Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is executed by and between
Morelli Brothers Enterprises, LLC, a California limited liability company
(“Seller”), and SST IV Acquisitions, LLC, a Delaware limited liability company
(“Purchaser”).

 

In consideration of the mutual covenants and representations herein contained,
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, Seller and Purchaser agree as follows:

 

1.
PURCHASE AND SALE

 

1.1

Purchase and Sale.  Subject to the terms and conditions of this Agreement, and
conditioned upon Seller’s acquisition of the Property, Seller hereby agrees to
sell and convey to Purchaser, and Purchaser hereby agrees to purchase from
Seller, all of the following described property (herein collectively called the
“Property”):

 

(a)

Land.  That certain tract of land located at 5216 Walnut Grove Avenue, San
Gabriel, California 91776, containing 1.94 acres of land, and being more
particularly described on Exhibit “A” attached hereto and made a part hereof
(herein, the “Land”).

(b)

Easements.  All easements, if any, benefiting the Land or the Improvements (as
defined in Section 1.1(d) of this Agreement).

(c)

Rights and Appurtenances.  All rights and appurtenances pertaining to the Land,
including any right, title and interest of Seller in and to adjacent streets,
alleys or rights-of‑way.

(d)

Improvements.  All improvements and related amenities to be hereafter
constructed on the Land by Seller in accordance with the plans and
specifications set forth on Schedule “B” attached hereto and incorporated herein
(the “Plans and Specifications”), to contain approximately 68,250 net rentable
square feet (“NSRF”) of storage space (which net rentable area shall not include
the manager’s on-site office and residence) and approximately 708 rental units
(herein, the “Improvements”), together with approximately 30 parking spaces.

(e)

Leases.  Seller’s interest under (i) all written leases, occupancy agreements
and rental agreements for rental units in the Property hereafter entered into by
or on behalf of Seller in accordance with the terms of this Agreement, if any
(collectively, the “Leases”), including all tenant leasing files, together with
all tenant security deposits held by Seller on the Closing Date (as defined in
Section 6.1 of this Agreement), (ii) all cellular tower leases relating to the
Property, if any, hereafter entered into by Seller in accordance with the terms
of this Agreement (the “Tower Leases”), and (iii) all billboard leases relating
to the Property, if any, hereafter entered into by Seller in accordance with the
terms of this Agreement (the “Billboard Leases”).

(f)

Tangible Personal Property.  All appliances, fixtures, equipment, machinery,
furniture, carpet, drapes and other items of personal property, if any, now or
hereafter owned by Seller and located on or about the Land and the Improvements
(the “Tangible Personal

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Property”), including any and all items of Personal Property set forth in the
Plans and Specifications.

(g)

Contracts.  Seller’s interest under the “Contracts” (as defined below), if any.

(h)Intangible Property.  All intangible property (the “Intangible Property”)
owned by Seller and pertaining to the Land, the Improvements, or the Tangible
Personal Property, including, without limitation, (i) all "yellow page"
advertisements, (ii) all transferable utility contracts, (iii) all transferable
telephone and telecopy numbers, (iv) the Plans and Specifications, (v) all
licenses, permits, engineering plans and landscape plans, (vi) all assignable
warranties and guarantees relating to the Property or any part thereof, and
(vii) all internet websites and other internet related property rights owned by
Seller and/or any affiliate thereof and relating to the Property.

 

2.
PURCHASE PRICE

 

2.1

Purchase Price.  The purchase price (the “Purchase Price”) for the Property
shall be the sum of Thirteen Million Five Hundred Thousand and no/100 Dollars
($13,500,000.00), subject to prorations and adjustments as set forth in this
Agreement, and shall be paid by Purchaser to Seller at the Closing by wire
transfer of immediately available funds to the “Escrow Agent” (as defined in
Section 3.1(A) below) on the Closing Date in accordance with wire transfer
instructions to be provided by the Escrow Agent.

 

2.2Purchase Price Adjustment.The Purchase Price is based on the build-out of the
Improvements yielding 68,250 NRSF of storage space (not including the manager’s
on-site office and residence), plus or minus one percent (1%).  Thus, the
Purchase Price will not change if the actual yield varies from the anticipated
yield by less than one percent (1%).  Seller’s permit application, however,
seeks authorization to build up to an additional 3,128 NRSF of storage space
outside the perimeter of  building shell located upon the Property, the location
and unit mix of such additional storage space to be subject to Purchaser’s prior
written approval, not to be unreasonably withheld.  In the event that some or
all of the additional storage space is permitted and built-out, or the interior
build-out yields more than 68,933 NRSF (68,250 NRSF plus 1%), then the Purchase
Price shall be increased by One Hundred Ninety Four Dollars ($194) per NRSF of
additional storage space (above 68,250 NRSF) constructed by Seller.  In the
event that the build-out of the Improvements yields less than 67,567 NRSF
(68,250 NRSF less 1%), then the Purchase Price shall be decreased by One Hundred
Ninety Four Dollars ($194) per NRSF of storage space actually constructed by
Seller below the anticipated yield of 68,250 NRSF.  The actual NRSF of the
storage space portion of the Improvements, once completed, shall be certified to
Seller and Purchaser in writing by the “Architect” (as defined below).

 

3.
EARNEST MONEY

3.1

Earnest Money.  

(A)

Purchaser shall deliver to Commonwealth Land Title, 4100 Newport Place Drive,
Suite 120, Newport Beach, CA 92660, Attn: Kelly Ralph (“Escrow Agent”), as agent
for a national title underwriter acceptable to Purchaser (the “Title Company”),
within three (3) business days after the “Effective Date” (as defined below), an
earnest money deposit (the “Initial Deposit”) in the amount of Two Hundred
Thousand and no/100 Dollars ($200,000.00). In the event that Purchaser delivers
the “Closing Notice” (as defined in Section 4.1.1 of this Agreement) to Seller,
then within three (3) business

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days following the expiration of the “Approval Period” (as defined in
Section 4.1.1 of this Agreement), Purchaser shall make an additional deposit
(the “Additional Deposit”) with Escrow Agent in the amount of Two Hundred
Thousand and no/100 Dollars ($200,000.00).   

(B)

The Initial Deposit, together with the Additional Deposit, if delivered
hereunder, and together with all interest accrued thereon, are herein
collectively called the “Earnest Money”.  The Initial Deposit and the Additional
Deposit, if made, shall be invested by the Escrow Agent in an FDIC-insured,
interest‑bearing account as Purchaser shall direct.  If the sale of the Property
is consummated under this Agreement, the Earnest Money shall be paid to Seller
and applied as a credit against the Purchase Price at Closing.  If Purchaser
terminates this Agreement in accordance with any right to terminate granted to
Purchaser by the terms of this Agreement, the Earnest Money shall be returned to
Purchaser by Escrow Agent.   

4.
CONDITIONS TO CLOSING

4.1Seller’s Obligations.  Seller shall deliver to Purchaser (at Seller’s
expense), within three (3) business days after the Effective Date, complete and
(to the extent available) legible copies of the due diligence items listed on
Schedule “A” attached hereto and incorporated herein with respect to the
Property to the extent such items are within Seller’s possession or control
(collectively, the “Due Diligence Items”). Seller shall provide Purchaser with
written notice at such time as Seller determines that the Due Diligence Items in
Seller’s possession or control have been delivered to Purchaser (the “Due
Diligence Delivery Notice”).  Within two (2) business days following Purchaser’s
receipt of the Due Diligence Delivery Notice, Purchaser shall confirm in writing
to Seller, if such be the case, that all Due Diligence Items that Purchaser
desires have been received by Purchaser, in which event the date that Purchaser
receives the Due Diligence Delivery Notice shall be deemed to be the “Due
Diligence Receipt Date” (herein so called) for all purposes of this
Agreement.  In the event, however, that Purchaser determines that it has not
been provided with all of the Due Diligence Items, then Purchaser shall provide
Seller with written notice thereof (the “Missing Due Diligence Notice”), within
two (2) business days following Purchaser’s receipt of the Due Diligence
Delivery Notice, enumerating with specificity in such notice which Due Diligence
Items have not been provided by Seller (the “Missing Due Diligence Items”).  If
Purchaser fails to either (i) timely confirm in writing that Purchaser has
received all Due Diligence Items that Purchaser desires, or (ii) timely provide
Seller with a Missing Due Diligence Notice, then the date of the Due Diligence
Delivery Notice shall be deemed the Due Diligence Receipt Date.  Within two (2)
business days following Seller’s receipt of a Missing Due Diligence Notice,
Seller shall provide Purchaser with the Missing Due Diligence Items to the
extent same are within Seller’s possession or control, together with written
notice confirming such delivery (the “Missing Due Diligence Delivery
Notice”).  Within two (2) business days following Purchaser’s receipt of the
Missing Due Diligence Delivery Notice, accompanied by such missing Due Diligence
Items as are in Seller’s possession or control, Purchaser shall confirm in
writing to Seller that Purchaser has received all Due Diligence Items which
Purchaser desires, in which event the date that Purchaser receives the Missing
Due Diligence Delivery Notice, accompanied by all missing Due Diligence Items,
shall be deemed to be the Due Diligence Receipt Date for all purposes of this
Agreement.  If Purchaser fails timely to provide such written confirmation, then
the date of the Missing Due Diligence Delivery Notice shall be deemed the Due
Diligence Receipt Date. Notwithstanding the foregoing or anything to the
contrary contained in this Agreement, Purchaser may request additional
information, documentation or materials concerning the Property from Seller at
any time after the Effective Date, and Seller agrees to use commercially
reasonable efforts to provide such additional information, documentation or
materials to Purchaser, provided it is within Seller’s possession or under its
control, and further provided that the delivery or non-delivery of any such item
shall in no manner extend the Approval Period.  Notwithstanding the foregoing
provisions of this Section 4.1, should Seller (i) fail to timely deliver the Due
Diligence Delivery Notice to Purchaser, as required above, or (ii) fail to
timely deliver the Missing Due Diligence

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Delivery Notice and/or the Missing Due Diligence Items to Purchaser, as required
above, then the Due Diligence Receipt Date shall not occur until Purchaser so
acknowledges in writing, and until such time as Purchaser so acknowledges the
occurrence of the Due Diligence Receipt Date, Purchaser shall be entitled to
terminate this Agreement upon written notice to Seller, whereupon this Agreement
automatically shall terminate, the Earnest Money shall be returned by Escrow
Agent to Purchaser, without the consent or joinder of Seller being required and
notwithstanding any contrary instructions which might be provided by Seller, and
neither party shall have any further obligations hereunder except for such
obligations which by their terms expressly survive the termination of this
Agreement (the “Surviving Obligations”).  

4.1.1

Approval Period.  During the period commencing on the Effective Date and
expiring at 5:00 p.m. Central Time on the later to occur of: (i) the forty fifth
(45th) day following the Due Diligence Receipt Date, or (ii) the fifth (5th)
business day following the “Entitlement Date”, as defined below (the “Approval
Period”), Purchaser shall have the right to investigate the following matters:

(a)the suitability of the Property for Purchaser’s intended use; and

(b)the Due Diligence Items.

Purchaser may (but shall not be obligated to) terminate this Agreement by
delivering written notice of such termination to Seller at any time prior to the
expiration of the Approval Period, if, in Purchaser's sole and absolute
discretion, Purchaser decides not to consummate the purchase of the Property
contemplated hereby.  In such event, this Agreement will terminate as of the
date of such notice, and neither party shall have any further obligation
hereunder except for the Surviving Obligations.  If, in Purchaser’s sole and
absolute discretion, Purchaser determines that it desires to consummate the
purchase of the Property contemplated hereby, then Purchaser will give written
notice thereof (the “Closing Notice”) to Seller, prior to the expiration of the
Approval Period.  In the event that Purchaser provides Seller with the Closing
Notice, then Purchaser will be deemed to have waived its termination rights
under this Section 4.1.1, and the parties will proceed to Closing, subject to
all other terms and conditions of this Agreement.  If Purchaser does not give
Seller the Closing Notice prior to the expiration of the Approval Period and has
not previously terminated this Agreement by written notice to Seller, then this
Agreement automatically shall terminate upon the expiration of the Approval
Period, and, in such event, neither party shall have any further obligation
hereunder except for the Surviving Obligations.  In either of such events
terminating this Agreement as described above, immediately following written
request from Purchaser to the Escrow Agent, the Escrow Agent shall return all of
the Earnest Money to Purchaser, without the consent or joinder of Seller being
required and notwithstanding any contrary instructions which might be provided
by Seller.  For purposes of this Agreement, the Entitlement Date shall mean the
date upon which (i) the City of San Gabriel has issued a building permit for
construction of the Improvements, and (ii) Seller has delivered written notice
thereof to Purchaser accompanied by a copy of such building permit.

4.1.2Title Commitment.  Seller shall convey good and marketable fee simple title
to the Property to Purchaser at Closing, subject only to the “Permitted
Encumbrances” (defined below).  Within five (5) days following the Effective
Date, Purchaser shall order a preliminary title commitment (the “Title
Commitment”) for an ALTA Extended Owner's Policy of Title Insurance (the “Title
Policy”), issued by the Escrow Agent on behalf of the Title Company, insuring
good and marketable fee simple title to the Property, together with legible (or
best available) copies of all exceptions listed therein.  The Title Policy to be
issued to Purchaser at Closing shall include, in addition to any other matters
as may be agreed upon between Purchaser and the Title Company, affirmative
coverage by endorsement or other acceptable mechanism, against mechanic’s liens
arising as a result of the construction of the Improvements on the Land, such
affirmative mechanic’s lien coverage to be at Seller’s sole cost and expense,
and Seller shall be solely responsible for compliance with the Title Company’s
usual and customary requirements for issuance of such affirmative mechanic’s
lien coverage (including without limitation any indemnity as may be

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required of Seller).  Purchaser shall have ten (10) days following its receipt
of the Title Commitment, legible (or best available) copies of all exceptions
listed therein and the “Survey” (defined below), to deliver to Seller written
notice of Purchaser’s objections to title (the “Title Objection
Letter”).  Seller shall have the right, but not the obligation, to cure
Purchaser’s objections to title; subject, however, to Seller’s obligation to
remove all “Monetary Liens” (as defined below) by Closing.  Seller shall notify
Purchaser in writing within five (5) days following Seller’s receipt of the
Title Objection Letter concerning which title objections, if any, Seller has
agreed to cure.  In the event that Seller does not undertake to cure all of the
objections in the Title Objection Letter to Purchaser’s sole satisfaction (or
does not timely respond to the Title Objection Letter), then Purchaser shall
have the right for five (5) days after receipt of Seller’s response to the Title
Objection Letter (or five (5) days following the expiration of the period within
which Seller was to so respond) to either (i) waive any such title objection(s)
in writing and proceed to Closing (in which event such waived title objection(s)
shall be deemed to be a “Permitted Encumbrance”, as defined below), or
(ii)  terminate this Agreement upon written notice to Seller and receive an
immediate refund of the Earnest Money, without the consent or joinder of Seller
being required and notwithstanding any contrary instructions which might be
provided by Seller, in which event neither party hereto shall have any further
obligations under this Agreement except for the Surviving Obligations.  All
exceptions set forth in Schedule B of the Title Commitment which are not
objected to by Purchaser (including matters initially objected to by Purchaser
which objections are subsequently waived in writing or which are deemed waived
by Purchaser’s failure to terminate this Agreement in the event Seller does not
elect to cure any objection(s) in the Title Objection Letter), exclusive of
preprinted exceptions, are herein collectively called the “Permitted
Encumbrances”.  In the event that any update to the Title Commitment or Survey,
including any update to the Title Commitment or Survey following “Substantial
Completion of the Work” and/or “Completion of the Work” (as defined in Section
5.7 below), indicates the existence of any liens, encumbrances or other defects
or exceptions (the “Unacceptable Encumbrances”) which are not shown in the
initial Title Commitment or Survey, which were not caused by Purchaser or a
party acting on behalf of Purchaser, and that are unacceptable to Purchaser, in
its sole discretion, Purchaser shall, within five (5) days after receipt of any
such update to the Title Commitment or Survey, notify Seller in writing of its
objection to any such Unacceptable Encumbrance (the “Unacceptable Encumbrance
Notice”).  Notwithstanding anything to the contrary contained herein, Seller
shall have no obligation to take any steps or bring any action or proceeding or
otherwise to incur any expense whatsoever to eliminate or modify any of the
Unacceptable Encumbrances; provided, however, that Seller shall, prior to
Closing, eliminate by paying, bonding around or otherwise discharging in a
manner satisfactory to Purchaser (i) any Unacceptable Encumbrances that arise
by, through or under Seller, (ii) any exceptions that arise in connection with
construction of the Improvements, and (iii) any mortgages, deeds of trust, deeds
to secure debt, mechanics’ liens or monetary judgments that appear on the Title
Commitment (“Monetary Liens”).  In the event Seller is unable, unwilling or for
any reason fails to eliminate or modify all of the Unacceptable Encumbrances to
the sole satisfaction of Purchaser (other than the Unacceptable Encumbrances and
Monetary Liens required to be removed by Seller in accordance with the preceding
sentence), Purchaser may terminate this Agreement by delivering notice thereof
in writing to Seller by the earliest to occur of (i) the Closing Date, (ii) five
(5) days after Seller’s written notice to Purchaser of Seller’s intent to not
cure one or more of such Unacceptable Encumbrances, or (iii) ten (10) days after
the Unacceptable Encumbrance Notice, in the event Seller does not timely respond
thereto.  Upon a termination of this Agreement pursuant to the immediately
preceding sentence, (a) the Earnest Money shall be returned to Purchaser,
without the consent or joinder of Seller being required and notwithstanding any
contrary instructions which might be provided by Seller, (b) Purchaser shall be
entitled to receive reimbursement from Seller for all out-of-pocket expenses
incurred by Purchaser or any affiliate of Purchaser in connection with this
Agreement or the transaction contemplated hereby, not to exceed the sum of One
Hundred Thousand and no/100 Dollars ($100,000.00), and (c) neither party shall
have any further obligations hereunder other than the Surviving Obligations.

4.1.3

Survey.  Within five (5) days following the Effective Date, Purchaser shall
order a current survey of the Property (the “Survey”), which shall be in form
reasonably acceptable to Purchaser

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and shall include the following ALTA/ACSM Land Title Survey Table A Items: 1, 2,
3, 4, 6(b), 7(a), 7(b)(1), 7(c), 8, 9, 10(a), 11(b), 13, 14, 16, 17, 18, 19 and
20(a).  Additionally, within five (5) days following “Substantial Completion of
the Work” (as defined in Section 5.7 below), Purchaser shall order a current
as-built survey of the Property (the “Updated Survey”), dated subsequent to the
date of completion of the Improvements, reflecting the location of the completed
Improvements, all ALTA/ACSM Land Title Survey Table A Items referenced in the
preceding sentence, and otherwise in form reasonably satisfactory to
Purchaser.  All costs and expenses relating to the Survey and the Updated
Survey, including all revisions thereto, shall be borne by Purchaser.

4.2

Inspection.  During the Approval Period, at any time and from time to time
during normal business hours (and thereafter through the Closing Date),
Purchaser may inspect, test, and survey: (a) the Property and any and all
portions thereof, including physical and mechanical inspections; provided that
Purchaser and any third parties acting for Purchaser shall not interfere with
Seller’s performance of the “Work,” as defined below, (b) all financial and
other records pertaining to the operation of the Property, including, but not
limited to, all books, records, documents, accounting and management reports of
Seller, and (c) originals of all Leases and Contracts.  Notwithstanding the
foregoing, Purchaser must obtain Seller’s prior written approval of the scope
and method of any environmental testing or investigation (other than a Phase I
environmental site assessment, which shall require no consent or approval of any
kind), prior to Purchaser’s commencement of such inspections or testing.  Seller
shall cooperate in good faith with Purchaser, Purchaser’s agents and independent
contractors in connection with all such inspections, tests and
surveys.  Purchaser, at Purchaser’s sole expense, shall repair any and all
damage resulting from any of the tests, studies, inspections and investigations
performed by or on behalf of Purchaser pursuant to this Section 4.2, and
Purchaser shall indemnify, defend and hold Seller harmless for, from and against
all claims for bodily injury or property damage which may be asserted against
Seller arising out of the tests, studies, inspections and investigations
performed by Purchaser hereunder, excluding the discovery of pre-existing
conditions on the Property, which obligation of indemnification shall survive
the Closing or termination of this Agreement.  Prior to any entry onto the
Property by Purchaser or any of its agents, Purchaser shall furnish Seller with
evidence that Purchaser maintains a policy of general liability insurance
providing premises/operations coverage included under the per occurrence/general
aggregate coverage, having a combined single limit liability of  not less than
$2,000,000, naming Seller as an additional insured.  All entries onto the
Property by Purchaser shall be preceded by not less than 24 hours prior notice
to Seller, which may be verbal.

4.2.1  Commercial Property Disclosures.  Seller or Seller’s broker, at no cost
to Purchaser, shall cause the Escrow Agent to order a commercial property
disclosure report from a third party service to satisfy the statutory disclosure
requirements of the California Natural Hazard Disclosure Act, and pursuant to
applicable provisions of the California Government Code, California Public
Resources Code and other California Codes.  The report, including the Natural
Hazards Disclosure Statement to be included in the report, shall be delivered to
Purchaser within ten (10) days of Escrow Agent’s acknowledgment of receipt of a
fully executed copy of this Agreement.

4.3

Seller’s Representations and Warranties.

 

(a)

Seller represents and warrants to Purchaser that:

(i)

Seller owns good and marketable fee simple title to the Property, and no party
has the right or option to acquire all or any portion of the Property, other
than Purchaser pursuant to the terms of this Agreement,

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(ii)

Seller has the full right, power, and authority, without the joinder of any
other person or entity, to enter into, execute and deliver this Agreement, and
to perform all duties and obligations imposed on Seller under this Agreement,

(iii)

neither the execution nor the delivery of this Agreement, nor the consummation
of the purchase and sale contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement conflict with or will
result in the breach of any of the terms, conditions, or provisions of any
agreement or instrument to which Seller is a party or by which Seller or any of
Seller’s assets is bound,

(iv)

there is no existing (or to Seller’s actual knowledge threatened) litigation
affecting Seller or the Property,

(v)

Seller has no actual knowledge of, and has not received any written notice of,
any violation of any governmental requirements (including “Environmental
Requirements”, as defined below) concerning the Property, which have not been
remedied,

(vi)

Seller has no actual knowledge of, and has not received, with respect to the
Property, written notice from any governmental authority regarding, any change
to the zoning classification, any condemnation proceedings or proceedings to
widen or realign any street or highway adjacent to the Property or that
otherwise affects the Land or the Improvements,

(vii)

there are no service contracts, equipment leases and/or maintenance agreements
affecting the Property, other than Contracts, if any, hereafter approved in
writing by Purchaser pursuant to Section 5.3 below,

(viii)

Seller is not a “foreign person” within the meaning of Sections 1445 and 7701 of
the Internal Revenue Code of 1986, as amended,

(ix)

there are and will be no tenant leases in effect relating to the Property, other
than those leases described in Section 5.4 below, all of which leases shall be
cancelled by Seller by Closing, at Seller’s sole cost and expense,

(x)

all documentary information delivered by Seller to Purchaser pursuant to Section
4.1 hereof, is a complete copy of the original in Seller’s possession or
control,

(xi)

Seller has no actual knowledge, and has received no notice, regarding any
environmental contamination on, at or adjacent to the Property,

(xii)

Seller has not received any written or verbal notice or request from any
insurance company or board of fire underwriters (or any organization exercising
functions similar thereto) requesting the performance of any work or alterations
with respect to the Property, except those as to which Seller has completed
remedial action which has been formally accepted as sufficient by such authority
or insurer,

(xiii)

there are no employment agreements of any kind to which Seller is a party,
including union or collective bargaining agreements, which will be binding on
Purchaser after the Closing,

(xiv)

to Seller’s actual knowledge, there are no underground storage tanks located on
or under the Property, there are no conditions on, at or relating to the
Property which are in non-

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compliance with “Environmental Requirements” (as defined below) or otherwise
adversely affect the Property, and there are no “Hazardous Materials” (as
defined below) on, in or under the Property in quantities that require
reporting, investigation or remediation under Environmental Requirements,

(xv)

to Seller’s actual knowledge, the Property is legally compliant and conforms
with all applicable zoning laws, rules and regulations,

(xvi)

Neither Seller nor any beneficial owner of Seller: (a) is listed on the
Specially Designated Nationals and Blocked Persons List maintained by the Office
of Foreign Assets Control, Department of the Treasury (“OFAC”) pursuant to
Executive Order No. 133224, 66 Fed. Reg. 49079 (September 25, 2001) (the
“Order”) and/or on any other list of terrorists or terrorist organizations
maintained pursuant to any of the rules and regulations of OFAC or pursuant to
any other applicable orders (such lists are collectively referred to as the
“Lists”); (b) is a person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Orders; or (c) is
owned or controlled by, or acts for or on behalf of, any person or entity on the
Lists or any other person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Order,

(xvii)

at Closing there will be no unpaid bills or claims in connection with any
construction or repair of the Property by or on behalf of Seller that could
result in the filing of a lien against the Property,

(xviii)

the Improvements will be, and as of the Closing Date shall have been,
constructed substantially and in all material respects in accordance with the
Plans and Specifications, with no defects in the drainage systems, foundations,
roofs, walls, superstructures, plumbing, air conditioning and heating equipment,
electrical wiring, boilers, hot water heaters or other portions of the Property,
and

(xix)

on or before Closing, Seller shall obtain all necessary certificates, licenses
and other approvals, governmental and otherwise, necessary for the operation of
the Property and the conduct of its business and all required zoning, building
code, land use, environmental and other similar permits or approvals, all of
which, as of the Closing, shall be in full force and effect.

Seller shall deliver a certificate to Purchaser at Closing updating and
recertifying all of the foregoing representations and warranties to Purchaser so
as to be effective and deemed given as of the Closing Date.   Seller’s
representations and warranties set forth in this Section 4.3 and anywhere else
in this Agreement shall survive Closing for a period of one (1) year.  Purchaser
shall assert any claims or bring any causes of action based on Seller’s alleged
breach of any such representations or warranties within said one (1) year period
or be forever barred from asserting or bringing same. This limitation shall
survive Closing and shall not merge with the Deed or title to the Property.

 

As used in this Agreement, including without limitation this Section 4.3,
Seller’s “knowledge,” “actual knowledge” (or words or phrases of similar
meaning) shall mean the actual, but not constructive or imputed, knowledge of
David A. Morelli and Timothy Morelli (the “Seller’s Knowledge Individuals”),
without independent inquiry or investigation for the purpose of making any
representation contained in this Agreement.  The foregoing named individuals are
identified solely for the purpose of defining the scope of Seller’s knowledge
and not for the purpose of imposing any liability or duties on such individuals
and Purchaser shall not bring any action of any kind against such individuals
relating to or arising out of this Agreement.  Seller represents and warrants
that the Seller’s Knowledge Individuals are the most

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knowledgeable individuals within Seller’s business organization with respect to
both the Property and the factual accuracy of the representations and warranties
of Seller set forth in Section 4.3(a) above.

 

(b)

For purposes of this Agreement,  “Hazardous Materials” shall mean any substance
which is or contains (i) any “hazardous substance” as now or hereafter defined
in §101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. §9601 et seq.) (“CERCLA”) or any
regulations promulgated under CERCLA; (ii) any “hazardous waste” as now or
hereafter defined in the Resource Conservation and Recovery Act (42 U.S.C. §6901
et seq.) (“RCRA”) or regulations promulgated under RCRA; (iii) any substance
regulated by the Toxic Substances Control Act (15 U.S.C. §2601 et seq.);
(iv) gasoline, diesel fuel, or other petroleum hydrocarbons; (v) asbestos and
asbestos containing materials, in any form, whether friable or non‑friable;
(vi) polychlorinated biphenyls; (vii) radon gas; (viii) any radioactive
material, including any “source material”, “special nuclear material” or
“byproduct material”, as now or hereafter defined in 42 U.S.C. §2011 et seq.;
and (ix) any additional substances or materials which are now or hereafter
classified or considered to be hazardous or toxic under “Environmental
Requirements” (as defined below) or the common law, or any other applicable laws
relating to the Property. Hazardous Materials shall include, without limitation,
any substance, the presence of which on the Property, (A) requires reporting,
investigation or remediation under Environmental Requirements; (B) causes or
threatens to cause a nuisance on the Property or adjacent property or poses or
threatens to pose a hazard to the health or safety of persons on the Property or
adjacent property; or (C) which, if it emanated or migrated from the Property,
could constitute a trespass.  Further, for purposes of this Agreement,
“Environmental Requirements” shall mean all laws, ordinances, statutes, codes,
rules, regulations, agreements, judgments, orders, and decrees, now or hereafter
enacted, promulgated, or amended, of the United States, the states, the
counties, the cities, or any other political subdivisions in which the Property
is located, and any other political subdivision, agency or instrumentality
exercising jurisdiction over the owner of the Property, the Property, or the use
of the Property, relating to pollution, the protection or regulation of human
health, natural resources, or the environment, or the emission, discharge,
release or threatened release of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or waste or Hazardous Materials into
the environment (including, without limitation, ambient air, surface water,
ground water or land or soil).

4.4

As-Is.Subject to Seller’s representations and warranties set forth in this
Agreement and in the documents executed by Seller at Closing, Purchaser is
relying upon its own inspections of the Land and the existing Improvements
located upon the Property and is not relying in any way upon any representation,
statement, agreement, warranty, study, plan, report, description, guideline, or
any other information or material provided by Seller or any of its
representatives, whether oral or written, express or implied, of any nature
whatsoever concerning any aspect of owning, acquiring, developing, constructing
or marketing the Property.  Subject to Seller’s representations and warranties
set forth in this Agreement and in the documents executed by Seller at Closing,
Seller makes no representation or warranty regarding the physical condition of
the Land or the existing Improvements located upon the Property.  Purchaser is a
sophisticated purchaser and is represented by sophisticated consultants and,
subject to Seller’s representations and warranties set forth in this Agreement
and in the documents executed by Seller at Closing, is acquiring the Land "as
is" and "with all faults" in its present state and condition, without additional
representation or warranty by Seller of any matters whatsoever.  Subject to
Seller’s representations and warranties set forth in this Agreement and in the
documents executed by Seller at Closing, no patent or latent condition affecting
the Land in any way, whether or not known or discoverable, or hereafter
discovered, shall affect Purchaser's obligations hereunder, nor shall any such
condition give rise to any right of damages, rescission or otherwise against
Seller.  Seller shall have no liability for inaccuracies in the representations
and warranties set forth in Section 4.3 to the extent that, as of the Closing,
Purchaser has actual knowledge that a representation or warranty is inaccurate
and proceeds to close notwithstanding such inaccuracy.

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4.5

Conditions Precedent to Closing.  It shall be a condition precedent to
Purchaser's obligations to consummate this transaction that (a) all
representations and warranties made herein by Seller are true and correct in all
respects as of the Closing Date, and all covenants made by Seller herein are
fully complied with, (b) as of the Closing Date, there shall exist no pending or
threatened actions, suits, arbitrations, claims, attachments, proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy, reorganization
or other proceedings that could adversely affect the operation or value of the
Property or Seller's ability to perform its obligations under this Agreement,
(c) as of the Closing Date, there shall have been no material adverse change in
the Property or in any of the items reviewed by Purchaser during the Approval
Period, including without limitation the Due Diligence Items, and (d) as of the
Closing Date, the Improvements shall have been constructed strictly in
accordance with the Plans and Specifications, free from any liens or other
claims, and all required certificates of occupancy shall have been issued with
respect thereto; failing which, Purchaser, at its option, and in addition to any
other remedy available, shall be entitled to terminate this Agreement and
receive a return of the Earnest Money.

4.6

Purchaser’s Representations and Warranties.Purchaser represents and warrants to
Seller that:

4.6.1Purchaser is a limited liability company validly existing in the State of
Delaware and authorized to do business in the State of California, and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.

4.6.2Purchaser has full power and authority to execute and deliver this
Agreement and to perform all obligations arising under this Agreement; the
execution by the undersigned on behalf of Purchaser, and the delivery and
performance of this Agreement by Purchaser, has been duly and validly authorized
by all necessary action on the part of Purchaser; and this Agreement constitutes
the legal, valid and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms, subject to debtor relief laws and
general principles of equity.

4.6.3No filing with, and no permit, authorization, consent or approval of, any
governmental authority or other person is necessary for the consummation by
Purchaser of its obligations under this Agreement, and neither the execution and
delivery of this Agreement by Purchaser, nor the consummation by Purchaser of
the transaction contemplated under this Agreement, nor compliance by Purchaser
with any of the terms of this Agreement will:  (i) violate any provision of the
organizational or governing documents of Purchaser; (ii) violate any applicable
law to which Purchaser is subject; or (iii) result in a violation or breach of
or constitute a default under any contract, agreement or other instrument or
obligation to which Purchaser is a party or by which Purchaser is bound.

4.6.4Neither Purchaser nor any beneficial owner of Purchaser: (a) is listed on
the Specially Designated Nationals and Blocked Persons List maintained by OFAC
pursuant to the Order and/or on any other Lists; (b) is a person or entity who
has been determined by competent authority to be subject to the prohibitions
contained in the Orders; or (c) is owned or controlled by, or acts for or on
behalf of, any person or entity on the Lists or any other person or entity who
has been determined by competent authority to be subject to the prohibitions
contained in the Order.

4.7

Seller’s Conditions to Closing.Seller’s obligation to close the transaction
contemplated under this Agreement is subject to the satisfaction at or prior to
Closing of the following conditions precedent (the “Seller’s Closing
Conditions”):

4.7.1Intentionally Omitted.  

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4.7.2The Escrow Agent shall have received the Purchase Price (subject to
prorations and adjustments pursuant to this Agreement) and be prepared to
disburse the same to Seller, subject to performance by Seller of its obligations
under this Agreement at Closing;

4.7.3Purchaser shall have deposited with Escrow Agent for the benefit of Seller,
all of the closing documents and other items set forth in Section 6.6.;

4.7.4The representations and warranties made by Purchaser in this Agreement
shall be true and correct in all material respects as of the Closing;

4.7.5Purchaser shall have performed its covenants and obligations under this
Agreement in all material respects.

The Seller’s Closing Conditions are for the benefit of Seller, and Seller shall
have the right to waive any of the Seller’s Closing Conditions at or prior to
Closing.

5.

COVENANTS OF SELLER

 

5.1Insurance.  From the Effective Date through and including the Closing Date,
Seller agrees to keep the Property insured for its full replacement cost against
fire and other hazards covered by extended coverage endorsement, including at
all time maintaining builder’s risk insurance at completed value, with wind and
flood coverage, and carry commercial general liability insurance against claims
for bodily injury, death and property damage occurring in, on or about the
Property, in an amount not less than Three Million and no/100 Dollars
($3,000,000.00), and to pay all premiums for such insurance prior to the
applicable due dates.

 

5.2Operation of Property.  Following completion of the Improvements, and through
and including the Closing Date, Seller agrees to operate and maintain the
Property in the normal course of business and in a commercially reasonable
manner.

 

5.3Third-Party Contracts. From the Effective Date through and including the
Closing Date, Seller agrees to enter into only those third-party service
contracts which are approved by Purchaser, in writing, in Purchaser’s sole
discretion (herein, the “Contracts”).

 

5.4Leasing of Property.  From the Effective Date through and including the
Closing Date, Seller agrees not to (i) enter into any leases, including Tower
Leases and Billboard Leases, without Purchaser’s prior written consent, to be
granted or withheld in Purchaser’s sole discretion, or (ii) amend, terminate or
accept the surrender of any  leases, including Tower Leases and Billboard
Leases, if any, or directly or indirectly grant any discounts or rental
concessions to any tenant of the Property, without the prior written consent of
Purchaser which may be granted or withheld in Purchaser’s sole
discretion.  Seller agrees to cause any existing lease(s) of all or any portion
of the Property to be terminated prior to Closing, excluding self storage leases
hereafter entered into by Seller with Purchaser’s prior written consent, and
hereby agrees to indemnify, defend and hold Purchaser harmless from and against
all loss, cost, expense and liability relating to any existing leases, which
obligation expressly shall survive Closing.  

 

5.5Listing of Property for Sale.  From the Effective Date through and including
the Closing Date, Seller agrees to not list, verbally or in writing, the
Property with any broker or otherwise solicit or make or accept any offers to
sell the Property or enter into any contracts or agreements, including back-up
contracts, regarding any disposition of the Property.

 

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5.6Obligation to Provide Notices.  Seller agrees to promptly provide Purchaser
with copies of any and all notices which Seller receives from and after the
Effective Date concerning (i) any proposed or threatened condemnation of the
Property, (ii) any alleged violations of the Property with respect to applicable
governmental laws or requirements, (iii) any litigation filed or threatened
against Seller or the Property, or (iv) any other matter that adversely affects,
or potentially could adversely affect, the Property.

 

5.7Construction of Improvements.

 

(a)Seller’s Construction Obligations.  Seller shall at all times diligently
prosecute “Completion of the Work”  (as hereinafter defined), including
construction of the Improvements (the "Work") with all due diligence strictly in
accordance with the Plans and Specifications and otherwise in accordance with
this Agreement.  Seller agrees to deliver Completion of the Work no later than
twelve (12) months after the expiration of the Approval Period (the “Outside
Completion Date”).  No changes may be made to the Plans and Specifications
without the express prior written consent of Purchaser, which may be granted or
withheld in Purchaser’s sole discretion.  Further, prior to Purchaser’s delivery
of the Closing Notice, no changes may be made to the Plans and Specifications by
Purchaser without the express prior written consent of Seller which may be
granted or withheld in Seller’s sole discretion.  The Outside Completion Date
and Closing Date shall each by extended by one day for each day of delay in
construction of the Improvements directly caused by: (i) changes to the Plans or
working drawings requested by Purchaser, or (ii) any other act or omission of
Purchaser or its employees, agents or representatives that directly results in a
construction delay.

 

(b)Changes in Plans and Specifications.  Any changes to the Plans and
specifications or working drawings requested by Purchaser shall be subject to
Seller’s approval, not to be unreasonably conditioned, withheld or delayed;
provided, however, that Seller’s consent to changes in the Plans and
Specifications requested by Purchaser prior to Purchaser’s delivery of the
Closing Notice may be granted or withheld in Seller’s sole discretion.  If so
approved by Seller, revised Plans and Specifications and/or working drawings
shall be prepared by Seller's architect and/or engineer at Purchaser's sole cost
and expense, and any excess costs of the Work resulting from such changes shall
also be at Purchaser's sole cost and expense, payable within thirty (30) days
after Seller’s demand therefor and in any event as a condition to Seller’s
implementing the requested changes.  Further, the Outside Completion Date and
Closing shall be extended by one day for each day of delay that may be result
from Purchaser’s changes to the Plans and Specifications.    

 

(c)Substantial Completion of Work.   At such time as Seller determines that
“Substantial Completion of the Work” (as defined below) has occurred, Seller
shall provide Purchaser with written notice thereof.  Within ten (10) days
following Purchaser’s receipt of such notice, Seller and Purchaser shall perform
a walk-through of the Improvements and, based upon such walk-through, Purchaser
shall prepare a detailed punchlist (the “Punchlist”), setting forth items not
completed or not constructed in substantial compliance with the Plans and
Specifications which need to be corrected or otherwise completed by Seller.  For
purposes of this Section 5.7(c), “Substantial Completion of the Work” shall mean
the stage in the progress of the Work when the Work is sufficiently complete in
accordance with the Plans and Specifications so that the Improvements can be
occupied for their intended use.  If Purchaser fails to provide the Punchlist to
Seller within five (5) business days following the walk-through, then Purchaser
shall be deemed to have waived its rights with respect to providing the
Punchlist.

 

(d)Completion of the Work.  The term "Completion of the Work" shall mean the
date upon which all of the following shall have occurred, as acknowledged by
Purchaser in writing:

 

 

(i)

All utilities required by the Plans and Specifications have been installed and
are fully operational;

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(ii)

the Work shall have been completed in accordance with the Plans and
Specifications, all applicable laws, ordinances, codes, rules and regulations,
including without limitation, building codes and standards, and an architect
designated by Purchaser and structural engineer designated by Purchaser (as to
foundations and slabs) shall have provided completion certificates to Purchaser
in form satisfactory to Purchaser at Purchaser’s sole cost;

 

 

(iii)

final and unconditional certificates of occupancy (the “Certificates of
Occupancy”) shall have been issued for the Property by all applicable
governmental authorities, and any and all other permits, licenses and approvals
from all applicable governmental authorities necessary for the intended use of
the Property shall have been issued, copies of all of which shall have been
provided to Purchaser;

 

 

(iv)

any and all assessments, public or private, special or general, arising out of
or in connection with, or in any manner pertaining to, the prosecution of the
Work or any portion thereof, including, but not limited to, paving assessments
and/or liens and assessments for or relating to the construction of sewer,
water, electric or other utility facilities, shall have been paid in full, and
Seller shall have delivered to Purchaser evidence of the same;

 

 

(v)

all amounts due to contractors, subcontractors and material suppliers with
respect to the Work shall have been paid in full, and no liens shall have been
filed or threatened with respect to the Work; provided that Seller may bond
around any such liens and defend any claims or actions, in a manner satisfactory
to the Title Company, so long as no exception is taken with respect to any such
lien or claim on the Title Policy;

 

 

(vi)

Seller shall have provided Purchaser with final lien waivers from the general
contractor and each subcontractor and supplier of material with respect to the
Work;

 

 

(vii)

Purchaser shall have obtained the Updated Survey, in form satisfactory to
Purchaser, reflecting completion of the Work;

 

 

(viii)

Seller shall have completed all work set forth on the Punchlist, provided same
has been timely submitted pursuant to Section 5.7(c) above, to Purchaser’s
satisfaction;

 

 

(ix)

The Land and Improvements shall be in a neat, clean and orderly condition, with
no debris, trash or construction equipment located thereon, and

 

 

(x)

Seller shall deliver to Purchaser a copy of a seismic study of the Improvements
that returns a Probable Maximum Loss Score (also known as a Scenario Upper Loss
Score) of twenty (20) or less

 

5.8Signage.  Seller agrees that Purchaser shall be entitled to install temporary
signage on the Land at any time following the Effective Date announcing the self
storage facility to be constructed on the Land; provided that Purchaser shall
not interfere with the construction of the Work, shall comply with all
applicable laws and regulations, and shall promptly remove such signage at its
sole cost in the event this transaction fails to Close.  Seller further agrees
that at any time following the Approval Period, Purchaser shall have the right
to add permanent signage to the Land and the Improvements, at Purchaser’s cost,
subject to any applicable governmental requirements and provided that in the
event that Closing fails to occur pursuant to this Agreement

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for any reason other than a default of Seller, Purchaser shall remove such
signage at its sole cost and expense within ten (10) days after Seller’s written
demand, which obligation shall be a Surviving Obligation.  

 

5.9Assignment of Contractor Warranties.  At the Closing, Seller shall assign to
Purchaser all warranties and guaranties under that certain Construction Contract
dated December 12, 2017 (the “Construction Agreement”), by and between Seller,
as owner, and Enviro Services, Inc., a Nevada corporation (“Contractor”), as
general contractor, a copy of which is attached hereto as Exhibit “E” and
incorporated herein, covering the construction of the Improvements, pursuant to
an Assignment of Contractor Warranties in form attached hereto as Exhibit “F”
and incorporated herein (the “Assignment of Contractor Warranties”).  The
Construction Agreement shall not be modified, amended or terminated in any
respect without Purchaser’s prior written consent, which may be granted or
withheld in Purchaser’s sole discretion.  

 

5.10Intentionally Omitted.

  

5.11Assignment of Subcontractor Warranties.  At the Closing, Seller shall cause
Contractor to assign to Purchaser, pursuant to an Assignment of Subcontractor
Warranties in form attached hereto as Exhibit “G” and incorporated herein (the
“Assignment of Subcontractor Warranties”), all of Contractor’s rights with
respect to the “Subcontractor Warranties” (as defined in the Assignment of
Subcontractor Warranties).

 

5.12Assignment of Architect’s Warranties.  At the Closing, Seller shall cause
Wallace Design Group, Inc., a California corporation (“Architect”), to assign to
Purchaser, pursuant to an Assignment of Architect’s Warranties in form attached
hereto as Exhibit “H” and incorporated herein (the “Assignment of Architect’s
Warranties”), all of Seller’s rights with respect to the “Architect’s
Warranties” (as defined in the Assignment of Architect’s Warranties).

 

5.13Seller Warranty.  At the Closing, Seller shall deliver to Purchaser a
construction warranty (the “Seller’s Construction Warranty”), in the form
attached hereto as Exhibit “I” and incorporated herein, warranting the
Improvements to be free from defects in materials or workmanship for a period of
twelve (12) months following the Closing Date  (the “Warranty Period”).  

    

6.
CLOSING

6.1

Closing.  Assuming that all conditions to closing have been satisfied and this
Agreement has not otherwise been terminated, the consummation of the transaction
contemplated hereby (the “Closing”) shall be held at the offices of the Escrow
Agent, located at the address set forth in Section 9.1 hereof, on the date (the
“Closing Date”) that is fifteen (15) days following Completion of the Work;
provided, however, that in the event Completion of the Work has not occurred by
the Outside Completion Date (as same may be extended pursuant to the terms of
Section 5.7(a) or (b) above), through no fault of Purchaser, and Purchaser has
performed all of its obligations under this Agreement, then Seller shall be in
default under this Agreement, and Purchaser shall be entitled to pursue any
remedies available to Purchaser under Section 8.1 below.  If Purchaser has not
closed escrow on the Closing Date, and provided that (i) all conditions
precedent to Purchaser’s obligations to close have been satisfied, and (ii)
Seller has performed all of Seller’s obligations under this Agreement, then
Seller may deliver written demand to Purchaser to close escrow on or before the
date which is ten (10) days after the Closing Date (the “Outside Closing
Date”).  If Purchaser, following receipt of such written demand, does not close
escrow on the Outside Closing Date, then Purchaser shall have no further cure
period and Seller shall not be required to provide Purchaser with any further
notice of Purchaser’s default. In such event, this Agreement shall be deemed
terminated without further act of either party, all rights, obligations and
liabilities of Seller and Purchaser

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under this Agreement (except the Surviving Obligations) shall cease, and Seller
shall retain the Earnest Money as liquidated damages.  Seller and Purchaser
agree that the Closing shall be consummated through an escrow closing with the
Escrow Agent acting as escrow agent, and neither party need be present at
Closing.      

6.2

Possession.  Possession of the Property shall be delivered to Purchaser at the
Closing, subject only to tenants in possession under the Leases.

6.3

Proration.  All rents, other amounts payable by the tenants under the Leases,
including the Tower Leases and Billboard Leases, if any, and all other income
with respect to the Property for the month in which the Closing occurs, to the
extent collected by Seller on or before the Closing Date, and real estate and
personal property taxes and other assessments with respect to the Property for
the year in which the Closing occurs, shall be prorated to the Closing Date,
with Purchaser receiving the benefits and burdens of ownership on the Closing
Date.  To the extent any such rents, real estate taxes, personal property taxes
and other assessments with respect to the Property are unknown or otherwise not
accounted for at Closing Seller’s obligation to pay Purchaser Seller’s prorata
share of said amounts (as calculated in accordance with the previous sentence)
shall survive Closing.  Should any supplemental real property taxes relating to
the Property and assessed for a period prior to Closing be due and payable on or
after Closing , such taxes shall be the sole responsibility of Seller, and
Seller hereby agrees to indemnify and hold Purchaser harmless therefrom, which
obligations of Seller expressly shall survive Closing.  Utilities shall be
canceled by Seller and reestablished in Purchaser’s name on the Closing Date, if
possible through commercially reasonable efforts; otherwise utilities shall be
prorated at Closing.  Any amounts unpaid under the Contracts which Purchaser
elects to assume at Closing shall be prorated between Seller and Purchaser at
Closing.  

(a)

If the Closing shall occur before rents and all other amounts payable by the
tenants under the Leases, including the Tower Leases and Billboard Leases, if
any, and all other income from the Property have actually been paid for the
month in which the Closing occurs, the apportionment of such rents and other
amounts and other income shall be upon the basis of such rents, other amounts
and other income actually received by Seller, with Purchaser receiving the
portion of all such rentals attributable to the period from and after Closing,
which proration obligation expressly shall survive Closing. Following Closing,
if any rents which are delinquent as of Closing are actually received by
Purchaser, in good funds, all such amounts shall be paid by Purchaser to Seller
within ten (10) days following Purchaser’s receipt thereof, to the extent, and
only to the extent, of any rental delinquencies owed by any such tenant to
Seller for the period prior to Closing, but only after rentals paid by any such
tenant are first applied to rental obligations owed by such tenant to Purchaser
for the period following Closing which are currently due and payable as of the
date of Purchaser’s receipt of such funds.  If, subsequent to the Closing, any
rents or other income are actually received by Seller, such rentals shall be
paid by Seller to Purchaser and applied by Purchaser to rentals owed by such
tenant for the period from and after Closing which are currently due and payable
as of the date of Seller’s receipt of such funds, with the balance of such
rentals, if any, to be retained by Seller to the extent of any rental
delinquencies owed by such tenant to Seller.  Seller agrees that, after the
Closing, it shall not file any action in an effort to collect any outstanding
rents that remain owing to Seller after the Closing.

(b)

If the Closing shall occur before the tax rate or the assessed valuation of the
Property is fixed for the then current year, the apportionment of taxes shall be
upon the basis of the tax rate for the preceding year, including all matters
appearing on the tax bill for such year, whether ad valorem or non-ad valorem,
applied to the latest assessed valuation.  Subsequent to the Closing, when the
tax rate and the assessed valuation of the Property are fixed for the year in
which the Closing occurs, the parties agree to adjust the proration of taxes
and, if necessary, to refund or repay such sums as shall be necessary to effect
such adjustment, which obligation expressly shall survive Closing.

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(c)

Seller shall pay all assessments, contributions, fees and related charges
required to be paid upon transfer of the Property pursuant to any declaration or
restriction affecting the Property.

The terms and provisions of this Section 6.3 shall expressly survive Closing.

6.4

Closing Costs and Credits.  Purchaser shall pay, on the Closing Date, (a)
one-half (1/2) of the escrow fees, (b) all title insurance costs relating to any
endorsements desired by Purchaser with respect to the Title Policy, (c) all
costs relating to the Survey and the Updated Survey, and (d) the fees of
Purchaser’s counsel.  Seller shall pay, on the Closing Date, (t) one-half (1/2)
of the escrow fees of the Escrow Agent, (u) all recording costs relating to the
Deed, (v) all costs and expenses of whatsoever nature relating to construction
of the Improvements, (w) all title insurance costs relating to the Title Policy
and mechanic’s lien coverage, (x) all applicable transfer taxes, grantor’s
taxes, documentary stamp taxes and similar charges relating to the transfer of
the Property, (y) all costs and expenses relating to retirement of any and all
indebtedness secured by the Property, including without limitation prepayment
penalties, yield maintenance fees, defeasance costs and the costs of recording
all mortgage cancellations, and (z) the fees of Seller’s counsel. Purchaser
shall receive a credit at Closing for all security deposits made by tenants
under the Leases and for any prepaid rents and other amounts related to months
following the month in which Closing occurs.  

6.5

Seller’s Obligations at the Closing. At the Closing, or at such other time as
indicated below, Seller shall take such action as the Escrow Agent reasonably
requires to consummate the transactions made the subject of this Agreement and
shall deliver to Purchaser (or cause to be delivered to Purchaser) the
following:

(a)

Deed.  Grant Deed (the “Deed”) conveying the Land and the Improvements to
Purchaser, in the form attached to this Agreement as Exhibit “B” and
incorporated herein, subject only to the Permitted Encumbrances.  The
description of the Land provided with the Updated Survey shall be the
description used in the Deed.

(b)

Assignment of Personal Property, Service Contracts, Warranties and Leases.  An
Assignment of Personal Property, Service Contracts, Warranties and Leases (the
“Assignment of Personal Property”), in the form attached to this Agreement as
Exhibit “D” and incorporated herein.

(c)

Evidence of Authority.  Such organizational and authorizing documents of Seller
as shall be reasonably required by the Escrow Agent to evidence Seller’s
authority to consummate the transactions contemplated by this Agreement.

(d)

Foreign Person.  An affidavit of Seller certifying that Seller is not a “foreign
person,” as defined in the federal Foreign Investment in Real Property Tax Act
of 1980, and the 1984 Tax Reform Act, as amended, in form attached to this
Agreement as Exhibit “C” and incorporated herein.

(e)

Leases.  The originals of all of the Leases, and the Tower Leases and Billboard
Leases, if any.

(f)

Contracts.  The originals of all of the Contracts.

(g)

Affidavit.  An affidavit in the form customarily required by the Escrow Agent to
remove any standard exceptions, including mechanics’ liens, parties in
possession and similar matters, together with a GAP Indemnity if required by
Escrow Agent.

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(h)

Reaffirmation Certificate.  A reaffirmation certificate in accordance with the
provisions of Section 4.3(a).

(i)

Title Policy.  The Title Policy, issued by the Escrow Agent on behalf of the
Title Company, in the form approved by Purchaser and subject only to the
Permitted Encumbrances; provided that in the event the Title Policy is not
available at Closing, then the Escrow Agent shall provide Purchaser at Closing,
at Purchaser’s option, with either (i) a “marked title commitment”, committing
to issue the Title Policy in the form approved by Purchaser and subject only to
the Permitted Encumbrances, or (ii) a proforma owner’s title policy, in the form
approved by Purchaser and subject only to the Permitted Encumbrances, with the
Title Policy to be delivered to Purchaser as promptly after Closing as
reasonably possible.

(j)

Contractor Warranties.  The Assignment of Contractor Warranties, executed by
Seller and Contractor;

(k)

Subcontractor Warranties.  The Assignment of Subcontractor Warranties, executed
by Contractor;

(l)

Architect’s Warranties.  The Assignment of Architect’s Warranties, executed by
Seller and Architect;

(m)

Seller’s Warranties.  The Seller’s Construction Warranty;

(n)

California Withholding.  California Form 593-C with respect to Seller, as to any
applicable  exemption from California withholding tax.   If no exemption is
claimed, the Escrow Agent, in its capacity as escrow holder, shall withhold the
required amount of California state tax from Seller’s proceeds of sale and remit
same to the California Franchise Tax Board;

(o)

Warranty Escrow Agreement.  The Warranty Escrow Agreement; and

(p)

Seller’s Closing Statement.  Seller shall execute and deliver to the Title
Company a Seller’s Closing Statement, in conformity with the terms of this
Agreement, and otherwise in form satisfactory to Seller.

6.6

Purchaser’s Obligations at the Closing.  At the Closing, Purchaser shall deliver
to Escrow Agent the following:

(a)

Purchase Price.  The Purchase Price (net of the Earnest Money, to be applied as
a credit against the Purchase Price, and subject to adjustment in connection
with prorations, credits and charges hereunder), payment of which shall be made
by wire transfer of immediately available funds to the account of the Escrow
Agent;

(b)

Contractor Warranties.  The Assignment of Contractor Warranties, executed by
Purchaser;

(c)

Subcontractor Warranties.  The Assignment of Subcontractor Warranties, executed
by Purchaser;

(d)

Architect’s Warranties.  The Assignment of Architect’s Warranties, executed by
Purchaser;

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(e)

Evidence of Authority.  Such organizational and authorizing documents of
Purchaser as shall be reasonably required by the Escrow Agent to evidence
Purchaser’s authority to consummate the transactions contemplated by this
Agreement;

(f)

Warranty Escrow Agreement.  The Warranty Escrow Agreement; and

(g)

Purchaser’s Closing Statement.  Purchaser shall execute and deliver to the Title
Company a Purchaser’s Closing Statement, in conformity with the terms of this
Agreement, and otherwise in form satisfactory to Purchaser.

7.
RISK OF LOSS

7.1

Condemnation.  If, prior to the Closing, action is initiated to take all or any
portion of the Property, by eminent domain proceedings or by deed in lieu
thereof, Purchaser may either at or prior to Closing (a) terminate this
Agreement, in which event the Earnest Money shall be refunded to Purchaser,
without the consent or joinder of Seller being required and notwithstanding any
contrary instructions which might be provided by Seller, and neither party shall
have any further right or obligation hereunder, other than the Surviving
Obligations, or (b) consummate the Closing, in which latter event all of
Seller’s assignable right, title and interest in and to the award of the
condemning authority shall be assigned to Purchaser at the Closing and there
shall be no reduction in the Purchase Price.

7.2

Casualty.  Except for Purchaser’s liability for damage or injury arising under
Paragraph 4.2 of this Agreement, Seller assumes all risks and liability for
damage to or injury occurring to the Property by fire, storm, accident, or any
other casualty or cause until the Closing has been consummated.  If the Property
suffers any damage equal to or in excess of Seventy Five Thousand and no/100
Dollars ($75,000.00) prior to the Closing from fire or other casualty, other
than damage or injury for which Purchaser is expressly liable under this
Agreement, Purchaser may either at or prior to Closing (a) terminate this
Agreement, in which event the Earnest Money shall be refunded to Purchaser,
without the consent or joinder of Seller being required and notwithstanding any
contrary instructions which might be provided by Seller, and neither party shall
have any further right or obligation hereunder, other than the Surviving
Obligations, or (b) consummate the Closing, in which latter event all of
Seller’s right, title and interest in and to the proceeds of any insurance
covering such damage, and including any and all rent loss insurance proceeds
relating to the period from and after the Closing Date, shall be assigned to
Purchaser at the Closing and Purchaser shall receive a credit against the
Purchase Price at Closing in an amount equal to the sum of (i) Seller’s
deductible under its insurance policy and (ii) the amount of any uninsured or
underinsured loss.  If the Property suffers any damage less than Seventy Five
Thousand and no/100 Dollars ($75,000.00) prior to the Closing, Purchaser will
consummate the Closing and accept the assignment of the proceeds of any
insurance covering such damage, including any and all rent loss insurance
proceeds relating to the period from and after the Closing Date, plus receive a
credit against the Purchase Price in an amount equal to the sum of (i) Seller’s
deductible under its insurance policy and (ii) the amount of any uninsured or
underinsured loss, and there shall be no other reduction in the Purchase Price.

8.
DEFAULT

8.1Breach by Seller.  Subject to Section 8.3 below, in the event that Seller
fails to consummate this Agreement for any reason, except Purchaser’s default or
a termination of this Agreement by Purchaser or Seller pursuant to a right to do
so under the provisions hereof, Purchaser shall be entitled, as Purchaser’s sole
and exclusive remedy, to either (i) pursue the remedy of specific performance of
Seller’s obligations under this Agreement; provided, however, that in the event
specific performance for any reason is not

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available, then Purchaser shall be entitled to receive a refund of the Earnest
Money and further receive reimbursement of its out of pocket costs from Seller
as described in Section 8.1(ii) below, or (ii) terminate this Agreement, receive
a refund of the Earnest Money, and receive reimbursement from Seller for any and
all out of pocket costs incurred by Purchaser or any affiliate of Purchaser in
connection with this Agreement or the transaction contemplated hereby not to
exceed the sum of  One Hundred Thousand and no/100 Dollars ($100,000.00).  In
connection with a default by Seller under this Agreement, Purchaser shall in no
event be entitled to recover, and hereby waives any and all claims for,
consequential, special, indirect, punitive or exemplary damages and/or lost
profits.  

8.2Breach by Purchaser. In the event ESCROW FAILS TO CLOSE DUE TO a default by
Purchaser under this Agreement not cured within the applicable notice and cure
period set forth in Section 8.3 below, Purchaser and Seller agree that Seller
would suffer damages in an amount which would be impractical and extremely
difficult to ascertain.  In addition, Purchaser wishes to have a limitation
placed upon Purchaser’s potential liability in the event of a default by
Purchaser, and wishes to induce Seller to waive other remedies.  Purchaser and
Seller, after due negotiation, agree that the amount of the EARNEST MONEY
represents a reasonable estimate of the damages which Seller will sustain IF
ESCROW FAILS TO CLOSE DUE TO AN event of a default by Purchaser WHICH IS NOT
CURED WITHIN THE APPLICABLE NOTICE AND CURE PERIOD. In the event of a default by
Purchaser WHICH IS NOT CURED WITHIN THE APPLICABLE NOTICE AND CURE PERIOD,
Seller may terminate this Agreement by written notice to Purchaser, cancel the
escrow and retain the EARNEST MONEY as liquidated damages.  Such retention of
the EARNEST MONEY is Seller's sole and exclusive remedy and is intended to
constitute liquidated damages to Seller.  Seller waives any rights it may have
to seek specific performance under California Civil Code section
3389.  Following termination of this Agreement, cancellation of the escrow, and
retention of the EARNEST MONEY as liquidated damages, Purchaser and Seller shall
have no further rights or obligations under this Agreement, except for the
Surviving Obligations.  The parties have read and understand the provisions of
this section 8.2 and by their signatures immediately below agree to be bound by
its terms.

 

SELLER:PURCHASER:

 

 

/s/ david a. morelli/s/ h. michael schwartz

 

8.3Notice and Cure.  In the event of a default by Seller or Purchaser under this
Agreement, the non-defaulting party shall provide the defaulting party with
notice and ten (10) days to cure such default, prior to pursuing any remedies
available with respect to such default; provided, however, that (i) no such
notice and cure shall be provided with respect to a party’s default in failing
to timely close, (ii) Seller shall only be entitled to receive no more than
three (3) such notices with respect to Seller’s construction obligations under
this Agreement, and (iii) in no event shall any such notice and cure period
result in an extension of the Closing Date or the Outside Completion Date.

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8.4Limitations on Seller’s Liability.  Notwithstanding any provisions contained
in this Agreement: (a) the period of limitations and survival with respect to
the representations and warranties of Seller under this Agreement (collectively,
“Seller’s Representations and Warranties”) shall expire upon the date which is
twelve (12) months following the date of Closing, and (b) Seller’s liability for
any and all of Seller’s Representations and Warranties shall be limited to Five
Hundred Thousand and no/100 Dollars ($500,000.00) in the aggregate with respect
to a breach of Seller’s Representations and Warranties hereunder, as to which
Purchaser notifies Seller and institutes legal proceedings against Seller within
twelve (12) months following the Closing Date, which notice must describe the
breach.  In no event shall Seller be liable to Purchaser for consequential,
special, indirect, punitive, or exemplary damages, whatever the nature of a
breach by Seller of its obligations under this Agreement, and Purchaser hereby
waives all claims for consequential, special, indirect, punitive, or exemplary
damages and/or lost profits it may have against Seller.  The foregoing
limitation and waiver shall survive Closing and shall not merge with the Deed or
title to the Property.

 

9.
MISCELLANEOUS

9.1

Notices.  All notices, demands and requests which may be given or which are
required to be given by either party to the other, and any exercise of a right
of termination provided by this Agreement, shall be in writing and shall be
deemed effective either:  (a) on the date personally delivered to the address
below, as evidenced by written receipt therefor, whether or not actually
received by the person to whom addressed; (b) on the third (3rd) business day
after being sent, by certified or registered mail, return receipt requested,
postage prepaid, addressed to the intended recipient at the address specified
below; (c) on the first business day after being deposited into the custody of a
nationally recognized overnight delivery service such as Federal Express
Corporation, addressed to such party at the address specified below, or (d) on
the date delivered by facsimile to the respective numbers specified below,
provided confirmation of facsimile is received and further provided any such
facsimile notice shall be sent by one of the other permitted methods of
providing notice on the next succeeding business day.  For purposes of this
Section 9.1, the addresses of the parties for all notices are as follows (unless
changed by similar notice in writing given by the particular party whose address
is to be changed):

If to Seller:

Morelli Brothers Enterprises, LLC

3450 N. Verdugo Road

Glendale, CA 91208

Attn: David A. Morelli

Tel:  (818) 402-2675

Fax: (818) 957-7961

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with a copy to:

Jensen & Jensen, LLP

5100 Campus Drive, Suite 200

Newport Beach, CA 92660

Attn: Jeffrey V. Jensen

Tel:  (949) 757-0788

Fax: (949) 261-8670

 

If to Purchaser:

SST IV Acquisitions, LLC

10 Terrace Road 

Ladera Ranch, CA 92694 

Attn: H. Michael Schwartz

Tel:  (949) 429-6600

Fax: (949) 429-6606

 

with copies to:

SST IV Acquisitions, LLC

8235 Douglas Ave #815

Dallas, Texas 75225

Attn: Wayne Johnson

Tel:  (214) 217-9797

Fax: (949) 429-6606; and

 

Mastrogiovanni Mersky & Flynn, P.C.
2001 Bryan Street, Suite 1250Dallas, Texas 75201
Attn:  Charles Mersky, Esq.
Tel:  (214) 922-8800
Fax:  (214) 922-8801

 

If to Escrow Agent:

Commonwealth Land Title

4100 Newport Place Drive, Suite 120

Newport Beach, CA 92660

Attn: Kelly Ralph

Tel:  (949) 724-3135

Fax: (714) 459-7199

 

9.2

Real Estate Commissions.  Pursuant to a separate written agreement, Seller has
agreed to pay Self Storage Investment Services, Inc. (“Broker”) a real estate
commission upon consummation of the transaction contemplated by this
Agreement.  Except for Seller’s agreement with Broker, neither Seller nor
Purchaser has authorized any broker or finder to act on any party’s behalf in
connection with the sale and purchase hereunder and neither Seller nor Purchaser
has dealt with any broker or finder purporting to act on behalf of any other
party.  Purchaser agrees to indemnify, defend and hold harmless Seller for, from
and against any and all claims, losses, damages, costs or expenses of any kind
or character arising out of or resulting from any agreement, arrangement or
understanding alleged to have been made by Purchaser or on Purchaser’s behalf
with any broker or finder in connection with this Agreement or the transaction
contemplated hereby.  Seller agrees to indemnify, defend and hold harmless
Purchaser for, from and against any and all claims, losses, damages, costs or
expenses of any kind or character arising out of or resulting from any
agreement, arrangement or understanding alleged to have been made by Seller or
on Seller’s behalf with any broker or finder in connection with this Agreement
or the transaction contemplated hereby, including Broker.  Notwithstanding
anything to the contrary contained herein, this Section 9.2 shall survive the
Closing or any earlier termination of this Agreement.

 

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9.3

Entire Agreement. This Agreement embodies the entire agreement between the
parties relative to the subject matter hereof, and there are no oral or written
agreements between the parties, nor any representations made by either party
relative to the subject matter hereof, which are not expressly set forth herein.

9.4

Amendment.  This Agreement may be amended only by a written instrument executed
by the party or parties to be bound thereby.

9.5

Headings.  The captions and headings used in this Agreement are for convenience
only and do not in any way limit, amplify, or otherwise modify the provisions of
this Agreement.

9.6

Time of Essence.  Time is of the essence of this Agreement; however, if the
final date of any period which is set out in any provision of this Agreement, or
the date for performance specified in this Agreement, falls on a Saturday,
Sunday or legal holiday under the laws of the United States or the State of
California, then, in such event, the time of such period, or the date for such
performance, shall be extended to the next day which is not a Saturday, Sunday
or legal holiday.

9.7

Governing Law.  This Agreement shall be governed by the laws of the State of
California and the laws of the United States pertaining to transactions in such
State.

9.8

Successors and Assigns; Assignment.  This Agreement shall bind and inure to the
benefit of Seller and Purchaser and their respective heirs, executors,
administrators, personal and legal representatives, successors and
assigns.  Notwithstanding anything contained in this Agreement to the contrary,
Purchaser shall be entitled to assign this Agreement, without Seller’s consent,
one or more times, to (i) an affiliate of Purchaser, (ii) an entity in which SS
Growth Operating Partnership, L.P., a Delaware limited partnership, Strategic
Storage Growth Trust, Inc., a Maryland corporation, Strategic Storage Operating
Partnership II, L.P., a Delaware limited partnership, Strategic Storage Trust
II, Inc., a Maryland corporation, Strategic Storage Trust IV, Inc., a Maryland
corporation, and/or Strategic Storage Operating Partnership IV, L.P., a Delaware
limited partnership, has a direct or indirect ownership interest, (iii) a real
estate investment trust of which Purchaser or an affiliate of Purchaser is the
external advisor, or (iv) a Delaware statutory trust of which Purchaser or an
affiliate of Purchaser is the signatory trustee; provided, however, that, no
such assignment shall release or relieve Purchaser of any liability hereunder.

9.9

Invalid Provision.  If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws, such provision shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement; and, the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by such illegal, invalid, or
unenforceable provision or by its severance from this Agreement.

9.10

Attorneys’ Fees.  In the event it becomes necessary for either party hereto to
file suit to interpret or enforce this Agreement or any provision contained
herein, the party prevailing in such suit shall be entitled to recover, in
addition to all other remedies or damages, as provided herein, reasonable costs
and attorneys’ and experts’ fees incurred in such suit.

9.11

Multiple Counterparts.  This Agreement may be executed in a number of identical
counterparts which, taken together, shall constitute collectively one agreement;
in making proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart with each party’s
signature.  Facsimile and/or electronic signature pages shall be effective for
purposes of this Section 9.11.

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

9.12

Effective Date.  For purposes of this Agreement, the “Effective Date” shall mean
the later of the dates that this Agreement has been executed by Seller and
Purchaser, as indicated on the signature page hereof, unless this Agreement is
executed by Seller and Purchaser on the same date, in which event such same date
shall constitute the Effective Date.

9.13

Exhibits.  The following schedules, exhibits and other documents are attached to
this Agreement and incorporated herein by this reference and made a part hereof
for all purposes:

(a)

Schedule A, List of Due Diligence Documents

 

(b)

Schedule B, Copy of Plans and Specifications

 

(c)

Exhibit A, Legal description of the Land

 

(d)

Exhibit B, Form of the Deed

 

(e)

Exhibit C, Form of the Non-Foreign Affidavit;

 

(f)

Exhibit D, Form of the Assignment of Personal Property

 

(g)

Exhibit E, Construction Agreement

 

(h)

Exhibit F, Form of the Assignment of Contractor Warranties

 

(i)

Exhibit G, Form of the Assignment of Subcontractor Warranties

 

(j)

Exhibit H, Form of the Assignment of Architect’s Warranties

 

(k)

Exhibit I, Form of the Seller’s Construction Warranty

9.14

Intentionally Omitted.

9.15.

Tax-Deferred Exchange.  Each party will, upon request by the other party,
cooperate as reasonably required to assist the other party in facilitating a
tax-deferred exchange.  Notwithstanding the foregoing, neither party will be
required to undertake or incur any liabilities or obligations or expend any sums
of money in connection with a proposed tax-free exchange for the benefit of the
other party.

9.16Confidentiality.  Seller and Purchaser hereby covenant and agree that, at
all times after the Effective Date and continuing after the Closing, unless
consented to in writing by the other party (which consent may be granted or
withheld in the sole discretion of the party whose consent is being requested),
no press release or other public disclosure concerning this transaction shall
disclose the Purchase Price or any other economic terms of this transaction, and
each party agrees to use best efforts to prevent disclosure of any such
restricted information by any third party.  Notwithstanding the foregoing, (i)
each party shall be entitled to make disclosures concerning this Agreement and
materials provided hereunder to its lenders, attorneys, accountants, employees,
agents and other service professionals as may be reasonably necessary in
furtherance of the transactions contemplated hereby, (ii) Purchaser shall be
entitled to make disclosures concerning this transaction and materials provided
hereunder to its potential debt and equity sources, and (iii) each party shall
be entitled to make such disclosures concerning this Agreement and materials
provided hereunder as may be necessary to comply with (a) any court order, (b)
the directive of any applicable governmental authority, or (c) any applicable
securities law, rule and/or regulation.   The provisions of this Section 9.16
shall survive Closing or any termination of this Agreement.

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9.17

Independent Consideration.  Contemporaneously with the execution hereof,
Purchaser shall deliver to Seller the sum of One Hundred and no/100 Dollars
($100.00), representing independent consideration for the Approval Period and
Purchaser’s right to terminate this Contract during the Approval Period.

9.18

Non-Competition.  Seller shall deliver a non‑compete agreement (the “Non-Compete
Agreement”) to Purchaser at Closing in form and content satisfactory to
Purchaser, executed by Seller, David A. Morelli and Timothy M. Morelli
(collectively, the “Restricted Parties”).  The Non-Compete Agreement shall
provide that neither the Restricted Parties nor any of their respective
principals, partners, members, managers, directors, officers, shareholders
and/or affiliates may directly or indirectly develop, own, lease, manage or
operate a self storage facility for a period of three (3) years subsequent to
the Closing within a three (3) mile radius of the Property.

9.19Environmental.  In the event that Purchaser determines, prior to Closing,
that there are conditions on, at or relating to the Property which are in
non-compliance with Environmental Requirements and such conditions did not exist
prior to the expiration of the Approval Period and that will require remediation
under any applicable federal or state laws, then, notwithstanding anything to
the contrary contained herein, Purchaser may terminate this Agreement on or
before the Closing Date upon written notice to Seller, in which event, the
Earnest Money shall be immediately returned to Purchaser, without the consent or
joinder of Seller being required and notwithstanding any instructions to the
contrary which might be provided by Seller, and thereafter neither party hereto
shall have any further rights or obligations under this Agreement except for the
Surviving Obligations.

 

9.20Approval of Plans and Specifications.  Seller has informed Purchaser that
the Plans and Specifications have not yet been prepared.  In that regard, Seller
agrees to provide Purchaser with a copy of Seller’s proposed Plans and
Specifications not later than March 30, 2018.  Such proposed Plans and
Specifications shall be subject in all respects to Purchaser’s prior written
approval, which may be granted or withheld in Purchaser’s sole discretion.  In
the event that Purchaser so approves Seller’s proposed Plans and Specifications,
then the parties shall enter into an Amendment to this Agreement for the purpose
of incorporating such Plans and Specifications into this Agreement as Schedule B
hereof, and such approved plans and specifications shall be deemed to be the
“Plans and Specifications”, as defined in this Agreement.  In the event that
Purchaser, in its sole opinion, finds Seller’s proposed Plans and Specifications
to be unsatisfactory due to the final unit mix and resulting economic impact or
site plan layout, then Purchaser shall be entitled to terminate this Agreement
upon written notice to Seller, whereupon the Earnest Money shall be immediately
returned by Escrow Agent to Purchaser, without the consent or joinder of Seller
being required and notwithstanding any contrary instructions which might be
provided by Seller, and neither party shall have any further obligations
hereunder except for the Surviving Obligations.

 

9.21Acquisition of Land.  Seller has informed Purchaser that (i) title to the
Land is currently held by 5216 Walnut Grove Ave., LLC, a Delaware limited
liability company (“5216”) formed pursuant to that certain Limited Liability
Company Agreement of 5216 Walnut Grove Ave., LLC, dated August 10, 2017 (the
“5216 Operating Agreement”), (ii) Seller’s affiliate, Morelli Brothers
Partnership I, LLC, a California limited liability company (“MBP I”) is the
“Morelli Member” under the 5216 Operating Agreement, and (iii) Seller and MBP I
are under the common ownership of David A. Morelli and Timothy M.
Morelli.  Seller agrees that, prior to commencing construction of the Work,
Seller shall cause MBP I to (i) exercise the Morelli Member Call Option, as
provided for in Section 6.5 of the 5216 Operating Agreement, and (ii) convey the
Land to Seller.  Seller agrees to acquire title to the Land not later than March
30, 2018, and provide Purchaser with written evidence thereof on or before such
date, failing which Purchaser shall be entitled to terminate this Agreement upon
written notice to Seller, whereupon the Earnest Money shall be immediately
returned by Escrow Agent to Purchaser, without the consent or joinder of

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Seller being required and notwithstanding any contrary instructions which might
be provided by Seller, and neither party shall have any further obligations
hereunder except for the Surviving Obligations.  

 

 

[Signature page to follow and remainder of page intentionally left blank]

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Executed to be effective as of the Effective Date.

SELLER:

 

Morelli Brothers Enterprises, LLC, a California limited liability company

 

By: /s/ David A. Morelli

Name: David A. Morelli

Title: Managing Member

 

Date: January 4, 2018

 

 

PURCHASER:

 

SST IV Acquisitions, LLC, a Delaware limited liability company

 

By: /s/ H. Michael Schwartz

Name: H. Michael Schwartz

Title: Chief Executive Officer

 

Date: January 4, 2018

 

 

 

 

The undersigned Escrow Agent hereby acknowledges receipt of (i) a fully executed
copy of this Agreement on the 4th day of January, 2018, and (ii) the Two Hundred
Thousand and no/100 Dollar ($200,000.00) earnest money deposit on the 8th day of
January, 2018, and agrees to hold and dispose of the Earnest Money strictly in
accordance with the provisions of this Agreement.  Seller and Purchaser hereby
designate the Escrow Agent as the “Real Estate Reporting Person” with respect to
the transaction contemplated by this Agreement, for purposes of compliance with
Section 6045(e) of the Tax Reform Act of 1986, as amended, and the Escrow Agent,
by its execution below, hereby accepts such designation.

 

ESCROW AGENT:

 

Commonwealth Land Title

 

By: /s/ Kelly Ralph

Name: Kelly Ralph

Title: AVP / Escrow Officer