Document:

Exhibit 10.1

 

Exhibit 10.1

SECOND AMENDMENT TO THE

AMENDMENT AND RESTATEMENT OF THE

EQUITY INCENTIVE PLAN OF

MANOR CARE, INC.

     WHEREAS, Manor Care, Inc. (“Company”) has adopted the Amendment and Restatement of the Equity
Incentive Plan of Manor Care, Inc. (“Plan”) for the benefit of key employees, directors and
consultants;

     WHEREAS, pursuant to Section 11.2, the Compensation Committee of the Board of Directors (the
“Committee”) has the authority to amend the Plan; and

     WHEREAS, at a meeting on October 6, 2005, the Committee approved the following amendments to
the Plan.

     NOW THEREFORE, in consideration of the foregoing, the Plan is hereby amended, effective as of
October 6, 2005 as follows:

     1. Section 1.4 of the Plan is amended to read as follows:

        “Award” shall mean an Option, Restricted Stock, Stock Appreciation Rights or RSU Award made
pursuant to this Plan.

     2. The provisions of Article I of the Plan are amended by adding the following provisions:

     1.35. “Period of Restriction” means the period during which the vesting of a RSU is limited
and the units are subject to substantial risk of forfeiture.

     1.36. “Plan Restrictions” means the restrictions set forth in Article VIII hereof on any
transfer of Common Stock, or any interest therein, which is the subject of a Restricted Stock Award
granted hereunder or the restrictions set forth in Article XII hereof on receiving the benefit of a
RSU Award.

     1.37. “RSU” means a restricted stock unit. An RSU Award granted to an Employee, Outside
Director or Consultant pursuant to Article XII herein shall be settled by the delivery of one share
of Common Stock for each RSU as specified in the applicable RSU Award Agreement. The Award of an
RSU represents the promise of the Company to deliver Common Stock at the end of the Period of
Restriction (or such later date as provided by the RSU Award Agreement) in accordance with and
subject to the terms and conditions of the applicable RSU Award Agreement, and is not intended to
constitute a transfer of “property” within the meaning of

 

 

Section 83 of the Internal Revenue Code unless and until the Common Stock is actually delivered.

     1.38. “RSU Award Agreement” means the written agreement between the Holder and the Company
relating to the grant of RSUs to the Holder.

     3. The provisions of the Plan are further amended by adding Article XII as follows:

ARTICLE XII

RSU Awards

     12.1. Eligibility. Subject to the Award Limit, RSUs may be awarded to any Employee, Outside
Director or Consultant who the Administrator selects as eligible to receive such RSUs .

     12.2. Termination. If during the Period of Restriction the Holder incurs a Termination of
Consultancy, Termination of Directorship or Termination of Employment, as applicable , the RSU
Award Agreement shall provide the extent to which the Holder shall receive any benefit pursuant to
such RSU Award or whether all or any portion of such RSU Award shall be forfeited. The Holder
shall have no further interest in any RSU Award that is forfeited.

     12.3. General. The Administrator may, from time to time, designate those Employees, Outside
Directors or Consultants to be granted RSU Awards under the Plan, the number of RSUs to be granted
in an RSU Award, the terms of the RSUs, and such other conditions as the Administrator may deem
appropriate. Not all grants of RSU Awards need to be on the same terms and conditions even though
granted at the same time, and the terms of RSU Award Agreements may vary from time to time and from
Holder to Holder, depending upon the purpose of the RSU Award; provided, however,
all RSU Awards shall be subject of the provisions of Section 12.7 hereof.

     12.4. Limitation. The Period of Restriction on any RSU Award may be of any length of time
and/or may have the Period of Restriction shortened or established by Performance Criteria as
determined by the Administrator.

     12.5. Additional Restrictions. RSU Awards shall be expressly subject to the terms and
conditions of this Article XII, but the Administrator may establish additional restrictions,
including Performance Criteria, on the settlement of any RSU Award.

     12.6. Plan Restrictions. During the Period of Restriction for any RSU Award, a Holder may
not, voluntarily or involuntarily, sell, assign, encumber, pledge or otherwise transfer any
interest the Holder has in the RSU Award otherwise than by will or the law of descent and
distribution. Any attempted sale, assignment, encumbrance, pledge or other transfer of the RSU
interest in derogation of these restrictions shall result in a forfeiture to the Corporation of the
RSU Award(s) subject to such attempted transfer.

 

 

     12.7. Award Agreement. Each person granted an RSU Award shall enter into an RSU Award
Agreement with the Company in a form specified by the Administrator, agreeing to the terms and
conditions of the RSU Award (including whether the Holder will be entitled to dividend equivalents)
and such other matters as the Administrator shall in its sole discretion determine, including any
additional conditions of forfeiture. The execution and delivery of the RSU Award Agreement by the
Holder of the RSU Award shall be a condition precedent to the Holder having any interest in the RSU
Award. Failure to execute and deliver the RSU Award Agreement within not less than sixty (60) days
after the grant of an RSU Award may terminate the RSU Award upon the determination of the
Administrator. If any Holder forfeits any RSU Award, or any such award otherwise terminates with
respect to any RSUs without the Plan Restrictions being terminated, the Holder shall have no
further interest in such RSUs.

     IN WITNESS WHEREOF, the Company has caused this amendment to the Plan to be executed by its
duly authorized officer as of October 6, 2005.

	 	 	 	 	 
	 

	 	MANOR CARE, INC.	 	 
	 
	 	 	 	 
	 

	 	  /s/ R. Jeffrey Bixler
	 	 
	 

	 	 	 	 
	 

	 	R. Jeffrey Bixler, SecretaryEX-10.1

 

Exhibit 10.1

$72,457,510.00

Effective as of November 1, 2005

Secured Promissory Note

FOR VALUE RECEIVED, the undersigned, YSI XX LP, a Delaware limited partnership, whose
address is 6745 Engle Road, Cleveland, Ohio 44130 (the “Borrower”), promises to pay Seventy-Two
Million Four Hundred Fifty-Seven Thousand Five Hundred Ten Dollars and No Cents ($72,457,510.00),
together with interest according to the terms of this secured promissory note (this “Note”), to the
order of TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY, a New York corporation (together with any
future holder, the “Lender”), whose address is c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood
Road, N.E., Cedar Rapids, Iowa 52499-5443. Capitalized terms used but not defined in this Note
shall have the meanings assigned to them in the Deed of Trust, as defined in Section 12 below.

	1.	 	CONTRACT INTEREST RATE
	 
	 	 	The principal balance of this Note shall bear interest at the rate of the lesser of
(i) Five and Ninety-Seven One Hundredths percent (5.97%) per annum (the “Note Rate”) and
(ii) the Maximum Lawful Rate (as defined in Section 24.1 below). Interest shall be
calculated in arrears based on a 360-day year having twelve thirty-day months.
	 
	2.	 	SCHEDULED PAYMENTS

	 	2.1	 	Prepayment of Interest for the Month of Funding
	 
	 	 	 	Unless the funding of the loan evidenced by this Note (together with all
additional charges, advances and accruals, the “Loan”) occurs on the first day of a
calendar month, the Borrower shall prepay, on the date of the funding, interest due
from the date of the funding through and including the last day of the calendar
month in which the funding occurs.
	 
	 	2.2	 	Monthly Payments
	 
	 	 	 	On the first day of December, 2005 and on the first day of each subsequent
calendar month through October 1, 2015, the Borrower shall pay an installment in
the amount of FOUR HUNDRED SIXTY-FIVE THOUSAND FIVE HUNDRED SIXTEEN AND 90/100
DOLLARS ($465,516.90). Monthly installments of principal and interest shall be made
when due, regardless of the prior acceptance by the Lender of unscheduled payments.
	 
	 	2.3	 	Final Payment
	 
	 	 	 	The Loan shall mature on the first day of November, 2015 (the “Maturity
Date”), when the Borrower shall pay its entire principal balance, together with all
accrued interest and any other amounts owed by the Borrower under this Note or
under any of the other documents entered into now or in the future in connection
with the Loan (the “Loan Documents”).

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	3.	 	BALLOON PAYMENT ACKNOWLEDGMENT
	 
	 	 	The Borrower acknowledges that the scheduled monthly payments referred to in Section 2
will not amortize fully the principal sum of this Note over its term, resulting in a
“balloon” payment at maturity. Any future agreement to extend this Note or refinance the
Indebtedness it evidences may be made only by means of a writing executed by a duly
authorized officer of the Lender.
	 
	4.	 	APPLICATION OF MONTHLY PRINCIPAL AND INTEREST PAYMENTS
	 
	 	 	When the Lender receives a monthly principal and interest payment, the Lender shall
apply it first to interest in arrears for the previous month and then to the amortization
of the principal amount of this Note, unless other amounts are then due under this Note or
the other Loan Documents. If other amounts are due when a regular monthly payment is
received, the Lender shall apply the payment first to accrued interest and then, at its
discretion, either to those other amounts or to principal.
	 
	5.	 	DEFAULT INTEREST
	 
	 	 	If a Default exists (as defined in Section 9 below) the outstanding principal balance
of this Note shall, at the option of the Lender, bear interest at a rate (the “Default
Rate”) equal to the lesser of (i) sixteen percent (16%) per annum and (ii) the Maximum
Lawful Rate. If interest has accrued at the Default Rate during any period, the difference
between such accrued interest and interest which would have accrued at the Note Rate during
such period shall be payable on demand. If a court of competent jurisdiction determines
that any interest charged has exceeded the maximum rate allowed by law, the excess of the
amount collected over the legal rate of interest will be applied to the Indebtedness as a
principal prepayment without premium, retroactively, as of the date of receipt, or returned
to the Borrower if the Indebtedness has been fully paid.
	 
	6.	 	LATE CHARGE
	 
	 	 	If the Lender does not receive any scheduled monthly principal and interest payment on
or before the tenth (10th) day of the calendar month in which it is due, the Lender will
send the Borrower written Notice that a late charge equal to five percent (5%) of the late
payment has accrued. The Borrower shall pay any such late charge on or before the tenth day
of the calendar month following the month during which the late payment was scheduled to
have been received.
	 
	7.	 	PREPAYMENT
	 
	 	 	This Note is closed to prepayment prior to and during the first twenty-four (24) full
calendar months of its term (the “Lock Period”). Thereafter, the principal balance of this
Note may be prepaid upon not less than sixty (60) days’ prior written Notice to the Lender.
At the time of any prepayment, the Borrower shall pay all accrued interest on the principal
balance of this Note and all other sums due to the Lender under the Loan Documents. In
addition, unless the prepayment is a “Permitted Par Prepayment” (as defined in Section 8
below), the Borrower shall remit together with any prepayment a

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	 	 	premium (the “Prepayment Premium Amount”) equal to the greater of (A) one percent (1%) of
the prepayment and (B) the amount (the “Yield Protection Amount”) calculated in accordance
with the next succeeding paragraph of this Note.
	 
	 	 	The Yield Protection Amount shall be calculated as follows:
	 
	 	 	First, the Lender shall determine the annual percentage yield on U.S. Treasury securities
maturing at the end of the term of the Loan (the “Annual Treasury Instrument Yield”). The
Annual Treasury Instrument Yield shall be determined as of ten (10) Business Days (as
defined in the Deed of Trust) before the effective date of the prepayment. The Lender shall
base its determination of the Annual Treasury Instrument Yield on the yield on U.S.
Treasury instruments, as published in The Wall Street Journal (or, if The Wall
Street Journal is not then being published or if no such reports are then being
published in The Wall Street Journal, as reported in another public source of
information nationally recognized for accuracy in the reporting of the trading of
governmental securities). If no such instruments mature on the exact maturity date of this
Note, the Lender shall interpolate the Annual Treasury Instrument Yield on a straight-line
basis using the yield on the instrument whose maturity date most closely precedes that of
this Note, and the yield on the instrument whose maturity date most closely succeeds that
of this Note.
	 
	 	 	Second, the Lender shall determine the monthly payment (the “Monthly Reinvestment
Payment”), based on a 360-day year and 30-day months, which would be payable on a
hypothetical interest-only promissory note having a principal balance equal to the prepaid
amount and bearing interest at the rate (the “Reinvestment Rate”) which, when compounded
monthly, would produce a yield equal to the Annual Treasury Instrument Yield.
	 
	 	 	Third, the Lender shall determine the hypothetical monthly interest-only payment (based on
a 360-day year and 30-day months) which would be payable on a promissory note having a
principal balance equal to the prepaid amount and bearing interest at the Note Rate (the
“Monthly Coupon Rate Payment”).
	 
	 	 	Fourth, the Lender shall determine the present value of a series of monthly payments, each
equal in amount to the amount by which the Monthly Coupon Rate Payment exceeds the Monthly
Reinvestment Payment, received on the first day of each calendar month from and including
the first day of the first full calendar month immediately following the effective date of
prepayment to and including the Maturity Date, using the Reinvestment Rate as the discount
rate.
	 
	 	 	Voluntary partial prepayments shall be permitted only in minimum amounts of Five Hundred
Thousand Dollars ($500,000).
	 
	8.	 	PERMITTED PAR PREPAYMENTS
	 
	 	 	The Lender shall not charge a prepayment premium on certain prepayments (the
“Permitted Par Prepayments”). Permitted Par Prepayments include:

	 	(a)	 	any prepayment in full of the Loan made no more than one
hundred fifty (150) days before the Maturity Date; and
	 
	 	(b)	 	any prepayment made as the result of the Lender’s election to
apply insurance or condemnation proceeds to the principal balance of these
Notes or to achieve any required loan to value ratio that is a prerequisite to
the Borrower’s rights to obtain and to use such proceeds.

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	9.	 	DEFAULT
	 
	 	 	A default on this Note (“Default”) shall exist if (a) the Lender fails to receive any
required installment of principal and interest on or before the tenth (10th) day
of the calendar month in which it is due, (b) the Borrower fails to pay the matured balance
of this Note on the Maturity Date or (c) a “Default” exists as defined in any other Loan
Document. If a Default exists and the Lender engages counsel to collect any amount due
under this Note or if the Lender is required to protect or enforce this Note in any
probate, bankruptcy or other proceeding, then any expenses incurred by the Lender in
respect of the engagement, including the reasonable fees and reimbursable expenses of
counsel and including such costs and fees which relate to issues that are particular to any
given proceeding, shall constitute indebtedness evidenced by this Note, shall be payable on
demand, and shall bear interest at the Default Rate. Such fees and expenses include those
incurred in connection with any action against the Borrower for a deficiency judgment after
a foreclosure or trustee’s sale of the Real Property under the Deed of Trust (defined
below), including all of the Lender’s reasonable attorneys’ fees, property appraisal costs
and witness fees.
	 
	10.	 	ACCELERATION
	 
	 	 	If a Default exists, the Lender may, at its option, declare the unpaid principal
balance of this Note to be immediately due and payable, together with all accrued interest
on the Indebtedness, all costs of collection (including reasonable attorneys’ fees and
expenses) and all other charges due and payable by the Borrower under this Note or any
other Loan Document. If the subject Default has arisen from a failure by the Borrower to
make a regular monthly payment of principal and interest, the Lender shall not accelerate
the Indebtedness unless the Lender shall have given the Borrower at least three (3)
Business Days’ advance Notice of its intent to do so.
	 
	 	 	If the subject Default is a Curable Nonmonetary Default, the Lender shall exercise its
option to accelerate only by delivering Notice of acceleration to the Borrower. The Lender
shall not deliver any such Notice of acceleration until (a) the Borrower has been given any
required Notice of the prospective Default and (b) any applicable cure period has expired.
	 
	 	 	Except as expressly described in this Section, no Notice of acceleration shall be required
in order for the Lender to exercise its option to accelerate the Indebtedness in the event
of Default.
	 
	11.	 	PREPAYMENT FOLLOWING ACCELERATION
	 
	 	 	Any Default resulting in the acceleration of the Indebtedness evidenced by this Note
shall be presumed to be an attempt to avoid the provisions of Section 7 of this Note, which
prohibit prepayment or condition the Lender’s obligation to accept prepayment on the
payment of a prepayment premium. Accordingly, if the Indebtedness is accelerated, any
amounts tendered to repay the accelerated Indebtedness, or realized by the Lender through
its remedies following acceleration, shall be subject to either (a) if the prepayment is
tendered or realized during the Lock Period, a premium equal to the greater of (x) ten
percent (10%) of the amount so tendered or realized and (y) the prepayment premium that
would have been applicable under Section 7 (calculated from the date of acceleration
through the Maturity Date), or (b) if the prepayment is tendered

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	 	 	or realized thereafter, the prepayment premium that would have been applicable under
Section 7 in respect of a voluntary prepayment (calculated from the date of acceleration
through the Maturity Date).
	 
	12.	 	SECURITY
	 
	 	 	This Note is secured in part by thirty-seven (37) Mortgages or Deeds of Trust,
Security Agreement and Fixture Filing (separately and collectively referred to as the “Deed
of Trust”) granted by the Borrower for the benefit of the Lender, conveying certain real
property (separately and collectively referred to as the “Property,” “Real Property” or
“Parcels”) located in the States of Arizona, California, Colorado, New Mexico, Texas and
Utah, and granting a security interest in certain fixtures and personal property, and by
thirty-seven (37) separate Absolute Assignment of Leases and Rents made by the Borrower to
the Lender, assigning the landlord’s interest in all present and future leases (the
“Leases”) of all or any portion of the Property encumbered by the Deed of Trust. Reference
is made to the Loan Documents for a description of the security and rights of the Lender.
This reference shall not affect the absolute and unconditional obligation of the Borrower
to repay the Loan in accordance with its terms.
	 
	13.	 	RECOURSE TO BORROWER
	 
	 	 	The Lender agrees that it shall not seek to enforce any monetary judgment with respect
to the Indebtedness evidenced by this Note against the Borrower except through recourse to
the Property (as defined in the Deed of Trust), unless the obligation from which the
judgment arises is one of the “Carveout Obligations” defined in Section 14.
	 
	14.	 	CARVEOUT OBLIGATIONS
	 
	 	 	The “Carveout Obligations” are (a) the obligation to repay any portion of the
Indebtedness evidenced by this Note that arises because the Lender has advanced funds or
incurred expenses in respect of any of the “Carveouts” (as defined below), (b) the
obligation to repay the entire Indebtedness evidenced by this Note, if the Lender’s
exculpation of the Borrower from personal liability under this Section has become void as
set forth below, (c) the obligation to indemnify the Lender in respect of its actual
damages suffered in connection with any of the Carveouts, and (d) the obligation to defend
and hold the Lender harmless from and against any claims, judgments, causes of action or
proceedings arising from any of the Carveouts. The “Carveouts” are:

(a) fraud or intentional misrepresentation;

(b) gross negligence or willful misconduct;

(c) the breach of any representation, warranty, covenant or indemnification provision in
the Environmental Indemnity Agreement or in any other Loan Document concerning
environmental laws, hazardous substances and asbestos and any indemnification obligations
with respect thereto;

(d) the removal or disposal of any portion of the Property after an event of default;

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(e) the misapplication or conversion (but only to the extent of such misapplication or
conversion) of (i) any Insurance Proceeds, (ii) any Condemnation Proceeds, or (iii) any
Rents following a Default;

(f) failure to pay taxes, charges for labor or materials or other charges that can create
liens on any portion of the properties;

(g) any security deposits, advance deposits or any other deposits which are not delivered
to Lender upon a foreclosure or action in lieu thereof, except to the extent any such
security deposits were applied in accordance with the terms and conditions of any of the
Leases prior to the occurrence of a Default that gave rise to such foreclosure or action in
lieu thereof;

(h) failure to maintain status as a special purpose entity (as required under Section 6.5
herein);

(i) failure to permit on-site inspection of the Property;

(j) failure to provide financial information (as required under Section 6.22 herein); and

(k) failure to appoint a new property manager upon the request of the Lender after a
Default.

The Lender’s exculpation of the Borrower from personal liability for the repayment of the
Indebtedness evidenced by this Note shall be void without Notice with respect to any of the
following: (i) failure to obtain Lender’s prior written consent to any subordinate
financing or other voluntary lien encumbering the Property in violation of this Deed of
Trust; (ii) failure to obtain Lender’s prior written consent to any assignment, transfer,
or conveyance of the Property in violation of this Deed of Trust; or (iii) if the Property
or any part thereof shall become an asset in a bankruptcy or insolvency proceeding as a
result of any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, filed by or collusively arranged by
Borrower or any affiliates of Borrower.

	15.	 	SEVERABILITY
	 
	 	 	If any provision of this Note is held to be invalid, illegal or unenforceable in any
respect, or operates, or would if enforced operate to invalidate this Note, then that
provision shall be deemed null and void. Nevertheless, its nullity shall not affect the
remaining provisions of this Note, which shall in no way be affected, prejudiced or
disturbed.
	 
	16.	 	WAIVER
	 
	 	 	Except to the extent that such rights are expressly provided in this Note, the
Borrower waives demand, presentment for payment, notice of intent to accelerate, notice of
acceleration, protest, notice of protest, dishonor and of nonpayment and any and all lack
of diligence or delays in collection or enforcement of this Note. Without affecting the
liability of the Borrower under this Note, the Lender may release any of the Property,
grant any indulgence, forbearance or extension of time for payment, or release any other

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	 	 	 	person now or in the future liable for the payment or performance of any obligation under
this Note or any of the Loan Documents.
	 
	 	 	 	The Borrower further (a) waives any homestead or similar exemption; (b) waives any statute
of limitation; (c) agrees that the Lender may, without impairing any future right to insist
on strict and timely compliance with the terms of this Note, grant any number of extensions
of time for the scheduled payments of any amounts due, and may make any other accommodation
with respect to the Indebtedness evidenced by this Note; (d) waives any right to require a
marshaling of assets; and (e) to the extent not prohibited by applicable law, waives the
benefit of any law or rule of law intended for its advantage or protection as a debtor or
providing for its release or discharge from liability under this Note, excepting only the
defense of full and complete payment of all amounts due under this Note and the Loan
Documents.
	 
	 	17.	 	VARIATION IN PRONOUNS
	 
	 	 	 	All the terms and words used in this Note, regardless of the number and gender in
which they are used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context or sense of
this Note or any paragraph or clause herein may require, the same as if such word had been
fully and properly written in the correct number and gender.
	 
	 	18.	 	WAIVER OF JURY TRIAL
	 
	 	 	 	THE BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT OR (B) ARISING
FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN
DOCUMENT, AND THE BORROWER AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A JUDGE AND NOT BEFORE A JURY.
	 
	 	19.	 	OFFSET RIGHTS
	 
	 	 	 	In addition to all liens upon and rights of setoff against the money, securities, or
other property of the Borrower given to the Lender by law, the Lender shall have a lien
upon and a right of setoff against all money, securities, and other property of the
Borrower, now or hereafter in possession of or on deposit with the Lender, whether held in
a general or special account or deposit, or safe-keeping or otherwise, and, following a
Default, every such lien and right of setoff may be exercised without demand upon, or
notice to the Borrower. No lien or right of setoff shall be deemed to have been waived by
any act or conduct on the part of the Lender, or by any neglect to exercise such right of
setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and
lien shall continue in full force and effect until such right of setoff or lien is
specifically waived or released by an instrument in writing executed by the Lender.

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	20.	 	COMMERCIAL LOAN
	 
	 	 	The Borrower hereby represents and warrants to the Lender that the Loan was made for
commercial or business purposes, and that the funds evidenced by this Note will be used
solely in connection with such purposes.
	 
	21.	 	REPLACEMENT OR BIFURCATION OF NOTE
	 
	 	 	If this Note is lost or destroyed, the Borrower shall, at the Lender’s request,
execute and return to the Lender a replacement promissory note identical to this Note,
provided the Lender delivers to the Borrower an affidavit to the foregoing effect. Upon
delivery of the executed replacement Note, the Lender shall indemnify the Borrower from and
against its actual damages suffered as a result of the existence of two Notes evidencing
the same obligation. No replacement of this Note under this Section shall result in a
novation of the Borrower’s obligations under this Note. In addition, the Lender may at its
sole and absolute discretion require that the Borrower execute and deliver two separate
promissory notes, which shall replace this Note as evidence of the Borrower’s obligations.
The two replacement notes shall, taken together, evidence the exact obligations set forth
in this Note. The replacement notes shall be independently transferable. If this Note is so
replaced, the Lender shall return this Note to the Borrower marked to evidence its
cancellation.
	 
	22.	 	GOVERNING LAW
	 
	 	 	This Note shall be construed and enforced according to, and governed by, the laws of
Texas without reference to conflicts of laws provisions which, but for this provision,
would require the application of the law of any other jurisdiction.
	 
	23.	 	TIME OF ESSENCE
	 
	 	 	In the performance of the Borrower’s obligations under this Note, time is of the
essence.
	 
	24.	 	AGREEMENT CONCERNING INTEREST

	 	24.1	 	Definitions
	 
	 	 	 	As used in this Note, the term “Maximum Lawful Rate” shall mean the maximum
lawful rate of interest which may be contracted for, charged, taken, received or
reserved by Lender in accordance with the applicable laws of the State of Texas (or
applicable federal law, if it permits a higher rate). “Charges” means all fees,
charges, and any other things of value, if any, that are contracted for, charged,
received, taken or reserved pursuant to this Note, any of the other Loan Documents,
or any other conversation or writing between the Lender and the Borrower in
connection with the Loan (whether in connection with the acceleration by the Lender
of the maturity of the Indebtedness, in connection with any voluntary prepayment of
the Indebtedness, or otherwise, and including fees for the forbearance of any
enforcement action or for the extension or modification of the Loan) which are
treated as interest under applicable law. The term “Indebtedness” shall mean any
and all debt paid or payable by the Borrower

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	 	 	 	to the Lender pursuant to this Note, the Loan Documents or any other communication
or writing by or between the Borrower and the Lender relating to the Loan.
	 
	 	24.2	 	Savings Clause
	 
	 	 	 	The Borrower and the Lender agree that they intend to comply strictly at all
times with applicable Texas law governing the maximum rate or amount of interest
payable on this Note or the Indebtedness (or applicable federal law, if it preempts
Texas law and permits the Lender to contract for, charge, take, reserve or receive
a higher rate or amount of interest than would be permitted under Texas law). If
the applicable law is ever judicially interpreted so as to render usurious any
Charges, then it is the Borrower’s and the Lender’s express intent that all Charges
in excess of the Maximum Lawful Rate shall be automatically cancelled, ab initio.
If the Indebtedness has not been paid in full, all such cancelled amounts shall be
applied to the Indebtedness, and this Note and the other Loan Documents shall
immediately be deemed reformed to require the payment of interest at the Maximum
Lawful Rate. If the Indebtedness has been paid in full, all such cancelled amounts
shall be refunded to the Borrower. The Borrower agrees that as a condition
precedent to any claim seeking usury penalties against the Lender, the Borrower
shall provide written Notice to the Lender, advising the Lender in reasonable
detail of the nature and amount of the violation. The Lender shall have sixty (60)
days after receipt of the Notice to correct any usury violation by either refunding
such excess interest to the Borrower or by crediting such excess interest against
the Indebtedness. All sums contracted for, charged or received by the Lender for
the use, forbearance or detention of any debt evidenced by this Note or any of the
other Loan Documents shall, to the extent permitted by applicable law, be amortized
or spread, using the actuarial method, throughout the term of this Note (including
any extension periods) until payment in full so that the rate or amount of interest
on account of the Indebtedness does not exceed the Maximum Lawful Rate from time to
time in effect and applicable to the Indebtedness for so long as any portion of the
Indebtedness remains outstanding. Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty accounts)
shall not apply to this Note or to the Indebtedness. Notwithstanding anything to
the contrary contained herein or in any of the other Loan Documents, it is not the
intention of the Lender to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration.
	 
	 	24.3	 	Ceiling Election
	 
	 	 	 	To the extent that the Lender is relying on Chapter 303 of the Texas Finance
Code to determine the Maximum Lawful Rate payable on the Indebtedness, the Lender
will utilize the weekly ceiling from time to time in effect as provided in such
Chapter 303, as amended. To the extent federal law permits the Lender to contract
for, charge, take, receive or reserve a greater amount of interest than under Texas
law, the Lender will rely on federal law instead of such Chapter 303 for the
purpose of determining the Maximum Lawful Rate. Additionally, to the extent
permitted by applicable law now or hereafter in effect, the Lender may, at its
option and from time to time, utilize any other method of establishing the

Secured Promissory Note

U-Store-It Self Storage Warehouse Portfolio

AEGON Loan No. 89255

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	 	 	 	Maximum Lawful Rate under such Chapter 303 or under other applicable law by giving
Notice, if required, to the Borrower as provided by applicable law now or hereafter
in effect.

	25.	 	NO ORAL AGREEMENTS
	 
	 	 	THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF THE
BORROWER AND THE LENDER AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE LOAN AND MAY
NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE BORROWER AND THE LENDER. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE BORROWER AND THE LENDER. THE PROVISIONS OF THIS NOTE AND THE OTHER LOAN
DOCUMENTS MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE BORROWER
AND THE LENDER.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

Secured Promissory Note

U-Store-It Self Storage Warehouse Portfolio

AEGON Loan No. 89255

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     IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed effective as of
the date first above written.

	 	 	 	 	 	 	 	 
	 	 	YSI XX LP,
	 
	 	 	 	 	 	 
	 	 	By:	 	YSI XX GP LLC
	 

	 	 	 	Its:
	 	General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Steven G. Osgood
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:       Steven G. Osgood
	 

	 	 	 	 	 	Title:          President and Chief Financial Officer

Secured
Promissory Note — Signature Page

U-Store-It Self Storage Warehouse Portfolio

AEGON Loan No. 89255

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