<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
STORAGE USA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
(STORAGE USA LETTERHEAD)
April 5, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Storage USA, Inc. (the "Company") to be held on May 5, 1999, at 10:00 a.m. local
time, at 165 Madison Avenue, Memphis, Tennessee 38103. The meeting will be held
in the auditorium on the lower level. The business to be conducted at the
meeting is set forth in the formal notice that follows. There will also be a
report on the Company's business, and shareholders will have an opportunity to
ask questions.
The Company relies upon all shareholders to execute and return their
proxies in order to avoid costly proxy solicitation. Therefore, in order to save
your Company the unnecessary expense of further proxy solicitation, I ask that
you promptly sign and return the enclosed proxy card in the envelope provided.
If you attend the annual meeting, you may withdraw your proxy at the meeting and
vote your shares in person.
I look forward to seeing you at the Annual Meeting.
Sincerely,
/S/ Dean Jernigan
Dean Jernigan
Chairman of the Board,
Chief Executive Officer and
President
This proxy statement is first being mailed to shareholders on April 5, 1999.
<PAGE> 3
STORAGE USA, INC.
165 MADISON AVENUE
SUITE 1300
MEMPHIS, TENNESSEE 38103
(901) 252-2000
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 5, 1999
---------------------
NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders (the "Annual
Meeting") of Storage USA, Inc., a Tennessee corporation (the "Company"), will be
held on May 5, 1999, at 10:00 a.m. local time, at 165 Madison Avenue, Memphis,
Tennessee 38103, in the lower-level auditorium, for the following purposes:
1. To elect nine directors (Proposal 1);
2. To ratify the selection of the auditors for the fiscal year ending
December 31, 1999 (Proposal 2);
3. To approve an amendment to the Company's 1995 Employee Stock Purchase
and Loan Plan (Proposal 3); and
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Pursuant to the Bylaws of the Company, the Company's Board of Directors has
fixed the close of business on March 31, 1999, as the record date for the
determination of shareholders of the Company entitled to notice of and to vote
at the Annual Meeting. Therefore, only record holders of Company Common Stock at
the close of business on that date are entitled to notice of and to vote shares
held on the record date at the Annual Meeting and any adjournments thereof.
We urge you to review carefully the enclosed materials. Your vote is
important. All shareholders are urged to attend the meeting in person or by
proxy. If you receive more than one proxy card because your shares are
registered in different names or at different addresses, please indicate your
vote, sign, date and return each proxy card so that all of your shares will be
represented at the Annual Meeting.
By Order of the Board of Directors
/s/ Christopher Marr
Christopher Marr
Secretary
Memphis, Tennessee
April 5, 1999
IT IS IMPORTANT THAT ALL PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE INDICATE YOUR VOTE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. YOU
MAY, IF YOU WISH, REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED,
INCLUDING BY VOTING AT THE MEETING.
<PAGE> 4
STORAGE USA, INC.
165 MADISON AVENUE
SUITE 1300
MEMPHIS, TENNESSEE 38103
(901) 252-2000
---------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1999
---------------------
GENERAL
The enclosed proxy is solicited by the Board of Directors of Storage USA,
Inc. (the "Company") for the Annual Meeting of Shareholders to be held on May 5,
1999, at 10:00 a.m. local time, 165 Madison Avenue, Memphis, Tennessee 38103
(the "Annual Meeting"). The Annual Meeting will be held in the auditorium on the
lower level. The proxy may be revoked at any time prior to voting thereof by
notifying the persons named therein of intention to revoke or by conduct
inconsistent with continued effectiveness of the proxy, such as delivery of a
later dated proxy or appearance at the meeting and voting in person the shares
to which the proxy relates. Shares represented by executed proxies will be
voted, unless a different specification is made therein, FOR election of nine
directors, FOR the ratification of the selection of auditors for the fiscal year
ending December 31, 1999 and FOR the proposed amendment to the Company's 1995
Employee Stock Purchase and Loan Plan. If necessary, and unless the shares
represented by the proxy were voted against the applicable proposal therein, the
proxy holder also may vote in favor of a proposal to adjourn the Annual Meeting
to permit further solicitation of proxies in order to obtain sufficient votes to
approve any of the matters being considered at the Annual Meeting. The Company
knows of no business other than that set forth above to be transacted at the
meeting or any adjournment thereof, but if other matters requiring a vote do
arise, it is the intention of the persons named in the proxy to vote in
accordance with their judgment on such matters.
This proxy statement and the enclosed proxy were mailed on April 5, 1999 to
shareholders of record at the close of business on March 31, 1999 (the "Record
Date"). The Company has mailed each shareholder of record as of the Record Date
an Annual Report that includes audited financial statements for the period ended
December 31, 1998.
At the close of business on the Record Date, the Company had 27,875,377
shares outstanding and entitled to vote. Each share has one vote on all matters
including those to be acted upon at the Annual Meeting. A majority of votes
entitled to be cast on matters to be considered at the Annual Meeting will
constitute a quorum. If a share is represented for any purpose at the Annual
Meeting, it is deemed to be present for all other matters. Abstentions and
shares held of record by a broker or its nominee ("Broker Shares") that are
voted on any matter are included in determining the number of votes present.
Broker Shares that are not voted on any matter at the Annual Meeting will not be
included in determining whether a quorum is present. If a quorum is present, the
affirmative vote of a plurality of the shares voting at the Annual Meeting is
required to elect directors. The affirmative vote of a majority of the votes
cast is required to approve the selection of auditors and the proposed amendment
to the Company's 1995 Employee Stock Purchase and Loan Plan.
Shareholders who wish to abstain from voting on any matter to be voted on
at the Annual Meeting may do so by specifying that their vote on such matter be
withheld in the manner provided in the enclosed proxy. Abstentions will not be
included in determining the number of votes cast for selection of auditors.
Abstentions will be counted as a vote against the proposed amendment of the
Company's 1995 Employee Stock Purchase and Loan Plan.
The Company will comply with instructions in a proxy executed with respect
to Broker Shares that less than all of such shares are to be voted on a
particular matter.
The mailing address of the Company is 165 Madison Avenue, Suite 1300,
Memphis, Tennessee 38103. Notices of revocation of proxies should be sent to
that address.
<PAGE> 5
PROPOSAL TO ELECT NINE DIRECTORS
(PROPOSAL 1)
ELECTION OF DIRECTORS
At the Annual Meeting, nine directors are to be elected, each to hold
office until the next Annual Meeting of Shareholders and until his or her
successor is duly elected and qualified, except in the event of death,
resignation or removal. Unless otherwise specified, proxies solicited hereby
will be voted FOR election of the nominees listed below, except that in the
event any of those named should not continue to be available for election,
discretionary authority may be exercised to vote for a substitute. No
circumstances are presently known that would render any nominee named herein
unavailable. All of the nominees are now members of the Board of Directors, and
were elected at the 1998 Annual Meeting of Shareholders.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AGE EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- --- -------------------------------------------
<S> <C> <C>
Dean Jernigan................ 53 Director since 1985. Mr. Jernigan has been the Chief
Executive Officer of the Company since its inception in
1985.
John P. McCann(1)(3)......... 54 Director since March 23, 1994. Mr. McCann has, since
1978, been the Chief Executive Officer and a Director of
United Dominion Realty Trust, Inc. Richmond, Virginia and
since 1997 has been a Director of Land America Financial
Group, Inc.
C. Ronald Blankenship(3)..... 49 Director since November 5, 1997. Director, Vice Chairman
and Chief Operating Officer of Security Capital Group
Incorporated since March 1991. From June 1988 to March
1991, Mr. Blankenship was Regional Partner, Trammell Crow
Residential, Chicago, Illinois.
William D. Sanders(4)........ 57 Director since November 6, 1996. Mr. Sanders has, since
1990, been Chairman of the Board and Chief Executive
Officer of Security Capital Group. Mr. Sanders is also a
Director of R. R. Donnelley & Sons Company, Regency
Realty Corporation, Carr America Realty Corp. and
Security Capital U.S. Realty.
Caroline S. McBride (2)...... 45 Director since May 7, 1997. Managing Director of Security
Capital Investment Research Incorporated since June 1996.
From January 1995 to June 1996, Ms. McBride was the
director of private market investments for the IBM
Retirement Fund and from January 1992 to January 1995,
she was also the director of real estate investments for
such fund. Prior to joining the IBM Retirement Fund in
1992, Ms. McBride was director of finance, investments
and asset management for IBM's corporate real estate
division. Ms. McBride is a director of CarrAmerica Realty
Corp.
Harry J. Thie(1)(2)(3)....... 56 Director since March 23, 1994. Senior researcher with the
RAND Corporation, a non-profit research institute since
1991. Prior thereto, from 1987 to 1991, he was Senior
Manager in the Office of the Assistant Secretary of the
Army for Manpower and Reserve Affairs.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AGE EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---- --- -------------------------------------------
<S> <C> <C>
Mark Jorgensen(1)(4)......... 58 Director since January 25, 1995. Mr. Jorgensen serves as
a real estate consultant to the pension fund industry and
since 1995, has served as a member of the Advisory Board
of Opportunity Capital Partners, an investment fund. From
1992 until 1994, Mr. Jorgensen was the managing director
of the Prudential's PRISA, PRISA II and PRISA III real
estate portfolios, and prior thereto he was a Senior
Investment Officer -- Real Estate for California State
Teachers' Retirement System.
Howard P. Colhoun(1)(2)(4)... 63 Director since March 23, 1994. Mr. Colhoun has been
General Partner of Emerging Growth Partners, Baltimore,
Maryland, a venture capital/small public company
investment partnership since 1982.
Alan B. Graf, Jr.(1)(2)(3)... 45 Director since August 6, 1997. Mr. Graf has been
Executive Vice President & Chief Financial Officer of FDX
Corporation and Federal Express Corp. since 1996 and Sr.
Vice President & Chief Financial Officer since 1991. Mr.
Graf is also a director of Kimball International, Inc.
</TABLE>
- ---------------
(1) Independent Director
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Corporate Governance Committee
Regular meetings of the Board are held quarterly. The Board had 12
additional special meetings during 1998. All of the Directors attended at least
75% of the aggregate number of meetings of the Board and committees of the Board
during the period in which they served in 1998. Ms. McBride and Messrs.
Blankenship and Sanders have been nominated for election as directors by
Security Capital U.S. Realty ("SC-USREALTY") pursuant to the terms of the
Strategic Alliance Agreement, dated March 19, 1996, among the Company, SUSA
Partnership, L.P., Security Capital Holdings S.A. and SC-USREALTY, as amended.
The Strategic Alliance Agreement generally provides that SC-REALTY may nominate
a number of directors proportionate to its ownership of the Company's Common
Stock, but not fewer than two, for so long as it owns at least 20% of the
Company's Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1.
3
<PAGE> 7
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth information regarding the beneficial
ownership of shares of Company Common Stock outstanding as of January 31, 1999,
by (i) each person or group known to the Company who owns more than 5% of the
outstanding shares of Company Common Stock, and (ii) each of the Directors, the
Chief Executive Officer and the other four most highly compensated executive
officers of the Company. Unless otherwise indicated in the footnotes, all of
such interests are owned directly, and the indicated person or entity has sole
voting and investment power. The number of shares represents the number of
shares of Company Common Stock the person holds, including shares that may be
issued upon the exercise of options that are exercisable within 60 days of
January 31, 1999.
<TABLE>
<CAPTION>
PERCENT
SHARES OF
HELD CLASS
--------- -------
<S> <C> <C>
Security Capital U.S. Realty................................ 11,765,654 42.22%
Security Capital Holdings S.A
25B, Boulevard Royal
L-2449 Luxembourg
Dean Jernigan............................................... 618,219(1) 2.2%
Morris Kriger............................................... 84,878(2) (15)
Douglas Chamberlain......................................... 60,517(3) (15)
Christopher Marr............................................ 34,500(4) (15)
Karl Haas................................................... 73,430(5) (15)
Caroline S. McBride......................................... 4,746(6) (15)
Howard P. Colhoun*.......................................... 10,013(7) (15)
John P. McCann*............................................. 14,275(8) (15)
Harry J. Thie*.............................................. 12,404(9) (15)
Mark Jorgensen*............................................. 17,849(10) (15)
William D. Sanders.......................................... 4,468(11) (15)
Alan B. Graf Jr.*........................................... 5,681(12) (15)
C. Ronald Blankenship....................................... 3,566(13) (15)
All Directors and Executive Officers as a Group (18
persons).................................................. 1,002,062(14) 3.59%
165 Madison Avenue
Suite 1300
Memphis, Tennessee 38103
</TABLE>
- ---------------
* Independent Director
(1) Includes 135,000 shares of Company Common Stock subject to immediately
exercisable options and 3,219 shares owned, indirectly as custodian for his
minor children.
(2) Includes 54,000 shares of Company Common Stock subject to immediately
exercisable options.
(3) Includes 60,500 shares of Company Common Stock subject to immediately
exercisable options and 17 shares owned indirectly, as custodian for his
minor children.
(4) Includes 24,400 shares of Company Common Stock subject to immediately
exercisable options.
(5) Includes 60,000 shares of Company Common Stock subject to immediately
exercisable options and 30 shares owned indirectly as custodian for his
minor children.
(6) Includes 4,000 shares of Company Common Stock subject to immediately
exercisable options.
(7) Includes 6,318 shares of Company Common Stock subject to immediately
exercisable options.
(8) Includes 6,318 shares of Company Common Stock subject to immediately
exercisable options.
(9) Includes 6,318 shares of Company Common Stock subject to immediately
exercisable options.
(10) Includes 5,376 shares of Company Common Stock subject to immediately
exercisable options, and all are owned by the Jorgensen Family Trust, Mark
and Wilhelmina Jorgensen, Trustees.
4
<PAGE> 8
(11) Includes 3,722 shares of Company Common Stock subject to immediately
exercisable options.
(12) Includes 3,000 shares of Company Common Stock subject to immediately
exercisable options.
(13) Includes 3,000 shares of Company Common Stock subject to immediately
exercisable options.
(14) Includes 395,952 shares of Company Common Stock subject to immediately
exercisable options.
(15) Less than 1%
The Strategic Alliance Agreement generally provides that SC-USREALTY is
required to vote its shares of Common Stock in accordance with the
recommendation of the Company's Board of Directors or proportionally in
accordance with the vote of the other holders of the Common Stock, except with
respect to the election of its nominees to the Company's Board (as to which
SC-USREALTY can vote its shares in its sole discretion) and with respect to any
amendment to the Company's Charter or Bylaws that would reasonably be expected
to materially adversely affect SC-USREALTY and certain extraordinary matters.
Consequently, SC-USREALTY must vote its shares at the annual meeting for the
Board of Directors' nominees (other than SC-USREALTY's representatives) or vote
proportionally for such nominees in accordance with the vote of the other
shareholders.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
The Audit Committee, which met 3 times in 1998, consists of three
Independent Directors and Ms. McBride. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls. Messrs. Graf, Thie and Colhoun, and Ms. McBride
currently serve on the Audit Committee with Mr. Graf serving as Chairman.
Compensation Committee
The Compensation Committee, which met 3 times in 1998, consists of three
Independent Directors and Mr. Blankenship. The Compensation Committee determines
compensation for the Company's Chief Executive Officer and President, reviews
and approves the Company's benefit plans and the compensation of the other
executive officers and administers the 1993 Omnibus Stock Plan and 1995 Employee
Stock Purchase and Loan Plan and the 1996 Officer's Stock Option Loan Program.
Messrs. Thie, Graf, McCann and Blankenship currently serve on the Compensation
Committee, with Mr. Thie serving as Chairman. The Company has no "Compensation
Committee Interlocks" or "Insider Participation" on its Compensation Committee.
Governance Committee
The Governance Committee, which met 4 times in 1998, is comprised of two
independent directors and Mr. Sanders. Messrs. Jorgensen, Colhoun and Sanders
currently serve on the Governance Committee, with Mr. Jorgensen serving as
Chairman. The committee evaluates the Company's corporate governance policies
and procedures and monitors related matters of current concern to investors and
the Board of Directors.
COMPENSATION OF DIRECTORS
The Company pays each non-employee Director an annual fee of $14,000, paid
in Company Common Stock under the 1993 Omnibus Stock Plan, plus $1,000 cash per
Board meeting attended, $750 cash per committee meeting attended, and $350 cash
for teleconference meetings attended. Directors who are employees of the Company
are not paid any directors' fees, either in stock or in cash. In addition, the
Company reimburses non-employee Directors for expenses incurred in connection
with their activities on behalf of the Company.
Each non-employee Director of the Company who is serving on the date of the
last regularly scheduled quarterly meeting, receives a grant of options under
the Company's 1993 Omnibus Stock Plan to purchase 2,000 shares of Company Common
Stock at a price equal to fair market value per share on the fourth Wednesday of
October of each year. The options vest on the date of the grant.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual
compensation for services in all capacities to the Company and its subsidiaries
for the period from January 1, 1996 through December 31, 1998, of those persons
who were, at December 31, 1998, (i) the Chief Executive Officer and (ii) the
four other most highly compensated executive officers of the Company
(hereinafter, the "Named Officers") whose annual salary exceeds $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
OTHER -------------------------
ANNUAL COMPENSATION ANNUAL SECURITIES
-------------------------- COMPEN- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS(#) ALL OTHER(1)
--------------------------- ---- -------- -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dean Jernigan 1998 $360,000 $180,000 $ 50,152 $12,477
Chairman of the Board and 1997 328,681 197,209 -- 75,000 11,476
Chief Executive Officer 1996 279,231 174,519 -- -- 15,084
Karl Haas 1998 172,335 52,201 -- 7,523 6,319
Executive Vice President, 1997 162,187 72,502 -- 25,000 5,738
Operations 1996 149,841 67,449 -- 15,000 7,483
Morris Kriger 1998 177,445 53,734 -- 7,523 6,336
Executive Vice President, 1997 181,803 79,523 -- 20,000 6,231
Acquisitions 1996 159,202 70,768 -- 55,000 3,711
Christopher Marr 1998 152,002 55,221 -- 12,190 5,080
Chief Financial Officer 1997 123,622 51,988 -- 32,000 4,446
1996 100,046 39,526 -- 10,000 4,749
Douglas Chamberlain 1998 138,695 42,109 -- 5,851 5,084
Executive Vice President, 1997 138,050 62,337 -- 15,000 5,184
Construction 1996 133,013 60,718 -- 7,500 7,078
</TABLE>
- ---------------
(1) Represents contributions to the Company's 401k plan for each of the Named
Officers.
STOCK OPTIONS
The following table provides information concerning the grants of options
to the Named Officers during 1998 under the Company's 1993 Omnibus Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE
NUMBER OF TOTAL OPTIONS/ AT ASSUMED ANNUAL RATES
SECURITIES SARS GRANTED OF STOCK PRICE APPRECIATION
UNDERLYING TO EMPLOYEES EXERCISE OR FOR OPTION TERM
OPTION/SARS IN FISCAL BASE PRICE EXPIRATION ----------------------------
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- -------------- ------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Dean Jernigan.......... 50,152 7.33% $29.50 10/28/2008 $ 930,440 $2,357,916
Karl Haas.............. 7,523 1.10 29.50 10/28/2008 139,570 353,697
Morris Kriger.......... 7,523 1.10 29.50 10/28/2008 139,570 353,697
Christopher Marr....... 12,190 1.78 29.50 10/28/2008 226,154 573,118
Douglas Chamberlain.... 5,851 .86 29.50 10/28/2008 108,550 275,087
</TABLE>
6
<PAGE> 10
The following table provides information on the value of each Named
Officer's unexercised options under the Company's 1993 Omnibus Stock Plan at
December 31, 1998.
AGGREGATED OPTION EXERCISES IN 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT YEAR END(#) OPTIONS AT YEAR-END($)(1)
ON VALUE ------------------------------ ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dean Jernigan.......... -- -- 135,000 110,152 $1,267,560 $ 141,078
Karl Haas.............. 60,000 27,523 302,520 21,162
Morris Kriger.......... 5000 $38,750 54,000 23,523 47,835 21,162
Christopher Marr....... -- -- 24,400 37,790 60,504 34,290
Douglas Chamberlain.... -- -- 60,500 17,851 408,150 16,459
</TABLE>
- ---------------
(1) Based upon the closing price of the Company Common Stock on the NYSE on
December 31, 1998, of $32.3125 per share.
INDEBTEDNESS BY EXECUTIVES
The executive officers of the Company listed in the table below are
indebted to the Company for loans to purchase Company Common Stock pursuant to
the 1995 Employee Stock Purchase and Loan Plan (the "Stock Purchase and Loan
Plan") approved by the shareholders at the 1994 Annual Meeting. The table
indicates the largest amount of the indebtedness outstanding since the beginning
of fiscal year 1998 and the amount outstanding at December 31, 1998. As provided
in the Stock Purchase and Loan Plan, such indebtedness bears interest at rates
ranging from 6.38% to 8.43% per annum and is collateralized by the Company
Common Stock purchased with the proceeds of such loan.
<TABLE>
<CAPTION>
MAXIMUM INDEBTEDNESS
INDEBTEDNESS AT
SINCE JANUARY 1, DECEMBER 31,
NAME 1998 1998
---- ---------------- ------------
<S> <C> <C>
Dean Jernigan............................................... $4,742,654 $4,689,173
Karl Haas................................................... 286,515 280,818
Morris Kriger............................................... 616,976 608,740
Christopher Marr............................................ 286,665 280,979
Douglas Chamberlain......................................... 573,332 -0-
Mark Yale................................................... 155,000 153,437
Francis C. Brown III........................................ 398,125 394,908
John McConomy............................................... 455,625 450,631
Richard Stern............................................... 101,133 100,514
</TABLE>
The executive officers of the Company listed in the table below are
indebted to Company for loans under the 1996 Officers' Stock Option Loan Program
(the "Program"), which was approved by the Company's Board of Directors
effective December 16, 1996. The Program, which is administered by the
Compensation Committee, generally allows certain executive officers of the
Company to borrow, on a full recourse basis, up to 75% of the difference between
the fair market value of the Company's Common Stock at the time of the loan and
the exercise price of such officer's unexercised, vested options. Such loans are
evidenced by notes payable to the Company, executed by participating officer and
his/her spouse, are collateralized by any shares
7
<PAGE> 11
of the Company's Common Stock obtained by exercise of any of such officer's
options and bear interest at 6.81%.
<TABLE>
<CAPTION>
MAXIMUM INDEBTEDNESS
INDEBTEDNESS AT
SINCE JANUARY 1, DECEMBER 31,
NAME 1998 1998
---- ---------------- ------------
<S> <C> <C>
Dean Jernigan............................................... $220,000 $220,000
Christopher Marr............................................ 75,000 75,000
</TABLE>
CERTAIN EMPLOYMENT AGREEMENT
Morris Kriger has an employment agreement with the Company dated December
6, 1995, which employs him as the Company's Executive Vice President,
Acquisitions through March 31, 2001 at an annual base salary of $175,000,
subject to merit increases (Mr. Kriger's current annual salary is $180,000),
plus bonus and incentive compensation on the same basis as other executive level
employees. The agreement also provides for Mr. Kriger to receive a loan under
the 1995 Employee Stock Purchase and Loan Plan to purchase 20,000 shares of
Company Common Stock (which were purchased on February 8, 1996) (see
"Indebtedness by Executives"), and for Mr. Kriger to receive a grant of options
to purchase 50,000 shares of Company Common Stock at a price of $31.25, which
grant vested over three years (1997, 1998 and 1999) and which is exercisable
over 10 years. The agreement provides that Mr. Kriger's employment is terminable
for cause, defined as the willful failure and refusal to perform his duties.
8
<PAGE> 12
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
To Our Shareholders:
The Compensation Committee of the Board of Directors is composed of three
Independent Directors and Mr. Blankenship. The Board has delegated to the
Compensation Committee responsibility for the compensation of the Company's
executives and for the incentive programs for all management personnel. In 1998,
the Compensation Committee conducted a complete review of executive compensation
through an outside advisor and through internal reviews.
The goals of the compensation program are to:
- - Attract and retain critical management talent
- - Motivate management to attain the goals of the Company as a team
- - Share with management the financial success and shortcomings of the Company
- - Link management's interest directly with those of the shareholders.
To achieve these goals, the compensation program consists of base salary
and annual and long-term incentives. The program emphasizes variable
compensation as a significant portion of the total compensation package. As
levels of executive responsibility increase, the emphasis increases on
compensation related to the long-term performance of the Company. Base salary is
generally set near competitive levels. The annual incentive plan rewards
management for achieving or surpassing annual Company performance goals and
individual goals. The long-term incentive is directly related to increasing
share price and to outperforming peers in generating total shareholder return.
Overall, the compensation program is targeted to be above market when
performance exceeds that of peers. The compensation program is tightly linked to
performance and if performance does not meet expectations, total compensation
will be below market. Thus, this compensation mix emphasizes performance and
places more of total compensation at risk. The Company also provides retirement,
health and life insurance in addition to other ancillary benefits. The benefits
offered to management are intended to be competitive.
The compensation program is composed of three elements: base salary, annual
performance bonus; and long-term incentives. In administering base salaries, the
Committee set salary ranges within formal tiers for executives. The competitive
employment market for senior executives for base salary is defined as 26 equity
Real Estate Investment Trusts ("REIT") with similar market capitalization. Base
salaries were determined to be at or slightly above midpoint for this group and
as a result, no general base salary increases were made in 1998. Some salary
adjustments were made within tiers below the most highly compensated executives
to achieve equity within the Company for comparable positions. Individual
salaries are reviewed annually.
Mr. Jernigan's base salary is based on his performance, his
responsibilities and the compensation levels for comparable positions in other
REITs. He also participates in the incentive and benefit programs provided to
senior officers of the Company. As noted above, no adjustment was made to Mr.
Jernigan's base salary in 1998. His options were awarded in accordance with the
Committee's policies as set out in this report and are described in the table
entitled "Option/SAR Grants in Last Fiscal Year".
The annual performance bonus is split equally between achieving individual
goals determined by management for each executive and Company performance based
on percentage goals in increased funds from operations ("FFO"). A target bonus
is determined for each tier. Participants may earn more (superior) or less
(threshold), or none (below threshold) depending on their individual performance
and the performance of the Company. If threshold performance goals for FFO are
not achieved, individual performance awards may be made only to executives below
the highest three executives. In 1998, the Company achieved threshold
performance. Payments under the annual performance plan, corporate performance
goal, and individual performance goals are reviewed annually.
The long-term incentive program consists of stock options and performance
units under the Company's Shareholder Value Plan for more senior executives and
a combination of stock options and restricted shares
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<PAGE> 13
of Company Common Stock and/or performance units under the Company's Shareholder
Value Plan for less senior executives (below the top three executives).
Restricted shares of Company Common Stock are currently being used for this
group because their more certain nature make them a strong retention device
during this period of building human capital for the Company. Stock options and
restricted shares of Company Common Stock vest over a five-year period. The
number of options and restricted shares of Company Common Stock are arrived at
through an annual grant methodology that provides a targeted percentage of base
salary. Moreover, the Company provided a fixed number of stock options to all
employees. The Company also has a Shareholder Value Plan that rewards executives
through Senior Vice President level at the end of a 3-year period when the
Company's 3-year total shareholder return outperforms a pre-defined comparison
group. The first such plan began January 1, 1999. Equally weighted comparisons
are made to the self-storage industry and to equity REITs in the NAREIT Equity
REIT Total Return Index. The comparison measures how well the Company did when
compared to others in the self-storage REIT sector and to all REITs operating in
a similar tax and capital environment. The measure establishes goals for 3-year
total return of being number one in the self-storage industry and in the top 25
percent of all equity REITs as a basis for maximum reward to executives in the
Plan. These two goals align with shareholder expectations.
In summary, the compensation program provides increased motivation for
executives to achieve stated goals, thus enhancing the value of the Company for
shareholders.
COMPENSATION COMMITTEE
Harry J. Thie, Chairman
C. Ronald Blankenship
Alan B. Graf, Jr.
John P. McCann
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<PAGE> 14
CERTAIN TRANSACTIONS
During 1998, payments of $223,330 were made to Security Capital Group,
Incorporated, primarily in connection with services provided by its Real Estate
Research Group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's directors and
executive officers, and persons that own more than 10% of the Company Common
Stock, file with the Securities and Exchange Commission initial reports of
ownership and reports of change in ownership of Company Common Stock and other
equity securities of the Company. Copies of these reports must be filed with the
Company. Based solely on its review of the copies of these reports filed with
it, and written representations that no other reports were required, to the
Company's knowledge, all reports required by Section 16(a) were timely filed in
1998, except a Form 3 for Francis C. Brown, III Senior Vice President of Human
Resources.
SHAREHOLDER RETURN
The following line graph sets forth a comparison of the percentage change
in the cumulative total shareholder return on the Company's Common Stock
compared to the cumulative total return of the S&P Stock Index and the National
Association of Real Estate Investment Trusts ("NAREIT") Equity REIT Total Return
Index for the period March 16, 1994, the date on which trading of the Company's
Common Stock commenced, through December 31, 1998.
The graph assumes that the shares of the Company Common Stock were bought
at the Initial Public Offering price of $21.75 per share and that the value of
the investment in each of the Company Common Stock and the indices was $100 at
the beginning of the period. The graph further assumes the reinvestment of
dividends.
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<PAGE> 15
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
STORAGE USA, INC.
THE NAREIT EQUITY REIT TOTAL RETURN
INDEX AND THE S&P 500 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NAREIT
(FISCAL YEAR COVERED) STORAGE USA S&P 500 EQUITY
<S> <C> <C> <C>
3/16/94 100 100 100
12/31/94 133.15 105.33 99.7
12/31/96 205.15 177.98 115.01
12/31/97 229.20 237.39 187.08
12/31/98 196.51 305.21 154.34
</TABLE>
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<PAGE> 16
PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
The Company has engaged PricewaterhouseCoopers LLP as its independent
public accountants since September 1993. The Board has selected
PricewaterhouseCoopers LLP as auditors for the fiscal year ended December 31,
1999. Representatives of PricewaterhouseCoopers LLP will be present at the
meeting to respond to appropriate questions and to make such statements as they
may desire.
The Board unanimously recommends a vote FOR the proposal to ratify the
selection of PricewaterhouseCoopers LLP as the Company's independent public
accountants for the fiscal year ended December 31, 1999.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2
PROPOSAL TO AMEND THE COMPANY'S 1995 EMPLOYEE
STOCK PURCHASE AND LOAN PLAN
(PROPOSAL 3)
The Board of Directors has unanimously recommended amending the 1995
Employee Stock Purchase and Loan Plan (the "Stock Purchase Plan") to increase
the number of shares of Company Common Stock issuable under the Stock Purchase
Plan from 500,000 to 750,000. The purpose of the Stock Purchase Plan is to
assist the Company in recruiting and retaining key employees with ability and
initiative by enabling employees who contribute significantly to the Company to
participate in its future success and to associate their interests with those of
the Company and its shareholders through the purchase of Company Common Stock.
ADMINISTRATION
The Stock Purchase Plan is administered by the Compensation Committee,
which has complete authority to interpret all provisions of the Stock Purchase
Plan; to prescribe the form of agreements with participants; to adopt, amend and
rescind rules and regulations pertaining to the administration of the Stock
Purchase Plan; and to make all other determinations necessary or advisable for
its administration of the Stock Purchase Plan. Any decision made, or action
taken, by the Compensation Committee or in connection with the administration of
the Stock Purchase Plan is final and conclusive.
ELIGIBILITY
Any officer of the Company (or of any affiliate, including Storage USA
Franchise Corp.) who is selected by the Compensation Committee and is not a
member of the Compensation Committee is eligible to participate in the Stock
Purchase Plan. The Compensation Committee determines, from time to time, the
number of shares of Company Common Stock that an eligible officer may purchase.
As of December 31, 1998, there were 26 such persons eligible to participate in
the Stock Purchase Plan. Under the Stock Purchase Plan, as proposed to be
amended, a total of 750,000 shares of Company Common Stock will be available for
sale (subject to adjustment in the event of stock dividends, stock splits or
similar changes in the number of outstanding shares of Company Common Stock) to
participants selected by the Compensation Committee at a price per share equal
to the closing sale price of Company Common Stock on the New York Stock Exchange
(the "NYSE") on the date on which a participant executes and delivers an
agreement to purchase Company Common Stock pursuant to the Stock Purchase Plan
(an "Agreement"), or, if the NYSE shall be closed on such date, the next
preceding date on which the NYSE shall have been open. As of December 31, 1998,
a total of 518,000 shares had been sold to 29 employees of the Company (of whom
21 were still in the Company's employ as of December 31, 1998) under the Stock
Purchase Plan. At the option of the participant, payment of the purchase price
of Company Common Stock acquired under the Stock Purchase Plan is made in full
in cash or a cash equivalent acceptable to the Compensation Committee, at the
time of execution and delivery of the participant's Agreement, or by delivery to
the Company of a note ("Note"), provided that the initial principal amount of
the Note may in no event exceed the "Good Faith Loan Value" of such Company
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<PAGE> 17
Common Stock. "Good Faith Loan Value" means "good faith loan value" as defined
in Section 207.2(e) of Regulation G of the Board of Governors of the Federal
Reserve System, 12 CFR 207.2(e). Each Note is executed and delivered by the
participant and the participant's spouse, if any; is due and payable seven years
after the date of purchase; bears interest at rates to be determined by the
Compensation Committee; becomes due and payable on the 90th day following
cessation of the participant's employment by the Company; and is secured by a
pledge of all Company Common Stock purchased by the participant pursuant to the
Stock Purchase Plan. In the discretion of the Compensation Committee and on such
terms and conditions as it may specify, pledged shares of Company Common Stock
may be released from such pledge, provided that such release shall not cause the
principal amount of the Note then outstanding to exceed the Good Faith Loan
Value of the remaining pledged shares. Until a default under the Note, all
pledged Company Common Stock is registered in the participant's name and the
participant has all rights of a shareholder of the Company with respect to such
Company Common Stock. The participant agrees to remit to the Company all
dividends paid on such Company Common Stock, to be applied first towards payment
of interest on the Note accrued to the dividend payment date, and then towards
reduction of principal of the Note. Any balance of any applied dividend payment
remaining after prepayment of the Note in full is delivered to the participant.
Before the second anniversary of the Note, no partial payment of the Note is
deemed payment in full of the purchase price of any Company Common Stock
purchased pursuant to the Stock Purchase Plan, entitling the participant to the
release of any Company Common Stock from the pledge thereof securing the Note,
but each such prepayment is deemed a pro rata partial payment of the purchase
price of all such Company Common Stock. A partial prepayment after the second
anniversary of the Note that is attributable to a source other than remitted
dividend payments may be deemed, at the discretion of the participant, payment
in full for the number of whole shares of pledged Company Common Stock obtained
by dividing the amount of such prepayment allocable to reduction of principal of
the Note by the quotient obtained by dividing the principal amount of the Note
outstanding before giving effect to such prepayment by the number of shares
pledged, and at the request of the participant, shares deemed paid for in full
are released from pledge, but only if the principal amount of the Note then
outstanding will not exceed the Good Faith Loan Value of the remaining pledged
Company Common Stock.
The Board of Directors may amend the Stock Purchase Plan from time to time;
provided that shareholder approval is required for any amendment that would
increase the number of shares of Company Common Stock that may be sold pursuant
to the Stock Purchase Plan or change the class of individuals eligible to
participate. Unless it is sooner terminated by the Board of Directors, the Stock
Purchase Plan will terminate on May 3, 2005.
No Named Officer was granted any benefits under the Stock Purchase Plan in
1998.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3.
OTHER MATTERS AT THE MEETING
The Board of Directors does not know of any matters to be presented at the
meeting other than those mentioned in this Proxy Statement. If any other matters
are properly brought before the meeting, it is intended that the proxies will be
voted in accordance with the best judgment of the person or persons voting such
proxies.
COST OF SOLICITATION
The expense of soliciting proxies and the cost of preparing, assembling and
mailing material in connection with the solicitation of proxies will be paid by
the Company. In addition to the use of mails, certain Directors, officers or
employees of the Company and its subsidiaries, who receive no compensation for
their services other than their regular salaries, may solicit and tabulate
proxies.
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<PAGE> 18
SHAREHOLDER PROPOSALS
Any qualified shareholder willing to make a proposal to be acted upon at
the Annual Meeting of Shareholders in 2000 may do so by following the procedures
prescribed in Rule 14a-8 of the Securities Exchange Act of 1934 and must submit
such proposal to be considered by the Company for inclusion in the proxy
statement, to the Secretary of the Company at its principal office in Memphis,
Tennessee. The deadline for submitting a stockholder proposal or a nomination
for director that is to be included in such proxy statement is December 7, 1999.
If the Company receives notice of a shareholder proposal after December 7, 1999,
the persons named as proxies in the proxy statement for the 2000 Annual Meeting
will have discretionary voting authority to vote on such proposal at the 2000
Annual Meeting. The chairman of the meeting may refuse to acknowledge the
introduction of any stockholder proposal not made in compliance with the
foregoing procedures.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference into this Proxy Statement the
following sections of the Company's 1998 Annual Report: (i) Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
(ii) the Company's Audited Consolidated Financial Statements.
The Company will provide without charge to each person to whom a copy of
this Proxy Statement is delivered, on the written or oral request of such person
and by first class mail or other equally prompt means within one business day of
receipt of such request, a copy of any and all of the documents referred to
above which may have been or may be incorporated by reference in this Proxy
Statement. Such written or oral request should be directed to Storage USA, Inc.,
165 Madison Avenue, Suite 1300, Memphis, Tennessee 38103, Attention: Investor
Relations ((901) 252-2000).
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<PAGE> 19
APPENDIX A
STORAGE USA, INC.
1995 EMPLOYEE STOCK PURCHASE AND LOAN PLAN
ARTICLE I
DEFINITIONS
1.01. Affiliate means any "subsidiary" or "parent corporation" (within the
meaning of Section 425 of the Code) of the Company.
1.02. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant pursuant to which the
Participant agrees to purchase Common Stock pursuant to this Plan.
1.03. Board means the Board of Directors of the Company.
1.04. Code means the Internal Revenue Code of 1986, as amended.
1.05. Committee means the Compensation Committee of the Board.
1.06. Common Stock means the common stock of the Company.
1.07. Company means Storage USA, Inc.
1.08. Escrow Agreement means a written agreement (including any amendment
or supplement thereto) between the Company, a Participant and an escrow agent
effecting the escrow contemplated by Article XIII.
1.09. Fair Market Value means, on any given date, the closing sale price
of the Common Stock on the NYSE on such date, or, if the NYSE shall be closed
on such date, the next preceding date on which the NYSE shall have been open.
1.10. Good Faith Loan Value means "good faith loan value" as defined in
Section 207.2(e) of Regulation G of the Board of Governors of the Federal
Reserve System, 12 CFR 207.2(e).
1.11. Note means the Participant's promissory note evidencing his
obligation to pay for Common Stock as provided in Section 7.01.
1.12. Note Year means any period of one year beginning with the date of
the Note or any anniversary of such date.
1.13. NYSE means the New York Stock Exchange.
1.14. Participant means an employee of the Company or of an Affiliate who
satisfies the requirements of Article IV and is selected by the Committee to
participate in the Plan.
1.15. Plan means the Storage USA, Inc. 1995 Employee Stock Purchase and
Loan Plan.
1.16. Plan Documents means the Plan, the Note, the Agreement and the
Escrow Agreement.
1.17. Pledged Shares means all shares of Common Stock which at the time of
determination are pledged to secure the Note.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company in recruiting and retaining
key employees with ability and initiative by enabling employees who contribute
significantly to the Company or an Affiliate to participate in its future
success and to associate their interests with those of the Company and its
shareholders through the purchase of Common Stock. The proceeds received by the
Company from the sale of Common Stock pursuant to this Plan shall be used for
general corporate purposes.
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ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
authority to sell Common Stock to Participants upon such terms (not inconsistent
with the provisions of this Plan) as the Committee may consider appropriate.
Such terms may include, but are not limited to, conditions (in addition to those
contained in this Plan) relating to the obligation of a Participant to sell, or
of the Company to purchase, Common Stock upon the Participant's termination of
employment with the Company and its Affiliates or upon the Participant's death.
In addition, the Committee shall have complete authority to interpret all
provisions of this Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee. Any decision made, or action taken, by the Committee or in
connection with the administration of this Plan shall be final and conclusive.
No member of the Committee shall be liable for any act done in good faith with
respect to this Plan or any Agreement. All expenses of administering this Plan
shall be borne by the Company.
ARTICLE IV
ELIGIBILITY
4.01. General. Any officer of the Company or of any Affiliate (including
any corporation that becomes an Affiliate after the adoption of this Plan) who
is selected by the Committee may purchase Common Stock pursuant to this Plan.
A person who is a member of the Committee may not participate in this Plan.
4.02. Offers. The Committee will specify the number of shares of Common
Stock that each Participant may purchase under this Plan and the terms and
conditions of each purchase. In determining the number of shares of Common Stock
that each Participant may purchase, the Committee shall take into account the
Fair Market Value of the Common Stock. Each sale of Common Stock under this Plan
shall be evidenced by an Agreement which shall be subject to applicable
provisions of this Plan and to such other provisions not inconsistent with this
Plan as the Committee may approve for the particular sale transaction.
ARTICLE V
NUMBER OF SHARES AVAILABLE FOR PURCHASE
The maximum aggregate number of shares of Common Stock that may be issued
under this Plan is 400,000 subject to adjustment as provided in Article VIII.
ARTICLE VI
PURCHASE PRICE
The price per share for Common Stock purchased by a Participant under
this Plan shall be the Fair Market Value on the date the Participant executes
and delivers an Agreement.
ARTICLE VII
PAYMENT OF PURCHASE PRICE
7.01. Payment. At the option of the Participant, payment of the purchase
price of Common Stock required under this Plan shall be made in full in cash or
a cash equivalent acceptable to the Committee, at the time of execution and
delivery of the Participant's Agreement, or by delivery to the Company of a Note
in principal amount equal to the purchase price of the shares covered by the
Agreement, less any partial cash payment made at the time of execution and
delivery, or for the full purchase price if no such partial cash payment is
made, provided that the initial principal amount of the Note may in no event
exceed the Good Faith Loan Value of such Common Stock.
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7.02. Terms of Note. Each Note shall be in substantially the form of
Exhibit 1 hereto, with such variations conforming to this paragraph as shall be
appropriate under the circumstances. Each Note shall be executed and delivered
by the Participant and the Participant's spouse, if any; shall be due and
payable seven years after the date of purchase; shall bear interest payable
quarterly on the first day of each February, May, August and November; and shall
be secured by a pledge of all Common Stock purchased by the Participant pursuant
to the Plan. In the discretion of the Committee and on such terms and conditions
as it may specify, Pledged Shares may be released from such pledge, provided
that such release shall not cause the principal amount of the Note then
outstanding to exceed the Good Faith Loan Value of the remaining Pledged Shares.
7.03. Shareholder Rights in Pledged Shares. Until a default under the
Note, all Pledged Shares shall be registered in the Participant's name and the
Participant shall have all rights of a shareholder of the Company with respect
to such Pledged Shares.
7.04. Dividends on Pledged Shares. The Participant shall agree to remit to
the Company all dividends paid on the Pledged Shares, to be applied first
towards payment of interest on the Note accrued to the dividend payment date,
and then towards reduction of principal of the Note. Any balance of any applied
dividend payment remaining after prepayment of the Note in full shall be
delivered to the Participant.
7.05. Effect of Prepayment of Note. During the first two Note Years, no
partial prepayment of the Note shall be deemed payment in full of the purchase
price of any Common Stock purchased pursuant to this Plan, entitling the
Participant to release of any Pledged Shares from the pledge thereof securing
the Note, but each such prepayment shall be deemed a pro rata partial payment of
the purchase price of all such Common Stock. A partial prepayment after the
second Note Year which is attributable to a source other than dividend payments
remitted pursuant to Section 7.04 may at the discretion of the Participant be
deemed payment in full for the number of whole Pledged Shares obtained by
dividing the amount of such prepayment allocable to reduction of principal of
the Note by the quotient of division of the principal amount of the Note
outstanding before giving effect to such prepayment by the number of Pledged
Shares, and at the request of the Participant, Pledged Shares deemed paid for in
full shall be released from pledge, but only if the principal amount of the Note
then outstanding will not exceed the Good Faith Loan Value of the remaining
Pledged Shares.
ARTICLE VIII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or other similar changes in
capitalization, then this Plan shall continue to apply to the number and kind of
securities which a holder of the number of shares of Common Stock then subject
to this Plan immediately before the effective time of such change in
capitalization would hold immediately thereafter.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, this
Plan.
ARTICLE IX
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Common Stock shall be issued, no certificates for shares of Common
Stock shall be delivered, and no payment shall be made under this Plan except in
compliance with all applicable federal and state laws and regulations
(including, without limitation, withholding tax requirements) and the rules of
all domestic stock exchanges on which the Company shares may be listed. The
Company shall have the right to rely on an opinion of its counsel as to such
compliance. Any share certificate issued to
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evidence Common Stock purchased under this Plan may bear such legends and
statements as the Committee may deem advisable to assure compliance with federal
and state laws and regulations. No Common Stock shall be issued, no certificate
for shares shall be delivered, and no payment shall be made under this Plan
until the Company has obtained such consent or approval as the Committee may
deem advisable from regulatory bodies having jurisdiction over such matters.
ARTICLE X
GENERAL PROVISIONS
10.01. Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any individual any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.02. Unfunded Plan. The Plan shall be unfunded and the Company shall not
be required to segregate any assets at any time for purposes of this Plan. Any
liability of the Company to any person under this Plan shall be based solely
upon any contractual obligations that may be created pursuant to this Plan. No
such obligation of the Company shall be deemed to be secured by any pledge of,
or other encumbrance on, any property of the Company.
10.03. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
ARTICLE XI
AMENDMENT
The Board may amend from time to time or terminate this Plan; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment (i) increases the aggregate number of shares of Common
Stock that may be sold pursuant to this Plan or (ii) changes the class of
individuals eligible to become Participants.
ARTICLE XII
DURATION OF PLAN
No Common Stock may be sold under this Plan after May 3, 2005.
ARTICLE XIII
EFFECTIVE DATE OF PLAN
The Plan shall be effective upon its approval by the affirmative vote of a
majority of the shares present or represented, and entitled to vote at a duly
held meeting of the Company's shareholders.
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EXHIBIT 1
PROMISSORY NOTE
$ Columbia, Maryland
FOR VALUE RECEIVED, the undersigned (the "Officer" or the "Maker")
and, if the Officer is married at the date of execution of this Note, the
undersigned spouse of the Officer (also a "Maker"), promises (or if there shall
be two Makers, both jointly and severally promise) to pay to the order of
STORAGE USA, INC. (the "Company"), on , at the principal office of the
Company in Memphis, Tennessee, or at such other place as the holder hereof may
designate in writing, in lawful money of the United States of America, the sum
of Dollars ($ ), with interest thereon payable in arrears
on the first days of each February, May, August and November until this Note is
paid in full, at the rate of % per annum.
Optional Prepayment. The Maker (or if there shall be two Makers, each
Maker) shall have the right to prepay this Note in whole at any time or in part
from time to time without penalty on any amounts so prepaid.
Mandatory Prepayment. This Note has been executed and delivered in
payment of the purchase price of shares of Common Stock of the Company (the
"Shares") purchased by the Officer pursuant to the Company's 1995 Employee Stock
Purchase and Loan Plan. If at any time before payment of this Note in full, the
Officer shall sell any of the Shares, the Maker agrees (or if there shall be two
Makers, both jointly and severally agree) to prepay this Note immediately upon
receipt of the net proceeds of such sale in an amount equal to the lesser of
100% of such net proceeds or the outstanding principal of this Note and accrued
interest to the date of such prepayment.
All prepayments, mandatory or optional, shall be applied first to payment
of accrued interest and then to reduction of outstanding principal.
If any payment under this Note is not made when due, all unpaid principal
and accrued interest under this Note may, at the option of the holder, be
declared immediately due and payable. If the Officer ceases to be employed by
the Company or by any "subsidiary" or "parent corporation" (within the meaning
of Section 425 of the Internal Revenue Code of 1986, as amended) of the Company,
all such principal and accrued interest shall become due and payable on the 90th
day following cessation of such employment without declaration or notice of any
kind. If proceedings under the federal Bankruptcy Code or under any other law,
state or federal, for the relief of debtors are filed by or against the Maker
(or if there shall be two Makers, either Maker) and not dismissed within 60 days
after filing, all such principal and accrued interest shall become immediately
due and payable without declaration or notice of any kind. No failure by the
holder of this Note to exercise any right hereunder shall be or be deemed to be
a waiver of such right or of any remedy consequent thereon.
Presentment, demand and notice of dishonor are hereby waived, and the
Maker agrees (or if there shall be two Makers, both jointly and severally agree)
to be bound for the payment hereof notwithstanding any agreement for the
extension of the due date of any payment made by the holder after the maturity
thereof.
The Maker agrees (or if there shall be two Makers, both jointly and
severally agree) to pay all collection expenses, court costs and reasonable
attorneys' fees incurred in collection of this Note or any part hereof.
References to the Maker or Makers shall include the Maker or Makers and all
endorsers, sureties, guarantors and other obligors hereon.
A-5
<PAGE> 24
This Note is secured by a pledge of the Shares pursuant to the terms of the
Plan. Dividends on the Shares shall be applied towards prepayment hereof, and
Shares shall or may be released from such pledge, all as provided in the Plan.
(SEAL)
---------------------------------
(SEAL)
---------------------------------
A-6
<PAGE> 25
STORAGE USA, INC.
AMENDMENT NO. 1 TO
1995 EMPLOYEE STOCK PURCHASE AND LOAN PLAN
This Amendment No. 1, dated as of May 7, 1997, to the Storage USA, Inc.
1995 Employee Stock Purchase and Loan Plan recites and provides as follows:
A. At a meeting held on May 7, 1997, the Board of Directors of Storage
USA, Inc. (the "Company") determined to amend the Company's 1995 Employee Stock
Purchase and Loan Plan (the "Plan") to increase the number of shares of the
Company's common stock, par value $.01 per share ("Common Stock"), issuable
thereunder from 400,000 to 500,000 and to submit such amendment to the
shareholders of the Company at the annual meeting to be held May 7, 1997 (the
"Annual Meeting"), pursuant to Article XI of the Plan.
B. At the Annual Meeting, the holders of a majority of the Company's
shares of Common Stock present and entitled to vote approved the amendment to
the Plan.
NOW, THEREFORE, Article V of the Plan is struck out and the following
substituted therefor:
The maximum aggregate number of shares of Common Stock that
may be issued under this Plan is 500,000 (subject, however, to
adjustments as provided in Article VIII).
IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be
executed as of the date first above written.
STORAGE USA, INC.
By: /s/ Christopher P. Marr
----------------------------------
Christopher P. Marr
Senior Vice President
<PAGE> 26
APPENDIX B
STORAGE USA, INC.
MEMPHIS, TENNESSEE 38103
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING MAY 5, 1999 CUSIP 861907 10 3
The undersigned hereby appoints Dean Jernigan and Christopher P. Marr and
each of their proxies (and if the undersigned is a proxy, as substitute proxies)
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all of the shares of Common Stock of
the Company which the undersigned is entitled to vote at the annual meeting of
shareholders to be held at 10:00 a.m. on May 5, 1999, or any adjournment
thereof.
The Board of Directors unanimously recommends a vote "FOR" each of the
following proposals
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed
(except as marked to the contrary) below
</TABLE>
C. Ronald Blankenship, Howard P. Calhoun, Alan B. Graf, Jr., Dean Jernigan, Mark
Jorgensen, Caroline S. McBride,
John P. McCann, William D. Sanders, Harry J. Thie
To withhold authority to vote for any individual nominee, write that name on the
line below.
- --------------------------------------------------------------------------------
2. To ratify the selection of the auditors for the fiscal year ending December
31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to Storage USA, Inc.'s 1995 Employee Stock Purchase
and Loan Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby acknowledges receipt of notice of said meeting and
the related Proxy Statement.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AND MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
Please sign exactly as your
name appears hereon. When
shares are held by joint
tenants, only one of such
persons need sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by the
president or other authorized
officer. If a partnership,
please sign in partnership
name by an authorized person.
Please mark, sign, date and
return the proxy card
promptly, using the enclosed
envelope.
------------------------------
Signature
Date: , 1999
----------------------
