction within the State of Ohio to
determine any dispute arising out of or related to this Agreement, including the
enforcement and the breach hereof. The parties agree that any claim arising out
of or related to this Agreement, or the breach hereof, must be filed within six
(6) months after the date of the alleged breach, and in any event within six
months after the date of termination of Employee's employment, that any claim
which is not
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filed within such six month period is waived, and that any statute of
limitations to the contrary is hereby waived.
20. ACKNOWLEDGMENT. Employee acknowledges that: (i) he has carefully read
all of the terms of this Agreement, and that such terms have been fully
explained to him; (ii) he understands the consequences of each and every term of
this Agreement; (iii) he has had sufficient time and an opportunity to consult
with his own legal advisor prior to signing this Agreement, and that Employer
has encouraged him to seek legal counsel prior to signing this Agreement; (iv)
he had other employment opportunities at the time he entered into this
Agreement; (v) he specifically understands that by signing this Agreement he is
giving up certain rights he may have otherwise had, and that he is agreeing to
limit his freedom to engage in certain employment during and after the
termination of this Agreement, and (vi) the limitations to his right to compete
contained in this Agreement represent reasonable limitations as to scope,
duration and geographical area, and that such limitations are reasonably related
to protection which Employer reasonably requires.
21. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between Employer and Employee and supersedes all prior agreements
and understandings relating to the subject matter hereof.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
date first hereinabove mentioned.
LIBERTY SELF-STOR, INC.
By:
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Its:
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XXXXXX X. XXXXX
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