Document:

Exhibit

Exhibit 10.2

FLIR SYSTEMS, INC.
EXECUTIVE SEVERANCE BENEFIT PLAN
1.INTRODUCTION. The FLIR Systems, Inc. Executive Severance Benefit Plan (the “Plan”) is hereby established effective as of October 16, 2019 (the “Effective Date”).  The Plan provides for the payment of certain severance benefits to eligible employees of FLIR Systems, Inc. (the “Company”) in the event of a qualifying termination of employment, all on the terms and conditions described in the Plan. This document constitutes both the Plan document and the Summary Plan Description for the Plan.
2.    DEFINITIONS. For purposes of the Plan, the following terms are defined as follows: 
(a)    “Board” means the Board of Directors of the Company. 
(b)    “Cause” means, with respect to a Participant: 
(i)    any material violation by the Participant of any law or regulation applicable to the business of the Company; 
(ii)    Participant’s conviction for, or plea of no contest to, a felony or a crime involving moral turpitude;
(iii)    Participant’s commission of an act of personal dishonesty that is intended to result in the substantial personal enrichment of Participant (excluding inadvertent acts that are promptly cured following notice);
(iv)    continued material violations by Participant of Participant’s lawful and reasonable duties of employment (including, but not limited to, compliance with material written policies of the Company and material written agreements with the Company), but, if such violation is curable, only after the Company has delivered a written demand for performance to Participant that describes the basis for the Company’s belief that Participant has not substantially performed Participant’s duties and Participant has not cured within a period of (15) days following notice;
(v)    Participant’s willful failure (other than due to physical incapacity) to cooperate with an investigation by a governmental authority or the Company of the Company’s business or financial condition;  
(vi)    any other willful misconduct or gross negligence by Participant that is materially injurious to the financial condition or business reputation of the Company; or
(vii)    a material breach of the Participant’s fiduciary duty to the Company.

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Notwithstanding the above, if approved by the Plan Administrator and specifically provided in the Participation Notice, a different definition of Cause may apply to a particular Participant to the extent provided in the Participant’s Participation Notice
(c)    “Change in Control” means the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company. In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company, the following provisions shall apply:
(i)    A “change in the ownership” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Treasury Regulation §1.409A-3(i)(5)(v).
(ii)    A “change in the effective control” of the Company shall occur on the date on which a majority of the members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election, as determined in accordance with Treasury Regulation §1.409A-3(i)(5)(vi).
(iii)    A “change in the ownership of a substantial portion of the assets” of the Company shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Treasury Regulation §1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the Company, as determined in accordance with Treasury Regulation §1.409A-3(i)(5)(vii)(B).
(d)    “Change in Control Period” means the time period beginning on the date that is 3 months prior to a Change in Control and ending on the date that is 18 months following a Change in Control. 
(e)    “CIC Plan” means the FLIR Systems, Inc. Change in Control Severance Benefit Plan as may be amended from time to time.

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(f)    “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a specific section of the Code will include such section and any valid regulation or other applicable guidance that has been promulgated under such section and is in effect.
(g)    “Disability” shall mean, with respect to a Participant, a total and permanent disability as defined in Code Section 22(e)(3). 
(h)    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 
(i)     “Good Reason Termination” means the voluntary termination of employment with the Company by the Participant resulting in a Separation from Service after one or more of the following is undertaken (through a single action or series of actions) without the Participant’s written consent: 
(i)    a material reduction by the Company in Participant’s annual base compensation or target bonus opportunity (as a percentage of base compensation) as in effect on the Effective Date, specifically excluding one or more reductions totaling not more than 15% (applied separately to base compensation and bonus); 
(ii)    the relocation of Participant’s principal work location to a location more than 50 miles from Participant’s principal work location as of immediately prior to the Effective Date; 
(iii)    the failure of a successor to the Company to become liable under the Plan as contemplated in Section 15(b); or
(iv)    a material breach by the Company of this Plan or any Company equity award agreement entered into with Participant.
An event or action will not give the Participant grounds to voluntarily terminate employment as a Good Reason Termination unless (A) the Participant gives the Company written notice within 60 days after the Participant knows or reasonably should know of the initial existence of such event or action, (B) such event or action is not reversed, remedied or cured, as the case may be, by the Company as soon as possible but in no event later than 30 days of receiving such written notice from the Participant, and (C) the Participant terminates employment within 60 days following the end of the cure period.
Notwithstanding the above, if approved by the Plan Administrator and specifically provided in the Participation Notice, a different definition of Good Reason Termination may apply to a particular Participant to the extent provided in the Participant’s Participation Notice.

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(j)    “Involuntary Termination Without Cause” means a Participant’s involuntary termination of employment by the Company resulting in a Separation from Service for a reason other than death, disability or Cause. 
(k)    “Participant” means an individual who has been designated by the Plan Administrator to participate in the Plan, but only if that individual also has executed and returned a valid Participation Notice to the Company no later than the deadline specified by the Company. 
(l)    “Participation Notice” means the latest notice delivered by the Company to a Participant informing the employee that the employee is eligible to participate in the Plan, substantially in the form of EXHIBIT A hereto.  Notwithstanding any contrary provision of the Plan, an employee will become a Participant only if that individual has executed and returned a valid Participation Notice to the Company no later than the deadline specified by the Company. 
(m)    “Plan Administrator” means the Board or any committee thereof duly authorized by the Board to administer the Plan. As of the Effective Date, the Plan Administrator is the Compensation Committee of the Board. The Board may at any time administer the Plan, in whole or in part, notwithstanding that the Board has previously appointed a committee to act as the Plan Administrator. 
(n)    “Qualifying Termination” means either (i) an Involuntary Termination Without Cause, or (ii) a Good Reason Termination, in either case that occurs other than during a Change in Control Period.  For the avoidance of doubt, termination of employment of a Participant due to death or Disability, during the Change in Control Period or in circumstances not described in the preceding sentence will not constitute a Qualifying Termination.
(o)    “Restricted Period” means the period of 12 months immediately following the Participant’s termination of employment.  Notwithstanding the preceding, if approved by the Plan Administrator and specifically provided in the Participation Notice, the duration of the Restricted Period for a particular Participant may differ if and to the extent specified in the Participant’s Participation Notice.
(p)    “Section 409A Limit” means 2 times the lesser of: (i) the Participant’s annualized compensation based upon the annual rate of pay paid to the Participant during the Participant’s taxable year preceding the Participant’s taxable year of the Participant’s termination of employment as determined under, and with such adjustments as are set forth in, Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any applicable guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Participant’s employment is terminated. 

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(q)    “Separation from Service” means a “separation from service” within the meaning of Treasury Regulations Section 1.409A-1(h), without regard to any permissible alternative definition of “termination of employment” thereunder.
3.    CONDITIONS TO RECEIPT OF BENEFITS.  Notwithstanding any contrary Plan provision, as a condition to receiving any severance payments or benefits under Section 4, a Participant will be required to comply with all of the provisions of this Section 3.
(a)    Release of Claims Agreement.  The receipt of any severance payments or benefits in Section 4 is subject to Participant (or, in the event of Participant’s death, Participant’s estate’s) signing and not revoking a release of claims in favor of the Company and in the form specified by the Company (the “Release”).  The Company will provide the Release to Participant (or Participant’s estate) within five (5) days following termination of Participant’s employment.  The Company may specify a form of Release that reflects changes in law subsequent to the Effective Date and consistent with the intent of a full release of claims by Participant in favor of the Company.  However, in no event may the Company add any new material post-employment obligation on the part of Participant (or Participant’s estate) to which Participant has not already agreed in writing. Notwithstanding any contrary provision of this Plan, if the Release does not become effective and irrevocable by the Release Deadline, Participant will forfeit any right to severance payments or benefits under this Plan.  For purposes of this Plan, “Release Deadline” means the sixtieth (60th) day following Participant’s termination of employment. In no event will severance payments or benefits be paid or provided until the Release actually becomes effective and irrevocable.
(b)    Non-Competition.  The portion of this Section 3(b) that applies during the Restricted Period shall not apply to any Participant located within the state of California.  While Participant is employed by the Company and during the Restricted Period, Participant must not (whether for compensation or otherwise), alone or as an officer, director, investor (except for investments in securities of publicly traded companies that are not in excess of one percent (1%) of such entity’s securities), partner, associate, employee, agent, principal, trustee, person, consultant, co-venturer, creditor, guarantor, owner, representative, or in any other such capacity, participate with or become associated with any person, firm, partnership, corporation or other entity that is engaged in a business that competes directly with a material business of the Company (it being understood that “material” for purposes of this Section 3 means: (i) business from which the Company (as constituted during Participant’s employment and ignoring any non-Company business from any company that acquires the Company) derives at least 5% of its annual revenue, or (ii) any entity which directly, or through its affiliates, is engaged in the design and/or production of thermal imaging cameras, components and/or imaging sensors, or (iii) is a line of business that: (A) is reasonably expected to have a material impact on the Company’s prospects during the Restricted Period, (B) was under active and substantial development by the Company during Participant’s employment, or the Company has taken demonstrable steps to develop, and (C) is brought to the 

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commercial market by the Company during the Restricted Period, (individually and collectively, a “Competitive Business”); provided that, subject to the next sentence, nothing in this Section 3(b) shall preclude Participant from providing services to or otherwise being associated with an entity that operates multiple businesses including indirectly, through its affiliates, a Competitive Business, if Participant does not provide services, directly or indirectly, with respect to, or have supervisory or executive authority with respect to, any such affiliate which is itself directly engaged in such Competitive Business.  Participant understands and agrees that the Company has global operations and that there are entities that may compete with the principal businesses of the Company in countries outside of the United States, and that may be included in the scope of this Section 3(b) if Participant’s job duties and geographic areas served include countries outside of the United States.  During the Restricted Period, Participant will inform each new employer or other entity, prior to accepting employment or acting as an agent or independent contractor for any person or entity, of the existence and details of this Plan and provide the employer or other entity with a copy of this Plan. Participant represents that Participant’s experience and capabilities are such that the restrictions contained herein will not prevent Participant from obtaining employment or otherwise earning a reasonable living.  If Participant is employed in the Commonwealth of Massachusetts, Participant understands that Participant will only be bound by the foregoing if Participant (a) is not laid off or terminated without cause, and (b) is provided appropriate payment during the Restricted Period, as defined by applicable law.  
(c)    Non-Solicit.  The portion of this Section 3(b) that applies during the Restricted Period shall not apply to any Participant located within the state of California. While Participant is employed by the Company and during the Restricted Period, Participant must not directly or indirectly, for Participant’s own account or the account of any other person or entity solicit, recruit, induce, or attempt to solicit, recruit, or induce, directly or by assisting others (including but not limited to, any new employer) any person who is, or within 12 months of that time has been, employed by or otherwise engaged to perform services for the Company.  A general advertisement by Participant’s new employer that is not directed specifically at service providers of the Company shall not be deemed a violation of the preceding sentence. 
(d)    Non-Disparagement.  While Participant is employed by the Company and during the Restricted Period, Participant must not disparage, defame, libel, or slander of any of the parties named in the Release.  So long as Participant complies with the preceding sentence, the Company will instruct its executive officers and members of the Board not to engage in any disparagement, defamation, libel, or slander of the Participant during the Restricted Period so long as each such individual remains an officer or member of the Company.
(e)    Return of Company Property.  Participant must return all Company Property. For this purpose, “Company Property” means all paper and electronic Company documents (and all copies thereof) created and/or received by the Participant during Participant’s period of employment 

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with the Company and other Company materials and property that Participant has in Participant’s possession, custody or control, including, without limitation, Company files, notes, drawings records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, operational information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, without limitation, leased vehicles, computers, computer equipment, software programs, facsimile machines, mobile telephones, servers), credit and calling cards, entry cards, identification badges and keys, and any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all reproductions thereof, in whole or in part). As a condition to receiving payments or benefits under Section 4, Participant must not make or retain copies, reproductions or summaries of any such Company documents, materials or property. However, Participant is not required to return the Participant's personal copies of documents evidencing the Participant’s hire, termination, compensation, benefits, equity awards, other terms and conditions of employment and any other documentation received as a stockholder of the Company.
(f)    Proprietary Information Agreement.  While Participant is employed by the Company and during the Restricted Period, Participant must to comply with the form of [NAME OF PARTICIPANT INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT] or any similar or successor document (the “Proprietary Agreement”) between Participant and the Company.  If Participant has not entered into a Proprietary Agreement, Participant must sign the standard form in effect immediately prior to the termination of employment (and comply with the Proprietary Agreement), provided that the Company may revise that agreement to make it effective if it is being signed at or close to termination of employment and/or the Company may add terms incorporating the concepts from the Proprietary Agreement into the Release Agreement Participant is required to sign as a condition of receiving severance or benefits under Section 4.
4.    BENEFITS UPON TERMINATION OF EMPLOYMENT. 
(a)    Qualifying Termination.  If a Participant incurs a Qualifying Termination, then, in all cases only if Participant timely signs, returns to the Company and does not revoke the Release, and the Participant fully complies with all provisions of Section 3, then subject to this Section 4, Participant will receive the following:
(i)    Severance Payment.  Participant will receive the following: 
(1)    continued payment of Participant’s annual base salary as in effect immediately prior to Participant’s termination date (excluding any reduction that would constitute Good Reason) for a period equal to the Restricted Period;

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(2)    a lump sum payment of the Executive’s earned bonus (if any) for the fiscal year of the Company in which the termination occurs (based on actual performance determined after fiscal year end and prorated for the portion of the fiscal year preceding the date of termination), paid at the same time as other senior executives;
(3)    a lump sum payment of one hundred percent (100%) of Participant’s target bonus for the fiscal year of the Company in which the termination occurs or, if greater, for the immediately preceding fiscal year, and
(4)    the product of (x) the number of months in the Restricted Period, multiplied by (y) the amount of monthly premium that Participant otherwise would be required to pay for Participant and any of Participant’s eligible dependents (if applicable) for the first month of Company group health care coverage under COBRA, without regard to whether Participant elects continued health coverage under for the first month of Company group health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for Participant and any of Participant’s eligible dependents.
(ii)    Vesting Acceleration of Equity Awards.  
(1)    All shares of Participant’s equity-based compensation awards (including, without limitation, restricted stock, restricted stock units, performance shares, performance units and stock options) that, as of immediately prior to Participant’s termination of employment with the Company, are outstanding but unvested and subject only to time-based vesting (that is, continued service to Company), will vest immediately as to one hundred percent (100%) of the shares subject thereto. 
(2)    All shares of Participant’s performance-based equity compensation awards (meaning awards that remain subject to the achievement of performance goals) that are outstanding but unvested as of immediately prior to the termination of Participant’s employment with the Company (the “Performance Awards”) immediately will be forfeited at termination of employment and never will vest; provided, however, that if the termination of Participant’s employment occurs prior to a Change in Control and Participant also is a participant in the CIC Plan, then solely for purposes of determining whether the Performance Awards become eligible for vesting acceleration under and in accordance with the terms of the CIC Plan (but not, for example, any other vesting provided in any award agreement, including but not limited to, on account of a “Corporate Transaction” as defined in any such award agreement), the Performance Awards will remain outstanding for the period necessary following the termination of Participant’s employment to determine vesting acceleration eligibility under the CIC Plan, and if no Change in Control has occurred within such period or Participant fails to become eligible for vesting acceleration under the CIC Plan for any other reason, the Performance Awards will terminate automatically without having vested. For the avoidance of doubt, any equity compensation awards for which the applicable 

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performance goals previously were achieved but that remain subject to time-based vesting will be considered time-based awards subject to subsection (1) above. In addition, any awards for which the performance period has ended but that await certification of achievement will become time-vested or vest based on certification of performance goal achievement, to the extent determined by the administrator of the awards in the normal course and in accordance with the applicable award agreement.  Accordingly, and for the avoidance of doubt, any awards described in the immediately preceding sentence will remain outstanding until, and solely for purposes of, completion of certification, and (A) to the extent an award becomes time-vested, the award will be subject to subsection (1) above, or (B) to the extent performance was (I) achieved, will vest based on certification of performance goal achievement, or (II) not achieved, will be forfeited without having vested based on certification of performance goal achievement. 
(3)    Notwithstanding the above subsections (1) and (2), (A) if approved by the Plan Administrator and specifically provided in a Participant’s Participation Notice, a different treatment for vesting of equity awards (including, but not limited to, no vesting) may apply to that particular Participant to the extent provided in the Participant’s Participation Notice, and (B) with respect to any equity awards that are outstanding as of the Effective Date, this Plan is not intended to divest any Participant of any rights specifically provided in any such award agreement. 
(b)    Timing of Payments.
(i)    If the Release does not become effective and irrevocable by the Release Deadline, Participant will forfeit any rights to severance or benefits under this Plan other than the accrued compensation set forth in Section 4(f).  In no event will any other severance payments or benefits be paid or provided until the Release becomes effective and irrevocable.
(ii)    Unless otherwise required by Section 4(e), the Company will pay any severance payments set forth in Section 4(b) in the manner set forth therein, subject to the other provisions of this Section 4.  Any lump-sum payment will be paid 60 days following Participant’s termination date, except as otherwise provided in Section 4.  Any installment payments will commence on the 60th day after termination or the next payroll date thereafter. If Participant should die before all of the severance amounts have been paid, such unpaid amounts will be paid in a lump-sum payment promptly following such event to Participant’s designated beneficiary, if living, or otherwise to the personal representative of Participant’s estate.
(c)    Voluntary Resignation; Termination for Cause.  For the avoidance of doubt, if Participant’s employment with the Company terminates (i) voluntarily by Participant (with or without Good Reason) during the Change of Control Period or by Participant other than for Good Reason at any time, or (ii) for Cause by the Company, then Participant will not be entitled to receive severance or other benefits under this Plan except for those (if any) as may then be established under 

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the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.
(d)    Disability; Death.  If the Company terminates Participant’s employment as a result of Participant’s Disability, or Participant’s employment terminates due to his or her death, then Participant will not be entitled to receive any other severance or other benefits except for those (if any) as may then be established under the Company’s then existing written severance and benefits plans and practices or pursuant to other written agreements with the Company (including, but not limited to, any applicable equity award agreement).  
(e)    Section 409A.
(i)    Notwithstanding anything to the contrary in this Plan, no severance pay or benefits to be paid or provided to Participant , if any, pursuant to this Plan that, when considered together with any other severance payments or separation benefits are considered deferred compensation under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Compensation Separation Benefits”) will be paid or otherwise provided until Participant has a “separation from service” within the meaning of Section 409A.  Similarly, no severance payable to Participant, if any, pursuant to this Plan that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Participant has a “separation from service” within the meaning of Section 409A.
(ii)    Any severance payments or benefits under this Plan that would be considered Deferred Compensation Severance Benefits will be paid on, or, in the case of installments, will not commence until, the sixtieth (60th) day following Participant’s separation from service, or, if later, such time as required by Section 4(e)(iii).  Except as required by Section 4(e)(iii), any installment payments that would have been made to Participant during the sixty (60) day period immediately following Participant’s separation from service but for the preceding sentence will be paid to Participant on the sixtieth (60th) day following Participant’s separation from service and the remaining payments shall be made as provided in this Plan.
(iii)    Notwithstanding anything to the contrary in this Plan, if Participant is a “specified employee” within the meaning of Section 409A at the time of Participant’s termination (other than due to death), then the Deferred Compensation Separation Benefits that are payable within the first six (6) months following Participant’s separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Participant’s separation from service.  All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Participant dies following Participant’s separation from service, but prior to the six (6) month anniversary of the separation 

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from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Participant’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment, installment and benefit payable under this Plan is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.  To the extent necessary to comply with Section 409A, references to the termination of Participant’s employment with the Company or similar terms shall mean a “separation from service” within the meaning of Section 409A. 
(iv)    Any amount paid under this Plan that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above.  
(v)    Any amount paid under this Plan that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit will not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above.
(vi)    This Plan is intended to be exempt from or comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be exempt or so comply.  The Company and Participant agree to work together in good faith to consider amendments to this Plan and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Participant under Section 409A.  In no event will the Company or any of its parent, subsidiaries or affiliates have any liability or obligation to reimburse, indemnify, or hold harmless Participant for any taxes, penalties, or interest imposed, or other costs incurred, as a result of Section 409A or any other tax law or regulation. 
(f)    Accrued Amounts.  Notwithstanding any contrary provision of the Plan and without regard to the reason for, or the timing of, Participant’s termination of employment, the Company shall pay Participant: (i) any unpaid base salary due for periods prior to the date of termination, payable on the next payroll date following termination, (ii) any accrued but unused vacation, as required under the applicable Company policy, payable on the next payroll date following termination; (iii) all expenses incurred by Participant in connection with the business of the Company prior to the date of termination in accordance with the Company’s business expense reimbursement policy, payable pursuant to the Company reimbursement policy; (iv) any amounts or benefits otherwise due under applicable law, payable within the period of time mandated by law and (v) accrued vested benefits due under the applicable terms of the benefits plans of the Company or its subsidiaries (including, without limitation, any previously vested equity awards).

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(g)    Other Requirements.  Participant’s receipt of any payments or benefits under this Section 4 (other than under Section 4(f)) will be subject to Participant complying with Section 3 of this Plan.
5.    LIMITATIONS ON BENEFITS. 
(a)    Prior Agreements; Certain Reductions. The Plan Administrator will reduce a Participant’s benefits under this Plan by any other statutory severance obligations or contractual severance benefits, obligations for pay in lieu of notice, and any other similar benefits payable to the Participant by the Company (or any successor thereto) that are due in connection with the Participant’s Qualifying Termination and that are in the same form as the benefits provided under this Plan.  Without limitation, this reduction includes a reduction for any benefits required pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act (the “WARN Act”), (ii) any Company policy or practice providing for the Participant to remain on the payroll for a limited period of time after being given notice of the termination of the Participant’s employment, and (iii) any required salary continuation, notice pay, statutory severance payment, or other payments either required by local law, or owed pursuant to a collective labor agreement, as a result of the termination of the Participant’s employment.  For the avoidance of doubt, and in order to prevent any duplication of benefits under this Plan and the CIC Plan, if a Participant has received or becomes entitled to receive any benefits under this Plan, but also becomes entitled to receive any benefits under the CIC Plan (for example, due to the Participant’s Qualifying Termination occurring during the Change in Control Period prior to the Change in Control), then (A) the benefits payable under the CIC Plan will be reduced by any amounts already provided to the Participant under this Plan, (B) any benefits not already paid or provided to the Participant under this Plan will cease immediately upon the Participant becoming entitled to benefits under the CIC Plan, and (C) the Participant will receive benefits under the CIC Plan and forfeit any remaining benefits that otherwise would be payable to the Participant under this Plan.  The benefits provided under the Plan are intended to satisfy, to the greatest extent possible, and not to provide benefits duplicative of, any and all statutory, contractual and collective agreement obligations of the Company in respect of the form of benefits provided under this Plan that may arise out of a Qualifying Termination, and the Plan Administrator will so construe and implement the terms of the Plan. Reductions may be applied on a retroactive basis, with benefits previously provided being recharacterized as benefits pursuant to the Company’s statutory or other contractual obligations.  The payments pursuant to the Plan are in addition to, and not in lieu of, any earned but unpaid salary, bonuses, other wages or employee welfare benefits to which a Participant may be entitled for the period ending with the Participant’s Qualifying Termination.
(b)    Mitigation. A Participant will not be required to mitigate damages or the amount of any payment provided under the Plan by seeking other employment or otherwise, nor will the amount of any payment provided for under the Plan be reduced by any compensation earned by a Participant 

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as a result of employment by another employer or any retirement benefits received by such Participant after the date of the Participant’s termination of employment with the Company.
(c)    Indebtedness of Participants. If a Participant is indebted to the Company on the effective date of the Participant's Qualifying Termination, the Company reserves the right to offset the payment of any severance benefits under the Plan by the amount of such indebtedness.  Such offset shall be made only to the extent permitted under applicable laws.  The Participant’s execution of the Participant's Notice constitutes knowing written consent to the foregoing.
(d)    Parachute Payments. Except as otherwise expressly provided in an agreement between a Participant and the Company, if any payment or benefit the Participant would receive in connection with a Change in Control from the Company or otherwise (a “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount. The “Reduced Amount” will be either (A) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (B) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state, provincial, foreign and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Participant’s receipt, on an after-tax basis, of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of stock awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to the Participant. Within any such category of Payments (that is, (1), (2), (3) or (4)), a reduction will occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are. In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Participant’s applicable type of stock award (i.e., earliest granted stock awards are cancelled last).  If Section 409A is not applicable by law to a Participant, the Company shall determine whether any similar law in the Participant’s jurisdiction applies and should be taken into account.
6.    TAX MATTERS.
(a)    Withholding. All payments under the Plan will be subject to all applicable withholding obligations of the Company, including, without limitation, obligations to withhold for federal, state, provincial, foreign and local income and employment taxes. 

13 

(b)    Tax Advice.  By becoming a Participant in the Plan, Participant agrees to review with Participant’s own tax advisors the federal, state, provincial, local and foreign tax consequences of participation in this Plan.  Participant shall rely solely on such advisors and not on any statements or representations of the Company or any of its agents.  Participant understands that Participant (and not the Company) shall be responsible for the Participant's own tax liability that may arise as a result of becoming a Participant in the Plan.  
7.    REEMPLOYMENT. In the event of a Participant’s reemployment by the Company during the period of time in respect of which severance benefits have been provided (that is, benefits as a result of a Qualifying Termination), the Company, in its sole and absolute discretion, may require such Participant to repay to the Company all or a portion of such severance benefits as a condition of reemployment.
8.    RIGHT TO INTERPRET PLAN; TERM OF PLAN; AMENDMENT AND TERMINATION. 
(a)    Exclusive Discretion. The Plan Administrator will have the exclusive discretion and full authority to administer the Plan and to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, without limitation, the eligibility to participate in the Plan, the amount of benefits paid under the Plan and any adjustments that need to be made in accordance with the laws applicable to a Participant. The rules, interpretations, computations and other actions of the Plan Administrator will be binding and conclusive on all persons. 
(b)    Term of Plan. The Plan will become effective upon the Effective Date and will terminate automatically on the third anniversary of the Effective Date, except that the Plan will not terminate and automatically will be extended for additional 1 year terms commencing on the first anniversary of the Effective Date, unless the Company provides written notice to the affected Participant(s) at least 6 months in advance of the expiration of the then-current term (that is, either the initial 3 year term or any subsequent 1 year term).  A termination of the Plan pursuant to the preceding sentence shall be effective for all purposes, except that such termination shall not affect the payment or provision of compensation or benefits on account of a qualifying termination of employment occurring prior to the termination of the Plan.  
(c)    Amendment or Termination. The Company (by action of the Board or any committee thereof) reserves the right to amend or (subject to Section 8(b)) terminate the Plan, any Participation Notice issued pursuant to the Plan or the benefits provided hereunder at any time, subject to the following provisions of this Section 8(c). Any amendment or termination of the Plan will be in writing.  Any amendment to the Plan that (1) causes an individual or group of individuals to cease to be a Participant, or (2) reduces or alters to the detriment of the Participant the severance 

14 

benefits potentially payable to the Participant (including, without limitation, imposing additional conditions or modifying the timing of payment) (an amendment described in clause (1) and/or clause (2) being an “adverse amendment”), will not be effective during the 3 year period beginning on the Effective Date.  An adverse amendment or termination will be effective after the third anniversary of the Effective Date and subject to Section 8(b), only if (A) it is approved by the Company and communicated to the affected individual(s) in writing more than 6 months before both the effective date of the adverse amendment or termination and the end of the then-current term of the Plan.  Once a Participant has incurred a Qualifying Termination, no amendment or termination of the Plan may, without that Participant’s written consent, reduce or alter to the detriment of the Participant, the severance benefits payable to the Participant.  Any action of the Company in amending or terminating the Plan will be taken solely in a non‐fiduciary capacity. 
9.    NO IMPLIED EMPLOYMENT CONTRACT. The Plan will not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company, or (ii) to interfere with the right of the Company to discharge any employee or other person at any time, with or without cause, for any reason or no reason, with or without notice, which right is hereby reserved.
10.    LEGAL CONSTRUCTION. The Plan will be governed by and construed under the laws of the State of Oregon (without regard to principles of conflict of laws), except to the extent preempted by ERISA.
11.    CLAIMS, INQUIRIES AND APPEALS. 
(a)    Applications for Benefits and Inquiries. Any application for benefits under the Plan must be submitted to the Plan Administrator in writing by an applicant (or the applicant's authorized representative). The Plan Administrator is set forth in Section 13(d).
(b)    Denial of Claims. In the event that any application for benefits is denied in whole or in part, the Plan Administrator must provide the applicant with written or electronic notice of the denial of the application, and of the applicant’s right to review the denial. Any electronic notice will comply with the regulations of the U.S. Department of Labor. The notice of denial will be set forth in a manner designed to be understood by the applicant and will include the following:
(1)    the specific reason or reasons for the denial;
(2)    references to the specific Plan provisions upon which the denial is based;
(3)    a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and

15 

(4)    an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 11(d).
The notice of denial will be given to the applicant within 90 days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional 90 days for processing the application. If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial 90 day period.
The notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator expects to render its decision on the application. 
(c)    Request for a Review. Any person (or that person’s authorized representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within 60 days after the Participant receives notification that the Participant's application was denied. A request for a review will be in writing and will be addressed to:
FLIR Systems, Inc.
Attn: General Counsel
27700 SW Parkway Avenue
Wilsonville, OR 97070
A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent. The applicant (or the applicant's representative) will have the opportunity to submit (or the Plan Administrator may require the applicant to submit) written comments, documents, records, and other information relating to the applicant's claim. The applicant (or the applicant's representative) will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the applicant's claim. The review will take into account all comments, documents, records and other information submitted by the applicant (or the applicant's representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(d)    Decision on Review. The Plan Administrator will act on each request for review within 60 days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional 60 days), for processing the request for a review. If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial 60 day period. This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator expects to render its decision on the 

16 

review. The Plan Administrator will give prompt, written or electronic notice of its decision to the applicant. Any electronic notice will comply with the regulations of the U.S. Department of Labor. In the event that the Plan Administrator confirms the denial of the application for benefits, in whole or in part, the notice will set forth, in a manner designed to be understood by the applicant, the following:
(1)    the specific reason or reasons for the denial;
(2)    references to the specific Plan provisions upon which the denial is based;
(3)    a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the applicant's claim; and
(4)    a statement of the applicant’s right to bring a civil action under Section 502(a) of ERISA. 
(e)    Rules and Procedures. The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims.
(f)    Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until the applicant (i) has submitted a written application for benefits in accordance with the procedures described by Section 11(a), (ii) has been notified by the Plan Administrator that the application is denied, (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 11(c), and (iv) has been notified that the Plan Administrator has denied the appeal. Notwithstanding the foregoing, if the Plan Administrator does not respond to an applicant’s claim or appeal within the relevant time limits specified in this Section 11, the applicant may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA. 
12.    BASIS OF PAYMENTS TO AND FROM PLAN. All benefits under the Plan will be paid by the Company. The Plan will be unfunded, and benefits hereunder will be paid only from the general assets of the Company.
13.    OTHER PLAN INFORMATION.
(a)    Employer and Plan Identification Numbers. The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is 93-0708501. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is [NUMBER].

17 

(b)    Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is December 31.
(c)    Agent for the Service of Legal Process. The agent for the service of legal process with respect to the Plan is:
FLIR Systems, Inc.
Attn: General Counsel
27700 SW Parkway Avenue
Wilsonville, OR 97070
(d)    Plan Sponsor and Administrator. The “Plan Sponsor” and the “Plan Administrator” of the Plan is:
FLIR Systems, Inc.
Attn: General Counsel
27700 SW Parkway Avenue
Wilsonville, OR 97070
The Plan Sponsor’s and Plan Administrator’s telephone number is (503) 498-3547. The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.
14.    STATEMENT OF ERISA RIGHTS.
Participants in the Plan (which is a welfare benefit plan sponsored by FLIR Systems, Inc.) are entitled to certain rights and protections under ERISA. If you are a Participant, you are considered a Participant in the Plan for the purposes of this Section 14 and, under ERISA, you are entitled to:

Receive Information About Your Plan and Benefits
(a)    Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration;
(b)    Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and an updated (as necessary) Summary Plan Description. The Plan Administrator may make a reasonable charge for the copies; and

18 

(c)    Receive a summary of the Plan’s annual financial report, if applicable. The Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.
Enforce Your Rights
If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court.
If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
Assistance with Your Questions
If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution 

19 

Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
15.    GENERAL PROVISIONS.
(a)    Notices. Any notice, demand or request required or permitted to be given by either the Company or a Participant pursuant to the terms of the Plan will be in writing and will be deemed given when delivered personally, when received electronically (including email addressed to the Participant’s Company email account and to the Company email account of the Company’s General Counsel), or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties, in the case of the Company, at the address set forth in Section 13(d), in the case of a Participant, at the address as set forth in the Company’s employment file maintained for the Participant as previously furnished by the Participant or such other address as a party may request by notifying the other in writing.
(b)    Transfer and Assignment. The rights and obligations of a Participant under the Plan may not be transferred or assigned without the prior written consent of the Company. The Plan will be binding upon any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person or entity actively assumes the obligations hereunder.
(c)    Waiver. Any party’s failure to enforce any provision or provisions of the Plan will not in any way be construed as a waiver of any such provision or provisions, nor prevent any party from thereafter enforcing each and every other provision of the Plan. The rights granted to the parties herein are cumulative and will not constitute a waiver of any party’s right to assert all other legal remedies available to it under the circumstances. 
(d)    Protected Activity. Notwithstanding any contrary provision of the Plan or of the Release, nothing in this Plan or the Release shall prohibit or impede Participant from engaging in any Protected Activity.  For purposes of this Plan, “Protected Activity” shall mean communicating, cooperating or filing a complaint with any U.S. federal, state or local governmental or law enforcement branch, agency or entity, including, but not limited to, the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation, or otherwise making disclosures to any Governmental Entity, in each case, that are protected under the whistleblower provisions of any such law or regulation; provided that, in each case, such communications and disclosures are consistent with applicable law.  Notwithstanding the foregoing, the Participant agrees to take all reasonable precautions to prevent any unauthorized use or disclosure 

20 

of any information that may constitute Company confidential information (as defined in the Proprietary Agreement or any other agreement between the Participant and the Company relating to the protection of confidential information) to any parties other than the Governmental Entities.  The Participant further understands that Protected Activity does not include disclosure of any Company attorney-client privileged communications or attorney work product.  Any language in the Proprietary Agreement (or in any other agreement between the Participant and the Company relating to the protection of confidential information) that conflicts with, or is contrary to, this paragraph is superseded by this Plan.  The Participant understands and acknowledges that pursuant to the Defend Trade Secrets Act of 2016 (A) an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal and (B) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(e)    Severability. Should any provision of the Plan be declared or determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired.
(f)    Section Headings. Section headings in the Plan are included only for convenience of reference and will not be considered part of the Plan for any other purpose.
16.    EXECUTION. To record the adoption of the Plan as set forth herein, FLIR Systems, Inc. has caused its duly authorized officer to execute the same as of the Effective Date.
	
		
	 
	FLIR SYSTEMS, INC.:
                                                                          
(Signature)
By: __________________________________
Title: _________________________________

21 

EXHIBIT A
FLIR SYSTEMS, INC.
EXECUTIVE SEVERANCE BENEFIT PLAN
PARTICIPATION NOTICE
To:    
Date:    
FLIR Systems, Inc. (the “Company”) has adopted the FLIR Systems, Inc. Executive Severance Benefit Plan (the “Plan”). The Company is providing you this Participation Notice to inform you that you have been designated as a Participant in the Plan. A copy of the Plan document is attached to this Participation Notice. The terms and conditions of your participation in the Plan are as set forth in the Plan and this Participation Notice, which together constitute the Summary Plan Description for the Plan.  [Insert sentence to tailor any specific items that vary from policy, if any: For purposes of your participation in the Plan, the Restricted Period will be [  ] months following your termination of employment, rather than the 12 months indicated in the Plan.]
Please return to the Company’s [General Counsel] a copy of this Participation Notice signed by you and retain a copy of this Participation Notice, along with the Plan document, for your records. If you do not return the signed Participation Notice by [DEADLINE], you will not become a Participant in the Plan and you will not be entitled to any payments or benefits under the Plan.  
Your signature below confirms your agreement (1) to all of the terms and conditions of the Plan, the Plan supersedes and replaces, in its entirety, any prior agreement between the Company and you relating to the subject matter that is contained in this Plan, including, without limitation any offer letter, severance agreement, severance plan, severance policy or similar plan or arrangement [(including, for example, [SPECIFIC REFERENCE TO ANY EXPIRING AGREEMENT IF AVAILABLE]].  

22 

	
		
	 
	FLIR SYSTEMS, INC.:
                                                                            
(Signature)
By:___________________________________
Title:_________________________________

23ck1680232-ex1001_8.htm

Exhibit 10.1

 

 

 

 

PURCHASE AND SALE AGREEMENT

AMONG

UNIVERSITY BOULEVARD STORAGE, LLC,

ARDREY KELL STORAGE, LLC,

HYDRAULIC ROAD STORAGE, LLC

AS SELLERS

AND

SST IV ACQUISITIONS, LLC,

AS PURCHASER

DATED OCTOBER 16, 2019

 

 

 

 

TABLE OF CONTENTS

Page No.

	
ARTICLE 1  Basic Information
	
1

	
 
	
Section 1.2
	
Closing Costs
	
2

	
 
	
Section 1.3
	
Notice Addresses:
	
5

	
ARTICLE 2  Property
	
5

	
 
	
Section 2.1
	
Property
	
5

	
ARTICLE 3  Earnest Money
	
6

	
 
	
Section 3.1
	
Deposit and Investment of Earnest Money
	
6

	
 
	
Section 3.2
	
Independent Consideration
	
7

	
 
	
Section 3.3
	
Form; Failure to Deposit
	
7

	
 
	
Section 3.4
	
Disposition of Earnest Money
	
7

	
ARTICLE 4  Due Diligence
	
7

	
 
	
Section 4.1
	
Due Diligence Materials To Be Delivered
	
7

	
 
	
Section 4.2
	
Due Diligence Materials To Be Made Available
	
8

	
 
	
Section 4.3
	
Physical Due Diligence
	
9

	
 
	
Section 4.4
	
Due Diligence/Termination Right
	
9

	
 
	
Section 4.5
	
Return of Documents and Reports
	
10

	
 
	
Section 4.6
	
Service Contracts
	
10

	
 
	
Section 4.7
	
Proprietary Information; Confidentiality
	
10

	
 
	
Section 4.8
	
No Representation or Warranty by Sellers
	
11

	
 
	
Section 4.9
	
Purchaser's Responsibilities
	
11

	
 
	
Section 4.10
	
Purchaser's Agreement to Indemnify
	
11 

	
 
	
Section 4.11
	
Purchase Price Allocation
	
11

	
ARTICLE 5  Title and Survey
	
12

	
 
	
Section 5.1
	
Title Commitment
	
12

	
 
	
Section 5.2
	
New or Updated Survey
	
12

	
 
	
Section 5.3
	
Title Review
	
12

	
 
	
Section 5.4
	
Delivery of Title Policy at Closing
	
12

	
ARTICLE 6  Operations and Risk of Loss
	
13

	
 
	
Section 6.1
	
Ongoing Operations
	
13

	
 
	
Section 6.2
	
Damage
	
13

	
 
	
Section 6.3
	
Condemnation
	
14 

	
 
	
Section 6.4
	
Noncompetition
	
14 

	
 
	
Section 6.5
	
On-Site Manager Apartments
	
14 

	
 
	
Section 6.6
	
Truck Rental Agreement
	
14

	
 
	
Section 6.7
	
No Back-Up Contracts
	
14

	
ARTICLE 7  Closing
	
15

	
 
	
Section 7.1
	
Closing
	
15

	
 
	
Section 7.2
	
Conditions to Parties' Obligation to Close
	
15

	
 
	
Section 7.3
	
Sellers' Deliveries in Escrow
	
15

	
 
	
Section 7.4
	
Purchaser's Deliveries in Escrow
	
16

	
 
	
Section 7.5
	
Closing Statements
	
16

	
 
	
Section 7.6
	
Purchase Price
	
17

	
 
	
Section 7.7
	
Possession
	
17

	
 
	
Section 7.8
	
Delivery of Books and Records
	
17

	
 
	
Section 7.9
	
Notice to Tenants
	
17

 

 

	
ARTICLE 8  Prorations, Deposits, Commissions
	
17

	
 
	
Section 8.1
	
Prorations
	
17

	
 
	
Section 8.2
	
Sales and Other Taxes
	
16

	
 
	
Section 8.3
	
Closing Costs
	
18

	
 
	
Section 8.4
	
Final Adjustment After Closing
	
18

	
 
	
Section 8.5
	
Tenant Deposits
	
18

	
 
	
Section 8.6
	
Commissions
	
18

	
ARTICLE 9  Representations and Warranties
	
18

	
 
	
Section 9.1
	
Sellers' Representations and Warranties
	
18

	
 
	
Section 9.2
	
Purchaser's Representations and Warranties
	
19

	
 
	
Section 9.3
	
Survival of Representations and Warranties
	
20

	
ARTICLE 10  Default and Remedies
	
21

	
 
	
Section 10.1
	
Sellers' Remedies
	
21

	
 
	
Section 10.2
	
Purchaser's Remedies
	
21

	
 
	
Section 10.3
	
Attorneys' Fees
	
22

	
 
	
Section 10.4
	
Other Expenses
	
22

	
ARTICLE 11  Disclaimers, Release and Indemnity
	
22

	
 
	
Section 11.1
	
Disclaimers By Sellers
	
22

	
 
	
Section 11.2
	
Sale "As Is, Where Is"
	
22

	
 
	
Section 11.3
	
Sellers Released from Liability
	
23

	
 
	
Section 11.4
	
"Hazardous Materials" Defined
	
24

	
 
	
Section 11.5
	
Survival
	
24

	
ARTICLE 12  Miscellaneous
	
24

	
 
	
Section 12.1
	
Parties Bound; Assignment
	
24

	
 
	
Section 12.2
	
Headings
	
24

	
 
	
Section 12.3
	
Invalidity and Waiver
	
25

	
 
	
Section 12.4
	
Governing Law
	
25

	
 
	
Section 12.5
	
Survival
	
25

	
 
	
Section 12.6
	
Entirety and Amendments
	
25

	
 
	
Section 12.7
	
Time
	
25

	
 
	
Section 12.8
	
Confidentiality; Press Releases
	
25

	
 
	
Section 12.9
	
No Electronic Transactions
	
25

	
 
	
Section 12.10
	
Notices
	
26

	
 
	
Section 12.11
	
Construction
	
26

	
 
	
Section 12.12
	
Calculation of Time Periods
	
26

	
 
	
Section 12.13
	
Execution in Counterparts
	
26

	
 
	
Section 12.14
	
No Recordation
	
26

	
 
	
Section 12.15
	
Further Assurances
	
26

	
 
	
Section 12.16
	
Intentionally Omitted.
	
27

	
 
	
Section 12.17
	
ERISA
	
27

	
 
	
Section 12.18
	
No Third Party Beneficiary
	
27

	
 
	
Section 12.19
	
Reporting Person
	
27

	
 
	
Section 12.20
	
Mandatory Arbitration
	
27

	
 
	
Section 12.21
	
Like-Kind Exchange
	
27

	
 
	
Section 12.22
	
Cooperation with Purchaser’s Auditors and SEC Filing Requirements
	
27

 

 

 

 

 

 

LIST OF DEFINED TERMS

Page No.

 

 

	
Additional Earnest Money
	
1

	
Additional Property Information
	
8

	
Agreement
	
1

	
Assignment
	
16

	
Broker
	
2

	
Casualty Notice
	
13

	
CERCLA
	
23

	
Closing
	
15

	
Closing Date
	
2

	
Code
	
20

	
Deed
	
15

	
Due Diligence Termination Notice
	
9

	
Earnest Money
	
1

	
Effective Date
	
2

	
ERISA
	
20

	
Escrow Agent
	
2

	
Exchange
	
27

	
Hazardous Material
	
24

	
Hazardous Materials
	
24

	
Hazardous Substance
	
24

	
Improvements
	
5

	
Independent Consideration
	
7

	
Initial Earnest Money
	
1

	
Inspection Period
	
2

	
Intangible Personal Property
	
6, 2

	
Land
	
5

	
Lease Files
	
8

	
Leases
	
6

	
License Agreements
	
6

	
Material Damage
	
14

	
Materially Damaged
	
14

	
Natural Gas Liquids
	
24

	
OFAC
	
19, 20

	
Operating Statements
	
8

	
Permitted Exceptions
	
12

	
Permitted Outside Parties
	
10

	
Petroleum
	
24

	
Plan
	
20

	
Pollutant or Contaminant
	
24

	
Property
	
5

	
Property Documents
	
9

	
Property Information
	
7

	
Proposed Purchase Price Allocation
	
11

	
Purchase Price
	
1

	
Purchaser
	
1

	
Real Property
	
5

	
Rent Roll
	
7

	
Report
	
10

	
Reports
	
10

	
Seller
	
1

	
Seller's Representatives
	
20

 

1

 

	
Service Contracts
	
6

	
Survey
	
12

	
Survival Period
	
20

	
Tangible Personal Property
	
6

	
Taxes
	
17

	
Tenant Receivables
	
17

	
Title and Survey Review Period
	
2

	
Title Commitment
	
12

	
Title Commitment Delivery Date
	
2

	
Title Company
	
2

	
Title Policy
	
12

	
to Seller's knowledge
	
20

	
to the best of Seller's knowledge
	
20

 

 

 

2

 

PURCHASE AND SALE AGREEMENT
[University Boulevard Self Storage, located in Charlotte, Mecklenburg County, North Carolina]

[Ardrey Kell Self Storage, located in Charlotte, Mecklenburg County, North Carolina]

[Charlottesville Self Storage, located in Charlottesville, Albemarle County, Virginia]

This Purchase and Sale Agreement (this "Agreement") is made and entered into by and among Purchaser and Sellers.

RECITALS

A.Defined terms are indicated by initial capital letters.  Defined terms shall have the meaning set forth herein, whether or not such terms are used before or after the definitions are set forth.

B.Purchaser desires to purchase the Property and Sellers desire to sell the Property, all upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual terms, provisions, covenants and agreements set forth herein, as well as the sums to be paid by Purchaser to Sellers, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Purchaser and Sellers agree as follows:

ARTICLE 1
Basic Information

	
1.1.1     Sellers:
	
UNIVERSITY BOULEVARD STORAGE, LLC, a South Carolina limited liability company (“University Boulevard Seller”), ARDREY KELL STORAGE, LLC, a South Carolina limited liability company (“Ardrey Kell Seller”), and HYDRAULIC ROAD STORAGE, LLC, a South Carolina limited liability company (“Hydraulic Road Seller” and, together with University Boulevard Seller and Ardrey Kell Seller, collectively, the “Sellers”)

 

	
1.1.2     Purchaser:
	
SST IV ACQUISITIONS, LLC, a Delaware limited liability company

 

	
1.1.3     Purchase Price:  
	
$51,000,000.00 allocated in accordance with the following table:

 

	
Property
	
Purchase Price Allocation

	
University Boulevard
	
$11,900,000.00

	
Ardrey Kell
	
$18,400,000.00

	
Hydraulic Road
	
$20,700,000.00

	
1.1.4     Earnest Money:
	
$400,000.00 (the "Initial Earnest Money"), including interest thereon, to be deposited in accordance with Section 3.1 below, to be increased by $800,000.00 (the "Additional Earnest Money") to $1,200,000.00, plus interest thereon, pursuant to Section 3.1.  

	
1.1.5     Title Company:
	
Fidelity National Title Insurance Company

555 S. Flower St., Suite 4420 

Los Angeles, California 90071 

Attn: Jessica Avila

Telephone number: (213) 452-713

E-mail: jessica.avila@fnf.com

 

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1.1.6     Escrow Agent:
	
Fidelity National Title Insurance Company

555 S. Flower St., Suite 4420 

Los Angeles, California 90071 

Attn: Jessica Avila

Telephone number: (213) 452-713

E-mail: jessica.avila@fnf.com

 

	
1.1.7     Broker:
	
Eastdil Secured, L.L.C.

2000 K. Street, NW 

Suite 300 

Washington, DC 20006 

Attention:  Mark  R. Owen

Telephone: 202-302-3395

E-mail: mowen@eastdilsecured.com

 

	
1.1.8     Effective Date:
	
The date on which this Agreement is executed by the latter to sign of Purchaser or Sellers, as indicated on the signature page of this Agreement, unless executed by both parties on the same date in which event it shall be such same date.  If the execution date is left blank by either Purchaser or Sellers, the Effective Date shall be the execution date inserted by the other party.

	
1.1.9     Title Commitment Delivery Date:
	
The date which is ten (10) days after the Effective Date.

	
1.1.10   Title and Survey Review Period:
	
The period ending twenty (20) days after Purchaser's receipt of the initial Title Commitment and the Survey, but in any event not later than Friday, October 18, 2019.

	
1.1.11   Inspection Period:
	
The period beginning on September 17, 2019, and ending forty (40) days thereafter at 5:00 p.m. Orlando, Florida time on Monday, October 28, 2019.

	
1.1.12   Closing Date:
	
Tuesday, November 5, 2019.

Section 1.2Closing Costs.  Closing costs shall be allocated and paid as follows:

 

As to the University Boulevard Property:

 

	
 

COST
	
RESPONSIBLE PARTY

	
Title Commitment required to be delivered pursuant to Section 5.1.
	
Purchaser

	
Premium for Title Policy required to be delivered pursuant to Section 5.4.
	
Purchaser

	
Premium for any upgrade of Title Policy for any additional coverage and any endorsements desired by Purchaser, any inspection fee charged by the Title Company, tax certificates, municipal and utility lien certificates, and any other customary Title Company charges
	
Purchaser

	
Costs of Survey and/or any revisions, modifications or recertifications thereto
	
Purchaser

	
Costs for UCC searches
	
Purchaser

	
Recording fees for the Deed at Closing and any mortgage taxes
	
Purchaser

	
Recording fees related to modifications or releases of existing title encumbrances
	
University Boulevard Seller

	
Any deed taxes, documentary stamps, transfer taxes, intangible taxes or other similar taxes, fees or assessments imposed upon the transfer of the Property (excluding recording fees) 
	
University Boulevard Seller

 

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Any escrow fee charged by Escrow Agent for holding the Earnest Money or conducting the Closing
	
Purchaser: 1⁄2

University Boulevard 

Seller: 1⁄2

	
Real Estate Sales Commission to Broker
	
University Boulevard Seller

	
All other customary closing costs
	
The party incurring the same

 

As to the Ardrey Kell Property:

 

	
 

COST
	
RESPONSIBLE PARTY

	
Title Commitment required to be delivered pursuant to Section 5.1.
	
Purchaser

	
Premium for Title Policy required to be delivered pursuant to Section 5.4.
	
Purchaser

	
Premium for any upgrade of Title Policy for any additional coverage and any endorsements desired by Purchaser, any inspection fee charged by the Title Company, tax certificates, municipal and utility lien certificates, and any other customary Title Company charges
	
Purchaser

	
Costs of Survey and/or any revisions, modifications or recertifications thereto
	
Purchaser

	
Costs for UCC searches
	
Purchaser

	
Recording fees for the Deed at Closing and any mortgage taxes
	
Purchaser

	
Recording fees related to modifications or releases of existing title encumbrances
	
Ardrey Kell Seller

	
Any deed taxes, documentary stamps, transfer taxes, intangible taxes or other similar taxes, fees or assessments imposed upon the transfer of the Property (excluding recording fees) 
	
Ardrey Kell Seller

 

	
Any escrow fee charged by Escrow Agent for holding the Earnest Money or conducting the Closing
	
Purchaser: 1⁄2

Ardrey Kell Seller: 1⁄2

	
Real Estate Sales Commission to Broker
	
Ardrey Kell Seller

	
All other customary closing costs
	
The party incurring the same

 

As to the Hydraulic Road Property:

 

	
 

COST
	
RESPONSIBLE PARTY

	
Title Commitment required to be delivered pursuant to Section 5.1.
	
Purchaser

	
Premium for Title Policy required to be delivered pursuant to Section 5.4.
	
Purchaser

	
Premium for any upgrade of Title Policy for any additional coverage and any endorsements desired by Purchaser, any inspection fee charged by the Title Company, tax certificates, municipal and utility lien certificates, and any other customary Title Company charges
	
Purchaser

	
Costs of Survey and/or any revisions, modifications or recertifications thereto
	
Purchaser

	
Costs for UCC searches
	
Purchaser

	
Recording fees for the Deed at Closing and any mortgage taxes
	
Purchaser

	
Recording fees related to modifications or releases of existing title encumbrances
	
Hydraulic Road Seller

	
Any deed taxes, documentary stamps, transfer taxes, intangible taxes or other similar taxes, fees or assessments imposed upon the transfer of the Property (excluding recording fees)
	
Purchaser pay State transfer tax (Va. Code Ann. §58.1-801) and Local transfer tax (Va. Code Ann. § 58.1-814) and Hydraulic Road Seller pays Grantor taxes and fees (Va. Code Ann. § 58.1-802).

 

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Any escrow fee charged by Escrow Agent for holding the Earnest Money or conducting the Closing
	
Purchaser: 1⁄2

Hydraulic Road Seller: 

1⁄2

	
Real Estate Sales Commission to Broker
	
Hydraulic Road Seller

	
All other customary closing costs
	
The party incurring the same

 

Section 1.3Notice Addresses:

	
Purchaser:

SST IV Acquisitions, LLC

10 Terrace Road 

Ladera Ranch, California  92694 

Attention:  H. Michael Schwartz

Telephone:  949 429-6600

Email: hms@smartstop.com

 
	
Copy to:

SST IV Acquisitions, LLC

8235 Douglas Avenue, #815 

Dallas, Texas 75225 

Attn: Wayne Johnson

Telephone: (214) 217-9797

E-mail: wjohnson@smartstop.com

 

With an additional copy to:

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

E-mail: cmersky@mastromersky.com

 

	
Sellers:

University Boulevard Storage, LLC

Ardrey Kell Storage, LLC

Hydraulic Road Storage, LLC

1213 Lady Street, Suite 300Columbia, South Carolina 29201
Attn:  Walter Taylor, Bill Theus,
Ty Colpini, and David Ellison
Email:  wtaylor@taylortheus.com
Email:  btheus@taylortheus.com
Email:  tcolpini@taylortheus.com
Email:  dellison@taylortheus.com

 

 
	
Copies to:

Haynsworth, Sinkler & Boyd
1201 Main Street, 22nd Floor
Columbia, South Carolina 29201
Attn:  John Langford, Esq.
Email:  jlangford@hsblawfirm.com

 

 

 

 

 

 

	
 
	
 

ARTICLE 2
Property

Section 2.1Property.  Subject to the terms and conditions of this Agreement, Sellers agree to sell to Purchaser, and Purchaser agrees to purchase from Sellers, the following properties (individually, the “University Boulevard Property”, the “Ardrey Kell Property”, and the “Hydraulic Road Property”, and collectively, the "Property"):

2.1.1Real Property.  The land described in Exhibit A-1 through A-3 attached hereto (the "Land"), together with (a) all improvements located thereon ("Improvements"), (b)  all right, title and interest of Sellers, if any, in and to the rights, benefits, privileges, easements, tenements, hereditaments, and appurtenances thereon or in anywise appertaining thereto, and (c) without warranty, all right, title, and interest of Sellers, if any, in and to all strips and gores and any land lying in the bed of any street, road or alley, open or proposed, adjoining the Land (collectively, the "Real Property").

2.1.2Leases.  All of Sellers’ right, title and interest in all leases of the Real Property (other than License Agreements), including leases which may be made by Sellers after the Effective Date and prior to Closing as permitted by this Agreement (the "Leases").

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2.1.3Tangible Personal Property.  All of Sellers’ right, title and interest in the equipment, machinery, furniture, furnishings, supplies and other tangible personal property, if any, owned by Sellers and now or hereafter located in and used in connection with the operation, ownership or management of the Real Property, including those items set forth on Exhibit G hereto, but specifically excluding any items of personal property owned or leased by Sellers’ property manager or tenants at or on the Real Property and further excluding any items of personal property owned by third parties and leased to Sellers (collectively, the "Tangible Personal Property").

2.1.4Intangible Personal Property.  All of Sellers’ right, title and interest, if any, without warranty, in all intangible personal property related to the Real Property and the Improvements, including, without limitation: all trade names and trade marks associated with the Real Property and the Improvements, including Seller's rights and interests, if any, in the names “University City Self Storage”, “University City Storage Center”, “Ardrey Kell Self Storage”, “Ardrey Kell Storage Center”, “Hydraulic Road Self Storage”, and “Hydraulic Road Storage Center”; the plans and specifications and other architectural and engineering drawings for the Improvements, if any (to the extent owned by Sellers and assignable without cost to Sellers); contract rights related to those service contracts assumed by Purchaser pursuant to Section 4.6 below, if any, but not including Leases or License Agreements (collectively, the "Service Contracts") (but only to the extent assignable without cost to Sellers and Sellers’ obligations thereunder are expressly assumed by Purchaser pursuant to this Agreement); warranties (to the extent owned by Sellers and assignable without cost to Sellers); governmental permits, approvals and licenses, if any (to the extent owned by Sellers and assignable without cost to Sellers); telephone exchange numbers (to the extent owned by Sellers and assignable without cost to Sellers); the goodwill, reputation and prestige associated with the Real Property ("Goodwill"); the internet related property rights owned by Sellers and relating to the Property set forth on Exhibit H hereto, but expressly excluding any internet websites hosted or owned by Sellers’ property manager (all of the items described in this Section 2.1.4 collectively referred to as the "Intangible Personal Property").  Tangible Personal Property and Intangible Personal Property shall not include (a) any appraisals or other economic evaluations of, or projections with respect to, all or any portion of the Property, including, without limitation, budgets prepared by or on behalf of Sellers or any affiliate of Sellers, (b) any documents, materials or information which are subject to attorney/client, work product or similar privilege, which constitute attorney communications with respect to the Property and/or Sellers, or which are subject to a confidentiality agreement, and (c) any trade name, mark or other identifying material that includes the names “Taylor/Theus” or any derivative thereof.

2.1.5License Agreements.  All of Sellers’ right, title and interest in and to all agreements (other than Leases), if any, for the leasing or licensing of rooftop space or equipment, telecommunications equipment, cable access and other space, equipment and facilities that are located on or within the Real Property and generate income  to Sellers as the owner of the Real Property (the "License Agreements").  Anything in this Agreement to the contrary notwithstanding, Purchaser shall assume at Closing the obligations of the "lessor" or "licensor" under all License Agreements provided by Sellers to Purchaser prior to the Effective Date pursuant to Section 4.1.6 below, some or all of which may be non-cancelable.

ARTICLE 3
Earnest Money

Section 3.1Deposit and Investment of Earnest Money.  Within three business days after the Effective Date, Purchaser shall deposit the Initial Earnest Money with Escrow Agent.  If upon the expiration of the Inspection Period, this Agreement is still in force and effect, Purchaser shall, no later than the third business day following the expiration of the Inspection Period, deposit the Additional Earnest Money, if any, as specified in Section 1.1.4 above, with Escrow Agent.  Escrow Agent shall invest the Earnest Money in government insured interest-bearing accounts satisfactory to Sellers and Purchaser, shall not commingle the Earnest Money with any funds of Escrow Agent or others, and shall promptly provide Purchaser and Sellers with confirmation of the investments made.  Such account shall have no penalty for early withdrawal, and Purchaser accepts all risks with regard to such account.

Section 3.2Independent Consideration.  If Purchaser elects to terminate this Agreement for any reason and is entitled to receive a return of the Earnest Money pursuant to the terms hereof, the Escrow Agent shall first disburse to Sellers One Hundred and No/100 Dollars ($100.00) of the Earnest Money as independent 

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consideration for Sellers’ performance under this Agreement ("Independent Consideration"), which shall be retained by Sellers in all instances.

Section 3.3Form; Failure to Deposit.  The Earnest Money shall be in the form of a certified or cashier's check or the wire transfer to Escrow Agent of immediately available U.S. federal funds.  If Purchaser fails to timely deposit any portion of the Earnest Money within the time periods required, Sellers may terminate this Agreement by written notice to Purchaser at any time prior to the actual receipt by Escrow Agent of such deposit from Purchaser, in which event any Earnest Money that has previously been deposited by Purchaser with Escrow Agent shall be immediately delivered to Sellers and thereafter the parties hereto shall have no further rights or obligations hereunder, except for rights and obligations which, by their terms, survive the termination hereof.

Section 3.4Disposition of Earnest Money.  The Earnest Money shall be applied as a credit to the Purchase Price at Closing.  However, if Purchaser elects to terminate this Agreement (i) prior to the expiration of the Inspection Period pursuant to Section 4.4, or (ii) pursuant to Section 5.3 by delivery of a Title Termination Notice, then Escrow Agent shall pay the entire Earnest Money (less the Independent Consideration) to Purchaser one business day following receipt of the Due Diligence Termination Notice or Title Termination Notice, as applicable, from Purchaser (as long as the current investment can be liquidated and disbursed in one business day).  No notice to Escrow Agent from Sellers, or other consent of Sellers, shall be required for the release of the Earnest Money to Purchaser by Escrow Agent if Purchaser terminates this Agreement pursuant to Section 4.4 or Section 5.3.  In the event of a termination of this Agreement by either Sellers or Purchaser for any reason other than pursuant to Section 4.4 or Section 5.3, Escrow Agent is authorized to deliver the Earnest Money to the party hereto entitled to same pursuant to the terms hereof on or before the tenth business day following receipt by Escrow Agent and the non-terminating party of written notice of such termination from the terminating party, unless the other party hereto notifies Escrow Agent that it disputes the right of the other party to receive the Earnest Money.  In such event, Escrow Agent shall interplead the Earnest Money into a court of competent jurisdiction in the county in which the Earnest Money has been deposited.  All reasonable attorneys' fees and costs and Escrow Agent's costs and expenses incurred in connection with such interpleader shall be assessed against the party that is not awarded the Earnest Money, or if the Earnest Money is distributed in part to both parties, then in the inverse proportion of such distribution.

ARTICLE 4
Due Diligence

Section 4.1Due Diligence Materials To Be Delivered.  Prior to the Effective Date, Sellers have delivered or made available to Purchaser the following (the "Property Information"):

4.1.1Rent Roll.  A current rent roll ("Rent Roll") for the Property utilizing Sellers’ standard form;

4.1.2Financial Information.  Copy of operating statements and a summary of capital expenditures pertaining to the Property for the 12 months preceding the Effective Date or such lesser period as Sellers have owned the Property ("Operating Statements");

4.1.3Tax Statements.  Copy of ad valorem tax statements relating to the Property for the current tax period;

4.1.4Title and Survey.  Copy of Sellers’ most current title insurance information and survey of the Property;

4.1.5Service Contracts.  A list of Service Contracts, together with copies thereof;

4.1.6License Agreements.  A list of any License Agreements, together with copies thereof; 

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4.1.7Environmental Reports.  A copy of any environmental report relating to the Property and prepared for the benefit of each Seller;

4.1.8Loss Run Reports.  A copy of a casualty loss run report from Sellers’ insurance provider for claim activity pertaining to the Property for the 24 months preceding the Effective Date or such lesser period as Sellers have owned the Property;

4.1.9Other Reports.  A copy of any ACM, soils, seismic, flood and zoning reports relating to the Property and prepared for the benefit of each Seller; and

4.1.10Licenses, Permits and Certificates of Occupancy.  Licenses, permits and certificates of occupancy relating to the Property.

Except for the Rent Roll contemplated in Section 4.1.1, Sellers’ obligations to deliver the items listed in this Section 4.1 shall be limited to the extent such items are in the possession of Sellers or their property management company.

Section 4.2Due Diligence Materials To Be Made Available.  To the extent such items are in Sellers’ possession and control, Sellers shall make available to Purchaser for Purchaser's review, at Sellers’ option at either the offices of Sellers’ property manager or at the Property, the following items and information (the "Additional Property Information") on or before the Effective Date, and Purchaser at its expense shall have the right to make copies of same:

4.2.1Lease Files.  The lease files for all tenants, including the Leases, amendments, guaranties, any letter agreements and assignments which are then in effect ("Lease Files");

4.2.2Maintenance Records and Warranties.  Maintenance work orders for the 12 months preceding the Effective Date and warranties, if any, on roofs, air conditioning units, fixtures and equipment;

4.2.3Plans and Specifications.  Building plans and specifications relating to the Property; and

4.2.4Licenses, Permits and Certificates of Occupancy.  Licenses, permits and certificates of occupancy relating to the Property.

Section 4.3Physical Due Diligence.  Commencing on the Effective Date and continuing until the Closing, Purchaser shall have reasonable access to the Property at all reasonable times during normal business hours, upon appropriate prior notice to tenants as permitted or required under the Leases, for the purpose of conducting reasonably necessary tests, including surveys and architectural, engineering, geotechnical and environmental inspections and tests as permitted under this Agreement, provided that (a) Purchaser must give Sellers one full business days' prior telephone or written notice of any such inspection or test, (b) with respect to (i) any intrusive inspection or test, (ii) any "Phase II" type testing or investigation or (iii) any testing scope that is beyond a customary "Phase I" investigation (including, without limitation, any core sampling, soils testing, vapor testing, air-quality testing, infrared testing, testing of on-site materials or other similar testing, sampling or investigation) Purchaser must obtain Sellers’ prior written consent (which consent may be given, withheld or conditioned in Sellers’ sole discretion), (c) prior to performing any inspection or test, Purchaser must deliver a certificate of insurance to Sellers evidencing that Purchaser and its contractors, agents and representatives have in place reasonable amounts of commercial general liability insurance and workers compensation insurance for its activities on the Property in terms and amounts reasonably satisfactory to Sellers covering any accident arising in connection with the presence of Purchaser, its contractors, agents and representatives on the Property, which insurance shall name Sellers as an additional insured thereunder, and (c) all such tests shall be conducted by Purchaser in compliance with Purchaser's responsibilities set forth in Section 4.9 below.  Purchaser shall bear the cost of all such inspections or tests and shall be responsible for and act as the generator with respect to any wastes generated by those tests.  Subject to the provisions of Section 4.7 hereof, Purchaser or Purchaser's representatives may meet with any tenant; provided, however, Purchaser must contact Sellers at least two full business days in 

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advance by telephone or in writing to inform Sellers of Purchaser's intended meeting and to allow Sellers the opportunity to attend such meeting if Sellers desire.  Subject to the provisions of Section 4.7 hereof, Purchaser or Purchaser's representatives may meet with any governmental authority for the sole purpose of gathering information in connection with the transaction contemplated by this Agreement; provided, however, Purchaser must contact Sellers at least two full business days in advance by telephone to inform Sellers of Purchaser's intended meeting and to allow Sellers the opportunity to attend such meeting if Sellers desire.

Section 4.4Due Diligence/Termination Right.  Purchaser shall have through 5:00 p.m. Orlando, Florida time on the last day of the Inspection Period in which to (a) examine, inspect, and investigate the Property Information and the Additional Property Information (collectively, the "Property Documents") and the Property and, in Purchaser's sole and absolute judgment and discretion, determine whether the Property is acceptable to Purchaser, (b) obtain all necessary internal approvals, and (c) satisfy all other contingencies of Purchaser.  Notwithstanding anything to the contrary in this Agreement, Purchaser may terminate this Agreement for any reason or no reason by giving written notice of termination to Sellers and Escrow Agent (the "Due Diligence Termination Notice") prior to 5:00 p.m. Orlando, Florida time on the last day of the Inspection Period. In the event that Purchaser obtains an environmental report (including a Phase II environmental site assessment) from a third-party service provider that identifies one or more recognized environmental conditions indicating the presence of Hazardous Materials or should a Phase I environmental site assessment recommend performance of  a Phase II environmental site assessment (the "Hazardous Materials Condition"), then Sellers shall be entitled to terminate this Agreement upon written notice to Purchaser delivered prior to the expiration of the Inspection Period (the “Environmental Termination Notice”), in which event the Earnest Money shall be returned to Purchaser, as described in Section 3.4 above.  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 Sellers, prior to the expiration of the Inspection Period.  In the event that Purchaser provides Sellers with the Closing Notice, then Purchaser will be deemed to have waived its termination rights under this Section 4.4, and the parties will proceed to Closing, subject to all other terms and conditions of this Agreement.  If Purchaser does not give Sellers the Closing Notice prior to the expiration of the Inspection Period and has not previously delivered the Due Diligence Termination Notice, then this Agreement automatically shall terminate upon the expiration of the Inspection Period, and, in such event, immediately following written request to the Escrow Agent from Purchaser, the Escrow Agent shall return all of the Earnest Money to Purchaser,  without the consent or joinder of Sellers being required and notwithstanding any contrary instructions which might be provided by Sellers, and neither party shall have any further rights or obligations hereunder except as otherwise provided herein..

Section 4.5Return of Documents and Reports.  Upon any termination of this Agreement (other than arising out of a Seller default hereunder), upon the written request of Sellers, Purchaser shall provide to Sellers copies of all third party reports, investigations and studies, other than economic analyses and other than legal analysis memoranda (collectively, the "Reports" and, individually, a "Report") prepared for Purchaser in connection with its due diligence review of the Property, including, without limitation, any and all Reports involving structural or geological conditions, environmental, hazardous waste or hazardous substances contamination of the Property, if any, provided the preparer of such Report consents thereto.  The Reports shall be delivered to Sellers without any liability to Purchaser and without representation or warranty from Purchaser as to the completeness or accuracy of the Reports or any other matter relating thereto.  Purchaser's obligation to deliver to Sellers, (i) the Property Documents provided by Sellers to Purchaser, and (ii) the Reports, shall survive the termination of this Agreement but shall not constitute a condition to any right of Purchaser to a return of the Earnest Money pursuant to the terms of this Agreement.

Section 4.6Service Contracts.  On or prior to 5:00 p.m. Orlando, Florida time on the last day of the Inspection Period, Purchaser will advise Sellers in writing of which Service Contracts it will assume and for which Service Contracts Purchaser shall require that Sellers deliver written notice of termination at or prior to Closing.  Sellers shall deliver at Closing notices of termination of all Service Contracts that are not so assumed, and shall be obligated to pay any applicable termination fees.  

Section 4.7Proprietary Information; Confidentiality.  Purchaser acknowledges that the Property Documents are proprietary and confidential and will be delivered to Purchaser solely to assist Purchaser in determining the feasibility of purchasing the Property.  Purchaser shall not use the Property Documents for any 

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purpose other than as set forth in the preceding sentence.  Purchaser shall not disclose the contents to any person other than to those persons who are responsible for determining the feasibility of Purchaser's acquisition of the Property and who have agreed to preserve the confidentiality of such information as required hereby (collectively, "Permitted Outside Parties").  At any time and from time to time, within two business days after Sellers’ request, Purchaser shall deliver to Sellers a list of all parties to whom Purchaser has provided any Property Documents or any information taken from the Property Documents.  Purchaser may disclose such contents as (a) expressly required under applicable laws or (b) expressly required by appropriate written judicial order, subpoena or demand issued by a court of competent jurisdiction (but will first give Sellers written notice of the requirement and will cooperate with Sellers so that Sellers, at their expense, may seek an appropriate protective order and, in the absence of a protective order, Purchaser may disclose only such content as may be necessary to avoid any penalty, sanction, or other adverse consequence, and Purchaser will use reasonable efforts to secure confidential treatment of any such content so disclosed).  Purchaser shall not divulge the contents of the Property Documents and other information except in strict accordance with the confidentiality standards set forth in this Section 4.7.  In permitting Purchaser to review the Property Documents or any other information, Sellers have not waived any privilege or claim of confidentiality with respect thereto, and no third party benefits or relationships of any kind, either express or implied, have been offered, intended or created.  As used hereunder, the term "Permitted Outside Parties" shall not include Sellers’ existing mortgage lenders and Purchaser shall not deliver to Sellers’ existing mortgage lenders any information relating to the Property unless approved by Sellers in writing, in Sellers’ sole and absolute discretion.   

Section 4.8No Representation or Warranty by Sellers.  Purchaser acknowledges that, except as expressly set forth in this Agreement and in the documents executed by Sellers at Closing, Sellers have not made and do not make any warranty or representation regarding the truth, accuracy or completeness of the Property Documents or the source(s) thereof.  Purchaser further acknowledges that some if not all of the Property Documents were prepared by third parties other than Sellers.  Subject to Sellers’ representations and warranties set forth in this Agreement and in the documents executed by Sellers at Closing, Sellers expressly disclaims any and all liability for representations or warranties, express or implied, statements of fact and other matters contained in such information, or for omissions from the Property Documents, or in any other written or oral communications transmitted or made available to Purchaser.  Subject to Sellers’ representations and warranties set forth in this Agreement and in the documents executed by Sellers at Closing, Purchaser shall rely solely upon its own investigation with respect to the Property, including, without limitation, the Property's physical, environmental or economic condition, compliance or lack of compliance with any ordinance, order, permit or regulation or any other attribute or matter relating thereto.  Sellers have not undertaken any independent investigation as to the truth, accuracy or completeness of the Property Documents and is providing the Property Documents solely as an accommodation to Purchaser.

Section 4.9Purchaser's Responsibilities.  In conducting any inspections, investigations or tests of the Property and/or Property Documents, Purchaser and its agents and representatives shall:  (a) not disturb the tenants or interfere with their use of the Property pursuant to their respective Leases; (b) not interfere with the operation and maintenance of the Property; (c) not damage any part of the Property or any personal property owned or held by any tenant or any third party; (d) not injure or otherwise cause bodily harm to Sellers or their agents, guests, invitees, contractors and employees or any tenants or their guests or invitees; (e) comply with all applicable laws; (f) promptly pay when due the costs of all tests, investigations, and examinations done with regard to the Property; (g) not permit any liens to attach to the Real Property by reason of the exercise of its rights hereunder; and (h) repair any damage to the Real Property resulting directly or indirectly from any such inspection or tests.

Section 4.10Purchaser's Agreement to Indemnify.  Purchaser hereby agrees to indemnify, defend and hold Sellers harmless from and against any and all liens, claims, causes of action, damages, liabilities and expenses (including reasonable attorneys' fees) arising out of Purchaser's inspections or tests permitted under this Agreement or any violation of the provisions of Section 4.3, Section 4.7 and Section 4.9; provided, however, the indemnity shall not extend to protect Sellers from (a) any pre-existing liabilities for matters merely discovered by Purchaser (i.e., latent environmental contamination) so long as Purchaser's actions do not aggravate any pre-existing liability of Sellers or (b) the consequences of any act or omission on the part of Sellers or any of their agents, contractors, representatives or employees.  Purchaser's obligations under this Section 4.10 shall survive the termination of this Agreement and shall survive the Closing.

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Section 4.11Purchase Price Allocation.  Prior to the expiration of the Inspection Period, Purchaser shall provide to Sellers the proposed allocation of the Purchase Price for each Property among the Land, Improvements, Tangible Personal Property and Intangible Personal Property (including Goodwill provided that not more than ten percent (10%) of the Purchase Price may be allocated to Goodwill) (the "Proposed Purchase Price Allocation") for Sellers’ approval, such approval not to be unreasonably withheld, conditioned or delayed.  Sellers shall notify Purchaser in writing whether it approves of the Proposed Purchase Price Allocation within three business days after Purchaser's submission thereof.  If Sellers disapprove of such Proposed Purchase Price Allocation, then Sellers shall notify Purchaser thereof in writing specifying in reasonable detail the reasons for such disapproval, in which case Purchaser and Sellers shall negotiate the Proposed Purchase Price Allocation in consideration of Sellers’ objections, and within three business days after such notice, Purchaser shall revise such Proposed Purchase Price Allocation in accordance with such negotiations.  If Sellers fail to notify Purchaser in writing that it disapproves of the Proposed Purchase Price Allocation within three business days after the submission thereof, then Sellers shall be deemed to have approved the Proposed Purchase Price Allocation.

ARTICLE 5
Title and Survey

Section 5.1Title Commitment.  Purchaser shall cause to be prepared, with a copy delivered to Sellers, on or before the Title Commitment Delivery Date: (a) a current commitment for title insurance or preliminary title report (the "Title Commitment") issued by the Title Company, in the amount of the Purchase Price and on an ALTA Standard Form commitment, with Purchaser as the proposed insured, and (b) copies of all documents of record referred to in the Title Commitment as exceptions to title to the Property.

Section 5.2New or Updated Survey.  Purchaser may elect to obtain a new survey or revise, modify, or re-certify an existing survey ("Survey") as necessary in order for the Title Company to delete the survey exception from the Title Policy or to otherwise satisfy Purchaser's objectives.

Section 5.3Title Review.  During the Title and Survey Review Period, Purchaser shall review title to the Property as disclosed by the Title Commitment and the Survey, and shall notify Sellers in writing of any title matters which are unacceptable to Purchaser, in its sole discretion (the “Title Objection Notice”).  Sellers shall have no obligation to cure any such title objections except for financing liens of an ascertainable amount, mechanics liens and judgment liens, created by, under or through Sellers, which liens Sellers shall cause to be released at or prior to Closing (with Sellers having the right to apply the Purchase Price or a portion thereof for such purpose), and Sellers shall deliver the Property free and clear of any such liens; provided, however, that Sellers additionally shall be obligated to remove any encumbrances that arise by, through or under Sellers and that do not appear on the Title Commitment or Survey until after the expiration of the Title and Survey Review Period.  Sellers may notify Purchaser in writing (the “Seller Response Notice”) within two (2) business days following Sellers’ receipt of the Title Objection Notice of which title objections Sellers agree to cure.  In the event that Sellers do not elect to cure all of Purchaser’s title objections or Sellers do not provide a Seller Response Notice, then Purchaser shall have the right to terminate this Agreement upon written notice to Seller (the “Title Termination Notice”) delivered within two (2) business day following Purchaser’s receipt of the Seller Response Notice (or within two (2) business days following the period within which Sellers were to respond should Sellers not deliver the Seller Response Notice), whereupon the Earnest Money shall be delivered to Purchaser.  Sellers further agree to remove any exceptions or encumbrances to title which are voluntarily created by, under or through Sellers after the Effective Date without Purchaser's prior written consent, which may be granted or withheld in Purchaser’s sole discretion.  The term "Permitted Exceptions" shall mean: (i) the specific exceptions (excluding exceptions that are part of the promulgated title insurance form) in the Title Commitment that the Title Company has not agreed to remove from the Title Commitment as of the end of the Title and Survey Review Period and that Sellers are not required to remove as provided above; (ii) matters created by, through or under Purchaser; (iii) items shown on the Survey which have not been removed as of the end of the Inspection Period (or if Purchaser does not obtain a Survey, all matters that a current, accurate survey of the Property would show); (iv) real estate taxes not yet due and payable; and (v) rights of tenants under the Leases and rights of tenants or licensees under License Agreements.

Section 5.4Delivery of Title Policy at Closing.  In the event that the Title Company does not issue at Closing, or unconditionally commit at Closing to issue, to Purchaser, an owner's title policy in accordance with 

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the Title Commitment, insuring Purchaser's title to the Property in the amount of the Purchase Price, subject only to the standard exceptions and exclusions from coverage contained in such policy and the Permitted Exceptions (the "Title Policy"), Purchaser shall have the right to terminate this Agreement, in which case the Earnest Money shall be immediately returned to Purchaser and the parties hereto shall have no further rights or obligations, other than those that by their terms survive the termination of this Agreement.

ARTICLE 6
Operations and Risk of Loss

Section 6.1Ongoing Operations.  From the Effective Date through Closing:

6.1.1Leases, Service Contracts and License Agreements.  Sellers will perform their respective obligations under the Leases, Service Contracts and License Agreements.

6.1.2New Contracts.  Except as provided in Section 6.1.4, Sellers will not enter into any contract that will be an obligation affecting the Property subsequent to the Closing, except contracts entered into in the ordinary course of business that are terminable without cause and without the payment of any termination penalty on not more than 30 days' prior notice.

6.1.3Maintenance of Improvements; Removal of Personal Property.  Subject to Section 6.2 and Section 6.3, Sellers shall maintain or cause the tenants under the Leases to maintain all Improvements substantially in their present condition (ordinary wear and tear and casualty excepted) and in a manner consistent with Sellers’ maintenance of the Improvements during Sellers’ period of ownership.  Sellers will not remove any Tangible Personal Property except as may be required for necessary repair or replacement, and replacement shall be of approximately equal quality and quantity as the removed item of Tangible Personal Property.

6.1.4Leasing.  Sellers shall use reasonable efforts to negotiate new leases for unrented storage units in the Improvements and/or Lease renewals for rented storage units in the Improvements and shall maintain an advertising and marketing program for storage units in the Improvements consistent with Sellers’ past practices at the Property.  Except for amendments of Leases entered into pursuant to renewal notices mailed prior to the Effective Date, unless Purchaser agrees otherwise in writing, any new Leases or renewals of existing Leases for such storage units entered into by Sellers after the Effective Date until the Closing or earlier termination of this Agreement shall be on Sellers’ standard lease form for the Property.  In all cases, Sellers shall retain the discretion to set rent rates, concessions and other terms of occupancy, provided Sellers shall only enter into new Leases or renewals in the ordinary course of business taking into account Sellers’ then-current good faith evaluation of market conditions.  At Closing, Sellers shall deliver any vacant self-storage units and parking spaces in broom-clean condition consistent with Sellers’ maintenance of the Improvements during Sellers’ period of ownership.

6.1.5Insurance.  From the Effective Date through and including the Closing Date, Sellers agrees to keep the Property insured for its replacement cost under its current policies against fire and other hazards covered by extended coverage endorsement 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) on a per Property basis, and to pay all premiums for such insurance prior to the applicable due dates.

Section 6.2Damage.  If prior to Closing any Property is damaged by fire or other casualty requiring repairs in excess of $25,000.00 to repair,  Sellers shall estimate the cost to repair and the time required to complete repairs and will provide Purchaser written notice of Sellers’ estimation (the "Casualty Notice") as soon as reasonably possible after the occurrence of the casualty.

6.2.1Material.  In the event of any Material Damage to or destruction of the Property or any portion thereof prior to Closing, Purchaser may, at its option, terminate this Agreement by delivering written notice to Sellers on or before the expiration of 30 days after the date Sellers deliver the Casualty Notice to Purchaser (and if necessary, the Closing Date shall be extended to give the parties the full thirty-day period to make such election).  Upon any such termination, the Earnest Money shall be returned to Purchaser and the parties hereto shall have no 

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further rights or obligations hereunder, other than those that by their terms survive the termination of this Agreement.  If Purchaser does not elect to terminate this Agreement within said 30-day period, then the parties shall proceed under this Agreement and close on schedule (subject to extension of Closing as provided above), and as of Closing Sellers shall assign to Purchaser, without representation or warranty by or recourse against Sellers, all of Sellers’ rights in and to any resulting insurance proceeds (including any rent loss insurance applicable to any period on and after the Closing Date) due Sellers as a result of such damage or destruction and Purchaser shall assume full responsibility for all needed repairs, and Purchaser shall receive a credit at Closing for any deductible amount under such insurance policies as well as the amount of any uninsured loss.  For the purposes of this Agreement, "Material Damage" and "Materially Damaged" means damage which, in Sellers’ reasonable estimation, exceeds $250,000.00 to repair.

6.2.2Not Material.  If the Property is not Materially Damaged, then neither Purchaser nor Sellers shall have the right to terminate this Agreement, and Sellers shall, at their option, either (a) repair the damage before the Closing in a manner reasonably satisfactory to Purchaser (and if necessary, Sellers may extend the Closing Date up to 30 days to complete such repairs), or (b) credit Purchaser at Closing for the reasonable cost to complete the repair (in which case Sellers shall retain all insurance proceeds and Purchaser shall assume full responsibility for all needed repairs).

Section 6.3Condemnation.  If proceedings in eminent domain are instituted with respect to the Property or any portion thereof, Purchaser may, at its option, by written notice to Sellers given within ten days after Sellers notify Purchaser of such proceedings (and if necessary the Closing Date shall be automatically extended to give Purchaser the full ten-day period to make such election), either:  (a) terminate this Agreement, in which case the Earnest Money shall be immediately returned to Purchaser and the parties hereto shall have no further rights or obligations, other than those that by their terms survive the termination of this Agreement, or (b) proceed under this Agreement, in which event Sellers shall, at the Closing, assign to Purchaser its entire right, title and interest in and to any condemnation award, and Purchaser shall have the sole right after the Closing to negotiate and otherwise deal with the condemning authority in respect of such matter.  If Purchaser does not give Seller written notice of its election within the time required above, then Purchaser shall be deemed to have elected option (b) above.

Section 6.4Noncompetition.  Sellers agree and covenant with Purchaser that from the Closing Date until the earlier of the date which is (a) 36 months following the Closing Date, or (b) the date on which Purchaser sells, transfers or conveys all or substantially all of the Property to any person or entity that is not an Affiliate of Purchaser, neither Sellers nor any Affiliate of Sellers shall expand an existing or develop a new self-storage center and/or self-storage unit facility located within a three-mile radius of the Property, or commence or otherwise take any action in furtherance thereof, or participate in or fund any such transaction.  The foregoing restriction shall not prohibit Sellers or their Affiliates from owning or purchasing an existing self-storage unit facility located within a three-mile radius of the Property, so long as the facility is not expanded to add additional square footage.  As used in this Section 6.4, "Affiliate" means an entity which, directly or indirectly, is in Control of, is Controlled by, or is under common Control with Sellers or Purchaser, as applicable, and "Control" means, with respect to Sellers or Purchaser, as applicable, the ownership of more than 10% of the equity interests in such entity, or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the Controlled entity.  The provisions of this Section 6.4 shall survive the Closing.

Section 6.5No Back-Up Contracts.  Sellers agree not to enter into a purchase and sale agreement for the sale of all or any portion of the Property (other than this Agreement) from the Effective Date until the earlier of (a) the Closing or (b) a termination of this Agreement.

ARTICLE 7
Closing

Section 7.1Closing.  The consummation of the transaction contemplated herein ("Closing") shall occur on the Closing Date at the offices of Escrow Agent (or such other location as may be mutually agreed upon by Sellers and Purchaser).  Funds shall be deposited into and held by Escrow Agent in a closing escrow account with a bank satisfactory to Purchaser and Sellers.  Upon satisfaction or completion of all closing conditions and deliveries, 

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the parties shall direct Escrow Agent to immediately record and deliver the closing documents to the appropriate parties and make disbursements according to the closing statements executed by Sellers and Purchaser.

Section 7.2Conditions to Parties' Obligation to Close.  In addition to all other conditions set forth herein, the obligation of Sellers, on the one hand, and Purchaser, on the other hand, to consummate the transactions contemplated hereunder are conditioned upon the following:

7.2.1Representations and Warranties.  The other party's representations and warranties contained herein shall be true and correct in all material respects as of the Effective Date and the Closing Date, except for representations and warranties made as of, or limited by, a specific date, which will be true and correct in all material respects as of the specified date or as limited by the specified date;

7.2.2Deliveries.  As of the Closing Date, the other party shall have tendered all deliveries to be made at Closing; and

7.2.3Actions, Suits, etc.  There shall exist no pending actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, against the other party that would prevent the other party from performing its obligations under this Agreement.

So long as a party is not in default hereunder, if any condition to such party's obligation to proceed with the Closing hereunder has not been satisfied as of the Closing Date (or such earlier date as is provided herein), subject to any applicable notice and cure periods provided in Section 10.1 and Section 10.2, such party may, in its sole discretion, (i) terminate this Agreement by delivering written notice to the other party on or before the Closing Date (or such earlier date as is provided herein), or (ii) elect to close (or to permit any such earlier termination deadline to pass) notwithstanding the non-satisfaction of such condition, in which event such party shall be deemed to have waived any such condition.  In the event such party elects to close (or to permit any such earlier termination deadline to pass), notwithstanding the non-satisfaction of such condition, said party shall be deemed to have waived said condition, and there shall be no liability on the part of any other party hereto for breaches of representations and warranties of which the party electing to close had actual knowledge at the Closing.

Section 7.3Sellers’ Deliveries in Escrow.  As of or prior to the Closing Date, Sellers shall deliver in escrow to Escrow Agent the following:

7.3.1Deed.  Special warranty deeds in the form of Exhibit B-1 to B-3 hereto, executed and acknowledged by the applicable Seller, conveying to Purchaser Sellers’ interest in and to the Real Property, subject only to the Permitted Exceptions (the "Deed");

7.3.2Bill of Sale, Assignment and Assumption.  A Bill of Sale, Assignment and Assumption of Leases and Contracts in the form of Exhibit C attached hereto (the "Assignment"), executed by each Seller, vesting in Purchaser, without warranty, Sellers’ right, title and interest in and to the property described therein free of any claims;

7.3.3Conveyancing or Transfer Tax Forms or Returns.  Such conveyancing or transfer tax forms or returns, if any, as are required to be delivered or signed by Sellers by applicable state and local law in connection with the conveyance of the Real Property;

7.3.4FIRPTA.  A Foreign Investment in Real Property Tax Act affidavit in the form of Exhibit D hereto executed by each Seller;

7.3.5Authority.  Evidence of the existence, organization and authority of each Seller and of the authority of the persons executing documents on behalf of Sellers reasonably satisfactory to the underwriter for the Title Policy; 

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7.3.6Rent Roll.  Rent Roll dated not earlier than two business days prior to the Closing Date; and

7.3.7Additional Documents.  Any additional documents that Escrow Agent or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Agreement (provided, however, no such additional document shall expand any obligation, covenant, representation or warranty of Sellers or result in any new or additional obligation, covenant, representation or warranty of Sellers under this Agreement beyond those expressly set forth in this Agreement).

Section 7.4Purchaser's Deliveries in Escrow.  As of or prior to the Closing Date, Purchaser shall deliver in escrow to Escrow Agent the following:

7.4.1Bill of Sale, Assignment and Assumption.  The Assignment, executed by Purchaser;

7.4.2Conveyancing or Transfer Tax Forms or Returns.  Such conveyancing or transfer tax forms or returns, if any, as are required to be delivered or signed by Purchaser by applicable state and local law in connection with the conveyance of the Real Property;

7.4.3Authority.  Evidence of the existence, organization and authority of Purchaser and of the authority of the persons executing documents on behalf of Purchaser reasonably satisfactory to the underwriter for the Title Policy; and

7.4.4Additional Documents.  Any additional documents that Escrow Agent or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Agreement (provided, however, no such additional document shall expand any obligation, covenant, representation or warranty of Purchaser or result in any new or additional obligation, covenant, representation or warranty of Purchaser under this Agreement beyond those expressly set forth in this Agreement).

Section 7.5Closing Statements.  As of or prior to the Closing Date, Sellers and Purchaser shall deposit with Escrow Agent executed closing statements consistent with this Agreement in the form agreed upon with Escrow Agent.  A separate closing statement shall be prepared for each Property.

Section 7.6Purchase Price.  At or before 3:00 p.m. Central Time on the Closing Date, Purchaser shall deliver to Escrow Agent the Purchase Price, less the Earnest Money that is applied to the Purchase Price, plus or minus applicable prorations, in immediate, same-day U.S. federal funds wired for credit into Escrow Agent's escrow account.  In the event that Escrow Agent is unable to deliver good funds to each Seller or its designee on the Closing Date, then the closing statements and related prorations will be revised as necessary.

Section 7.7Possession.  Sellers shall deliver possession of the Property to Purchaser at the Closing subject only to the Permitted Exceptions.

Section 7.8Delivery of Books and Records.  After the Closing, Sellers shall deliver to the offices of Purchaser's property manager or to the Real Property to the extent in Sellers’ or its property manager's possession or control: Lease Files; License Agreements; maintenance records and warranties; plans and specifications; licenses, permits and certificates of occupancy; copies or originals of all books and records of account, contracts, and copies of correspondence with tenants and suppliers; all advertising materials; booklets; and keys.

Section 7.9Notice to Tenants.  Sellers and Purchaser shall each execute, and Purchaser shall deliver to each tenant immediately after the Closing, a notice regarding the sale in substantially the form of Exhibit E attached hereto, or such other form as may be required by applicable state law.  This obligation on the part of Purchaser shall survive the Closing.

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ARTICLE 8
Prorations, Deposits, Commissions

Section 8.1Prorations.  At Closing, the following items shall be prorated as of the date of Closing with all items of income and expense for the Property being borne by Purchaser from and after (and including) the date of Closing:  (i) Tenant Receivables (defined below) and other income and rents that have been collected by Sellers as of Closing; (ii) prepaid expenses paid by Sellers under the Service Contracts; and (iii) real and personal property ad valorem taxes ("Taxes”).  Specifically, the following shall apply to such prorations and to post-Closing collections of Tenant Receivables:

8.1.1Taxes.  If Taxes for the year of Closing are not known or cannot be reasonably estimated, Taxes shall be prorated based on Taxes for the year prior to Closing.

8.1.2Utilities.  Purchaser shall take all steps necessary to effectuate the transfer of all utilities to its name as of the Closing Date, and where necessary, post deposits or escrows with the utility companies.  Sellers shall ensure that all utility meters are read as of the Closing Date.  Sellers shall be entitled to recover any and all deposits, escrows, bonds or letters of credit held by any utility company, owner's association or any quasi-governmental authority as of the Closing Date.

8.1.3Tenant Receivables.  Rents due from tenants under Leases and from tenants or licensees under License Agreements (collectively, "Tenant Receivables") and not collected by Sellers as of Closing shall prorated as follows:  Tenant Receivables that are from 0-30 days past due as of the Closing Date will be credited to Sellers at Closing and all other Tenant Receivables that are 31 or more days past due at Closing are assigned and apportioned to Purchaser (without proration at Closing).

Section 8.2Sales and Other Taxes.   Purchaser shall be liable for any retail sales or use tax imposed in respect of the sale of any Tangible Personal Property or Intangible Personal Property effected pursuant to this Agreement.

Section 8.3Closing Costs.  Closing costs shall be allocated between Sellers and Purchaser in accordance with Section 1.2.

Section 8.4Final Adjustment After Closing.  If final bills are not available or cannot be issued prior to Closing for any item being prorated under Section 8.1, including Taxes, then Purchaser and Sellers agree to reprorate such items based upon final bills as soon as such bills are available, final adjustment to be made as soon as reasonably possible after the Closing.  Payments in connection with the final adjustment shall be due within 30 days of written notice.  All such rights and obligations shall survive the Closing.

Section 8.5Tenant Deposits.  All tenant and licensee security deposits collected and not applied by Sellers (and interest thereon if required by law or contract) shall be transferred or credited to Purchaser at Closing.  As of the Closing, Purchaser shall assume Sellers’ obligations related to tenant and licensee security deposits, but only to the extent they are credited or transferred to Purchaser.

Section 8.6Commissions.  Sellers shall be responsible to Broker for a real estate sales commission at Closing (but only in the event of a Closing in strict accordance with this Agreement) in accordance with a separate agreement between Sellers and Broker.  Broker may share its commission with any other licensed broker involved in this transaction, but the payment of the commission by Sellers to Broker shall fully satisfy any obligations of Seller to pay a commission hereunder.  Under no circumstances shall Sellers owe a commission or other compensation directly to any other broker, agent or person.  Any cooperating broker shall not be an affiliate, subsidiary or related in any way to Purchaser.  Other than as stated above in this Section 8.6, Sellers and Purchaser each represent and warrant to the other that no real estate brokerage commission is payable to any person or entity in connection with the transaction contemplated hereby on account of the actions of such party, and each agrees to and does hereby indemnify and hold the other harmless against the payment of any commission to any other person or entity claiming by, through or under Sellers or Purchaser, as applicable.  This indemnification shall extend to any and all 

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claims, liabilities, costs and expenses (including reasonable attorneys' fees and litigation costs) arising as a result of such claims and shall survive the Closing.

ARTICLE 9
Representations and Warranties

Section 9.1Sellers’ Representations and Warranties.  Sellers represents and warrants to Purchaser that:

9.1.1Organization and Authority.  Each Seller has been duly organized, is validly existing, and is in good standing in the state in which it was formed.  Each Seller has the full right and authority and has obtained any and all consents required to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby.  This Agreement has been, and all of the documents to be delivered by each Seller at the Closing will be, authorized and executed and constitute, or will constitute, as appropriate, the valid and binding obligation of each Seller, enforceable in accordance with their terms.  

9.1.2Conflicts and Pending Actions.  There is no agreement to which any Seller is a party or, to Sellers’ knowledge, that is binding on any Seller which is in conflict with this Agreement.  To Sellers’ knowledge, there is no action or proceeding pending or threatened against any Seller or relating to any Property, which challenges or impairs any Seller's ability to execute or perform its respective obligations under this Agreement.

9.1.3Tenant Leases, Service Contracts and License Agreements.  To Sellers’ knowledge, as of the Effective Date, the Lease Files contain all of the Leases.  To Sellers’ knowledge, the list of Service Contracts and License Agreements to be delivered to Purchaser pursuant to this Agreement will be correct and complete as of the date of its delivery.

9.1.4Notices from Governmental Authorities.  Sellers have not received from any governmental authority written notice of any violation of any laws applicable (or alleged to be applicable) to the Real Property, or any part thereof, that has not been corrected, except as may be reflected by the Property Documents.

9.1.5Prohibited Persons and Transactions.  Neither Sellers nor any of their respective affiliates, nor any of their respective partners, members, shareholders or other equity owners, and none of their respective employees, officers, directors, representatives or agents is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Assets Control ("OFAC") of the Department of the Treasury (including those named on OFAC's Specially Designated Nationals and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not and will not engage in any dealings or transactions or be otherwise associated with such persons or entities.

9.1.6Non-Foreign Person.  No Seller is a “foreign person” within the meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as amended.

9.1.7Parties in Possession.  No person known to Sellers is entitled to occupy the Property except pursuant to leases or rental agreements for self-storage units located at the Property as may change from day-to-day or the apartment manager units.

9.1.8Management Agreement.  The management agreement between Sellers and Extra Space Management, Inc., a Utah corporation, Seller's property manager, will be terminated at Closing, and Sellers will pay the termination fee therefor, with evidence of such termination, executed by Sellers and such property manager, to be provided by Sellers to Purchaser at Closing.

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9.1.9Rent Roll.  The Rent Roll, as the same is updated by Sellers at Closing, is and shall be in the form historically used by Sellers in its operation of the Property.

9.1.10No Unpaid Bills.  At Closing there will be no unpaid bills or claims in connection with any repair of the Property by or on behalf of Sellers that could result in the filing of a lien against the Property.

Section 9.2Purchaser's Representations and Warranties.  Purchaser represents and warrants to Sellers that:

9.2.1Organization and Authority.  Purchaser has been duly organized and is validly existing as a limited liability company in good standing in the State of Delaware and is, or at Closing will be, qualified to do business in the state in which the Real Property is located.  Purchaser has the full right and authority and has obtained any and all consents required to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby.  This Agreement has been, and all of the documents to be delivered by Purchaser at the Closing will be, authorized and properly executed and constitute, or will constitute, as appropriate, the valid and binding obligation of Purchaser, enforceable in accordance with their terms.

9.2.2Conflicts and Pending Action.  There is no agreement to which Purchaser is a party or to Purchaser's actual knowledge binding on Purchaser which is in conflict with this Agreement.  To Purchaser’s actual knowledge, there is no action or proceeding pending or, to Purchaser's actual knowledge, threatened against Purchaser which challenges or impairs Purchaser's ability to execute or perform its obligations under this Agreement.

9.2.3ERISA.  Purchaser is not an employee benefit plan (a "Plan") subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), Purchaser's assets do not constitute "plan assets" within the meaning of the "plan asset regulations" (29.C.F.R. Section 2510.3-101), and Purchaser's acquisition of the Property will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

9.2.4Prohibited Persons and Transactions.  Neither Purchaser nor any of its affiliates, nor any of their respective partners, members, shareholders or other equity owners, and none of their respective employees, officers, directors, representatives or agents is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the OFAC of the Department of the Treasury (including those named on OFAC's Specially Designated Nationals and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and Purchaser is not and will not knowingly engage in any dealings or transactions or be otherwise associated with such persons or entities.  Notwithstanding the foregoing, the representations set forth in this Section 9.2.4 are limited to the actual knowledge of Purchaser insofar as they relate to any shareholder or employee of any affiliate of Purchaser, and such shareholder’s employees, officers, directors, representatives or agents.  

Section 9.3Survival of Representations and Warranties.  The representations and warranties set forth in this Article 9 are made as of the Effective Date and are remade as of the Closing Date and shall not be deemed to be merged into or waived by the instruments of Closing, but shall survive the Closing for a period of six months (the "Survival Period").  Terms such as "to Sellers’ knowledge," "to the best of Sellers’ knowledge" or like phrases mean the actual present and conscious awareness or knowledge of Tyler Colpini ("Sellers’ Representatives"), without any duty of inquiry or investigation; provided that so qualifying Sellers’ knowledge shall in no event give rise to any personal liability on the part of Sellers’ Representatives, or any of them, or any other officer or employee of Sellers, on account of any breach of any representation or warranty made by Sellers herein; provided further, however, that Sellers represent and warrant that Tyler Colpini is familiar with the day to day operation of the Property and is the individual within Seller’s business organization most knowledgeable with respect to the substance of Sellers’ representations and warranties set forth in Section 9.1 above.  Said terms do not include constructive knowledge, imputed knowledge, or knowledge Sellers or such persons do not have but could have obtained through further investigation or inquiry.  No broker, agent, or party other than Sellers is authorized to make any representation or warranty for or on behalf of Sellers.  Each party shall have the right to bring an action 

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against the other following Closing on the breach of a representation or warranty hereunder, but only on the following conditions:  (a) the party bringing the action for breach first learns of the breach after Closing and files such action within the Survival Period, and (b) neither party shall have the right to bring a cause of action for a breach of a representation or warranty unless the damage to such party on account of such breach (individually or when combined with damages from other breaches) equals or exceeds $25,000.00.  Neither party shall have any liability after Closing for the breach of a representation or warranty hereunder of which the other party hereto had actual knowledge as of Closing.  Notwithstanding any other provision of this Agreement, any agreement contemplated by this Agreement, or any rights which Purchaser might otherwise have at law, equity, or by statute, whether based on contract or some other claim, Purchaser agrees that any liability of each Seller to Purchaser following Closing will be limited to $500,000.00.  In order to provide Purchaser with a source of recovery for Sellers’ post-closing liabilities under this Agreement and the documents executed by Sellers at Closing, each Seller shall and hereby agrees to maintain a Tangible Net Worth (defined below) of at least $500,000.00 at all times during the Survival Period, and thereafter until the resolution and payment in full of any claim brought against a Seller by Purchaser during the Survival Period which remains unresolved upon the expiration of the Survival Period. As used herein, "Tangible Net Worth" means the excess of total assets over total liabilities, in each case as determined in accordance with sound accounting principles consistently applied, excluding, however, from the determination of total assets all assets which would be classified as intangible assets, including goodwill, licenses, patents, trademarks, trade names, copyrights, and franchises.  The provisions of this Section 9.3 shall survive the Closing.  Any breach of a representation or warranty that occurs prior to Closing shall be governed by Article 10.  

ARTICLE 10
Default and Remedies

Section 10.1Sellers’ Remedies.  If Purchaser fails to consummate the purchase of the Property pursuant to this Agreement or otherwise defaults on its obligations hereunder at or prior to Closing for any reason except failure by Sellers (or any party comprising Sellers), to perform hereunder, or if prior to Closing any one or more of Purchaser's representations or warranties are breached in any material respect, and such default or breach is not cured by the earlier of the third (3rd) business day after written notice thereof from Sellers or the Closing Date (except no notice or cure period shall apply if Purchaser fails to timely consummate the purchase of the Property or the timely payment of the Purchase Price hereunder), Sellers shall be entitled, as its sole and exclusive remedy (except as provided in Section 4.10, Section 8.6, Section 10.3 and Section 10.4 hereof), to terminate this Agreement and recover the Earnest Money as liquidated damages and not as penalty, in full satisfaction of claims against Purchaser hereunder.  Sellers and Purchaser agree that Sellers’ damages resulting from Purchaser's default are difficult, if not impossible, to determine and the Earnest Money is a fair estimate of those damages which has been agreed to in an effort to cause the amount of such damages to be certain.

Section 10.2Purchaser's Remedies.  If Sellers or any party comprising Sellers fails to consummate the sale of all or any portion of the Property pursuant to this Agreement or otherwise defaults on its obligations hereunder at or prior to Closing for any reason except failure by Purchaser to perform hereunder, or if prior to Closing any one or more of Sellers’ representations or warranties are breached in any material respect, and such default or breach is not cured by the earlier of the third (3rd) business day after written notice thereof from Purchaser or the Closing Date (except no notice or cure period shall apply if Sellers or any party comprising Sellers fails to consummate the sale of all or any portion of the Property hereunder), Purchaser shall elect, as its sole remedy, either to (a) terminate this Agreement by giving Sellers timely written notice of such election prior to or at Closing and recover the Earnest Money, plus receive reimbursement from Sellers 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 Fifty Thousand and no/100 Dollars ($50,000.00), (b) enforce specific performance to consummate the sale of the Property hereunder, or (c) waive said failure or breach and proceed to Closing without any reduction in the Purchase Price.  Notwithstanding anything herein to the contrary, Purchaser shall be deemed to have elected to terminate this Agreement under Section 10.2(a) above if Purchaser fails to deliver to Sellers written notice of its intent to file a claim or assert a cause of action for specific performance against Sellers on or before ten business days following the scheduled Closing Date or, having given such notice, fails to file a lawsuit asserting such claim or cause of action in the county or counties in which the Property is located within two months following the scheduled Closing Date.  Purchaser's remedies shall be limited to those described in this Section 10.2 and Section 8.6, Section 10.3 and Section 10.4 hereof.  IN NO EVENT SHALL SELLERS’ DIRECT 

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OR INDIRECT PARTNERS, SHAREHOLDERS, OWNERS OR AFFILIATES, ANY OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF THE FOREGOING, OR ANY AFFILIATE OR CONTROLLING PERSON THEREOF HAVE ANY LIABILITY FOR ANY CLAIM, CAUSE OF ACTION OR OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY, WHETHER BASED ON CONTRACT, COMMON LAW, STATUTE, EQUITY OR OTHERWISE.

Section 10.3Attorneys' Fees.  In the event either party hereto employs an attorney in connection with claims by one party against the other arising from the operation of this Agreement, the non-prevailing party shall pay the prevailing party all reasonable fees and expenses, including reasonable attorneys' fees, incurred in connection with such claims.

Section 10.4Other Expenses.  If this Agreement is terminated due to the default of a party, then the defaulting party shall pay any reasonable and customary fees or charges due to Escrow Agent for holding the Earnest Money as well as any reasonable and customary escrow cancellation fees or charges and any reasonable and customary fees or charges due to the Title Company for preparation and/or cancellation of the Title Commitment.

ARTICLE 11
Disclaimers, Release and Indemnity

Section 11.1Disclaimers By Sellers.  Except as expressly set forth in this Agreement and in the documents executed by Sellers at Closing, it is understood and agreed that Sellers and Sellers’ agents or employees have not at any time made and are not now making, and they specifically disclaim, any warranties, representations or guaranties of any kind or character, express or implied, with respect to the Property, including, but not limited to, warranties, representations or guaranties as to (a) matters of title (other than Sellers’ special warranty of title to be contained in the Deed), (b) environmental matters relating to the Property or any portion thereof, including, without limitation, the presence of Hazardous Materials in, on, under or in the vicinity of the Property, (c) geological conditions, including, without limitation, subsidence, subsurface conditions, water table, underground water reservoirs, limitations regarding the withdrawal of water, and geologic faults and the resulting damage of past and/or future faulting, (d) whether, and to the extent to which the Property or any portion thereof is affected by any stream (surface or underground), body of water, wetlands, flood prone area, flood plain, floodway or special flood hazard, (e) drainage, (f) soil conditions, including the existence of instability, past soil repairs, soil additions or conditions of soil fill, or susceptibility to landslides, or the sufficiency of any undershoring, (g) the presence of endangered species or any environmentally sensitive or protected areas, (h) zoning or building entitlements to which the Property or any portion thereof may be subject, (i) the availability of any utilities to the Property or any portion thereof including, without limitation, water, sewage, gas and electric, (j) usages of adjoining property, (k) access to the Property or any portion thereof, (l) the value, compliance with the plans and specifications, size, location, age, use, design, quality, description, suitability, structural integrity, operation, title to, or physical or financial condition of the Property or any portion thereof, or any income, expenses, charges, liens, encumbrances, rights or claims on or affecting or pertaining to the Property or any part thereof, (m) the condition or use of the Property or compliance of the Property with any or all past, present or future federal, state or local ordinances, rules, regulations or laws, building, fire or zoning ordinances, codes or other similar laws, (n) the existence or non-existence of underground storage tanks, surface impoundments, or landfills, (o) any other matter affecting the stability and integrity of the Property, (p) the potential for further development of the Property, (q) the merchantability of the Property or fitness of the Property for any particular purpose, (r) the truth, accuracy or completeness of the Property Documents, (s) tax consequences, or (t) any other matter or thing with respect to the Property.

Section 11.2Sale "As Is, Where Is".  Purchaser acknowledges and agrees that upon Closing, Sellers shall sell and convey to Purchaser and Purchaser shall accept the Property "AS IS, WHERE IS, WITH ALL FAULTS," except to the extent expressly provided otherwise in this Agreement and any document executed by Sellers and delivered to Purchaser at Closing.  Except as expressly set forth in this Agreement and in the documents executed by Sellers at Closing, Purchaser has not relied and will not rely on, and Sellers have not made and are not liable for or bound by, any express or implied warranties, guarantees, statements, representations or information pertaining to the Property or relating thereto (including specifically, without limitation, Property information packages distributed with respect to the Property) made or furnished by Sellers, or any property manager, real estate broker, agent or third party representing or purporting to represent Sellers, to whomever made or given, directly or 

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indirectly, orally or in writing.  Purchaser represents that it is a knowledgeable, experienced and sophisticated purchaser of real estate and that, except as expressly set forth in this Agreement, it is relying solely on its own expertise and that of Purchaser's consultants in purchasing the Property and shall make an independent verification of the accuracy of any documents and information provided by Sellers.  Purchaser will conduct such inspections and investigations of the Property as Purchaser deems necessary, including, but not limited to, the physical and environmental conditions thereof, and shall rely upon same.  By failing to terminate this Agreement prior to the expiration of the Inspection Period, Purchaser acknowledges that Sellers have afforded Purchaser a full opportunity to conduct such investigations of the Property as Purchaser deemed necessary to satisfy itself as to the condition of the Property and the existence or non-existence or curative action to be taken with respect to any Hazardous Materials on or discharged from the Property, and will rely solely upon same and not upon any information provided by or on behalf of Sellers or their agents or employees with respect thereto, other than such representations, warranties and covenants of Seller as are expressly set forth in this Agreement and in the documents executed by Sellers at Closing.  Upon Closing, subject to Sellers’ representations and warranties set forth in this Agreement and in the documents executed by Sellers at Closing, Purchaser shall assume the risk that adverse matters, including, but not limited to, adverse physical or construction defects or adverse environmental, health or safety conditions, may not have been revealed by Purchaser's inspections and investigations.  Purchaser hereby represents and warrants to Sellers that:  (a) Purchaser is represented by legal counsel in connection with the transaction contemplated by this Agreement; and (b) Purchaser is purchasing the Property for business, commercial, investment or other similar purpose and not for use as Purchaser's residence.  Purchaser waives any and all rights or remedies it may have or be entitled to, deriving from disparity in size or from any significant disparate bargaining position in relation to Sellers.

Section 11.3Sellers Released from Liability.  Purchaser acknowledges that it will have the opportunity to inspect the Property during the Inspection Period, and during such period, observe its physical characteristics and existing conditions and the opportunity to conduct such investigation and study on and of the Property and adjacent areas as Purchaser deems necessary, and, subject to Sellers’ representations and warranties set forth in this Agreement and in the documents executed by Sellers at Closing, Purchaser hereby FOREVER RELEASES AND DISCHARGES Sellers from all responsibility and liability, including without limitation, liabilities under the Comprehensive Environmental Response, Compensation and Liability Act Of 1980 (42 U.S.C. Sections 9601 et seq.), as amended ("CERCLA"), the Resource Conservation and Recovery Act (42 U.S.C. Section 9601 et seq.), as amended, and the Oil Pollution Act (33 U.S.C. Section 2701 et seq.) regarding the condition, valuation, salability or utility of the Property, or its suitability for any purpose whatsoever (including, but not limited to, with respect to the presence in the soil, air, structures and surface and subsurface waters, of Hazardous Materials or other materials or substances that have been or may in the future be determined to be toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, handled and/or removed from the Property under current or future federal, state and local laws, regulations or guidelines, and any structural and geologic conditions, subsurface soil and water conditions and solid and hazardous waste and Hazardous Materials on, under, adjacent to or otherwise affecting the Property).  Subject to Sellers’ representations and warranties set forth in this Agreement and in the documents executed by Sellers at Closing, Purchaser further hereby WAIVES (and by Closing this transaction will be deemed to have WAIVED) any and all objections and complaints (including, but not limited to, federal, state and local statutory and common law based actions, and any private right of action under any federal, state or local laws, regulations or guidelines to which the Property is or may be subject, including, but not limited to, CERCLA) concerning the physical characteristics and any existing conditions of the Property.  Subject to Sellers’ representations and warranties set forth in this Agreement and in the documents executed by Sellers at Closing, Purchaser further hereby assumes the risk of changes in applicable laws and regulations relating to past, present and future environmental conditions on the Property and the risk that adverse physical characteristics and conditions, including, without limitation, the presence of Hazardous Materials or other contaminants, may not have been revealed by its investigation.

Section 11.4"Hazardous Materials" Defined.  For purposes hereof, "Hazardous Materials" means "Hazardous Material," "Hazardous Substance," "Pollutant or Contaminant," and "Petroleum" and "Natural Gas Liquids," as those terms are defined or used in Section 101 of CERCLA, and any other substances regulated because of their effect or potential effect on public health and the environment, including, without limitation, PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials, putrescible materials, and infectious materials.

Section 11.5Intentionally Omitted.

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Section 11.6Survival.  The terms and conditions of this Article 11 shall expressly survive the Closing, and not merge with the provisions of any closing documents.

Purchaser acknowledges and agrees that the disclaimers and other agreements set forth herein are an integral part of this Agreement and that Sellers would not have agreed to sell the Property to Purchaser for the Purchase Price without the disclaimers and other agreements set forth above.

ARTICLE 12
Miscellaneous

Section 12.1Parties Bound; Assignment.  This Agreement, and the terms, covenants, and conditions herein contained, shall inure to the benefit of and be binding upon the heirs, personal representatives, successors, and assigns of each of the parties hereto.  Purchaser may assign its rights under this Agreement upon the following conditions:  (a) the assignee of Purchaser must be an entity controlling, controlled by, or under common control with Purchaser, (b) the assignee of Purchaser shall assume all obligations of Purchaser hereunder, but Purchaser shall remain primarily liable for the performance of Purchaser's obligations, (c) a copy of the fully executed written assignment and assumption agreement shall be delivered to Sellers at least two days prior to Closing with notice to Sellers of the name and signature block of the assignee at least five business days prior to Closing, and (d) the requirements in Section 12.17 are satisfied.  Notwithstanding anything contained in this Agreement to the contrary, Purchaser shall be entitled to assign this Agreement, without Sellers’ consent, one or more times, to (i) an affiliate of Purchaser, (ii) an entity in which SmartStop OP, L.P., , a Delaware limited partnership, SmartStop Self Storage REIT, Inc., a Maryland corporation, SS Growth Operating Partnership II, L.P., a Delaware limited partnership, Strategic Storage Growth 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, or an affiliate of any of the foregoing, 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, until the consummation of the Closing, no such assignment shall release or relieve Purchaser of any liability hereunder.  Additionally, Purchaser shall be entitled to assign its rights to acquire each of the three (3) properties comprising the Property to separate assignees.

Section 12.2Headings.  The article, section, subsection, paragraph and/or other headings of this Agreement are for convenience only and in no way limit or enlarge the scope or meaning of the language hereof.

Section 12.3Invalidity and Waiver.  If any portion of this Agreement is held invalid or inoperative, then so far as is reasonable and possible the remainder of this Agreement shall be deemed valid and operative, and, to the greatest extent legally possible, effect shall be given to the intent manifested by the portion held invalid or inoperative.  The failure by either party to enforce against the other any term or provision of this Agreement shall not be deemed to be a waiver of such party's right to enforce against the other party the same or any other such term or provision in the future.

Section 12.4Governing Law.  This Agreement shall, in all respects, be governed, construed, applied, and enforced in accordance with the law of the state in which the Real Property is located.

Section 12.5Survival.  The provisions of this Agreement that contemplate performance after the Closing and the obligations of the parties not fully performed at the Closing (other than any unfulfilled closing conditions which have been waived or deemed waived by the other party) shall survive the Closing and shall not be deemed to be merged into or waived by the instruments of Closing.

Section 12.6Entirety and Amendments.  This Agreement embodies the entire agreement among the parties and supersedes all prior agreements and understandings relating to the Property.  This Agreement may be amended or supplemented only by an instrument in writing executed by the party against whom enforcement is sought.  All Exhibits attached hereto are incorporated herein by this reference for all purposes.

Section 12.7Time.  Time is of the essence in the performance of this Agreement.

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Section 12.8Confidentiality; Press Releases.  Neither Sellers nor Purchaser shall make any public announcement, press release or disclosure of the transactions contemplated under this Agreement, nor any information related to this Agreement, to outside brokers, media or third parties, before or after the Closing, without the prior written specific consent of the other party, not to be unreasonably withheld; provided, however, that Purchaser may, subject to the provisions of Section 4.7, make disclosure of this Agreement to its Permitted Outside Parties as necessary to perform its obligations hereunder and as may be required under laws or regulations applicable to Purchaser.  Without limiting the foregoing requirement for Sellers approval, the name "Taylor/Theus" shall not be used or referenced in any public announcement, press release or disclosure relating to the transactions contemplated under this Agreement.  Purchaser acknowledges and agrees that the use of such name in any public announcement, press release or disclosure is not accurate and Purchaser will instruct Purchaser's partners, lenders, investors, brokers, agents, employees, officers, directors, attorneys and representatives (collectively, the "Purchaser Parties") to comply with this provision.   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.   

Section 12.9No Electronic Transactions.  The parties hereby acknowledge and agree this Agreement shall not be executed, entered into, altered, amended or modified by electronic means.  Without limiting the generality of the foregoing, the parties hereby agree the transactions contemplated by this Agreement shall not be conducted by electronic means, except as specifically set forth in the "Notices" section of this Agreement.

Section 12.10Notices.  All notices required or permitted hereunder shall be in writing and shall be served on the parties at the addresses set forth in Section 1.3.  Any such notices shall, unless otherwise provided herein, be given or served (a) by depositing the same in the United States mail, postage paid, certified and addressed to the party to be notified, with return receipt requested, (b) by overnight delivery using a nationally recognized overnight courier, (c) by personal delivery, or (d) by electronic mail addressed to the electronic mail address set forth in Section 1.3 for the party to be notified with a confirmation copy delivered by another method permitted under this Section 12.10.  Notice given in accordance herewith for all permitted forms of notice other than by electronic mail, shall be effective upon the earlier to occur of actual delivery to the address of the addressee or refusal of receipt by the addressee.  Notice given by electronic mail in accordance herewith shall be effective upon the entrance of such electronic mail into the information processing system designated by the recipient's electronic mail address.  Except for electronic mail notices as described above, no notice hereunder shall be effective if sent or delivered by electronic means.  In no event shall this Agreement be altered, amended or modified by electronic mail or electronic record.  A party's address may be changed by written notice to the other party; provided, however, that no notice of a change of address shall be effective until actual receipt of such notice.  Copies of notices are for informational purposes only, and a failure to give or receive copies of any notice shall not be deemed a failure to give notice.  Notices given by counsel to the Purchaser shall be deemed given by Purchaser and notices given by counsel to the Sellers shall be deemed given by Sellers.

Section 12.11Construction.  The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and agree that the normal rule of construction - to the effect that any ambiguities are to be resolved against the drafting party - shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto.

Section 12.12Calculation of Time Periods.  Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday for national banks in the location where the Property is located, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday.  The last day of any period of time described herein shall be deemed to end at 5:00 p.m. local time in the state in which the Real Property is located.

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Section 12.13Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one Agreement.  To facilitate execution of this Agreement, the parties may execute and exchange by electronic mail counterparts of the signature pages, provided that executed originals thereof are forwarded to the other party on the same day by any of the delivery methods set forth in Section 12.9 other than electronic mail.

Section 12.14No Recordation.  Without the prior written consent of Sellers, there shall be no recordation of either this Agreement or any memorandum hereof, or any affidavit pertaining hereto, and any such recordation of this Agreement or memorandum or affidavit by Purchaser without the prior written consent of Sellers shall constitute a default hereunder by Purchaser, whereupon Sellers shall have the remedies set forth in Section 10.1 hereof.  In addition to any such remedies, Purchaser shall be obligated to execute an instrument in recordable form releasing this Agreement or memorandum or affidavit, and Purchaser's obligations pursuant to this Section 12.14 shall survive any termination of this Agreement as a surviving obligation.

Section 12.15Further Assurances.  In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by either party at Closing, each party agrees to perform, execute and deliver, but without any obligation to incur any additional liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate the transactions contemplated hereby or to further perfect the conveyance, transfer and assignment of the Property to Purchaser.

Section 12.16Scope of Each Seller’s Covenants, Representations and Warranties.  The parties acknowledge and agree that the covenants, representations and warranties of the University Boulevard Seller are limited to the University Boulevard Property, the covenants, representations and warranties of the Ardrey Kell Seller are limited to the Ardrey Kell Property, and the covenants, representations and warranties of the Hydraulic Road Seller are limited to the Hydraulic Road Property.

Section 12.17ERISA.  Under no circumstances shall Purchaser have the right to assign this Agreement to any person or entity owned or controlled by an employee benefit plan if Sellers’ sale of the Property to such person or entity would, in the reasonable opinion of Sellers’ ERISA advisors or consultants, create or otherwise cause a "prohibited transaction" under ERISA.  In the event Purchaser assigns this Agreement or transfers any ownership interest in Purchaser, and such assignment or transfer would make the consummation of the transaction hereunder a "prohibited transaction" under ERISA and necessitate the termination of this Agreement then, notwithstanding any contrary provision which may be contained herein, Sellers shall have the right to terminate this Agreement.

Section 12.18No Third Party Beneficiary.  The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Sellers and Purchaser only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing.

Section 12.19Reporting Person.  Purchaser and Sellers hereby designate the Title Company as the "reporting person" pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986, as amended.

Section 12.20Mandatory Arbitration.  The parties have agreed to submit disputes to mandatory arbitration in accordance with the provisions of Exhibit F attached hereto and made a part hereof for all purposes.  Each of Sellers and Purchaser waives the right to commence an action in connection with this Agreement in any court and expressly agrees to be bound by the decision of the arbitrator determined in Exhibit F attached hereto.  The waiver of this Section 12.20 will not prevent Sellers or Purchaser from commencing an action in any court for the sole purposes of enforcing the obligation of the other party to submit to binding arbitration or the enforcement of an award granted by arbitration herein.

Section 12.21 Like-Kind Exchange.  Purchaser may consummate the purchase of the Property as part of a so-called like-kind exchange (the "Exchange") pursuant to §1031 of the Internal Revenue Code of 1986, as amended, provided that (a) Purchaser shall notify Sellers in writing no later than ten days before Closing that it intends to consummate this transaction as part of an Exchange, and shall provide with such notice all material 

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information relating to the parties and properties to the Exchange; (b) all costs, fees, and expenses attendant to the Exchange shall be the sole responsibility of Purchaser, and Purchaser shall indemnify and hold harmless Sellers from and against any such costs, fees, and expenses; (c) the Closing shall not be delayed or affected by reason of the Exchange nor shall the consummation or accomplishment of the Exchange be a condition precedent or condition subsequent to Purchaser's obligations and covenants under this Agreement; and (d) Sellers shall not be required to acquire or hold title to any real property other than the Property for purposes of consummating the Exchange.  Purchaser agrees to defend, indemnify and hold Sellers harmless from any liability, damages, or costs, including (without limitation) reasonable attorneys' fees, that may result from Sellers’ acquiescence to the Exchange.  Sellers shall not, by this Agreement or acquiescence to the Exchange, (1) have their rights under this Agreement, including (without limitation) those that survive Closing, affected or diminished in any manner or (2) be responsible for compliance with or be deemed to have warranted to Purchaser that the Exchange in fact complies with §1031 of the Internal Revenue Code of 1986, as amended.  The terms of this Section shall survive Closing.

Section 12.22Cooperation with Purchaser’s Auditors and SEC Filing Requirements.  

A.From the Effective Date through and including seventy five (75) days after the Closing Date, Sellers shall provide to Purchaser (at Purchaser’s expense) copies of, or shall provide Purchaser access to, the books and records with respect to the ownership, management, maintenance and operation of the Property and shall furnish Purchaser with such additional information concerning the same as Purchaser shall reasonably request and which is in the possession or control of Sellers, or any of its affiliates, agents, or accountants, to enable Purchaser or its assignee, to file its or their Form 8-K, if, as and when such filing may be required by the Securities and Exchange Commission (“SEC”).   At Purchaser’s sole cost and expense, Sellers shall allow Purchaser’s auditor (BDO USA, LLP or any successor auditor selected by Purchaser) to conduct an audit of the income statements of the Property for the calendar year prior to Closing (or to the date of Closing) and the two (2) prior years, and shall cooperate (at no cost to Sellers) with Purchaser’s auditor in the conduct of such audit. In addition, Sellers agree to provide to Purchaser’s auditor a letter of representation substantially in the form attached hereto as Exhibit I (the “Representation Letter”) relating to the Property (or separate Representation Letters relating to each project comprising the Property), and, if requested by such auditor, historical financial statements for the Property, including income and balance sheet data for the Property, whether required before or after Closing, but in no event shall Sellers be required to provide any financial information other than for the Property. Without limiting the foregoing, (i) Purchaser or its auditor may audit Sellers’ operating statements of the Property, at Purchaser’s expense, and Sellers shall provide such documentation as Purchaser or its auditor may reasonably request in order to complete such audit, (ii) Sellers shall furnish to Purchaser such financial and other information as may be reasonably required by Purchaser to make any required filings with the SEC or other governmental authority; provided, however, that the foregoing obligations of Sellers shall be limited to providing such information or documentation as may be in the possession of, or reasonably obtainable by, Sellers,  or their agents and accountants, at no cost to Sellers, and in the format that Sellers (or their affiliates, agents or accountants) have maintained such information, (iii) Sellers and Purchaser acknowledge and agree that the Representation Letter is not intended to expand, extend, supplement or increase the representations and warranties made by Sellers to Purchaser pursuant to the terms and provisions of this Agreement or to expose Sellers to any risk of liability to third parties, (iv) Purchaser shall promptly reimburse Sellers for all reasonable, out-of-pocket costs and expenses incurred by Sellers in connection with Sellers’ obligations under this Section 12.22 (it being acknowledged that Seller will incur costs to a third-party administrator or accountant for the preparation, review and other requirements of Sellers hereunder), and (v) Purchaser agrees to defend, indemnify and hold Sellers harmless from any liability, damages, or costs, including (without limitation) reasonable attorneys' fees, that may result from Sellers providing such information and documentation under this Section 12.22, unless arising as a result of the negligence or willful misconduct of Sellers. 

B.Inasmuch as any adjustments to Sellers’ books and records are required to conform to generally accepted accounting principles ("GAAP"), Purchaser has agreed, at its expense, to have its auditors convert Sellers’ books and records to GAAP, prior to Sellers executing the Representation Letter, and Sellers agrees to so execute the Representation Letter following Sellers’ review and approval of any adjustments of its books and records by Purchaser's auditors.

C.The provisions of this Section 12.22 shall survive Closing.

 

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[SIGNATURE PAGES AND EXHIBITS TO FOLLOW]

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SIGNATURE PAGE TO 
PURCHASE AND SALE AGREEMENT
BY AND AMONG 
UNIVERSITY BOULEVARD STORAGE, LLC,

ARDREY KELL STORAGE, LLC,

HYDRAULIC ROAD STORAGE, LLC,
AND
SST IV ACQUISITIONS, LLC

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year written below.

	
SELLERS:

 

 

Date executed by Sellers

 

October 16, 2019
	
UNIVERSITY BOULEVARD STORAGE, LLC, a South Carolina limited liability company

 

	
By:
	
/s/ William H. Theus

	
Name:
	
William H. Theus

	
Title:
	
President

	
 
	
ARDREY KELL STORAGE, LLC, a South Carolina limited liability company

	
By:
	
/s/ William H. Theus

	
Name:
	
William H. Theus

	
Title:
	
President

	
 
	
HYDRAULIC ROAD STORAGE, LLC, a South Carolina limited liability company

	
By:
	
/s/ William H. Theus

	
Name:
	
William H. Theus

	
Title:
	
President

	
PURCHASER:

 

 

Date executed by Purchaser

 

 

October 16, 2019
	
SST IV ACQUISITIONS, LLC, a Delaware limited liability company

	
By:
	
/s/ Michael S. McClure

	
Name:
	
Michael S. McClure

	
Title:
	
President

I-26

 

JOINDER BY ESCROW AGENT

Escrow Agent has executed this Agreement in order to confirm that Escrow Agent shall hold the Earnest Money required to be deposited under this Agreement and the interest earned thereto, in escrow, and shall disburse the Earnest Money, and the interest earned thereon, pursuant to the provisions of this Agreement.

FIDELITY NATIONAL TITLE INSURANCE COMPANY

	
 

 

Date executed by Escrow Agent

 

October ____, 2019
	
 

	
 
	
 

	
By:
	
 

	
Name:
	
 

	
Title:
	
 

	
 
	
 

 

 

 

 

 

 

 

 

I-27

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