SENIOR MANAGEMENT EMPLOYMENT AGREEMENT
SENIOR MANAGEMENT EMPLOYMENT AGREEMENT, dated the __ day
of _____, 2000, between SHURGARD STORAGE CENTERS, INC., a
Washington corporation (the "Company"), and name
("Executive").
RECITALS
A. Executive is currently employed by the Company or
one of its Subsidiaries.
B. The Board of Directors of the Company (the "Board")
has determined that it is appropriate to reinforce the
continued attention and dedication of certain members of the
Company's management, including Executive, to their assigned
duties without distraction in potentially disturbing
circumstances arising from the possibility of a Business
Combination of the Company, as defined in Schedule A attached
hereto.
AGREEMENTS
NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, the Company and Executive
agree as follows:
1. Definitions
Terms capitalized in this Agreement which are not
otherwise defined shall have the meanings assigned to such
terms in Schedule A attached hereto.
2. Employment Following a Business Combination.
Once a Business Combination has occurred, no termination
of Executive's employment with the Company, other than on
account of death, shall be effective unless the party causing
such termination of employment provides the other party 30
days' prior written notice of such termination, which shall
indicate those specific provisions in this Agreement relied
upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for the termination
of Executive's employment constituting a Termination, if any,
under the provision so indicated.
3. Benefits Upon Business Combination
Executive shall be entitled to the following payments and
benefits following a Business Combination, whether or not a
Termination occurs:
(a) Salary and Benefits. Executive shall (i)
receive an annual base salary no less than the Executive's
annual base salary in effect immediately prior to the date
that the Business Combination occurs, including any salary
which has been earned but deferred, and an annual bonus equal
to at least the average of the two annual bonuses paid to
Executive in the two years prior to the Business Combination,
and (ii) be entitled to participate in all employee expense
reimbursement, incentive, savings and retirement plans,
practices, policies and programs (including any Company plan
qualified under Section 401(a) of the Code) available to other
peer executives of the Company and its Subsidiaries, but in no
event shall the benefits provided to Executive under this item
(ii) be less favorable, in the aggregate, than the most
favorable of those plans, practices, policies or programs in
effect immediately prior to the date that the Business
Combination occurs.
(b) Welfare Benefits. The Company shall at the
Company's expense (except for the amount, if any, of any
required employee contribution which would have been necessary
for Executive to contribute as an active employee under the
plan or program as in effect on the date of the Business
Combination) continue to cover Executive (and his or her
dependents) under, or provide Executive (and his or her
dependents) with insurance coverage no less favorable than,
the Company's life, disability, health, dental and any other
employee welfare benefit plans or programs, as in effect on
the date of the Business Combination (such benefits, the
"Welfare Benefits").
(c) Death of Executive. In the event of
Executive's death prior to Termination, but while employed by
the Company or any Subsidiary, as the case may be, his or her
spouse, if any, or otherwise the personal representative of
his or her estate shall be entitled to receive (i) Executive's
salary at the rate then in effect through the date of death,
as provided under the Company's pay policy, and (ii) any
Accrued Benefits for the periods of service prior to the date
of death.
(d) Disability of Executive. In the event of
Executive's Disability prior to Termination, but while
employed by the Company or any Subsidiary, as the case may be,
Executive shall be entitled to receive (i) his or her salary
at the rate then in effect through the date of the
determination of Disability, as provided under the Company's
pay policy, (ii) any Accrued Benefits for the periods of
service prior to the date of the determination of Disability,
(iii) payments under the Company's short and long term
disability plans following the determination of Disability,
and (iv) Welfare Benefits for a period of one year following
the determination of Disability.
(e) Cause; Upon Expiration of This Agreement; Other
Than for Good Reason. If Executive's employment shall be
terminated by the Company for Cause or upon expiration of this
Agreement or by Executive other than for Good Reason,
Executive shall be entitled to receive only (i) his or her
salary at the rate then in effect through the date of such
termination, as provided under the Company's pay policy, and
(ii) any Accrued Benefits for the periods of service prior to
the date of such termination.
(f) Withholding. All payments under this Section 4
are subject to applicable federal and state payroll
withholding or other applicable taxes.
4. Payments and Benefits Upon Termination
Executive shall be entitled to the following payments and
benefits following Termination:
(a) Termination Payment. Subject to Section
4(b)(i), in recognition of past services to the Company by
Executive, the Company shall make a lump sum payment in cash
to Executive as severance pay within ten (10) business days
following the date of Termination equal to two and one-half (2-
1/2) times the sum of: (i) Executive's annual base salary in
effect immediately prior to the date that either a Business
Combination shall occur or such date of Termination, whichever
salary is higher; plus (ii) Executive's target bonus for the
current fiscal year as determined by the Compensation
Committee; provided, however, that if Termination occurs prior
to the determination of such target bonus for a fiscal year,
such bonus shall be the target bonus for the prior fiscal
year.
(b) Termination Benefits; Certain Additional Payments by the
Company.
(i) "Termination Benefits" shall mean the
payments or benefits provided under Section 4(a)
either alone or together with all other payments
and benefits that Executive receives or is then
entitled to receive (pursuant to this Agreement or
otherwise) from the Company or any Subsidiary and
that would be considered in determining whether or
not Executive had received a Parachute Payment.
(ii) If all or any portion of Termination
Benefits would constitute a Parachute Payment and
be subject to Excise Tax, then the payments to
Executive under Section 4(a) shall be increased
(such increase, a "Gross-Up Payment"), but only to
the extent necessary to ensure that, after payment
by the Executive of all taxes (including any
interest or penalties imposed with respect to such
taxes), including, without limitation, any income
taxes and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed
upon the Termination Benefits. The foregoing
calculations shall be made by the Company and
Executive. If no agreement on the calculations is
reached within ten (10) business days after the
date of Termination, then the accounting firm
which regularly audits the financial statements of
the Company (the "Auditors") shall review the
calculations, and report their determination of
the amount due to both Executive and the Company
within thirty (30) days of the Termination. The
determination of such firm shall be conclusive and
binding on all parties and the expense for such
accountants shall be paid by the Company. Pending
such determination, the Company shall continue to
make all other required payments to Executive at
the time and in the manner provided herein.
(iii) As a result of the uncertainty in the
application of Section 280G and Section 4999 of
the Code, it is possible that the Company will
make a Payment (including a Gross-Up Payment)
under this Agreement that should not have been
made (an "Overpayment") or that the Company will
fail to make a payment (including a Gross-Up
Payment) under this Agreement that should have
been made (an "Underpayment"). If the Company and
Executive, or, if no agreement is reached by the
Company and Executive, the Auditors, determine
that Overpayment has been made, such Overpayment
shall be treated for all purposes as a loan to the
Executive which he shall repay to the Company,
together with interest at the applicable federal
rate provided for in section 7872(f)(2)(A) of the
Code. If the Company and Executive, or, if no
agreement is reached by the Company and Executive,
the Auditors, determine that an Underpayment has
occurred, such Underpayment shall promptly be paid
by the Company to Executive, together with
interest at the applicable federal rate provided
for in section 7872(f)(2)(A) of the Code. The
Company and Executive agree to give each other
prompt written notice of any information or taxing
authority inquiry that could reasonably result in
the determination that an Overpayment or
Underpayment has been made.
(c) Accrued Benefits. Within ten (10) business
days following the date of Termination, the Company shall make
a lump sum payment in cash to Executive in the amount of any
Accrued Benefits for the periods of service prior to the date
of Termination.
(d) Welfare Benefits. The Company shall, at its
sole option and expense (except for the amount, if any, of any
required employee contribution that would have been necessary
for Executive to contribute as an active employee under the
plan or program as in effect on the date of Termination)
either (i) continue to cover Executive (and his or her
dependents) under, or provide Executive (and his or her
dependents) with Welfare Benefits (as in effect on the date of
the Business Combination or, at the option of Executive, on
the date of Termination) for a period of two and one-half (2-
1/2) years following the date of Termination, or (ii) pay
Executive a lump sum cash payment within ten (10) business
days following the date of Termination equal to the then-
present value of the cost to the Company of such Welfare
Benefits; provided, however, that if Executive is provided by
another employer during such two and one-half-year period with
benefits substantially comparable to the Welfare Benefits, the
benefits provided by the Company shall, unless a lump sum
payment has been made by the Company (in which case Executive
shall not, for any reason, be required to return any part of
such payment), be reduced by the benefits provided by such
other employer, but only to the extent of, and with respect
to, the Welfare Benefits otherwise payable by the Company to
Executive.
(e) Death of Executive. In the event of
Executive's death subsequent to Termination and prior to
receiving all benefits and payments provided for by this
Section 4, such benefits and payments shall be paid to his or
her spouse, if any, or otherwise to the personal
representative of his or her estate, unless Executive has
otherwise directed the Company in writing prior to his or her
death.
(f) Exclusive Source of Severance Pay. Benefits
provided hereunder shall replace the amount of any severance
payments to which Executive would otherwise be entitled under
any severance plan or policy generally available to employees
of the Company.
(g) Nonsegregation. No assets of the Company need
be segregated or earmarked to represent the liability for
benefits payable hereunder. The rights of any person to
receive benefits hereunder shall be only those of a general
unsecured creditor.
(h) Withholding. All payments under this Section 4
are subject to applicable federal and state payroll
withholding or other applicable taxes.
5. Noncompetition
(a) Noncompetition. In the event that this
Agreement is terminated by the Company or by Executive for any
reason, and provided that any payments due Executive upon such
termination are paid when due, then for a period of one year
after such termination, Executive shall not, within any
standard metropolitan statistical area in which the Company
has ten or more self storage facilities, engage in any
activities (including, without limitation, activities for any
subsequent employer of Executive) directly competitive with
the self-storage business of the Company.
(b) Company Remedy. In the event of any breach by
Executive of the obligations set forth in Section 5(a), the
Company shall be entitled to recover an amount equal to the
total of all amounts paid to Executive pursuant to Sections
4(a) and 4(b) of this Agreement in addition to any other
remedies available to the Company at law or in equity.
6. Arbitration
Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by
arbitration in Seattle, Washington, in accordance with the
Rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any
jurisdiction.
7. Conflict in Benefits
This Agreement is not intended to and shall not adversely
affect, limit or terminate any other agreement or arrangement
between Executive and the Company presently in effect or
hereafter entered into, including any employee benefit plan
under which Executive is entitled to benefits.
8. Term, Termination and Amendment
(a) The initial term of this Agreement shall be from the
date hereof until the anniversary date of this Agreement. On
each such annual anniversary date, this Agreement shall
automatically be renewed for a period of one year, unless 60
days prior to such anniversary date the Company shall give
notice to Executive that the Agreement is terminated or
amended, provided that no Business Combination has occurred
prior to such anniversary. Notwithstanding such termination,
the Company shall remain liable for any rights or payments
arising prior to such termination to which Executive is
entitled under this Agreement. During each such one year
term, this Agreement may not be amended or terminated except
by written agreement between Executive and the Company.
(b) In the event of a Business Combination, unless
earlier terminated as provided herein, this Agreement shall
continue in effect until for a period of 30 months from the
date of the Business Combination at which time this Agreement
shall expire. For a 30 month period following a Business
Combination, (i) this Agreement may not be terminated, and
(ii) no amendment or other action of the Board which adversely
affects the rights of Executive hereunder is valid and
enforceable without the prior written consent of Executive.
After the 30 month period from the date of the Business
Combination, the Board may terminate or amend this Agreement
without the prior written consent of Executive.
9. Miscellaneous
(a) Amendment. This Agreement may not be amended
except by written agreement between Executive and the Company.
(b) No Mitigation. All payments and benefits to
which Executive is entitled under this Agreement shall be made
and provided without offset, deduction or mitigation on
account of income Executive could or may receive from other
employment or otherwise, except as provided in Section 4(d)
and Section 5(b) hereof.
(c) Employment Not Guaranteed. Nothing contained
in this Agreement, and no decision as to the eligibility for
benefits or the determination of the amount of any benefits
hereunder, shall give Executive any right to be retained in
the employ of the Company or rehired, and the right and power
of the Company to dismiss or discharge any employee for any
reason is specifically reserved. Except as expressly provided
herein, no employee or any person claiming under or through
him or her shall have any right or interest herein, or in any
benefit hereunder.
(d) Legal Expenses. In connection with any
litigation, arbitration or similar proceeding, whether or not
instituted by the Company or Executive, with respect to the
interpretation or enforcement of any provision of this
Agreement, the prevailing party shall be entitled to recover
from the other party all costs and expenses, including
reasonable attorneys' fees and disbursements, in connection
with such litigation, arbitration or similar proceeding. The
Company shall pay prejudgment interest on any money judgment
obtained by Executive as a result of such proceedings,
calculated at the published commercial interest rate of
Seattle-First National Bank for its best customers, as in
effect from time to time from the date that payment should
have been made to Executive under this Agreement.
(e) Notices. Any notices required under the terms
of this Agreement shall be effective when mailed, postage
prepaid, by certified mail and addressed to, in the case of
the Company:
Shurgard Storage Centers, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
and to, in the case of Executive
name
add1
add2
Either party may designate a different address by giving
written notice of change of address in the manner provided
above.
(f) Waiver; Cure. No waiver or modification in
whole or in part of this Agreement, or any term or condition
hereof, shall be effective against any party unless in writing
and duly signed by the party sought to be bound. Any waiver
of any breach of any provision hereof or any right or power by
any party on one occasion shall not be construed as a waiver
of, or a bar to, the exercise of such right or power on any
other occasion or as a waiver of any subsequent breach. Other
than a breach of the provisions of Section 5, any breach of
this Agreement may be cured by the breaching party within ten
days of the date that such breaching party shall have received
written notice of such breach from the party asserting such
breach.
(g) Binding Effect; Successors. Subject to the
provisions hereof, nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any
other corporation, or the sale by the Company of all or
substantially all of its properties and assets, or the
assignment of this Agreement by the Company in connection with
any of the foregoing actions. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the
Company and Executive and their respective heirs, legal
representatives, successors and assigns. If the Company shall
be merged into or consolidated with another entity, the
provisions of this Agreement shall be binding upon and inure
to the benefit of the entity surviving such merger or
resulting from such consolidation. The Company shall require
any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company, including the
successor to all or substantially all of the business or
assets of any Subsidiary, division or profit center 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. The provisions of this Section 9(g) shall
continue to apply to each subsequent employer of Executive
hereunder in the event of any subsequent merger, consolidation
or transfer of assets of such subsequent employer.
(h) Separability. Any provision of this Agreement
which is held to be unenforceable or invalid in any respect in
any jurisdiction shall be ineffective in such jurisdiction to
the extent that it is unenforceable or invalid without
affecting the remaining provisions hereof, which shall
continue in full force and effect. The enforceability or
invalidity of a provision of this Agreement in one
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(i) Controlling Law. This Agreement shall be
governed by and construed in accordance with the laws of the
state of Washington applicable to contracts made and to be
performed therein.
IN WITNESS WHEREOF, the Company and Executive have
executed this Agreement as of the day and year first above
written.
SHURGARD STORAGE CENTERS, INC.
By: ___________________________
Title: ________________________
EXECUTIVE:
________________________
name
Schedule A
CERTAIN DEFINITIONS
As used in this Agreement, and unless the context
requires a different meaning, the following terms have the
meanings indicated:
"Accrued Benefits" means the aggregate of any
compensation previously deferred by Executive (together with
any accrued interest or earnings thereon), any accrued
vacation pay and, if the date of Termination occurs after the
end of a Fiscal Year for which a bonus is payable to
Executive, such bonus, in each case to the extent previously
earned and not paid.
"Base Amount" shall mean the "base amount" of Executive
as defined in Section 280G of the Code.
"Business Combination" means, and shall be deemed to
occur upon the happening of, any one of the following:
(a) The occupying of a majority of the seats (other than
vacant seats) on the Board by individuals who were neither
nominated or appointed by a majority of the Incumbent
Directors;
(b) The acquisition, directly or indirectly, by any
Person of beneficial ownership of 15% or more of the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors, which acquisition is not approved in advance by a
majority of the Incumbent Directors;
(c) The first purchase of the Company's Common Stock
pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company);
(d) The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale of
substantially all of the assets of the Company (an
"Acquisition Transaction") unless, following such Acquisition
Transaction, all or substantially all of the individuals and
entities who were the beneficial owners of the outstanding
voting securities of the Company immediately prior to such
Acquisition Transaction beneficially own, directly or
indirectly, more than 50% of the then outstanding voting
securities of the corporation resulting from such Acquisition
Transaction (including, without limitation, a corporation
which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Acquisition Transaction of the outstanding voting securities
of the Company; or
(e) Approval by the stockholders of the Company of a
liquidation or dissolution of the Company.
(f) For purposes of this definition, (i) the terms
"beneficial owner" and "beneficial ownership" shall have the
meanings set forth in Rules 13d-3 and 13d-5 of the General
Rules and Regulations promulgated under the Exchange Act, and
the term "voting securities" shall mean the voting securities
of a corporation entitled to vote generally in the election of
directors.
"Cause" means (a) willful misconduct on the part of
Executive that has a materially adverse effect on the Company
and its Subsidiaries, taken as a whole, (b) Executive's
engaging in conduct which could reasonably result in his or
her conviction of a felony or a crime against the Company or
involving substance abuse, fraud or moral turpitude, or which
would materially compromise the Company's reputation, as
determined in good faith by a written resolution duly adopted
by the affirmative vote of not less than two-thirds of all of
the directors who are not employees or officers of the
Company, or (c) unreasonable refusal by Executive to perform
the duties and responsibilities of his or her position in any
material respect. No action, or failure to act, shall be
considered "willful" if it is done by Executive in good faith
and with reasonable belief that his or her action or omission
was in the best interests of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Disability" means that (a) a person has been
incapacitated by bodily injury or physical or mental disease
so as to be prevented thereby from performance of his or her
duties with the Company for 120 days in any 12-month period,
and (b) such person is disabled for purposes of any and all
of the plans or programs of the Company or any Subsidiary that
employs Executive under which benefits, compensation or awards
are contingent upon a finding of disability. The
determination with respect to whether Executive is suffering
from such a Disability will be determined by a mutually
acceptable physician or, if there is no physician mutually
acceptable to the Company and Executive, by a physician
selected by the then Xxxx of the University of Washington
Medical School.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Excise Tax" means the excise tax, including any interest
or penalties thereon, imposed on Executive by Section 4999 of
the Code.
"Fiscal Year" means the 12-month period ending on
December 31 in each year (or such other fiscal year period
established by the Board).
"Good Reason" means, without Executive's express written
consent:
(a) (i) the assignment to Executive of duties, or
limitation of Executive's responsibilities,
inconsistent with Executive's title, position,
duties, responsibilities and status with the Company
Executive as such duties and responsibilities
existed immediately prior to the date of the
Business Combination, or (ii) removal of Executive
from, or failure to re-elect Executive to,
Executive's positions with the Company or any
Subsidiary that employs Executive immediately prior
to the Business Combination, except in connection
with the involuntary termination of Executive's
employment by the Company for Cause or as a result
of Executive's death or Disability;
(b) failure by the Company to pay, or reduction by the
Company of, Executive's annual base salary, as
reflected in the Company's payroll records for
Executive's last pay period immediately prior to the
Business Combination;
(c) failure by the Company to pay, or reduction by the
Company of, Executive's bonus;
(d) the relocation of the principal place of Executive's
employment to a location that is more than 25 miles
further from Executive's principal residence than
such principal place of employment immediately prior
to the Business Combination; or
(e) the breach of any material provision of this
Agreement by the Company, including, without
limitation, failure by the Company to bind any
successor to the Company to the terms and provisions
of this Agreement in accordance with Section 10(g).
"Gross-Up Payment" shall have the meaning set forth in
Section 4(b).
"Incumbent Director" means a member of the Board who has
been either (a) nominated by a majority of the directors of
the Company then in office or (b) appointed by directors so
nominated, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board.
"Parachute Payment" means any payment deemed to
constitute a "parachute payment" as defined in Section 280G of
the Code.
"Person" means any individual, entity or group (as such
term is used in Section 13(d)(3) or 14(d)(2) of the Exchange
Act).
"Subsidiary" means an Person controlled by the Company
directly, or indirectly through one or more intermediaries.
"Termination" means, following the occurrence of any
Business Combination by the Company, (a) the involuntary
termination of the employment of Executive for any reason
other than death, Disability or for Cause or (b) the
termination of employment by Executive for Good Reason.
"Termination Benefits" shall have the meaning set forth
in Section 4(b)(i).
"Welfare Benefits" shall have the meaning set forth in
Section 3(b).
SCHEDULE OF AGREEMENTS
Xxxxxxx X. Xxxxx, Chief Executive Officer
Xxxxxxx Xxxx, Chief Financial Officer
Xxxxxxxx Xxxxxxxx, Vice President
Xxxx Xxxxx, Vice President
Xxxx Xxxx, Vice President
Xxxxxxxxx XxXxx, General Counsel
Xxxxxxx Xxxxxxxx, Vice President
Xxxx Xxxxxxxx, Senior Vice President
Xxxxx Xxxxx, Senior Vice President
Xxxxxxx Xxxxxxxxx, STG President/Chief Operating Officer
Xxx Xxxxxxxx, Vice President
Xxxx Xxxxx, Vice President
