SECURED PROMISSORY NOTE

 

$4,000,000 September 25, 2008

 

FOR VALUE RECEIVED SSTI 15 MCCLURE DR, LLC, a Delaware limited liability
company, and SSTI 1742 PASS RD, LLC, a Delaware limited liability (collectively
hereinafter referred to as "Borrower"), jointly and severally promise to pay to
the order of SPECTRUM REALTY MEZZANINE FUND I, LLC, a Delaware limited liability
company, its successors and assigns (hereinafter referred to as "Lender"), at
the office of Lender or its agent, designee, or assignee at 4121 Cox Road, Suite
107, Glen Allen, Virginia 23060, or at such place as Lender or its agent,
designee, or assignee may from time to time designate in writing, the principal
sum of Four Million And No/100 Dollars ($4,000,000.00), or so much thereof as
shall have been disbursed hereunder from time to time and remains unpaid, in
lawful money of the United States of America, with interest thereon to be
computed on the unpaid principal balance from time to time outstanding at the
Applicable Interest Rate (hereinafter defined), at all times prior to the
occurrence of an Event of Default (as defined in the Security Instrument
[hereinafter defined]), and to be paid in installments as set forth below.
Unless otherwise herein defined, all initially capitalized terms shall have the
meanings given such terms in the Security Instrument.

    PAYMENT TERMS.

    (a) Upon the closing of the loan evidenced by this Note (the "Closing")
    Lender shall lend and Borrower shall borrow the sum of Four Million and
    No/100 Dollars ($4,000,000.00) (the "Funded Loan Amount").

    (b) Upon the Closing, Borrower shall pay to Lender a loan fee (the "Initial
    Loan Fee") equal to three percent (3%) of the Funded Loan Amount. The
    Initial Loan Fee shall be netted out of the Funded Loan Amount proceeds.

    (c) Borrower shall make payments of interest only on the unpaid principal
    amount of this note from the date of the Loan until the Maturity Date at a
    rate per annum equal to the Applicable Interest Rate (as hereinafter
    defined), calculated on the basis of a year of 360 days for the actual
    number of days elapsed. Accrued interest shall be payable on the first day
    of each calendar month, up to and including the first day of March 2009. Any
    amount hereunder which is not paid when due (whether at stated maturity, by
    acceleration or otherwise), shall accrue interest from the due date until
    the date such amount is paid in full at the Default Rate. All payments
    hereunder shall be made in lawful money of the United States of America and
    in immediately available funds. Any extension of time for the payment of the
    principal of this note resulting from the Maturity Date falling on a
    non-Banking Day shall be included in the computation of interest. Payments
    under this Note shall be applied as follows:

    

    First, to the payment of interest and other costs and charges due in
    connection with this Note or the Debt, as Lender may determine in its sole
    discretion; and
    
    
    
    The balance shall be applied toward the reduction of the principal sum;

    and the balance of said principal sum, together with accrued and unpaid
    interest and any other amounts due under this Note shall be due and payable
    on March 25, 2009 or upon earlier maturity hereof whether by acceleration or
    otherwise (the "Maturity Date"). Interest on the principal sum of this Note
    shall be calculated and accrue daily on the basis of the then outstanding
    principal balance, a three hundred sixty (360) day year and paid for the
    actual number of days elapsed. All amounts due under this Note shall be
    payable without setoff, counterclaim or any other deduction whatsoever.

    

    INTEREST. The term "Applicable Interest Rate" means a rate of thirteen
    percent (13%) per annum.

    EXTENSIONS AND EXTENSION FEES. Borrower may in its sole discretion, upon the
    written consent of Lender and provided no Default exists under this Note or
    the Security Instrument (as hereinafter defined), extend the Maturity Date
    for an additional term of one (1) month (the "Extension Term"). Subject to
    the provisions herein, Borrower may opt to exercise the Extension Term three
    (3) consecutive times and in each instance must provide Lender with written
    notice of Borrowers option to enter into an Extension Term no later than
    fifteen (15) days prior to the pending Maturity Date or Extension Term
    maturity date (each an "Extension Term Maturity Date"). In no event shall
    the Maturity Date be extended beyond June 25, 2009. Borrower shall pay to
    Lender a fee equal to one percent (1%) of the then outstanding principal
    balance of this Note for each exercised Extension Term (each an "Extension
    Fee"), and each such Extension Fee shall be due and payable in lawful monies
    of the United States of America in immediately available funds paid into
    escrow upon Lender's written consent to each such Extension Term. Each
    Extension Fee shall be in addition to all other fees and interest to be paid
    by Borrower hereunder. Each Extension Fee shall be paid by Borrower in
    consideration of Lender granting such Extension Term and shall not be deemed
    a penalty.

    

    SECURITY. This Note is secured by, and Lender is entitled to the benefits
    of, the Security Instrument and the other Loan Documents (as defined in the
    Security Agreement). The term "Security Instrument" means the Mortgage and
    Security Agreement given by SSTI 15 McClure Dr, LLC and the Deed of Trust
    and Security Agreement given by SSTI 1742 Pass Rd, LLC, each dated the date
    hereof, for the use and benefit of Lender covering the estate of Borrower in
    the Property (as defined therein).

    

    LATE FEE. If any installment is not received by the Lender prior to the 15th
    calendar day after the same is due (without regard to any applicable cure
    and/or notice period), Borrower shall pay to Lender upon demand an amount
    equal to four percent (4%) of such unpaid sum to defray the expenses
    incurred by Lender in handling and processing such delinquent payment and to
    compensate Lender for the loss of the use of such delinquent payment, and
    such amount shall be secured by the Loan Documents. In no event shall any
    late fee apply or be due and payable with respect to the unpaid principal
    balance of this Note, whether payable at maturity of this Note, upon
    acceleration or otherwise.

    

    EXPENSES OF COLLECTION. In the event that it should become necessary to
    employ counsel to collect the Debt, Borrower also agrees to pay to Lender on
    demand all reasonable costs of collection or defense incurred by Lender,
    including reasonable attorneys' fees for the services of counsel whether or
    not suit be brought.

    

    DEFAULT INTEREST. Upon the occurrence of an Event of Default Borrower shall
    pay interest on the entire unpaid principal sum and any other amounts due
    under the Loan Documents at the rate equal to the greater of (i) five
    percent (5%) above the Applicable Interest Rate or (ii) five percent (5%)
    above the Prime Rate (hereinafter defined), in effect at the time of the
    occurrence of the Event of Default (the "Default Rate"). The term "Prime
    Rate" means the prime rate reported in the Money Rates section of The Wall
    Street Journal, or if the Wall Street Journal should cease publication,
    another business newspaper of national standing and general circulation
    chosen by Lender.

    PREPAYMENT.

     a. The principal balance of this Note may be prepaid in whole or in part
        prior to the Maturity Date, without penalty or fee, upon fifteen (15)
        days prior written notice; provided, however, that (i) any such
        prepayment shall be made on the last day of a calendar month, and (ii)
        any partial prepayment shall be in the amount of $500,000 or increments
        thereof.
     b. If the prepayment results from the application to the Debt of the
        casualty or condemnation proceeds from the Property, such prepayment may
        be made in an amount not equal to $500,000 or an increment thereof,
        provide that such prepayment constitutes all such casualty or
        condemnation proceeds or is used to pay the entire outstanding principal
        and interest balance of the Note.

    SAVINGS CLAUSE. This Note is subject to the express condition that at no
    time shall Borrower be obligated or required to pay interest or late fees on
    the principal balance due hereunder at a rate which could subject Lender to
    either civil or criminal liability as a result of being in excess of the
    maximum interest rate or late fees which Borrower is permitted by applicable
    law to contract or agree to pay. If by the terms of this Note, Borrower is
    at any time required or obligated to pay interest or late fees on the
    principal balance due hereunder at a rate in excess of such maximum rate,
    the Applicable Interest Rate, the Default Rate, or the late fee as the case
    may be, shall be deemed to be immediately reduced to such maximum rate and
    all previous payments in excess of the maximum rate shall be deemed to have
    been payments in reduction of principal and not on account of the interest
    or late fee due hereunder. All sums paid or agreed to be paid to Lender for
    the use, forbearance, or detention of the Debt, shall, to the extent
    permitted by applicable law, be amortized, prorated, allocated, and spread
    throughout the full stated term of this Note until payment in full so that
    the rate or amount of interest on account of the Debt does not exceed the
    maximum lawful rate of interest from time to time in effect and applicable
    to the Debt for so long as the Debt is outstanding. Notwithstanding anything
    to the contrary contained herein or in any of the other Loan Documents, it
    is not the intention of Lender to accelerate the maturity of any interest
    that has not accrued at the time of such acceleration or to collect unearned
    interest at the time of such acceleration.

    

    WAIVERS.

    Except as specifically provided in the Loan Documents, Borrower and any
    endorsers, sureties or guarantors hereof jointly and severally waive
    presentment and demand for payment, notice of intent to accelerate maturity,
    notice of acceleration of maturity, protest and notice of protest and
    non-payment, all applicable exemption rights, valuation and appraisement,
    notice of demand, and all other notices in connection with the delivery,
    acceptance, performance, default or enforcement of the payment of this Note
    and the bringing of suit and diligence in taking any action to collect any
    sums owing hereunder or in proceeding against any of the rights and
    collateral securing payment hereof. Borrower and any surety, endorser or
    guarantor hereof agree (i) that the time for any payments hereunder may be
    extended from time to time without notice and consent, (ii) to the
    acceptance by Lender of further collateral, (iii) the release by Lender of
    any existing collateral for the payment of this Note, (iv) to any and all
    renewals, waivers or modifications that may be granted by Lender with
    respect to the payment or other provisions of this Note, and/or (v) that
    additional Borrowers, endorsers, guarantors or sureties may become parties
    hereto all without notice to them and without in any manner affecting their
    liability under or with respect to this Note. No extension of time for the
    payment of this Note or any installment hereof shall affect the liability of
    Borrower under this Note or any endorser or guarantor hereof even though the
    Borrower or such endorser or guarantor is not a party to such agreement.

    

    Failure of Lender to exercise any of the options granted herein to Lender
    upon the happening of one or more of the events giving rise to such options
    shall not constitute a waiver of the right to exercise the same or any other
    option at any subsequent time in respect to the same or any other event. The
    acceptance by Lender of any payment hereunder that is less than payment in
    full of all amounts due and payable at the time of such payment shall not
    constitute a waiver of the right to exercise any of the options granted
    herein to Lender at that time or at any subsequent time or nullify any prior
    exercise of any such option without the express written acknowledgment of
    the Lender.

    

    RECOURSE. This Note shall be fully recourse to Borrower, and any endorsers,
    sureties or guarantors hereof jointly and severally.

    NOTICES. All notices or other communications required or permitted to be
    given pursuant hereto shall be given in the manner and be effective as
    specified in the Security Instrument, directed to the parties at their
    respective addresses as provided therein.

    TRANSFER. Lender shall have the unrestricted right at any time or from time
    to time to sell this Note and the loan evidenced by this Note and the Loan
    Documents or participation interests therein. Borrower shall execute,
    acknowledge and deliver any and all instruments reasonably requested by
    Lender to satisfy such purchasers or participants that the unpaid
    indebtedness evidenced by this Note is outstanding upon the terms and
    provisions set out in this Note and the other Loan Documents. To the extent,
    if any, specified in such assignment or participation, such assignee(s) or
    participant(s) shall have the rights and benefits with respect to this Note
    and the other Loan Documents as such assignee(s) or participant(s) would
    have if they were the Lender hereunder.

    

    WAIVER OF TRIAL BY JURY. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY
    OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
    FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
    REGARD TO THIS NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM
    OR OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED
    TO, THOSE RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN
    LENDER AND BORROWER; (B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C)
    ALLEGATIONS OF UNCONSCIONABLE ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD
    FAITH OR FAIR DEALING, LACK OF COMMERCIAL REASONABLENESS, OR SPECIAL
    RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR CONFIDENTIAL RELATIONSHIP); (D)
    ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL
    ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE,
    INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH
    PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F)
    SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY
    JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO
    ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
    A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE
    A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
    WAIVER BY BORROWER.

    APPLICABLE LAW; JURISDICTION. This Note shall be governed by and construed
    in accordance with the laws of the state of Florida (without regard to any
    conflict of laws or principles) and the applicable laws of the United States
    of America. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
    COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE PROPERTY
    IS LOCATED IN CONNECTION WITH ANY PROCEEDING ARISING OUT OF OR RELATING TO
    THIS NOTE.

 1. Any Florida Documentary Stamp Tax that is due on this Note has been paid
    upon recordation of the Florida Mortgage.

[SIGNATURE PAGE FOLLOWS]

 

 

Executed as of the day and year first above written.

 

 

BORROWER:

SSTI 15 MCCLURE DR, LLC,

a Delaware limited liability company

By: STRATEGIC STORAGE HOLDINGS, LLC,

a Delaware limited liability company

Its: Manager

By: U.S. COMMERCIAL LLC,

A Virginia limited liability company

Its: Manager

By: /s/ H. Michael Schwartz

H. Michael Schwartz, President

 

SSTI 1742 PASS RD, LLC,

a Delaware limited liability company

By: STRATEGIC STORAGE HOLDINGS, LLC,

a Delaware limited liability company

Its: Manager

By: U.S. COMMERCIAL LLC,

A Virginia limited liability company

Its: Manager

By: /s/ H. Michael Schwartz

H. Michael Schwartz, President