Exhibit 10.2

 

CONTRIBUTION AGREEMENT

(Pool 2)

 

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made and entered into as of
the 23rd day of June, 2009 by and between EXTRA SPACE STORAGE LLC, a Delaware
limited liability company (“Extra Space”), and HSRE-ESP IA, LLC, a Delaware
limited liability company (“HSRE”).

 

RECITALS

 

WHEREAS, Extra Space is the owner of a ninety nine percent (99%) ownership
interest (the “ESP 51 Interest”) in Extra Space Properties Fifty One LLC (“ESP
51”) and one hundred percent (100%) of the ownership interest (the “ESP 57
Interest”; together with the ESP 51 Interest, the “ESP Interests”) in Extra
Space Properties Fifty Seven LLC (“ESP 57”), which owns the remaining one
percent (1%) interest in ESP 51;

 

WHEREAS, ESP 51 is the direct owner of fifteen self storage facilities more
particularly described on Schedule R-1, attached hereto (each, a “Facility” or a
“Direct Facility” and collectively, the “Direct Facilities”);

 

WHEREAS, ESP 51 is the owner of a ninety nine percent (99%) limited partnership
interest (the “Texas LP Interest”) in Extra Space of Texas Eleven LP, a Texas
limited partnership (“ESP Texas”) and one hundred percent (100%) of the
ownership interest (the “Texas GP Interest”; the Texas LP Interest and the Texas
GP Interest are together referred to herein as the “Texas Interests”) in ESP
Texas Eleven GP LLC, a Delaware limited liability company (“ESP Texas GP”),
which is the owner of a one percent (1%) general partnership interest in ESP
Texas;

 

WHEREAS, ESP Texas is the direct owner of four self storage facilities more
particularly described on Schedule R-2, attached hereto (each, a “Facility” or a
“Texas Facility” and collectively, the “Texas Facilities”; the Direct Facilities
and the Texas Facilities are collectively referred to herein as the
“Facilities”);

 

WHEREAS, subject to the terms and conditions of this Agreement, Extra Space and
HSRE desire to engage in a series of transactions pursuant to which:

 

(1)           Extra Space and HSRE will form a new limited liability company to
be named HSRE-ESP I, LLC (“HSRE-ESP”) to be owned by Extra Space and HSRE and,
as Extra Space’s initial capital contribution to HSRE-ESP, Extra Space will
contribute cash in the amount specified in this Agreement and all of Extra
Space’s right, title, and interest in and to the ESP Interests in exchange for
membership interests in HSRE-ESP (the “ESS HSRE-ESP Interests”), which ESS
HSRE-ESP Interests are more particularly described in the form of limited
liability company agreement for HSRE-ESP attached hereto as Exhibit A and by
this reference made a part hereof (the “HSRE-ESP Operating Agreement”);

 

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(2)           As HSRE’s initial capital contribution to HSRE-ESP, HSRE will
contribute cash in the amount specified in this Agreement in exchange for
membership interests in HSRE-ESP (the “HSRE HSRE-ESP Interests”), which HSRE
HSRE-ESP Interests are more particularly described in the HSRE-ESP Operating
Agreement; and

 

(3)           HSRE-ESP will distribute cash to Extra Space in the amount
specified in this Agreement;

 

WHEREAS, the Facilities are subject to the Existing Indebtedness (defined below)
in the aggregate approximate amount of $101,000,000.00 and after contribution of
the ESP Interests to HSRE-ESP, the Facilities will continue to be subject to the
Existing Indebtedness.

 

THEREFORE, in consideration of the terms and conditions contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Extra Space and HSRE agree as
follows:

 

1.             AGREEMENT TO CONTRIBUTE.  Subject to the conditions and on the
terms contained in this Agreement, HSRE agrees to contribute to HSRE-ESP cash in
the amount specified in Section 2.2.3 below and Extra Space agrees to
(i) contribute, assign, convey and transfer to HSRE-ESP the ESP Interests, on
the terms and conditions set forth in this Agreement and in the Assignment
Agreement (as defined in Section 4.2.2.2 below) and (ii) contribute to HSRE-ESP
cash in the amount specified in Section 2.2.4 below.

 

2.             TRANSFER OF ESP INTERESTS.

 

2.1           RECITALS.  THE FOREGOING RECITALS ARE HEREBY INCORPORATED BY THIS
REFERENCE.

 

2.2           CONSIDERATION AND CLOSING STRUCTURE.

 

2.2.1        CONTRIBUTION VALUE.  THE PARTIES HEREBY AGREE THAT THE GROSS FAIR
VALUE OF THE ESP INTERESTS (WHICH INCLUDE THE VALUE OF ALL OF THE FACILITIES),
FOR ALL PURPOSES OF THIS AGREEMENT, IS EQUAL TO $132,500,000 (THE “CONTRIBUTION
VALUE”).

 

2.2.2        DISTRIBUTION AMOUNT.  IMMEDIATELY AFTER THE CLOSING EXTRA SPACE AND
HSRE SHALL CAUSE HSRE-ESP TO DISTRIBUTE TO EXTRA SPACE CASH IN AN AMOUNT (THE
“EXTRA SPACE DISTRIBUTION AMOUNT”) EQUAL TO THE SUM OF: (I) THE “INITIAL HSRE
CONTRIBUTION AMOUNT” (HEREINAFTER DEFINED) MINUS (II) ANY CLOSING COSTS AND
PRORATIONS DESCRIBED IN SECTION 4.3 BELOW (INCLUDING THE COSTS DESCRIBED IN
SECTION 4.3.4 BELOW) (COLLECTIVELY, THE “PRORATIONS”) AND CREDITED, AS OF THE
PRORATION DATE (AS DEFINED BELOW), TO HSRE-ESP, PLUS (III) ANY PRORATIONS
CREDITED, AS OF THE PRORATION DATE, TO EXTRA SPACE.  AS USED HEREIN, THE TERM
“INITIAL HSRE CONTRIBUTION AMOUNT” SHALL MEAN EIGHTY PERCENT (80%) OF THE
DIFFERENCE BETWEEN (A) THE CONTRIBUTION VALUE, MINUS (B) THE SUM OF THE
AGGREGATE UNPAID PRINCIPAL BALANCE OF THE EXISTING INDEBTEDNESS PLUS ALL ACCRUED
AND UNPAID INTEREST WITH RESPECT TO THE EXISTING INDEBTEDNESS AS OF THE
PRORATION DATE.  EXTRA SPACE AND HSRE AGREE THAT FOR PURPOSES OF DETERMINING THE
BALANCE

 

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OF EXTRA SPACE’S “CAPITAL ACCOUNT” (AS DEFINED IN THE HSRE-ESP OPERATING
AGREEMENT) AND EXTRA SPACE’S “ADJUSTED CAPITAL ACCOUNT” (AS DEFINED IN THE
HSRE-ESP OPERATING AGREEMENT), THE GROSS AMOUNT OF EXTRA SPACE’S INITIAL
“CAPITAL CONTRIBUTION” TO HSRE-ESP SHALL BE REDUCED BY THE INITIAL HSRE
CONTRIBUTION AMOUNT NOTWITHSTANDING THE FACT THAT THE AMOUNT ACTUALLY
DISTRIBUTED TO EXTRA SPACE BY HSRE-ESP IS ADJUSTED (EITHER INCREASED OR
DECREASED) PURSUANT TO THE PROVISIONS OF THIS SECTION 2.2.2.  THE PARTIES HEREBY
AGREE THAT THE PROVISIONS OF THIS SECTION 2.2.2 ARE INTENDED TO CAUSE THE
ADJUSTED CAPITAL ACCOUNTS OF HSRE AND EXTRA SPACE TO BE IN AN 80.00%/20.00%
RATIO, RESPECTIVELY, FOLLOWING THE CONTRIBUTION OF THE ESP INTERESTS BY EXTRA
SPACE AND THE INITIAL HSRE CONTRIBUTION AMOUNT BY HSRE AND THE DISTRIBUTION OF
THE EXTRA SPACE DISTRIBUTION AMOUNT TO EXTRA SPACE AND THE PRO-RATIONS AND
CREDITS PROVIDED FOR HEREIN.

 

2.2.3        CASH TO BE CONTRIBUTED BY HSRE.  AT CLOSING, HSRE SHALL CONTRIBUTE
TO HSRE-ESP CASH IN AN AMOUNT (THE “TOTAL HSRE CONTRIBUTION AMOUNT”) EQUAL TO
THE SUM OF (I) THE INITIAL HSRE CONTRIBUTION AMOUNT, PLUS (II) EIGHTY PERCENT
(80.00%) OF THE TOTAL PRORATIONS CHARGED TO HSRE-ESP.

 

2.2.4        CASH TO BE CONTRIBUTED BY EXTRA SPACE.  AT CLOSING, EXTRA SPACE
SHALL CONTRIBUTE TO HSRE-ESP CASH IN AN AMOUNT (THE “TOTAL EXTRA SPACE
CONTRIBUTION AMOUNT”) EQUAL TO THE SUM OF TWENTY PERCENT (20.00%) OF THE
PRORATIONS CHARGED TO HSRE-ESP.

 

3.             THE PROPERTY; EXISTING INDEBTEDNESS.

 

3.1           PROPERTY.  AS USED HEREIN, “PROPERTY” SHALL MEAN AND INCLUDE ALL
OF THE FOLLOWING:

 

3.1.1        LAND.  THOSE CERTAIN TRACTS OF REAL ESTATE UNDERLYING THE
FACILITIES, AS MORE PARTICULARLY DESCRIBED ON SCHEDULES 3.1(A) 1 THROUGH 19,
TOGETHER WITH ALL EASEMENTS, COVENANTS, RIGHTS, PRIVILEGES, TENEMENTS,
HEREDITAMENTS AND APPURTENANCES THEREUNTO NOW OR HEREAFTER BELONGING OR
APPERTAINING THERETO (COLLECTIVELY, THE “LAND”);

 

3.1.2        IMPROVEMENTS. ALL OF THE BUILDINGS, STRUCTURES, FIXTURES AND OTHER
IMPROVEMENTS LOCATED ON OR USED IN CONNECTION WITH THE LAND, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PLUMBING, AIR CONDITIONING, HEATING, VENTILATING,
MECHANICAL, ELECTRICAL AND OTHER UTILITY SYSTEMS, PARKING LOTS AND FACILITIES,
LANDSCAPING, ROADWAYS, SIDEWALKS, SECURITY DEVICES, SIGNS AND LIGHT FIXTURES
(THE “IMPROVEMENTS”) (THE LAND AND THE IMPROVEMENTS ARE COLLECTIVELY REFERRED TO
AS THE “PREMISES”);

 

3.1.3        TANGIBLE PERSONAL PROPERTY.  TO THE EXTENT OWNED BY EITHER ESP 51
OR ESP TEXAS, ALL FURNITURE, FURNISHINGS, FIXTURES, EQUIPMENT, MACHINERY,
MAINTENANCE VEHICLES AND EQUIPMENT, TOOLS, PARTS, RECREATIONAL EQUIPMENT,
CARPETING, WINDOW TREATMENTS, STATIONERY AND OTHER OFFICE SUPPLIES AND OTHER

 

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TANGIBLE PERSONAL PROPERTY OF EVERY KIND SITUATED IN, ON, OVER AND UNDER THE
PREMISES OR USED IN CONNECTION THEREWITH, WHICH IS NOT OWNED BY TENANTS UNDER
THE LEASES (DEFINED BELOW), TOGETHER WITH ALL REPLACEMENTS AND SUBSTITUTIONS
THEREFOR BETWEEN THE DATE HEREOF AND CLOSING (THE “TANGIBLE PERSONAL PROPERTY”),
INCLUDING BUT NOT LIMITED TO THOSE ITEMS SET FORTH ON SCHEDULE 3.1(C) ATTACHED
HERETO;

 

3.1.4        LEASES AND CONTRACTS.  ALL RIGHT, TITLE AND INTEREST OF ESP 51 OR
ESP TEXAS (AS APPLICABLE) IN AND TO THE CONTRACTS, IF ANY, AND THE LEASES (AS
SUCH TERMS ARE DEFINED BELOW); AND

 

3.1.5        INTANGIBLES.  ALL TRANSFERABLE WARRANTIES OR GUARANTIES ISSUED IN
CONNECTION WITH THE IMPROVEMENTS OR TANGIBLE PERSONAL PROPERTY, AND ANY OTHER
INTANGIBLE PERSONAL PROPERTY, AND USED EXCLUSIVELY IN CONNECTION WITH THE
PREMISES OR THE BUSINESS TRANSACTED THEREON (COLLECTIVELY, THE “INTANGIBLE
PERSONAL PROPERTY”), INCLUDING, WITHOUT LIMITATION, TO THE EXTENT ASSIGNABLE,
ALL LAND USE ENTITLEMENTS, DEVELOPMENT RIGHTS, LICENSES, PERMITS,
AUTHORIZATIONS, NAMES, AND TELEPHONE EXCHANGE NUMBERS; PROVIDED, HOWEVER, THAT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION 3.1, THE
TERMS PROPERTY AND INTANGIBLE PERSONAL PROPERTY SHALL EXPRESSLY EXCLUDE ANY AND
ALL TRADE NAMES AND TRADEMARKS OWNED, DIRECTLY OR INDIRECTLY, BY EXTRA SPACE
STORAGE INC. REGARDLESS OF WHETHER SUCH TRADE NAMES OR TRADEMARKS ARE USED ON OR
WITH RESPECT TO THE PROPERTY AND NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED TO
EITHER CONVEY OR TO CREATE ANY OBLIGATION ON THE PART OF EXTRA SPACE TO CONVEY,
TO HSRE-ESP ANY RIGHTS IN OR RIGHTS TO USE ANY SUCH TRADE NAMES OR TRADEMARKS.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH ABOVE OR OTHERWISE CONTAINED
HEREIN, “PROPERTY” EXPRESSLY EXCLUDES (I) ALL PROPERTY OWNED BY TENANTS OR OTHER
USERS OR OCCUPANTS OF THE PREMISES (OTHER THAN ESP 51 AND ESP TEXAS), (II) ALL
PROPERTY OWNED BY THE PROPERTY MANAGER OF THE PREMISES, (III) ALL PROPERTY OWNED
BY ANY VENDOR UNDER ANY CONTRACT, (IV)  ALL RIGHTS AND LIABILITIES OF EITHER ESP
51 OR ESP TEXAS IN, TO AND UNDER THOSE LITIGATION MATTERS, IF ANY, DESCRIBED IN
SCHEDULE 3.1 ATTACHED HERETO.

 

3.2           EXISTING INDEBTEDNESS.  AS USED IN THIS AGREEMENT, THE TERM
“EXISTING INDEBTEDNESS” SHALL MEAN THOSE CERTAIN LOANS EVIDENCED BY SEPARATE
PROMISSORY NOTES WITH RESPECT TO EACH OF THE FACILITIES IN WHICH EITHER ESP 51
OR ESP TEXAS APPEARS AS BORROWER AND WACHOVIA BANK N.A. APPEARS AS LENDER (EACH
A “THIRD PARTY NOTE” AND COLLECTIVELY THE “THIRD PARTY NOTES”).  THE THIRD PARTY
NOTES ARE SECURED BY ONE OR MORE MORTGAGES OR DEEDS OF TRUST AGAINST THE
PROPERTY (EACH A THE “THIRD PARTY MORTGAGE” AND COLLECTIVELY THE “THIRD PARTY
MORTGAGES”).  EXTRA SPACE AND HSRE AGREE AS FOLLOWS WITH RESPECT TO THE EXISTING
INDEBTEDNESS:

 

3.2.1        THE OBLIGATIONS OF EXTRA SPACE AND HSRE UNDER THIS AGREEMENT SHALL
BE SUBJECT TO THE FOLLOWING:

 

3.2.1.1                 HSRE’S APPROVAL, PRIOR TO THE EXPIRATION OF THE DUE
DILIGENCE PERIOD (DEFINED BELOW) OF THE EXISTING INDEBTEDNESS, INCLUDING,

 

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BUT NOT LIMITED TO, HSRE’S APPROVAL OF THE AMOUNT, INTEREST RATE, PAYMENT
SCHEDULE, REPAYMENT TERM AND OTHER TERMS OF THE EXISTING INDEBTEDNESS, AND THE
FORM OF THE DOCUMENTS EVIDENCING AND OR SECURING THE EXISTING INDEBTEDNESS,
INCLUDING, BUT NOT LIMITED TO, ANY GUARANTEES OF THE EXISTING INDEBTEDNESS (THE
“THIRD PARTY LOAN DOCUMENTS”), WHICH APPROVALS SHALL BE IN HSRE’S SOLE AND
ABSOLUTE DISCRETION.

 

3.2.1.2                 THE CURRENT HOLDER OR HOLDERS OF THE EXISTING
INDEBTEDNESS (THE “LENDER”) AND EACH SERVICER OF THE EXISTING INDEBTEDNESS
CONSENTING TO THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT AND
HSRE-ESP’S ASSUMPTION OF THE EXISTING INDEBTEDNESS, ALL ON TERMS THAT ARE
ACCEPTABLE TO HSRE AND EXTRA SPACE, IN THEIR RESPECTIVE SOLE DISCRETIONS (THE
“LENDER CONDITIONS”).  THE PARTIES ACKNOWLEDGE THAT THE LENDER MAY REQUIRE AS A
LENDER CONDITION THAT THE EXISTING INDEBTEDNESS BE GUARANTEED BY HSRE-ESP AND
THAT EXTRA SPACE CONTINUE TO PROVIDE CERTAIN GUARANTEES AND/OR INDEMNIFICATIONS
WITH RESPECT TO THE EXISTING INDEBTEDNESS.  SUBJECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT, EXTRA SPACE AGREES TO PROVIDE SUCH GUARANTEES AND/OR
INDEMNIFICATIONS.  THE PARTIES ALSO ACKNOWLEDGE THAT (I) ANY REQUIRED GUARANTIES
OR INDEMNIFICATIONS FROM EITHER HSRE-ESP OR EXTRA SPACE THAT ARE MORE BURDENSOME
OR ONEROUS, IN ANY MATERIAL RESPECTS, THAN THE EXISTING GUARANTEES AND
INDEMNIFICATIONS PROVIDED BY EXTRA SPACE SHALL NOT BE ACCEPTABLE, (II) ANY
LENDER CONDITIONS THAT REQUIRE ANY GUARANTIES OR INDEMNIFICATIONS FROM HSRE OR
ANY AFFILIATE OF HSRE (OTHER THAN HSRE-ESP) ARE NOT ACCEPTABLE TO HSRE.

 

3.2.2        EXTRA SPACE AGREES TO PROMPTLY APPLY FOR AND PURSUE WITH REASONABLE
DILIGENCE LENDER’S CONSENT TO THE TRANSACTION WHICH IS THE SUBJECT OF THIS
AGREEMENT.  EXTRA SPACE WILL ADVANCE THE NON-REFUNDABLE AMOUNTS CHARGED BY THE
LENDER AS A CONDITION TO PROCESSING THE REQUEST THAT LENDER CONSENT TO THE
TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT.  EXTRA SPACE AGREES, FROM
TIME TO TIME, TO INFORM HSRE AS TO THE STATUS OF THE APPROVAL PROCESS AND EXTRA
SPACE AND HSRE EACH AGREE TO USE COMMERCIALLY REASONABLE EFFORTS TO COOPERATE
WITH EACH OTHER AND WITH LENDER AND ANY SERVICER IN SEEKING SUCH APPROVAL AND
CONSENT AND IN RESPONDING TO THE REASONABLE REQUESTS OF LENDER AND/OR SUCH
SERVICER.  PROVIDED THAT THE CLOSING OCCURS, HSRE-ESP SHALL BE RESPONSIBLE FOR
AND PAY ALL FEES, COSTS, EXPENSES, AND OTHER CHARGES CHARGED BY LENDER AND/OR
ANY SERVICER OF THE EXISTING INDEBTEDNESS OR INCURRED IN THE SATISFACTION OF ANY
CONDITION OR REQUIREMENT IMPOSED BY LENDER OR SUCH SERVICER WITH RESPECT TO
LENDER’S CONSENTING TO THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT
(“LENDER EXPENSES”) AND ANY PARTY ADVANCING SUCH COSTS PRIOR TO CLOSING SHALL BE
REIMBURSED FOR SUCH COSTS AT CLOSING.  IF THE CLOSING DOES NOT OCCUR, NEITHER
EXTRA SPACE NOR HSRE SHALL BE REIMBURSED FOR ANY OF THE LENDER EXPENSES ADVANCED
BY SUCH PARTY.  THE OBLIGATIONS OF THIS SECTION 3.2.2 SHALL SURVIVE THE CLOSING
AND SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

 

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3.2.3        NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IF AT
THE CLOSING DATE, LENDER AND/OR ANY SERVICER OF EXISTING INDEBTEDNESS HAS NOT
CONSENTED TO THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT AND PROVIDED
THAT HSRE HAS NOT TERMINATED THIS AGREEMENT PURSUANT TO SECTION 8.3 BELOW, HSRE
SHALL HAVE THE OPTION TO EITHER (A) EXTEND THE CLOSING FOR AN ADDITIONAL SIXTY
(60) DAYS (HEREINAFTER THE “LENDER APPROVAL EXTENSION PERIOD”) TO PERMIT EXTRA
SPACE TO CONTINUE TO PURSUE WITH REASONABLE DILIGENCE LENDER’S CONSENT TO THE
TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT OR (B) TERMINATE THIS
AGREEMENT.  SUCH OPTION SHALL BE EXERCISED BY HSRE GIVING EXTRA SPACE WRITTEN
NOTICE OF HSRE’S ELECTION TO EITHER EXTEND THE CLOSING OR TERMINATE THIS
AGREEMENT PURSUANT TO THIS SECTION 3.2.3 AT ANY TIME ON OR BEFORE THE DATE ON
WHICH THE CLOSING DATE WOULD BE SCHEDULED TO OCCUR BUT FOR SUCH EXTENSION.  IF
HSRE FAILS TO GIVE SUCH WRITTEN NOTICE TO EXTRA SPACE, SUCH FAILURE SHALL BE
DEEMED TO BE AN ELECTION TO TERMINATE THIS AGREEMENT.

 

3.2.4        DURING THE DUE DILIGENCE PERIOD, EXTRA SPACE WILL MAKE AVAILABLE TO
HSRE TRUE AND CORRECT COPIES OF ALL OF THE MATERIAL THIRD PARTY LOAN DOCUMENTS
FOR INSPECTION, COPYING AND REVIEW.

 

4.             CLOSING.

 

4.1           CLOSING DATE.  THE “CLOSING DATE” OR “CLOSING” OF THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT SHALL BE ON OR BEFORE THE DATE WHICH IS FIFTEEN
(15) DAYS FROM THE END OF THE DUE DILIGENCE PERIOD.  THE “CLOSING DATE” SHALL BE
THE DATE ON WHICH THE “CLOSING” OCCURS.  THE CLOSING SHALL OCCUR AT THE OFFICE
OF HSRE’S COUNSEL, DLA PIPER LLP (US), 203 NORTH LASALLE STREET, 19TH FLOOR,
CHICAGO, IL, 60601.  THE “CLOSING” SHALL BE DEEMED TO HAVE OCCURRED WHEN ALL OF
THE CONDITIONS TO CLOSING (AS SET FORTH IN THIS AGREEMENT) HAVE EITHER BEEN
SATISFIED OR WAIVED, THE ESCROW AGENT (DEFINED BELOW) HOLDS A SETTLEMENT
STATEMENT SIGNED BY EXTRA SPACE, A SETTLEMENT STATEMENT SIGNED BY HSRE, AND ALL
OF THE FUNDS AND ALL OF THE OTHER DOCUMENTS REQUIRED BY THIS AGREEMENT, AND
EXTRA SPACE AND HSRE HAVE AUTHORIZED ESCROW AGENT TO DISBURSE SUCH FUNDS AND
DELIVER SUCH DOCUMENTS IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT.

 

4.2           CLOSING DOCUMENTS.

 

4.2.1        COORDINATION WITH CLOSING UNDER POOL 1 CONTRIBUTION AGREEMENT. 
CONCURRENTLY WITH THE EXECUTION OF THIS AGREEMENT, THE PARTIES TO THIS AGREEMENT
ALSO EXECUTED THAT CERTAIN CONTRIBUTION AGREEMENT (POOL 1) (THE “POOL 1
CONTRIBUTION AGREEMENT”) RELATING TO CERTAIN OTHER SELF STORAGE FACILITIES, AS
MORE PARTICULARLY DESCRIBED IN THE POOL 1 CONTRIBUTION AGREEMENT.  IT IS THE
ANTICIPATION OF THE PARTIES TO THIS AGREEMENT THAT THE CLOSING UNDER THIS
AGREEMENT WILL OCCUR PRIOR TO THE CLOSING UNDER THE POOL 1 CONTRIBUTION
AGREEMENT.  IF THE CLOSING UNDER THIS AGREEMENT DOES NOT OCCUR EITHER PRIOR TO
OR CONCURRENTLY WITH THE CLOSING UNDER THE POOL 1 CONTRIBUTION, THE PARTIES
WILL, IN CONNECTION WITH THE CLOSING UNDER THIS AGREEMENT, PROCEED WITH THE
DELIVERY OF DOCUMENTS AND FUNDS IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT EXCEPT TO THE EXTENT THAT SUCH DOCUMENTS WERE EXECUTED AND DELIVERED
IN CONNECTION WITH

 

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THE CLOSING UNDER THE POOL 1 CONTRIBUTION AGREEMENT AND, TO THE EXTENT
NECESSARY, SHALL MODIFY THIS AGREEMENT TO REFLECT THE FACT THAT THE CLOSING
UNDER THE POOL 1 CONTRIBUTION AGREEMENT OCCURRED PRIOR TO THE CLOSING UNDER THIS
AGREEMENT.

 

4.2.2        EXTRA SPACE.  AT CLOSING, EXTRA SPACE SHALL DELIVER EACH OF THE
FOLLOWING:

 

4.2.2.1                 [RESERVED].

 

4.2.2.2                 TWO COUNTERPARTS OF AN ASSIGNMENT AND ASSUMPTION OF THE
MEMBERSHIP INTERESTS IN ESP 51 AND ESP 57 (THE “ASSIGNMENT AGREEMENT”) EXECUTED
BY EXTRA SPACE IN THE FORM OF EXHIBIT B ATTACHED HERETO AND BY THIS REFERENCE
MADE A PART HEREOF [AT CLOSING, ONE COUNTERPART WILL BE DELIVERED TO EXTRA SPACE
AND ONE COUNTERPART WILL BE DELIVERED TO HSRE-ESP];

 

4.2.2.3                 UNLESS THE CLOSING UNDER THE POOL 1 CONTRIBUTION
AGREEMENT HAS ALREADY OCCURRED, THREE COUNTERPARTS OF THE HSRE-ESP OPERATING
AGREEMENT, EXECUTED BY EXTRA SPACE [AT CLOSING, ONE COUNTERPART WILL BE
DELIVERED TO EXTRA SPACE, ONE COUNTERPART WILL BE DELIVERED TO HSRE AND ONE
COUNTERPART WILL BE DELIVERED TO HSRE-ESP];

 

4.2.2.4                 ANY AND ALL AFFIDAVITS, UNDERTAKINGS, CERTIFICATES OR
OTHER DOCUMENTS CUSTOMARILY REQUIRED BY TITLE INSURER IN ORDER TO CAUSE IT TO
ISSUE THE TITLE POLICY OR THE ENDORSEMENTS (AS DEFINED IN SECTION 11.1.1
HERETO), AS APPLICABLE, TO HSRE-ESP OR ANY APPLICABLE SUBSIDIARY OF HSRE-ESP
INCLUDING, WITHOUT LIMITATION, ESP 51 OR ESP TEXAS;

 

4.2.2.5                 EXTRA SPACE’S AFFIDAVIT STATING EXTRA SPACE’S U.S.
TAXPAYER IDENTIFICATION NUMBER AND THAT EXTRA SPACE IS NOT A DISREGARDED ENTITY
OR FOREIGN PERSON WITHIN THE MEANING OF SECTION 1445 OF THE INTERNAL REVENUE
CODE (AND ANY SIMILAR AFFIDAVIT THAT MAY BE REQUIRED UNDER STATE LAW);

 

4.2.2.6                 TO THE EXTENT NOT PROVIDED TO HSRE PRIOR TO CLOSING,
COPIES OF ALL CONTRACTS, IF ANY, AND ALL LEASES (EACH OF WHICH MAY BE DELIVERED
AT THE FACILITY WHICH IS THE SUBJECT OF SUCH LEASE) [TO BE DELIVERED TO
HSRE-ESP];

 

4.2.2.7                 EVIDENCE REASONABLY SATISFACTORY OF TERMINATION OF THE
EXISTING PROPERTY MANAGEMENT AGREEMENTS FOR THE PROPERTY [TO BE DELIVERED TO
HSRE-ESP];

 

4.2.2.8                 TWO COUNTERPARTS OF A NEW PROPERTY MANAGEMENT AGREEMENT
WITH RESPECT TO EACH FACILITY EXECUTED BY EXTRA SPACE MANAGEMENT, INC. (“ESMI”),
IN THE FORM OF PROPERTY MANAGEMENT AGREEMENT ATTACHED AS EXHIBIT C TO THE
HSRE-ESP OPERATING AGREEMENT AND BY THIS REFERENCE MADE A PART HEREOF (EACH A
“PROPERTY MANAGEMENT

 

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AGREEMENT” AND COLLECTIVELY THE “PROPERTY MANAGEMENT AGREEMENTS”) [AT CLOSING,
ONE COUNTERPART OF EACH PROPERTY MANAGEMENT AGREEMENT WILL BE DELIVERED TO ESMI
AND ONE COUNTERPART OF EACH PROPERTY MANAGEMENT AGREEMENT WILL BE DELIVERED TO
HSRE-ESP];

 

4.2.2.9                 UNLESS THE CLOSING UNDER THE POOL 1 CONTRIBUTION
AGREEMENT HAS ALREADY OCCURRED, TWO COUNTERPARTS OF A NON-COMPETITION AND RIGHT
OF FIRST OPPORTUNITY AGREEMENT IN THE FORM ATTACHED HERETO AS EXHIBIT C AND BY
THIS REFERENCE MADE A PART HEREOF (THE “ROFO AGREEMENT”) [AT CLOSING, ONE
COUNTERPART OF THE ROFO AGREEMENT WILL BE DELIVERED TO EXTRA SPACE AND ONE
COUNTERPART OF THE ROFO AGREEMENT WILL BE DELIVERED TO HSRE];

 

4.2.2.10               CASH IN THE AMOUNT SPECIFIED IN SECTION 2.2.4 ABOVE [TO
BE DELIVERED TO HSRE-ESP]; AND

 

4.2.2.11               ALL OTHER DOCUMENTS REASONABLY AND CUSTOMARILY REQUIRED
IN ORDER TO COMPLETE THE CONVEYANCE, TRANSFER AND ASSIGNMENT OF THE ESP
INTERESTS TO HSRE-ESP.

 

4.2.3        HSRE.  AT CLOSING, HSRE SHALL DELIVER EACH OF THE FOLLOWING:

 

4.2.3.1                 CASH IN THE AMOUNT SPECIFIED IN SECTION 2.2.3 ABOVE [TO
BE DELIVERED TO HSRE-ESP];

 

4.2.3.2                 UNLESS THE CLOSING HAS ALREADY OCCURRED UNDER THE POOL 1
CONTRIBUTION AGREEMENT, THREE COUNTERPARTS OF THE HSRE-ESP OPERATING AGREEMENT,
EXECUTED BY EXTRA SPACE [AT CLOSING, ONE COUNTERPART WILL BE DELIVERED TO EXTRA
SPACE, ONE COUNTERPART WILL BE DELIVERED TO HSRE AND ONE COUNTERPART WILL BE
DELIVERED TO HSRE-ESP];

 

4.2.3.3                 UNLESS THE CLOSING UNDER THE POOL 1 CONTRIBUTION
AGREEMENT HAS ALREADY OCCURRED, TWO COUNTERPARTS OF THE ROFO AGREEMENT EXECUTED
BY HARRISON STREET REAL ESTATE CAPITAL, LLC [AT CLOSING, ONE COUNTERPART OF THE
ROFO AGREEMENT WILL BE DELIVERED TO EXTRA SPACE AND ONE COUNTERPART OF THE ROFO
AGREEMENT WILL BE DELIVERED TO HSRE];

 

4.2.4        HSRE-ESP.  AT CLOSING, EXTRA SPACE AND HSRE SHALL CAUSE HSRE-ESP TO
DELIVER THE FOLLOWING:

 

4.2.4.1                 THE ESS HSRE-ESP INTERESTS AND THE HSRE HSRE-ESP
INTERESTS (THE DELIVERY OF WHICH SHALL BE EVIDENCED BY THE EXECUTION AND
DELIVERY OF THE HSRE-ESP OPERATING AGREEMENT BY HSRE AND EXTRA SPACE);

 

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4.2.4.2                 TWO COUNTERPARTS OF THE ASSIGNMENT AGREEMENT [AT
CLOSING, ONE COUNTERPART WILL BE DELIVERED TO EXTRA SPACE AND ONE COUNTERPART
WILL BE DELIVERED TO HSRE-ESP];

 

4.2.4.3                 TWO COUNTERPARTS OF A PROPERTY MANAGEMENT AGREEMENT WITH
RESPECT TO EACH OF THE FACILITIES EXECUTED, AS APPLICABLE, BY EITHER ESP 51 OR
ESP TEXAS [AT CLOSING, ONE COUNTERPART OF EACH PROPERTY MANAGEMENT AGREEMENT
WILL BE DELIVERED TO ESMI AND ONE COUNTERPART OF EACH PROPERTY MANAGEMENT
AGREEMENT WILL BE DELIVERED TO HSRE-ESP];

 

4.2.4.4                 TO EXTRA SPACE, CASH IN THE AMOUNT OF THE EXTRA SPACE
DISTRIBUTION AMOUNT;

 

4.2.4.5                 ANY AND ALL AFFIDAVITS, UNDERTAKINGS, CERTIFICATES OR
OTHER DOCUMENTS CUSTOMARILY REQUIRED BY TITLE INSURER IN ORDER TO CAUSE IT TO
ISSUE THE TITLE POLICY OR THE ENDORSEMENT, AS APPLICABLE; AND

 

4.2.4.6                 COPIES OF RESOLUTIONS AUTHORIZING THIS TRANSACTION AND
AN INCUMBENCY CERTIFICATE EVIDENCING THE AUTHORITY OF HSRE’S SIGNATORIES.

 

4.3           CREDITS AND PRORATIONS.

 

4.3.1        PRORATIONS.  SUBJECT TO THE PRORATION REVIEW (AS DEFINED IN
EXHIBIT D), THE FOLLOWING SHALL BE APPORTIONED BETWEEN EXTRA SPACE AND HSRE-ESP
WITH RESPECT TO THE PROPERTY, SUCH PRORATIONS TO BE COMPUTED BASED ON THE NUMBER
OF DAYS EXTRA SPACE AND HSRE-ESP EACH OWN THE PROPERTY IN THE MONTH IN WHICH THE
CLOSING OCCURS, AS OF 12:01 A.M. ON THE THIRD DAY PRIOR TO THE CLOSING DATE (THE
“PRORATION DATE”), AS IF EXTRA SPACE WERE SELLING THE PROPERTY TO HSRE ON THE
PRORATION DATE, AND SUCH PRORATIONS SHALL INCREASE OR DECREASE THE AMOUNT OF
CASH DISBURSED TO EXTRA SPACE AT CLOSING:

 

4.3.1.1                 ALL COLLECTED RENTS AND OTHER SUMS RECEIVED UNDER LEASES
(“RENTS”) (INCLUDING PREPAID RENTS) (TO THE EXTENT THAT COLLECTED RENTS OR OTHER
SUMS ARE DISTRIBUTED BY EITHER ESP 51 OR ESP TEXAS TO EXTRA SPACE, THE
APPLICABLE PRORATED PORTION OF SUCH COLLECTED RENTS AND OTHER SUMS SHALL BE A
CREDIT TO HSRE-ESP AND TO THE EXTENT THAT SUCH COLLECTED RENTS OR OTHER SUMS ARE
RETAINED BY ESP 51 AND/OR ESP TEXAS, THE APPLICABLE PRORATED PORTION OF SUCH
COLLECTED RENTS OR OTHER SUMS SHALL BE A CREDIT TO EXTRA SPACE);

 

4.3.1.2                 TAXES AND ASSESSMENTS (INCLUDING, WITHOUT LIMITATION,
PERSONAL PROPERTY TAXES ON THE PERSONAL PROPERTY AND RENT TAXES) LEVIED AGAINST
THE PROPERTY;

 

4.3.1.3                 PRE-PAYMENTS AND ACCRUED AMOUNTS DUE UNDER ANY CONTRACTS
RELATING TO THE PROPERTY;

 

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4.3.1.4                 ACCRUED INCOME AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, GAS, ELECTRICITY AND OTHER UTILITY CHARGES FOR WHICH ESP 51 OR ESP
TEXAS IS LIABLE, IF ANY, WITH SUCH CHARGES TO BE APPORTIONED AS OF THE PRORATION
DATE ON THE BASIS OF THE MOST RECENT METER READING OCCURRING PRIOR TO THE
PRORATION DATE OR, IF UNMETERED, ON THE BASIS OF A CURRENT BILL FOR EACH SUCH
UTILITY);

 

4.3.1.5                 ALL OTHER EXPENSES PERTAINING TO THE PROPERTY;

 

4.3.1.6                 PREMIUMS UNDER INSURANCE POLICIES; AND

 

4.3.1.7                 A CREDIT TO EXTRA SPACE FOR THE AMOUNT OF ANY RESERVE
ACCOUNTS HELD BY THE LENDER TO THE EXTENT RETAINED FOR THE BENEFIT OF HSRE-ESP
AFTER CLOSING.

 

4.3.2        METHOD OF PRORATIONS.  NOTWITHSTANDING ANYTHING CONTAINED IN THE
FOREGOING PROVISIONS:

 

4.3.2.1                 REAL ESTATE AND PERSONAL PROPERTY TAXES AND ASSESSMENTS
WILL BE PRORATED BETWEEN EXTRA SPACE AND HSRE-ESP FOR THE PERIOD FOR WHICH SUCH
TAXES ARE ASSESSED, REGARDLESS OF WHEN PAYABLE.  IF THE CURRENT TAX BILL IS NOT
AVAILABLE AT CLOSING, THEN THE PRORATION SHALL BE MADE ON THE BASIS OF 100% OF
THE MOST RECENT ASCERTAINABLE TAX BILL.  ANY TAXES PAID AT OR PRIOR TO CLOSING
SHALL BE PRORATED BASED UPON THE AMOUNTS ACTUALLY PAID.  IF TAXES AND
ASSESSMENTS FOR THE FISCAL YEAR IN WHICH CLOSING OCCURS OR ANY PRIOR YEARS HAVE
NOT BEEN PAID BEFORE CLOSING, HSRE-ESP SHALL BE CREDITED BY EXTRA SPACE AT THE
TIME OF CLOSING WITH AN AMOUNT EQUAL TO THAT PORTION OF SUCH TAXES AND
ASSESSMENTS WHICH ARE RATABLY ATTRIBUTABLE TO THE PERIOD BEFORE THE PRORATION
DATE AND HSRE-ESP SHALL PAY THE TAXES AND ASSESSMENTS PRIOR TO THEIR BECOMING
DELINQUENT.  IF TAXES AND ASSESSMENTS FOR THE FISCAL YEAR IN WHICH CLOSING
OCCURS HAVE BEEN PAID BEFORE CLOSING, EXTRA SPACE SHALL BE CREDITED BY HSRE-ESP
AT THE TIME OF CLOSING WITH AN AMOUNT EQUAL TO THAT PORTION OF SUCH TAXES AND
ASSESSMENTS WHICH ARE RATABLY ATTRIBUTABLE TO THE PERIOD FROM AND AFTER THE
PRORATION DATE.  FOR EACH FACILITY FOR WHICH A CURRENT TAX BILL FOR THE YEAR IN
WHICH THE CLOSING OCCURS IS NOT AVAILABLE AT CLOSING, AT SUCH TIME AS THE
CURRENT TAX BILL FOR THE YEAR IN WHICH THE CLOSING OCCURS BECOMES AVAILABLE,
EXTRA SPACE AND HSRE-ESP SHALL RE-PRORATE REAL ESTATE TAXES AND EACH AGREES TO
PAY TO THE OTHER SUCH AMOUNTS AS ARE DETERMINED TO BE DUE AND OWING BY SUCH
PARTY PURSUANT TO SUCH RE-PRORATION WITHIN TWENTY (20) DAYS WRITTEN NOTICE FROM
THE OTHER.

 

4.3.2.2                 “DELINQUENT RENTS” (AS DEFINED BELOW) OWED BY TENANTS
WHO HAVE NO DELINQUENT RENTS WHICH ARE MORE THAN THIRTY (30) DAYS DELINQUENT AS
OF THE PRORATION DATE SHALL BE PRORATED AS OF THE PRORATION DATE AS IF FULLY
COLLECTED ON THE PRORATION DATE.  EXCEPT AS PROVIDED IN THE PRECEDING SENTENCE,
DELINQUENT RENTS SHALL NOT BE PRORATED

 

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AND ALL DELINQUENT RENTS SHALL BE THE PROPERTY OF HSRE-ESP AS OF THE CLOSING
DATE.  AS USED HEREIN, “DELINQUENT RENTS” MEANS ALL RENT DUE AND PAYABLE 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 PRIOR TO THE CLOSING DATE.

 

4.3.3        PRORATION REVIEW.  WITHIN SIXTY (60) DAYS AFTER THE CLOSING, EXTRA
SPACE AND HSRE-ESP SHALL REVIEW THE PRORATIONS AS SPECIFIED IN SECTIONS 4.3.1
AND 4.3.2 ABOVE IN ACCORDANCE WITH THE PROVISIONS OF EXHIBIT D ATTACHED HERETO
AND BY THIS REFERENCE MADE A PART HEREOF, WITH ANY PAYMENTS THAT ARE CALLED FOR
BY SUCH REVIEW TO BE MADE BY THE APPLICABLE PARTY IN CASH.  THE PROVISIONS OF
THIS SECTION 4.3.3 SHALL SURVIVE THE CLOSING.

 

4.3.4        CLOSING COSTS.  AT THE CLOSING, THE FOLLOWING COSTS SHALL BE PAID
BY HSRE-ESP AND/OR REIMBURSED TO EXTRA SPACE OR HSRE, AS APPLICABLE: (I) THE
COST OF THE SURVEY, ALL RECORDING COSTS AND ALL ESCROW COSTS; (II) ALL ACTUAL
OUT OF POCKET COSTS INCURRED OR PAID TO UNAFFILIATED THIRD PARTIES BY HSRE IN
CONNECTION WITH ITS DUE DILIGENCE INVESTIGATION OF THE PROPERTY, THE ESP
INTERESTS, THE TEXAS INTERESTS AND EXTRA SPACE; (III) ALL FEES, COSTS, EXPENSES,
AND OTHER CHARGES CHARGED BY LENDER AND/OR ANY SERVICER OF THE EXISTING
INDEBTEDNESS OR INCURRED IN THE SATISFACTION OF ANY CONDITION OR REQUIREMENT
IMPOSED BY LENDER OR SUCH SERVICER WITH RESPECT TO LENDER’S CONSENTING TO THE
TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT; (IV) ALL ATTORNEY’S FEES AND
COSTS INCURRED BY EITHER EXTRA SPACE OR HSRE IN CONNECTION WITH THE NEGOTIATION
AND DOCUMENTATION OF THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT AND
THE PERFORMANCE OF DUE DILIGENCE FOR THE BENEFIT OF HSRE.  AT CLOSING, THE
FOLLOWING COSTS SHALL BE PAID BY EXTRA SPACE AND/OR HSRE-ESP IN ACCORDANCE WITH
LOCAL PRACTICE AND CUSTOM IN THE AREA APPLICABLE TO EACH PROPERTY:  (A) THE COST
OF THE BASE TITLE POLICY, ENDORSEMENTS, REINSURANCE OR COINSURANCE,
(B) TRANSFER, DOCUMENTARY AND SIMILAR TAXES RELATED TO THE PURCHASE OF THE ESP
INTERESTS, IF ANY; PROVIDED, HOWEVER, THAT IN THE ABSENCE OF LOCAL PRACTICE AND
CUSTOM RELATING TO THE PAYMENT OF SUCH COSTS, SUCH COSTS SHALL BE PAID BY
HSRE-ESP.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 4.3.4, IF
THE CLOSING DOES NOT OCCUR, NO PARTY TO THIS AGREEMENT SHALL BE RESPONSIBLE FOR
REIMBURSING ANY OTHER PARTY TO THIS AGREEMENT FOR FEES, EXPENSES COSTS INCURRED
BY OR FOR THE BENEFIT OF SUCH PARTY EXCEPT AS EXPRESSLY PROVIDED OTHERWISE IN
SECTION 13.1.2 BELOW.

 

4.3.5        SURVIVAL.  THE OBLIGATIONS UNDER THIS SECTION 4.3 SHALL SURVIVE
CLOSING.

 

5.             REPRESENTATIONS AND WARRANTIES OF EXTRA SPACE.

 

5.1           WARRANTIES AND REPRESENTATIONS  EXTRA SPACE REPRESENTS AND
WARRANTS TO HSRE THAT, AS OF THE DATE OF THIS AGREEMENT AND AT THE CLOSING:

 

5.1.1        AUTHORITY, ETC.  EXTRA SPACE IS A LIMITED LIABILITY COMPANY, DULY
ORGANIZED AND VALIDLY EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN

 

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GOOD STANDING UNDER THE LAWS OF THE STATE OF DELAWARE.  EXTRA SPACE HAS FULL
POWER AND LAWFUL AUTHORITY UNDER ITS ORGANIZATIONAL DOCUMENTS TO ENTER INTO AND
CARRY OUT THE TERMS AND PROVISIONS OF THIS AGREEMENT AND TO EXECUTE AND DELIVER
ALL DOCUMENTS WHICH ARE CONTEMPLATED BY THIS AGREEMENT.  ALL ACTIONS NECESSARY
TO CONFER SUCH POWER AND AUTHORITY UPON THE PERSONS EXECUTING THIS AGREEMENT
(AND ALL DOCUMENTS WHICH ARE CONTEMPLATED BY THIS AGREEMENT TO BE EXECUTED ON
BEHALF OF EXTRA SPACE) HAVE BEEN TAKEN.  EXTRA SPACE’S EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT WILL NOT RESULT IN ANY VIOLATION OF, OR DEFAULT
UNDER, OR REQUIRE ANY NOTICE OR CONSENT UNDER EXTRA SPACE’S ORGANIZATIONAL
DOCUMENTS.

 

5.1.2        NO OTHER AGREEMENTS.  EXTRA SPACE HAS NOT ENTERED INTO ANY
AGREEMENT TO DISPOSE OF ITS INTEREST IN THE PROPERTY OR ANY PART THEREOF.  EXTRA
SPACE HAS NOT ENTERED INTO ANY AGREEMENT TO DISPOSE OF THE ESP INTERESTS, EXCEPT
FOR THIS AGREEMENT.

 

5.1.3        TITLE AND SURVEY.  AT CLOSING, ESP 51 OR ESP TEXAS (AS APPLICABLE)
SHALL OWN A FEE SIMPLE ESTATE IN AND TO THE PROPERTY RELATING TO THE DIRECT
FACILITIES AND ESP TEXAS SHALL OWN A FEE SIMPLE ESTATE IN AND TO THE PROPERTY
RELATING TO THE TEXAS FACILITIES, SUBJECT ONLY TO: (I) THE APPROVED TITLE
MATTERS (AS DEFINED IN SECTION 8.2.3 HERETO), (II) THE LIEN OF GENERAL REAL
ESTATE TAXES WHICH ARE NOT YET DUE OR PAYABLE AS OF CLOSING, (III) THE RIGHTS OF
TENANTS, AS TENANTS ONLY, UNDER THE LEASES (WITH NO OPTIONS TO PURCHASE OR
RIGHTS OF FIRST REFUSAL TO PURCHASE THEREUNDER), (IV) ACTS OF, BY OR THROUGH
HSRE, (V) MATTERS DISCLOSED BY THE SURVEYS OF THE PREMISES AND MORE PARTICULARLY
DESCRIBED ON SCHEDULE 5.1.3 ATTACHED HERETO (COLLECTIVELY, THE “SURVEYS”), AND
(VI) STANDARD EXCEPTIONS WHICH CANNOT BE WAIVED OR DELETED FROM THE TITLE POLICY
(DEFINED BELOW) IN THE JURISDICTION IN WHICH THE PROPERTY IS LOCATED
(COLLECTIVELY, THE “PERMITTED EXCEPTIONS”).

 

5.1.4        LEASES.  EXTRA SPACE HAS MADE AVAILABLE TO HSRE AT THE FACILITIES
TRUE AND COMPLETE COPIES OF ALL LEASES SET FORTH IN THE RENT ROLLS DESCRIBED ON
SCHEDULE 5.1.4 ATTACHED HERETO (THE “LEASES”) AND ALL OF EXTRA SPACE’S FILES AND
CORRESPONDENCE RELATING TO THE LEASES.  THE RENT ROLLS DESCRIBED IN SCHEDULE
5.1.4 ARE TRUE, CORRECT AND COMPLETE.  AS OF CLOSING, ESP 51 OR ESP TEXAS (AS
APPLICABLE) SHALL BE THE LANDLORD UNDER EACH LEASE AND SHALL NOT HAVE ASSIGNED
ANY INTEREST THEREIN TO ANY ENTITY OR PERSON.  THE INFORMATION SET FORTH ON
CENTER SHIFT (AS DEFINED IN SECTION 8.2.1) RELATING TO THE PROPERTY AND THE
LEASES IS TRUE AND CORRECT IN ALL MATERIAL RESPECTS.

 

5.1.5        CONTRACTS.  WITH THE EXCEPTION OF THE PERMITTED EXCEPTIONS, THE
THIRD PARTY LOAN DOCUMENTS, THE LEASES, AND THE EXISTING PROPERTY MANAGEMENT
CONTRACTS BETWEEN ESMI AND EITHER ESP 51 OR ESP TEXAS, AS APPLICABLE, ALL OF
WHICH PROPERTY MANAGEMENT CONTRACTS WILL BE TERMINATED AT CLOSING, THERE ARE NO
SERVICE, MAINTENANCE, REPAIR, PARKING, EMPLOYMENT, UNION, CONSTRUCTION, LEASING
OR OTHER SIMILAR CONTRACTS TO WHICH EITHER ESP 51 OR ESP TEXAS IS A PARTY AND
RELATING TO THE OWNERSHIP OR OPERATION OF THE PROPERTY (THE “CONTRACTS”).

 

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5.1.6        LITIGATION.  EXCEPT AS SET FORTH ON SCHEDULE 5.1.6 ATTACHED HERETO
AND NEITHER ESP 51 NOR ESP TEXAS HAS BEEN SERVED WITH ANY LITIGATION (INCLUDING
EMINENT DOMAIN PROCEEDINGS) WHICH, AS OF THE DATE OF THIS AGREEMENT, IS STILL
PENDING AGAINST ANY OF SUCH PARTIES WITH RESPECT TO THE OWNERSHIP OR OPERATION
OF THE PROPERTY.  NEITHER ESP 51 NOR ESP TEXAS HAS BEEN SERVED WITH ANY
LITIGATION WHICH IS STILL PENDING AGAINST SUCH PARTY WITH RESPECT TO THE ESP
INTERESTS, THE TEXAS INTERESTS.

 

5.1.7        VIOLATIONS.  NEITHER EXTRA SPACE, ESP 51 NOR ESP TEXAS HAS RECEIVED
FROM ANY GOVERNMENTAL AUTHORITY WRITTEN NOTICE OF, NOR DOES EXTRA SPACE HAVE ANY
KNOWLEDGE OF, ANY PENDING, THREATENED OR CURRENTLY EXISTING MATERIAL VIOLATION
OF ANY ZONING, BUILDING, FIRE, ENVIRONMENTAL OR HEALTH CODE OR ANY OTHER
STATUTE, ORDINANCE, RULE, REGULATION OR ORDER APPLICABLE TO EXTRA SPACE, ESP 51,
ESP TEXAS OR THE PROPERTY OR ANY PART THEREOF.

 

5.1.8        BROKERAGE AGREEMENTS.  THERE ARE NO LEASING BROKERAGE AGREEMENTS,
LEASING COMMISSION AGREEMENTS OR OTHER AGREEMENTS PROVIDING FOR THE PAYMENT OF
ANY AMOUNT FOR LEASING ACTIVITIES WITH RESPECT TO THE PROPERTY OR ANY PORTION
THEREOF.

 

5.1.9        LICENSES.  EXTRA SPACE, ESP 51 OR ESP TEXAS (AS APPLICABLE) HAS
OBTAINED AND KEPT IN FORCE ANY NECESSARY LICENSES TO CARRY ON ITS BUSINESS NOW
CONDUCTED IN THE STATES IN WHICH THE PROPERTY IS LOCATED. TO EXTRA SPACE’S
KNOWLEDGE, ANY NECESSARY BUSINESS CERTIFICATES OR FICTITIOUS NAME CERTIFICATES,
OR BOTH, REQUIRED TO BE FILED BY EXTRA SPACE, ESP 51 OR ESP TEXAS (AS
APPLICABLE) UNDER THE LAWS OF ANY STATE HAVE BEEN DULY FILED AND ARE IN FULL
FORCE AND EFFECT IN ACCORDANCE WITH THE RESPECTIVE TERMS THEREOF.

 

5.1.10      OTHER PROPERTY.  NEITHER ESP 51 NOR ESP TEXAS OWNS, NOR HAS IT EVER
OWNED, DIRECTLY OR INDIRECTLY, ANY REAL OR PERSONAL PROPERTY OTHER THAN THE
DIRECT FACILITIES (AS TO ESP 51) OR THE TEXAS FACILITIES (AS TO ESP TEXAS).

 

5.1.11      EMPLOYEES.  NEITHER ESP 51 NOR ESP TEXAS HAVE, NOR HAVE THEY EVER
HAD, ANY EMPLOYEES.  ALL EMPLOYEES WORKING AT THE FACILITIES ARE EMPLOYEES OF
THE EXISTING PROPERTY MANAGER.

 

5.1.12      SECURITIES.  NEITHER ESP 51 NOR ESP TEXAS HAVE SOLD ANY SECURITIES
FROM AND AFTER THE DATE OF ITS FORMATION OR HAVE BEEN OBLIGATED TO FILE ANY
REPORTS, SCHEDULES, FORMS, STATEMENTS AND OTHER DOCUMENTS WITH THE SEC THROUGH
THE DATE HEREOF.

 

5.1.13      TAX STATUS.  EACH OF ESP 51 AND ESP TEXAS HAS BEEN AT ALL TIMES
SINCE ITS INCEPTION A PARTNERSHIP OR DISREGARDED ENTITY FOR FEDERAL INCOME TAX
PURPOSES AND (II) AS OF THE CLOSING, SHALL BE TREATED FOR FEDERAL INCOME TAX
PURPOSES AS A “DISREGARDED ENTITY”.  THERE HAVE BEEN PROPERLY COMPLETED AND
FILED ON A TIMELY BASIS ALL TAX RETURNS REQUIRED TO BE FILED (IF ANY) BY ESP 51
AND ESP TEXAS AND ITS SUBSIDIARIES.  AS OF THE TIME OF FILING, THE FOREGOING TAX
RETURNS (IF

 

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ANY) CORRECTLY REFLECTED IN ALL MATERIAL RESPECTS THE FACTS REGARDING THE
INCOME, BUSINESS, ASSETS, OPERATIONS, ACTIVITIES, STATUS AND OTHER MATTERS OF OR
INFORMATION REGARDING THE ESP 51 OR ESP TEXAS (AS APPLICABLE) REQUIRED TO BE
SHOWN THEREON AND ALL SUCH TAX RETURNS HAVE BEEN FILED ON A TIMELY BASIS
(INCLUDING EXTENSIONS).

 

5.1.14      CONDEMNATION.  NEITHER EXTRA SPACE, ESP 51 NOR ESP TEXAS HAS
RECEIVED WRITTEN NOTICE OF ANY PENDING CONDEMNATION ACTION WITH RESPECT TO ANY
FACILITY.

 

5.1.15      BANKRUPTCY.  THERE ARE NO ATTACHMENTS, EXECUTIONS, ASSIGNMENTS FOR
THE BENEFIT OF CREDITORS OR VOLUNTARY OR INVOLUNTARY PROCEEDINGS IN BANKRUPTCY
PENDING AGAINST EXTRA SPACE, ESP 51, ESP TEXAS OR ESP TEXAS GP.

 

5.1.16      REZONING AND PROPERTY ASSESSMENTS.  TO EXTRA SPACE’S KNOWLEDGE AND
EXCEPT AS SET FORTH ON SCHEDULE 5.1.16, NONE OF EXTRA SPACE, ESP 51 OR ESP TEXAS
HAS RECEIVED WRITTEN NOTICE OF ANY PENDING OR PROPOSED PROCEEDING TO CHANGE OR
REDEFINE THE ZONING CLASSIFICATION OF ALL OR ANY PART OF ANY FACILITY.

 

5.1.17      TANGIBLE PERSONAL PROPERTY.  AS OF CLOSING, THE TANGIBLE PERSONAL
PROPERTY WILL BE OWNED BY ESP 51 OR ESP TEXAS FREE AND CLEAR OF ANY CONDITIONAL
BILLS OF SALE, CHATTEL MORTGAGES, SECURITY AGREEMENTS OR FINANCING STATEMENTS OR
OTHER SECURITY INTERESTS OF ANY KIND.

 

5.1.18      ESP 51, ESP TEXAS AND STORAGE FACILITIES IN COMPLIANCE WITH LAWS,
REGULATIONS, ETC.  EACH OF ESP 51, ESP TEXAS AND THE FACILITIES ARE IN
COMPLIANCE IN ALL MATERIAL RESPECTS WITH ANY AND ALL APPLICABLE FEDERAL, STATE
AND LOCAL LAWS, REGULATIONS, ORDINANCES AND RULES PERTAINING TO THE OPERATING OF
THE FACILITIES.

 

5.1.19      ENVIRONMENTAL LAWS.  TO THE KNOWLEDGE OF EXTRA SPACE AND EXCEPT AS
DISCLOSED IN ANY ENVIRONMENTAL SITE ASSESSMENT PROVIDED BY EXTRA SPACE TO HSRE,
NONE OF EXTRA SPACE, ESP 51 OR ESP TEXAS ARE IN VIOLATION IN ANY MATERIAL
RESPECT, IN CONNECTION WITH ITS RESPECTIVE OWNERSHIP, USE, MAINTENANCE OR
OPERATION OF THE PROPERTY AND THE CONDUCT OF THE BUSINESS RELATED THERETO, OF
ANY APPLICABLE FEDERAL, STATE, COUNTY OR MUNICIPAL OR LOCAL STATUTES, LAWS,
REGULATIONS, RULES, ORDINANCES, CODES, STANDARDS, ORDERS OR LICENSES OR PERMITS
OF ANY GOVERNMENTAL AUTHORITIES RELATING TO ENVIRONMENTAL MATTERS, INCLUDING,
WITHOUT LIMITATION, THE RESOURCE CONSERVATION AND RECOVERY ACT, THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT AND THE
OCCUPATIONAL HEALTH ACT (BEING HEREINAFTER COLLECTIVELY REFERRED TO AS THE
“ENVIRONMENTAL LAWS”) AND ALL OTHER APPLICABLE ENVIRONMENTAL STANDARDS OR
REQUIREMENTS.  SCHEDULE 5.1.19 IS A TRUE, CORRECT AND COMPLETE, IN ALL MATERIAL
RESPECTS, LIST OF ALL ENVIRONMENTAL STUDIES OR REPORTS PREPARED AT THE REQUEST
OF EXTRA SPACE AND RELATING TO ANY OF THE FACILITIES, COPIES OF WHICH HAVE BEEN
PROVIDED TO HSRE BY EXTRA SPACE EITHER PRIOR TO OR CONCURRENTLY WITH THE
EXECUTION OF THIS AGREEMENT

 

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AND EXTRA SPACE HAS NO KNOWLEDGE THAT SUCH REPORTS ARE NOT TRUE, CORRECT AND
COMPLETE IN ALL MATERIAL RESPECTS.

 

5.1.20      HAZARDOUS MATERIALS.  EXCEPT AS DISCLOSED IN ANY ENVIRONMENTAL SITE
ASSESSMENT PROVIDED BY EXTRA SPACE TO HSRE, NONE OF EXTRA SPACE, ESP 51, ESP
TEXAS NOR THEIR ITS RESPECTIVE AGENTS, EMPLOYEES, OR INDEPENDENT CONTRACTS, OR
TO THE KNOWLEDGE OF EXTRA SPACE, ANY TENANT HAS (A) OPERATED THE PROPERTY FOR
THE PURPOSE OF RECEIVING, HANDLING, USING, STORING, TREATMENT, TRANSPORTING AND
DISPOSING OF ANY HAZARDOUS MATERIALS (MEANING ASBESTOS, UREA FORMALDEHYDE,
POLYCHLORINATED BIPHENYLS, LEAD, NUCLEAR FUEL OR MATERIALS, CHEMICAL WASTE,
RADIOACTIVE MATERIALS, EXPLOSIVES, KNOWN CARCINOGENS, PETROLEUM HYDROCARBON,
INCLUDING CRUDE OIL OR ANY FRACTION THEREOF AND ALL PETROLEUM PRODUCTS, OR OTHER
DANGEROUS OR TOXIC OR HAZARDOUS POLLUTANTS, CONTAMINANTS, CHEMICAL MATERIALS OR
OTHER SUBSTANCES DEFINED IN OR REGULATED BY SAID ENVIRONMENTAL LAWS (ALL OF THE
FOREGOING BEING HEREINAFTER COLLECTIVELY REFERRED TO AS “HAZARDOUS MATERIALS”);
AND/OR (B) RELEASED (OR CAUSED TO BE RELEASED) HAZARDOUS MATERIALS INTO THE
ENVIRONMENT FROM A FACILITY.  EXCEPT AS DISCLOSED IN ANY ENVIRONMENTAL SITE
ASSESSMENT PROVIDED BY EXTRA SPACE TO HSRE AND TO THE KNOWLEDGE OF EXTRA SPACE,
THERE ARE NO UNDERGROUND STORAGE TANKS ON THE PREMISES NOR HAVE ANY UNDERGROUND
STORAGE TANKS BEEN REMOVED FROM THE PREMISES.

 

5.1.21      OPERATING AGREEMENTS; PARTNERSHIP AGREEMENT.  ATTACHED AS SCHEDULE
5.1.21A IS A TRUE, CORRECT AND COMPLETE COPY OF THE OPERATING AGREEMENT OF ESP
51.  ATTACHED AS SCHEDULE 5.1.21B IS A TRUE, CORRECT AND COMPLETE COPY OF THE
OPERATING AGREEMENT OF ESP 57.  ATTACHED AS SCHEDULE 5.1.21C IS A TRUE, CORRECT
AND COMPLETE COPY OF THE OPERATING AGREEMENT OF ESP TEXAS GP.  ATTACHED AS
SCHEDULE 5.1.21D IS A TRUE, CORRECT AND COMPLETE COPY OF THE PARTNERSHIP
AGREEMENT OF ESP TEXAS.

 

5.1.22      TITLE TO ESP INTERESTS.  EXTRA SPACE OWNS THE ESP INTERESTS AND ESP
51 OWNS THE TEXAS INTERESTS FREE AND CLEAR OF ANY SECURITY AGREEMENTS, FINANCING
STATEMENTS, LIENS, ENCUMBRANCES, SECURITY INTERESTS OR OTHER CLAIMS OF ANY
KIND.  THE ESP INTERESTS CONSTITUTE ALL OF EXTRA SPACE’S INTEREST IN ESP 51 AND
ESP 57.  THE TEXAS INTERESTS CONSTITUTE ALL OF EXTRA SPACE’S INTEREST IN ESP
TEXAS GP AND ESP TEXAS.  EXTRA SPACE HAS NOT ENTERED INTO ANY SIDE LETTERS OR
OTHER WRITTEN INSTRUMENTS RELATING TO THE ESP INTERESTS OR THE TEXAS INTERESTS
OTHER THAN THE AGREEMENTS DESCRIBED IN SECTION 5.1.21 OTHER THAN THOSE DESCRIBED
ON SCHEDULE 5.1.22.

 

5.1.23      NO UNDISCLOSED LIABILITIES.   AS OF THE DATE OF THIS AGREEMENT,
EXCEPT FOR TRADE PAYABLES INCURRED IN THE ORDINARY COURSE OF BUSINESS
RESPECTIVELY OF ESP 51, ESP 57, ESP TEXAS GP AND ESP TEXAS AND EXCEPT AS SHOWN
ON THE BALANCE SHEET ATTACHED HERETO AS SCHEDULE 5.1.23 OR DISCLOSED IN THE
FINANCIAL STATEMENTS (INCLUDING THE FOOTNOTES THERETO) THAT WERE DELIVERED TO
HSRE PRIOR TO THE DATE OF THIS AGREEMENT (THE “ESP FINANCIALS”), NONE OF ESP 51,
ESP 57, ESP TEXAS GP NOR ESP TEXAS HAS ANY INDEBTEDNESS OR LIABILITIES (WHETHER
ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE; WHETHER DUE OR TO BECOME DUE; AND
INCLUDING,

 

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WITHOUT LIMITATION, WITH RESPECT TO TAXES) THAT WOULD NORMALLY BE DISCLOSED ON A
BALANCE SHEET (INCLUDING ITS FOOTNOTES) THAT WAS PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IF SUCH INDEBTEDNESS OR LIABILITIES HAD
BEEN KNOWN AT THE TIME OF THE BALANCE SHEET’S PREPARATION.  THE ESP FINANCIALS
ARE TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS.

 

5.1.24      ERISA.  NEITHER ESP 51, ESP 57, ESP TEXAS GP NOR ESP TEXAS SPONSORS,
MAINTAINS, CONTRIBUTES TO OR HAS ANY OBLIGATION TO SPONSOR, MAINTAIN OR
CONTRIBUTE TO, OR HAS (OR MAY HAVE) LIABILITY UNDER ANY “EMPLOYEE BENEFIT PLAN,”
AS DEFINED IN SECTION 3(3) OF ERISA (WHETHER OR NOT SUBJECT TO ERISA), OR ANY
EMPLOYMENT, CONSULTING, OR OTHER EMPLOYEE BENEFIT PLAN, UNDERSTANDING,
AGREEMENT, ARRANGEMENT, POLICY OR PAYROLL PRACTICE, INCLUDING, WITHOUT
LIMITATION, SEVERANCE PAY, SICK LEAVE, VACATION PAY, SALARY CONTINUATION FOR
DISABILITY, RETIREMENT, DEFERRED COMPENSATION, BONUS, STOCK PURCHASE, STOCK
OPTION, STOCK OWNERSHIP, STOCK APPRECIATION RIGHTS, PHANTOM STOCK, EQUITY (OR
EQUITY-BASED), LAYOFF, DEPENDENT CARE, LEGAL SERVICES, CAFETERIA, HEALTH,
DENTAL, VISION, ACCIDENT, CHANGE OF CONTROL, TERMINATION, HOSPITALIZATION,
MEDICAL INSURANCE, LIFE INSURANCE, TUITION REIMBURSEMENT AND SCHOLARSHIP
PROGRAMS.

 

5.1.25      EXISTING INDEBTEDNESS.  TO EXTRA SPACE’S KNOWLEDGE, SCHEDULE 5.1.25
SETS FORTH THE OUTSTANDING PRINCIPAL BALANCE OWING UNDER EACH OF THE THIRD PARTY
NOTES.  NONE OF EXTRA SPACE, ESP 51 OR ESP TEXAS HAS RECEIVED WRITTEN NOTICE
THAT AN EVENT OF DEFAULT BY EITHER ESP 51 OR ESP TEXAS EXISTS UNDER THE THIRD
PARTY LOAN DOCUMENTS AND, TO EXTRA SPACE’S KNOWLEDGE, NO EVENTS HAVE OCCURRED OR
CONDITIONS EXIST WHICH, WITH THE GIVING OF NOTICE OR LAPSE OF TIME, OR BOTH,
WOULD CONSTITUTE SUCH AN EVENT OF DEFAULT.  EXTRA SPACE AGREES THAT AT THE
CLOSING, EXTRA SPACE WILL AMEND AND SUPPLEMENT THIS SECTION 5.1.25 TO PROVIDE A
REPRESENTATION AS TO AMOUNT OF THE OUTSTANDING BALANCE, AS OF THE CLOSING, OF
EACH RESERVE BEING HELD BY LENDER, ON A FACILITY BY FACILITY BASIS, WITH RESPECT
TO THE EXISTING INDEBTEDNESS.  PURSUANT TO SECTION 3.2.4, EXTRA SPACE WILL,
DURING THE DUE DILIGENCE PERIOD, MAKE AVAILABLE TO HSRE TRUE AND CORRECT COPIES
OF THE THIRD PARTY LOAN DOCUMENTS FOR INSPECTION AND REVIEW.  WITHIN TEN
(10) BUSINESS DAYS AFTER THE FULL EXECUTION OF THIS AGREEMENT, EXTRA SPACE SHALL
UPDATE SCHEDULE 5.1.25 WITH A LIST OF ALL MATERIAL THIRD PARTY LOAN DOCUMENTS,
AND SUCH UPDATE SHALL CONSTITUTE EXTRA SPACE’S REPRESENTATION AND WARRANTY THAT
SUCH LIST IS A TRUE AND COMPLETE LIST OF ALL SUCH MATERIAL THIRD PARTY LOAN
DOCUMENTS.  EXTRA SPACE AGREES THAT AT CLOSING EXTRA SPACE WILL AMEND AND
SUPPLEMENT THIS SECTION 5.1.25 TO PROVIDE A REPRESENTATION THAT THE COPIES OF
THE MATERIAL THIRD PARTY LOAN DOCUMENTS IDENTIFIED BY HSRE DURING THE DUE
DILIGENCE PERIOD ARE TRUE AND CORRECT COPIES OF THE ORIGINALS OF SUCH DOCUMENTS.

 

5.2           DEFINITION OF EXTRA SPACE’S KNOWLEDGE.  AS USED IN THIS AGREEMENT
“EXTRA SPACE’S KNOWLEDGE” AND SIMILAR REFERENCES SHALL MEAN ONLY THAT
INFORMATION THAT IS KNOWN, OR WITH DUE DILIGENCE AND APPROPRIATE INQUIRY OR
INVESTIGATION FOR AN OWNER OF SELF STORAGE FACILITIES, WOULD BE KNOWN, BY ANY
ONE OR MORE OF THE SENIOR VICE PRESIDENTS OF EXTRA SPACE STORAGE INC.

 

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5.3           REMAKING OF EXTRA SPACE WARRANTIES AND REPRESENTATIONS.  THE
REPRESENTATIONS AND WARRANTIES MADE IN SECTION 5.1 ABOVE SHALL BE DEEMED REMADE
FOR THE BENEFIT OF BOTH HSRE AND HSRE-ESP BY EXTRA SPACE AS OF THE CLOSING DATE
WITH THE SAME FORCE AND EFFECT AS IF, IN FACT, SPECIFICALLY REMADE AT THAT
TIME.  IF PRIOR TO THE CLOSING EITHER EXTRA SPACE OR HSRE LEARNS OF ANY FACTS OR
CIRCUMSTANCES WHICH MAKE ANY WARRANTY OR REPRESENTATION CONTAINED IN 5.1 ABOVE
UNTRUE, INCORRECT, OR MISLEADING IN ANY MATERIAL RESPECT, HSRE AND EXTRA SPACE
SHALL EACH GIVE THE OTHER PROMPT WRITTEN NOTICE OF SUCH FACTS OR CIRCUMSTANCES. 
IF EITHER (A) MATTERS OCCURRING AFTER THE DATE OF THIS AGREEMENT RENDER EXTRA
SPACE UNABLE TO REMAKE A REPRESENTATION OR WARRANTY AS OF THE CLOSING DATE, AND
HSRE LEARNS OF SUCH MATTERS PRIOR TO THE CLOSING, OR (B) PRIOR TO CLOSING EXTRA
SPACE LEARNS OF ANY FACTS OR CIRCUMSTANCES WHICH MAKE ANY WARRANTY OR
REPRESENTATION MADE IN THIS AGREEMENT BY EXTRA SPACE UNTRUE, INCORRECT, OR
MISLEADING IN ANY MATERIAL RESPECT AND, AT OR PRIOR TO CLOSING, EXTRA SPACE HAS
GIVEN HSRE WRITTEN NOTICE OF SUCH FACTS OR CIRCUMSTANCES, AND, IN EACH INSTANCE,
AS OF THE DATE OF THIS AGREEMENT, EXTRA SPACE DID NOT HAVE KNOWLEDGE OF SUCH
FACTS OR CIRCUMSTANCES, EXTRA SPACE SHALL NOT HAVE ANY LIABILITY TO EITHER HSRE
OR HSRE-ESP WITH RESPECT TO SUCH WARRANTY OR REPRESENTATION AND THE FAILURE TO
REMAKE SUCH REPRESENTATION OR WARRANTY SHALL NOT CONSTITUTE A DEFAULT HEREUNDER
BY EXTRA SPACE, EXCEPT IN THE EVENT OR TO THE EXTENT THAT THE UNTRUTH OF SUCH
REPRESENTATION OR WARRANTY IS THE RESULT OF ANY WILLFUL OR INTENTIONAL ACT OF
EXTRA SPACE (OR ANYONE ACTING AT HIS, HER OR ITS REQUEST) OR WILLFUL OR
INTENTIONAL FAILURE TO ACT ON THE PART OF EXTRA SPACE (OR ANYONE ACTING AT HIS,
HER OR ITS REQUEST) AND IN BREACH OF THIS AGREEMENT.  NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THIS SECTION 5.3, THE CONTINUING TRUTH AND ACCURACY IN ALL
MATERIAL RESPECTS OF ALL REPRESENTATIONS AND WARRANTIES MADE BY EXTRA SPACE IN
SECTION 5.1 ABOVE IN THIS AGREEMENT SHALL BE A CONDITION PRECEDENT TO HSRE’S
OBLIGATION TO CLOSE.

 

5.4           SURVIVAL AND INDEMNIFICATION.

 

5.4.1        LIMITED SURVIVAL OF EXTRA SPACE WARRANTIES AND REPRESENTATIONS. 
WITH THE EXCEPTION OF THE REPRESENTATIONS AND WARRANTIES IN SECTIONS 5.1.1,
5.1.10, 5.1.11, 5.1.12, 5.1.13, 5.1.22 AND 5.1.23, ALL OF WHICH SHALL SURVIVE
INDEFINITELY, THE WARRANTIES AND REPRESENTATIONS CONTAINED IN SECTION 5.1 ABOVE
SHALL SURVIVE THE CLOSING AND SHALL INURE TO THE BENEFIT OF HSRE, HSRE-ESP AND
THEIR RESPECTIVE LEGAL REPRESENTATIVES, HEIRS, SUCCESSORS OR ASSIGNS FOR A
PERIOD OF ONE YEAR AFTER THE CLOSING AND SHALL AUTOMATICALLY EXPIRE ON THE FIRST
ANNIVERSARY OF THE CLOSING UNLESS EITHER HSRE OR HSRE-ESP PRIOR THERETO HAS
GIVEN EXTRA SPACE WRITTEN NOTICE OF ANY ALLEGED BREACH AND EITHER HSRE OR
HSRE-ESP COMMENCES AND SERVES AN ACTION AGAINST EXTRA SPACE WITHIN NINETY (90)
DAYS AFTER SUCH NOTICE IS GIVEN TO EXTRA SPACE (AND, IN THE EVENT ANY SUCH SUIT
IS TIMELY COMMENCED BY EITHER HSRE OR HSRE-ESP AND SERVED AGAINST EXTRA SPACE,
SHALL SURVIVE THEREAFTER ONLY INSOFAR AS THE SUBJECT MATTER OF THE ALLEGED
BREACH SPECIFIED IN SUCH SUIT IS CONCERNED).  IF NOTICE IS NOT TIMELY GIVEN AND
SUIT IS NOT TIMELY COMMENCED AND SERVED BY EITHER HSRE OR HSRE-ESP, SUCH
REPRESENTATIONS AND WARRANTIES SHALL THEREAFTER BE VOID AND OF NO FORCE OR
EFFECT.

 

5.4.2        INDEMNIFICATION.  SUBJECT TO THE PROVISIONS OF SECTION 5.4.1 ABOVE,
IF ANY CLAIM (DEFINED BELOW) ARISES BECAUSE OF ANY OF THE REPRESENTATIONS AND

 

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WARRANTIES OF EXTRA SPACE SET FORTH IN SECTION 5.1 ABOVE PROVES TO THE FALSE OR
MISLEADING IN ANY MATERIAL RESPECT, EXTRA SPACE SHALL INDEMNIFY, DEFEND (WITH
COUNSEL REASONABLY ACCEPTABLE TO HSRE), PROTECT, AND SAVE AND HOLD HARMLESS HSRE
AND HSRE-ESP WITH RESPECT TO ANY SUCH CLAIM.  AS USED HEREIN, THE TERM “CLAIM”
SHALL MEAN ANY AND ALL LIABILITIES, JUDGMENTS, SETTLEMENT AMOUNTS, CLAIMS,
CAUSES OF ACTION, SUITS PENALTIES, DAMAGES, DEMANDS, ORDERS, COSTS AND EXPENSES
OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, REASONABLE LEGAL,
ACCOUNTING, CONSULTING, ENGINEERING, AND OTHER COSTS AND EXPENSES WHICH MAY BE
INCURRED BY OR ASSERTED AGAINST THE INDEMNIFIED PARTY.

 

5.4.3        SURVIVAL.  THE PROVISIONS OF THIS SECTION 5.4 SHALL SURVIVE THE
CLOSING.  EXCEPT AS MAY OTHERWISE BE SPECIFICALLY SET FORTH IN THIS AGREEMENT,
THE OBLIGATIONS OF THE EXTRA SPACE UNDER THIS AGREEMENT SHALL NOT SURVIVE THE
CLOSING OR ANY TERMINATION OF THIS AGREEMENT.

 

6.             WARRANTIES AND REPRESENTATIONS OF HSRE.

 

6.1           WARRANTIES AND REPRESENTATIONS.  HSRE REPRESENTS AND WARRANTS TO
EXTRA SPACE THAT, AS OF THE DATE OF THIS AGREEMENT AND AT THE CLOSING:

 

6.1.1        AUTHORITY, ETC.  HSRE IS A LIMITED LIABILITY COMPANY, DULY
ORGANIZED AND VALIDLY EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN
GOOD STANDING UNDER THE LAWS OF THE STATE OF DELAWARE, AND HAS FULL POWER AND
LAWFUL AUTHORITY UNDER HSRE’S ORGANIZATIONAL DOCUMENTS TO ENTER INTO AND CARRY
OUT THE TERMS AND PROVISIONS OF THIS AGREEMENT AND TO EXECUTE AND DELIVER ALL
DOCUMENTS WHICH ARE CONTEMPLATED BY THIS AGREEMENT.  ALL ACTIONS NECESSARY TO
CONFER SUCH POWER AND AUTHORITY UPON THE PERSONS EXECUTING THIS AGREEMENT ON
BEHALF OF HSRE (AND ALL DOCUMENTS WHICH ARE CONTEMPLATED BY THIS AGREEMENT TO BE
EXECUTED ON BEHALF OF HSRE) HAVE BEEN TAKEN.  HSRE’S EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT WILL NOT RESULT IN ANY VIOLATION OF, OR DEFAULT
UNDER, OR REQUIRE ANY NOTICE OR CONSENT UNDER, ANY OF IT’S ORGANIZATIONAL
DOCUMENTS.

 

6.1.2        LITIGATION.  HSRE HAS NOT BEEN SERVED WITH ANY LITIGATION WHICH IS
STILL PENDING AGAINST HSRE WITH RESPECT TO THE TRANSACTION WHICH IS THE SUBJECT
OF THIS AGREEMENT OR WHICH WOULD MATERIALLY AND ADVERSELY AFFECT HSRE’S ABILITY
TO CONSUMMATE THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT.

 

6.2           DEFINITION OF HSRE’S KNOWLEDGE.  AS USED IN THIS AGREEMENT,
“HSRE’S KNOWLEDGE” MEANS ONLY THAT INFORMATION THAT IS POSSESSED BY STEPHEN
GORDON, ROBERT MATHIAS, OR ANY OFFICER, MANAGER, OR MEMBER OF HARRISON STREET
REAL ESTATE CAPITAL, LLC, WITHOUT INVESTIGATION, INQUIRY OR REVIEW OF FILES, AND
SHALL NOT INCLUDE ANY KNOWLEDGE OF ANY OTHER PARTY WHICH MIGHT OTHERWISE BE
IMPUTED TO SUCH PARTY.

 

6.3           REMAKING OF HSRE WARRANTIES AND REPRESENTATIONS.  THE
REPRESENTATIONS AND WARRANTIES MADE IN SECTION 6.1 ABOVE SHALL BE DEEMED REMADE
FOR THE BENEFIT OF BOTH EXTRA SPACE AND HSRE-ESP BY HSRE AS OF THE CLOSING DATE
WITH THE

 

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SAME FORCE AND EFFECT AS IF, IN FACT, SPECIFICALLY REMADE AT THAT TIME.  IF
PRIOR TO THE CLOSING EITHER HSRE OR EXTRA SPACE LEARNS OF ANY FACTS OR
CIRCUMSTANCES WHICH MAKE ANY WARRANTY OR REPRESENTATION CONTAINED IN 6.1 ABOVE
UNTRUE, INCORRECT, OR MISLEADING IN ANY MATERIAL RESPECT, EXTRA SPACE AND HSRE
SHALL EACH GIVE THE OTHER PROMPT WRITTEN NOTICE OF SUCH FACTS OR CIRCUMSTANCES. 
IF EITHER (A) MATTERS OCCURRING AFTER THE DATE OF THIS AGREEMENT RENDER HSRE
UNABLE TO REMAKE A REPRESENTATION OR WARRANTY AS OF THE CLOSING DATE, AND EXTRA
SPACE LEARNS OF SUCH MATTERS PRIOR TO THE CLOSING, OR (B) PRIOR TO CLOSING HSRE
LEARNS OF ANY FACTS OR CIRCUMSTANCES WHICH MAKE ANY WARRANTY OR REPRESENTATION
MADE IN THIS AGREEMENT BY EXTRA SPACE UNTRUE, INCORRECT, OR MISLEADING IN ANY
MATERIAL RESPECT AND, AT OR PRIOR TO CLOSING, HSRE HAS GIVEN EXTRA SPACE WRITTEN
NOTICE OF SUCH FACTS OR CIRCUMSTANCES, AND, IN EACH INSTANCE, AS OF THE DATE OF
THIS AGREEMENT, HSRE DID NOT HAVE KNOWLEDGE OF SUCH FACTS OR CIRCUMSTANCES, HSRE
SHALL NOT HAVE ANY LIABILITY TO EITHER EXTRA SPACE OR HSRE-ESP WITH RESPECT TO
SUCH WARRANTY OR REPRESENTATION AND THE FAILURE TO REMAKE SUCH REPRESENTATION OR
WARRANTY SHALL NOT CONSTITUTE A DEFAULT HEREUNDER BY HSRE, EXCEPT IN THE EVENT
OR TO THE EXTENT THAT THE UNTRUTH OF SUCH REPRESENTATION OR WARRANTY IS THE
RESULT OF ANY WILLFUL OR INTENTIONAL ACT OF HSRE (OR ANYONE ACTING AT HIS, HER
OR ITS REQUEST) OR WILLFUL OR INTENTIONAL FAILURE TO ACT ON THE PART OF HSRE (OR
ANYONE ACTING AT HIS, HER OR ITS REQUEST) AND IN BREACH OF THIS AGREEMENT. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 6.3, THE CONTINUING
TRUTH AND ACCURACY IN ALL MATERIAL RESPECTS OF ALL REPRESENTATIONS AND
WARRANTIES MADE BY HSRE IN SECTION 6.1 IN THIS AGREEMENT SHALL BE A CONDITION
PRECEDENT TO EXTRA SPACE’S OBLIGATION TO CLOSE.

 

6.4           SURVIVAL AND INDEMNIFICATION.

 

6.4.1        LIMITED SURVIVAL OF HSRE WARRANTIES AND REPRESENTATIONS.  WITH THE
EXCEPTION OF THE REPRESENTATIONS AND WARRANTIES IN SECTION 6.1.1, WHICH SHALL
SURVIVE INDEFINITELY, THE WARRANTIES AND REPRESENTATIONS CONTAINED IN
SECTION 6.1 ABOVE SHALL SURVIVE THE CLOSING AND SHALL INURE TO THE BENEFIT OF
EXTRA SPACE, HSRE-ESP AND THEIR RESPECTIVE LEGAL REPRESENTATIVES, HEIRS,
SUCCESSORS OR ASSIGNS FOR A PERIOD OF ONE YEAR AFTER THE CLOSING AND SHALL
AUTOMATICALLY EXPIRE ON THE FIRST ANNIVERSARY OF THE CLOSING UNLESS EITHER EXTRA
SPACE OR HSRE-ESP PRIOR THERETO HAS GIVEN HSRE WRITTEN NOTICE OF ANY ALLEGED
BREACH AND EITHER EXTRA SPACE OR HSRE-ESP COMMENCES AND SERVES AN ACTION AGAINST
HSRE WITHIN NINETY (90) DAYS AFTER SUCH NOTICE IS GIVEN TO HSRE (AND, IN THE
EVENT ANY SUCH SUIT IS TIMELY COMMENCED BY EITHER EXTRA SPACE OR HSRE-ESP AND
SERVED AGAINST HSRE, SHALL SURVIVE THEREAFTER ONLY INSOFAR AS THE SUBJECT MATTER
OF THE ALLEGED BREACH SPECIFIED IN SUCH SUIT IS CONCERNED).  IF NOTICE IS NOT
TIMELY GIVEN AND SUIT IS NOT TIMELY COMMENCED AND SERVED BY EITHER EXTRA SPACE
OR HSRE-ESP, SUCH REPRESENTATIONS AND WARRANTIES SHALL THEREAFTER BE VOID AND OF
NO FORCE OR EFFECT.

 

6.4.2        INDEMNIFICATION.  SUBJECT TO THE PROVISIONS OF SECTION 6.4.1 ABOVE,
IF ANY CLAIM (DEFINED BELOW) ARISES BECAUSE OF ANY OF THE REPRESENTATIONS AND
WARRANTIES OF HSRE SET FORTH IN SECTION 6.1 ABOVE PROVES TO THE FALSE OR
MISLEADING IN ANY MATERIAL RESPECT, HSRE SHALL INDEMNIFY, DEFEND (WITH COUNSEL
REASONABLY ACCEPTABLE TO EXTRA SPACE), PROTECT, AND SAVE AND HOLD HARMLESS EXTRA
SPACE AND HSRE-ESP WITH RESPECT TO ANY SUCH CLAIM.  AS USED HEREIN, THE TERM
“CLAIM” SHALL MEAN ANY AND ALL LIABILITIES, JUDGMENTS, SETTLEMENT AMOUNTS,
CLAIMS,

 

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CAUSES OF ACTION, SUITS PENALTIES, DAMAGES, DEMANDS, ORDERS, COSTS AND EXPENSES
OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, REASONABLE LEGAL,
ACCOUNTING, CONSULTING, ENGINEERING, AND OTHER COSTS AND EXPENSES WHICH MAY BE
INCURRED BY OR ASSERTED AGAINST THE INDEMNIFIED PARTY.

 

6.4.3        SURVIVAL.  THE PROVISIONS OF THIS SECTION 6.4 SHALL SURVIVE THE
CLOSING.  EXCEPT AS MAY OTHERWISE BE SPECIFICALLY SET FORTH IN THIS AGREEMENT,
THE OBLIGATIONS OF THE HSRE UNDER THIS AGREEMENT SHALL NOT SURVIVE THE CLOSING
OR ANY TERMINATION OF THIS AGREEMENT.

 

7.             ADDITIONAL WARRANTIES AND REPRESENTATIONS OF EXTRA SPACE AND
HSRE.

 

7.1           KNOWLEDGE.  EXTRA SPACE AND HSRE (EACH HEREINAFTER A “PARTY” AND
COLLECTIVELY THE “PARTIES”), SOLELY WITH RESPECT TO ITSELF AND NOT WITH RESPECT
TO ANY OTHER PARTY, EACH WARRANTS AND REPRESENTS TO THE OTHER THAT SUCH PARTY IS
AWARE THAT:

 

7.1.1        ACQUISITION OF AN INTEREST IN HSRE-ESP IS A SPECULATIVE INVESTMENT
WHICH INVOLVES A SUBSTANTIAL DEGREE OF RISK OF LOSS BY SUCH PARTY OF SUCH
PARTY’S ENTIRE INVESTMENT IN HSRE-ESP, THAT SUCH PARTY UNDERSTANDS AND TAKES
FULL COGNIZANCE OF THE RISK FACTORS RELATED TO ACQUISITION OF AN INTEREST IN
HSRE-ESP.

 

7.1.2        NO FEDERAL, STATE OR LOCAL AGENCY HAS PASSED UPON THE INTERESTS IN
HSRE-ESP OR MADE ANY FINDING OR DETERMINATION CONCERNING THE FAIRNESS OF AN
INVESTMENT IN HSRE-ESP.

 

7.1.3        THE TAX CONSEQUENCES TO SUCH PARTY OF INVESTING IN HSRE-ESP WILL
DEPEND ON SUCH PARTY’S PARTICULAR CIRCUMSTANCES, AND NEITHER HSRE-ESP, ANY
MEMBER OF HSRE-ESP, ANY OTHER PARTY, NOR ANY OF THEIR RESPECTIVE, AGENTS,
OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES, OR CONSULTANTS OF ANY OF THEM WILL
BE RESPONSIBLE OR LIABLE FOR THE TAX CONSEQUENCES OF AN INVESTMENT IN HSRE-ESP. 
SUCH PARTY WILL LOOK SOLELY TO, AND RELY UPON, ITS OWN ADVISERS WITH RESPECT TO
THE TAX CONSEQUENCES OF AN INVESTMENT IN HSRE-ESP.

 

7.1.4        THERE CAN BE NO ASSURANCE THAT THE INTERNAL REVENUE CODE OR THE
REGULATIONS THEREUNDER WILL NOT BE AMENDED OR INTERPRETED IN THE FUTURE IN SUCH
A MANNER SO AS TO DEPRIVE HSRE-ESP AND ITS MEMBERS OF SOME OR ALL OF THE TAX
BENEFITS THEY MIGHT NOW RECEIVE, NOR THAT SOME OF THE DEDUCTIONS CLAIMED BY
HSRE-ESP OR THE ALLOCATIONS OF ITEMS OF INCOME, GAIN, LOSS, DEDUCTION, OR CREDIT
AMONG ITS MEMBERS MAY NOT BE CHALLENGED BY THE INTERNAL REVENUE SERVICE.

 

7.1.5        ANY PROJECTIONS WHICH MAY HAVE BEEN DELIVERED TO SUCH PARTY
(INCLUDING PROJECTIONS SET FORTH IN THE “ANNUAL BUSINESS PLAN AND OPERATING
BUDGET (AS DEFINED BELOW)) ARE BASED ON ESTIMATES, ASSUMPTIONS AND FORECASTS OF
EXTRA SPACE AND OTHERS, ARE ONLY ESTIMATES AND OPINIONS, AND ARE NOT GUARANTEED
BY EXTRA SPACE, HSRE-ESP ANY MEMBER OF HSRE-ESP OR ANY OTHER PERSON.

 

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SUCH PARTY HAS UNDERTAKEN ITS OWN INDEPENDENT REVIEW OF THE INVESTMENT IN
HSRE-ESP.

 

7.1.6                        PURSUANT TO THE HSRE-ESP OPERATING AGREEMENT, THERE
ARE SUBSTANTIAL RESTRICTIONS ON THE TRANSFERABILITY OF THE INTERESTS IN HSRE-ESP
AND THAT THERE IS NO PUBLIC MARKET FOR SUCH INTERESTS AND NONE IS EXPECTED TO
DEVELOP, AND THAT, ACCORDINGLY, IT MAY NOT BE POSSIBLE FOR SUCH PARTY TO
LIQUIDATE ITS INVESTMENT IN HSRE-ESP.

 

7.1.7                        SUCH PARTY HAS RECEIVED AND REVIEWED ALL
INFORMATION SUCH PARTY CONSIDERS NECESSARY OR APPROPRIATE FOR DECIDING WHETHER
TO ACQUIRE AN INTEREST IN HSRE-ESP.  SUCH PARTY HAS HAD AN OPPORTUNITY TO ASK
QUESTIONS AND RECEIVE ANSWERS FROM THE OTHER PARTY AND ITS AFFILIATES AND/OR
EMPLOYEES REGARDING THE TERMS AND CONDITIONS OF SUCH PARTY’S ACQUISITION OF SUCH
INTEREST IN HSRE-ESP AND REGARDING THE BUSINESS, FINANCIAL AFFAIRS, AND OTHER
ASPECTS OF HSRE-ESP AND HAS FURTHER HAD THE OPPORTUNITY TO OBTAIN ALL
INFORMATION (TO THE EXTENT THE OTHER PARTY POSSESSES OR CAN ACQUIRE SUCH
INFORMATION WITHOUT UNREASONABLE EFFORT OR EXPENSE) WHICH IT DEEMS NECESSARY TO
EVALUATE THE INVESTMENT AND TO VERIFY THE ACCURACY OF INFORMATION OTHERWISE
PROVIDED TO SUCH PARTY.

 

7.1.8                        NEITHER HSRE-ESP THE OTHER PARTY OR ANY AFFILIATE,
AGENT OR EMPLOYEE OF HSRE-ESP, SUCH OTHER MEMBER, OR ANY OTHER PERSON HAS AT ANY
TIME EXPRESSLY OR IMPLICITLY REPRESENTED, GUARANTEED, OR WARRANTED TO SUCH PARTY
THAT SUCH PARTY MAY FREELY TRANSFER SUCH PARTY’S INTEREST IN HSRE-ESP, THAT A
PERCENTAGE RETURN OF PROFITS AND/OR AMOUNT OR TYPE OF CONSIDERATION WILL BE
REALIZED AS A RESULT OF AN INVESTMENT IN HSRE-ESP, THAT PAST PERFORMANCE OR
EXPERIENCE ON THE PART OF ANY PARTY OR ITS AFFILIATES OR ANY OTHER PERSON IN ANY
WAY INDICATES THE PREDICTABLE RESULTS OF THE OWNERSHIP OF SUCH PARTY’S INTEREST
IN HSRE-ESP OR OF THE OVERALL BUSINESS OF HSRE-ESP, THAT ANY CASH DISTRIBUTIONS
FROM HSRE-ESP OPERATIONS OR OTHERWISE WILL BE MADE TO THE MEMBERS BY ANY
SPECIFIC DATE OR WILL BE MADE AT ALL, OR THAT ANY SPECIFIC TAX BENEFITS WILL
ACCRUE AS A RESULT OF AN INVESTMENT IN HSRE-ESP.

 

7.1.9                        SUCH PARTY HAS BEEN ADVISED TO CONSULT WITH SUCH
PARTY’S OWN ATTORNEY REGARDING ALL LEGAL MATTERS CONCERNING AN INVESTMENT IN
HSRE-ESP AND THE TAX CONSEQUENCES OF PARTICIPATING IN HSRE-ESP, AND HAS DONE SO,
TO THE EXTENT SUCH PARTY CONSIDERS NECESSARY.

 

7.1.10                  SUCH PARTY MUST BEAR THE ECONOMIC RISK OF INVESTMENT IN
HSRE-ESP FOR AN INDEFINITE PERIOD OF TIME, SINCE THE INTERESTS HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND, THEREFORE, CANNOT BE SOLD
UNLESS EITHER THEY ARE SUBSEQUENTLY REGISTERED UNDER SUCH ACT OR AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.

 

7.1.11                  INTERESTS IN HSRE-ESP HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR QUALIFIED UNDER THE

 

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SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE BLUE SKY LAWS IN RELIANCE,
IN PART, ON THE WARRANTIES AND REPRESENTATIONS OF SUCH PARTY HEREIN.

 

7.2                                 ADDITIONAL WARRANTIES AND REPRESENTATIONS. 
EACH PARTY, SOLELY WITH RESPECT TO SUCH PARTY AND NOT WITH RESPECT TO ANY OTHER
PARTY, WARRANTS AND REPRESENTS TO THE OTHER PARTY THAT:

 

7.2.1                        SUCH PARTY AND SUCH PARTY’S INVESTMENT ADVISORS, IF
ANY, HAVE CAREFULLY REVIEWED AND UNDERSTAND THE RISKS OF, AND OTHER
CONSIDERATIONS RELATING TO, THE PURCHASE OF AN INTEREST IN HSRE-ESP.

 

7.2.2                        SUCH PARTY IS ACQUIRING SUCH PARTY’S INTEREST IN
HSRE-ESP FOR INVESTMENT PURPOSES ONLY FOR ITS OWN ACCOUNT, AND NOT WITH A VIEW
TO THE RESALE, ASSIGNMENT, PLEDGE, MORTGAGE, HYPOTHECATION, TRANSFER OR
DISTRIBUTION OF ALL OR ANY PART THEREOF.  NO OTHER PERSON WILL HAVE ANY DIRECT
OR INDIRECT BENEFICIAL INTEREST IN OR RIGHT TO SUCH PARTY’S INTEREST IN
HSRE-ESP.

 

7.2.3                        SUCH PARTY:  (1) IS AUTHORIZED AND OTHERWISE DULY
QUALIFIED TO PURCHASE AND HOLD INTERESTS IN HSRE-ESP;  AND (2) HAS ITS PRINCIPAL
PLACE OF BUSINESS AT ITS ADDRESS SET FORTH ABOVE IN THIS AGREEMENT.

 

7.2.4                        BY REASON OF ITS BUSINESS OR FINANCIAL EXPERIENCE,
OR BY REASON OF THE BUSINESS OR FINANCIAL EXPERIENCE OF SUCH PARTY’S FINANCIAL
ADVISOR WHO IS UNAFFILIATED WITH AND WHO IS NOT COMPENSATED, DIRECTLY OR
INDIRECTLY, BY EITHER THE OTHER PARTY OR HSRE-ESP OR ANY AFFILIATE OR SELLING
AGENT OF EITHER THE OTHER PARTY OR HSRE-ESP, SUCH PARTY IS CAPABLE OF EVALUATING
THE RISKS AND MERITS OF THIS INVESTMENT AND OF PROTECTING SUCH PARTY’S OWN
INTERESTS IN CONNECTION WITH THIS INVESTMENT.

 

7.2.5                        SUCH PARTY IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(A) PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION (“SEC”). 
NOTWITHSTANDING SUCH PARTY’S STATUS AS AN ACCREDITED INVESTOR, SUCH PARTY IS
ACQUIRING SUCH PARTY’S INTEREST IN HSRE-ESP AND ENTERING INTO THIS AGREEMENT AS
A JOINT VENTURE WITH THE OTHER PARTY AND DOES NOT CONSIDER THE INTERESTS IN
HSRE-ESP TO CONSTITUTE A “SECURITY” UNDER ANY FEDERAL OR STATE LAW.

 

7.2.6                        SUCH PARTY IS FINANCIALLY ABLE TO BEAR THE ECONOMIC
RISK OF AN INVESTMENT IN HSRE-ESP, INCLUDING THE TOTAL LOSS THEREOF.

 

7.2.7                        NEITHER THE OTHER PARTY NOR  HSRE-ESP IS UNDER ANY
OBLIGATION TO REGISTER OR QUALIFY INTERESTS IN THE COMPANY UNDER THE SECURITIES
ACT OR UNDER ANY STATE SECURITIES LAW, OR TO ASSIST SUCH PARTY IN COMPLYING WITH
ANY EXEMPTION FROM REGISTRATION AND QUALIFICATION.  SUCH PARTY IS AN EXPERIENCED
INVESTOR IN UNREGISTERED AND RESTRICTED SECURITIES OF LIMITED LIABILITY
COMPANIES OR LIMITED PARTNERSHIPS.

 

7.3                                 INDEMNIFICATION REGARDING WARRANTIES AND
REPRESENTATIONS.  EACH PARTY AGREES TO INDEMNIFY AND HOLD HARMLESS EACH OTHER
PARTY, HSRE-ESP, AND ANY

 

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OFFICERS, DIRECTORS, SHAREHOLDERS, MANAGERS, MEMBERS, EMPLOYEES, PARTNERS,
AGENTS, ATTORNEYS, REGISTERED REPRESENTATIVES, AND CONTROL PERSONS OF ANY SUCH
ENTITY WHO WAS OR IS A PARTY OR IS THREATENED TO BE MADE A PARTY TO ANY
THREATENED, PENDING, OR COMPLETED ACTION, SUIT, OR PROCEEDING, WHETHER CIVIL,
CRIMINAL, ADMINISTRATIVE, OR INVESTIGATIVE, BY REASON OF OR ARISING FROM ANY
MISREPRESENTATION OR MISSTATEMENT OF FACTS OR OMISSION TO REPRESENT OR STATE
FACTS MADE BY SUCH PARTY INCLUDING, WITHOUT LIMITATION, THE INFORMATION IN THIS
AGREEMENT, AGAINST LOSSES, LIABILITIES, AND EXPENSES OF HSRE-ESP, EACH AND EVERY
OTHER PARTY, AND ANY OFFICERS, DIRECTORS, SHAREHOLDERS, MANAGERS, MEMBERS,
EMPLOYEES, PARTNERS, ATTORNEYS, AGENTS, REGISTERED REPRESENTATIVES, AND CONTROL
PERSONS OF ANY SUCH PERSON (INCLUDING ATTORNEYS’ FEES, JUDGMENTS, FINES, AND
AMOUNTS PAID IN SETTLEMENT, PAYABLE AS INCURRED) INCURRED BY SUCH PERSON IN
CONNECTION WITH SUCH ACTION, SUIT, PROCEEDING, OR THE LIKE.

 

7.4                                 SURVIVAL.  THE PROVISIONS OF THIS SECTION 7
SHALL SURVIVE THE CLOSING AND/OR ANY TERMINATION OF THIS AGREEMENT.

 

8.                                      INSPECTIONS.

 

8.1                                 INSPECTIONS.  SUBJECT TO THE PROVISIONS OF
THIS SECTION 8, DURING THE FORTY-FIVE (45) DAY PERIOD FOLLOWING THE FULL
EXECUTION OF THIS AGREEMENT (THE “DUE DILIGENCE PERIOD”), HSRE SHALL BE
PERMITTED TO MAKE A COMPLETE REVIEW AND INSPECTION OF THE PHYSICAL, LEGAL,
ECONOMIC AND ENVIRONMENTAL CONDITION OF THE PROPERTY, INCLUDING, WITHOUT
LIMITATION, INTERVIEWS WITH EXTRA SPACE’S PERSONNEL AT THE FACILITIES, IF ANY,
OR THE PERSONNEL OF EXTRA SPACE’S PROPERTY MANAGER, ANY LEASES AND CONTRACTS
AFFECTING THE PREMISES, BOOKS AND RECORDS MAINTAINED BY EXTRA SPACE OR ITS
AGENTS RELATING TO THE PROPERTY, PEST CONTROL MATTERS, SOIL CONDITION, ASBESTOS,
PCB, HAZARDOUS WASTE, TOXIC SUBSTANCE OR OTHER ENVIRONMENTAL MATTERS, COMPLIANCE
WITH BUILDING, HEALTH, SAFETY, LAND USE AND ZONING LAWS, REGULATIONS AND ORDERS,
PLANS AND SPECIFICATIONS, STRUCTURAL, LIFE SAFETY, HVAC AND OTHER BUILDING
SYSTEM AND ENGINEERING CHARACTERISTICS, TRAFFIC PATTERNS, AND ALL OTHER
INFORMATION PERTAINING TO THE PROPERTY.  WITHOUT REPRESENTATION OR WARRANTY,
EXTRA SPACE SHALL COOPERATE IN HSRE’S REVIEW AND PROVIDE HSRE WITH THE
OPPORTUNITY TO REVIEW LEASES, FINANCIAL REPORTS AND OTHER THIRD-PARTY INSPECTION
REPORTS AND SIMILAR MATERIALS IN EXTRA SPACE’S POSSESSION RELATING TO THE
PROPERTY (EXCLUDING APPRAISALS, INTERNAL VALUATIONS OR SIMILAR PROPRIETARY
MATERIALS THAT MAY BE IN EXTRA SPACE’S POSSESSION).  THE PROPERTY MANAGEMENT
AGREEMENT APPLICABLE TO EACH FACILITY SHALL BE TERMINATED AS OF CLOSING.  PRIOR
TO THE EXPIRATION OF THE INSPECTION PERIOD, HSRE SHALL NOTIFY EXTRA SPACE IN
WRITING OF ANY REPAIR AND MAINTENANCE ITEMS THAT HSRE HAS IDENTIFIED DURING THE
COURSE OF ITS INSPECTIONS, ALONG WITH AN ESTIMATE OF THE EXPENSE TO REPAIR SUCH
ITEMS (THE “REPAIR NOTICE”).  WITHIN FIVE (5) BUSINESS DAYS AFTER EXTRA SPACE’S
RECEIPT OF THE REPAIR NOTICE, EXTRA SPACE SHALL PROVIDE WRITTEN NOTICE (THE
“REPAIR RESPONSE”) TO HSRE OF THOSE ITEMS WHICH IT AGREES TO REPAIR (THE “REPAIR
ITEMS”).  IF EXTRA SPACE DOES NOT ELECT TO REPAIR ALL OF THE ITEMS SET FORTH IN
THE REPAIR NOTICE, HSRE MAY EITHER WAIVE HSRE’S REQUIREMENT THAT EXTRA SPACE
REPAIR SUCH REPAIR ITEMS AND PROCEED TO CLOSING OR TERMINATE THIS AGREEMENT BY
PROVIDING WRITTEN NOTICE TO EXTRA SPACE WITHIN THREE (3) BUSINESS DAYS OF HSRE’S
RECEIPT OF THE REPAIR RESPONSE.  UPON SUCH TERMINATION, NEITHER PARTY SHALL HAVE
ANY FURTHER RIGHTS OR LIABILITIES HEREUNDER EXCEPT FOR THOSE PROVISIONS WHICH
EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT.  IF

 

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PRIOR TO CLOSING EXTRA SPACE FAILS TO COMPLETE THE REPAIR OF ANY REPAIR ITEMS
THAT EXTRA SPACE ELECTED TO REPAIR, A PORTION OF THE EXTRA SPACE DISTRIBUTION
AMOUNT EQUAL TO ONE HUNDRED FIFTY PERCENT (150%) OF HSRE’S REASONABLE ESTIMATE
TO REPAIR SUCH ITEMS (AS SET FORTH IN THE REPAIR NOTICE) SHALL BE HELD IN AN
ESCROW WITH THE TITLE INSURER PURSUANT TO INSTRUCTIONS THAT ARE REASONABLY
ACCEPTABLE TO HSRE AND EXTRA SPACE TO ENSURE THE COMPLETION OF SUCH REPAIR
ITEMS.

 

8.2                                 CONDUCT OF INSPECTIONS.

 

8.2.1                        INSPECTIONS IN GENERAL.  DURING THE DUE DILIGENCE
PERIOD, HSRE, ITS AGENTS, AND EMPLOYEES SHALL HAVE THE RIGHT TO ENTER UPON THE
PROPERTY FOR THE PURPOSE OF MAKING NON-INVASIVE INSPECTIONS AT HSRE’S SOLE RISK,
COST AND EXPENSE.  BEFORE ANY SUCH ENTRY, HSRE SHALL PROVIDE EXTRA SPACE WITH A
CERTIFICATE OF INSURANCE NAMING EXTRA SPACE AS AN ADDITIONAL INSURED AND WITH AN
INSURER AND INSURANCE LIMITS AND COVERAGE REASONABLY SATISFACTORY TO EXTRA
SPACE.  ALL SUCH ENTRIES UPON THE PROPERTY SHALL BE AT REASONABLE TIMES DURING
NORMAL BUSINESS HOURS AND AFTER AT LEAST 24 HOURS PRIOR NOTICE TO EXTRA SPACE OR
EXTRA SPACE’S AGENT, AND EXTRA SPACE OR EXTRA SPACE’S AGENT SHALL HAVE THE RIGHT
TO ACCOMPANY HSRE DURING ANY INSPECTION ACTIVITIES PERFORMED BY HSRE ON THE
PROPERTY.  HSRE SHALL NOT DISTURB THE TENANTS ON THE PROPERTY, AND HSRE’S
INSPECTION SHALL BE SUBJECT TO THE RIGHTS OF TENANTS UNDER THE LEASES.  DURING
THE DUE DILIGENCE PERIOD, EXTRA SPACE SHALL PROVIDE TO HSRE, FROM TIME TO TIME
AT THE REQUEST OF HSRE, COPIES OF CURRENT REPORTS AND INFORMATION WITH RESPECT
TO THE FACILITIES WHICH ARE AVAILABLE FROM THE CENTER SHIFT PROPERTY MANAGEMENT
SYSTEM (“CENTER SHIFT”).  IF ANY INSPECTION OR TEST DISTURBS THE PROPERTY, HSRE
WILL RESTORE THE PROPERTY TO THE SAME CONDITION AS EXISTED BEFORE THE INSPECTION
OR TEST.  HSRE SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS EXTRA SPACE AND EXTRA
SPACE’S PARTNERS AND THEIR RESPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS,
AFFILIATES, TENANTS, AGENTS, CONTRACTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS
(“EXTRA SPACE RELATED PARTIES”) AND THE PROPERTY FROM AND AGAINST ANY AND ALL
LOSSES, COSTS, DAMAGES, CLAIMS, OR LIABILITIES, INCLUDING REASONABLE ATTORNEYS’
FEES, ARISING OUT OF OR IN CONNECTION WITH ANY ENTRY OR INSPECTIONS PERFORMED BY
HSRE, ITS AGENTS OR REPRESENTATIVES.  THE PROVISIONS OF THIS SECTION 8.2.1 SHALL
SURVIVE THE CLOSING OR ANY TERMINATION OF THIS AGREEMENT.

 

8.2.2                        ENVIRONMENTAL INSPECTIONS.  THE INSPECTIONS
PERMITTED UNDER SECTION 8.2, MAY INCLUDE A NON-INVASIVE PHASE I ENVIRONMENTAL
INSPECTION OF THE PROPERTY, BUT NO PHASE II ENVIRONMENTAL INSPECTION OR OTHER
INVASIVE INSPECTION OR SAMPLING OF SOIL OR MATERIALS, INCLUDING WITHOUT
LIMITATION CONSTRUCTION MATERIALS, EITHER AS PART OF THE PHASE I INSPECTION OR
ANY OTHER INSPECTION, SHALL BE PERFORMED WITHOUT THE PRIOR WRITTEN CONSENT OF
EXTRA SPACE, WHICH MAY BE WITHHELD IN EXTRA SPACE’S SOLE AND ABSOLUTE
DISCRETION, AND IF CONSENTED TO BY EXTRA SPACE, THE PROPOSED SCOPE OF WORK AND
THE PARTY WHO WILL PERFORM THE WORK SHALL BE SUBJECT TO EXTRA SPACE’S REVIEW AND
APPROVAL.  HSRE SHALL DELIVER TO EXTRA SPACE COPIES OF ANY PHASE I, PHASE II OR
OTHER ENVIRONMENTAL REPORT TO WHICH EXTRA SPACE CONSENTS AS PROVIDED ABOVE.

 

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8.2.3                        TITLE AND SURVEY REVIEW.  DURING THE DUE DILIGENCE
PERIOD, HSRE SHALL REVIEW:  EXTRA SPACE’S EXISTING TITLE INSURANCE POLICIES WITH
RESPECT TO THE PROPERTY AND EXTRA SPACE’S EXISTING SURVEYS WITH RESPECT TO THE
PROPERTY.  HSRE MAY ORDER, AT HSRE’S EXPENSE, UPDATES ON THE EXISTING SURVEYS. 
HSRE MAY, AT ITS SOLE EXPENSE, OBTAIN DURING THE DUE DILIGENCE PERIOD ANY
ADDITIONAL TITLE COMMITMENT(S) (THE “TITLE COMMITMENTS”) FROM CHICAGO TITLE
INSURANCE COMPANY, NATIONAL OFFICE, AT 171 N. CLARK STREET, 3RD FLOOR, CHICAGO,
IL 60601, ATTENTION: RONALD K. SZOPA, AS THE “ESCROW AGENT” OR “TITLE INSURER”,
OR SURVEY UPDATES DESIRED BY HSRE.  HSRE SHALL WORK DIRECTLY WITH THE TITLE
INSURER TO RESOLVE ANY OBJECTIONS TO EXCEPTIONS SET FORTH ON THE TITLE
COMMITMENTS AND SHALL PROVIDE EXTRA SPACE WITH COPIES OF FINAL, REVISED TITLE
COMMITMENTS OR PRO FORMA POLICIES, WHICH SET FORTH ONLY THOSE TITLE EXCEPTIONS
THAT HAVE BEEN ACCEPTED BY HSRE (THE “APPROVED TITLE MATTERS”).  EXTRA SPACE
SHALL HAVE NO OBLIGATION TO REMOVE ANY EXCEPTIONS TO TITLE REFLECTED ON THE
TITLE COMMITMENTS EXCEPT LIENS OF AN ASCERTAINABLE AMOUNT CREATED BY EXTRA SPACE
(BUT SPECIFICALLY NOT INCLUDING LIENS TO SECURE THE EXISTING INDEBTEDNESS),
INCLUDING MECHANICS’ AND MATERIALMEN’S LIENS FILED AGAINST THE EXTRA SPACE AND
JUDGMENT LIENS FILED AGAINST THE PROPERTY WITH RESPECT TO JUDGMENTS OBTAINED
AGAINST EXTRA SPACE, WHICH LIENS EXTRA SPACE SHALL CAUSE TO BE REMOVED AS
EXCEPTIONS TO THE TITLE POLICY AT CLOSING (AND IF EXTRA SPACE FAILS TO REMOVE
SUCH MATTERS AS EXCEPTIONS, BY BONDING OVER SUCH MATTERS OR OTHERWISE, HSRE MAY
DIRECT THAT A PORTION OF THE EXTRA SPACE DISTRIBUTION AMOUNT BE APPLIED TO
REMOVE SAME).  EXTRA SPACE FURTHER AGREES TO REMOVE ANY EXCEPTIONS OR
ENCUMBRANCES TO TITLE WHICH ARE CREATED BY EXTRA SPACE AFTER THE DATE OF THIS
AGREEMENT WITHOUT HSRE’S CONSENT.  HSRE MAY TERMINATE THIS AGREEMENT IF THE
TITLE COMPANY REVISES THE TITLE REPORT AFTER THE EXPIRATION OF THE DUE DILIGENCE
PERIOD TO ADD EXCEPTIONS IF SUCH ADDITIONS ARE NOT REASONABLY ACCEPTABLE TO HSRE
AND ARE NOT REMOVED AS EXCEPTIONS TO THE TITLE POLICY AT CLOSING.

 

8.3                                 TERMINATION DURING DUE DILIGENCE PERIOD.  IF
HSRE DETERMINES, IN ITS SOLE DISCRETION, BEFORE THE EXPIRATION OF THE DUE
DILIGENCE PERIOD THAT THE PROPERTY IS UNACCEPTABLE FOR HSRE’S PURPOSES, HSRE
SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT BY GIVING TO EXTRA SPACE
WRITTEN NOTICE OF TERMINATION BEFORE THE EXPIRATION OF THE DUE DILIGENCE PERIOD,
AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR LIABILITIES HEREUNDER EXCEPT
FOR THOSE PROVISIONS WHICH EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT.

 

8.4                                 APPROVAL OF ANNUAL BUSINESS PLAN AND ANNUAL
OPERATING BUDGET.  AT LEAST TEN BUSINESS DAYS PRIOR TO THE EXPIRATION OF THE DUE
DILIGENCE PERIOD, EXTRA SPACE SHALL PREPARE AND SUBMIT TO HSRE, AN ANNUAL
BUSINESS PLAN AND ANNUAL OPERATING BUDGET (AS DEFINED IN THE HSRE-ESP OPERATING
AGREEMENT) FOR REVIEW AND APPROVAL BY HSRE.

 

9.                                      DAMAGE TO PROPERTY.

 

If before the Closing one or more of the Facilities is materially or adversely
affected in any way as a result of any fire, flood, earthquake, similar acts of
nature or other acts of

 

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destruction which involves damage requiring repair and restoration costs of less
than or equal to Five Hundred Thousand and No/100 Dollars ($500,000.00), the
parties shall be obligated to proceed with the Closing.  In that event, if
(A) the amount of the insurance proceeds available for such loss have been
determined prior to the Closing Date, then the difference between (i) the cost
of repairing and restoring such Facilities and (ii) the total amount of
insurance proceeds payable with respect to such material adverse change (the
“Casualty Adjustment Amount”) shall be treated as a “cost” which is charged to
Extra Space for purposes of determining the Extra Space Distribution Amount
pursuant to Section 2.2.2 above, or (B) the amount of the insurance proceeds
available for such loss have not been determined prior to the Closing Date, then
the right to receive such insurance proceeds shall be assigned to HSRE-ESP or
the title holder of the applicable property, and Extra Space shall pay the
Casualty Adjustment Amount to HSRE-ESP within ten (10) days after such amount
has been determined.  If the material or adverse change involves damage
requiring repair and restoration costs in excess of Five Hundred Thousand and
No/100 Dollars ($500,000.00) or more (a “Major Event”), the parties shall
proceed to Closing with the Facilities being transferred in their un-restored
condition together with any insurance proceeds or the right to receive such
insurance proceeds, and the rights to any other claims arising as a result of
such material or adverse change, in which event, the amount of any “deductible”
from the insurance proceeds payable with respect to such material or adverse
change shall be treated as a “cost” which is charged to Extra Space for purposes
of determining the Extra Space Distribution Amount pursuant to Section 2.2.2
above; provided, however, that HSRE shall have the right, exercisable within
twenty (20) days of the occurrence of such Major Event, to terminate this
Agreement (and if such Major Event results in uninsured repair and restoration
costs in excess of $500,000, either Extra Space or HSRE shall have the right to
so terminate this Agreement), in which event, except as specifically provided
otherwise in this Agreement, the parties shall have no further obligations to
each other under this Agreement.

 

10.                               EMINENT DOMAIN.

 

If, before Closing, proceedings, are commenced or threatened for the taking by
exercise of the power of eminent domain (a “Taking”) of all or a “material” (as
defined below) part of any of the Facilities, each of Extra Space or HSRE shall
have the right, by giving written notice to the other within twenty (20) days
after Extra Space gives HSRE written notice of the commencement of such
proceedings or the threat to commence such proceedings, to terminate this
Agreement, in which event, except as specifically provided otherwise in this
Agreement, the parties shall have no further obligations to each other under
this Agreement.  If, before the Closing, proceedings are commenced or threatened
for a Taking of less than such a “material” part of a Facility, or if neither
Extra Space nor HSRE exercises the right to terminate this Agreement pursuant to
the preceding sentence, then this Agreement shall remain in full force and
effect and, on the Closing, the condemnation award (or, if not therefore
received, the right to receive such portion of the award) payable on account of
the Taking shall constitute an asset of the owner of such Facility (i.e., either
ESP 51 or ESP Texas) and, as such, shall be part of the Property.  Extra Space
shall give written notice to HSRE within ten (10) business days after Extra
Space receives notice of the commencement of any proceedings for a Taking of all
or any part of a Facility.  For purposes of this Section 10 a Taking of any
portion of a Facility shall be “material” if such Taking would render such
Facility unsuitable, in the reasonable determination of Extra Space and HSRE,
for use as a self storage facility in the same manner in which such Facility has
historically been used by Extra Space.

 

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11.                               CONDITIONS PRECEDENT.

 

11.1                           HSRE’S CONDITIONS PRECEDENT.  THE OBLIGATIONS OF
HSRE UNDER THIS AGREEMENT ARE CONTINGENT UPON ANY ONE OR MORE OF THE FOLLOWING,
THE FAILURE OF ANY OF WHICH SHALL, UPON WRITTEN NOTICE BY HSRE TO EXTRA SPACE,
RENDER THIS AGREEMENT AND THE HSRE OPERATING AGREEMENT NULL AND VOID:

 

11.1.1                  TITLE POLICY.  TITLE INSURER SHALL BE IRREVOCABLY
COMMITTED TO ISSUE FOR EACH FACILITY UPON CLOSING EITHER (X) A FORM 2006 ALTA
OWNER’S POLICY OF TITLE INSURANCE (OR AN APPLICABLE LOCAL EQUIVALENT) WITH AN
ENDORSEMENT DELETING THE EXCLUSION FOR CREDITORS’ RIGHTS AND DELETING THE
ARBITRATION PROVISION (OR OTHER CURRENT FORM OF EXTENDED COVERAGE OWNER’S POLICY
IF SUCH FORM IS NOT AVAILABLE), ALONG WITH SUCH TITLE ENDORSEMENTS REASONABLY
REQUESTED BY HSRE AND IN THE FORM PREVIOUSLY APPROVED BY HSRE (COLLECTIVELY, THE
“TITLE POLICY”), OR (Y) AN ENDORSEMENT TO EXTRA SPACE’S EXISTING TITLE INSURANCE
POLICY FOR THE PROPERTY (COLLECTIVELY, THE “ENDORSEMENT”), IN EITHER CASE,
TOGETHER WITH A NON-IMPUTATION ENDORSEMENT (IF AVAILABLE IN THE JURISDICTION IN
WHICH THE PROPERTY IS LOCATED) AND INSURING ESP 51 OR ESP TEXAS (AS APPLICABLE)
AS THE OWNER OF FEE SIMPLE TITLE TO THE APPLICABLE FACILITY, SUBJECT ONLY TO
PERMITTED EXCEPTIONS, IN THE AMOUNTS SET FORTH ON SCHEDULE 9.1.1 ATTACHED
HERETO.

 

11.1.2                  NO DEFAULT.  EXTRA SPACE SHALL NOT BE IN DEFAULT IN ANY
MATERIAL RESPECT UNDER ANY OF ITS OBLIGATIONS HEREUNDER.

 

11.1.3                  REPRESENTATIONS AND WARRANTIES.  EACH OF THE
REPRESENTATIONS AND WARRANTIES OF EXTRA SPACE SHALL BE TRUE AND CORRECT IN ALL
MATERIAL RESPECTS AS OF CLOSING.

 

11.1.4                  ANNUAL BUSINESS PLAN AND ANNUAL OPERATING BUDGET.  HSRE
AND EXTRA SPACE SHALL HAVE APPROVED THE ANNUAL BUSINESS PLAN AND ANNUAL
OPERATING BUDGET.

 

11.1.5                  EXISTING LOAN.  THE LENDER AND EACH SERVICER OF THE
EXISTING INDEBTEDNESS SHALL HAVE APPROVED THE TRANSACTION WHICH IS THE SUBJECT
OF THIS AGREEMENT AND THE LENDER CONDITIONS ARE ACCEPTABLE TO BOTH HSRE AND
EXTRA SPACE.

 

11.2                           EXTRA SPACE’S CONDITIONS PRECEDENT.  THE
OBLIGATIONS OF EXTRA SPACE UNDER THIS AGREEMENT ARE CONTINGENT UPON ANY ONE OR
MORE OF THE FOLLOWING, THE FAILURE OF ANY OF WHICH SHALL, UPON WRITTEN NOTICE BY
EXTRA SPACE TO HSRE, RENDER THIS AGREEMENT AND THE HSRE OPERATING AGREEMENT NULL
AND VOID:

 

11.2.1                  NO DEFAULT.  HSRE SHALL NOT BE IN DEFAULT IN ANY
MATERIAL RESPECT UNDER ANY OF ITS OBLIGATIONS HEREUNDER.

 

11.2.2                  REPRESENTATIONS AND WARRANTIES.  EACH OF THE
REPRESENTATIONS AND WARRANTIES OF HSRE SHALL BE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS AS OF CLOSING.

 

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11.2.3                  ANNUAL BUSINESS PLAN AND ANNUAL OPERATING BUDGET.  HSRE
AND EXTRA SPACE SHALL HAVE APPROVED THE ANNUAL BUSINESS PLAN AND ANNUAL
OPERATING BUDGET.

 

11.2.4                  EXISTING LOAN.  THE LENDER AND EACH SERVICER OF THE
EXISTING INDEBTEDNESS SHALL HAVE APPROVED THE TRANSACTION WHICH IS THE SUBJECT
OF THIS AGREEMENT AND THE LENDER CONDITIONS ARE ACCEPTABLE TO BOTH HSRE AND
EXTRA SPACE.

 

12.                               BROKERAGE.

 

Each of Extra Space and HSRE represents that it has not engaged any broker in
connection with the transactions contemplated by this Agreement.  Each of Extra
Space and HSRE shall indemnify and hold the other party harmless from and
against any and all claims of all brokers and finders claiming by, through or
under the indemnifying party.  The provisions of this Section 12 shall survive
Closing.

 

13.                               DEFAULTS AND REMEDIES.

 

13.1                           HSRE’S REMEDIES.

 

13.1.1                  PRE-CLOSING DEFAULT.  IN THE EVENT THAT PRIOR TO
CLOSING, EXTRA SPACE BREACHES IN ANY MATERIAL RESPECT ANY WARRANTY OR
REPRESENTATION CONTAINED IN THIS AGREEMENT OR FAILS IN ANY MATERIAL RESPECT TO
COMPLY WITH OR PERFORM ANY OF THE CONDITIONS TO BE COMPLIED WITH OR ANY OF THE
COVENANTS, AGREEMENTS OR OBLIGATIONS TO BE PERFORMED BY EXTRA SPACE UNDER THE
TERMS AND PROVISIONS OF THIS AGREEMENT AND SUCH BREACH OR FAILURE CONTINUES FOR
A PERIOD OF TEN (10) BUSINESS DAYS AFTER WRITTEN NOTICE THEREOF FROM HSRE TO
EXTRA SPACE, HSRE, AS HSRE’S EXCLUSIVE REMEDIES, SHALL BE ENTITLED TO
(I) TERMINATE THIS AGREEMENT BY GIVING WRITTEN NOTICE THEREOF TO EXTRA SPACE,
WHEREUPON, EXCEPT AS PROVIDED BELOW IN THIS SECTION 13.1.1 AND EXCEPT AS
EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT, NEITHER PARTY SHALL HAVE ANY
FURTHER RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT; OR (II) ENFORCE SPECIFIC
PERFORMANCE OF EXTRA SPACE’S OBLIGATIONS UNDER THIS AGREEMENT; PROVIDED,
HOWEVER, THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 13.1.1,
IN THE EVENT OF A TERMINATION BY HSRE UNDER (I) ABOVE, EXTRA SPACE SHALL, UPON
DEMAND FROM HSRE, REIMBURSE HSRE FOR THE ACTUAL AND REASONABLE OUT-OF-POCKET
EXPENSES PAID OR INCURRED BY HSRE IN CONNECTION WITH THIS AGREEMENT AND/OR
HSRE’S INVESTIGATION OR INSPECTION OF THE PROPERTY IN AN AMOUNT NOT TO EXCEED
TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00).  HSRE EXPRESSLY
AGREES THAT IN NO EVENT SHALL EXTRA SPACE BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
LOSS OF BUSINESS PROFITS OR OPPORTUNITY) AND BY EXECUTION OF THIS AGREEMENT,
HSRE WAIVES ANY RIGHT TO CLAIM OR SEEK ANY SUCH DAMAGES.  THE PROVISIONS OF THIS
SECTION 13.1.1 SHALL SURVIVE THE CLOSING OR ANY TERMINATION OF THIS AGREEMENT.

 

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13.1.2                  POST CLOSING DEFAULT.  IN THE EVENT THAT THE TRANSACTION
WHICH IS THE SUBJECT OF THIS AGREEMENT CLOSES AND AT OR AFTER CLOSING EXTRA
SPACE BREACHES ANY WARRANTY, REPRESENTATION OR COVENANT CONTAINED IN THIS
AGREEMENT WHICH SURVIVES CLOSING OR CONTAINED IN ANY DOCUMENT DELIVERED BY EXTRA
SPACE AT CLOSING HSRE MAY, SUBJECT TO THE LIMITATIONS CONTAINED IN THIS
AGREEMENT, PURSUE ANY AND ALL REMEDIES AVAILABLE AT LAW OR IN EQUITY; PROVIDED,
HOWEVER, IN NO EVENT SHALL EXTRA SPACE BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
LOSS OF BUSINESS PROFITS OR OPPORTUNITY) AND BY EXECUTION OF THIS AGREEMENT,
HSRE WAIVES ANY RIGHT TO CLAIM OR SEEK ANY SUCH DAMAGES.  THE PROVISIONS OF THIS
SECTION 13.1.2 SHALL SURVIVE THE CLOSING.

 

13.2                           EXTRA SPACE’S REMEDIES.  EXCEPT AS PROVIDED BELOW
IN THIS SECTION 13.2, IN THE EVENT HSRE BREACHES ANY WARRANTY OR REPRESENTATION
CONTAINED IN THIS AGREEMENT IN ANY MATERIAL RESPECT OR FAILS TO COMPLY WITH OR
PERFORM IN ANY MATERIAL RESPECT ANY OF THE COVENANTS, AGREEMENTS OR OBLIGATIONS
TO BE PERFORMED BY HSRE UNDER THE TERMS AND PROVISIONS OF THIS AGREEMENT AND
SUCH BREACH OR FAILURE CONTINUES FOR A PERIOD OF TEN (10) BUSINESS DAYS AFTER
WRITTEN NOTICE THEREOF FROM EXTRA SPACE TO HSRE, AS THE SOLE AND EXCLUSIVE
REMEDY OF EXTRA SPACE, EXTRA SPACE MAY TERMINATE THIS AGREEMENT BY WRITTEN
NOTICE TO HSRE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 13.2,
THE LIMITATIONS SET FORTH ABOVE IN THIS SECTION 13.2 SHALL NOT APPLY TO A
DEFAULT BY HSRE UNDER (1) SECTION 8.2.1, (2) ANY OTHER COVENANT OF HSRE UNDER
THIS AGREEMENT WHICH, PURSUANT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT,
SURVIVES THE CLOSING, BUT ONLY TO THE EXTENT THAT THE TRANSACTION WHICH IS THE
SUBJECT OF THIS AGREEMENT CLOSES AND SUCH DEFAULT OCCURS AT OR AFTER THE
CLOSING, OR (3) ANY DOCUMENT DELIVERED BY HSRE AT THE CLOSING; PROVIDED,
HOWEVER, IN NO EVENT SHALL HSRE BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
LOSS OF BUSINESS PROFITS OR OPPORTUNITY) AND BY EXECUTION OF THIS AGREEMENT,
EXTRA SPACE WAIVES ANY RIGHT TO CLAIM OR SEEK ANY SUCH DAMAGES.  THE PROVISIONS
OF THIS SECTION 13.2 SHALL SURVIVE THE CLOSING OR ANY TERMINATION OF THIS
AGREEMENT.

 

AFTER CLOSING, EACH OF EXTRA SPACE AND HSRE SHALL, SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, HAVE SUCH RIGHTS AND REMEDIES AS ARE AVAILABLE AT
LAW OR IN EQUITY WITH RESPECT TO A DEFAULT (OR BREACH OF A REPRESENTATION OR
WARRANTY) BY ANOTHER PARTY UNDER THIS AGREEMENT, EXCEPT (I) AS EXPRESSLY LIMITED
IN THIS AGREEMENT, AND (II) THAT NONE OF THE PARTIES HERETO SHALL BE ENTITLED TO
RECOVER FROM THE OTHER CONSEQUENTIAL OR SPECIAL DAMAGES.

 

14.                               MISCELLANEOUS.

 

14.1                           ENTIRE AGREEMENT.  THIS AGREEMENT CONSTITUTES THE
ENTIRE AGREEMENT BETWEEN EXTRA SPACE AND HSRE WITH RESPECT TO THE MATTERS
DISCUSSED HEREIN.  THIS AGREEMENT SHALL NOT BE MODIFIED OR AMENDED EXCEPT IN A
WRITTEN DOCUMENT SIGNED BY EXTRA SPACE AND HSRE.

 

14.2                           TIME.  TIME IS OF THE ESSENCE OF THIS AGREEMENT. 
IN THE COMPUTATION OF ANY PERIOD OF TIME PROVIDED FOR IN THIS AGREEMENT OR BY
LAW, THE DAY OF THE ACT OR EVENT FROM WHICH THE PERIOD OF TIME RUNS SHALL BE
EXCLUDED, AND THE LAST DAY OF SUCH PERIOD

 

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SHALL BE INCLUDED, UNLESS IT IS A SATURDAY, SUNDAY, MONDAY, OR LEGAL HOLIDAY, IN
WHICH CASE THE PERIOD SHALL BE DEEMED TO RUN UNTIL THE END OF THE NEXT DAY WHICH
IS NOT A SATURDAY, SUNDAY, MONDAY, OR LEGAL HOLIDAY.

 

14.3                           NOTICES.  ANY NOTICES REQUIRED OR PERMITTED TO BE
GIVEN HEREUNDER SHALL BE IN WRITING AND SHALL BE (AS ELECTED BY THE PARTY GIVING
SUCH NOTICE):  (I) PERSONALLY DELIVERED, (II) SENT BY A NATIONALLY RECOGNIZED
OVERNIGHT COURIER SERVICE, FEES PREPAID, OR (III) SENT BY TELECOPIER, IN EACH
INSTANCE ADDRESSED AS PROVIDED BELOW.  EITHER PARTY MAY CHANGE ITS ADDRESS FOR
PURPOSES HEREOF BY NOTICE GIVEN TO THE OTHER PARTY.  NOTICES HEREUNDER SHALL BE
DIRECTED:

 

 

If to Extra Space:

 

 

 

Extra Space Storage LLC

 

2795 E. Cottonwood Parkway

 

Suite 400

 

Salt Lake City, UT 84121

 

Attn: Mr. Charles L. Allen

 

Fax: (801) 365-4947

 

 

 

With a copy to:

 

 

 

Holland & Hart LLP

 

60 East South Temple, Suite 2000

 

Salt Lake City, Utah 84111

 

Attn: Mr. Steven E. Tyler

 

Fax: (866) 711-8035

 

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2.

If to HSRE:

 

 

 

c/o Harrison Street Real Estate Capital, LLC

 

71 S. Wacker Drive

 

Suite 3575

 

Chicago, IL 60606

 

Attn: Stephen Gordon and Robert Mathias

 

Fax:  (312) 920-1855

 

 

 

With copies to:

 

 

 

DLA Piper LLP (US)

 

203 N. LaSalle Street

 

Suite 1900

 

Chicago, IL 60601-1293

 

Attention:

Michael S. Gershowitz

 

Fax:

(312) 630-6306

 

A NOTICE SENT IN COMPLIANCE WITH THE PROVISIONS OF THIS 14.3 SHALL BE DEEMED
GIVEN ON THE DATE OF RECEIPT OR REFUSAL TO ACCEPT DELIVERY, PROVIDED, HOWEVER,
THAT A NOTICE DELIVERED BY FACSIMILE SHALL ONLY BE EFFECTIVE (RETROACTIVE TO THE
TIME OF RECEIPT) IF SUCH NOTICE IS ALSO DELIVERED WITHIN TWO (2) BUSINESS DAYS
BY HAND OR DEPOSITED IN THE UNITED STATES MAIL, POSTAGE PREPAID, REGISTERED OR
CERTIFIED MAIL.

 

14.4         NO RECORDATION.  NEITHER THIS AGREEMENT NOR ANY MEMORANDUM THEREOF
SHALL BE RECORDED AGAINST THE PROPERTY.

 

14.5         COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
IDENTICAL COUNTERPARTS ANY OR ALL OF WHICH MAY CONTAIN THE SIGNATURES OF FEWER
THAN ALL OF THE PARTIES BUT ALL OF WHICH SHALL BE TAKEN TOGETHER AS A SINGLE
INSTRUMENT.

 

14.6         WAIVER.  THE FAILURE BY EITHER PARTY TO ENFORCE AGAINST THE OTHER
ANY TERM OF THIS AGREEMENT SHALL NOT BE DEEMED A WAIVER OF SUCH PARTY’S RIGHT TO
ENFORCE AGAINST THE OTHER PARTY THE SAME OR ANY OTHER TERM IN THE FUTURE.

 

14.7         SEVERABILITY.  IF ANY ONE OR MORE OF THE PROVISIONS HEREOF SHALL BE
HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT, SUCH INVALIDITY,
ILLEGALITY OR UNENFORCEABILITY SHALL NOT AFFECT ANY OTHER PROVISION HEREOF AND
THIS AGREEMENT SHALL BE CONSTRUED AS IF SUCH INVALID, ILLEGAL OR UNENFORCEABLE
PROVISION WERE NOT HEREIN CONTAINED.

 

14.8         JURY.  THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER REGARDING
ANY MATTERS ARISING OUT OF THIS AGREEMENT.

 

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14.9         FURTHER ASSURANCES.  EACH PARTY AGREES TO PERFORM, EXECUTE AND
DELIVER, ON AND AFTER THE CLOSING, SUCH FURTHER ACTIONS AND DOCUMENTS AS MAY BE
REASONABLY NECESSARY OR REQUESTED TO MORE FULLY EFFECTUATE THE PURPOSES, TERMS
AND INTENT OF THIS AGREEMENT AND THE CONVEYANCES CONTEMPLATED HEREIN.

 

14.10       ATTORNEYS’ FEES.  IF ANY PARTY HERETO OR THEIR RESPECTIVE SUCCESSORS
OR ASSIGNS FILES SUIT TO ENFORCE THE OBLIGATIONS OF, OR REMEDY AGAINST, ANY
OTHER PARTY TO THIS AGREEMENT, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER
FROM THE NON-PREVAILING PARTY THE REASONABLE FEES AND EXPENSES OF ITS ATTORNEYS
AND ITS COURT COSTS.

 

14.11       CONSTRUCTION.  THE PARTIES ACKNOWLEDGE THAT EACH PARTY AND ITS
COUNSEL HAVE REVIEWED AND REVISED THIS AGREEMENT AND THAT THE NORMAL RULE OF
CONSTRUCTION TO THE EFFECT THAT ANY AMBIGUITIES ARE TO BE RESOLVED AGAINST THE
DRAFTING PARTY SHALL NOT BE EMPLOYED IN THE INTERPRETATION OF THIS AGREEMENT OR
ANY AMENDMENTS OR EXHIBITS HERETO.  THE CAPTIONS PRECEDING THE TEXT OF EACH
SECTION ARE INCLUDED FOR CONVENIENCE OF REFERENCE ONLY AND SHALL BE DISREGARDED
IN THE CONSTRUCTION AND INTERPRETATION OF THIS AGREEMENT.

 

14.12       NO THIRD-PARTY BENEFICIARIES.  THIS AGREEMENT SHALL BENEFIT ONLY THE
PARTIES HERETO, AND NO OTHER PERSON OR ENTITY SHALL HAVE ANY RIGHTS HEREUNDER.

 

14.13       AS-IS.  HSRE ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO INSPECT
THE PROPERTY AND THAT IT ACCEPTS THE ESP INTERESTS, THE TEXAS INTERESTS AND THE
PROPERTY IN ITS “AS IS” CONDITION, SUBJECT, IN THE CASE OF THE PROPERTY, TO USE,
ORDINARY WEAR AND TEAR, AND NATURAL DETERIORATION, SUBJECT TO THE OTHER TERMS OF
THIS AGREEMENT.  HSRE FURTHER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT OR IN ANY DOCUMENT DELIVERED BY EXTRA SPACE AT CLOSING IN
ACCORDANCE WITH THIS AGREEMENT (COLLECTIVELY “EXTRA SPACE’S CLOSING DOCUMENTS”),
(I) NEITHER EXTRA SPACE NOR ANY AGENT OR REPRESENTATIVE OF SUCH PARTIES HAS
MADE, AND (II) NEITHER EXTRA SPACE NOR ANY SUCH AGENT OR REPRESENTATIVE IS
LIABLE FOR OR BOUND IN ANY MANNER BY, ANY EXPRESS OR IMPLIED WARRANTIES,
GUARANTIES, PROMISES, STATEMENTS, INDUCEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE ESP INTERESTS, THE TEXAS INTERESTS OR THE PROPERTY.

 

14.14       REPORTING PERSON.  EXTRA SPACE AND HSRE HEREBY DESIGNATE TITLE
INSURER TO ACT AS AND PERFORM THE DUTIES AND OBLIGATIONS OF THE “REPORTING
PERSON” WITH RESPECT TO THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT FOR
PURPOSES OF 26 C.F.R. SECTION 1.6045-4(E)(5) RELATING TO THE REQUIREMENTS FOR
INFORMATION REPORTING ON REAL ESTATE TRANSACTION CLOSED ON OR AFTER JANUARY 1,
1991.  IN THIS REGARD, EXTRA SPACE AND HSRE EACH AGREE TO EXECUTE AT CLOSING,
AND TO CAUSE TITLE INSURER TO EXECUTE AT CLOSING, A DESIGNATION AGREEMENT,
DESIGNATING TITLE INSURER AS THE REPORTING PERSON WITH RESPECT TO THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT.

 

14.15       PUBLIC NOTICES.  ANY PRESS RELEASE AND OTHER PUBLIC NOTICE TO BE
RELEASED BY ANY PARTY HERETO DISCLOSING THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL FIRST BE SUBMITTED TO THE OTHER PARTIES HERETO FOR
REVIEW AND COMMENT, AND EACH PARTY HERETO SHALL REASONABLY COOPERATE IN
ADDRESSING THE CONCERNS OF THE OTHER WITH RESPECT TO THE NATURE AND CONTENT OF
SUCH DISCLOSURE (EXCEPT AND TO THE EXTENT ANY SUCH DISCLOSURE MAY BE REQUIRED BY
LAW).

 

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14.16       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.

 

14.17       CONFIDENTIAL INFORMATION.  ALL INFORMATION OBTAINED PURSUANT TO THIS
AGREEMENT BY ANY PARTY HERETO FROM THE OTHER PARTIES HERETO AND THE MATTERS AND
PROVISIONS HEREOF SHALL BE AND REMAIN CONFIDENTIAL (SUBJECT TO THE NECESSITY OF
DIVULGING TO THIRD PARTIES, INCLUDING, WITHOUT LIMITATION, ATTORNEYS,
ACCOUNTANTS, ENGINEERS, ARCHITECTS AND PROSPECTIVE EQUITY PARTNERS AND LENDERS,
SUCH INFORMATION AS EITHER PARTY MAY REQUIRE IN ORDER TO PERFORM ITS OBLIGATIONS
HEREUNDER AND SUBJECT TO DISCLOSURE OF ALL INFORMATION REQUIRED BY GOVERNMENTAL
AUTHORITIES (INCLUDING DISCLOSURES REQUIRED UNDER STATE OR FEDERAL SECURITIES
LAWS OR THE RULES OF A PARTY’S PRINCIPAL SECURITIES EXCHANGE) AND ANY ACTUAL OR
PROSPECTIVE LENDER TO THE COMPANY OR ANY SUBSIDIARY).  NO PARTY WILL ISSUE OR
CAUSE THE ISSUANCE OF, AND EACH WILL PREVENT ITS EMPLOYEES OR AGENTS FROM
ISSUING OR CAUSING THE ISSUANCE OF, ANY PRESS OR MEDIA RELEASE OR OTHER
INFORMATION IN THE NATURE OF A PRESS RELEASE RELATING TO EITHER THIS AGREEMENT
OR THE TRANSACTION CONTEMPLATED HEREBY EXCEPT UPON THE PRIOR WRITTEN APPROVAL OF
EXTRA SPACE AND HSRE AS TO THE EXACT TEXT OF SUCH PRESS RELEASE.

 

[SIGNATURE PAGE FOLLOWS NEXT]

 

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IN WITNESS WHEREOF, THIS AGREEMENT IS EXECUTED ON THE DAY AND YEAR FIRST ABOVE
WRITTEN.

 

 

 

EXTRA SPACE

 

 

 

EXTRA SPACE STORAGE LLC, a Delaware limited liability company

 

 

 

 

 

By:

/s/ Charles L. Allen

 

 

Name: Charles L. Allen

 

 

Title: Manager

 

 

 

 

 

HSRE

 

 

 

HSRE-ESP IA, LLC, a Delaware limited liability company

 

 

 

 

By: HSREP II Holding LLC, a Delaware limited liability company, its sole member,

 

 

 

HSRE REIT II, a Maryland real estate investment trust, a member

 

 

 

By:

/s/ Stephen M. Gordon

 

Name:

Stephen M. Gordon

 

Its:

Trustee

 

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EXHIBIT D

 

ARBITRATION AND PRORATION REVIEW

 

1.             Post Closing True-Up.  Within sixty (60) calendar days after
Closing, Extra Space shall recalculate the Prorations (other than prorations of
real estate and personal property taxes that are based on a tax bill for a
period prior to the year in which the Closing occurs, which prorations shall be
recalculated upon receipt of the current tax bill for the year in which the
Closing occurs, as set forth in Section 4.3.2.1) as of the Proration Date as set
forth in Section 4.3 of the Agreement (the “Proration Recalculation”) and shall
send a copy of the Proration Recalculation to HSRE.  Extra Space and HSRE shall
each have an opportunity to provide the other with a review (a “Review”) of the
Proration Recalculation setting forth in reasonable detail any discrepancy which
it has discovered in the Prorations made at the Closing or in the Proration
Recalculation.  If either party to which the Proration Recalculation is
presented does not provide the other party with a Review within ten
(10) business days after receipt of the Proration Recalculation, such party
shall be deemed to be in agreement with 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 it).  Such Disagreement Notice shall detail all points of disagreement.  If
Extra Space and HSRE do not resolve such disagreement within ten (10) business
days after delivery of the Disagreement Notice, the parties shall proceed to
arbitration.  If the parties agree or are deemed to agree with either the
Proration Recalculation or the Review or if there is an arbitration award, then
Extra Space or HSRE shall, as applicable, pay to the other party, in cash, the
amount owed within ten (10) days of the date of such agreement or deemed
agreement or such arbitration award, as applicable.

 

2.             Dispute Resolution.  Any controversy or claim between or among
the parties hereto relating to or arising from the either the Review or the
Proration Recalculation shall be determined by binding arbitration in Cook
County, Illinois in accordance with one of the following as selected by HSRE:

 

a.               the Rules of Practice and Procedure for the Arbitration of
Commercial Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.) or

 

b.              the Rules of  Practice and Procedure of the American Arbitration
Association (“AAA”), or

 

c.               the Special Rules of an individual mutually agreed upon by the
parties.  The Special Rules shall be those determined by an individual
arbitrator agreed upon by the parties, and shall require that all arbitration
hearings will be commenced within ninety (90) days of the demand for
arbitration, and that the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for an additional sixty
(60) days.

 

Judgment upon any arbitration award may be entered in any court having
jurisdiction.  Any party hereto may bring an action, including a summary or
expedited proceeding, to compel arbitration of any controversy or claim to which
this provision applies in any court having jurisdiction over such action in Cook
County, Illinois.

 

In the event of a controversy or claim between the parties which is subject to
arbitration pursuant to this Exhibit D, either party may give written notice
(“Arbitration Notice”) to the other requesting arbitration.  If HSRE requests an
individual arbitrator and the parties have not agreed upon an individual within
ten (10) days after delivery of the Arbitration Notice, then AAA shall apply.

 

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The prevailing party in such arbitration or in any proceeding to compel or
enforce such arbitration shall be entitled to collect from the non-prevailing
party reasonable attorney’s fees and costs.

 

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