Exhibit 10.1

 

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CREDIT AGREEMENT

Dated as of December 27, 2006

by and among

PUBLIC STORAGE, INC.,

                                                         as Borrower

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

                                                      as Lender

 

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THIS CREDIT AGREEMENT dated as of December 27, 2006, by and between PUBLIC
STORAGE, INC., a corporation organized under the laws of the State of California
(the “Borrower”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (“the lender”).

WHEREAS, the Borrower has requested that the Lender make a term loan to the
Borrower in a principal amount of $300,000,000;

WHEREAS, the Lender is willing to make such loan to the Borrower on and subject
to the terms and conditions contained herein.

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

ARTICLE I. DEFINITIONS

Section 1.1. Definitions.

In addition to terms defined elsewhere herein, the following terms shall have
the following meanings for the purposes of this Agreement:

“Accession Agreement” means an Accession Agreement substantially in the form of
Annex I to the Guaranty.

“Additional Costs” has the meaning given that term in Section 4.1.

“Affiliate” has the meaning that term in the Existing Credit Agreement.

“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Law” means all applicable provisions of constitutions, statutes,
rules, regulations and orders of all governmental bodies and all orders and
decrees of all courts, tribunals and arbitrators.

“Applicable Margin” means (a) with respect to LIBOR Loans, three-tenths of one
percent (0.30%) and (b) with respect to Base Rate Loans, zero percent (0.0%).

“Assignee” has the meaning given that term in Section 9.5.(d).

“Base Rate” means the greater of (a) the rate of interest per annum publicly
announced from time to time by the Lender at its principal office in San
Francisco, California as its “prime rate” (which rate of interest may not be the
lowest rate charged by the Lender) and (b) the Federal Funds Rate plus one-half
of one percent (0.5%). Each change in the Base Rate shall become effective
without prior notice to the Borrower automatically as of the opening of business
on the date of such change in the Base Rate.

 

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“Base Rate Loan” means any portion of the Loan bearing interest at a rate based
on the Base Rate.

“Borrower” has the meaning set forth in the introductory paragraph hereof and
shall include the Borrower’s successors and permitted assigns.

“Business Day” means (a) any day other than a Saturday, Sunday or other day on
which banks in San Francisco, California are authorized or required to close and
(b) with reference to a LIBOR Loan, any such day that is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.

“Commitment” means the Lender’s obligation to make the Loan pursuant to
Section 2.1. in an amount up to, but not exceeding, the amount set forth for the
Lender on its signature page hereto as the Lender’s “Commitment Amount”.

“Continue”, “Continuation” and “Continued” each refers to the continuation of a
LIBOR Loan from one Interest Period to another Interest Period pursuant to
Section 2.7.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a
portion of the Loan from one Type into another Type pursuant to Section 2.8.

“Credit Event” means any of the following: (a) the making of the Loan, (b) the
Conversion of a portion of Loan, or (c) the Continuation of a LIBOR Loan.

“Default” means any of the events specified in Section 8.1., whether or not
there has been satisfied any requirement for the giving of notice, the lapse of
time, or both.

“Dollars” or “$” means the lawful currency of the United States of America.

“Effective Date” means the later of (a) the Agreement Date and (b) the date on
which all of the conditions precedent set forth in Section 5.1.(a) shall have
been fulfilled or waived in writing by the Lender.

“Event of Default” means any of the events specified in Section 8.1., provided
that any requirement for notice or lapse of time or any other condition has been
satisfied.

“Existing Credit Agreement” means that certain Credit Agreement dated as of
November 1, 2001, by and among the Borrower, the financial institutions party
thereto as “Lenders”, Wells Fargo Bank, National Association, as Agent, and the
other parties thereto.

“Existing Credit Agreement Covenants” means all of the covenants set forth in
Article VIII (excluding Sections 8.8 and 8.14) through Article X (excluding
Section 10.3) of the Existing Credit Agreement.

“Existing Credit Agreement Event of Default” means any event or condition set
forth in Section 11.1 of the Existing Credit Agreement.

 

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“Existing Credit Agreement Representations” means the representations and
warranties set forth in Section 7.1 (excluding subsections (a), (c), (d), (k),
(l), (n), and (u)) of the Existing Credit Agreement.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward to
the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that (a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Lender
by federal funds dealers selected by the Lender on such day on such transaction
as determined by the Lender.

“Fees” means any fees payable by the Borrower hereunder or under any other Loan
Document.

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination.

“Governmental Approvals” means all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.

“Governmental Authority” means any national, state or local government (whether
domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
Federal Deposit Insurance Corporation, the Comptroller of the Currency or the
Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.

“Guarantor” means any Person that is party to the Guaranty as a “Guarantor”.

“Guaranty” means the Guaranty to which the Guarantors are parties substantially
in the form of Exhibit A.

“Indebtedness” has the meaning given that term in the Existing Credit Agreement.

“Interest Period” means, with respect to any LIBOR Loan, each period commencing
on the date such LIBOR Loan is made or the last day of the next preceding
Interest Period for such Loan and ending on the numerically corresponding day in
the first, second or third calendar month thereafter, as the Borrower may select
in the Notice of Borrowing, a Notice of

 

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Continuation or Notice of Conversion, as the case may be, except that each
Interest Period that commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) if any
Interest Period would otherwise end after the Termination Date, such Interest
Period shall end on the Termination Date; (ii) each Interest Period that would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and
(iii) no Interest Period shall have a duration of less than one month and, if
the Interest Period would otherwise be a shorter period, such Loan shall not be
available hereunder for such period.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Lender” means Wells Fargo Bank, National Association and its successors and
assigns.

“LIBOR” means, for any LIBOR Loan for any Interest Period therefor, the average
rate of interest per annum (rounded upwards, if necessary, to the next highest
1/100th of 1%) at which deposits in immediately available funds in Dollars are
offered to the Lender (at approximately 9:00 a.m., two Business Days prior to
the first day of such Interest Period) by first class banks in the interbank
Eurodollar market where the Eurodollar operations of the Lender are customarily
conducted, for delivery on the first day of such Interest Period, such deposits
being for a period of time equal or comparable to such Interest Period and in an
amount equal to or comparable to the principal amount of the LIBOR Loan to which
such Interest Period relates. Each determination of LIBOR by the Lender shall,
in absence of demonstrable error, be conclusive and binding.

“LIBOR Loan” means any portion of the Loan bearing interest at a rate based on
LIBOR.

“Loan” means the Loan made by the Lender to the Borrower pursuant to
Section 2.1.

“Loan Document” means this Agreement, the Note, and each other document or
instrument now or hereafter executed and delivered by a Loan Party in connection
with, pursuant to or relating to this Agreement.

“Loan Party” means each of the Borrower, each other Person who guarantees all or
a portion of the Obligations and/or who pledges any collateral to secure all or
a portion of the Obligations. Schedule 1.1. sets forth the Loan Parties in
addition to the Borrower as of the Agreement Date.

“Material Adverse Effect” means a materially adverse effect on (a) the business,
assets, liabilities, financial condition, results of operations or business
prospects of the Borrower and its Subsidiaries taken as a whole, (b) the ability
of the Borrower or any other Loan Party to perform its obligations under any
Loan Document to which it is a party, (c) the validity or enforceability of any
of the Loan Documents, (d) the rights and remedies of the Lender under any of
the Loan

 

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Documents or (e) the timely payment of the principal of or interest on the Loan
or other amounts payable in connection therewith.

“New Guarantor” has the meaning given that term in Section 7.4.

“Note” has the meaning given that term in Section 2.9.

“Notice of Borrowing” means a notice in the form of Exhibit B to be delivered to
the Lender pursuant to Section 2.1. evidencing the Borrower’s request for the
borrowing of the Loan.

“Notice of Continuation” means a notice in the form of Exhibit C to be delivered
to the Lender pursuant to Section 2.7. evidencing the Borrower’s request for the
Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice in the form of Exhibit D to be delivered
to the Lender pursuant to Section 2.8. evidencing the Borrower’s request for the
Conversion of a portion of the Loan from one Type into another Type.

“Obligations” means, individually and collectively: (a) the aggregate principal
balance of, and all accrued and unpaid interest on the Loan; and (b) all other
indebtedness, liabilities, obligations, covenants and duties of the Borrower or
any of the other Loan Parties owing to the Lender of every kind, nature and
description, under or in respect of this Agreement or any of the other Loan
Documents, including, without limitation, the Fees and indemnification
obligations, whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any promissory note.

“Participant” has the meaning given that term in Section 9.5.(c).

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.

“Post-Default Rate” means, in respect of any principal of the Loan or any other
Obligation that is not paid when due (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum equal to five percent (5.0%) plus the Base Rate as in effect from time to
time.

“Regulatory Change” means, with respect to the Lender, any change effective
after the Agreement Date in Applicable Law (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including the Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by the
Lender with any request or directive regarding capital adequacy.

 

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“Securities Act” means the Securities Act of 1933, as amended from time to time,
together with all rules and regulations issued thereunder.

“Solvent” means, when used with respect to any Person, that (a) the fair value
and the fair salable value of its assets (excluding any Indebtedness due from
any affiliate of such Person) are each in excess of the fair valuation of its
total liabilities (including all contingent liabilities); (b) such Person is
able to pay its debts or other obligations in the ordinary course as they
mature; and (c) such Person has capital not unreasonably small to carry on its
business and all business in which it proposes to be engaged.

“Subsidiary” means, for any Person, any corporation, partnership, limited
liability company or other entity of which at least a majority of the securities
or other ownership interests having by the terms thereof ordinary voting power
to elect a majority of the Board of Directors or other persons performing
similar functions of such corporation, partnership, limited liability company or
other entity (without regard to the occurrence of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.

“Taxes” has the meaning given that term in Section 3.6.

“Termination Date” means April 1, 2007.

“Type” with respect to a portion of the Loan, refers to whether such portion is
a LIBOR Loan or a Base Rate Loan.

Section 1.2. General; References to San Francisco Time.

Unless otherwise indicated, all accounting terms, ratios and measurements shall
be interpreted or determined in accordance with GAAP in effect as of the
Agreement Date. References in this Agreement to “Sections”, “Articles”,
“Exhibits” and “Schedules” are to sections, articles, exhibits and schedules
herein and hereto unless otherwise indicated. References in this Agreement to
any document, instrument or agreement (a) shall include all exhibits, schedules
and other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, to the extent permitted
hereby and (c) shall mean such document, instrument or agreement, or replacement
or predecessor thereto, as amended, supplemented, restated or otherwise modified
from time to time to the extent permitted hereby and in effect at any given
time. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Unless explicitly set forth to the
contrary, a reference to “Subsidiary” means a Subsidiary of the Borrower or a
Subsidiary of such Subsidiary and a reference to an “Affiliate” means a
reference to an Affiliate of the Borrower. Titles and captions of Articles,
Sections, subsections and clauses in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement. Unless otherwise
indicated, all references to time are references to San Francisco, California
time.

 

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ARTICLE II. CREDIT FACILITY

Section 2.1. Loan.

Subject to the terms and conditions hereof, on the Effective Date the Lender
agrees to make a loan to the Borrower in the principal amount equal to the
amount requested by the Borrower in the Notice of Borrowing, which amount may
not exceed the amount of the Lender’s Commitment. Subject to the satisfaction of
the conditions set forth in Article V., the Lender will make the proceeds of the
Loan available to the Borrower no later than 10:00 a.m. on the Effective Date,
and in the manner specified by the Borrower in the Notice of Borrowing. The
Borrower may not reborrow any portion of the Loan once repaid.

Section 2.2. Rates and Payment of Interest on Loan.

(a) Rates. The Borrower promises to pay to the Lender interest on the unpaid
principal amount of the Loan for the period from and including the date of the
making of such Loan to but excluding the date such Loan shall be paid in full,
at the following per annum rates:

(i) with respect to any portion of the Loan that is a Base Rate Loan, at the
Base Rate (as in effect from time to time), plus the Applicable Margin for Base
Rate Loans; and

(ii) with respect to any portion of the Loan that is a LIBOR Loan, at LIBOR for
such portion of the Loan for the Interest Period therefor, plus the Applicable
Margin for LIBOR Loans.

Notwithstanding the foregoing, during the continuance of an Event of Default,
the Borrower shall pay to the Lender interest at the Post-Default Rate on the
outstanding principal amount of the Loan and on any other amount payable by the
Borrower hereunder or under the Note (including without limitation, accrued but
unpaid interest to the extent permitted under Applicable Law).

(b) Payment of Interest. All accrued and unpaid interest on the Loan shall be
payable (i) in the case of a Base Rate Loan, monthly in arrears on the first day
of each month, (ii) in the case of a LIBOR Loan, on the last day of each
Interest Period therefor and, (iii) on the Termination Date and (iv) on any date
on which the principal balance of the Loan is due and payable in full (whether
at maturity, due to acceleration or otherwise). Interest payable at the
Post-Default Rate shall be payable from time to time on demand. All
determinations by the Lender of an interest rate hereunder shall be conclusive
and binding on the Borrower for all purposes, absent manifest error.

Section 2.3. Number of Interest Periods.

There may be no more than 6 different Interest Periods collectively with respect
to LIBOR Loans outstanding at the same time.

 

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Section 2.4. Repayment of Loan.

The Borrower shall repay the entire outstanding principal amount of, and all
accrued but unpaid interest on, the Loan on the Termination Date.

Section 2.5. Prepayments.

The Borrower may prepay the Loan, in whole or part, at any time without premium
or penalty.

Section 2.6. Late Charges.

If the Borrower fails to pay any interest payable under this Agreement on or
prior to the expiration of 10 days after such interest first becomes due and
payable, the Borrower shall pay to the Lender a late charge equal to four
percent (4.0%) of the amount of such unpaid interest payment. The Borrower
acknowledges and agrees that an accurate determination of the Lender’s damages
as a result of the Borrower’s failure to pay interest as and when due hereunder
is not reasonably practicable, and the late charge provided for herein is a
reasonable estimate of the amount of additional cost and the value of the loss
of use of funds that will be suffered by the Lender if an interest payment is
not paid when due.

Section 2.7. Continuation.

So long as no Default or Event of Default exists, the Borrower may on any
Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan
or any portion thereof as a LIBOR Loan by selecting a new Interest Period for
such LIBOR Loan. Each new Interest Period selected under this Section shall
commence on the last day of the immediately preceding Interest Period. Each
selection of a new Interest Period shall be made by the Borrower giving to the
Lender a Notice of Continuation not later than 10:00 a.m. on the third Business
Day prior to the date of any such Continuation. Such notice by the Borrower of a
Continuation shall be by telecopy, electronic mail or other form of
communication in the form of a Notice of Continuation, specifying (a) the
proposed date of such Continuation, (b) the LIBOR Loan and portion thereof
subject to such Continuation and (c) the duration of the selected Interest
Period. Each Notice of Continuation shall be irrevocable by and binding on the
Borrower once given. If the Borrower shall fail to select in a timely manner a
new Interest Period for any LIBOR Loan in accordance with this Section, such
Loan will automatically, on the last day of the current Interest Period
therefor, Convert into a Base Rate Loan notwithstanding failure of the Borrower
to comply with Section 2.7.

Section 2.8. Conversion.

So long as no Default or Event of Default exists, the Borrower may on any
Business Day, upon the Borrower’s giving of a Notice of Conversion to the
Lender, Convert all or a portion of a Loan of one Type into a Loan of another
Type. Any Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and
only on, the last day of an Interest Period for such LIBOR Loan and, upon
Conversion of a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued
interest to the date of Conversion on the principal amount so Converted. Each
such Notice of

 

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Conversion shall be given not later than 10:00 a.m. one Business Day prior to
the date of any proposed Conversion into Base Rate Loans and three Business Days
prior to the date of any proposed Conversion into LIBOR Loans. Subject to the
restrictions specified above, each Notice of Conversion shall be by telecopy in
the form of a Notice of Conversion specifying (a) the requested date of such
Conversion, (b) the Type of Loan to be Converted, (c) the portion of the Loan to
be Converted, (d) the Type of Loan such portion is to be Converted into and
(e) if such Conversion is into a LIBOR Loan, the requested duration of the
Interest Period of such portion. Each Notice of Conversion shall be irrevocable
by and binding on the Borrower once given.

Section 2.9. Note.

The Loan shall, in addition to this Agreement, also be evidenced by a promissory
note of the Borrower substantially in the form of Exhibit E (the “Note”),
payable to the order of the Lender in a principal amount equal to the amount of
its Commitment as originally in effect and otherwise duly completed.

ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1. Payments.

Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Agreement or
any other Loan Document shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender, not later than
11:00 a.m. on the date on which such payment shall become due (each such payment
made after such time on such due date to be deemed to have been made on the next
succeeding Business Day). The Borrower shall, at the time of making each payment
under this Agreement or the Note, specify to the Lender the amounts payable by
the Borrower hereunder to which such payment is to be applied. If the due date
of any payment under this Agreement or any other Loan Document would otherwise
fall on a day which is not a Business Day such date shall be extended to the
next succeeding Business Day and interest shall be payable for the period of
such extension.

Section 3.2. Minimum Amounts.

(a) Borrowings. Each Base Rate Loan shall be in an aggregate minimum amount of
$5,000,000 and integral multiples of $500,000 in excess thereof. Each borrowing
of and Continuation of, and each Conversion of Base Rate Loans into, LIBOR Loans
shall be in an aggregate minimum amount of $5,000,000.

(b) Prepayments. Each voluntary prepayment of the Loan shall be in an aggregate
minimum amount of $5,000,000, or if less, the entire outstanding balance of the
Loan then outstanding.

 

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Section 3.3. Computations.

Unless otherwise expressly set forth herein, any accrued interest on the Loan or
other Obligations due hereunder shall be computed on the basis of a year of 360
days and the actual number of days elapsed.

Section 3.4. Usury.

In no event shall the amount of interest due or payable on the Loan or other
Obligations exceed the maximum rate of interest allowed by Applicable Law and,
if any such payment is paid by the Borrower or received by the Lender, then such
excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the Lender in writing that the Borrower elects to have such excess
sum returned to it forthwith. It is the express intent of the parties hereto
that the Borrower not pay and the Lender not receive, directly or indirectly, in
any manner whatsoever, interest in excess of that which may be lawfully paid by
the Borrower under Applicable Law. The parties hereto hereby agree and stipulate
that the only charge imposed upon the Borrower for the use of money in
connection with this Agreement is and shall be the interest specifically
described in subsections Section 2.2.(a)(i) and (ii). Notwithstanding the
foregoing, the parties hereto further agree and stipulate that all default
charges, late charges, funding or “breakage” charges, increased cost charges,
attorneys’ fees and reimbursement for costs and expenses paid by the Lender to
third parties or for damages incurred by the Lender, are charges made to
compensate the Lender for costs or losses performed or incurred, and to be
performed or incurred, by the Lender in connection with this Agreement and shall
under no circumstances be deemed to be charges for the use of money. All charges
other than charges for the use of money shall be fully earned and nonrefundable
when due.

Section 3.5. Statement of Account.

The Lender will account to the Borrower monthly with a statement of the Loan,
accrued interest, charges and payments made pursuant to this Agreement and the
other Loan Documents, and such account rendered by the Lender shall be deemed
conclusive upon the Borrower absent manifest error. The failure of the Lender to
deliver such a statement of accounts shall not relieve or discharge the Borrower
from any of its obligations hereunder.

Section 3.6. Taxes.

(a) Taxes Generally. All payments by the Borrower of principal of, and interest
on, the Loan and all other Obligations shall be made free and clear of and
without deduction for any present or future excise, stamp or other taxes, fees,
duties, levies, imposts, charges, deductions, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise taxes, (ii) any taxes (other than withholding taxes) that would
not be imposed but for a connection between the Lender and the jurisdiction
imposing such taxes (other than a connection arising solely by virtue of the
activities of the Lender pursuant to or in respect of this Agreement or any
other Loan Document), (iii) any taxes imposed on or measured by the Lender’s
assets, net income, receipts or branch profits and (iv) any taxes arising after
the Agreement Date solely as a result of or attributable to the Lender changing
its designated Lending Office after the Agreement Date (such non-excluded items
being collectively called

 

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“Taxes”). If any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
Applicable Law, then the Borrower will:

(i) pay directly to the relevant Governmental Authority the full amount required
to be so withheld or deducted;

(ii) promptly forward to the Lender an official receipt or other documentation
satisfactory to the Lender evidencing such payment to such Governmental
Authority; and

(iii) pay to the Lender such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Lender will equal the full
amount that the Lender would have received had no such withholding or deduction
been required.

(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to the
appropriate Governmental Authority or fails to remit to the Lender the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Lender for any incremental Taxes, interest or penalties that may become
payable by the Lender as a result of any such failure.

(c) Tax Forms. Prior to the date that any Participant or Assignee organized
under the laws of a jurisdiction outside the United States of America purchases
a Participation or becomes a party hereto, such Person shall deliver to the
Borrower and the Lender such certificates, documents or other evidence, as
required by the Internal Revenue Code or Treasury Regulations issued pursuant
thereto (including Internal Revenue Service Forms W-8ECI and W-8BEN, as
applicable, or appropriate successor forms), properly completed, currently
effective and duly executed by such Participant or Assignee establishing that
payments to it hereunder and under the Notes are (i) not subject to United
States Federal backup withholding tax and (ii) not subject to United States
Federal withholding tax under the Code. Each such Participant or Assignee shall
(x) deliver further copies of such forms or other appropriate certifications on
or before the date that any such forms expire or become obsolete and after the
occurrence of any event requiring a change in the most recent form delivered to
the Borrower and (y) obtain such extensions of the time for filing, and renew
such forms and certifications thereof as may be reasonably requested by the
Borrower or the Lender. The Borrower shall not be required to pay any amount
pursuant to last sentence of subsection (a) above to any Participant or Assignee
that is organized under the laws of a jurisdiction outside of the United States
of America if it fails to comply with the requirements of this subsection.

ARTICLE IV. YIELD PROTECTION, ETC.

Section 4.1. Additional Costs; Capital Adequacy.

(a) Additional Costs. The Borrower shall promptly pay to the Lender from time to
time such amounts as the Lender may reasonably determine to be necessary to
compensate the Lender for any costs incurred by the Lender that it determines
are attributable to its making or maintaining of any LIBOR Loans or its
obligation to make any LIBOR Loans hereunder, any reduction in any amount
receivable by the Lender under this Agreement or any of the other Loan

 

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Documents in respect of any of such Loans or such obligation or the maintenance
by the Lender of capital in respect of its Loans or its Commitment (such
increases in costs and reductions in amounts receivable being herein called
“Additional Costs”), resulting from any Regulatory Change that: (i) changes the
basis of taxation of any amounts payable to the Lender under this Agreement or
any of the other Loan Documents in respect of any of such Loans or its
Commitments (other than taxes imposed on or measured by the overall net income
of the Lender or of its Lending Office for any of such Loans by the jurisdiction
in which the Lender has its principal office or such Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar requirements
(including without limitation, Regulation D of the Board of Governors of the
Federal Reserve System or other similar reserve requirement applicable to any
other category of liabilities or category of extensions of credit or other
assets by reference to which the interest rate on LIBOR Loans is determined)
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, the Lender, or any commitment of the Lender (including,
without limitation, the Commitment of the Lender hereunder); or (iii) has or
would have the effect of reducing the rate of return on capital of the Lender to
a level below that which the Lender could have achieved but for such Regulatory
Change (taking into consideration the Lender’s policies with respect to capital
adequacy).

(b) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the
provisions of the immediately preceding subsection (a), if by reason of any
Regulatory Change, the Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of the Lender that includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of the Lender
that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if the
Lender so elects by notice to the Borrower, the obligation of the Lender to make
or Continue, or to Convert any other Type of Loans into, LIBOR Loans hereunder
shall be suspended until such Regulatory Change ceases to be in effect (in which
case the provisions of Section 4.5. shall apply).

(c) Notification and Determination of Additional Costs. The Lender agrees to
notify the Borrower of any event occurring after the Agreement Date entitling
the Lender to compensation under any of the preceding subsections of this
Section as promptly as practicable; provided, however, the failure of the Lender
to give such notice shall not release the Borrower from any of its obligations
hereunder. The Lender agrees to furnish to the Borrower a certificate setting
forth the basis and amount of each request by the Lender for compensation under
this Section. Determinations by the Lender of the effect of any Regulatory
Change shall be conclusive, provided that such determinations are made on a
reasonable basis and in good faith.

Section 4.2. Suspension of LIBOR Loans.

Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBOR for any Interest Period:

(a) the Lender reasonably determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining LIBOR for such Interest Period;
or

 

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(b) the Lender reasonably determines (which determination shall be conclusive)
that LIBOR will not adequately and fairly reflect the cost to the Lender of
making or maintaining LIBOR Loans for such Interest Period; or

then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to,
and shall not, make additional LIBOR Loans, Continue LIBOR Loans or Convert
Loans into LIBOR Loans and the Borrower shall, on the last day of each current
Interest Period for each outstanding LIBOR Loan, either repay such Loan or
Convert such Loan into a Base Rate Loan.

Section 4.3. Illegality.

Notwithstanding any other provision of this Agreement, if it becomes unlawful
for the Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then the Lender shall promptly notify the Borrower thereof and the
Lender’s obligation to Continue, or to Convert Loans of any other Type into,
LIBOR Loans shall be suspended until such time as the Lender may again make and
maintain LIBOR Loans (in which case the provisions of Section 4.5. shall be
applicable).

Section 4.4. Compensation.

The Borrower shall pay to the Lender upon the request of the Lender such amount
or amounts as shall be sufficient (in the reasonable opinion of the Lender) to
compensate it for any yield-maintenance loss, cost or expense that the Lender
determines is attributable to: (a) any payment or prepayment (whether mandatory
or optional) of a LIBOR Loan or Conversion of a LIBOR Loan, made by the Lender
for any reason (including, without limitation, acceleration) on a date other
than the last day of the Interest Period for such Loan; or (b) any failure by
the Borrower for any reason (including, without limitation, the failure of any
of the applicable conditions precedent specified in Article V. to be satisfied)
to borrow a LIBOR Loan from the Lender on the date for such borrowing, or to
Convert a Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date
of such Conversion or Continuation. Upon the Borrower’s request, the Lender
shall provide the Borrower with a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof.
Any such statement shall be conclusive absent manifest error.

Section 4.5. Treatment of Affected Loans.

If the obligation of the Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 4.1. (b), or 4.3., then the Lender’s LIBOR Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for LIBOR Loans (or, in the case of a Conversion required by
Section 4.1. (b) or 4.3., on such earlier date as the Lender may specify to the
Borrower) and, unless and until the Lender gives notice as provided below that
the circumstances specified in Section 4.1. or 4.3. that gave rise to such
Conversion no longer exist:

 

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(a) to the extent that the Lender’s LIBOR Loans have been so Converted, all
payments and prepayments of principal that would otherwise be applied to the
Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and

(b) all Loans that would otherwise be made or Continued by the Lender as LIBOR
Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate
Loans of the Lender that would otherwise be Converted into LIBOR Loans shall
remain as Base Rate Loans.

If the Lender gives notice to the Borrower that the circumstances specified in
Section 4.1. or 4.3. that gave rise to the Conversion of the Lender’s LIBOR
Loans pursuant to this Section no longer exist (which the Lender agrees to do
promptly upon such circumstances ceasing to exist), then the Base Rate Loans
shall be automatically Converted to LIBOR Loans.

Section 4.6. Change of Lending Office

The Lender agrees that it will use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate an alternate
Lending Office with respect to any of its Loans affected by the matters or
circumstances described in Sections 3.6., 4.1. or 4.3. to reduce the liability
of the Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to the Lender as determined by the Lender in
its sole discretion.

Section 4.7. Assumptions Concerning Funding of LIBOR Loans.

Calculation of all amounts payable to the Lender under this Article IV. shall be
made as though the Lender had actually funded LIBOR Loans through the purchase
of deposits in the relevant market bearing interest at the rate applicable to
such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having
a maturity comparable to the relevant Interest Period; provided, however, that
the Lender may fund each of its LIBOR Loans in any manner it sees fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this Article IV.

ARTICLE V. CONDITIONS PRECEDENT

Section 5.1. Initial Conditions Precedent.

The obligation of the Lender to make the Loan is subject to the following
conditions precedent:

(a) The Lender shall have received each of the following, in form and substance
satisfactory to the Lender:

(i) counterparts of this Agreement executed by each of the parties hereto;

(ii) the Note executed by the Borrower;

 

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(iii) the Guaranty executed by each Guarantor (as defined in the Existing Credit
Agreement) existing as of the Effective Date;

(iv) an opinion of counsel to the Borrower and the other Loan Parties, addressed
to the Lender regarding such matters as the Lender may reasonably request;

(v) the articles of incorporation of the Borrower certified as of a recent date
by the Secretary of State of the State of formation of such Person;

(vi) a certificate of good standing (or certificate of similar meaning) with
respect to the Borrower issued as of a recent date by the Secretary of State of
the State of formation of the Borrower and certificates of qualification to
transact business or other comparable certificates issued by each Secretary of
State (and any state department of taxation, as applicable) of each state in
which the Borrower is required to be so qualified and where the failure to be so
qualified could reasonably be expected to have a Material Adverse Effect;

(vii) a certificate of incumbency signed by the Secretary or Assistant Secretary
(or other individual performing similar functions) of each Loan Party with
respect to each of the officers of such Person authorized to execute and deliver
the Loan Documents to which such Person is a party, and in the case of the
Borrower, authorized to execute and deliver on behalf of the Borrower the Notice
of Borrowing, Notices of Conversion and Notices of Continuation;

(viii) copies certified by the Secretary or Assistant Secretary of the Borrower
(or other individual performing similar functions) of (i) the by-laws of such
Person and (ii) all corporate action taken by such Person to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party; and

(ix) such other documents and instruments as the Lender, may reasonably request;
and

(b) In the good faith judgment of the Lender:

(i) There shall not have occurred or become known to the Lender any event,
condition, situation or status since the date of the information contained in
the financial and business projections, budgets, pro forma data and forecasts
concerning the Borrower and its Subsidiaries delivered to the Lender prior to
the Agreement Date that has had or could reasonably be expected to result in a
Material Adverse Effect;

(ii) No litigation, action, suit, investigation or other arbitral,
administrative or judicial proceeding shall be pending or threatened which could
reasonably be expected to (A) result in a Material Adverse Effect or
(B) restrain or enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect the ability of any Loan Party to fulfill its
obligations under the Loan Documents to which it is a party;

 

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(iii) The Borrower and the other Loan Parties shall have received all approvals,
consents and waivers, and shall have made or given all necessary filings and
notices as shall be required to consummate the transactions contemplated hereby
without the occurrence of any default under, conflict with or violation of
(A) any Applicable Law or (B) any agreement, document or instrument to which any
Loan Party is a party or by which any of them or their respective properties is
bound, except for such approvals, consents, waivers, filings and notices the
receipt, making or giving of which, or the failure to make, give or receive
which, would not reasonably be likely to (1) have a Material Adverse Effect, or
(2) restrain or enjoin, impose materially burdensome conditions on, or otherwise
materially and adversely affect the ability of the Borrower or any other Loan
Party to fulfill its obligations under the Loan Documents to which it is a
party; and

(iv) There shall not have occurred or exist any other material disruption of
financial or capital markets that could reasonably be expected to materially and
adversely affect the transactions contemplated by the Loan Documents.

Section 5.2. Additional Conditions Precedent.

The obligation of the Lender to make the Loan is subject to the further
condition precedent that: (a) no Default or Event of Default shall exist as of
the date of the making of such Loan or would exist immediately after giving
effect thereto; and (b) the representations and warranties made or deemed made
by the Borrower and each other Loan Party in the Loan Documents to which any of
them is a party, shall be true and correct on and as of the date of the making
of such Loan or date of issuance of such Letter of Credit with the same force
and effect as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and except for changes in factual circumstances
specifically and expressly permitted hereunder. Each Credit Event shall
constitute a certification by the Borrower to the effect set forth in the
preceding sentence (both as of the date of the giving of notice relating to such
Credit Event and, unless the Borrower otherwise notifies the Lender prior to the
date of such Credit Event, as of the date of the occurrence of such Credit
Event).

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

Section 6.1. Representations and Warranties.

In order to induce the Lender to enter into this Agreement and to make the Loan,
the Borrower represents and warrants to the Lender as follows:

(a) Organization; Power; Qualification. Each of the Loan Parties and the other
Subsidiaries is a corporation, partnership or other legal entity, duly organized
or formed, validly existing and in good standing under the jurisdiction of its
incorporation or formation, has the power and authority to own or lease its
respective properties and to carry on its respective business as now being and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a foreign corporation, partnership or other legal entity, and authorized to
do

 

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business, in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization and where
the failure to be so qualified or authorized could reasonably be expected to
have, in each instance, a Material Adverse Effect.

(b) Authorization of Agreement, Loan Documents and Borrowing. The Borrower has
the right and power, and has taken all necessary action to authorize it, to
borrow hereunder. The Borrower and each other Loan Party has the right and
power, and has taken all necessary action to authorize it, to execute, deliver
and perform each of the Loan Documents to which it is a party in accordance with
their respective terms and to consummate the transactions contemplated hereby
and thereby. The Loan Documents to which the Borrower or any other Loan Party is
a party have been duly executed and delivered by the duly authorized officers of
such Person and each is a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its respective terms, except
as the same may be limited by bankruptcy, insolvency, and other similar laws
affecting the rights of creditors generally and the availability of equitable
remedies for the enforcement of certain obligations contained herein or therein
may be limited by equitable principles generally.

(c) Compliance of Agreement, Etc. with Laws. The execution, delivery and
performance of this Agreement, and the other Loan Documents to which the
Borrower or any other Loan Party is a party in accordance with their respective
terms and the borrowings hereunder do not and will not, by the passage of time,
the giving of notice, or both: (i) require any Governmental Approval or violate
any Applicable Law (including all Environmental Laws) relating to the Borrower
or any other Loan Party; (ii) conflict with, result in a breach of or constitute
a default under the Borrower’s articles of incorporation or bylaws (including
without limitation, Section 2 of Article IV and Section 2(a) of Article VIII of
the Borrower’s bylaws), or any resolution adopted by the Borrower’s Board of
Directors in connection with the designation of any series of Preferred Stock of
the Borrower, or the organizational documents of any other Loan Party, or any
indenture, agreement or other instrument to which the Borrower or any other Loan
Party is a party or by which it or any of its respective properties may be
bound, including without limitation, the Existing Credit Agreement; or
(iii) result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by the Borrower or any
other Loan Party.

(d) Financial Statements. The Borrower has furnished to the Lender copies of
(i) the audited consolidated balance sheet of the Borrower and its Subsidiaries
for the fiscal years ending December 31, 2004 and December 31, 2005 and the
related consolidated statements of operations, stockholders’ equity and cash
flow for the fiscal years ending on such dates, with the opinion thereon of
Ernst & Young LLP, and (ii) the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal quarter ending September 30, 2006,
and the related consolidated statements of operations, stockholders’ equity and
cash flow of the Borrower and its Subsidiaries for the three fiscal quarter
period ending on such date. Such balance sheets and statements (including in
each case related schedules and notes) are complete and correct and present
fairly, in accordance with GAAP consistently applied throughout the periods
involved, the consolidated financial position of the Borrower and its
Subsidiaries as at their respective dates and the results of operations and the
cash flow for such periods (subject, as to interim statements, to changes
resulting from normal year-end audit adjustments). Neither the Borrower

 

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nor any of its Subsidiaries has on the Agreement Date any material contingent
liabilities, liabilities, liabilities for taxes, unusual or long-term
commitments or unrealized or forward anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said
financial statements.

(e) No Material Adverse Change. Since December 31, 2005, there has been no
material adverse change in the consolidated financial condition, results of
operations, business or prospects of the Borrower and its Subsidiaries taken as
a whole. Each of the Borrower, the other Loan Parties and the other Subsidiaries
is Solvent.

(f) Absence of Defaults. None of the Borrower, the other Loan Parties or the
other Subsidiaries is in default under its articles of incorporation, bylaws,
partnership agreement or other similar organizational documents, and no event
has occurred, which has not been remedied, cured or waived: (i) which
constitutes a Default or an Event of Default; or (ii) which constitutes, or
which with the passage of time, the giving of notice, or both, would constitute,
a default or event of default by the Borrower, any other Loan Party or any other
Subsidiary under any agreement (other than this Agreement) or judgment, decree
or order to which any such Person is a party or by which any such Person or any
of its respective properties may be bound where such default or event of default
could, individually or in the aggregate, have a Material Adverse Effect.

(g) Accuracy and Completeness of Information. All written information, reports
and other papers and data furnished to the Lender by, on behalf of, or at the
direction of, the Borrower, any other Loan Party or any other Subsidiary were,
at the time the same were so furnished, complete and correct in all material
respects, to the extent necessary to give the recipient a true and accurate
knowledge of the subject matter, or, in the case of financial statements,
present fairly, in accordance with GAAP consistently applied throughout the
periods involved, the financial position of the Persons involved as at the date
thereof and the results of operations for such periods. No fact is known to the
Borrower which has had, or may in the future have (so far as the Borrower can
reasonably foresee), a Material Adverse Effect which has not been set forth in
the financial statements referred to in Section 7.1.(d) or in such information,
reports or other papers or data or otherwise disclosed in writing to the Lender
prior to the Effective Date. No document furnished or written statement made to
the Lender in connection with the negotiation, preparation or execution of this
Agreement or any of the other Loan Documents contains or will contain any untrue
statement of a fact material to the creditworthiness of the Borrower, any other
Loan Party or any other Subsidiary or omits or will omit to state a material
fact necessary in order to make the statements contained therein not misleading.

(h) OFAC. None of the Borrower, any of the other Loan Parties, any of the other
Subsidiaries, or any other Affiliate of the Borrower: (i) is a person named on
the list of Specially Designated Nationals or Blocked Persons maintained by the
U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)
available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as
otherwise published from time to time; (ii) is (A) an agency of the government
of a country, (B) an organization controlled by a country, or (C) a person
resident in a country that is subject to a sanctions program identified on

 

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the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise
published from time to time, as such program may be applicable to such agency,
organization or person; or (iii) derives any of its assets or operating income
from investments in or transactions with any such country, agency, organization
or person; and none of the proceeds from the Loan will be used to finance any
operations, investments or activities in, or make any payments to, any such
country, agency, organization, or person.

(i) Existing Credit Agreement Representations. The Existing Credit Agreement
Representations are true and correct in all material respects except to the
extent that such Existing Credit Agreement Representations expressly relate
solely to an earlier date (in which case, such Existing Credit Agreement
Representations were true and correct in all material respects on and as of such
earlier date) and except for changes in factual circumstances not prohibited
under the Existing Credit Agreement or this Agreement.

Section 6.2. Survival of Representations and Warranties, Etc.

All statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower, any other Loan Party or
any other Subsidiary to the Lender pursuant to or in connection with this
Agreement or any of the other Loan Documents (including, but not limited to, any
such statement made in or in connection with any amendment thereto or any
statement contained in any certificate, financial statement or other instrument
delivered by or on behalf of the Borrower prior to the Agreement Date and
delivered to the Lender in connection with closing the transactions contemplated
hereby) shall constitute representations and warranties made by the Borrower
under this Agreement. All representations and warranties made under this
Agreement and the other Loan Documents shall be deemed to be made at and as of
the Agreement Date, the Effective Date and at and as of the date of the
occurrence of any Credit Event, except to the extent that such representations
and warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and except for changes in factual circumstances specifically
permitted hereunder. All such representations and warranties shall survive the
effectiveness of this Agreement, the execution and delivery of the Loan
Documents and the making of the Loan.

ARTICLE VII. COVENANTS

For so long as this Agreement is in effect, unless the Lender shall otherwise
consent in the manner provided for in Section 9.6., the Borrower shall comply
with the following covenants:

Section 7.1. Covenants of Existing Credit Agreement.

The Borrower will perform, comply with and be bound by, for the benefit of the
Lender, each of the Borrower’s agreements, covenants and obligations contained
in the Existing Credit Agreement Covenants, each of which (together with the
related definitions and ancillary provisions) is incorporated herein by
reference.

 

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Section 7.2. Use of Proceeds.

The Borrower shall use the proceeds of the Loan together with proceeds from a
borrowing of a Revolving Loan under (and as defined in) the Existing Credit
Agreement to repay in full the €325,000,000 secured notes issued by Self Storage
Securitization B.V. under the terms of a trust deed dated 15 October 2004 and
the related funding obligations of Shurgard Self Storage, SCA. The Borrower
shall not, and shall not permit any Subsidiary to, use any part of such proceeds
to purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System) or to extend credit to others
for the purpose of purchasing or carrying any such margin stock if, in any such
case, such use might result in any of the Loans being consider to be “purpose
credit” directly or indirectly secured by margin stock within the meaning of
Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System.

Section 7.3. Further Assurances.

At the Borrower’s cost and expense and upon request of the Lender, the Borrower
shall duly execute and deliver or cause to be duly executed and delivered, to
the Lender such further instruments, documents and certificates, and do and
cause to be done such further acts that may be reasonably necessary or advisable
in the reasonable opinion of the Lender to carry out more effectively the
provisions and purposes of this Agreement and the other Loan Documents.

Section 7.4. Guarantors; Release of Guarantors.

(a) Requirement to Become Guarantor. Within 10 Business Days of any Person
becoming (or becoming required to become) a “Guarantor” under and as defined in
the Existing Credit Agreement (a “New Guarantor”), the Borrower shall deliver to
the Lender an Accession Agreement executed by such Person, together with the
other items required to be delivered under the subsection (b) below.

(b) Required Deliveries. Each Accession Agreement delivered by a New Guarantor
under the immediately preceding subsection (a) shall be accompanied by each of
the following in form and substance satisfactory to the Lender:

(i) a certificate of incumbency signed by the Secretary or Assistant Secretary
(or other individual performing similar functions) of such New Guarantor with
respect to each of the officers of such New Guarantor authorized to execute and
deliver the Loan Documents to which such New Guarantor is a party; and

(ii) such other documents and instruments as the Lender may reasonably request.

(c) Release of Guarantor. The Borrower may request in writing that the Lender
release, and upon receipt of such request the Lender shall release, a Guarantor
from it obligations under the Guaranty if, and only if: (i) such Guarantor is no
longer required to be a “Guarantor”

 

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under and as defined in the Existing Credit Agreement; and (ii) no Default or
Event of Default shall then be in existence or would occur as a result of such
release.

Section 7.5. Other Information.

For so long as this Agreement is in effect, the Borrower shall furnish to the
Lender:

(a) Defaults. Prompt notice of the occurrence of any Default or Event of
Default; and

(b) Other Information. From time to time and promptly upon each request, such
data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower or any of
its Subsidiaries as the Lender may request and which is reasonably available to
the Borrower or any such Subsidiary.

ARTICLE VIII. DEFAULT

Section 8.1. Events of Default.

Each of the following shall constitute an Event of Default, whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of Applicable Law or pursuant to any judgment or order of any
Governmental Authority:

(a) Default in Payment. The Borrower shall fail to pay when due under this
Agreement or any other Loan Document (whether upon demand, at maturity, by
reason of acceleration or otherwise) (i) the principal of the Loan or (ii) any
interest on the Loan, or any of the other payment Obligations owing by the
Borrower under this Agreement or any other Loan Document, or any other Loan
Party shall fail to pay when due any payment obligation owing by such Loan Party
under any Loan Document to which it is a party, and solely in the case of this
clause (ii) such failure shall continue for a period of 5 calendar days.

(b) Default in Performance. The Borrower or any other Loan Party shall fail to
perform or observe any term, covenant, condition or agreement contained (i) in
Section 7.5.(a) or (ii) elsewhere in this Agreement or any other Loan Document
to which it is a party and not otherwise mentioned in this Section and solely in
the case of this clause (ii) such failure shall continue for a period of 30
calendar days after the earlier of (x) the date upon which the Borrower obtains
knowledge of such failure or (y) the date upon which the Borrower has received
written notice of such failure from the Lender;

(c) Misrepresentations. Any written statement, representation or warranty made
or deemed made by or on behalf of the Borrower or any other Loan Party under
this Agreement or under any other Loan Document, or any amendment hereto or
thereto, or in any other writing or statement at any time furnished by, or at
the direction of, the Borrower or any other Loan Party to the Lender, shall at
any time prove to have been incorrect or misleading in any material respect when
furnished or made.

 

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(d) Voluntary Bankruptcy Proceeding. The Borrower, any other Loan Party or any
other Subsidiary shall: (i) commence a voluntary case under the Bankruptcy Code
of 1978, as amended or other federal bankruptcy laws (as now or hereafter in
effect); (ii) file a petition seeking to take advantage of any other Applicable
Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts; (iii) consent to, or fail to
contest in a timely and appropriate manner, any petition filed against it in an
involuntary case under such bankruptcy laws or other Applicable Laws or consent
to any proceeding or action described in the immediately following subsection;
(iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part of its
property, domestic or foreign; (v) admit in writing its inability to pay its
debts as they become due; (vi) make a general assignment for the benefit of
creditors; (vii) make a conveyance fraudulent as to creditors under any
Applicable Law; or (viii) take any corporate or partnership action for the
purpose of effecting any of the foregoing.

(e) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against the Borrower, any other Loan Party or any other Subsidiary in
any court of competent jurisdiction seeking: (i) relief under the Bankruptcy
Code of 1978, as amended or other federal bankruptcy laws (as now or hereafter
in effect) or under any other Applicable Laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of such Person, or of all or any substantial part of the assets,
domestic or foreign, of such Person, and in the case of either clause (i) or
(ii) such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an order for relief
under such Bankruptcy Code or such other federal bankruptcy laws) shall be
entered.

(f) Revocation of Loan Documents. The Borrower or any other Loan Party shall (or
shall attempt to) disavow, revoke or terminate any Loan Document to which it is
a party or shall otherwise challenge or contest in any action, suit or
proceeding in any court or before any Governmental Authority the validity or
enforceability of any Loan Document.

(g) Loan Documents. An Event of Default (as defined therein) shall occur under
any of the other Loan Documents.

(h) Existing Credit Agreement. An Existing Credit Agreement Event of Default
(each Existing Credit Agreement Default being hereby incorporated herein by
reference) shall occur.

Section 8.2. Remedies Upon Event of Default.

Upon the occurrence of an Event of Default the following provisions shall apply:

(a) Acceleration; Termination of Facilities.

(i) Automatic. Upon the occurrence of an Event of Default specified in
Sections 8.1. (d) or 8.1.(e), (1) the principal of, and all accrued interest on,
the Loan at the

 

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time outstanding and (2) all of the other Obligations of the Borrower,
including, but not limited to, the other amounts owed to the Lender under this
Agreement, the Note or any of the other Loan Documents shall become immediately
and automatically due and payable by the Borrower without presentment, demand,
protest, or other notice of any kind, all of which are expressly waived by the
Borrower.

(ii) Optional. If any other Event of Default shall exist, the Lender may declare
(1A) the principal of, and accrued interest on, the Loan at the time
outstanding, and (2) all of the other Obligations, including, but not limited
to, the other amounts owed to the Lender under this Agreement, the Note or any
of the other Loan Documents to be forthwith due and payable, whereupon the same
shall immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived by the Borrower.

(b) Loan Documents. The Lender may exercise any and all of its rights under any
and all of the other Loan Documents.

(c) Applicable Law. The Lender may exercise all other rights and remedies it may
have under any Applicable Law.

(d) Appointment of Receiver. To the extent permitted by Applicable Law, the
Lender shall be entitled to the appointment of a receiver for the assets and
properties of the Borrower and its Subsidiaries, without notice of any kind
whatsoever and without regard to the adequacy of any security for the
Obligations or the solvency of any party bound for its payment, to take
possession of all or any portion of the business operations of the Borrower and
its Subsidiaries and to exercise such power as the court shall confer upon such
receiver.

Section 8.3. Marshaling; Payments Set Aside.

The Lender shall not be under any obligation to marshal any assets in favor of
any Loan Party or any other party or against or in payment of any or all of the
Obligations. To the extent that any Loan Party makes a payment or payments to
the Lender, or the Lender enforces its security interests or exercise its rights
of setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

Section 8.4. Allocation of Proceeds.

If an Event of Default exists and maturity of any of the Obligations has been
accelerated, all payments received by the Lender under any of the Loan
Documents, in respect of any principal of or interest on the Obligations or any
other amounts payable by the Borrower hereunder or thereunder, shall be applied
in the following order and priority:

 

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(a) amounts due to the Lender in respect of expenses due under Section 9.2.

(b) payments of interest on the Loan;

(c) payments of principal of the Loan;

(d) payments of all other amounts due under any of the Loan Documents, if any;
and

(e) any amount remaining after application as provided above, shall be paid to
the Borrower or whomever else may be legally entitled thereto.

Section 8.5. Performance by Lender.

If the Borrower shall fail to perform any covenant, duty or agreement contained
in any of the Loan Documents, the Lender may perform or attempt to perform such
covenant, duty or agreement on behalf of the Borrower after the expiration of
any cure or grace periods set forth herein. In such event, the Borrower shall,
at the request of the Lender, promptly pay any amount reasonably expended by the
Lender in such performance or attempted performance to the Lender, together with
interest thereon at the applicable Post-Default Rate from the date of such
expenditure until paid. Notwithstanding the foregoing, the Lender shall not have
any liability or responsibility whatsoever for the performance of any obligation
of the Borrower under this Agreement or any other Loan Document.

Section 8.6. Rights Cumulative.

The rights and remedies of the Lender under this Agreement and each of the other
Loan Documents shall be cumulative and not exclusive of any rights or remedies
which any of them may otherwise have under Applicable Law. In exercising its
respective rights and remedies the Lender may be selective and no failure or
delay by the Lender in exercising any right shall operate as a waiver of it, nor
shall any single or partial exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right.

ARTICLE IX. MISCELLANEOUS

Section 9.1. Notices.

Unless otherwise provided herein, communications provided for hereunder shall be
in writing and shall be mailed, telecopied or delivered as follows:

 

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If to the Borrower:

Public Storage, Inc.

701 Western Avenue

Glendale, California 91201-2349

Attention: John Reyes, Chief Financial Officer

Telecopy Number:        (818) 244-9267

Telephone Number:      (818) 244-8080

If to the Lender:

Wells Fargo Bank, National Association

1000 Lakes Drive, Suite 250

West Covina, California 91790

Attention: Nathan R. Callister

Telecopy Number:        (626) 919-2909

Telephone Number:      (626) 919-6615

or, as to each party at such other address as shall be designated by such party
in a written notice to the other party delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmitted; or (iii) if hand
delivered, when delivered. Notwithstanding the immediately preceding sentence,
all notices or communications to the Lender under Article II. shall be effective
only when actually received. The Lender shall not incur any liability to the
Borrower for acting upon any telephonic notice referred to in this Agreement
which the Lender believes in good faith to have been given by a Person
authorized to deliver such notice or for otherwise acting in good faith
hereunder.

Section 9.2. Expenses.

The Borrower agrees (a) to pay or reimburse the Lender for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation, execution and delivery of, and any amendment, supplement or
modification to, any of the Loan Documents (including reasonable due diligence
expense and reasonable travel expenses related to closing), and the arrangement,
underwriting, consummation and administration of the transactions contemplated
thereby, including the reasonable fees and disbursements of counsel to the
Lender (which may include the reasonable allocated cost of in-house counsel),
(b) to pay or reimburse the Lender for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under the Loan
Documents, including the reasonable fees and disbursements of its respective
counsel (including the reasonable allocated cost of in-house counsel), (c) to
pay, and indemnify and hold harmless Lender from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
failure to pay or delay in paying, documentary, stamp, excise and other similar
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of any of the Loan Documents, or consummation of
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, any Loan Document and (d) to the extent not already covered by
any of the preceding subsections, to pay the reasonable fees and disbursements
of counsel to

 

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the Lender incurred in connection with the representation of the Lender in any
matter relating to or arising out of any bankruptcy or other proceeding of the
type described in Sections 8.1.(d) or 8.1. (e), including, without limitation
(i) any motion for relief from any stay or similar order, (ii) the negotiation,
preparation, execution and delivery of any document relating to the Obligations
and (iii) the negotiation and preparation of any debtor-in-possession financing
or any plan of reorganization of the Borrower or any other Loan Party, whether
proposed by the Borrower, such Loan Party, the Lender or any other Person, and
whether such fees and expenses are incurred prior to, during or after the
commencement of such proceeding or the confirmation or conclusion of any such
proceeding.

Section 9.3. Setoff.

In addition to any rights now or hereafter granted under Applicable Law and not
by way of limitation of any such rights, the Lender and each Participant is
hereby authorized by the Borrower, at any time or from time to time while an
Event of Default exists, without notice to the Borrower or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all deposits (general or special, including, but not limited
to, indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lender or
any affiliate of the Lender, to or for the credit or the account of the Borrower
against and on account of any of the Obligations, irrespective of whether or not
the Loan and all other Obligations have been declared to be, or have otherwise
become, due and payable as permitted by Section 8.2., and although such
obligations shall be contingent or unmatured.

Section 9.4. Litigation; Jurisdiction; Other Matters; Waivers.

(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN THE
BORROWER AND THE LENDER WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW
AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDER AND THE BORROWER
HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY
KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY
OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTE, OR ANY
OTHER LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE
WHATSOEVER BETWEEN OR AMONG THE BORROWER AND THE LENDER OF ANY KIND OR NATURE.

(b) EACH OF THE BORROWER AND THE LENDER HEREBY AGREES THAT THE FEDERAL DISTRICT
COURT OF THE NORTHERN DISTRICT OF CALIFORNIA OR, AT THE OPTION OF THE LENDER,
ANY STATE COURT LOCATED IN SAN FRANCISCO, CALIFORNIA, SHALL HAVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER AND THE LENDER
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOAN, THE NOTE OR ANY
OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM. THE BORROWER
AND THE LENDER EXPRESSLY

 

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SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS. THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT ITS ADDRESS
FOR NOTICES PROVIDED FOR HEREIN. SHOULD THE BORROWER FAIL TO APPEAR OR ANSWER
ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY DAYS AFTER THE
MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS,
COMPLAINT, PROCESS OR PAPERS. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET
FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION
BY THE LENDER OR THE ENFORCEMENT BY THE LENDER OF ANY JUDGMENT OBTAINED IN SUCH
FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

(c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE
ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR
EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

Section 9.5. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, except that the Borrower may not assign or otherwise transfer any of
its rights or obligations under this Agreement or as of the other Loan Documents
without the prior written consent of the Lender (and any such assignment or
other transfer to which the Lender has not so consented shall be null and void).

(b) The Lender may make, carry or transfer the Loan or any portion thereof, at,
to or for the account of, any of its branch offices or the office of an
affiliate of the Lender except to the extent such transfer would result in
increased costs to the Borrower.

(c) The Lender may at any time grant to one or more banks or other financial
institutions (each a “Participant”) participating interests in its Commitment or
the Obligations owing to the Lender; provided, however, any such participating
interest must be for a constant and not a varying percentage interest. No
Participant shall have any rights or benefits under this Agreement or any other
Loan Document. In the event of any such grant by the Lender of a participating
interest to a Participant, the Lender shall remain responsible for the
performance of its obligations hereunder, and the Borrower shall continue to
deal solely and directly with the

 

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Lender in connection with the Lender’s rights and obligations under this
Agreement. Any agreement pursuant to which the Lender may grant such a
participating interest shall provide that the Lender shall retain the sole right
and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided, however, the Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase, or extend the term or extend the time or
waive any requirement for the reduction or termination of, the Lender’s
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the Loan or portions thereof owing to the Lender, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which interest
is payable thereon or (v) release any Guarantor from its obligations under the
Guaranty. An assignment or other transfer which is not permitted by
subsection (d) or (f) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (c).

(d) The Lender may, with the prior written consent of the Borrower (which
consent shall not be unreasonably with held) assign to one or more banks or
other financial institutions (each an “Assignee”) all or a portion of the
Obligations and the Lender’s other rights and obligations under this Agreement
and the other Loan Documents. Notwithstanding the immediately preceding
sentence, the Borrower’s consent shall not be required in the case of an
assignment to an affiliate of the Lender or if an Event of Default exists.

(e) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, the Lender may assign and pledge all or
any portion of its Loan and its Note to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank, and such Loan and Note shall be fully transferable as
provided therein. No such assignment shall release the assigning Lender from its
obligations hereunder.

(f) The Lender may furnish any information concerning the Borrower, any other
Loan Party or any of their respective Subsidiaries in the possession of the
Lender from time to time to Assignees and Participants (including prospective
Assignees and Participants) subject to compliance with Section 9.8.

(g) The Lender agrees that, without the prior written consent of the Borrower,
it will not make any assignment hereunder in any manner or under any
circumstances that would require registration or qualification of, or filings in
respect of, the Loan or Note under the Securities Act or any other securities
laws of the United States of America or of any other jurisdiction.

Section 9.6. Amendments.

Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement or in any Loan Document to be
given by the Lender may be given, and any term of this Agreement or of any other
Loan Document may be amended, and the performance or observance by the Borrower,
any other Loan Party or any other Subsidiary of any terms of this Agreement or
such other Loan Document or the continuance of any Default or Event of Default
may be waived (either generally or in a particular instance and

 

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either retroactively or prospectively) with, but only with, the written consent
of the Lender (and, in the case of an amendment to any Loan Document, the
written consent of each Loan Party which is party thereto. No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon and any amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose set forth therein. No
course of dealing or delay or omission on the part of the Lender in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
Any Event of Default occurring hereunder shall continue to exist until such time
as such Event of Default is waived in writing in accordance with the terms of
this Section, notwithstanding any attempted cure or other action by the
Borrower, any other Loan Party or any other Person subsequent to the occurrence
of such Event of Default. Except as otherwise explicitly provided for herein or
in any other Loan Document, no notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances.

Section 9.7. Nonliability of Lender.

The relationship between the Borrower, on the one hand, and the Lender, on the
other hand, shall be solely that of borrower and lender. The Lender shall not
have any fiduciary responsibilities to the Borrower and no provision in this
Agreement or in any of the other Loan Documents, and no course of dealing
between or among any of the parties hereto, shall be deemed to create any
fiduciary duty owing by the Lender to the Borrower, any Subsidiary or any other
Loan Party. The Lender does not undertake any responsibility to the Borrower to
review or inform the Borrower of any matter in connection with any phase of the
Borrower’s business or operations.

Section 9.8. Confidentiality.

Except as otherwise provided by Applicable Law, the Lender shall utilize all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as confidential or proprietary by the Borrower in
accordance with its customary procedure for handling confidential information of
this nature and in accordance with safe and sound banking practices but in any
event may make disclosure: (a) to any of its respective affiliates (provided any
such affiliate shall agree to keep such information confidential in accordance
with the terms of this Section); (b) as reasonably requested by any bona fide
Assignee, Participant or other transferee in connection with the contemplated
transfer of any Commitment or participations therein as permitted hereunder
(provided they shall agree to keep such information confidential in accordance
with the terms of this Section); (c) as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process or
in connection with any legal proceedings; (d) to the Lender’s independent
auditors and other professional advisors (provided they shall be notified of the
confidential nature of the information); (e) if an Event of Default exists, to
any other Person, in connection with the exercise by the Lender of rights
hereunder or under any of the other Loan Documents; and (f) to the extent such
information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to the Lender on a nonconfidential basis
from a source other than the Borrower or any Affiliate.

 

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Section 9.9. Indemnification.

(a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless
the Lender and its respective affiliates, parents, directors, officers,
shareholders, agents, employees and counsel (each referred to herein as an
“Indemnified Party”) from and against any and all losses, costs, claims,
damages, liabilities, deficiencies, judgments or expenses of every kind and
nature (including, without limitation, amounts paid in settlement, court costs
and the fees and disbursements of counsel incurred in connection with any
litigation, investigation, claim or proceeding or any advice rendered in
connection therewith, but excluding losses, costs, claims, damages, liabilities,
deficiencies, judgments or expenses indemnification in respect of which is
specifically covered by Section 3.6. or 4.1. or expressly excluded from the
coverage of such Sections) incurred by an Indemnified Party in connection with,
arising out of, or by reason of, any suit, cause of action, claim, arbitration,
investigation or settlement, consent decree or other proceeding (the foregoing
referred to herein as an “Indemnity Proceeding”) which is in any way related
directly or indirectly to: (i) this Agreement or any other Loan Document or the
transactions contemplated thereby; (ii) the making of any Loan hereunder;
(iii) any actual or proposed use by the Borrower of the proceeds of the Loan;
(iv) the Lender’s entering into this Agreement; (v) the fact that the Lender has
established the credit facility evidenced hereby in favor of the Borrower;
(vi) the fact that the Lender is a creditor of the Borrower and has or is
alleged to have information regarding the financial condition, strategic plans
or business operations of the Borrower and the Subsidiaries; (vii) the fact that
the Lender is a material creditor of the Borrower and is alleged to influence
directly or indirectly the business decisions or affairs of the Borrower and the
Subsidiaries or their financial condition; (viii) the exercise of any right or
remedy the Lender may have under this Agreement or the other Loan Documents;
provided, however, that the Borrower shall not be obligated to indemnify any
Indemnified Party for any acts or omissions of such Indemnified Party in
connection with matters described in this clause (viii) that constitute gross
negligence or willful misconduct; or (ix) any violation or non-compliance by the
Borrower or any Subsidiary of any Applicable Law (including any Environmental
Law) including, but not limited to, any Indemnity Proceeding commenced by
(A) the Internal Revenue Service or state taxing authority or (B) any
Governmental Authority or other Person under any Environmental Law, including
any Indemnity Proceeding commenced by a Governmental Authority or other Person
seeking remedial or other action to cause the Borrower or its Subsidiaries (or
its respective properties) (or the Lender as successor to the Borrower) to be in
compliance with such Environmental Laws.

(b) The Borrower’s indemnification obligations under this Section shall apply to
all Indemnity Proceedings arising out of, or related to, the foregoing whether
or not an Indemnified Party is a named party in such Indemnity Proceeding. In
this connection, this indemnification shall cover all costs and expenses of any
Indemnified Party in connection with any deposition of any Indemnified Party or
compliance with any subpoena (including any subpoena requesting the production
of documents). This indemnification shall, among other things, apply to any
Indemnity Proceeding commenced by other creditors of the Borrower or any
Subsidiary, any shareholder of the Borrower or any Subsidiary (whether such
shareholder(s) are prosecuting such Indemnity Proceeding in their individual
capacity or derivatively on behalf of the Borrower), any account debtor of the
Borrower or any Subsidiary or by any Governmental Authority.

 

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(c) This indemnification shall apply to any Indemnity Proceeding arising during
the pendency of any bankruptcy proceeding filed by or against the Borrower
and/or any Subsidiary.

(d) All out-of-pocket fees and expenses of, and all amounts required to be paid
to third-persons by, an Indemnified Party in connection with this Agreement or
any of the other Loan Documents shall be advanced by the Borrower at the request
of such Indemnified Party notwithstanding any claim or assertion by the Borrower
that such Indemnified Party is not entitled to indemnification hereunder upon
receipt of an undertaking by such Indemnified Party that such Indemnified Party
will reimburse the Borrower if it is actually and finally determined by a court
of competent jurisdiction that such Indemnified Party is not so entitled to
indemnification hereunder.

(e) An Indemnified Party may conduct its own investigation and defense of, and
may formulate its own strategy with respect to, any Indemnity Proceeding covered
by this Section and, as provided above, all costs and expenses incurred by such
Indemnified Party shall be reimbursed by the Borrower. No action taken by legal
counsel chosen by an Indemnified Party in investigating or defending against any
such Indemnity Proceeding shall vitiate or in any way impair the obligations and
duties of the Borrower hereunder to indemnify and hold harmless each such
Indemnified Party; provided, however, that (i) if the Borrower is required to
indemnify an Indemnified Party pursuant hereto and (ii) the Borrower has
provided evidence reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such Indemnified Party for
any amount paid by such Indemnified Party with respect to such Indemnified
Proceeding, such Indemnified Party shall not settle or compromise any such
Indemnified Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed).

(f) If and to the extent that the obligations of the Borrower hereunder are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under Applicable Law.

(g) The Borrower’s obligations hereunder shall survive any termination of this
Agreement and the other Loan Documents and the payment in full in cash of the
Obligations, and are in addition to, and not in substitution of, any other of
their obligations set forth in this Agreement or any other Loan Document to
which it is a party.

Section 9.10. Termination; Survival.

At such time as the outstanding principal amount of the Loan, all accrued and
unpaid interest thereon and all other Obligations (other than obligations which
survive as provided in the following sentence) have been paid and satisfied in
full, this Agreement shall terminate. The indemnities to which the Lender is
entitled under the provisions of Sections 3.6., 4.1., 4.4., 9.2., 9.9. and any
other provision of this Agreement and the other Loan Documents, and the
provisions of Section 9.4., shall continue in full force and effect and shall
protect the Lender (i) notwithstanding any termination of this Agreement, or of
the other Loan Documents, against events arising after such termination as well
as before and (ii) at all times after any such party ceases to be a party to
this Agreement with respect to all matters and events existing on or prior to
the date such party ceased to be a party to this Agreement.

 

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Section 9.11. Severability of Provisions.

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions or affecting the validity or
enforceability of such provision in any other jurisdiction.

Section 9.12. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.

Section 9.13. Patriot Act.

The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued
with respect thereto require all financial institutions to obtain, verify and
record certain information that identifies individuals or business entities
which open an “account” with such financial institution. Consequently, the
Lender hereunder may from time to time request, and the Borrower shall provide
to the Lender, the Borrower’s name, address, tax identification number and/or
such other identification information as shall be necessary for the Lender to
comply with federal law. An “account” for this purpose may include, without
limitation, a deposit account, cash management service, a transaction or asset
account, a credit account, a loan or other extension of credit, and/or other
financial services product.

Section 9.14. Counterparts.

This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.

Section 9.15. Obligations with Respect to Loan Parties.

The obligations of the Borrower to direct or prohibit the taking of certain
actions by the other Loan Parties as specified herein shall be absolute and not
subject to any defense the Borrower may have that the Borrower does not control
such Loan Parties.

Section 9.16. Marshaling; Payments Set Aside.

The Lender shall not be under any obligation to marshal any assets in favor of
any Loan Party or any other party or against or in payment of any or all of the
Obligations. To the extent that any Loan Party makes a payment or payments to
the Lender, or the Lender enforces its security interests or exercises its
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be

 

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fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

Section 9.17. Independence of Covenants.

All covenants hereunder (included covenants incorporated herein by reference)
shall be given in any jurisdiction independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.

Section 9.18. Limitation of Liability.

The Lender shall not have, nor shall any affiliate, officer, director, employee,
attorney, or agent of the Lender shall not have, any liability with respect to,
and the Borrower hereby waives, releases, and agrees not to sue any of them
upon, any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by the Borrower in connection with, arising out of, or in
any way related to, this Agreement or any of the other Loan Documents, or any of
the transactions contemplated by this Agreement or any of the other Loan
Documents. The Borrower hereby waives, releases, and agrees not to sue the
Lender or any of the Lender’s affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or financed hereby.

Section 9.19. Entire Agreement.

This Agreement, the Note, and the other Loan Documents referred to herein embody
the final, entire agreement among the parties hereto and supersede any and all
prior commitments, agreements, representations, and understandings, whether
written or oral, relating to the subject matter hereof and thereof and may not
be contradicted or varied by evidence of prior, contemporaneous, or subsequent
oral agreements or discussions of the parties hereto. There are no oral
agreements among the parties hereto.

Section 9.20. Construction.

The Borrower and the Lender acknowledge that each of them has had the benefit of
legal counsel of its own choice and has been afforded an opportunity to review
this Agreement and the other Loan Documents with its legal counsel and that this
Agreement and the other Loan Documents shall be construed as if jointly drafted
by the Lender and the Borrower.

 

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Section 9.21. Existing Credit Agreement Provisions.

(a) Notwithstanding any provision of any Loan Document to the contrary, the
Borrower and the Lender hereby agree that after the Agreement Date any effective
amendment to, or effective waiver of, (i) the Existing Credit Agreement
Representations, (ii) the Existing Credit Agreement Events of Default or
(iii) the Existing Credit Agreement Covenants, which has been expressly
consented to by the Lender, shall be deemed to be incorporated herein by
reference and shall become effective hereunder when such amendment or waiver
becomes effective thereunder, without any further action necessary by the
Borrower or the Lender. Any such amendment or waiver shall be effective only in
the specific instance and for the specific purpose for which given. The Borrower
agrees to provide promptly the Lender with a copy of such amendment or waiver.

(b) The Existing Credit Agreement Representations (as of the date when made or
deemed made hereunder), the Existing Credit Agreement Events of Default and the
Existing Credit Agreement Covenants incorporated herein by reference and any
definitions or other terms or provisions of the Existing Credit Agreement
incorporated herein by reference, will be deemed to continue in effect for the
benefit of the Lender until this Agreement has terminated in accordance with its
terms, including without limitation, whether or not the Existing Credit
Agreement remains in effect or whether or not the Existing Credit Agreement is
amended, restated or terminated after the date hereof. For purposes of the
foregoing, (i) references in the provisions of the Existing Credit Agreement
incorporated herein by reference to (w) the “Borrower” shall refer to the
Borrower; (x) to the “Agent”, “Lenders” and “Lender” shall refer to the Lender,
(y) to “Material Adverse Effect” shall refer to a Material Adverse Effect and
(z) to the “Agreement Date” shall refer to such term as defined in the Existing
Credit Agreement; and (ii) the terms “Agreement,” “hereto” and “hereof” when
used in the provisions of the Existing Credit Agreement incorporated herein by
referenced shall refer to this Agreement.

[Signatures on Following Pages]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
executed by their authorized officers all as of the day and year first above
written.

 

BORROWER: PUBLIC STORAGE, INC. By:   /s/ John Reyes Name:   John Reyes Title:  
Chief Financial Officer

 

[Signatures Continued on Next Page]

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Signature Page to Credit Agreement dated as of

December 27th, 2006 with Public Storage, Inc.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Lender By:   /s/ Nathan Callister
Name:   Nathan Callister Title:   VP Commitment Amount: $300,000,000