Exhibit 10.4

PREPARED BY                                            

AND UPON RECORDATION

RETURN TO:

Seyfarth Shaw LLP

1075 Peachtree Street, Suite 2500

Atlanta, Georgia 30309

Attention: Lori H. Whitfield, Esq.

Prudential Deal Name: SSTI Strategic

Storage Portfolio/                                    

Prudential Loan Number:                             

Tax Parcel Number:                                     

 

 

 

[property owning LLC], as grantor

(Borrower)

to

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, as grantee

(Lender)

 

 

ASSIGNMENT OF LEASES AND RENTS

(First Priority - [property address])

 

 

 

     

Dated: As of August 25, 2010

         Location: [property address]          County:   

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ASSIGNMENT OF LEASES AND RENTS

(First Priority - [property address])

This Assignment of Leases and Rents (First Priority - [property address]) (this
“Assignment”) is made as of the 25th day of August, 2010, by [property owning
LLC], a Delaware limited liability company, having its principal place of
business at c/o Strategic Storage Trust, Inc., 111 Corporate Drive, Suite 120,
Ladera Ranch, California 92694, as grantor (“Borrower”), to THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at 2100
Ross Avenue, Suite 2500, Dallas, Texas 75201, as grantee (“Lender”).

RECITALS:

A. Borrower is the sole owner and holder of (a) the premises described in
Exhibit A attached hereto and incorporated herein (“Property”) and (b) the
landlord’s interest under the Leases, including, without limitation, the leases
described in Exhibit B attached hereto and incorporated herein;

B. Lender has made a loan to Borrower in the principal sum of
                     Dollars ($        ) (“Loan”) evidenced by that certain
Promissory Note ([property address]) (“Note”) dated as of the date of this
Assignment and secured by that certain Deed of Trust and Security Agreement
(First Priority - [property address]) (“Instrument”) dated as of the date of
this Assignment (capitalized terms used without definition shall have the
meanings ascribed to them in the Instrument) and the Documents; and

C. Lender was willing to make the Loan to Borrower only if Borrower assigned the
Leases and Rents to Lender in the manner provided below to secure payment of the
Obligations.

IN CONSIDERATION of the principal sum of the Note and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower agrees as follows:

1. Assignment. Borrower irrevocably, absolutely and unconditionally assigns,
transfers, and sets over to Lender, its successors and assigns, all of the
right, title, interest, and estate that Borrower may now or later have in, to
and under (a) the Leases now or hereafter entered into; (b) the Rents; (c) all
proceeds from the cancellation, surrender, sale or other disposition of the
Leases, including, but not limited to, any Termination Fee (as defined in the
Note); (d) the right to collect and receive all the Rents; and (e) the right to
enforce and exercise, whether at law or in equity or by any other means, all
terms and conditions of the Leases. This Assignment is intended by Borrower and
Lender to constitute a present, absolute assignment and not a collateral
assignment for additional security only. Upon full payment and satisfaction of
the Obligations and written request by Borrower, Lender shall transfer, set
over, and assign to Borrower all right, title, and interest of Lender in, to,
and under the Leases and the Rents.

2. Borrower’s License. Until an Event of Default occurs, Borrower shall have a
revocable license (“License”) from Lender to exercise all rights extended to the
landlord under the Leases. Borrower shall hold the Rents, or an amount
sufficient to discharge all current sums due on the Obligations, in trust for
the payment of current sums due on the Obligations and, prior to the occurrence
of an Event of Default, Borrower may use, distribute and enjoy all Rents
remaining thereafter. Upon an Event of Default, whether or not legal proceedings
have commenced and without regard to waste, adequacy of security for the
Obligations or the solvency of Borrower, the License shall automatically
terminate without notice by Lender (any such notice being expressly waived by
Borrower). Upon such termination, Borrower shall deliver to Lender within seven
(7) days after written notice from Lender (a) all Rents (including prepaid
Rents) held or collected by Borrower from and after the date of the Event of
Default, (b) all security or other deposits paid pursuant to the Leases, and
(c) all previously paid charges for services, facilities or escalations to the
extent allocable to any period after the Event of Default. Borrower agrees and
stipulates that upon execution of this Assignment, Borrower’s only interest in
the Leases or Rents is as a licensee revocable upon an Event of Default.

3. Lender as Creditor of Tenant. Upon the occurrence of an Event of Default,
Lender, and not Borrower, shall be the creditor of any Tenant in respect of
assignments for the benefit of creditors and bankruptcy, reorganization,
insolvency, dissolution or receivership proceedings affecting any such Tenant;
provided, however, that Borrower shall be the party obligated to make timely
filings of claims in such proceedings or to otherwise pursue creditor’s rights
therein. At any time after the occurrence of an Event of Default, Lender shall
have the right, but not the obligation, to file such claims instead of Borrower
and if Lender does file a claim, Borrower agrees that Lender (a) is entitled to
all distributions on such claim to the exclusion of Borrower and (b) has the
exclusive right to vote such

 

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claim and otherwise to participate in the administration of the estate in
connection with such claim. At any time after the occurrence of an Event of
Default, Lender shall have the option to apply any monies received by it as such
creditor to the Obligations in the order set forth in the Documents. If a
petition is filed under the Bankruptcy Code by or against Borrower, and
Borrower, as landlord under any Lease, decides to reject such Lease pursuant to
Section 365(a) of the Bankruptcy Code, then Borrower shall give Lender at least
ten (10) days’ prior written notice of the date when Borrower shall apply to the
bankruptcy court for authority to reject the Lease. Lender may, but shall not be
obligated to, send Borrower within such ten-day period a written notice stating
that (a) Lender demands that Borrower assume and assign the Lease to Lender
pursuant to Section 365 of the Bankruptcy Code and (b) Lender covenants to cure
or provide adequate assurance of future performance under the Lease. If Lender
sends such notice, Borrower shall not reject the Lease provided Lender complies
with clause (b) of the preceding sentence.

4. Notice to Tenant of an Event of Default. Upon the occurrence of an Event of
Default and written demand sent by Lender to any of the Tenants (in each case, a
“Rent Direction Letter”), Borrower hereby irrevocably authorizes each Tenant to
(a) pay all Rents to Lender and (b) rely upon any such Rent Direction Letter
from Lender without any obligation to inquire as to the actual existence of the
Event of Default, notwithstanding any claim of Borrower to the contrary.
Borrower shall have no claim against any Tenant for any Rents paid by Tenant to
Lender pursuant to any Rent Direction Letter.

5. Indemnification of Lender. Borrower hereby agrees to indemnify and hold
Lender harmless from any and all Losses that Lender may incur under the Leases
or by reason of this Assignment, except for Losses incurred as a direct result
of Lender’s willful misconduct or gross negligence. Nothing in this Assignment
shall be construed to bind Lender to the performance of any of the terms of the
Leases or to otherwise impose any liability on Lender including, without
limitation, any liability under covenants of quiet enjoyment in the Leases in
the event that any Tenant shall have been joined as party defendant in any
action to foreclose the Instrument and shall have been barred thereby of all
right, title, interest, and equity of redemption in the premises. This
Assignment imposes no liability upon Lender for the operation and maintenance of
the Property or for carrying out the terms of any Lease before Lender has
entered and taken actual possession and complete control of all operations of
the Property. Any Losses incurred by Lender, by reason of actual entry and
taking possession under any Lease or this Assignment or in the defense of any
claims shall, at Lender’s request, be reimbursed by Borrower. Such reimbursement
shall include interest at the Default Rate from the date of demand by Lender and
any and all Costs incurred by Lender. Lender may, upon entry and taking of
possession, collect the Rents and apply them to reimbursement for any such
items.

6. Representations and Warranties. Borrower represents and warrants that
(a) Borrower is the absolute owner of the landlord’s interest in the Leases,
(b) Borrower has the right, power and authority to assign, transfer, and set
over all of its right, title and interest in, to and under the Leases and Rents
and no other person has any right, title or interest therein, (c) to Borrower’s
actual knowledge, the Leases are valid and in full force and effect and have not
been modified, amended or terminated, nor have any of the terms and conditions
of the Leases been waived, except as expressly stated in the Leases, (d) to
Borrower’s actual knowledge, there are no outstanding assignments or pledges of
the Leases or Rents, (e) there are no outstanding leasing commissions due under
the Leases for the initial term or for any extensions, renewals or expansions,
(f) to Borrower’s actual knowledge, except as disclosed to Lender in writing,
there are no existing material defaults or any state of facts which, with the
giving of notice and/or passage of time, would constitute a material default
under the Leases by any party thereto, (g) to Borrower’s actual knowledge, no
Tenant has any defense, set-off or counterclaim against Borrower, (h) to
Borrower’s actual knowledge, each Tenant is in possession of its leased premises
and paying Rent and other charges as provided in its Lease, except as otherwise
indicated on the Rent Roll (defined below), (i) no Rents have been or will later
be anticipated, discounted, released, waived, compromised or otherwise
discharged, except as may be expressly permitted by the Lease or herein,
(j) except as specified in the Leases and shown on the rent roll delivered to
Lender in connection with the funding of the Loan (the “Rent Roll”), there are
no (i) unextinguished rent concessions, abatements or other inducements relating
to the Leases, (ii) options or other rights to acquire any interest in the
Property in favor of any Tenant, or (iii) options or other rights (whether in
the form of expansion rights, purchase rights, rights of first refusal to lease
or purchase, or otherwise) relating to property which is not part of the
Property and/or would require Borrower and/or Lender to possess or control any
property (other than the Property) to honor such rights, and (k) to Borrower’s
actual knowledge, the Rent Roll discloses all currently existing Leases and is
true, complete and accurate in all material respects.

7. Leasing Restrictions.

Borrower shall lease the Property at market rents and on market terms (based on
the type, quality and location of the Property) using Borrower’s standard lease
form that has been approved by Lender, and Borrower’s standard lease form shall
prohibit any Tenant from using or storing any dry cleaning solvents on the
Property. All

 

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Leases shall be bona fide, binding contracts, duly authorized and executed with
third party tenants unrelated to Borrower, any guarantor or indemnitor of the
Loan or any of their affiliates. All free rent and similar concessions shall be
given only at the beginning of the term of the Lease, the Tenant’s share of
operating expenses shall not decrease over the term of the applicable Lease, and
there shall be no economic obligations on the landlord under a Lease beyond
maintaining the Property.

8. Covenants. Borrower shall not, except with the prior written consent of
Lender in each instance, (a) sell, assign, pledge, mortgage or otherwise
transfer or encumber (except hereby) any of the Leases, Rents or any right,
title or interest of Borrower therein; (b) accept prepayments of any Rents for a
period of more than one (1) month in advance of the due dates thereof except
with respect to Rents in an amount not to exceed five percent (5%) of the annual
gross revenue of the Property; (c) in any manner intentionally or materially
impair the value of the Property or the benefits to Lender of this Assignment;
(d) except in connection with Borrower’s normal and customary business practices
in the exercise of Borrower’s prudent business judgment for the benefit of the
Property, waive, excuse, condone, discount, set off, compromise, or in any
manner release or discharge any Tenant from any of its obligations under the
Leases; (e) except in connection with Borrower’s normal and customary business
practices in the exercise of Borrower’s prudent business judgment for the
benefit of the Property, enter into any settlement of any action or proceeding
arising under, or in any manner connected with, the Leases or with the
obligations of the landlord or the Tenants thereunder; (f) except in connection
with Borrower’s normal and customary business practices in the exercise of
Borrower’s prudent business judgment for the benefit of the Property, modify,
cancel or terminate any guaranties under any Lease; or (g) lease any portion of
the Property to a dry cleaner that uses dry cleaning solvents on the Property.
Borrower shall, at its sole cost and expense, duly and timely keep, observe,
perform, comply with and discharge all of the material obligations of the
landlord under the Leases, or cause the foregoing to be done, and Borrower shall
not take any actions that would, either presently or with the passage of time,
cause a default by Borrower under any of the Leases. At Borrower’s expense,
Borrower shall (a) [intentionally omitted], (b) enforce the Leases and all
remedies available to Borrower upon any Tenant’s default, (c) upon Lender’s
request, deliver to Lender copies of all papers served in connection with any
such enforcement proceedings, and (d) upon Lender’s request, consult with
Lender, its agents and attorneys with respect to the conduct thereof. Borrower
shall not enter into any settlement of any such proceeding without Lender’s
prior written consent.

9. No Merger. Each Lease shall remain in full force and effect, notwithstanding
any merger of Borrower’s and Tenant’s interest thereunder.

10. Documents Incorporated. The terms and conditions of the Documents are
incorporated into this Assignment as if fully set forth in this Assignment.

 

11. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of                     .

12. WAIVER OF TRIAL BY JURY. EACH OF BORROWER AND LENDER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR
OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE DOCUMENTS, OR ANY
ALLEGED ACTS OR OMISSIONS OF LENDER OR BORROWER IN CONNECTION THEREWITH.

13. Tenant Recovery. Borrower covenants and agrees that it shall pay the amount
of any Tenant Recovery (as defined below) to Lender to be disbursed by Lender
for the payment of Lender approved out-of-pocket (1) tenant improvement costs
and/or (2) market leasing commissions; provided, however, any such amount held
by Lender shall be released to Borrower upon written request at such time as a
replacement tenant (x) has executed a bona-fide, binding Lease on market terms
and conditions for the entire leased premises that was vacated in connection
with such Lease termination, cancellation or expiration, (y) is in actual
occupancy of the leased premises that was vacated in connection with such Lease
termination, cancellation or expiration and (z) is paying non-discounted monthly
rent under its Lease; provided further, however, that if an Event of Default
occurs under the Documents, Lender, at its option and in its sole discretion,
shall have the right to apply all such remaining undisbursed amounts to the
Obligations in such order as Lender in its sole discretion shall determine.
Tenant Recovery means, with respect to any Lease that provides more than five
percent (5%) of the gross annual income from the Property during any twelve
month period during the term of the Loan, the amount of any Recovery (as defined
in the Note) if such Recovery is greater than one (1) month’s base rent payable
under the applicable Lease, which is received by, or, on behalf of, any of the
Recourse Parties at any time during the term of the Loan.

 

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IN WITNESS WHEREOF, Borrower has duly executed this Assignment the date first
above written.

 

BORROWER: [property owning LLC], a Delaware limited liability company By:  
Strategic Storage Holdings, LLC, a Delaware limited liability company, its
Manager By:  

/s/ H. Michael Schwartz

  H. Michael Schwartz, its President

                                                     )

COUNTY OF                             )

I,                         , a notary public in and for the state and county
aforesaid do certify that H. Michael Schwartz, whose name is signed to the
writing above, being the President of Strategic Storage Holdings, LLC, a
Delaware limited liability company, as manager of [property owning LLC] a
limited liability company, bearing date on the 25th day of August, 2010, have
acknowledged the same before me in my county aforesaid.

 

                                                                     
                     Notary Public Name:                          
                                                      My Commission
Expires:                                                 Notary Registration No.
                         [NOTARY SEAL]