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EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is made and entered into as
of the 7th day of May, 1997, between STORAGE TRUST PROPERTIES, L.P., a
Delaware limited partnership, acting by and through its general partner,
STORAGE TRUST REALTY, A Maryland Real Estate Investment Trust (the "Company")
and XXXXXXX X. XXXXXX, Chief Executive Officer (the "Executive").
WHEREAS, the Company recognizes that the Executive's contribution to the
growth and success of the Company has been substantial and desires to assure
the Company of the Executive's continued employment; and
WHEREAS, the Company and the Executive previously executed an Employment
Agreement dated November 15, 1994, which they now wish to wholly replace and
restate through this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set forth,
the parties agree as follows:
1. EMPLOYMENT: The Company agrees to continue to employ the
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Executive, and the Executive agrees to continue to be employed by the Company,
subject to the terms and conditions set forth herein.
2. TERM: The employment of the Executive by the Company as
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provided in paragraph 1 hereof will be for a period of approximately three (3)
years and two (2) months, commencing on the date of this Agreement through and
ending on June 30, 2000, unless the term of this Agreement is extended as
provided in the following sentence of this paragraph 2 (the "Employment
Term"). Commencing on July 1, 2000, and on each anniversary of such date
thereafter (such date and each anniversary thereof is hereafter called the
"Renewal Date"), the Employment Term will be automatically extended so as to
terminate on each subsequent anniversary of the Renewal Date, unless, not less
than thirty (30) days prior to a Renewal Date, either party delivers to the
other party written notice of its or his election not to so extend the
Employment Term. If such a written notice is given in a timely manner, then
this Agreement shall terminate on the next succeeding Renewal Date subsequent
to said Notice. The Employment Term shall automatically end on the date of
the Employee's death and a Notice of Termination pursuant to paragraph 5, g,
shall be deemed to constitute a notice of nonrenewal under this paragraph 2.
Notwithstanding the foregoing provisions of this paragraph 2, if a Change in
Control (as defined in paragraph 7, a) occurs during the Employment Term, this
Agreement will automatically be extended for a period of twelve (12) months
following the date of such Change in Control.
3. POSITION AND DUTIES: During the Employment Term, while the
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Executive is employed by the Company, the Executive shall serve as Chief
Executive Officer of the Company or in such other executive capacity as a
senior officer of the Company as may be determined by
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the Company's Board of Trustees (the "Board") from time to time; provided,
however, that such duties at all times shall be consistent with the duties
normally performed by the Chief Executive Officer or such other executive
position of companies engaged in businesses similar to the business of the
Company. The Executive agrees to devote substantially all of his business
time, skill, attention, and best efforts to the business of the Company to the
extent necessary to discharge the responsibilities assigned to him during the
Employment Term; provided, that the Executive may:
a. except as provided in the noncompetition agreement between the
Executive and the Company dated as of December 31, 1997 (and effective as of May
7, 1997) invest solely as a passive investor in any business or enterprise which
is not in competition with the Company or which is not a supplier or vendor to
the Company;
b. serve on civic or charitable boards or committees that involve
limited commitments of time and do not interfere with the fulfillment of the
Executive's duties with respect to the Company, or, with the prior consent of
the Board, on other corporate boards;
c. take usual, ordinary, and customary periods of vacation; and
d. unless totally disabled (as hereafter defined) be absent due to
illness or other disability.
4. COMPENSATION:
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a. Base Salary: During the Employment Term, while the Executive
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is employed by the Company, the Executive shall receive a base salary ("Base
Salary") at an annual rate of One Hundred Fifty Thousand Dollars ($150,000.00)
per year. The Board, in its sole discretion, may increase the Executive's
Base Salary effective as of January 1 of each calendar year subsequent to
December 31, 1997, in an amount the Board deems appropriate, provided that the
Board shall increase the Executive's Base Salary with respect of each
remaining calendar year of the Employment Term by a percentage not less than
the ratio of the "CPI" for the month of October in the calendar year ending
immediately prior to a new calendar year as compared to the "CPI" for the
month of October in the calendar year two years prior to such new calendar
year. As used in this paragraph, the term "CPI" means the Consumer Price
Index for All Items for the United States (CP-U; All items; 1982-1984=100) as
published by the Bureau of Labor Statistics, United States Department of
Labor. Any increase in the Executive's Base Salary or other compensation
which is based on increases in the CPI shall in no way limit or reduce any
other obligation of the Company hereunder, and, once established at an
increased specified rate, the Executive's adjusted Base Salary shall not be
reduced thereafter. The Executive's Base Salary shall be paid in accordance
with the normal payroll practices of the Company, but in no event less
frequently than monthly.
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b. Incentive Compensation; Bonuses: In addition to the Base
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Salary specified above, during the Employment Term, while the Executive is
employed by the Company, the Executive shall be eligible to:
(1) participate in the Bonus Incentive Compensation
Plan as adopted May 9, 1995, as amended;
(2) participate in the 1994 Share Incentive Plan as
adopted by the Company, and as amended February 4, 1997;
(3) participate in any other incentive plan for
executive employees in effect from time to time hereafter;
(4) exercise such share options pursuant to their terms
as have been and as may be awarded to Executive from time to
time hereafter which vest at any time hereafter; and
(5) receive such other bonuses or discretionary
compensation payments as the Board may determine from time to
time hereafter.
The bonus and incentive plans described above in this subparagraph 4, b, are
referred to herein collectively as the "Incentive Plans." Nothing in this
Agreement shall require the Company to adopt or continue any specific
Incentive Plan.
c. Expenses: The Executive shall be entitled to receive prompt
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reimbursement for all reasonable out-of-pocket expenses incurred by the
Executive during the Employment Term while the Executive is employed by the
Company in the normal course of the Company's business in accordance with the
policies and procedures of the Company.
d. Benefit Plans: During the Employment Term, while the Executive
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is employed by the Company, the Executive shall be entitled to continue to
participate in or receive benefits under all of the Company's employee benefit
plans, policies, practices, and arrangements ("Benefit Plans") on the same
basis as other executive officers of the Company.
e. Vacations: The Executive shall be entitled to paid vacations
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in accordance with the Company's vacation policy as in effect from time to
time. The Executive also shall be entitled to all paid holidays given by the
Company to its executive officers.
f. Fringe Benefits: The Executive shall be entitled to all fringe
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benefits generally provided by the Company to its executive officers.
g. Location of Employment: The Executive shall be based at the
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Company's corporate headquarters, except for required travel on the Company's
business in accordance with the Company's management practices.
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5. TERMINATION:
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The Executive's employment with the Company during the Employment Term
may be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in subparagraphs 5, a,
through 5, f, next below.
a. Death: The Executive's employment shall terminate
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automatically upon the death of the Executive.
b. Total Disability: The Company may terminate the Executive's
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employment by reason of the Executive's total disability. The term "total
disability" means a physical or mental condition which, in the judgment of the
Executive's attending physician, and based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive even with
reasonable accommodation by the Company from satisfactorily performing his
usual duties for the Company. The receipt of Social Security Disability
payments shall be presumptive evidence of total disability.
c. Cause or Inadequate Performance: The Company may terminate the
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Executive's employment for cause or inadequate performance; provided, however,
the Executive's employment may not be terminated for inadequate performance
during the twelve (12) month period following a Change in Control. The term
"cause" in this Agreement means the Executive's conviction of a felony or his
conviction of any misdemeanor involving moral turpitude (but only in the event
that such misdemeanor adversely impacts the Company), excessive use of
alcohol, the use of illegal drugs, acts of fraud or dishonesty, or any
material breach by the Executive of this Agreement. The term "inadequate
performance" means, in the good faith opinion of a majority of the Company's
Board of Trustees, a significant deviation from the Executive's past
performance under similar business conditions and not resulting from factors
beyond the reasonable control of the Executive.
d. Termination by the Executive Because of Change in Control or
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Good Reason: The Executive may terminate his employment for any reason at
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any time during the twelve (12) month period following a Change in Control or
upon the occurrence at any time of any event constituting Good Reason (as
hereafter defined). For the purposes of this Agreement, "Good Reason" shall
mean:
(1) the assignment to the Executive by the Company of any
duties materially inconsistent with the position of a senior officer
with the Company;
(2) a change by the Company in the Executive's responsibilities
to the Company such that the Executive is not acting as a senior officer
of the Company, as such responsibilities are ordinarily and customarily
required from time to time of an individual employed as a senior officer
with a corporation engaged in the Company's business; or
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(3) any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its material obligations hereunder.
e. Termination by Executive for other than Good Reason or following
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a Change in Control: The Executive may terminate his employment hereunder at
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any time for any reason not specified in subparagraph 5, d, above, by giving
the Company a written Notice of Termination in accordance with subparagraph 5,
g, below.
f. Termination by Company for other than Cause or Inadequate
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Performance. The Company may terminate the Executive's employment at any
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time for any reason not specified in subparagraphs 5, a, b, or c, above, by
giving the Executive a written Notice of Termination in accordance with
subparagraph 5, g, below.
g. Notice of Termination: Any termination of the Executive's
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employment for any reason other than the Executive's death, whether initiated
by the Company or by the Executive, shall be communicated by a written "Notice
of Termination" to the other party hereto. The "Notice of Termination" shall
specify which termination provision in this Agreement is relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the provision so
indicated. Such Notice of Termination shall be effective immediately or, in
the case of a termination described in subparagraphs 5, d, or f, above, such
later date as is specified in such notice.
h. Date of Termination: "Date of Termination" shall mean the last
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date the Executive is employed by the Company, provided that the Executive's
employment is terminated in accordance with the foregoing provisions of this
paragraph 5.
6. COMPENSATION AND OTHER RIGHTS UPON TERMINATION: The
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Executive's right to payments and benefits under this Agreement for any
period after his Date of Termination shall be determined in accordance with
the following provisions of this paragraph 6.
a. Termination Because of Death or Total Disability of Executive:
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If the Executive's Date of Termination occurs during the Employment Term by
reason of the Executive's death or total disability, the Executive, or in the
event of his death, the Executive's estate, heirs or designated beneficiaries
shall be entitled to receive the benefits specified in subparagraphs (1), (2)
and (3), below of this paragraph a. The amounts specified in subparagraphs (2)
and (3) shall be paid in a lump sum cash payment as soon after the Executive's
Date of Termination as is reasonably possible. Such payments shall be in
addition to any other benefits specifically provided under the terms of any
Incentive Plans or Benefit Plans. The benefits payable pursuant to this
paragraph shall be:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
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(2) an amount equal to 12 months of the Executive's Base
Salary at the rate in effect on his Date of Termination; plus
(3) an amount equal to the annual bonus payable to the
Executive, if any, under the Incentive Plans for the calendar year
immediately preceding the calendar year in which the Executive's Date of
Termination occurs. In the event of the Executive's death, any sum which
would have been paid to a participant's account in a qualified
retirement plan for the Executive by the Company shall instead be
included as a part of this payment.
The Executive's "estate, heirs, and beneficiaries" shall mean the trustee of
any trust or the personal representative of the Executive's estate or such
other person or persons who may be designated by the Executive to receive such
benefits on such documents or forms as the Company provides for this purpose.
b. Termination Following a Change in Control: If the Executive's
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Date of Termination occurs within twelve (12) months following a Change in
Control for any reason other than death, total disability or for cause, the
Executive shall be entitled to the following:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable.
(3) a lump sum cash payment in an amount equal to two and
one-half (2.5) times (250% of) of the sum of (i) the Executive's Base
Salary; plus (ii) bonuses paid during the twelve (12) full calendar
months immediately preceding the calendar month in which the Executive's
employment terminated. Such total amount shall be paid within ten (10)
days following the Date of Termination.
In addition, if the Executive's Date of Termination occurs for reasons other
than cause within twelve (12) months following a Change in Control or
following any event constituting Good Reason, and on such date the Executive
is party to any agreement with the Company restricting the Executive's ability
to obtain employment with a competitor of the Company or to engage in
activities which are competitive to the Company, such competition restrictions
shall lapse on the Date of Termination.
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c. Voluntary Termination by Executive: If the Executive's Date of
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Termination occurs under subparagraph 5, e, (relating to a voluntary
termination not within twelve (12) months following a Change in Control and
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not for Good Reason), then the Company shall promptly pay the Executive his
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full Base Salary through the Date of Termination at the rate in effect on his
Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans.
d. Termination for Cause or Inadequate Performance: If the
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Executive's Date of Termination shall occur under subparagraph 5, c, for
reasons of (i) cause, or (ii) inadequate performance provided such termination
for inadequate performance does not occur within twelve (12) months of a
Change in Control, the Company shall promptly pay the Executive his full Base
Salary through the Date of Termination at the rate in effect on his Date of
Termination and any amounts earned but unpaid as of the Date of Termination
under the Incentive Plans and Benefit Plans, in accordance with the terms of
such Plans. Such termination shall not impair the Company's remedies for any
breach of this Agreement by the Executive.
e. Other Termination by the Company or by the Executive for Good
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Reason: If the Executive's Date of Termination occurs under subparagraph 5,
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f, (relating to termination by the Company for reasons other than total
disability, cause or inadequate performance) or the Executive shall terminate
his employment for Good Reason under subparagraph 5, d, and such termination
is not during the 12 month period following a Change in Control, then the
Company shall pay to the Executive the following amounts:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable;
plus
(3) a lump sum cash payment in an amount equal to one times
(100% of) the sum of (i) the Executive's Base Salary; plus (ii) bonuses,
paid during the twelve (12) full calendar months immediately preceding
the calendar month in which the Executive's employment is terminated.
Such total amount shall be paid within ten (10) days following the Date
of Termination.
f. Additional Benefits for Certain Terminations: Notwithstanding
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any provisions to the contrary contained in this Agreement, in any Incentive
Plan or in any other agreement between the Company and the Executive, if the
Executive's Date of Termination occurs for any
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reason other than a termination by the Company for cause or inadequate
performance under subparagraph 5, c, or a voluntary termination by the
Executive under subparagraph 5, e, (relating to voluntary terminations which
are not for Good Reason or within 12 months of a Change in Control), then
effective immediately prior to such Date of Termination and continuing
thereafter:
(1) All share options and share appreciation rights which the
Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(2) All shares of restricted shares which the Executive holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested and all restrictions applicable to such shares under such
plans shall immediately terminate;
(3) All performance share awards, performance unit awards and
other similar performance-based awards which the Executive then holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested, all performance measures applicable to such awards shall
be deemed to have been fully satisfied through the Date of Termination,
and payment of the then value of such awards shall be made to the
Executive as soon as administratively feasible following the Date of
Termination or such Change in Control, with the value of such awards to
be based, to the extent applicable, on the Market Value (as hereinafter
defined) or the Change in Control Value (as hereinafter defined) of the
common shares of the Company, whichever is applicable; and
(4) All other incentive compensation awards, including
deferred cash bonuses or share awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable.
g. Benefits Delayed if Necessary to Assure Full Payment:
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Notwithstanding any other provisions of this Agreement, if applicable law or
any material agreement by which the Company is bound imposes any restrictions
on the Company's fulfilling its obligations under this paragraph 6 at the time
provided, the Company shall fulfill its obligations to the maximum extent
possible at that time without violating such restrictions, and such remaining
and unfulfilled obligations shall survive until the Company is able to fulfill
them and the Company shall use its best efforts to fulfill such obligations as
soon as reasonably practicable thereafter.
h. Continuation of Benefit Plans: If the Executive's employment
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is terminated under the circumstances described in subparagraph 6, b, hereof
(relating to termination following a Change in Control), then for a period of
eighteen (18) months following the Date of Termination, the Company shall
maintain in full force and effect for the continued benefit of the Executive
and his eligible dependents and beneficiaries, the employee benefits under the
Benefit Plans which they were eligible to receive immediately prior to the
Date of Termination, subject to the terms and conditions of the Benefit Plans,
at no greater cost to the Executive than he would have incurred had he
remained in the employ of the Company; provided that the Executive's continued
participation or the participation of such eligible dependents or
beneficiaries must be permissible
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under the general terms and provisions of such Benefit Plans and shall not
jeopardize the Plans' qualified status under the Internal Revenue Code or the
rules and regulations promulgated thereunder. In the event that the
Executive's participation or the participation of such eligible dependents or
beneficiaries in any such Benefit Plan is barred pursuant to the preceding
sentence, the Company shall arrange to provide the Executive or such eligible
dependents or beneficiaries, for the period of coverage specified in the
preceding sentence, with benefits substantially similar to those which the
Executive and such eligible dependents or beneficiaries were entitled to
receive under such Benefit Plans immediately prior to the Date of Termination,
or with cash approximately equal in value to the benefit which otherwise would
have been made available. Upon the Executive obtaining other employment or
becoming self-employed, the Company's obligations under this subparagraph 6,
h, hereof shall cease effective upon the date of the Executive's eligibility
to participate in his new employer's benefits plans or in any benefit plans
established by the Executive pursuant to his self-employment, irrespective of
whether such benefit plans are comparable to the Company's Benefit Plans;
provided, however, that in the case of limited self-employment the Company
may, in its sole discretion, agree to waive the foregoing provisions of this
sentence.
7. CERTAIN DEFINITIONS:
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a. Change in Control: For purposes of this Agreement, the term
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"Change in Control" means a change in the beneficial ownership of the
Company's voting shares or a change in the composition of the Company's Board
of Trustees which occurs as follows:
(1) any "person" (as such term is used in paragraph 13 (d) and
14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange Act"))
other than:
(a) a trustee or other fiduciary of securities held
under an employee benefit plan of the Company;
(b) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same
proportions as their ownership of the Company; or
(c) any person in which the Executive has a substantial
equity interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of shares of the Company representing twenty-five
percent (25%) or more of the total voting power of the Company's then
outstanding shares; or
(2) a tender offer is made for the shares of the Company by a
person other than a person described in subparagraph (1), (a), (b), or
(c), and the person making the offer owns or has accepted for payment
shares of the Company representing twenty-five percent (25%) or more of
the total voting power of the Company's shares; or
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(3) the shareholders of the Company approve a sale of all or
substantially all of the Company's assets or a merger or consolidation
of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the Company's voting shares outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting shares of the surviving
entity) more than fifty-one percent (51%) of the combined voting
power of the Company's or such surviving entity's outstanding
voting shares immediately after such merger or consolidation; or
(b) such an asset sale or a merger or consolidation
which would result in the Trustees of the Company who were
Trustees immediately prior thereto continuing to constitute at
least fifty percent (50%) of the Trustees of the surviving
entity immediately after such merger or consolidation; or
(4) a majority of the members of the Board of Trustees is
comprised of individuals whose initial assumption of office occurred as
a result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11.
For purposes of this paragraph 7, "surviving entity" shall mean only an
entity in which all of the Company's shareholders become shareholders by
the terms of such merger or consolidation, and the phrase "Trustees of
the Company who were Trustees immediately prior thereto" shall not
include:
1) any Trustee of the Company who was designated by a
person who has entered into an agreement with the Company to
effect a transaction described in this paragraph or in paragraph
(1) above; or
2) any Trustee who was not a Trustee at the beginning
of the 12-consecutive-month period preceding the date of such
merger or consolidation
unless his or her election by the Board of Trustees or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the Trustees then still in office who were Trustees
before the beginning of such period or two-thirds (2/3) of the
shareholders voting for the election of Trustees, as the case may be.
b. Change in Control Value: For purposes of this Agreement, the
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term "Change in Control Value" means the greatest of the amounts determined
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in subparagraphs (1), (2), or (3), below, unless any one or more of such
values are not applicable, to-wit:
(1) the per share price offered to shareholders of the Company
in any merger, consolidation, sale of assets or reorganization
transaction;
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(2) the highest per share price offered the shareholders of
the Company in any tender offer or exchange offer whereby a Change in
Control takes place; or
(3) if a Change in Control occurs other than as described in
subparagraphs (1) or (2), the Market Value per share, as of the date of
the Change in Control, as determined by the Board in Good faith. If the
consideration offered to shareholders of the Company in a transaction
consists of anything other than cash, the Board shall determine in Good
faith the fair cash equivalent of the portion of the consideration
offered which is other than cash.
8. ADJUSTMENT FOR TAX EFFECTS: If any payments under this
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Agreement, after taking into account all other payments to which the Executive
is entitled from the Company, or any affiliate thereof, are subject to an
excise tax under section 4999 of the Internal Revenue Code of 1986 or any
successor provision to that section, such payments shall be reduced to the
extent required to avoid such excise tax if, and only if, such reduction would
result in a larger after-tax benefit to the Executive, taking into account all
applicable local, state, federal and foreign income and excise taxes. The
Executive shall be entitled to select the order in which payments are to be
reduced in accordance with the preceding sentence. If requested by the
Executive, the Company shall provide complete compensation and tax data on a
timely basis to the Executive and to tax counsel designated by the Executive
in order to enable the Executive to determine the extent to which payments
from the Company and its affiliates may result in an excise tax, and the
Company shall reimburse the Executive for any reasonable fees and expenses
incurred by the Executive for such purpose. If the Executive and the Company
shall disagree as to whether a payment under this Agreement will result in an
excise tax or whether a reduction in any payment will result in a larger
after-tax benefit to the Executive, the matter shall be resolved by an opinion
of tax counsel chosen by the Executive. The Company shall pay the fees and
expenses of such tax counsel, and shall make available such information as may
be reasonably requested by such advisor to prepare the opinion. If, by reason
of the adjustments under this paragraph 8, the amount payable to the Executive
under paragraph 6 above cannot be determined prior to the due date for such
payment, the Company shall pay on the due date the minimum amount which it in
good faith determines to be payable and the Company shall pay the remaining
amount (or the Executive shall repay any excess), with interest at a rate,
compounded semi-annually, equal to 120% of the applicable Federal rate
determined under section 1274(d) of the Internal Revenue Code of 1986, as soon
as such remaining amount is determined in accordance with this paragraph 8.
9. NON-DISCLOSURE AND REMEDIES:
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a. The Executive shall not, during the Executive's employment
hereunder or at any time thereafter, disclose or reveal to anyone (other than
persons within the Company) any information relating to the business,
techniques, operations, condition (financial or otherwise), prospects or
affairs of the Company which is not generally known or recognized as a
standard industry practice. The Executive confirms that all confidential
information regarding the business of the Company received by him during his
employment is and shall remain the exclusive
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property of the Company. All business records, papers and documents kept or
made by the Executive relating to the business of the Company shall be and
remain its property. Upon the termination of his employment with the Company
or upon the Company's request at any time, the Executive shall promptly
deliver to the Company, and shall not, without the consent of the Company,
retain copies of any written materials not previously made available to the
public made by the Executive or coming into his possession concerning the
business or any of its affiliates. Notwithstanding the preceding provisions of
this subparagraph 9, a, or any other provision of this Agreement, the
Executive shall be entitled to retain any written materials received by the
Executive in the capacity as a shareholder of the Company or the Company's
affiliates.
b. Without limiting its other remedies at law or equity for any
breach of subparagraph 9, a, hereof, the Executive agrees that in the event of
such breach, the Company shall be entitled to a temporary restraining order
and a preliminary and permanent injunction to specifically enforce
subparagraph 9, a, hereof, which shall be enforceable by the Company,
irrespective of the reason for the Executive's termination of employment.
10. SUCCESSORS; BINDING AGREEMENT:
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a. The Company shall require any successor to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, 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 if no such succession had taken
place; provided that (i) any such assignment and assumption shall not relieve
the Company of its liability hereunder, and (ii) with respect to the Company's
Incentive Plans and Benefit Plans, the Company's obligations under this
subparagraph 10, a, shall be deemed satisfied if the Executive is entitled to
participate in the incentive and benefit plans of the successor company which
are generally offered to the other executives of such successor company. As
used in this Agreement, "Company" shall mean the Company as hereinabove
defined and any successors to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this subparagraph 10, a,
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
b. This Agreement shall inure to the benefit of and be enforceable
by:
(1) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees; and
(2) the Company's successors and assigns.
11. NOTICES: For the purposes of this Agreement, notices and all
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other communications provided for in this Agreement shall be in writing and
shall be delivered by certified mail, return provide receipt requested,
postage prepaid, addressed as follows:
-Page 12-
13
If to Executive: Xxxxxxx X. Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
If to the Company: Storage Trust Realty
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
12. MISCELLANEOUS: No provisions of this Agreement may be
--------------
modified, waived, or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and approved by the
Company. No modification, waiver or discharge by the Company shall be
effective unless it is approved by a majority of the Independent Trustees (as
defined in Article 5 of the Company's Declaration of Trust). No waiver by a
party at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same time or at any prior or subsequent time. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the state of Maryland.
13. VALIDITY: The invalidity or unenforceability of any
---------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
14. HEADINGS: The headings contained herein are for reference
---------
purposes only and shall not in any way affect the meaning or interpretation of
any provision of this Agreement.
15. SUPERSESSION OF PRIOR AGREEMENT: This Agreement
--------------------------------
supersedes and wholly replaces any previous employment agreements between the
Company or its predecessor corporations and the Executive, and any amendments
and supplements thereto.
16. ENTIRE AGREEMENT: This Agreement constitutes the entire
-----------------
agreement of the parties hereto relating, to the subject matter hereof and
there are no written or oral terms or representations made by either party
other than those contained herein.
17. ATTORNEYS' FEES AND COSTS: In the event there is any
--------------------------
legal action or arbitration between the parties hereto with respect to this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with such
action or proceeding in addition to any other relief to which such party may
be entitled.
18. SURVIVAL: Except as otherwise expressly provided in this
---------
Agreement, the rights and obligations of the parties hereunder shall survive
the expiration or termination of the term of the Executive's employment
hereunder.
19. NO EFFECT ON OTHER CONTRACTUAL RIGHTS: The provisions
--------------------------------------
of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the
-Page 13-
14
Executive, or in any way diminish the Executive's rights as an employee of the
Company, whether existing now or hereafter, under any employee benefit plan,
program, or arrangement or other contract or agreement of the Company
providing benefits to the Executive.
20. ARBITRATION: The parties agree that any disputes arising
------------
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association, but subject to the following terms and conditions:
a. Purpose. The parties recognize that during the term of this
-------
Agreement, it is to their mutual benefit for there to be a mechanism to avoid
litigation. Rather than resort to litigation, the parties agree that the
disputes which may arise between the parties during the term of this Agreement
shall be resolved by mediation and arbitration as prescribed by this
paragraph.
b. Term of Arbitration Obligation. The arbitration obligation set
------------------------------
forth in this paragraph shall exist during the term of this Agreement.
c. Mediation. Before any dispute between the Parties is referred
---------
to an arbitrator or arbitration panel for resolution, the Parties shall use
reasonable and good faith efforts to resolve said dispute on an informal basis
or through the use of a mediator mutually agreeable to both Parties. The
mediator selected for this purpose shall not have any power to render a decree
or to enter any judgment binding upon the Parties, but instead said mediator
shall be selected in an effort to achieve a consensus and agreement between
the Parties with respect to the issue or issues in dispute. In the event
either Party believes an issue has not been resolved to said Party's
satisfaction and that said dispute potentially may be the subject of
arbitration if not resolved, said Party shall have the right to demand that
said issue be presented to a mediator for mediation and conciliation. In such
event, said Party desiring such mediation (the "Electing Party") shall give
notice to the other Party (the "Notice Party") as to the Electing Party's
desire to refer said issue to a mediator for resolution. Said written notice
to the Notice Party shall specify the names of at least three (3) persons who
would be acceptable to the Electing Party as a mediator for this purpose. The
Notice Party shall have the right to agree to any one (1) of the three (3)
persons so named to serve as mediator or shall have the right to reject all
said persons named and suggest three (3) prospective mediators in return. If
both Parties are unable to agree as to the name of a mediator who will serve
as such in connection with said mediation proceedings within thirty (30) days
of the date the Electing Party first gives notice to the Notice Party in this
regard, then the issue involved shall not be required to be mediated, but
instead may be the subject of arbitration pursuant to the provisions hereafter
specified. If the Parties are able to agree as to a person who can serve as
mediator, then the parties shall meet with said mediator and attempt to
resolve that issue to their mutual satisfaction. If the parties are unable to
achieve a resolution of the issue through said mediation proceeding, then
either Party may thereafter invoke the arbitration proceedings hereafter
specified.
-Page 14-
15
d. Arbitration Procedures. If the Parties are unable to resolve
----------------------
an issue or issues about which they disagree through the mediation process
described above, then either Party shall have the right to require the binding
arbitration of such issue by demanding that said issue be arbitrated. In such
event, the Parties shall proceed as follows:
(1) The Party desiring arbitration (the "Electing Party")
shall given written notice to the other Party (the "Notice Party") as to
the Electing Party's election to invoke the binding arbitration
provisions of this paragraph. Said written notice shall identify the
issue or issues about which the Parties disagree, the fact of the
Electing Party's desire that said issues be arbitrated pursuant to this
Agreement, and the name of the arbitrator which the Electing Party has
selected to arbitrate said dispute.
(2) The Notice Party shall have ten (10) days following
receipt of the above-described written notice concerning the Electing
Party's decision to demand arbitration in which to select an arbitrator
to serve as such and who is acceptable to the Notice Party for this
purpose. The arbitrator selected by the Electing Party and the
arbitrator selected by the Notice Party shall thereafter meet within
five (5) days of the date the Notice Party indicates to the Electing
Party the name of the Notice Party's arbitrator and shall attempt to
agree upon a third arbitrator who shall be selected by said two (2)
previously named arbitrators. In the event said two (2) previously
named arbitrators are unable to agree upon a third arbitrator, then
either Party may communicate this fact to the American Arbitration
Association which shall thereupon name and select the third arbitrator.
(3) Any arbitrator selected by a Party must be independent of
the Party who has selected said arbitrator, i.e., said arbitrator may
not be an employee of that Party, may not be related within the third
degree of consanguinity to any employee or member of that Party or that
Party's Affiliate, and may not be an investor in, member of, or
Affiliate of any Party.
(4) Any arbitrator selected for the foregoing purposes must
agree in writing, to base said arbitrator's decision on the principles
hereafter set forth in subparagraph e of this paragraph.
(5) The Parties shall thereafter proceed to submit their
issues and disputes to the arbitrators selected in the foregoing manner
and shall thereafter be bound by any decision reached by said
arbitrators (so long as said decision is reached and determined in
accordance with the principles hereafter set forth in subparagraph e of
this paragraph).
(6) In lieu of the foregoing procedure, if the Parties are
able to agree on a single person to serve as arbitrator of the issue or
issues involved, then the
-Page 15-
16
Parties may submit the issues involved to said single arbitrator who
shall thereupon have the power to make a decision in the case which is
binding upon both Parties.
e. Governing Principles Applicable to Arbitration Proceedings. In
----------------------------------------------------------
any arbitration proceeding conducted pursuant to this Agreement and pursuant
to the foregoing provisions of this paragraph, the Arbitrator shall be bound
and governed by the following principles:
(1) The arbitration proceedings shall be stayed for a
reasonable period of time during which the Parties shall be permitted to
conduct such discovery (including depositions, interrogatories, requests
for admissions, and the like) in the same manner as if the issue or
issues involved were pending before the Circuit Court of Xxxxx County,
Missouri, and pursuant to the Missouri Rules of Civil Procedure then in
effect.
(2) Following said period of discovery, the issues shall be
presented to the arbitrator or arbitrators. However, in presenting such
issues and such evidence as may be involved, the arbitrator shall be
bound and obligated to apply the rules of evidence which are then in
effect with respect to Circuit Courts in Xxxxx County, Missouri, and
shall be governed by the rules of evidence with respect to the
admissibility of evidence in the Missouri courts in the same manner as
if said issues where then being tried to a Circuit Judge in the Circuit
Court of Xxxxx County, Missouri. The arbitrators may not consider (and
shall not consider) evidence which would not be admissible before the
Circuit Court of Xxxxx County, Missouri, were the issues being tried to
said Circuit Court in said case.
(3) Any decision rendered by the arbitrators must be a
decision which could be entered by the Circuit Court of Xxxxx County,
Missouri, under the same or similar circumstances. In this regard, the
arbitration panel shall have such equitable authority and powers as the
Circuit Court of Xxxxx County, Missouri, would have under the same or
similar circumstances, but shall not have the ability to fashion any
relief or decision which would be beyond the authority of the Circuit
Court of Xxxxx County, Missouri, to render under the same or similar
circumstances (assuming personal jurisdiction over both Parties).
(4) In the event no member of the arbitration panel is an
attorney licensed to practice law in the state of Missouri, then the
arbitration panel shall have the authority to retain the services of an
attorney who is licensed to practice law in the state of Missouri, and
who has no conflict of interest with respect to the Parties to advise
the arbitration panel concerning the legal issues coming before the
arbitration panel. However, because of the need for the arbitration
panel to be familiar with legal principles under the laws of the state
of Missouri, the arbitration panelists selected by the Parties (and by
the arbitrators) shall, if at all
-Page 00-
00
xxxxxxxx, xx practicing attorneys in the state of Missouri or Judges or
former Judges of the courts of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
[THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.]
STORAGE TRUST PROPERTIES, L.P., ("Company")
By: Storage Trust Realty, a Maryland
Real Estate Investment Trust, Sole
General Partner
By: /s/ X. Xxxxxxx Xxxxxx
-------------------------------------
X. Xxxxxxx Xxxxxx, Chief Operating
Officer
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
XXXXXXX X. XXXXXX, ("Executive")
-Page 17-
18
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into
as of the 31st day of December, 1997 and effective as of the 7th day of May,
1997, between STORAGE TRUST PROPERTIES, L.P., a Delaware limited partnership,
acting by and through its general partner, STORAGE TRUST REALTY, A Maryland
Real Estate Investment Trust (the "Company") and XXXXXXX X. XXXXX, Chief
Financial Officer (the "Executive").
WHEREAS, the Company recognizes that the Executive's contribution to
the growth and success of the Company has been substantial and desires to
assure the Company of the Executive's continued employment; and
WHEREAS, the Company and the Executive previously executed an
Employment Agreement dated November 15, 1994, which they now wish to wholly
replace and restate through this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set forth,
the parties agree as follows:
1. EMPLOYMENT: The Company agrees to continue to employ the
-----------
Executive, and the Executive agrees to continue to be employed by the
Company, subject to the terms and conditions set forth herein.
2. TERM: The employment of the Executive by the Company as
-----
provided in paragraph 1 hereof will be for a period of approximately three
(3) years and two (2) months, commencing on the date of this Agreement
through and ending on June 30, 2000, unless the term of this Agreement is
extended as provided in the following sentence of this paragraph 2 (the
"Employment Term"). Commencing on July 1, 2000, and on each anniversary of
such date thereafter (such date and each anniversary thereof is hereafter
called the "Renewal Date"), the Employment Term will be automatically
extended so as to terminate on each subsequent anniversary of the Renewal
Date, unless, not less than thirty (30) days prior to a Renewal Date, either
party delivers to the other party written notice of its or his election not
to so extend the Employment Term. If such a written notice is given in a
timely manner, then this Agreement shall terminate on the next succeeding
Renewal Date subsequent to said Notice. The Employment Term shall
automatically end on the date of the Employee's death and a Notice of
Termination pursuant to paragraph 5, g, shall be deemed to constitute a
notice of nonrenewal under this paragraph 2. Notwithstanding the foregoing
provisions of this paragraph 2, if a Change in Control (as defined in
paragraph 7, a) occurs during the Employment Term, this Agreement will
automatically be extended for a period of twelve (12) months following the
date of such Change in Control.
3. POSITION AND DUTIES: During the Employment Term, while
--------------------
the Executive is employed by the Company, the Executive shall serve as Chief
Financial Officer of the Company
19
or in such other executive capacity as a senior officer of the Company as may be
determined by the Company's Board of Trustees (the "Board") from time to time;
provided, however, that such duties at all times shall be consistent with the
duties normally performed by the Chief Financial Officer or such other executive
position of companies engaged in businesses similar to the business of the
Company. The Executive agrees to devote substantially all of his business time,
skill, attention, and best efforts to the business of the Company to the extent
necessary to discharge the responsibilities assigned to him during the
Employment Term; provided, that the Executive may:
a. except as provided in the noncompetition agreement between the
Executive and the Company dated as of December 31, 1997 (and effective as of
May 7, 1997) invest solely as a passive investor in any business or
enterprise which is not in competition with the Company or which is not a
supplier or vendor to the Company;
b. serve on civic or charitable boards or committees that involve
limited commitments of time and do not interfere with the fulfillment of the
Executive's duties with respect to the Company, or, with the prior consent of
the Board, on other corporate boards;
c. take usual, ordinary, and customary periods of vacation; and
d. unless totally disabled (as hereafter defined) be absent due to
illness or other disability.
4. COMPENSATION:
-------------
a. Base Salary: During the Employment Term, while the Executive
------------
is employed by the Company, the Executive shall receive a base salary ("Base
Salary") at an annual rate of One Hundred Thirty-Five Thousand ($135,000.00)
per year. The Board, in its sole discretion, may increase the Executive's
Base Salary effective as of January 1 of each calendar year subsequent to
December 31, 1997, in an amount the Board deems appropriate, provided that
the Board shall increase the Executive's Base Salary with respect of each
remaining calendar year of the Employment Term by a percentage not less than
the ratio of the "CPI" for the month of October in the calendar year ending
immediately prior to a new calendar year as compared to the "CPI" for the
month of October in the calendar year two years prior to such new calendar
year. As used in this paragraph, the term "CPI" means the Consumer Price
Index for All Items for the United States (CP-U; All items; 1982-1984=100) as
published by the Bureau of Labor Statistics, United States Department of
Labor. Any increase in the Executive's Base Salary or other compensation
which is based on increases in the CPI shall in no way limit or reduce any
other obligation of the Company hereunder, and, once established at an
increased specified rate, the Executive's adjusted Base Salary shall not be
reduced thereafter. The Executive's Base Salary shall be paid in accordance
with the normal payroll practices of the Company, but in no event less
frequently than monthly.
-Page 2-
20
b. Incentive Compensation; Bonuses: In addition to the Base
--------------------------------
Salary specified above, during the Employment Term, while the Executive is
employed by the Company, the Executive shall be eligible to:
(1) participate in the Bonus Incentive Compensation Plan as
adopted May 9, 1995, as amended;
(2) participate in the 1994 Share Incentive Plan as adopted
by the Company, and as amended February 4, 1997;
(3) participate in any other incentive plan for executive
employees in effect from time to time hereafter;
(4) exercise such share options pursuant to their terms as
have been and as may be awarded to Executive from time to time hereafter
which vest at any time hereafter; and
(5) receive such other bonuses or discretionary compensation
payments as the Board may determine from time to time hereafter.
The bonus and incentive plans described above in this subparagraph 4, b, are
referred to herein collectively as the "Incentive Plans." Nothing in this
Agreement shall require the Company to adopt or continue any specific
Incentive Plan.
c. Expenses: The Executive shall be entitled to receive prompt
---------
reimbursement for all reasonable out-of-pocket expenses incurred by the
Executive during the Employment Term while the Executive is employed by the
Company in the normal course of the Company's business in accordance with the
policies and procedures of the Company.
d. Benefit Plans: During the Employment Term, while the
--------------
Executive is employed by the Company, the Executive shall be entitled to
continue to participate in or receive benefits under all of the Company's
employee benefit plans, policies, practices, and arrangements ("Benefit
Plans") on the same basis as other executive officers of the Company.
e. Vacations: The Executive shall be entitled to paid vacations
----------
in accordance with the Company's vacation policy as in effect from time to
time. The Executive also shall be entitled to all paid holidays given by the
Company to its executive officers.
f. Fringe Benefits: The Executive shall be entitled to all
----------------
fringe benefits generally provided by the Company to its executive officers.
g. Location of Employment: The Executive shall be based at the
-----------------------
Company's corporate headquarters, except for required travel on the Company's
business in accordance with the Company's management practices.
-Page 3-
21
5. TERMINATION:
------------
The Executive's employment with the Company during the Employment Term
may be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in subparagraphs 5, a,
through 5, f, next below.
a. Death: The Executive's employment shall terminate
------
automatically upon the death of the Executive.
b. Total Disability: The Company may terminate the Executive's
-----------------
employment by reason of the Executive's total disability. The term "total
disability" means a physical or mental condition which, in the judgment of
the Executive's attending physician, and based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive even
with reasonable accommodation by the Company from satisfactorily performing
his usual duties for the Company. The receipt of Social Security Disability
payments shall be presumptive evidence of total disability.
c. Cause or Inadequate Performance: The Company may terminate
--------------------------------
the Executive's employment for cause or inadequate performance; provided,
however, the Executive's employment may not be terminated for inadequate
performance during the twelve (12) month period following a Change in
Control. The term "cause" in this Agreement means the Executive's conviction
of a felony or his conviction of any misdemeanor involving moral turpitude
(but only in the event that such misdemeanor adversely impacts the Company),
excessive use of alcohol, the use of illegal drugs, acts of fraud or
dishonesty, or any material breach by the Executive of this Agreement. The
term "inadequate performance" means, in the good faith opinion of a majority
of the Company's Board of Trustees, a significant deviation from the
Executive's past performance under similar business conditions and not
resulting from factors beyond the reasonable control of the Executive.
d. Termination by the Executive Because of Change in Control or
------------------------------------------------------------
Good Reason: The Executive may terminate his employment for any reason at
------------
any time during the twelve (12) month period following a Change in Control or
upon the occurrence at any time of any event constituting Good Reason (as
hereafter defined). For the purposes of this Agreement, "Good Reason" shall
mean:
(1) the assignment to the Executive by the Company of any
duties materially inconsistent with the position of a senior officer
with the Company;
(2) a change by the Company in the Executive's
responsibilities to the Company such that the Executive is not acting as
a senior officer of the Company, as such responsibilities are ordinarily
and customarily required from time to time of an individual employed as
a senior officer with a corporation engaged in the Company's business; or
-Page 4-
22
(3) any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its material obligations hereunder.
e. Termination by Executive for other than Good Reason or
------------------------------------------------------
following a Change in Control: The Executive may terminate his employment
------------------------------
hereunder at any time for any reason not specified in subparagraph 5, d,
above, by giving the Company a written Notice of Termination in accordance
with subparagraph 5, g, below.
f. Termination by Company for other than Cause or Inadequate
---------------------------------------------------------
Performance. The Company may terminate the Executive's employment at any
------------
time for any reason not specified in subparagraphs 5, a, b, or c, above, by
giving the Executive a written Notice of Termination in accordance with
subparagraph 5, g, below.
g. Notice of Termination: Any termination of the Executive's
----------------------
employment for any reason other than the Executive's death, whether initiated
by the Company or by the Executive, shall be communicated by a written
"Notice of Termination" to the other party hereto. The "Notice of
Termination" shall specify which termination provision in this Agreement is
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Such Notice of Termination
shall be effective immediately or, in the case of a termination described in
subparagraphs 5, d, or f, above, such later date as is specified in such
notice.
h. Date of Termination: "Date of Termination" shall mean the
--------------------
last date the Executive is employed by the Company, provided that the
Executive's employment is terminated in accordance with the foregoing
provisions of this paragraph 5.
6. COMPENSATION AND OTHER RIGHTS UPON TERMINATION: The
-----------------------------------------------
Executive's right to payments and benefits under this Agreement for any
period after his Date of Termination shall be determined in accordance with
the following provisions of this paragraph 6.
a. Termination Because of Death or Total Disability of Executive:
--------------------------------------------------------------
If the Executive's Date of Termination occurs during the Employment Term by
reason of the Executive's death or total disability, the Executive, or in the
event of his death, the Executive's estate, heirs or designated beneficiaries
shall be entitled to receive the benefits specified in subparagraphs (1), (2)
and (3), below of this paragraph a. The amounts specified in subparagraphs
(2) and (3) shall be paid in a lump sum cash payment as soon after the
Executive's Date of Termination as is reasonably possible. Such payments
shall be in addition to any other benefits specifically provided under the
terms of any Incentive Plans or Benefit Plans. The benefits payable pursuant
to this paragraph shall be:
(1) the right to exercise and obtain the benefits specified
in paragraph 6, f, below;
-Page 5-
23
(2) an amount equal to 12 months of the Executive's Base
Salary at the rate in effect on his Date of Termination; plus
(3) an amount equal to the annual bonus payable to the
Executive, if any, under the Incentive Plans for the calendar year
immediately preceding the calendar year in which the Executive's Date of
Termination occurs. In the event of the Executive's death, any sum which
would have been paid to a participant's account in a qualified retirement
plan for the Executive by the Company shall instead be included as a part
of this payment.
The Executive's "estate, heirs, and beneficiaries" shall mean the trustee of
any trust or the personal representative of the Executive's estate or such
other person or persons who may be designated by the Executive to receive
such benefits on such documents or forms as the Company provides for this
purpose.
b. Termination Following a Change in Control: If the Executive's
------------------------------------------
Date of Termination occurs within twelve (12) months following a Change in
Control for any reason other than death, total disability or for cause, the
Executive shall be entitled to the following:
(1) the right to exercise and obtain the benefits specified
in paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable.
(3) a lump sum cash payment in an amount equal to two and
one-half (2.5) times (250% of) of the sum of (i) the Executive's Base
Salary; plus (ii) bonuses paid during the twelve (12) full calendar
months immediately preceding the calendar month in which the Executive's
employment terminated. Such total amount shall be paid within ten (10)
days following the Date of Termination.
In addition, if the Executive's Date of Termination occurs for reasons other
than cause within twelve (12) months following a Change in Control or
following any event constituting Good Reason, and on such date the Executive
is party to any agreement with the Company restricting the Executive's
ability to obtain employment with a competitor of the Company or to engage in
activities which are competitive to the Company, such competition
restrictions shall lapse on the Date of Termination.
-Page 6-
24
c. Voluntary Termination by Executive: If the Executive's Date
-----------------------------------
of Termination occurs under subparagraph 5, e, (relating to a voluntarily
termination not within twelve (12) months following a Change in Control and
---
not for Good Reason), then the Company shall promptly pay the Executive his
---
full Base Salary through the Date of Termination at the rate in effect on his
Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans.
d. Termination for Cause or Inadequate Performance: If the
------------------------------------------------
Executive's Date of Termination shall occur under subparagraph 5, c, for
reasons of (i) cause, or (ii) inadequate performance provided such
termination for inadequate performance does not occur within twelve (12)
months of a Change in Control, the Company shall promptly pay the Executive
his full Base Salary through the Date of Termination at the rate in effect on
his Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans. Such termination shall not impair the Company's
remedies for any breach of this Agreement by the Executive.
e. Other Termination by the Company or by the Executive for Good
-------------------------------------------------------------
Reason: If the Executive's Date of Termination occurs under subparagraph 5,
-------
f, (relating to termination by the Company for reasons other than total
disability, cause or inadequate performance) or the Executive shall terminate
his employment for Good Reason under subparagraph 5, d, and such termination
is not during the 12 month period following a Change in Control, then the
Company shall pay to the Executive the following amounts:
(1) the right to exercise and obtain the benefits specified
in paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable;
plus
(3) a lump sum cash payment in an amount equal to one times
(100% of) the sum of (i) the Executive's Base Salary; plus (ii) bonuses,
paid during the twelve (12) full calendar months immediately preceding
the calendar month in which the Executive's employment is terminated.
Such total amount shall be paid within ten (10) days following the Date
of Termination.
f. Additional Benefits for Certain Terminations: Notwithstanding
---------------------------------------------
any provisions to the contrary contained in this Agreement, in any Incentive
Plan or in any other agreement between the Company and the Executive, if the
Executive's Date of Termination occurs for any
-Page 7-
25
reason other than a termination by the Company for cause or inadequate
performance under subparagraph 5, c, or a voluntary termination by the Executive
under subparagraph 5, e, (relating to voluntary terminations which are not for
Good Reason or within 12 months of a Change in Control), then effective
immediately prior to such Date of Termination and continuing thereafter:
(1) All share options and share appreciation rights which the
Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(2) All shares of restricted shares which the Executive holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested and all restrictions applicable to such shares under such
plans shall immediately terminate;
(3) All performance share awards, performance unit awards and
other similar performance-based awards which the Executive then holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested, all performance measures applicable to such awards shall
be deemed to have been fully satisfied through the Date of Termination,
and payment of the then value of such awards shall be made to the
Executive as soon as administratively feasible following the Date of
Termination or such Change in Control, with the value of such awards to
be based, to the extent applicable, on the Market Value (as hereinafter
defined) or the Change in Control Value (as hereinafter defined) of the
common shares of the Company, whichever is applicable; and
(4) All other incentive compensation awards, including
deferred cash bonuses or share awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable.
g. Benefits Delayed if Necessary to Assure Full Payment:
-----------------------------------------------------
Notwithstanding any other provisions of this Agreement, if applicable law or
any material agreement by which the Company is bound imposes any restrictions
on the Company's fulfilling its obligations under this paragraph 6 at the
time provided, the Company shall fulfill its obligations to the maximum
extent possible at that time without violating such restrictions, and such
remaining and unfulfilled obligations shall survive until the Company is able
to fulfill them and the Company shall use its best efforts to fulfill such
obligations as soon as reasonably practicable thereafter.
h. Continuation of Benefit Plans: If the Executive's employment
------------------------------
is terminated under the circumstances described in subparagraph 6, b, hereof
(relating to termination following a Change in Control), then for a period of
eighteen (18) months following the Date of Termination, the Company shall
maintain in full force and effect for the continued benefit of the Executive
and his eligible dependents and beneficiaries, the employee benefits under
the Benefit Plans which they were eligible to receive immediately prior to
the Date of Termination, subject to the terms and conditions of the Benefit
Plans, at no greater cost to the Executive than he would have incurred had he
remained in the employ of the Company; provided that the Executive's
continued participation or the participation of such eligible dependents or
beneficiaries must be permissible
-Page 8-
26
under the general terms and provisions of such Benefit Plans and shall not
jeopardize the Plans' qualified status under the Internal Revenue Code or the
rules and regulations promulgated thereunder. In the event that the Executive's
participation or the participation of such eligible dependents or beneficiaries
in any such Benefit Plan is barred pursuant to the preceding sentence, the
Company shall arrange to provide the Executive or such eligible dependents or
beneficiaries, for the period of coverage specified in the preceding
sentence, with benefits substantially similar to those which the Executive
and such eligible dependents or beneficiaries were entitled to receive under
such Benefit Plans immediately prior to the Date of Termination, or with cash
approximately equal in value to the benefit which otherwise would have been
made available. Upon the Executive obtaining other employment or becoming
self-employed, the Company's obligations under this subparagraph 6, h, hereof
shall cease effective upon the date of the Executive's eligibility to
participate in his new employer's benefits plans or in any benefit plans
established by the Executive pursuant to his self-employment, irrespective of
whether such benefit plans are comparable to the Company's Benefit Plans;
provided, however, that in the case of limited self-employment the Company
may, in its sole discretion, agree to waive the foregoing provisions of this
sentence.
7. CERTAIN DEFINITIONS:
--------------------
a. Change in Control: For purposes of this Agreement, the term
------------------
"Change in Control" means a change in the beneficial ownership of the
Company's voting shares or a change in the composition of the Company's Board
of Trustees which occurs as follows:
(1) any "person" (as such term is used in paragraph 13 (d)
and 14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) other than:
(a) a trustee or other fiduciary of securities held
under an employee benefit plan of the Company;
(b) a corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the same
proportions as their ownership of the Company; or
(c) any person in which the Executive has a
substantial equity interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of shares of the Company representing
twenty-five percent (25%) or more of the total voting power of the Company's
then outstanding shares; or
(2) a tender offer is made for the shares of the Company by a
person other than a person described in subparagraph (1), (a), (b), or
(c), and the person making the offer owns or has accepted for payment
shares of the Company representing twenty-five percent (25%) or more of
the total voting power of the Company's shares; or
-Page 9-
27
(3) the shareholders of the Company approve a sale of all or
substantially all of the Company's assets or a merger or consolidation
of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the Company's voting shares outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting shares of the surviving
entity) more than fifty-one percent (51%) of the combined voting
power of the Company's or such surviving entity's outstanding
voting shares immediately after such merger or consolidation; or
(b) such an asset sale or a merger or consolidation
which would result in the Trustees of the Company who were
Trustees immediately prior thereto continuing to constitute at
least fifty percent (50%) of the Trustees of the surviving
entity immediately after such merger or consolidation; or
(4) a majority of the members of the Board of Trustees is
comprised of individuals whose initial assumption of office occurred as
a result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11.
For purposes of this paragraph 7, "surviving entity" shall mean only an
entity in which all of the Company's shareholders become shareholders by
the terms of such merger or consolidation, and the phrase "Trustees of
the Company who were Trustees immediately prior thereto" shall not
include:
1) any Trustee of the Company who was designated by
a person who has entered into an agreement with the Company to
effect a transaction described in this paragraph or in paragraph
(1) above; or
2) any Trustee who was not a Trustee at the
beginning of the 12-consecutive-month period preceding the date
of such merger or consolidation
unless his or her election by the Board of Trustees or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the Trustees then still in office who were Trustees
before the beginning of such period or two-thirds (2/3) of the shareholders
voting for the election of Trustees, as the case may be.
b. Change in Control Value: For purposes of this Agreement, the
------------------------
term "Change in Control Value" means the greatest of the amounts determined
--------
in subparagraphs (1), (2), or (3), below, unless any one or more of such
values are not applicable, to-wit:
(1) the per share price offered to shareholders of the
Company in any merger, consolidation, sale of assets or reorganization
transaction;
-Page 10-
28
(2) the highest per share price offered the shareholders of
the Company in any tender offer or exchange offer whereby a Change in
Control takes place; or
(3) if a Change in Control occurs other than as described in
subparagraphs (1) or (2), the Market Value per share, as of the date of
the Change in Control, as determined by the Board in Good faith. If the
consideration offered to shareholders of the Company in a transaction
consists of anything other than cash, the Board shall determine in Good
faith the fair cash equivalent of the portion of the consideration
offered which is other than cash.
8. ADJUSTMENT FOR TAX EFFECTS: If any payments under this
---------------------------
Agreement, after taking into account all other payments to which the
Executive is entitled from the Company, or any affiliate thereof, are subject
to an excise tax under section 4999 of the Internal Revenue Code of 1986 or
any successor provision to that section, such payments shall be reduced to
the extent required to avoid such excise tax if, and only if, such reduction
would result in a larger after-tax benefit to the Executive, taking into
account all applicable local, state, federal and foreign income and excise
taxes. The Executive shall be entitled to select the order in which payments
are to be reduced in accordance with the preceding sentence. If requested by
the Executive, the Company shall provide complete compensation and tax data
on a timely basis to the Executive and to tax counsel designated by the
Executive in order to enable the Executive to determine the extent to which
payments from the Company and its affiliates may result in an excise tax, and
the Company shall reimburse the Executive for any reasonable fees and
expenses incurred by the Executive for such purpose. If the Executive and
the Company shall disagree as to whether a payment under this Agreement will
result in an excise tax or whether a reduction in any payment will result in
a larger after-tax benefit to the Executive, the matter shall be resolved by
an opinion of tax counsel chosen by the Executive. The Company shall pay the
fees and expenses of such tax counsel, and shall make available such
information as may be reasonably requested by such advisor to prepare the
opinion. If, by reason of the adjustments under this paragraph 8, the amount
payable to the Executive under paragraph 6 above cannot be determined prior
to the due date for such payment, the Company shall pay on the due date the
minimum amount which it in good faith determines to be payable and the
Company shall pay the remaining amount (or the Executive shall repay any
excess), with interest at a rate, compounded semi-annually, equal to 120% of
the applicable Federal rate determined under section 1274(d) of the Internal
Revenue Code of 1986, as soon as such remaining amount is determined in
accordance with this paragraph 8.
9. NON-DISCLOSURE AND REMEDIES:
----------------------------
a. The Executive shall not, during the Executive's employment
hereunder or at any time thereafter, disclose or reveal to anyone (other than
persons within the Company) any information relating to the business,
techniques, operations, condition (financial or otherwise), prospects or
affairs of the Company which is not generally known or recognized as a
standard industry practice. The Executive confirms that all confidential
information regarding the business of the Company received by him during his
employment is and shall remain the exclusive
-Page 11-
29
property of the Company. All business records, papers and documents kept or
made by the Executive relating to the business of the Company shall be and
remain its property. Upon the termination of his employment with the Company or
upon the Company's request at any time, the Executive shall promptly deliver to
the Company, and shall not, without the consent of the Company, retain copies of
any written materials not previously made available to the public made by the
Executive or coming into his possession concerning the business or any of its
affiliates. Notwithstanding the preceding provisions of this subparagraph 9,
a, or any other provision of this Agreement, the Executive shall be entitled
to retain any written materials received by the Executive in the capacity as
a shareholder of the Company or the Company's affiliates.
b. Without limiting its other remedies at law or equity for any
breach of subparagraph 9, a, hereof, the Executive agrees that in the event
of such breach, the Company shall be entitled to a temporary restraining
order and a preliminary and permanent injunction to specifically enforce
subparagraph 9, a, hereof, which shall be enforceable by the Company,
irrespective of the reason for the Executive's termination of employment.
10. SUCCESSORS; BINDING AGREEMENT:
------------------------------
a. The Company shall require any successor to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, 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 if no such succession had taken
place; provided that (i) any such assignment and assumption shall not relieve
the Company of its liability hereunder, and (ii) with respect to the
Company's Incentive Plans and Benefit Plans, the Company's obligations under
this subparagraph 10, a, shall be deemed satisfied if the Executive is
entitled to participate in the incentive and benefit plans of the successor
company which are generally offered to the other executives of such successor
company. As used in this Agreement, "Company" shall mean the Company as
hereinabove defined and any successors to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
subparagraph 10, a, or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
b. This Agreement shall inure to the benefit of and be enforceable by:
(1) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees; and
(2) the Company's successors and assigns.
11. NOTICES: For the purposes of this Agreement, notices and
--------
all other communications provided for in this Agreement shall be in writing
and shall be delivered by certified mail, return provide receipt requested,
postage prepaid, addressed as follows:
-Page 12-
30
If to Executive: Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company: Storage Trust Realty
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
12. MISCELLANEOUS: No provisions of this Agreement may be
--------------
modified, waived, or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and approved by the
Company. No modification, waiver or discharge by the Company shall be
effective unless it is approved by a majority of the Independent Trustees (as
defined in Article 5 of the Company's Declaration of Trust). No waiver by a
party at any time of any breach by the other party of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time. The
validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the state of Maryland.
13. VALIDITY: The invalidity or unenforceability of any
---------
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
14. HEADINGS: The headings contained herein are for reference
---------
purposes only and shall not in any way affect the meaning or interpretation
of any provision of this Agreement.
15. SUPERSESSION OF PRIOR AGREEMENT: This Agreement
--------------------------------
supersedes and wholly replaces any previous employment agreements between the
Company or its predecessor corporations and the Executive, and any amendments
and supplements thereto.
16. ENTIRE AGREEMENT: This Agreement constitutes the entire
-----------------
agreement of the parties hereto relating, to the subject matter hereof and
there are no written or oral terms or representations made by either party
other than those contained herein.
17. ATTORNEYS' FEES AND COSTS: In the event there is any
--------------------------
legal action or arbitration between the parties hereto with respect to this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with such
action or proceeding in addition to any other relief to which such party may
be entitled.
18. SURVIVAL: Except as otherwise expressly provided in this
---------
Agreement, the rights and obligations of the parties hereunder shall survive
the expiration or termination of the term of the Executive's employment
hereunder.
19. NO EFFECT ON OTHER CONTRACTUAL RIGHTS: The provisions
--------------------------------------
of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the Executive, or in any way diminish the
Executive's rights as an employee of the Company,
-Page 13-
31
whether existing now or hereafter, under any employee benefit plan, program, or
arrangement or other contract or agreement of the Company providing benefits to
the Executive.
20. ARBITRATION: The parties agree that any disputes arising
------------
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association, but subject to the following terms and conditions:
a. Purpose. The parties recognize that during the term of this
-------
Agreement, it is to their mutual benefit for there to be a mechanism to avoid
litigation. Rather than resort to litigation, the parties agree that the
disputes which may arise between the parties during the term of this
Agreement shall be resolved by mediation and arbitration as prescribed by
this paragraph.
b. Term of Arbitration Obligation. The arbitration obligation
------------------------------
set forth in this paragraph shall exist during the term of this Agreement.
c. Mediation. Before any dispute between the Parties is referred
---------
to an arbitrator or arbitration panel for resolution, the Parties shall use
reasonable and good faith efforts to resolve said dispute on an informal
basis or through the use of a mediator mutually agreeable to both Parties.
The mediator selected for this purpose shall not have any power to render a
decree or to enter any judgment binding upon the Parties, but instead said
mediator shall be selected in an effort to achieve a consensus and agreement
between the Parties with respect to the issue or issues in dispute. In the
event either Party believes an issue has not been resolved to said Party's
satisfaction and that said dispute potentially may be the subject of
arbitration if not resolved, said Party shall have the right to demand that
said issue be presented to a mediator for mediation and conciliation. In
such event, said Party desiring such mediation (the "Electing Party") shall
give notice to the other Party (the "Notice Party") as to the Electing
Party's desire to refer said issue to a mediator for resolution. Said
written notice to the Notice Party shall specify the names of at least three
(3) persons who would be acceptable to the Electing Party as a mediator for
this purpose. The Notice Party shall have the right to agree to any one (1)
of the three (3) persons so named to serve as mediator or shall have the
right to reject all said persons named and suggest three (3) prospective
mediators in return. If both Parties are unable to agree as to the name of a
mediator who will serve as such in connection with said mediation proceedings
within thirty (30) days of the date the Electing Party first gives notice to
the Notice Party in this regard, then the issue involved shall not be
required to be mediated, but instead may be the subject of arbitration
pursuant to the provisions hereafter specified. If the Parties are able to
agree as to a person who can serve as mediator, then the parties shall meet
with said mediator and attempt to resolve that issue to their mutual
satisfaction. If the parties are unable to achieve a resolution of the issue
through said mediation proceeding, then either Party may thereafter invoke
the arbitration proceedings hereafter specified.
-Page 14-
32
d. Arbitration Procedures. If the Parties are unable to resolve
----------------------
an issue or issues about which they disagree through the mediation process
described above, then either Party shall have the right to require the
binding arbitration of such issue by demanding that said issue be arbitrated.
In such event, the Parties shall proceed as follows:
(1) The Party desiring arbitration (the "Electing Party")
shall given written notice to the other Party (the "Notice Party") as to
the Electing Party's election to invoke the binding arbitration
provisions of this paragraph. Said written notice shall identify the
issue or issues about which the Parties disagree, the fact of the
Electing Party's desire that said issues be arbitrated pursuant to this
Agreement, and the name of the arbitrator which the Electing Party has
selected to arbitrate said dispute.
(2) The Notice Party shall have ten (10) days following
receipt of the above-described written notice concerning the Electing
Party's decision to demand arbitration in which to select an arbitrator
to serve as such and who is acceptable to the Notice Party for this
purpose. The arbitrator selected by the Electing Party and the
arbitrator selected by the Notice Party shall thereafter meet within
five (5) days of the date the Notice Party indicates to the Electing
Party the name of the Notice Party's arbitrator and shall attempt to
agree upon a third arbitrator who shall be selected by said two (2)
previously named arbitrators. In the event said two (2) previously
named arbitrators are unable to agree upon a third arbitrator, then
either Party may communicate this fact to the American Arbitration
Association which shall thereupon name and select the third arbitrator.
(3) Any arbitrator selected by a Party must be independent of
the Party who has selected said arbitrator, i.e., said arbitrator may
not be an employee of that Party, may not be related within the third
degree of consanguinity to any employee or member of that Party or that
Party's Affiliate, and may not be an investor in, member of, or
Affiliate of any Party.
(4) Any arbitrator selected for the foregoing purposes must
agree in writing, to base said arbitrator's decision on the principles
hereafter set forth in subparagraph e of this paragraph.
(5) The Parties shall thereafter proceed to submit their
issues and disputes to the arbitrators selected in the foregoing manner
and shall thereafter be bound by any decision reached by said
arbitrators (so long as said decision is reached and determined in
accordance with the principles hereafter set forth in subparagraph e of
this paragraph).
(6) In lieu of the foregoing procedure, if the Parties are
able to agree on a single person to serve as arbitrator of the issue or
issues involved, then the
-Page 15-
33
Parties may submit the issues involved to said single arbitrator who shall
thereupon have the power to make a decision in the case which is binding
upon both Parties.
e. Governing Principles Applicable to Arbitration Proceedings. In
----------------------------------------------------------
any arbitration proceeding conducted pursuant to this Agreement and pursuant
to the foregoing provisions of this paragraph, the Arbitrator shall be bound
and governed by the following principles:
(1) The arbitration proceedings shall be stayed for a
reasonable period of time during which the Parties shall be permitted to
conduct such discovery (including depositions, interrogatories, requests
for admissions, and the like) in the same manner as if the issue or
issues involved were pending before the Circuit Court of Xxxxx County,
Missouri, and pursuant to the Missouri Rules of Civil Procedure then in
effect.
(2) Following said period of discovery, the issues shall be
presented to the arbitrator or arbitrators. However, in presenting such
issues and such evidence as may be involved, the arbitrator shall be
bound and obligated to apply the rules of evidence which are then in
effect with respect to Circuit Courts in Xxxxx County, Missouri, and
shall be governed by the rules of evidence with respect to the
admissibility of evidence in the Missouri courts in the same manner as
if said issues where then being tried to a Circuit Judge in the Circuit
Court of Xxxxx County, Missouri. The arbitrators may not consider (and
shall not consider) evidence which would not be admissible before the
Circuit Court of Xxxxx County, Missouri, were the issues being tried to
said Circuit Court in said case.
(3) Any decision rendered by the arbitrators must be a
decision which could be entered by the Circuit Court of Xxxxx County,
Missouri, under the same or similar circumstances. In this regard, the
arbitration panel shall have such equitable authority and powers as the
Circuit Court of Xxxxx County, Missouri, would have under the same or
similar circumstances, but shall not have the ability to fashion any
relief or decision which would be beyond the authority of the Circuit
Court of Xxxxx County, Missouri, to render under the same or similar
circumstances (assuming personal jurisdiction over both Parties).
(4) In the event no member of the arbitration panel is an
attorney licensed to practice law in the state of Missouri, then the
arbitration panel shall have the authority to retain the services of an
attorney who is licensed to practice law in the state of Missouri, and
who has no conflict of interest with respect to the Parties to advise
the arbitration panel concerning the legal issues coming before the
arbitration panel. However, because of the need for the arbitration
panel to be familiar with legal principles under the laws of the state
of Missouri, the arbitration panelists selected by the Parties (and by
the arbitrators) shall, if at all
-Page 00-
00
xxxxxxxx, xx practicing attorneys in the state of Missouri or Judges or
former Judges of the courts of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
[THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.]
STORAGE TRUST PROPERTIES, L.P., ("Company")
By: Storage Trust Realty, a Maryland
Real Estate Investment Trust, Sole
General Partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx, Chief
Executive Officer
/s/ Xxxxxxx X. Xxxxx
---------------------------------------
XXXXXXX X. XXXXX, ("Executive")
-Page 17-
35
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into
as of the 31st day of December, 1997 and effective as of the 7th day of May,
1997, between STORAGE TRUST PROPERTIES, L.P., a Delaware limited partnership,
acting by and through its general partner, STORAGE TRUST REALTY, A Maryland
Real Estate Investment Trust (the "Company") and X. XXXXXXX XXXXXX, Chief
Operating Officer (the "Executive").
WHEREAS, the Company recognizes that the Executive's contribution to
the growth and success of the Company has been substantial and desires to
assure the Company of the Executive's continued employment; and
WHEREAS, the Company and the Executive previously executed an
Employment Agreement dated November 15, 1994, which they now wish to wholly
replace and restate through this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set forth,
the parties agree as follows:
1. EMPLOYMENT: The Company agrees to continue to employ the
-----------
Executive, and the Executive agrees to continue to be employed by the
Company, subject to the terms and conditions set forth herein.
2. TERM: The employment of the Executive by the Company as
-----
provided in paragraph 1 hereof will be for a period of approximately three
(3) years and two (2) months, commencing on the date of this Agreement
through and ending on June 30, 2000, unless the term of this Agreement is
extended as provided in the following sentence of this paragraph 2 (the
"Employment Term"). Commencing on July 1, 2000, and on each anniversary of
such date thereafter (such date and each anniversary thereof is hereafter
called the "Renewal Date"), the Employment Term will be automatically
extended so as to terminate on each subsequent anniversary of the Renewal
Date, unless, not less than thirty (30) days prior to a Renewal Date, either
party delivers to the other party written notice of its or his election not
to so extend the Employment Term. If such a written notice is given in a
timely manner, then this Agreement shall terminate on the next succeeding
Renewal Date subsequent to said Notice. The Employment Term shall
automatically end on the date of the Employee's death and a Notice of
Termination pursuant to paragraph 5, g, shall be deemed to constitute a
notice of nonrenewal under this paragraph 2. Notwithstanding the foregoing
provisions of this paragraph 2, if a Change in Control (as defined in
paragraph 7, a) occurs during the Employment Term, this Agreement will
automatically be extended for a period of twelve (12) months following the
date of such Change in Control.
3. POSITION AND DUTIES: During the Employment Term, while
--------------------
the Executive is employed by the Company, the Executive shall serve as Chief
Operating Officer of the Company or in such other executive capacity as a
senior officer of the Company as may be determined by
36
the Company's Board of Trustees (the "Board") from time to time; provided,
however, that such duties at all times shall be consistent with the duties
normally performed by the Chief Operating Officer or such other executive
position of companies engaged in businesses similar to the business of the
Company. The Executive agrees to devote substantially all of his business
time, skill, attention, and best efforts to the business of the Company to the
extent necessary to discharge the responsibilities assigned to him during the
Employment Term; provided, that the Executive may:
a. except as provided in the noncompetition agreement between the
Executive and the Company dated as of December 31, 1997 (and effective as of
May 7, 1997), invest solely as a passive investor in any business or
enterprise which is not in competition with the Company or which is not a
supplier or vendor to the Company;
b. serve on civic or charitable boards or committees that involve
limited commitments of time and do not interfere with the fulfillment of the
Executive's duties with respect to the Company, or, with the prior consent of
the Board, on other corporate boards;
c. take usual, ordinary, and customary periods of vacation; and
d. unless totally disabled (as hereafter defined) be absent due to
illness or other disability.
4. COMPENSATION:
-------------
a. Base Salary: During the Employment Term, while the Executive
------------
is employed by the Company, the Executive shall receive a base salary ("Base
Salary") at an annual rate of One Hundred Forty-Two Thousand Two Hundred
Dollars ($142,200.00) per year. The Board, in its sole discretion, may
increase the Executive's Base Salary effective as of January 1 of each
calendar year subsequent to December 31, 1997, in an amount the Board deems
appropriate, provided that the Board shall increase the Executive's Base
Salary with respect of each remaining calendar year of the Employment Term by
a percentage not less than the ratio of the "CPI" for the month of October in
the calendar year ending immediately prior to a new calendar year as compared
to the "CPI" for the month of October in the calendar year two years prior to
such new calendar year. As used in this paragraph, the term "CPI" means the
Consumer Price Index for All Items for the United States (CP-U; All items;
1982-1984=100) as published by the Bureau of Labor Statistics, United States
Department of Labor. Any increase in the Executive's Base Salary or other
compensation which is based on increases in the CPI shall in no way limit or
reduce any other obligation of the Company hereunder, and, once established
at an increased specified rate, the Executive's adjusted Base Salary shall
not be reduced thereafter. The Executive's Base Salary shall be paid in
accordance with the normal payroll practices of the Company, but in no event
less frequently than monthly.
-Page 2-
37
b. Incentive Compensation; Bonuses: In addition to the Base
--------------------------------
Salary specified above, during the Employment Term, while the Executive is
employed by the Company, the Executive shall be eligible to:
(1) participate in the Bonus Incentive Compensation Plan as
adopted May 9, 1995, as amended;
(2) participate in the 1994 Share Incentive Plan as adopted by
the Company, and as amended February 4, 1997;
(3) participate in any other incentive plan for executive
employees in effect from time to time hereafter;
(4) exercise such share options pursuant to their terms as
have been and as may be awarded to Executive from time to time hereafter
which vest at any time hereafter; and
(5) receive such other bonuses or discretionary compensation
payments as the Board may determine from time to time hereafter.
The bonus and incentive plans described above in this subparagraph 4, b, are
referred to herein collectively as the "Incentive Plans." Nothing in this
Agreement shall require the Company to adopt or continue any specific
Incentive Plan.
c. Expenses: The Executive shall be entitled to receive prompt
---------
reimbursement for all reasonable out-of-pocket expenses incurred by the
Executive during the Employment Term while the Executive is employed by the
Company in the normal course of the Company's business in accordance with the
policies and procedures of the Company.
d. Benefit Plans: During the Employment Term, while the
--------------
Executive is employed by the Company, the Executive shall be entitled to
continue to participate in or receive benefits under all of the Company's
employee benefit plans, policies, practices, and arrangements ("Benefit
Plans") on the same basis as other executive officers of the Company.
e. Vacations: The Executive shall be entitled to paid vacations
----------
in accordance with the Company's vacation policy as in effect from time to
time. The Executive also shall be entitled to all paid holidays given by the
Company to its executive officers.
f. Fringe Benefits: The Executive shall be entitled to all
----------------
fringe benefits generally provided by the Company to its executive officers.
g. Location of Employment: The Executive shall be based at the
-----------------------
Company's corporate headquarters, except for required travel on the Company's
business in accordance with the Company's management practices.
-Page 3-
38
5. TERMINATION:
------------
The Executive's employment with the Company during the Employment Term
may be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in subparagraphs 5, a,
through 5, f, next below.
a. Death: The Executive's employment shall terminate
------
automatically upon the death of the Executive.
b. Total Disability: The Company may terminate the Executive's
-----------------
employment by reason of the Executive's total disability. The term "total
disability" means a physical or mental condition which, in the judgment of
the Executive's attending physician, and based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive even
with reasonable accommodation by the Company from satisfactorily performing
his usual duties for the Company. The receipt of Social Security Disability
payments shall be presumptive evidence of total disability.
c. Cause or Inadequate Performance: The Company may terminate
--------------------------------
the Executive's employment for cause or inadequate performance; provided,
however, the Executive's employment may not be terminated for inadequate
performance during the twelve (12) month period following a Change in
Control. The term "cause" in this Agreement means the Executive's conviction
of a felony or his conviction of any misdemeanor involving moral turpitude
(but only in the event that such misdemeanor adversely impacts the Company),
excessive use of alcohol, the use of illegal drugs, acts of fraud or
dishonesty, or any material breach by the Executive of this Agreement. The
term "inadequate performance" means, in the good faith opinion of a majority
of the Company's Board of Trustees, a significant deviation from the
Executive's past performance under similar business conditions and not
resulting from factors beyond the reasonable control of the Executive.
d. Termination by the Executive Because of Change in Control or
------------------------------------------------------------
Good Reason: The Executive may terminate his employment for any reason at
------------
any time during the twelve (12) month period following a Change in Control or
upon the occurrence at any time of any event constituting Good Reason (as
hereafter defined). For the purposes of this Agreement, "Good Reason" shall
mean:
(1) the assignment to the Executive by the Company of any
duties materially inconsistent with the position of a senior officer
with the Company;
(2) a change by the Company in the Executive's responsibilities
to the Company such that the Executive is not acting as a senior officer
of the Company, as such responsibilities are ordinarily and customarily
required from time to time of an individual employed as a senior officer
with a corporation engaged in the Company's business; or
-Page 4-
39
(3) any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its material obligations hereunder.
e. Termination by Executive for other than Good Reason or
------------------------------------------------------
following a Change in Control: The Executive may terminate his employment
------------------------------
hereunder at any time for any reason not specified in subparagraph 5, d,
above, by giving the Company a written Notice of Termination in accordance
with subparagraph 5, g, below.
f. Termination by Company for other than Cause or Inadequate
---------------------------------------------------------
Performance. The Company may terminate the Executive's employment at any
-----------
time for any reason not specified in subparagraphs 5, a, b, or c, above, by
giving the Executive a written Notice of Termination in accordance with
subparagraph 5, g, below.
g. Notice of Termination: Any termination of the Executive's
----------------------
employment for any reason other than the Executive's death, whether initiated
by the Company or by the Executive, shall be communicated by a written
"Notice of Termination" to the other party hereto. The "Notice of
Termination" shall specify which termination provision in this Agreement is
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Such Notice of Termination
shall be effective immediately or, in the case of a termination described in
subparagraphs 5, d, or f, above, such later date as is specified in such
notice.
h. Date of Termination: "Date of Termination" shall mean the
--------------------
last date the Executive is employed by the Company, provided that the
Executive's employment is terminated in accordance with the foregoing
provisions of this paragraph 5.
6. COMPENSATION AND OTHER RIGHTS UPON TERMINATION: The
-----------------------------------------------
Executive's right to payments and benefits under this Agreement for any
period after his Date of Termination shall be determined in accordance with
the following provisions of this paragraph 6.
a. Termination Because of Death or Total Disability of Executive:
--------------------------------------------------------------
If the Executive's Date of Termination occurs during the Employment Term by
reason of the Executive's death or total disability, the Executive, or in the
event of his death, the Executive's estate, heirs or designated beneficiaries
shall be entitled to receive the benefits specified in subparagraphs (1), (2)
and (3), below of this paragraph a. The amounts specified in subparagraphs
(2) and (3) shall be paid in a lump sum cash payment as soon after the
Executive's Date of Termination as is reasonably possible. Such payments
shall be in addition to any other benefits specifically provided under the
terms of any Incentive Plans or Benefit Plans. The benefits payable pursuant
to this paragraph shall be:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
-Page 5-
40
(2) an amount equal to 12 months of the Executive's Base
Salary at the rate in effect on his Date of Termination; plus
(3) an amount equal to the annual bonus payable to the
Executive, if any, under the Incentive Plans for the calendar year
immediately preceding the calendar year in which the Executive's Date of
Termination occurs. In the event of the Executive's death, any sum which
would have been paid to a participant's account in a qualified
retirement plan for the Executive by the Company shall instead be
included as a part of this payment.
The Executive's "estate, heirs, and beneficiaries" shall mean the trustee of
any trust or the personal representative of the Executive's estate or such
other person or persons who may be designated by the Executive to receive
such benefits on such documents or forms as the Company provides for this
purpose.
b. Termination Following a Change in Control: If the Executive's
------------------------------------------
Date of Termination occurs within twelve (12) months following a Change in
Control for any reason other than death, total disability or for cause, the
Executive shall be entitled to the following:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable.
(3) a lump sum cash payment in an amount equal to two and
one-half (2.5) times (250% of) of the sum of (i) the Executive's Base
Salary; plus (ii) bonuses paid during the twelve (12) full calendar
months immediately preceding the calendar month in which the Executive's
employment terminated. Such total amount shall be paid within ten (10)
days following the Date of Termination.
In addition, if the Executive's Date of Termination occurs for reasons other
than cause within twelve (12) months following a Change in Control or
following any event constituting Good Reason, and on such date the Executive
is party to any agreement with the Company restricting the Executive's
ability to obtain employment with a competitor of the Company or to engage in
activities which are competitive to the Company, such competition
restrictions shall lapse on the Date of Termination.
-Page 6-
41
c. Voluntary Termination by Executive: If the Executive's Date
-----------------------------------
of Termination occurs under subparagraph 5, e, (relating to a voluntarily
termination not within twelve (12) months following a Change in Control and
---
not for Good Reason), then the Company shall promptly pay the Executive his
---
full Base Salary through the Date of Termination at the rate in effect on his
Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans.
d. Termination for Cause or Inadequate Performance: If the
------------------------------------------------
Executive's Date of Termination shall occur under subparagraph 5, c, for
reasons of (i) cause, or (ii) inadequate performance provided such
termination for inadequate performance does not occur within twelve (12)
months of a Change in Control, the Company shall promptly pay the Executive
his full Base Salary through the Date of Termination at the rate in effect on
his Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans. Such termination shall not impair the Company's
remedies for any breach of this Agreement by the Executive.
e. Other Termination by the Company or by the Executive for Good
-------------------------------------------------------------
Reason: If the Executive's Date of Termination occurs under subparagraph 5,
-------
f, (relating to termination by the Company for reasons other than total
disability, cause or inadequate performance) or the Executive shall terminate
his employment for Good Reason under subparagraph 5, d, and such termination
is not during the 12 month period following a Change in Control, then the
Company shall pay to the Executive the following amounts:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable;
plus
(3) a lump sum cash payment in an amount equal to one times
(100% of) the sum of (i) the Executive's Base Salary; plus (ii) bonuses,
paid during the twelve (12) full calendar months immediately preceding
the calendar month in which the Executive's employment is terminated.
Such total amount shall be paid within ten (10) days following the Date
of Termination.
f. Additional Benefits for Certain Terminations: Notwithstanding
---------------------------------------------
any provisions to the contrary contained in this Agreement, in any Incentive
Plan or in any other agreement between the Company and the Executive, if the
Executive's Date of Termination occurs for any
-Page 7-
42
reason other than a termination by the Company for cause or inadequate
performance under subparagraph 5, c, or a voluntary termination by the
Executive under subparagraph 5, e, (relating to voluntary terminations which
are not for Good Reason or within 12 months of a Change in Control), then
effective immediately prior to such Date of Termination and continuing
thereafter:
(1) All share options and share appreciation rights which the
Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(2) All shares of restricted shares which the Executive holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested and all restrictions applicable to such shares under such
plans shall immediately terminate;
(3) All performance share awards, performance unit awards and
other similar performance-based awards which the Executive then holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested, all performance measures applicable to such awards shall
be deemed to have been fully satisfied through the Date of Termination,
and payment of the then value of such awards shall be made to the
Executive as soon as administratively feasible following the Date of
Termination or such Change in Control, with the value of such awards to
be based, to the extent applicable, on the Market Value (as hereinafter
defined) or the Change in Control Value (as hereinafter defined) of the
common shares of the Company, whichever is applicable; and
(4) All other incentive compensation awards, including
deferred cash bonuses or share awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable.
g. Benefits Delayed if Necessary to Assure Full Payment:
-----------------------------------------------------
Notwithstanding any other provisions of this Agreement, if applicable law or
any material agreement by which the Company is bound imposes any restrictions
on the Company's fulfilling its obligations under this paragraph 6 at the
time provided, the Company shall fulfill its obligations to the maximum
extent possible at that time without violating such restrictions, and such
remaining and unfulfilled obligations shall survive until the Company is able
to fulfill them and the Company shall use its best efforts to fulfill such
obligations as soon as reasonably practicable thereafter.
h. Continuation of Benefit Plans: If the Executive's employment
------------------------------
is terminated under the circumstances described in subparagraph 6, b, hereof
(relating to termination following a Change in Control), then for a period of
eighteen (18) months following the Date of Termination, the Company shall
maintain in full force and effect for the continued benefit of the Executive
and his eligible dependents and beneficiaries, the employee benefits under
the Benefit Plans which they were eligible to receive immediately prior to
the Date of Termination, subject to the terms and conditions of the Benefit
Plans, at no greater cost to the Executive than he would have incurred had he
remained in the employ of the Company; provided that the Executive's
continued participation or the participation of such eligible dependents or
beneficiaries must be permissible
-Page 8-
43
under the general terms and provisions of such Benefit Plans and shall not
jeopardize the Plans' qualified status under the Internal Revenue Code or the
rules and regulations promulgated thereunder. In the event that the
Executive's participation or the participation of such eligible dependents or
beneficiaries in any such Benefit Plan is barred pursuant to the preceding
sentence, the Company shall arrange to provide the Executive or such eligible
dependents or beneficiaries, for the period of coverage specified in the
preceding sentence, with benefits substantially similar to those which the
Executive and such eligible dependents or beneficiaries were entitled to
receive under such Benefit Plans immediately prior to the Date of Termination,
or with cash approximately equal in value to the benefit which otherwise would
have been made available. Upon the Executive obtaining other employment or
becoming self-employed, the Company's obligations under this subparagraph 6,
h, hereof shall cease effective upon the date of the Executive's eligibility
to participate in his new employer's benefits plans or in any benefit plans
established by the Executive pursuant to his self-employment, irrespective of
whether such benefit plans are comparable to the Company's Benefit Plans;
provided, however, that in the case of limited self-employment the Company
may, in its sole discretion, agree to waive the foregoing provisions of this
sentence.
7. CERTAIN DEFINITIONS:
--------------------
a. Change in Control: For purposes of this Agreement, the term
------------------
"Change in Control" means a change in the beneficial ownership of the
Company's voting shares or a change in the composition of the Company's Board
of Trustees which occurs as follows:
(1) any "person" (as such term is used in paragraph 13 (d) and
14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange Act"))
other than:
(a) a trustee or other fiduciary of securities held
under an employee benefit plan of the Company;
(b) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same
proportions as their ownership of the Company; or
(c) any person in which the Executive has a substantial
equity interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of shares of the Company representing twenty-five
percent (25%) or more of the total voting power of the Company's then
outstanding shares; or
(2) a tender offer is made for the shares of the Company by a
person other than a person described in subparagraph (1), (a), (b), or
(c), and the person making the offer owns or has accepted for payment
shares of the Company representing twenty-five percent (25%) or more of
the total voting power of the Company's shares; or
-Page 9-
44
(3) the shareholders of the Company approve a sale of all or
substantially all of the Company's assets or a merger or consolidation
of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the Company's voting shares outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting shares of the surviving
entity) more than fifty-one percent (51%) of the combined voting
power of the Company's or such surviving entity's outstanding
voting shares immediately after such merger or consolidation; or
(b) such an asset sale or a merger or consolidation
which would result in the Trustees of the Company who were
Trustees immediately prior thereto continuing to constitute at
least fifty percent (50%) of the Trustees of the surviving
entity immediately after such merger or consolidation; or
(4) a majority of the members of the Board of Trustees is
comprised of individuals whose initial assumption of office occurred as
a result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11.
For purposes of this paragraph 7, "surviving entity" shall mean only an entity
in which all of the Company's shareholders become shareholders by the terms of
such merger or consolidation, and the phrase "Trustees of the Company who were
Trustees immediately prior thereto" shall not include:
1) any Trustee of the Company who was designated by a
person who has entered into an agreement with the Company to
effect a transaction described in this paragraph or in paragraph
(1) above; or
2) any Trustee who was not a Trustee at the beginning
of the 12-consecutive-month period preceding the date of such
merger or consolidation
unless his or her election by the Board of Trustees or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the Trustees then still in office who were Trustees
before the beginning of such period or two-thirds (2/3) of the shareholders
voting for the election of Trustees, as the case may be.
b. Change in Control Value: For purposes of this Agreement, the
------------------------
term "Change in Control Value" means the greatest of the amounts determined
--------
in subparagraphs (1), (2), or (3), below, unless any one or more of such
values are not applicable, to-wit:
(1) the per share price offered to shareholders of the Company
in any merger, consolidation, sale of assets or reorganization
transaction;
-Page 10-
45
(2) the highest per share price offered the shareholders of
the Company in any tender offer or exchange offer whereby a Change in
Control takes place; or
(3) if a Change in Control occurs other than as described in
subparagraphs (1) or (2), the Market Value per share, as of the date of
the Change in Control, as determined by the Board in Good faith. If the
consideration offered to shareholders of the Company in a transaction
consists of anything other than cash, the Board shall determine in Good
faith the fair cash equivalent of the portion of the consideration
offered which is other than cash.
8. ADJUSTMENT FOR TAX EFFECTS: If any payments under this
---------------------------
Agreement, after taking into account all other payments to which the
Executive is entitled from the Company, or any affiliate thereof, are subject
to an excise tax under section 4999 of the Internal Revenue Code of 1986 or
any successor provision to that section, such payments shall be reduced to
the extent required to avoid such excise tax if, and only if, such reduction
would result in a larger after-tax benefit to the Executive, taking into
account all applicable local, state, federal and foreign income and excise
taxes. The Executive shall be entitled to select the order in which payments
are to be reduced in accordance with the preceding sentence. If requested by
the Executive, the Company shall provide complete compensation and tax data
on a timely basis to the Executive and to tax counsel designated by the
Executive in order to enable the Executive to determine the extent to which
payments from the Company and its affiliates may result in an excise tax, and
the Company shall reimburse the Executive for any reasonable fees and
expenses incurred by the Executive for such purpose. If the Executive and
the Company shall disagree as to whether a payment under this Agreement will
result in an excise tax or whether a reduction in any payment will result in
a larger after-tax benefit to the Executive, the matter shall be resolved by
an opinion of tax counsel chosen by the Executive. The Company shall pay the
fees and expenses of such tax counsel, and shall make available such
information as may be reasonably requested by such advisor to prepare the
opinion. If, by reason of the adjustments under this paragraph 8, the amount
payable to the Executive under paragraph 6 above cannot be determined prior
to the due date for such payment, the Company shall pay on the due date the
minimum amount which it in good faith determines to be payable and the
Company shall pay the remaining amount (or the Executive shall repay any
excess), with interest at a rate, compounded semi-annually, equal to 120% of
the applicable Federal rate determined under section 1274(d) of the Internal
Revenue Code of 1986, as soon as such remaining amount is determined in
accordance with this paragraph 8.
9. NON-DISCLOSURE AND REMEDIES:
----------------------------
a. The Executive shall not, during the Executive's employment
hereunder or at any time thereafter, disclose or reveal to anyone (other than
persons within the Company) any information relating to the business,
techniques, operations, condition (financial or otherwise), prospects or
affairs of the Company which is not generally known or recognized as a
standard industry practice. The Executive confirms that all confidential
information regarding the business of the Company received by him during his
employment is and shall remain the exclusive
-Page 11-
46
property of the Company. All business records, papers and documents kept or
made by the Executive relating to the business of the Company shall be and
remain its property. Upon the termination of his employment with the Company
or upon the Company's request at any time, the Executive shall promptly
deliver to the Company, and shall not, without the consent of the Company,
retain copies of any written materials not previously made available to the
public made by the Executive or coming into his possession concerning the
business or any of its affiliates. Notwithstanding the preceding provisions
of this subparagraph 9, a, or any other provision of this Agreement, the
Executive shall be entitled to retain any written materials received by the
Executive in the capacity as a shareholder of the Company or the Company's
affiliates.
b. Without limiting its other remedies at law or equity for any
breach of subparagraph 9, a, hereof, the Executive agrees that in the event
of such breach, the Company shall be entitled to a temporary restraining
order and a preliminary and permanent injunction to specifically enforce
subparagraph 9, a, hereof, which shall be enforceable by the Company,
irrespective of the reason for the Executive's termination of employment.
10. SUCCESSORS; BINDING AGREEMENT:
------------------------------
a. The Company shall require any successor to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, 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 if no such succession had taken
place; provided that (i) any such assignment and assumption shall not relieve
the Company of its liability hereunder, and (ii) with respect to the
Company's Incentive Plans and Benefit Plans, the Company's obligations under
this subparagraph 10, a, shall be deemed satisfied if the Executive is
entitled to participate in the incentive and benefit plans of the successor
company which are generally offered to the other executives of such successor
company. As used in this Agreement, "Company" shall mean the Company as
hereinabove defined and any successors to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
subparagraph 10, a, or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
b. This Agreement shall inure to the benefit of and be enforceable
by:
(1) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees; and
(2) the Company's successors and assigns.
11. NOTICES: For the purposes of this Agreement, notices and
--------
all other communications provided for in this Agreement shall be in writing
and shall be delivered by certified mail, return provide receipt requested,
postage prepaid, addressed as follows:
-Page 12-
47
If to Executive: X. Xxxxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company: Storage Trust Realty
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
12. MISCELLANEOUS: No provisions of this Agreement may be
--------------
modified, waived, or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and approved by the
Company. No modification, waiver or discharge by the Company shall be
effective unless it is approved by a majority of the Independent Trustees (as
defined in Article 5 of the Company's Declaration of Trust). No waiver by a
party at any time of any breach by the other party of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time. The
validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the state of Maryland.
13. VALIDITY: The invalidity or unenforceability of any
---------
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
14. HEADINGS: The headings contained herein are for reference
---------
purposes only and shall not in any way affect the meaning or interpretation
of any provision of this Agreement.
15. SUPERSESSION OF PRIOR AGREEMENT: This Agreement
--------------------------------
supersedes and wholly replaces any previous employment agreements between the
Company or its predecessor corporations and the Executive, and any amendments
and supplements thereto.
16. ENTIRE AGREEMENT: This Agreement constitutes the entire
-----------------
agreement of the parties hereto relating, to the subject matter hereof and
there are no written or oral terms or representations made by either party
other than those contained herein.
17. ATTORNEYS' FEES AND COSTS: In the event there is any
--------------------------
legal action or arbitration between the parties hereto with respect to this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with such
action or proceeding in addition to any other relief to which such party may
be entitled.
18. SURVIVAL: Except as otherwise expressly provided in this
---------
Agreement, the rights and obligations of the parties hereunder shall survive
the expiration or termination of the term of the Executive's employment
hereunder.
19. NO EFFECT ON OTHER CONTRACTUAL RIGHTS: The provisions
--------------------------------------
of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the
-Page 13-
48
Executive, or in any way diminish the Executive's rights as an employee of the
Company, whether existing now or hereafter, under any employee benefit plan,
program, or arrangement or other contract or agreement of the Company
providing benefits to the Executive.
20. ARBITRATION: The parties agree that any disputes arising
------------
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association, but subject to the following terms and conditions:
a. Purpose. The parties recognize that during the term of this
-------
Agreement, it is to their mutual benefit for there to be a mechanism to avoid
litigation. Rather than resort to litigation, the parties agree that the
disputes which may arise between the parties during the term of this
Agreement shall be resolved by mediation and arbitration as prescribed by
this paragraph.
b. Term of Arbitration Obligation. The arbitration obligation
------------------------------
set forth in this paragraph shall exist during the term of this Agreement.
c. Mediation. Before any dispute between the Parties is referred
---------
to an arbitrator or arbitration panel for resolution, the Parties shall use
reasonable and good faith efforts to resolve said dispute on an informal
basis or through the use of a mediator mutually agreeable to both Parties.
The mediator selected for this purpose shall not have any power to render a
decree or to enter any judgment binding upon the Parties, but instead said
mediator shall be selected in an effort to achieve a consensus and agreement
between the Parties with respect to the issue or issues in dispute. In the
event either Party believes an issue has not been resolved to said Party's
satisfaction and that said dispute potentially may be the subject of
arbitration if not resolved, said Party shall have the right to demand that
said issue be presented to a mediator for mediation and conciliation. In
such event, said Party desiring such mediation (the "Electing Party") shall
give notice to the other Party (the "Notice Party") as to the Electing
Party's desire to refer said issue to a mediator for resolution. Said
written notice to the Notice Party shall specify the names of at least three
(3) persons who would be acceptable to the Electing Party as a mediator for
this purpose. The Notice Party shall have the right to agree to any one (1)
of the three (3) persons so named to serve as mediator or shall have the
right to reject all said persons named and suggest three (3) prospective
mediators in return. If both Parties are unable to agree as to the name of a
mediator who will serve as such in connection with said mediation proceedings
within thirty (30) days of the date the Electing Party first gives notice to
the Notice Party in this regard, then the issue involved shall not be
required to be mediated, but instead may be the subject of arbitration
pursuant to the provisions hereafter specified. If the Parties are able to
agree as to a person who can serve as mediator, then the parties shall meet
with said mediator and attempt to resolve that issue to their mutual
satisfaction. If the parties are unable to achieve a resolution of the issue
through said mediation proceeding, then either Party may thereafter invoke
the arbitration proceedings hereafter specified.
-Page 14-
49
d. Arbitration Procedures. If the Parties are unable to resolve
----------------------
an issue or issues about which they disagree through the mediation process
described above, then either Party shall have the right to require the
binding arbitration of such issue by demanding that said issue be arbitrated.
In such event, the Parties shall proceed as follows:
(1) The Party desiring arbitration (the "Electing Party")
shall given written notice to the other Party (the "Notice Party") as to
the Electing Party's election to invoke the binding arbitration
provisions of this paragraph. Said written notice shall identify the
issue or issues about which the Parties disagree, the fact of the
Electing Party's desire that said issues be arbitrated pursuant to this
Agreement, and the name of the arbitrator which the Electing Party has
selected to arbitrate said dispute.
(2) The Notice Party shall have ten (10) days following
receipt of the above-described written notice concerning the Electing
Party's decision to demand arbitration in which to select an arbitrator
to serve as such and who is acceptable to the Notice Party for this
purpose. The arbitrator selected by the Electing Party and the
arbitrator selected by the Notice Party shall thereafter meet within
five (5) days of the date the Notice Party indicates to the Electing
Party the name of the Notice Party's arbitrator and shall attempt to
agree upon a third arbitrator who shall be selected by said two (2)
previously named arbitrators. In the event said two (2) previously
named arbitrators are unable to agree upon a third arbitrator, then
either Party may communicate this fact to the American Arbitration
Association which shall thereupon name and select the third arbitrator.
(3) Any arbitrator selected by a Party must be independent of
the Party who has selected said arbitrator, i.e., said arbitrator may
not be an employee of that Party, may not be related within the third
degree of consanguinity to any employee or member of that Party or that
Party's Affiliate, and may not be an investor in, member of, or
Affiliate of any Party.
(4) Any arbitrator selected for the foregoing purposes must
agree in writing, to base said arbitrator's decision on the principles
hereafter set forth in subparagraph e of this paragraph.
(5) The Parties shall thereafter proceed to submit their
issues and disputes to the arbitrators selected in the foregoing manner
and shall thereafter be bound by any decision reached by said
arbitrators (so long as said decision is reached and determined in
accordance with the principles hereafter set forth in subparagraph of
this paragraph).
(6) In lieu of the foregoing procedure, if the Parties are able to
agree on a single person to serve as arbitrator of the issue or issues
involved, then the
-Page 15-
50
Parties may submit the issues involved to said single arbitrator who
shall thereupon have the power to make a decision in the case which is
binding upon both Parties.
e. Governing Principles Applicable to Arbitration Proceedings.
----------------------------------------------------------
In any arbitration proceeding conducted pursuant to this Agreement and
pursuant to the foregoing provisions of this paragraph, the Arbitrator shall
be bound and governed by the following principles:
(1) The arbitration proceedings shall be stayed for a
reasonable period of time during which the Parties shall be permitted to
conduct such discovery (including depositions, interrogatories, requests
for admissions, and the like) in the same manner as if the issue or
issues involved were pending before the Circuit Court of Xxxxx County,
Missouri, and pursuant to the Missouri Rules of Civil Procedure then in
effect.
(2) Following said period of discovery, the issues shall be
presented to the arbitrator or arbitrators. However, in presenting such
issues and such evidence as may be involved, the arbitrator shall be
bound and obligated to apply the rules of evidence which are then in
effect with respect to Circuit Courts in Xxxxx County, Missouri, and
shall be governed by the rules of evidence with respect to the
admissibility of evidence in the Missouri courts in the same manner as
if said issues where then being tried to a Circuit Judge in the Circuit
Court of Xxxxx County, Missouri. The arbitrators may not consider (and
shall not consider) evidence which would not be admissible before the
Circuit Court of Xxxxx County, Missouri, were the issues being tried to
said Circuit Court in said case.
(3) Any decision rendered by the arbitrators must be a
decision which could be entered by the Circuit Court of Xxxxx County,
Missouri, under the same or similar circumstances. In this regard, the
arbitration panel shall have such equitable authority and powers as the
Circuit Court of Xxxxx County, Missouri, would have under the same or
similar circumstances, but shall not have the ability to fashion any
relief or decision which would be beyond the authority of the Circuit
Court of Xxxxx County, Missouri, to render under the same or similar
circumstances (assuming personal jurisdiction over both Parties).
(4) In the event no member of the arbitration panel is an
attorney licensed to practice law in the state of Missouri, then the
arbitration panel shall have the authority to retain the services of an
attorney who is licensed to practice law in the state of Missouri, and
who has no conflict of interest with respect to the Parties to advise
the arbitration panel concerning the legal issues coming before the
arbitration panel. However, because of the need for the arbitration
panel to be familiar with legal principles under the laws of the state
of Missouri, the arbitration panelists selected by the Parties (and by
the arbitrators) shall, if at all
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xxxxxxxx, xx practicing attorneys in the state of Missouri or Judges or
former Judges of the courts of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
[THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.]
STORAGE TRUST PROPERTIES, L.P., ("Company")
By: Storage Trust Realty, a Maryland Real Estate
Investment Trust, Sole General Partner
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx, Chief Executive Officer
/s/ X. Xxxxxxx Xxxxxx
------------------------------------------
X. XXXXXXX XXXXXX, ("Executive")
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