Exhibit 10.1

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

by and among

 

PRISA III CO-INVESTMENT LLC, A DELAWARE LIMITED LIABILITY COMPANY,

 

and

 

EXTRA SPACE PROPERTIES SIXTY THREE LLC

 

Dated as of April 13, 2012

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I. DEFINITIONS

1

 

 

 

Section 1.1

Definitions

1

 

 

 

ARTICLE II. TRANSFER OF INTERESTS

4

 

 

 

Section 2.1

Purchase of Interests

4

 

 

 

ARTICLE III. Closing

4

 

 

 

Section 3.1

Closing

4

 

 

 

ARTICLE IV. CLOSING DELIVERABLES

4

 

 

 

Section 4.1

Closing Deliverables

4

 

 

 

ARTICLE V. COVENANTS

5

 

 

 

Section 5.1

Further Assurances

5

Section 5.2

Operations in the Ordinary Course; Access to Information

5

Section 5.3

Certain Notices

6

Section 5.4

Transfer Taxes

6

Section 5.5

Other Transaction Costs

6

Section 5.6

Prorations

7

Section 5.7

Post-Closing Collections

7

Section 5.8

Post Closing Adjustment

7

Section 5.9

Repayment of the Loan; Indemnity Agreement

8

Section 5.10

Filing of Final Tax Returns

8

Section 5.11

As-Is Sale

8

 

 

 

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

9

 

 

 

Section 6.1

Representations and Warranties of ESS

9

Section 6.2

Representations and Warranties of PRIII Member

10

Section 6.3

Survival of Representations and Warranties

12

Section 6.4

Maximum Aggregate Liability

13

 

 

 

ARTICLE VII. CONDITIONS TO CLOSING

13

 

 

 

Section 7.1

Conditions for the Benefit of ESS

13

Section 7.2

Conditions for the Benefit of PRIII Member

13

 

 

 

ARTICLE VIII. DEFAULT

14

 

 

 

Section 8.1

To PRIII Member’s Obligations

14

Section 8.2

To ESS’s Obligations

14

 

 

 

ARTICLE IX. ESCROW PROVISIONS

15

 

 

 

ARTICLE X. MISCELLANEOUS

16

 

 

 

Section 10.1

Notices

16

Section 10.2

Entire Agreement

18

 

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TABLE OF CONTENTS (continued)

 

 

 

Page

 

 

 

Section 10.3

Governing Law

18

Section 10.4

Construction

18

Section 10.5

Captions - Pronouns

18

Section 10.6

Binding Effect

18

Section 10.7

Severability

18

Section 10.8

Interpretation

19

Section 10.9

No Third Party Beneficiaries

19

Section 10.10

Counterparts

19

Section 10.11

Submission to Jurisdiction

19

Section 10.12

Assignment

19

Section 10.13

Amendments

19

Section 10.14

Publicity

20

Section 10.15

Facsimile/Email Signatures

20

Section 10.16

WAIVER OF JURY TRIAL

20

 

Exhibit A

List of Properties

 

 

 

 

Exhibit B

Intentionally Omitted

 

 

 

 

Exhibit C

Form of Indemnity

 

 

 

 

Exhibit D

Form of Assignment

 

 

 

 

Exhibit E

Form of Non-Foreign Affidavit

 

 

 

 

Schedule 1

Purchase Price Calculation

 

 

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”) is made as of
April 13, 2012 by and among PRISA III CO-INVESTMENT LLC, a Delaware limited
liability company (“PRIII Member”) and EXTRA SPACE PROPERTIES SIXTY THREE LLC, a
Delaware limited liability company (“ESS”).  Each of PRIII Member and ESS, as
applicable, is sometimes referred to herein, individually, as a “Party” and,
collectively, as the “Parties.”

 

RECITALS

 

A.                                    ESS and PRIII Member are the sole members
of ESS PRISA III LLC (the “JV”).

 

B.                                    ESS desires to acquire 100% of PRIII
Member’s interest in the JV (the “Interests”), such Interests to be free and
clear of any debt, encumbrances or adverse claims.

 

C.                                    As a result of the foregoing, immediately
following the Closing, ESS will own 100% of the Interests.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and for other good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I.
DEFINITIONS

 

Section 1.1                                   Definitions.  Capitalized words
and phrases used and not otherwise defined in this Agreement shall have the
following meanings:

 

“Agreement” is defined in the Preamble.

 

“Assignment” that certain Assignment and Assumption of Membership Interests in
the form attached hereto as Exhibit D.

 

“Business Day” means any day except (i) a Saturday, (ii) a Sunday or (iii) any
other day on which commercial banks are required or authorized by law to be
closed in the State of Utah or the State of New Jersey.

 

“Closing Date” means July 2, 2012.

 

“Closing Documents” means those documents set forth in Section 3.2.

 

“Closing Escrow” is defined in Section 4.2(a).

 

“Closing” is defined in Section 3.1.

 

“Closing Statement” is defined in Section 4.1(a).

 

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“Deposit” is defined in Section 2.1.

 

“Delinquent Rents” is defined in Section 5.7.

 

“Delinquent Rents Credit” is defined in Section 5.7.

 

“Designated Representatives” shall mean Scott M. Dalrymple, Gerard Norcia and
James Street.

 

“Disagreement Notice” is defined in Section 5.8.

 

“Escrow Agent” means First American Title Insurance Company, National Commercial
Services, 3281 East Guasti Road, Suite 440, Ontario, California 91761, Attn: 
Mr. Tom Zowarka.

 

“Escrow Deposits” is defined in Article IX.

 

“ESMI” is defined in Section 6.2.

 

“ESS” is defined in the Preamble.

 

“Final Accounting” is defined in Section 5.8.

 

“Indemnity Agreement” is defined in Section 5.9.

 

“Interests” is defined in Recital B.

 

“JV Agreement” means that certain Amended and Restated Operating Agreement of
the JV, dated as of July 14, 2005, as amended.

 

“JV” is defined in Recital A.

 

“Liabilities” shall mean, collectively, any and all problems, conditions,
losses, costs, damages, claims, liabilities, expenses, demands or obligations of
any kind or nature whatsoever.

 

“Lists” is defined in Section 6.1(f).

 

“Loan” means that certain loan in the original principal amount of $145,000,000
made to some of the Subsidiaries on July 14, 2005 by Wachovia Bank, N.A.

 

“OFAC” is defined in Section 6.1(f).

 

“Order” is defined in Section 6.1(f)

 

“Orders” is defined in Section 6.1(f).

 

“Party” or “Parties” has the meaning set forth in the Preamble.

 

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“Person” means and includes an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization, a government
or any department or agency thereof, or any entity similar to any of the
foregoing.

 

“Post Closing Adjustment Date” is defined in Section 5.8.

 

“PRIII Member’s Knowledge” or words of similar import shall refer only to the
actual (and not constructive) knowledge of the Designated Representatives and
shall not be construed to refer to the knowledge of any other party, or to
impose or have imposed upon the Designated Representatives any duty to
investigate the matters to which such knowledge, or the absence thereof,
pertains, including, but not limited to, the contents of the files, documents
and materials made available to or disclosed to ESS or the contents of files
maintained by the Designated Representatives.  There shall be no personal
liability on the part of the Designated Representatives arising out of any of
the PRIII Member’s Warranties.

 

“PRIII Member’s Limited Warranties” means those representations and warranties
set forth in Section 6.2(g) and Section 6.2(h).

 

“PRIII Member’s Other Warranties” means those representations and warranties set
forth in Sections 6.2(a)-6.2(f) and 6.2(i).

 

“PRIII Member’s Warranties” means, collectively, the PRIII Member’s Limited
Warranties and the PRIII Member’s Other Warranties.

 

“PRIII Member” is defined in the Preamble.

 

“Properties” means those certain properties owned by the Subsidiaries and set
forth on Exhibit A.

 

“Property Management Agreement” as defined in Section 6.2.

 

“Property Management Fees” as defined in Section 6.2.

 

“Proration Date” is defined in Section 5.6.

 

“Proration Recalculation” is defined in Section 5.8.

 

“Purchase Price” is defined in Section 2.1.

 

“Release” is defined in Section 10.14.

 

“Review” is defined in Section 5.8.

 

“Subsidiary” and “Subsidiaries” means individually and/or collectively, ESS
PRISA III Owner LLC, a Delaware limited liability company, ESS PRISA III GP,
LLC, a Delaware limited liability company, ESS PRISA III TX LP, a Delaware
limited partnership, and Acquisition Framingham Concord Street LLC.

 

“Title Company” means Escrow Agent (or its successor in interest).

 

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“Transaction” shall mean the transaction contemplated by this Agreement.

 

“Transfer Taxes” is defined in Section 4.1(a).

 

“Transfer Tax Forms” is defined in Section 4.1(a).

 

ARTICLE II.
TRANSFER OF INTERESTS

 

Section 2.1                                   Purchase of Interests.  At the
Closing, subject to the terms and conditions of this Agreement, ESS agrees to
purchase and assume from PRIII Member, and PRIII Member agrees to sell and
assign to ESS, the Interests for an amount equal to the amount PRIII Member is
entitled to receive under the terms of the JV Agreement if the Subsidiaries and
the Company, as the case may be, sold the Properties free and clear of all items
and encumbrances, including the Loan, for a purchase price equal to
$322,000,000, as calculated in connection with a sale of the Interests to ESS
pursuant to Section 9.6 of the JV Agreement (the amount to be paid to PRIII
Member, the “Purchase Price”), which amount will be paid in cash to PRIII Member
at Closing.  PRIII Member’s estimate of the Purchase Price as of the date of
this Agreement, without taking into account any prorations, is set forth on
Schedule 1 attached hereto.

 

(a)         The Purchase Price shall be paid as follows:

 

(i)                                     ESS shall deliver to Escrow Agent within
one (1) business day following execution of this Agreement by bank wire of
immediately available funds the sum of Ten Million Dollars ($10,000,000)
(together with interest earned thereon, the “Deposit”).

 

(ii)                                  ESS shall, no later than 2 p.m. Eastern
Time, on the Closing Date deliver to Escrow Agent, by bank wire transfer of
immediately available funds, a sum equal to the balance of the Purchase Price.

 

The Deposit shall be held in accordance with the provisions of Article IX.

 

ARTICLE III.
CLOSING

 

Section 3.1                                   Closing.  ESS and PRIII Member
shall close the Transaction on the Closing Date (“Closing”) through an escrow
closing with the Escrow Agent.

 

ARTICLE IV.
CLOSING DELIVERABLES

 

Section 4.1                                   Closing Deliverables.

 

(a)         On or before the Closing Date, ESS shall deliver or cause to be
delivered into escrow with the Escrow Agent (the “Closing Escrow”) each of the
following:

 

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(i)                                     At least one Business Day prior to the
Closing Date, four executed counterparts of the Assignment;

 

(ii)                                  At least one Business Day prior to the
Closing Date, two executed originals of the Indemnity Agreement;

 

(iii)                               At least one Business Day prior to the
Closing Date, one executed counterpart of the settlement statement reflecting
the prorations and adjustments as agreed to between ESS and PRIII Member (the
“Closing Statement”);

 

(iv)                              Pursuant to Section 2.1(a) above, the Purchase
Price; and

 

(v)                                 At least one Business Day prior to the
Closing Date, one executed counterpart, as applicable, of any completed returns,
questionnaires, applications or other documents (collectively, the “Transfer Tax
Forms”) regarding any real property transfer or gain, sales, use, transfer,
value added, stock transfer or stamp taxes, any transfer, recording,
registration and other fees and any similar taxes that become payable in
connection with the Transaction (together with any related interests, penalties
or additions to tax, the “Transfer Taxes”).

 

(b)         At least one Business Day prior to the Closing Date, PRIII Member
shall deliver or cause to be delivered into the Closing Escrow each of the
following:

 

(i)                                     Four executed counterparts of the
Assignment;

 

(ii)                                  One executed non-foreign affidavit in the
form attached hereto as Exhibit E;

 

(iii)                               One executed counterpart of the Closing
Statement; and

 

(iv)                              One executed counterpart, as applicable, of
the completed Transfer Tax Forms.

 

ARTICLE V.
COVENANTS

 

Section 5.1                                   Further Assurances.  The Parties
shall use their commercially reasonable efforts to take, or cause to be taken,
all actions necessary or appropriate to consummate the Transaction; provided,
however, that nothing in this Section 5.1 shall require any Party to incur any
costs or expenses other than (a) such costs and expenses as may be specified
herein as being the responsibility of such Party and (b) any costs and expenses
incurred in connection with the performance or satisfaction of such Party’s
express obligations under any other provision of this Agreement.

 

Section 5.2                                   Operations in the Ordinary Course;
Access to Information.  From the date hereof until Closing and as permitted by
law: (i) the Parties and the JV shall

 

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continue to operate in the ordinary course of business in accordance with the
terms of the JV Agreement and (ii) each Party shall afford the other Parties
access to such information as such other Parties may reasonably request in order
to complete the Transaction; provided, however, that nothing in this Section 5.2
shall require PRIII Member or ESS to disclose any information, which such Party
reasonably deems privileged or confidential.  The Parties acknowledge that on
January 27, 2012, PRIII Member gave ESS a “Sale Notice” (as defined in
Section 9.6(c) of the JV Agreement (the “Sale Notice”).  Notwithstanding
anything to the contrary in this Agreement, the Parties agree that:

 

(a)   PRIII Member shall be deemed to have withdrawn the Sale Notice with the
consent of ESS and neither PRIII Member nor ESS shall have any further right or
obligation under or with respect to the Sale Notice in the same manner and to
the same extent as if PRIII Member had not given ESS the Sale Notice.

 

(b)   Until the termination of this Agreement, neither Party shall have the
right to sell its “Entire Interest” (as defined in the JV Agreement) pursuant to
Section 9.2 of the JV Agreement.

 

(c)   Until the termination of this Agreement, PRIII Member shall not have any
right to give a “Sale Notice” within the meaning of or pursuant to
Section 9.6(c) of the JV Agreement.

 

(d)   Until the termination of this Agreement, neither Party shall have the
right to give a “Sale Proposal” within the meaning of Section 9.7(a) of the JV
Agreement.

 

Section 5.3            Certain Notices.  From the date hereof until Closing,
each Party shall promptly inform the other Parties in writing of (a) any event
or occurrence that could be reasonably expected to have a material adverse
effect on its ability to perform its obligations under this Agreement or to
execute, deliver or perform the other Closing Documents to which it is a party
or (b) any breach of its representations and warranties that cannot or will not
be cured by the Closing.

 

Section 5.4            Transfer Taxes.  All Transfer Taxes incurred in
connection with this consummation and Closing of the Transaction shall be paid
by either PRIII Member or ESS in accordance with the custom of the location of
the applicable Property.  The provisions of this Section 5.4 shall survive the
Closing and not be merged therein.

 

Section 5.5            Other Transaction Costs.  All costs of title insurance
shall be paid by ESS, except that PRIII Member shall pay half of the actual
costs of the so-called owner’s extended coverage title insurance premium
(including such endorsements to such owner’s policies as ESS may, in ESS’ sole
discretion, request) incurred by ESS at Closing in those states in which it is
custom that a seller of real property pay the costs of base title insurance,
provided, however, in no event shall PRIII Member pay an amount in excess of
$160,000 in title insurance costs in connection with this Transaction.  ESS
shall pay the cost of any surveys or survey updates.  Each Party shall pay its
own legal fees and disbursements in connection with the Transaction.  ESS shall
pay one-half of Escrow Agent’s escrow fee and PRIII Member shall pay

 

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one-half of Escrow Agent’s escrow fee.  Except as otherwise specified herein,
each Party shall bear any costs and expenses incurred by such Party in
connection with the Transaction.

 

Section 5.6            Prorations.  All prorations of real estate taxes, rents
and other items, to be prorated shall be made as of 12:00 p.m. on June 30, 2012
(the “Proration Date”) taking into account income and expenses through and
including June 30, 2012.  Prorations shall be based on the Parties then best
estimate of such amounts taking into account all then available information.  At
least five (5) days prior to Closing, PRIII Member shall provide ESS its good
faith determination of the Purchase Price as set forth herein.  ESS shall review
and approve such determination promptly and prior to Closing, such approval not
to be unreasonably withheld or delayed. Notwithstanding that the Closing Date is
July 2, 2012, all prorations will be done as of the Proration Date and, for the
avoidance of doubt, ESS shall be entitled to all income and obligated for all
expenses of the Company and the Subsidiaries beginning as of July 1, 2012.

 

Section 5.7            Post-Closing Collections.  “Delinquent Rents” shall not
be prorated and shall remain the property of the JV.  PRIII Member shall not
have any interest in or right to Delinquent Rents after the Closing.  As used
herein, “Delinquent Rents” means all rent due and other revenue payable to the
JV or any of the Subsidiaries as of the Proration Date and applicable, on an
accrual basis, to any period of time preceding the Proration Date, including,
but not limited to, checks received after the Proration Date, but applicable to
a period occurring prior to the Closing Date.  Notwithstanding anything to the
contrary contained herein, PRIII Member shall be entitled to a credit at Closing
in the amount of $100,000 to account for the fact that the parties agree not to
prorate Delinquent Rents (the “Delinquent Rents Credit”).

 

Section 5.8            Post Closing Adjustment.  No later than January 31, 2013
(the “Post Closing Adjustment Date”), ESS shall (a) prepare and provide to PRIII
Member a final accounting for the operations of the JV and the Subsidiaries
through the Proration Date (the “Final Accounting”) and (b) recalculate the
prorations and adjustments to the Purchase Price as of the Proration Date,
excluding the Delinquent Rents Credit which shall not be subject to adjustment
(the “Proration Recalculation”) and provide a copy of the Proration
Recalculation to PRIII Member.  ESS and PRIII Member shall each have an
opportunity to provide the other with a review (a “Review”) of the Final
Accounting and/or the Proration Recalculation setting forth in reasonable detail
any discrepancy which it has discovered in the prorations made as of the
Proration Date or in either the Final Accounting or the Proration
Recalculation.  If ESS or PRIII Member does not provide the other party with a
Review within thirty (30) days after receipt of the Final Accounting and the
Proration Recalculation, such party shall be deemed to be in agreement with the
Final Accounting and the Proration Recalculation.  If either party to which any
such Review is presented disagrees with such Review, it shall give written
notice (the “Disagreement Notice”) to the other party within ten (10) business
days after receipt of such Review (and, if no such notice is given, the party to
which such Review was presented shall be deemed to agree with the Review).  The
Disagreement Notice shall state in reasonable detail all points of
disagreement.  If ESS and PRIII Member do not resolve such disagreement within
thirty (30) days after delivery of the Disagreement Notice, the matter(s) shall
be referred to PriceWaterhouse Coopers for final determination with the costs of
such accountant to be paid 50% by PRIII Member and 50% by ESS.  If the parties
agree or are deemed to agree with either the Final Accounting and the Proration
Recalculation or the Review or if there is a determination by PriceWaterhouse
Coopers, then the party in whose favor any error was made shall pay to the

 

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other party, in cash, the amount owed within ten (10) days of the date of such
agreement or deemed agreement or such determination, as applicable.  The
provisions of this Section 5.8 shall survive the Closing and not be merged
therein.

 

Section 5.9            Repayment of the Loan; Indemnity Agreement. The Parties
acknowledge and agree that the Subsidiaries shall continue to be obligated for
the repayment of the Loan after the Closing and the assets of the Company and
the Subsidiaries shall continue to secure the repayment of the Loan after the
Closing. At Closing ESS shall cause Extra Space Storage Inc. to enter into an
indemnity agreement in the form attached hereto as Exhibit C (the “Indemnity
Agreement”) for the benefit of PRIII Member.  The provisions of this Section 5.9
shall survive the Closing and not be merged therein.

 

Section 5.10         Filing of Final Tax Returns. ESS shall, at the JV’s expense
and in a timely manner, prepare and file final tax returns for the JV, the
Subsidiaries and the Properties in accordance with applicable state and federal
laws.  ESS shall provide drafts of the final tax returns for review and approval
by PRIII Member prior to the filing of such tax returns. The obligations set
forth this Section 5.10 shall survive Closing and not be merged therein.

 

Section 5.11         As-Is Sale.  ESS acknowledges and agrees as follows:

 

(a)                                  Prior to ESS’s execution of this Agreement,
ESS has conducted (or has waived its right to conduct) all such due diligence as
ESS considered necessary or appropriate (including due diligence with respect to
hazardous materials or the environmental condition of the Properties).

 

(b)                                 Except for PRIII Member’s Warranties, the
Interests shall be sold, and ESS shall accept possession of the Interests on the
Closing Date, “AS IS, WHERE IS, WITH ALL FAULTS”, with no right of setoff or
reduction in the Purchase Price.

 

(c)                                  Except for PRIII Member’s Warranties, PRIII
Member shall not be deemed to have made any verbal or written representations,
warranties, promises or guarantees (whether express, implied, statutory or
otherwise) to ESS with respect to the Interests or the Properties.

 

(d)                                 Except for PRIII Member’s Warranties, upon
which ESS has relied in making ESS’ decision to purchase the Interests, ESS has
independently confirmed to its satisfaction all information that it considers
material to its purchase of the Interests or the Transaction.

 

In addition, ESS expressly understands and acknowledges that it is possible that
unknown Liabilities may exist with respect to the Interests and Property and
that with the exception of matters covered by PRIII Member’s Warranties, ESS
explicitly took that possibility into account in determining and agreeing to the
Purchase Price, and that a portion of such consideration, having been bargained
for between parties with the knowledge of the possibility of such unknown
Liabilities shall be given in exchange for a full accord and satisfaction and
discharge of all such Liabilities.  The terms of this Section 5.11 shall survive
the Closing and not be merged therein.

 

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ARTICLE VI.
REPRESENTATIONS AND WARRANTIES

 

Section 6.1            Representations and Warranties of ESS.  ESS hereby makes
the following representations and warranties to PRIII Member as of the date
hereof and as of the Closing Date:

 

(a)   Organization and Authority.  ESS has been duly organized and is validly
existing under the laws of the State of Delaware.  ESS has the requisite right
and authority to enter into this Agreement and the exhibits hereto and to
consummate or cause to be consummated the Transaction and the exhibits hereto. 
The person signing this Agreement on behalf of ESS is authorized to do so.

 

(b)   Authorization; Enforceability.  This Agreement has been duly authorized,
executed and delivered by ESS and constitutes the valid and binding obligation
of ESS enforceable against it in accordance with its terms, except as
enforceability may be affected by (i) the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors; (ii) the effect of general principles of equity and the
limitation of certain remedies by certain equitable principles of general
applicability; and (iii) the fact that the rights to indemnification hereunder
may be limited by federal or state securities laws.

 

(c)   No Breach; No Violation.  The execution and delivery of this Agreement by
ESS, the compliance by ESS with the provisions hereof and the consummation by
ESS of the Transaction will not result in a material breach or material
violation of (i) any governmental requirement applicable to ESS now in effect;
(ii) the organizational documents of ESS; (iii) any judgment, order or decree of
any governmental authority binding upon ESS; or (iv) any agreement or instrument
to which ESS is a party or by which it is bound.

 

(d)   Broker’s Fees, Commissions and Indemnity.  ESS has not engaged any broker,
agent or finder, licensed or otherwise, in connection with the Transaction.  ESS
hereby agrees to indemnify PRIII Member and hold it harmless from and against
all liability, loss, cost, damage and expense (including reasonable attorneys’
fees and costs incurred in the investigation, defense and settlement of the
matter) which the ESS suffers or incurs by reason of any claim by any broker,
agent or finder, whether or not meritorious, for any compensation with respect
to ESS’s dealings in connection with this Agreement.

 

(e)   ERISA.  ESS hereby represents and warrants that ESS is not an employee
benefit plan subject to the provisions of Title IV of ERISA or subject to the
minimum funding standards under Part 3, Subtitle B, Title I of ERISA or
Section 412 of the Internal Revenue Code or Section 302 of ERISA.  None of ESS’s
assets constitute plan assets or any employee benefit plan subject to Part 4 of
Subtitle B of Title I of ERISA and/or Section 4975 of the Code.  ESS is not a
“governmental plan” within the meaning of Section 3(32) of ERISA and the
Interests are not subject to State statutes regulating the investments of and
fiduciary obligations with respect to governmental plans.

 

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(f)    PATRIOT Act.

 

(A)          ESS is in compliance with the requirements of Executive Order
No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”) and other similar
requirements contained in the rules and regulations of the Office of Foreign
Assets Control, Department of the Treasury (“OFAC”) and in any enabling
legislation or other Executive Orders or regulations in respect thereof (the
Order and such other rules, regulations, legislation, or orders are collectively
called the “Orders”).

 

(B)           Neither ESS nor any beneficial owner of ESS:

 

(1)           is listed on the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to the Order and/or on any other list
of terrorists or terrorist organizations maintained pursuant to any of the
rules and regulations of OFAC or pursuant to any other applicable Orders (such
lists are collectively referred to as the “Lists”);

 

(2)           is a person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Orders; or

 

(3)           is owned or controlled by, or acts for or on behalf of, any person
or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Orders.

 

Notwithstanding anything contained hereinto the contrary, for the purposes of
this provision, the phrase “any beneficial owner of ESS” shall not include
(x) any holder of a direct or indirect interest in a publicly traded company
whose shares are listed and traded on a United States national stock exchange,
or (y) any limited partner, unit holder or shareholder owning an interest of
five percent (5%) or less in ESS or in the holder of any direct or indirect
interest in ESS.

 

Section 6.2            Representations and Warranties of PRIII Member.  The
Interests shall be transferred “as is” without the provisions of diligence
information, any covenants, representations or warranties except as expressly
set forth in this Agreement.  PRIII Member hereby makes the following
representations and warranties to ESS as of the date hereof and as of the
Closing Date:

 

(a)   Organization and Authority.  PRIII Member has been duly organized and is
validly existing under the laws of the State of Delaware.  PRIII Member has the
requisite right and authority to enter into this Agreement and the exhibits
hereto and to consummate or cause to be consummated the Transaction and the
exhibits hereto.  The person signing this Agreement on behalf of PRIII Member is
authorized to do so.

 

(b)   Authorization; Enforceability.  This Agreement has been duly authorized,
executed and delivered by PRIII Member and constitutes the valid and binding
obligation of PRIII Member enforceable against it in accordance with its terms,
except as enforceability may be affected by (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors; (ii) the effect of general principles of
equity and the limitation of certain remedies by certain equitable principles of
general applicability; and (iii) the fact that the rights to indemnification
hereunder may be limited by federal or state securities laws.

 

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(c)   No Breach; No Violation.  The execution and delivery of this Agreement by
PRIII Member, the compliance by PRIII Member with the provisions hereof and the
consummation by PRIII Member of the Transaction will not result in a material
breach or material violation of (i) any governmental requirement applicable to
PRIII Member now in effect; (ii) the organizational documents of PRIII Member;
(iii) any judgment, order or decree of any governmental authority binding upon
PRIII Member; or (iv) any agreement or instrument to which PRIII Member is a
party or by which it is bound.

 

(d)   Interests.  At the Closing PRIII Member will assign to ESS title to the
Interests free and clear of all liens, restrictions, security interests,
encumbrances, pledges, claims and rights whatsoever.  PRIII Member has the full
legal right, power and authority required by law to sell, assign, transfer and
deliver the Interests.

 

(e)   Broker’s Fees and Commissions.  PRIII Member has not engaged any broker,
agent or finder, licensed or otherwise, in connection with the Transaction. 
PRIII Member hereby agrees to indemnify each of the ESS and hold it harmless
from and against all liability, loss, cost, damage and expense (including
reasonable attorneys’ fees and costs incurred in the investigation, defense and
settlement of the matter) which the ESS suffers or incurs by reason of any claim
by any broker, agent or finder, whether or not meritorious, for any compensation
with respect to PRIII Member’s dealings in connection with this Agreement.

 

(f)    PATRIOT Act.

 

(A)          PRIII Member is in compliance with the requirements of the Orders.

 

(B)           Neither PRIII Member nor, to PRIII Member’s knowledge, any
beneficial owner of PRIII Member:

 

(1)           is listed on the Lists;

 

(2)           is a person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Orders; or

 

(3)           is owned or controlled by, or acts for or on behalf of, any person
or entity on the Lists or any other person or entity who has been determined by
competent authority to be subject to the prohibitions contained in the Orders.

 

Notwithstanding anything contained hereinto the contrary, for the purposes of
this provision, the phrase “any beneficial owner of PRIII Member” shall not
include (x) any holder of a direct or indirect interest in a publicly traded
company whose shares are listed and traded on a United States national stock
exchange, or (y) any limited partner, unit holder or shareholder owning an
interest of five percent (5%) or less in PRIII Member or in the holder of any
direct or indirect interest in PRIII Member.

 

(g)   To the PRIII Member’s Knowledge, neither the JV nor any Subsidiary has
granted any lien upon or otherwise encumbered any of the Properties without the
written consent of ESS.

 

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(h)   To PRIII Member’s Knowledge, neither the JV nor any Subsidiaries has any
liabilities, whether accrued, absolute or contingent, other than (A) the Loan,
(B) property taxes payable with respect to the Properties and any other taxes
payable in the ordinary course with respect to the Subsidiaries and the JV,
(C) trade payables incurred in the ordinary course of business, (D) obligations
incurred by Extra Space Management, Inc. (hereinafter “ESMI”), as manager of the
Properties pursuant to that certain Property Management Agreement dated as of
July 14, 2005 by and between the Subsidiaries and ESMI (as amended, the
“Property Management Agreement”), (E) amounts owing to ESMI under the Property
Management Agreement for its services as property manager of the Properties (the
“Property Management Fees”), which Property Management Fees will be paid by the
JV at Closing, and (F) any other amounts and liabilities which may have been
incurred with the written consent of ESS.

 

(i)    The Designated Representatives are employees of Prudential Investment
Management, Inc. (“PIM”) and PIM provides investment management services to the
entity that is the indirect sole member of PRIII Member.  In their capacity as
employees of PIM, the Designated Representatives are the representatives of
PRIII Member who, in the ordinary course of the performance of their duties for
and on behalf of PRIII Member, would have knowledge of the matters which are the
subject of the PRIII Member’s Limited Warranties.

 

Section 6.3            Survival of Representations and Warranties.  The
representations and warranties of ESS set forth in Section 6.1 shall survive the
Closing and not be merged therein.  PRIII Member’s Other Warranties shall
survive the Closing and not be merged therein.  PRIII Member’s Limited
Warranties shall survive the Closing for a period of one (1) year following the
Closing and PRIII Member shall only be liable to ESS hereunder for a breach of
the PRIII Member’s Limited Warranties with respect to which a claim is made by
ESS in writing against PRIII Member on or before the date that is one (1) year
following the date of the Closing.  Anything in this Agreement to the contrary
notwithstanding, the maximum aggregate liability of PRIII Member for breaches of
PRIII Member’s Limited Warranties shall be limited as set forth in Section 6.4
hereof.  Notwithstanding the foregoing, however, if the Closing occurs, ESS
hereby expressly waives, relinquishes and releases any right or remedy available
to it at law, in equity, under this Agreement or otherwise to make a claim
against PRIII Member for damages that ESS may incur, or to rescind this
Agreement and the Transaction, as the result of any of PRIII Member’s Warranties
being untrue, inaccurate or incorrect if (i) ESS had actual knowledge that such
representation or warranty was untrue, inaccurate or incorrect at the time of
the Closing or (ii) ESS’s damages as a result of such representation or warranty
being untrue, inaccurate or incorrect are reasonably estimated to aggregate less
than $50,000.  Furthermore, if the Closing occurs, PRIII Member hereby expressly
waives, relinquishes and releases any right or remedy available to it at law, in
equity, under this Agreement or otherwise to make a claim against ESS for
damages that PRIII Member may incur, or to rescind this Agreement and the
Transaction, as the result of any of the representations or warranties of ESS
set forth in Section 6.1 above being untrue, inaccurate or incorrect if at the
time of Closing PRIII Member had actual knowledge that such representation or
warranty was untrue, inaccurate or incorrect at the time of the Closing.  For
the purposes of this Section 6.3 only, “actual knowledge” of ESS as used in this
Section 6.3 shall refer only to the actual knowledge of Charley Allen, Tim
Arthurs, Scott Stubbs, Mackay Reid, David Rassmussen or Steven Tyler.

 

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Section 6.4            Maximum Aggregate Liability.  Notwithstanding any
provision to the contrary contained in this Agreement or the Closing Documents,
the maximum aggregate liability of the PRIII Member, and the maximum aggregate
amount which may be awarded to and collected by ESS, in connection with a breach
of any of PRIII Member’s Limited Warranties for which a claim is timely made by
ESS shall not exceed Ten Million 00/100 Dollars ($10,000,000.00). The provisions
of this Section 6.4 shall survive the Closing (and not be merged therein) or any
earlier termination of this Agreement.

 

ARTICLE VII.
CONDITIONS TO CLOSING

 

Section 7.1            Conditions for the Benefit of ESS.  The obligation of ESS
to consummate the Closing and the Transaction shall be subject to the
fulfillment at or before the Closing of all of the following conditions, any or
all of which may be waived by ESS in its sole and absolute discretion:

 

(a)   All actions required to be taken by, or on the part of, PRIII Member to
authorize the execution, delivery and performance of this Agreement and the
other documents referenced herein and the consummation of the Transaction shall
have been duly and validly taken.

 

(b)   Each of the items required to be delivered, fulfilled or performed, as
applicable, by PRIII Member under this Agreement (including the Closing
deliveries to be made pursuant to Section 4.1(b) shall have been delivered,
fulfilled or performed, as applicable, by PRIII Member.

 

(c)   Each of the representations and warranties of PRIII Member contained in
this Agreement shall be true and correct in all material respects at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date.

 

(d)   There shall be no injunctions or other orders in effect preventing the
consummation of the Transaction.

 

Section 7.2            Conditions for the Benefit of PRIII Member.  The
obligation of PRIII Member to consummate the Closing and the Transaction shall
be subject to the fulfillment at or before the Closing of all of the following
conditions, any or all of which may be waived by PRIII Member in its sole and
absolute discretion:

 

(a)   All actions required to be taken by, or on the part of, ESS to authorize
the execution, delivery and performance of this Agreement and the other
documents referenced herein and the consummation of the Transaction shall have
been duly and validly taken.

 

(b)   Each of the items required to be delivered, fulfilled or performed, as
applicable, by ESS under this Agreement (including the Closing deliveries to be
made pursuant to Section 4.1(a) shall have been delivered, fulfilled or
performed, as applicable, by ESS.

 

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(c)          Each of the representations and warranties of ESS contained in this
Agreement shall be true and correct in all material respects at and as of the
date of this Agreement and as of the Closing Date, as if made at and as of each
such date.

 

(d)         There shall be no injunctions or other orders in effect preventing
the consummation of the Transaction.

 

ARTICLE VIII.
DEFAULT

 

Section 8.1                                   To PRIII Member’s Obligations. 
If, on the Closing Date, (i) ESS is in default of any of its material
obligations hereunder, or (ii) to the actual knowledge of PRIII Member, any of
ESS’s representations or warranties are, in the aggregate, untrue, inaccurate or
incorrect, in any material respect, or (iii) the Closing otherwise fails to
occur by reason of ESS’s failure or refusal to perform its material obligations
hereunder in a prompt and timely manner, and any such circumstance described in
any of clauses (i), (ii) or (iii) continues for five (5) Business Days after
written notice from PRIII Member to ESS, which written notice shall detail such
default, untruth or failure, as applicable, then PRIII Member may, as its sole
and exclusive remedy, elect to (a) terminate this Agreement by written notice to
ESS, promptly after which the Deposit shall be paid to PRIII Member as
liquidated damages and, thereafter, the parties shall have no further rights or
obligations hereunder except for obligations which expressly survive the
termination of this Agreement; or (b) waive the condition and proceed to
Closing.  If this Agreement is so terminated, then PRIII Member shall be
entitled to the Deposit as liquidated damages, and thereafter neither party to
this Agreement shall have any further rights or obligations hereunder.  THE
AMOUNT PAID TO AND RETAINED BY PRIII MEMBER AS LIQUIDATED DAMAGES PURSUANT TO
THE FOREGOING PROVISIONS SHALL BE PRIII MEMBER’S SOLE AND EXCLUSIVE REMEDY IF
ESS FAILS TO CLOSE THE TRANSACTION.  THE PARTIES HERETO EXPRESSLY AGREE AND
ACKNOWLEDGE THAT PRIII MEMBER’S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY ESS
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND THAT THE AMOUNT
OF THE DEPOSIT THEREON REPRESENTS THE PARTIES’ REASONABLE ESTIMATE OF SUCH
DAMAGES.

 

Seller’s Initials: 

/s/ SD

 

Buyer’s Initial’s: 

/s/ CA

 

 

Section 8.2                                   To ESS’s Obligations.  If, at the
Closing, (i) PRIII Member is in default of any of its material obligations
hereunder, or (ii) to the actual knowledge of ESS, any of PRIII Member’s
Warranties are, in the aggregate, untrue, inaccurate or incorrect in any
material respect, or (iii) the Closing otherwise fails to occur by reason of
PRIII Member’s failure or refusal to perform its material obligations hereunder
in a prompt and timely manner, and any such circumstance described in any of
clauses (i), (ii) or (iii) continues for five (5) Business Days after written
notice from ESS to PRIII Member, which written notice shall detail such default,
untruth or failure, as applicable, then ESS shall have the right, to elect, as
its sole and exclusive remedy, to (a) terminate this Agreement by written notice
to PRIII Member, promptly after which the Deposit shall be returned to ESS and,
thereafter, the parties shall have no further rights or obligations hereunder
except for obligations which expressly

 

14

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survive the termination of this Agreement, or (b) waive the condition and
proceed to close the Transaction, or (c) seek specific performance of this
Agreement by PRIII Member.  As a condition precedent to ESS exercising any right
it may have to bring an action for specific performance hereunder, ESS must
commence such an action within sixty (60) days following the occurrence of PRIII
Member’s default.  ESS agrees that its failure to timely commence such an action
for specific performance within such sixty (60) day period shall be deemed a
waiver by it of its right to commence an action for specific performance as well
as a waiver by it of any right it may have to file or record a notice of lis
pendens or notice of pendency of action or similar notice against all or any
portion of the Properties.  PRIII MEMBER ACKNOWLEDGES THAT THE INTERESTS
REPRESENT INDIRECT INTERESTS IN REAL PROPERTY AND, AS SUCH, ARE UNIQUE, THAT AN
ACTION FOR DAMAGES FOR PRIII MEMBER’S BREACH OF ITS MATERIAL OBLIGATIONS UNDER
THIS AGREEMENT AT THE TIME OF OR PRIOR TO CLOSING WILL NOT ADEQUATELY COMPENSATE
ESS FOR THE LOSS OF THE INTERESTS AND THAT AS A RESULT ESS WILL ONLY BE MADE
WHOLE FOR SUCH A MATERIAL BREACH BY PRIII MEMBER IF ESS IS ENTITLED TO BRING AN
ACTION FOR SPECIFIC PERFORMANCE OF PRIII MEMBER’S DUTIES UNDER THIS AGREEMENT. 
For the purposes of this Section 8.2 only, “actual knowledge” of ESS as used in
this Section 8.2 shall refer only to the actual knowledge of Charley Allen, Tim
Arthurs, Scott Stubbs, Mackay Reid, David Rassmussen or Steven Tyler.

 

ARTICLE IX.
ESCROW PROVISIONS

 

The Deposit and any other sums which the parties agree shall be held in escrow
(herein collectively called the “Escrow Deposits”), shall be held by the Escrow
Agent, in trust, and disposed of only in accordance with the following
provisions:

 

(i)                         The Escrow Agent shall invest the Escrow Deposits in
government insured interest-bearing instruments reasonably satisfactory to both
ESS and PRIII Member, shall not commingle the Escrow Deposits with any funds of
the Escrow Agent or others, and shall promptly provide ESS and PRIII Member with
confirmation of the investments made.

 

(ii)                      If the Closing occurs, the Escrow Agent shall deliver
the Escrow Deposits to, or upon the instructions of, PRIII Member on the Closing
Date.

 

(iii)                   If for any reason the Closing does not occur, the Escrow
Agent shall deliver the Escrow Deposits and all interest earned thereon to PRIII
Member or ESS only upon receipt of a written demand therefor from such party,
subject to the following provisions of this Subsection (iii).  If for any reason
the Closing does not occur and either party makes a written demand upon the
Escrow Agent for payment of the Escrow Deposits or the interest earned thereon,
the Escrow Agent shall give written notice to the other party of such demand. 
If the Escrow Agent does not receive a written objection from the other party to
the proposed payment within ten (10) days after the giving of such

 

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notice, the Escrow Agent is hereby authorized to make such payment.  If the
Escrow Agent does receive such written objection within such period, the Escrow
Agent shall continue to hold such amount until otherwise directed by written
instructions signed by PRIII Member and ESS or a final judgment of a court.

 

(iv)                  The parties acknowledge that the Escrow Agent is acting
solely as a stakeholder at their request and for their convenience, that the
Escrow Agent shall not be deemed to be the agent of either of the parties, and
that the Escrow Agent shall not be liable to either of the parties for any
action or omission on its part taken or made in good faith, and not in disregard
of this Agreement, but shall be liable for its negligent acts and for any
Liabilities (including reasonable attorneys’ fees, expenses and disbursements)
incurred by PRIII Member or ESS resulting from the Escrow Agent’s mistake of law
respecting the Escrow Agent’s scope or nature of its duties.  PRIII Member and
ESS shall jointly and severally indemnify and hold the Escrow Agent harmless
from and against all Liabilities (including reasonable attorneys’ fees, expenses
and disbursements) incurred in connection with the performance of the Escrow
Agent’s duties hereunder, except with respect to actions or omissions taken or
made by the Escrow Agent in bad faith, in disregard of this Agreement or
involving negligence on the part of the Escrow Agent.

 

(v)                     ESS shall pay any income taxes on any interest earned on
the Escrow Deposits.  ESS represents and warrants to the Escrow Agent that its
taxpayer identification number is 20-2799025.

 

(vi)                  The Escrow Agent has executed this Agreement in the place
indicated on the signature page hereof in order to confirm that the Escrow Agent
has received and shall hold the Escrow Deposits and the interest earned thereon,
in escrow, and shall disburse the Escrow Deposits, and the interest earned
thereon, pursuant to the provisions of this Article IX.

 

The provisions of this Article IX shall survive the Closing (and not be merged
therein) or earlier termination of this Agreement.

 

ARTICLE X.
MISCELLANEOUS

 

Section 10.1                            Notices.  Any notice, consent, payment,
demand, or communication required or permitted to be given by any provision of
this Agreement shall be in writing and shall be (a) delivered personally to the
Person or to an officer of the Person to whom the same is directed, (b) sent by
reputable overnight delivery, (c) sent by facsimile or email, or (d) sent by
registered or certified mail, return receipt requested, postage prepaid, in each
case addressed as set forth below or to such other address as such Party may
from time to time specify by notice to the other Parties given in accordance
with this Section 10.1 (provided that in the case of email or facsimile, a copy
of such notice is also delivered within 24 hours to the Party by

 

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one of the other methods listed herein).  Any notice shall be deemed to be
delivered, given and received for all purposes as of: (i) the date so delivered,
if delivered personally or sent by email or facsimile, or (ii) on the date of
receipt or refusal indicated on the return receipt, (i) if sent by overnight
delivery or (ii) if sent by registered or certified mail, return receipt
requested, postage and charges prepaid and properly addressed.

 

 

If to ESS:

 

 

 

 

Extra Space Storage Inc.

 

 

2795 East Cottonwood Parkway, Suite 400

 

 

Salt Lake City, Utah 84121

 

 

Attention: Mr. Charles L. Allen

 

 

Telephone No.: (801) 365-4470

 

 

Fax: (801) 365-4870

 

 

Email: callen@extraspace.com

 

 

 

 

With a copy to:

 

 

 

 

 

Holland & Hart

 

 

222 South Main Street

 

 

Suite 2200

 

 

Salt Lake City 84101

 

 

Attention: Steven Tyler

 

 

Telephone No.: (801) 799-5925

 

 

Fax: (866) 711-8035

 

 

Email: setyler@hollandhart.com

 

 

 

 

If to PRIII Member:

 

 

 

 

 

c/o PRISA III REIT Operating LP

 

 

8 Campus Drive

 

 

Parsippany, New Jersey 07054

 

 

Attention: Scott M. Dalrymple

 

 

Telephone No.: (973) 734-1488

 

 

Fax: (973) 683-1794

 

 

Email: scott.dalrymple@prudential.com

 

 

 

 

With a copy to:

 

 

 

 

 

PREI Law Department

 

 

8 Campus Drive

 

 

Parsippany, New Jersey 07054

 

 

Attention: Joan N. Hayden, Esq.

 

 

(PREI Law Department)

 

 

Telephone No.: (973) 683-1772

 

 

Fax: (973) 683-1788

 

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Email: joan.hayden@prudential.com

 

 

 

 

With a copy to:

 

 

 

 

 

Goodwin | Procter LLP

 

 

53 State Street

 

 

Boston, Massachusetts 02109

 

 

Attention: Diane J. McCabe, Esq.

 

 

Telephone No.: (617) 570-1604

 

 

Fax: (617) 227-8591

 

 

Email: dmccabe@goodwinprocter.com

 

Section 10.2                            Entire Agreement.  This Agreement and
the other Closing Documents constitute the entire agreement among the Parties
pertaining to the subject matter hereof and thereof and fully supersede any and
all prior or contemporaneous agreements or understandings among the Parties
pertaining to the subject matter hereof and thereof; provided, however, that
until the Closing, the JV Agreement, shall remain in full force and effect
notwithstanding the execution and delivery of this Agreement or of any of the
Closing Documents.

 

Section 10.3                            Governing Law.  This Agreement,
including its existence, validity, construction, and operating effect, and the
rights of each of the Parties, shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to otherwise governing
principles of choice of law or conflicts of law.

 

Section 10.4                            Construction.  The Parties agree that
each Party and its counsel have reviewed and revised this Agreement and that any
rule of construction to the effect that ambiguities are to be resolved against
the drafting Party shall not apply in the interpretation of this Agreement or
any amendments or exhibits hereto.  The Parties intend that this Agreement shall
be construed as if all Parties prepared this Agreement.

 

Section 10.5                            Captions - Pronouns.  Any titles or
captions contained in this Agreement are for convenience only and shall not be
deemed part of the text of this Agreement.  All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as appropriate.

 

Section 10.6                            Binding Effect.  Except as otherwise
expressly provided herein, this Agreement shall be binding on and inure to the
benefit of the Parties, their heirs, executors, administrators, successors.

 

Section 10.7                            Severability.  In the event that any
provision of this Agreement as applied to any Party or to any circumstance,
shall be adjudged by a court to be void, unenforceable or inoperative as a
matter of law, then the same shall in no way affect any other provision in this
Agreement, the application of such provision in any other circumstance or with
respect to any other Party, or the validity or enforceability of the Agreement
as a whole.

 

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Section 10.8                            Interpretation.  All references herein
to Articles, Sections, subparagraphs and Exhibits shall be deemed to be
references to Articles, Sections and subparagraphs of, and Exhibits to, this
Agreement unless the context shall otherwise require.  All Exhibits attached
hereto shall be deemed incorporated herein as if set forth in full herein.  The
words “include,” “includes” and “including” shall be deemed to be followed by
the phrase “without limitation.”  The term “or” is not exclusive.  The word
“extent” in the phrase “to the extent” shall mean the degree to which a subject
or other thing extends, and such phrase shall not mean simply “if.”  The words
“date hereof” shall refer to the date set forth on the cover page of this
Agreement.  The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.  Unless otherwise expressly
provided herein, any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein.

 

Section 10.9                            No Third Party Beneficiaries.  This
Agreement is not intended to confer any rights or remedies hereunder upon, and
shall not be enforceable by, any Person other than the Parties.

 

Section 10.10                     Counterparts.  This Agreement may be executed
in any number of multiple counterparts, each of which shall be deemed to be an
original copy and all of which shall constitute one agreement, binding on all
Parties.  Delivery of an executed counterpart of a signature page to this
Agreement electronically or by facsimile shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

Section 10.11                     Submission to Jurisdiction.  The Parties
submit to personal jurisdiction in the State of Delaware for the enforcement of
the provisions of this Agreement and waive any and all rights to object to such
jurisdiction for the purposes of litigation to enforce this Agreement.  The
Parties hereby consent to the jurisdiction of the United States District Court
located in Delaware in the first instance and, any other court of the State of
Delaware in any action, suit, or proceeding which any Party may at any time wish
to file in connection with this Agreement or any related matter.  The Parties
hereby waive any objection which any Party may have to the laying of the venue
of any such action, suit, or proceeding in any such court; provided, however,
that the provisions of this Section 10.11 shall not be deemed to preclude any
Party from filing any such action, suit or proceeding in any other appropriate
forum if the courts above decline jurisdiction.

 

Section 10.12                     Assignment.  Neither Party may assign or
transfer its rights, obligations or interests under this Agreement without the
express prior written consent of the other Party, which consent may be granted
or withheld in such other Party’s sole and absolute discretion.

 

Section 10.13                     Amendments.  No change in or addition to this
Agreement or any part hereof shall be valid unless in writing and signed by each
of ESS and PRIII Member.

 

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Section 10.14                     Publicity.  PRIII Member and ESS each hereby
covenant and agree that (a) prior to the Closing neither PRIII Member nor ESS
shall issue any Release (as hereinafter defined) with respect to the Transaction
without the prior consent of the other, except to the extent required by
applicable law, and (b) after the Closing, any Release issued by either PRIII
Member or ESS shall be subject to the review and approval of both parties (which
approval shall not be unreasonably withheld, conditioned or delayed), except to
the extent required by applicable law.  If either PRIII Member or ESS is
required by applicable law to issue a Release, such party shall, at least two
(2) Business Days prior to the issuance of the same, deliver a copy of the
proposed Release to the other party for its review.  As used herein, the term
“Release” shall mean any press release or public statement with respect to the
Transaction or this Agreement.

 

Section 10.15                     Facsimile/Email Signatures.  Signatures to
this Agreement transmitted by facsimile or email shall be valid and effective to
bind the Party so signing.  Each Party agrees to promptly deliver an execution
original to this Agreement with its actual signature to the other Party, but a
failure to do so shall not affect the enforceability of this Agreement.  It
being expressly agreed that each Party to this Agreement shall be bound by its
own faxed or emailed signature and shall accept the faxed or emailed signature,
as the case may be, of the other Party to this Agreement.

 

Section 10.16                     WAIVER OF JURY TRIAL.  EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
OTHER DOCUMENT OR INSTRUMENT BETWEEN THE PARTIES RELATING TO THIS AGREEMENT, THE
PROPERTIES OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THAT RELATIONSHIP, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, ANTITRUST CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON-LAW OR STATUTORY CLAIMS.  EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS
AGREEMENT AND ALL OTHER AGREEMENTS AND INSTRUMENTS PROVIDED FOR HEREIN, AND THAT
EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. 
EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH LEGAL COUNSEL OF ITS OWN CHOOSING, OR HAS HAD AN OPPORTUNITY TO DO
SO, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS HAVING
HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT ENTERED INTO
BETWEEN THE PARTIES IN CONNECTION WITH THIS AGREEMENT.  IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT WITHOUT A JURY.

 

20

--------------------------------------------------------------------------------

 

(Signature Page Follows)

 

21

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day
and year first above written.

 

 

 

EXTRA SPACE PROPERTIES SIXTY THREE LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Charles L. Allen

 

 

 

 

 

Name:

Charles L. Allen

 

 

 

 

 

Title:

Manager

 

 

 

 

 

 

 

 

 

 

 

 

PRISA III CO-INVESTMENT LLC, a Delaware limited liability company

 

 

 

 

 

PRISA III Legacy, LLC, a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III REIT Operating LP, a Delaware limited partnership, its sole member

 

 

 

 

 

 

 

By:

PRISA III OP GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund LP, a Delaware limited partnership, its manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund GP, LLC, a Delaware limited liability company, its general
partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund PIM, LLC, a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

Prudential Investment Management, Inc., a New Jersey corporation, its sole
member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Scott M. Dalrymple

 

 

 

 

 

 

 

Name:

Scott M. Dalrymple

 

 

 

 

 

 

 

 

Title:

Vice President

 

 

22

--------------------------------------------------------------------------------

 

The undersigned hereby joins in this Agreement solely for the purposes of
guarantying the obligations of PRIII Member hereunder with respect to PRIII
Member’s Warranties, including with respect to the Maximum Aggregate Liability
Cap set forth in Section 6.4 with respect to PRIII Member’s Limited Warranties,
but only to the extent that (a) Closing occurs, and (b) PRIII Member expressly
has liability to ESS under this Agreement after Closing.  From and after the
Closing, the obligations of the undersigned and PRIII Member under this
Agreement with respect to the PRIII Member’s Warranties shall be joint and
several.

 

 

 

 

 

PRISA III REIT OPERATING LP, a Delaware limited partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III OP GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund LP, a Delaware limited partnership, its manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund GP, LLC, a Delaware limited liability company, its general
partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund PIM, LLC, a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

Prudential Investment Management, Inc., a New Jersey corporation, its sole
member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Scott M. Dalrymple

 

 

 

 

 

 

 

 

 

Name:

Scott M. Dalrymple

 

 

 

 

 

 

 

 

 

Title:

Vice President

 

23

--------------------------------------------------------------------------------

 

For the purposes of Article IX:

 

 

 

 

 

First American Title Insurance Company,

 

National Commercial Services

 

 

 

By:

/s/ Tom Zowarka

 

Name: Tom Zowarka

 

Title: Vice President

 

 

24

--------------------------------------------------------------------------------

 

EXHIBIT A

TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

List of Properties

 

0751

 

Birmingham/Grace Baker Rd 0653

 

115 Grace Baker Road

 

Birmingham

 

AL

 

35210

 

Prisa III

0239

 

Mesa/n Alma School Rd 0239

 

112 N Alma School Road

 

Mesa

 

AZ

 

85201

 

Prisa III

0231

 

Moreno Valley/Box Spring 0231

 

21201 Box Springs Road

 

Moreno Valley

 

CA

 

92557

 

Prisa III

0305

 

Hawaiian Gardens/S Norwalk 0305

 

21123 South Norwalk Blvd

 

Hawaiian Gardens

 

CA

 

90716

 

Prisa III

0352

 

Hollywood/N Vine St 0352

 

1860 North Vine Street

 

Hollywood

 

CA

 

90028

 

Prisa III

0353

 

Los Angeles/Fountain Ave 0353

 

4728 Fountain Avenue

 

Los Angeles

 

CA

 

90029

 

Prisa III

0721

 

Santa Cruz/Soquel Ave 8003

 

2900 Soquel Avenue

 

Santa Cruz

 

CA

 

95062

 

Prisa III

0568

 

Brookfield/Brookfield-Fed 0568

 

578 Federal Road

 

Brookfield

 

CT

 

06804

 

Prisa III

0208

 

Miami/NW 2nd 0208

 

20240 NW 2nd Avenue

 

Miami

 

FL

 

33169

 

Prisa III

0254

 

Miami/Coral Way 0254

 

9848 Carol Way

 

Miami

 

FL

 

33165

 

Prisa III

0730

 

Skokie/N. McCormick 9005

 

7540 N McCormick

 

Skokie

 

IL

 

60076

 

Prisa III

0261

 

Tyngsboro/Industrial Way 0261

 

3 Industrial Way

 

Tyngsboro

 

MA

 

01879

 

Prisa III

0734

 

Framingham/Concord St 9010

 

1590 Concord Street

 

Framingham

 

MA

 

01701

 

Prisa III

0258

 

Gambrills/Rte 3 0258

 

789 Route 3 North Ganbrills

 

Gambrills

 

MD

 

21054

 

Prisa III

0588

 

Towson/Joppa 0588

 

203 Joppa Road

 

Towson

 

MD

 

21286

 

Prisa III

0553

 

Belleville/Old Rawsonvill 0553

 

1900 Old Rawsonville Road

 

Belleville

 

MI

 

48111

 

Prisa III

0332

 

Harrison/Harrison Ave 0332

 

412 Harrison Ave

 

Harrison

 

NJ

 

07029

 

Prisa III

0381

 

Mt. Laurel/Ark Road 0381

 

103 Ark Road

 

Mt Laurel

 

NJ

 

08054

 

Prisa III

0485

 

Santa Fe/875 W San Mateo 0485

 

875 San Mateo Road

 

Santa Fe

 

NM

 

87501

 

Prisa III

0405

 

Kingston/Sawkill Rd 0405

 

119 Sawkill Road

 

Kingston

 

NY

 

12401

 

Prisa III

0409

 

Amsterdam/Route 5 So 0409

 

Route 5 South

 

Amsterdam

 

NY

 

12010

 

Prisa III

0470

 

Ridge/Middle Country Rd 0470

 

14 Francis Mooney Road

 

Long Island

 

NY

 

11961

 

Prisa III

0630

 

Hicksville/S Broadway 0630

 

789 South Broadway

 

Long Island

 

NY

 

11801

 

Prisa III

0674

 

Hauppage/Old Willets Path 0674

 

730 Old Willets Path

 

Hauppauge

 

NY

 

11788

 

Prisa III

0727

 

Brooklyn/64th St

 

201 64th Street

 

Brooklyn

 

NY

 

11220

 

Prisa III

0367

 

Willoughby/Reading Ave 0367

 

36155 Reading Avenue

 

Willoughby

 

OH

 

44094

 

Prisa III

0368

 

Mentor/Mentor Ave 0368

 

7679 Mentor Avenue

 

Mentor

 

OH

 

44060

 

Prisa III

0286

 

Aloha/SW 229th Ave 0286

 

2909 SW 229th Avenue

 

Aloha

 

OR

 

97007

 

Prisa III

0374

 

Memphis/Raleigh-LaGrange 0374

 

4994 Raleigh-LaGrange

 

Memphis

 

TN

 

38128

 

Prisa III

 

A-1

--------------------------------------------------------------------------------

 

0578

 

Bartlett/Germantown Rd N 0578

 

3175 Germantown Road North

 

Bartlett

 

TN

 

38133

 

Prisa III

0680

 

Memphis/Covington Way 0680

 

4961 Covington Way

 

Memphis

 

TN

 

38128

 

Prisa III

0306

 

Spring/I45N 0306

 

25690 I-45 North

 

Spring

 

TX

 

77386

 

Prisa III

0629

 

Dallas/19211 Preston Road 0629

 

19211 Preston Road

 

Dallas

 

TX

 

75252

 

Prisa III

0327

 

Fredericksburg/Plank 0327

 

2403 Plank Road

 

Fredericksburg

 

VA

 

22401

 

Prisa III

0467

 

Alexandria/N Henry St 0467

 

1022 North Henry Street

 

Alexandria

 

VA

 

22314

 

Prisa III

0285

 

Vancouver/NE 78th 0285

 

8016 NE 78th Street

 

Vancouver

 

WA

 

98662

 

Prisa III

 

A-2

--------------------------------------------------------------------------------

 

EXHIBIT B

TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

Intentionally Omitted

 

B-1

--------------------------------------------------------------------------------

 

EXHIBIT C

TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

Form of Indemnity

 

INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT (this “Agreement”) is made as of the          day of
                          , 2012 (the “Effective Date”), by Extra Space Storage
Inc., a Maryland corporation, and Extra Space Properties Sixty Three LLC, a
Delaware limited liability company (collectively, and jointly and severally,
“Indemnitor”), in favor of PRISA Co-Investment LLC, a Delaware limited liability
company (“Indemnitee”), with respect to the matters set forth herein.

 

BACKGROUND

 

Reference is hereby made to that certain Membership Interest Purchase Agreement,
dated as of April     , 2012, by and between Extra Space Properties Sixty Three
LLC (“ESS”) and Indemnitee (as the same may be otherwise amended or assigned,
collectively, the “Sale Agreement”).

 

TERMS AND CONDITIONS

 

NOW THEREFORE, incorporating the foregoing recitals and in consideration of the
mutual promises herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE I.
DEFINITIONS

 

Section 1.1            Definitions.  All capitalized terms used but not defined
herein shall have the respective meanings set forth in the Sale Agreement.

 

Section 1.2            Rules of Construction.  References to numbered or
lettered articles, sections and subsections refer to articles, sections and
subsections of this Agreement unless otherwise expressly stated.  The words
“herein”, “hereof’, “hereunder”, “hereby”, “this Agreement” and other similar
references shall be construed to mean and include this Agreement and all
amendments and supplements hereto unless the context shall clearly indicate or
require otherwise.  Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular and plural, as the identity of the person
may in the context require.  Any reference to statutes or laws shall include all
amendments, modifications or replacements of the specific sections and
provisions concerned.

 

C-1

--------------------------------------------------------------------------------

 

ARTICLE II.
INDEMNIFICATION

 

Section 2.1            Indemnification.  Indemnitor shall indemnify, defend and
save Indemnitee harmless from and against any loss, damage, claim, action,
liability, cost or expense (including reasonable attorneys’ fees and the
reasonable expenses of third-party consultants and experts) (collectively,
“Losses”) arising out of or in connection with any debt, including the Loan,
obligation or claim (i) of the JV or any Subsidiary or (ii) against the JV or
the Subsidiary, in each case, after the Closing, excluding those Losses arising
out of a breach of the PRIII Member’s Warranties.

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF INDEMNITOR

 

Section 3.1            By Indemnitor.  Indemnitor hereby represents and warrants
to Indemnitee as follows:

 

(a)           ESS is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the full right, power and authority to enter into this Agreement, and to perform
all of the obligations and liabilities of Indemnitor required to be performed
hereunder.  Extra Space Storage Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
the full right, power and authority to enter into this Agreement, and to perform
all of the obligations and liabilities of Indemnitor required to be performed
hereunder.

 

(b)           This Agreement has been duly and validly executed and delivered by
and on behalf of Indemnitor and constitutes a valid, binding and enforceable
obligation of Indemnitor enforceable in accordance with its terms. The aforesaid
representation and warranty is qualified to the extent the enforceability of
this Agreement may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws of general application affecting the rights
of creditors in general.

 

(c)           Neither the execution and delivery hereof, nor the taking of any
actions contemplated hereby, will conflict with or result in a breach of any of
the provisions of, or constitute a default, event of default or event creating a
right of acceleration, termination or cancellation of any obligation under any
instrument, note, mortgage, contract, judgment, order, award, decree or other
agreement or restriction to which Indemnitor is a party or by which Indemnitor
is otherwise bound.

 

ARTICLE IV.
GENERAL PROVISIONS

 

Section 4.1            Assignment.  Indemnitor may not assign its rights or
obligations under this Agreement without the prior written consent of Indemnitee
in its sole and absolute discretion.  Subject to this restriction, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

 

C-2

--------------------------------------------------------------------------------

 

Section 4.2            Entire Agreement.  This Agreement embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof and supersedes all prior agreements and understandings related to such
subject matter, and it is agreed that there are no terms, understandings,
representations or warranties, express or implied, relating to such subject
matter other than those set forth herein.

 

Section 4.3            Captions.  The descriptive headings of the sections of
this Agreement are inserted for convenience only.  They are not intended to and
shall not be construed to limit, enlarge or affect the scope or intent of this
Agreement or the meaning of any provision hereof.

 

Section 4.4            Notices.  All notices, approvals, consents, waivers,
directions, requests or communications shall be in writing, signed by the party
giving the same and shall be deemed properly given only if given in accordance
with the notice provisions set forth in the Sale Agreement.

 

Section 4.5            Time is of the Essence.  Time is of the essence in all
aspects of the performance of the obligations hereunder.

 

Section 4.6            Waiver.  No failure by Indemnitee to insist on the strict
performance of any obligation, covenant, agreement, term or condition of this
Agreement by Indemnitor, or to exercise any right or remedy available upon a
breach of this Agreement, will constitute a waiver, and no breach will be
waived, altered or modified, except by written instrument.

 

Section 4.7            Governing Law.  This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without reference
to its conflict of laws rules.

 

Section 4.8            Venue.  Each of the parties hereto consents to the
jurisdiction of any Federal or State court in the State of Delaware for any
action arising out of matters related to this Agreement.  Each of the parties
hereto waives the right to commence an action in connection with this Agreement
in any court outside of the State of Delaware.

 

Section 4.9            Attorney’s Fees.  In the event of any controversy, claim
or dispute between the parties affecting or relating to the purposes or subject
matter of this Agreement, the prevailing party shall be entitled to recover from
the other party all of its reasonable expenses, including reasonable attorneys’
and accountants fees, including in any bankruptcy or appellate proceeding.

 

Section 4.10         Counterparts.  This Agreement may be executed in multiple
counterparts, each of which is an original and all of which together constitute
one and the same document. Copies of this Agreement bearing signatures shall be
as binding as originals.

 

(Next page is signature page)

 

C-3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
and year, first above written.

 

 

 

EXTRA SPACE STORAGE INC., a
Maryland corporation

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

 

EXTRA SPACE PROPERTIES SIXTY
THREE LLC, a Delaware limited liability
company

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

C-4

--------------------------------------------------------------------------------

 

 

 

PRISA III CO-INVESTMENT LLC, a Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRISA III Legacy, LLC, a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III REIT Operating LP, a Delaware limited partnership, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III OP GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund LP, a Delaware limited partnership, its manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund GP, LLC, a Delaware limited liability company, its general
partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund PIM, LLC,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

Prudential Investment Management, Inc., a New Jersey corporation, its sole
member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

Title:

Vice President

 

C-5

--------------------------------------------------------------------------------

 

EXHIBIT D

TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

Form of Assignment

 

ASSIGNMENT AND ASSUMPTION OF

MEMBERSHIP INTERESTS IN

ESS PRISA III LLC

 

THIS ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS (the “Assignment”) in ESS
PRISA III LLC, a Delaware limited liability company (the “Company”) is made and
entered into as of the          day of                   , 2012, by and between
PRISA III CO-INVESTMENT LLC, a Delaware limited liability company (the
“Assignor”), and Extra Space Properties Sixty Three LLC, a Delaware limited
liability company (“Assignee”).

 

W I T N E S S E T H:

 

WHEREAS, on or about July 14, 2005, Assignor and Assignee, entered into that
certain Amended and Restated Limited Liability Company Agreement of the Company
(as amended, the “Operating Agreement”); and

 

WHEREAS, Assignor is the owner of ninety-five percent (95%) of the membership
interests in the Company (the “Assigned Interest”); and

 

WHEREAS, pursuant to the terms of that certain Membership Interest, Purchase
Agreement among Assignor and Assignee dated as of                       , 2012
(the “Purchase and Sale Agreement”), Assignor agreed to sell and Assignee agreed
to buy the Assigned Interest;

 

WHEREAS, Assignor desires to assign to Assignee, and Assignee desires to receive
and assume, the Assigned Interest as set forth below; and

 

WHEREAS, Assignor has agreed, among other things, to sell, transfer, set over,
deliver and assign unto Assignee all of Assignor’s right, title and interest
pertaining to the Assigned Interest.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       The recitals set forth hereinabove are
hereby incorporated herein by this reference with the same force and effect as
if fully hereinafter set forth.

 

2.                                       Assignor hereby sells, transfers, sets
over, delivers and assigns unto Assignee all of Assignor’s right, title and
interest with respect to the Assigned Interest with all of the rights, powers,
privileges and interests of Assignor arising out of or pursuant to the Operating
Agreement, as the same may be amended and restated.

 

D-1

--------------------------------------------------------------------------------

 

3.                                      Assignee hereby assumes (x) all of
Assignor’s right, title and interest with respect to the Assigned Interest, and
(y) all responsibilities and obligations associated with the Assigned Interest
arising or accruing from and after the date of this Assignment.

 

4.                                      This Assignment shall be binding upon
Assignor and its successors and assigns and shall inure to the benefit of
Assignee and its successors and assigns.  This Assignment has been entered into
by Assignor and Assignee solely for their benefit, and the benefit of their
respective successors, assigns, authorized agents and representatives, and not
for the benefit of any other persons not a party to this Assignment.

 

5.                                      This Assignment may be executed in
counterparts, each of which shall be an original and all of which counterparts
taken together shall constitute one and the same agreement.

 

6.                                      If any term or provision of this
Assignment or the application thereof to any persons or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Assignment or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Assignment shall be valid and
enforced to the fullest extent permitted by law.

 

7.                                      This Assignment shall be governed by and
construed and interpreted in accordance with the laws of the State of Delaware
without giving effect to principles of conflicts of laws.

 

[Remainder of page intentionally blank.]

 

D-2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment and
Assumption of Membership Interests under seal as of the day and year first
stated above.

 

 

 

ASSIGNOR:

 

 

 

PRISA III CO-INVESTMENT LLC

 

 

 

 

 

PRISA III REIT OPERATING LP, a Delaware limited partnership, its sole member

 

 

 

By:

PRISA III OP GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

By:

PRISA III Fund LP, a Delaware limited partnership, its manager

 

 

 

 

 

 

 

By:

PRISA III GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund PIM, LLC, a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

By:

Prudential Investment Management, Inc., its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

Vice President

 

D-3

--------------------------------------------------------------------------------

 

 

ASSIGNEE:

 

 

 

EXTRA SPACE PROPERTIES SIXTY THREE LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

D-4

--------------------------------------------------------------------------------

 

EXHIBIT E

 

CERTIFICATE OF NON-FOREIGN STATUS

BY ENTITY TRANSFEROR

 

Section 1445 of the Internal Revenue Code provides that a transferee of a United
States real property interest must withhold tax if the transferor is a foreign
person.  For U.S. tax purposes (including Section 1445), the owner of a
disregarded entity (which has legal title to a U.S. real property interest under
local law) will be the transferor of the property and not the disregarded
entity.  PRISA III CO-INVESTMENT, LLC, a Delaware limited liability company
(“Seller”), will transfer its membership interests in ESS PRISA III LLC which
owns the properties listed on Exhibit A attached hereto (the “Properties”) to
ESS Extra Space Sixty Three, LLC, a Delaware limited liability company
(“Transferee”).  Seller is a disregarded entity that is wholly-owned by PRISA
III REIT Operating LP, a Delaware limited partnership (“Transferor”).

 

1.                                      In order to inform Transferee that
withholding of tax is not required upon disposition of a U.S. real property
interest by Transferor, the undersigned hereby certifies and declares by means
of this certificate the following on behalf of the Transferor.

 

(a)                                 The Transferor is not a foreign corporation,
foreign partnership, foreign trust or foreign estate (as these terms are defined
in the Internal Revenue Code and Income Tax Regulations).

 

(b)                                 The Transferor is not a disregarded entity
as defined in § 1.1445-2(b)(2)(iii) of the Code.

 

(c)                                  The Transferor’s employer identification
number is:                            .

 

(d)                                 The Transferor’s office address is:
                                                        .

 

2.                                      The Transferor understands that this
certificate may be disclosed to the Internal Revenue Service by the Transferee
and that any false statement contained in this certificate may be punished by
fine, imprisonment, or both.

 

[Signature On Following Page]

 

E-1

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Under penalties of perjury, I declare that I have examined this certificate and
to the best of my knowledge and belief it is true, correct and complete.  I
further declare that I have authority to sign this document on behalf of the
Transferor.

 

Dated:                 ,       , 2012.

PRISA III REIT OPERATING LP, a Delaware limited partnership, its sole member

 

 

 

By:

PRISA III OP GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

By:

PRISA III Fund LP, a Delaware limited partnership, its manager

 

 

 

 

 

 

 

By:

PRISA III GP, LLC, a Delaware limited liability company, its general partner

 

 

 

 

 

 

 

 

 

By:

PRISA III Fund PIM, LLC, a Delaware limited liability company, its sole member

 

 

 

 

 

 

 

 

 

 

By:

Prudential Investment Management, Inc., its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

Vice President

 

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EXHIBIT A

TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

List of Properties

 

0751

 

Birmingham/Grace Baker Rd 0653

 

115 Grace Baker Road

 

Birmingham

 

AL

 

35210

 

Prisa III

0239

 

Mesa/n Alma School Rd 0239

 

112 N Alma School Road

 

Mesa

 

AZ

 

85201

 

Prisa III

0231

 

Moreno Valley/Box Spring 0231

 

21201 Box Springs Road

 

Moreno Valley

 

CA

 

92557

 

Prisa III

0305

 

Hawaiian Gardens/S Norwalk 0305

 

21123 South Norwalk Blvd

 

Hawaiian Gardens

 

CA

 

90716

 

Prisa III

0352

 

Hollywood/N Vine St 0352

 

1860 North Vine Street

 

Hollywood

 

CA

 

90028

 

Prisa III

0353

 

Los Angeles/Fountain Ave 0353

 

4728 Fountain Avenue

 

Los Angeles

 

CA

 

90029

 

Prisa III

0721

 

Santa Cruz/Soquel Ave 8003

 

2900 Soquel Avenue

 

Santa Cruz

 

CA

 

95062

 

Prisa III

0568

 

Brookfield/Brookfield-Fed 0568

 

578 Federal Road

 

Brookfield

 

CT

 

06804

 

Prisa III

0208

 

Miami/NW 2nd 0208

 

20240 NW 2nd Avenue

 

Miami

 

FL

 

33169

 

Prisa III

0254

 

Miami/Coral Way 0254

 

9848 Carol Way

 

Miami

 

FL

 

33165

 

Prisa III

0730

 

Skokie/N. McCormick 9005

 

7540 N McCormick

 

Skokie

 

IL

 

60076

 

Prisa III

0261

 

Tyngsboro/Industrial Way 0261

 

3 Industrial Way

 

Tyngsboro

 

MA

 

01879

 

Prisa III

0734

 

Framingham/Concord St 9010

 

1590 Concord Street

 

Framingham

 

MA

 

01701

 

Prisa III

0258

 

Gambrills/Rte 3 0258

 

789 Route 3 North Ganbrills

 

Gambrills

 

MD

 

21054

 

Prisa III

0588

 

Towson/Joppa 0588

 

203 Joppa Road

 

Towson

 

MD

 

21286

 

Prisa III

0553

 

Belleville/Old Rawsonvill 0553

 

1900 Old Rawsonville Road

 

Belleville

 

MI

 

48111

 

Prisa III

0332

 

Harrison/Harrison Ave 0332

 

412 Harrison Ave

 

Harrison

 

NJ

 

07029

 

Prisa III

0381

 

Mt. Laurel/Ark Road 0381

 

103 Ark Road

 

Mt Laurel

 

NJ

 

08054

 

Prisa III

0485

 

Santa Fe/875 W San Mateo 0485

 

875 San Mateo Road

 

Santa Fe

 

NM

 

87501

 

Prisa III

0405

 

Kingston/Sawkill Rd 0405

 

119 Sawkill Road

 

Kingston

 

NY

 

12401

 

Prisa III

0409

 

Amsterdam/Route 5 So 0409

 

Route 5 South

 

Amsterdam

 

NY

 

12010

 

Prisa III

0470

 

Ridge/Middle Country Rd 0470

 

14 Francis Mooney Road

 

Long Island

 

NY

 

11961

 

Prisa III

0630

 

Hicksville/S Broadway 0630

 

789 South Broadway

 

Long Island

 

NY

 

11801

 

Prisa III

0674

 

Hauppage/Old Willets Path 0674

 

730 Old Willets Path

 

Hauppauge

 

NY

 

11788

 

Prisa III

0727

 

Brooklyn/64th St

 

201 64th Street

 

Brooklyn

 

NY

 

11220

 

Prisa III

0367

 

Willoughby/Reading Ave 0367

 

36155 Reading Avenue

 

Willoughby

 

OH

 

44094

 

Prisa III

0368

 

Mentor/Mentor Ave 0368

 

7679 Mentor Avenue

 

Mentor

 

OH

 

44060

 

Prisa III

0286

 

Aloha/SW 229th Ave 0286

 

2909 SW 229th Avenue

 

Aloha

 

OR

 

97007

 

Prisa III

0374

 

Memphis/Raleigh-LaGrange 0374

 

4994 Raleigh-LaGrange

 

Memphis

 

TN

 

38128

 

Prisa III

 

--------------------------------------------------------------------------------

 

0578

 

Bartlett/Germantown Rd N 0578

 

3175 Germantown Road North

 

Bartlett

 

TN

 

38133

 

Prisa III

0680

 

Memphis/Covington Way 0680

 

4961 Covington Way

 

Memphis

 

TN

 

38128

 

Prisa III

0306

 

Spring/I45N 0306

 

25690 I-45 North

 

Spring

 

TX

 

77386

 

Prisa III

0629

 

Dallas/19211 Preston Road 0629

 

19211 Preston Road

 

Dallas

 

TX

 

75252

 

Prisa III

0327

 

Fredericksburg/Plank 0327

 

2403 Plank Road

 

Fredericksburg

 

VA

 

22401

 

Prisa III

0467

 

Alexandria/N Henry St 0467

 

1022 North Henry Street

 

Alexandria

 

VA

 

22314

 

Prisa III

0285

 

Vancouver/NE 78th 0285

 

8016 NE 78th Street

 

Vancouver

 

WA

 

98662

 

Prisa III

 

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SCHEDULE 1

 

PURCHASE PRICE CALCULATION

 

Sale Price $322,000,000
Less: sale costs
Less: Loan repayment

 

Distribution of Extraordinary Cash Flow per Section 8.2(b) of the JV Agreement

 

(i)                                     First, to the Members, in proportion to
and in an amount equal to their Unpaid Operating Returns;

 

(ii)                                  Second, to the Members, pro rata in
proportion to and in an amount equal to their Unreturned Shortfall Capital;

 

(iii)                               Third, to the Members, pro rata in
proportion to and in an amount equal to their Unreturned Capital;

 

(iv)                              Fourth, to the Members, pro rata in proportion
to their Capital Interests until PRIII Member receives a 13% IRR; and

 

(v)                                 Fifth, any remaining balance, to the Members
pro rata in accordance with their respective Percentage Interests (80% to PRIII
Member/20% to ESS).

 

For the purposes of this Schedule 1, the capitalized terms not defined in this
Agreement shall have the meaning ascribed to such terms in the JV Agreement.

 

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