Document:

ck1585389-ex103_11.htm

Exhibit 10.3

SMARTSTOP SELF STORAGE REIT, INC.

PERFORMANCE-BASED RESTRICTED SHARE AWARD

 

This RESTRICTED SHARE AWARD (the “Award”) is made and entered into as of the 22nd day of April 2020, by and between SmartStop Self Storage REIT, Inc. (the “Company”), a Maryland corporation, and _________________ (the “Participant”).

 

Upon and subject to the Additional Terms and Conditions attached hereto and incorporated herein by reference as part of this Award, the Company hereby awards as of the Grant Date to the Participant the Restricted Shares described below in consideration of the Participant’s services to the Company.

 

	
A.
	
Grant Date/Effective Date:  The grant date of the Restricted Shares shall be April 22, 2020 (the “Grant Date”) and the effective date of the Restricted Shares shall be January 1, 2020 (the “Effective Date”).

 

	
B.
	
Restricted Shares:  _________ Class A shares of the Company’s Common Stock, $0.001 par value per share (the “Target Award”).

 

	
C.
	
Plans (under which Award is granted): Employee and Director Long-Term Incentive Plan of SmartStop Self Storage REIT, Inc. effective as of December 20, 2013, as amended by Amendment No. 1 effective as of April 20, 2020 (collectively, and as may be further amended from time to time, the “Plan”); and 2020 Executive Compensation Program approved by the Committee on April 20, 2020 (the “Executive Compensation Program”).

 

	
D.
	
Vesting:  The Restricted Shares shall become vested upon a determination by the Committee of the Applicable Percentage of Target Award to be made by the Committee by March 31, 2023 (the “Determination Date”) based upon the following vesting schedule:  

 

							
	
Ranking of Company’s AASSRG among Peer Companies
	
1

(Highest AASSRG)
	
2
	
3
	
4
	
5
	
6

(Lowest AASSRG)

	
Applicable Percentage of Target Award
	
200%
	
150%
	
100%
	
65%
	
25%
	
0%

 

Upon such determination by the Committee, the Restricted Shares shall vest and become non-forfeitable with respect to the Applicable Percentage of Target Award set forth in the chart above.  Upon a Change of Control during the Performance Period, the Committee shall be permitted to measure Average Annual Same Store Revenue Growth for the Company vs the Peer Companies for a period shorter than the Performance Period prior to the consummation of the Change of Control in the sole discretion of the Committee.  In the event that one or more of the Peer Companies ceases to exist as a separate company or fails to report Same Store Revenues during the Performance Period, the Committee may adjust the ranking tiers and/or measure the Average Annual Same Store Revenue Growth for such companies for a period shorter than the Performance Period in its sole discretion.

 

For purposes of this Award, the following definitions shall apply:

 

“Applicable Percentage of Target Award” shall mean the percentage of the Target Award of Restricted Shares set forth in the chart above.

 

“Average Annual Same Store Revenue Growth” or “AASSRG” shall mean the simple average of the Annual Same Store Revenue Growth for the three calendar years of the Performance Period.

 

“Annual Same Store Revenue Growth” shall mean the percentage by which Same Store Revenues for the applicable calendar year exceeds Same Store Revenues for the prior calendar year (which growth may be expressed as a negative percentage).

 

“Peer Companies” shall mean the following companies:  Public Storage; Extra Space Storage Inc.; CubeSmart; Life Storage, Inc.; and National Storage Affiliates Trust.

 

“Performance Period” shall mean the period between January 1, 2020 and December 31, 2022.

 

“Same Store Revenue” shall mean the same store revenues reported by the Company and the Peer Companies in their respective Securities and Exchange Commission filings or applicable supplemental data contained on the Company’s or Peer Companies’ websites.

 

	
E.
	
Additional Vesting Provisions.  The Restricted Shares which have become vested are herein referred to as the “Vested Shares.”  If the Restricted Shares that become vested include a fraction of a share, such fractional share shall be rounded up or down to the next nearest whole number.

 

	
F.
	
Effect of Termination of Service and Change of Control.  In the event of (i) the Participant’s termination of employment or service with the Company, SmartStop OP, L.P. or SmartStop REIT Advisors, LLC, or any other Affiliate for any reason, or (ii) a Change of Control, the vesting of the Restricted Shares shall be governed by the Executive Severance and Change of Control Plan, as may be amended pursuant to its terms from time to time (the “Severance Plan”), as in effect at the time of such termination or Change of Control, or, if no such Severance Plan is in place, the Severance Plan last in effect prior to such termination or Change of Control.  

 

	
G.
	
Tax Withholding.  Participant hereby agrees to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with the grant of the Restricted Shares.  The Company shall have the right to deduct from any compensation or any other payment of any kind due to the Participant (including withholding the issuance or delivery of shares of Restricted Stock or redeeming Restricted Shares) the amount of any federal, state, local or foreign taxes required by law to be withheld as a result of the grant of the Restricted Shares, provided, however, that the value of the shares of Restricted Stock withheld or redeemed may not exceed the statutory minimum withholding amount required by law.  In lieu of such deduction, the Company may require the Participant make a cash payment to the Company equal to the amount required to be withheld.  If the Participant does not make such payment when requested, the Company may refuse to issue any Restricted Stock certificate under this Award until arrangements satisfactory to the Company for such payment have been made.

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IN WITNESS WHEREOF, the Company and Participant have signed this Award as of the Grant Date set forth above.

 

 

SMARTSTOP SELF STORAGE REIT, INC.

 

By:      Michael S. McClure, Chief Executive Officer

 

 

 

 

 

_________________[Participant]

 

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ADDITIONAL TERMS AND CONDITIONS OF

SMARTSTOP SELF STORAGE REIT, INC.

PERFORMANCE-BASED RESTRICTED SHARE AWARD

 

1.Code Section 83(b) Election.  Pursuant to Section 18.7 of the Plan, the Participant acknowledges that the Participant may not make an election under Section 83(b) of the Code without the Company’s consent.  Any attempt by the Participant to make an election under Section 83(b) of the Code without the Company’s consent will result in the immediate forfeiture of this Award.

 

2.Issuance of Restricted Shares.  

 

(a)The Company shall issue the Restricted Shares as of the Grant Date in one or more of the manners described below, as determined by the Company, in its sole discretion:

 

(i)by the issuance of share certificate(s) evidencing Restricted Shares to the Secretary of the Company or such other agent of the Company as may be designated by the Company or the Secretary (the “Share Custodian”); or

 

(ii)by documenting the issuance in uncertificated or book entry form on the Company’s stock records.  

 

Evidence of the Restricted Shares either in the form of share certificate(s) or book entry, as the case may be, shall be held by the Share Custodian or the Company, as applicable, until the Restricted Shares become Vested Shares. In the Participant’s discretion and subject to the consent of the Company, the Participant may direct that the Company issue the Restricted Shares to a revocable living trust established for the exclusive benefit of the Participant or the Participant and his or her spouse, provided that the Participant shall remain responsible for the satisfaction of all duties and obligations under the Award and under the Plan, including tax obligations.

 

(b)In the event that the Participant forfeits any of the Restricted Shares, the Company shall cancel the issuance on its stock records and, if applicable, the Share Custodian shall promptly deliver the share certificate(s) representing the forfeited shares to the Company.

 

(c)Participant hereby irrevocably appoints the Share Custodian, and any successor thereto, as the true and lawful attorney-in-fact of Participant with full power and authority to execute any stock transfer power or other instrument necessary to transfer any Restricted Shares to the Company in accordance with this Award, in the name, place, and stead of the Participant, by completing an irrevocable stock power in favor of the Share Custodian in the form attached hereto as Exhibit 1.  The term of such appointment shall commence on the Grant Date of this Award and shall continue until the last of the Restricted Shares are delivered to the Participant as Vested Shares or are returned to the Company as forfeited Restricted Shares.

 

(d)In the event the number of shares of Common Stock is increased or reduced as a result of a subdivision or combination of shares of Common Stock or the payment of a stock dividend or any other increase or decrease in the number of shares of Common Stock or other transaction such as a merger, reorganization or other change in the capital structure of the Company, the Participant agrees that any certificate representing shares of Common Stock or other securities of the Company issued as a result of any of the foregoing shall be delivered to the Share Custodian or recorded in book entry form, as applicable, and shall be subject to all of the provisions of this Award as if initially granted hereunder.

 

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3.Rights of a Stockholder.  Until the stock ledger entry reflecting the Restricted Shares accruing to the Participant upon vesting of the Restricted Shares is made, the Participant shall not have any rights as a stockholder.

 

4.Dividends.  The Participant shall be entitled to dividends or other distributions paid or made on Restricted Shares calculated commencing on the Effective Date, but only as and when the Restricted Shares to which the dividends or other distributions are attributable become Vested Shares.  Such dividends or other distributions paid on Restricted Shares will be held by the Company and transferred to the Participant, without interest, on such date as the Restricted Shares become Vested Shares.  Dividends or other distributions paid on Restricted Shares that are forfeited shall be retained by the Company.  

 

5.Restrictions on Transfer of Restricted Shares.  

 

(a)Except to the extent approved by the Company, the Participant shall not have the right to make or permit to exist any transfer or hypothecation, whether outright or as security, with or without consideration, voluntary or involuntary, of all or any part of any right, title, or interest in or to any Restricted Shares prior to the date that such Restricted Shares become Vested Shares.  After Restricted Shares have become Vested Shares pursuant to this Award, there shall be no restrictions on the transfer of such Vested Shares other than those restrictions imposed by any Applicable Laws.  

 

(b)The restrictions contained in this Section will not apply with respect to transfers of the Restricted Shares pursuant to the laws of descent and distribution governing the state in which the Participant is domiciled at the time of the Participant’s death; provided that the restrictions contained in this Section will continue to be applicable to the Restricted Shares after any such transfer; and provided further that the transferee(s) of such Restricted Shares must agree in writing to be bound by the provisions of this Award.

 

6.Changes in Capitalization.

 

(a)The number of Restricted Shares shall be proportionately adjusted from and after the record date for any nonreciprocal transaction between the Company and the holders of capital stock of the Company that causes the per share value of the shares of Common Stock underlying the Option to change (an “Equity Restructuring”), such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend.

 

(b)In the case of any reclassification or change of outstanding Common Stock issuable upon vesting of the Award, or in the case of any consolidation or merger of the Company with or into another entity (other than a merger in which the Company is the surviving entity and which does not result in any reclassification or change in the then-outstanding Stock) or in the case of any sale or conveyance to another entity of the property of the Company as an entirety or substantially as an entirety, in each case that is not an Equity Restructuring, then, as a condition of such reclassification, change, consolidation, merger, sale or conveyance, the Company or such successor or purchasing entity, as the case may be, shall make lawful and adequate provision whereby the Participant shall thereafter have the right, on exercise of the Award, to receive the kind and amount of securities, property and/or cash receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the number of securities issuable upon exercise of the Award immediately before such reclassification, change, consolidation, merger, sale or conveyance. Such provision shall include adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in Subsection (a). Notwithstanding the foregoing, if such a transaction occurs, in lieu of causing such rights to be substituted for the Award, the 

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Committee may, upon 20 days’ prior written notice to the Participant, in its sole discretion: (i) shorten the period during which the Award is exercisable, provided it remains exercisable, to the extent it is otherwise exercisable, for at least 20 days after the date the notice is given, or (ii) cancel the Award upon payment to the Participant in cash, with respect to the Award to the extent then exercisable, of an amount which, in the sole discretion of the Committee, is determined to be equivalent to the amount, if any, by which the Fair Market Value (at the effective time of the transaction) of the consideration that the Participant would have received if the Award had been exercised before the effective time exceeds the Exercise Price. The actions described in this Subsection (b) may be taken without regard to any resulting tax consequences to the Participant. Any determination made by the Committee pursuant to this Subsection (b) will be final and binding on the Participant.  Any action taken by the Committee need not treat all Participants under the Plan equally.

 

(c)The existence of the Plan and this Award shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Common Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.

 

7.Change of Control.  For purposes of this Agreement, “Change of Control” shall have the meaning set forth in the Executive Severance and Change of Control Plan, as may be amended pursuant to its terms from time to time.

 

8.Compliance With Laws.  The Plan, the granting and vesting of this Award under the Plan, the issuance and delivery of the Restricted Shares, and the payment of money or other consideration allowable under the Plan or this Award are subject to compliance with all applicable federal and state laws, rules and regulations (including, but not limited to, state and federal securities laws and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Committee, the Board or the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Committee, the Board or the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and this Award shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. Nothing in the Plan or in this Award shall require the Company to issue any Stock with respect to the Award if, in the opinion of counsel for the Company, that issuance could constitute a violation of any Applicable Laws. As a condition to the grant or exercise of the Award, the Company may require the Participant (or, in the event of the Participant’s death, the Participant’s legal representatives, heirs, legatees or distributees) to provide written representations concerning the Participant’s (or such other person’s) intentions with regard to the retention or disposition of the Restricted Shares and written covenants as to the manner of disposal of such Stock as may be necessary or useful to ensure that the grant, exercise or disposition thereof will not violate the Securities Act, any other law or any rule of any applicable securities exchange or securities association then in effect. The Company shall not be required to register any Stock under the Securities Act or register or qualify any Stock under any state or other securities laws.

 

9.Legend on Stock Certificates.Certificates evidencing the Restricted Shares, if issued, may have the following legend and statements of other applicable restrictions endorsed thereon:

 

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE LAWS. 

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THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE SOLE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS.

 

This legend shall not be required for any shares of Stock issued pursuant to an effective registration statement under the Securities Act.  Certificates evidencing the Restricted Shares, to the extent appropriate at the time, shall also have noted conspicuously on the certificates a legend intended to give all persons full notice of the existence of any other conditions, restrictions, rights and obligations set forth in this Award and in the Plan. 

 

Instead of the foregoing legend, the certificate may state that the Company will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge. Such statement shall also be sent on request and without charge to stockholders who are issued shares without a certificate.

 

10.Governing Laws.  This Award shall be construed, administered and enforced according to the laws of the State of Maryland; provided, however, no Restricted Shares shall be issued except, in the reasonable judgment of the Company, in compliance with exemptions under applicable state securities laws of the state in which the Participant resides, and/or any other applicable securities laws.

 

11.Successors.  This Award shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties.

 

12.Notice.  Except as otherwise specified herein, all notices and other communications under this Award shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of the recipient.  Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein.

 

13.Severability.  In the event that any one or more of the provisions or portion thereof contained in this Award shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award, and this Award shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

 

14.Entire Agreement.  Subject to the terms and conditions of the Plan, this Award expresses the entire understanding and agreement of the parties.  This Award may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

 

15.Violation.  Except as provided in Section 5, any transfer, pledge, sale, assignment, or hypothecation of the Award or any portion thereof shall be a violation of the terms of this Award and shall be void and without effect.

 

16.Headings.  Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award.  

 

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17.Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

 

18.No Right to Continued Employment.  Neither the establishment of the Plan nor the award of Restricted Shares hereunder shall be construed as giving the Participant the right to continued employment with the Company or any Affiliate.

 

19.Capitalized Terms.  As used in this Award, capitalized terms that are not defined herein have the meaning set forth in the Plan, except where the context does not reasonably permit.  

 

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EXHIBIT 1

 

 

IRREVOCABLE STOCK POWER

 

 

The undersigned hereby assigns and transfers to SmartStop Self Storage REIT, Inc. (the “Company”), _____________ Class A shares of the Common Stock of the Company registered in the name of the undersigned on the stock transfer records of the Company; and the undersigned does hereby irrevocably constitute and appoint , his attorney-in-fact, to transfer the aforesaid shares on the books of the Company, with full power of substitution; and the undersigned does hereby ratify and confirm all that said attorney-in-fact lawfully shall do by virtue hereof.

 

 

Date:Signed:

 

Print Name: 

 

 

IN THE PRESENCE OF:

 

 

 

(Print Name)

 

 

 

(Signature)

 

 

 

 

6ck1585389-ex104_10.htm

Exhibit 10.4

SMARTSTOP SELF STORAGE REIT, INC.

AND SMARTSTOP OP, L.P.

TIME-BASED LTIP UNIT AGREEMENT

 

This LTIP Unit Agreement (this “Agreement”), dated as of April 22, 2020, (the “Grant Date”) and effective as of January 1, 2020 (the “Effective Date”), is made by and between SmartStop Self Storage REIT, Inc. , a Maryland corporation (the “Company”), SmartStop OP, L.P. , a Delaware limited partnership (the “Partnership”) and ____________________ (the “Participant”);

 

WHEREAS, the Company maintains the Employee and Director Long-Term Incentive Plan of SmartStop Self Storage REIT, Inc., effective as of December 20, 2013, as amended by Amendment No. 1, effective as of April 20, 2020 (collectively, and as may be further amended from time to time, the “Plan”);

 

WHEREAS, the Plan allows the grant of Awards to employees of the Company or any Affiliate;

 

WHEREAS, the Compensation Committee (the “Committee”) of the board of directors (the “Board”) of the Company has designated SmartStop Storage Advisors, LLC, a Delaware limited liability company and subsidiary of the Partnership (“SmartStop Advisors”), as an “Affiliate” for purposes of the Plan;

 

WHEREAS, the Participant is an employee of SmartStop Advisors;

 

WHEREAS, Section 9 of the Plan provides for the issuance of Other Equity-Based Awards, which includes the LTIP Units, to eligible persons; 

 

WHEREAS, on April 20, 2020, the Committee approved the 2020 Executive Compensation Program (the “Executive Compensation Program”); and

 

WHEREAS, the Committee has determined that it would be to the advantage and in the best interest of the Company and its Affiliates to cause time based LTIP Units to be issued to the Participant under the Plan and the Executive Compensation Program, subject to the terms and conditions set forth herein (the “Award”).

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

1. Issuance of LTIP Units.  The Participant shall be issued, by the Partnership, a total of ______________ LTIP Units, subject to the terms and conditions set forth herein, in the Plan and in the Third Amended and Restated Limited Partnership Agreement of SmartStop OP, L.P., effective as of June 28, 2019, as amended by that certain Amendment No. 1, effective as of October 29, 2019, and that certain Amendment No. 2, effective as of January 1, 2020, and as may be subsequently amended (the “Partnership Agreement”).  Upon receipt of the Award, the Participant shall, automatically and without further action on his or her part, be deemed to be a party to, signatory of and bound by the Partnership Agreement.  At the request of the Partnership, the Participant shall execute the Partnership Agreement or a joinder or counterpart signature page thereto.  The Participant acknowledges that the Partnership may from time to time issue or cancel (or otherwise modify) LTIP Units and/or other equity interests in accordance with the terms of the Partnership Agreement.  The Award shall have the rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption and conversion set forth herein, in the Plan and in the Partnership Agreement.

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In the Participant’s discretion and subject to the consent of the General Partner, the Participant may direct that the Company issue the LTIP Units to a revocable living trust established for the exclusive benefit of the Participant or the Participant and his or her spouse, provided that the Participant shall remain responsible for the satisfaction of all duties and obligations under the Award and under the Plan, including tax obligations.

 

2. Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below.  All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan and/or the Partnership Agreement, as applicable.

 

	
 
	
(a)
	
“Cause” means “Cause” as defined in the Severance Plan.

 

	
 
	
(b)
	
“Change of Control” means “Change of Control” as defined in the Severance Plan.

 

	
 
	
(c)
	
“Good Reason” means “Good Reason” as defined in the Severance Plan.

 

	
 
	
(d)
	
“Restrictions” means the exposure to forfeiture set forth in Sections 4(a) and 5(b) below and the restrictions on sale or other transfer set forth in Section 3(b) below.

 

	
 
	
(e)
	
“Severance Plan” means that certain Executive Severance and Change of Control Plan issued by the Company, effective as of June 27, 2019, as the same may be amended from time to time, and pursuant to which the Participant has been issued by the Company an Executive Severance Plan Letter.

 

	
 
	
(f)
	
“Subsidiary” means any entity of which the majority of its equity interests are owned by the Company, the Partnership, or SmartStop Advisors, or a combination thereof.

 

3. LTIP Units Subject to Partnership Agreement; Transfer Restrictions.

  

(a) LTIP Units are subject to the terms of the Plan, this Agreement and the Partnership Agreement, including, without limitation, the restrictions on transfer of Units (including, without limitation, LTIP Units) set forth therein.  

 

(b) Except as otherwise provided in Section 3(c) below, without the consent of the General Partner (which it may give or withhold in its sole discretion), the Participant shall not sell, pledge, assign, hypothecate, transfer, or otherwise dispose of (collectively, “Transfer”) any unvested LTIP Units or any portion of the Award attributable to such unvested LTIP Units (or any securities into which such unvested LTIP Units are converted or exchanged), other than by will or pursuant to the laws of descent and distribution (the “Transfer Restrictions”); provided, however, that (i) the Participant may direct that the Company issue the LTIP Units to a revocable living trust as described in Section 1 above and (ii) the Transfer Restrictions shall not apply to any Transfer of unvested LTIP Units or Award to the Partnership or the Company.

 

(c) Any permitted transferee of the Award or LTIP Units shall take such Award or LTIP Units subject to the terms of the Plan, this Agreement, and the Partnership Agreement.  Any such permitted transferee must, upon the request of the Partnership, execute a joinder or counterpart signature page to the Partnership Agreement, and must agree to such other waivers, limitations, and restrictions as the Partnership or the Company may reasonably require.  Any Transfer of the Award or LTIP Units which is not made in compliance with the Plan, the Partnership Agreement and this Agreement shall be null and void and of no effect ab initio.  Notwithstanding any other provision of this Agreement, without the 

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consent of the General Partner (which it may give or withhold in its sole discretion), other than by will or the laws of descent and distribution, the Participant shall not Transfer the LTIP Units, including by means of a redemption of such LTIP Units by the Partnership, until the earlier of (i) the occurrence of, and in connection with, a Change of Control (or such earlier time as is necessary in order for the Participant to participate in such Change of Control transaction with respect to the LTIP Units and receive the consideration payable with respect thereto in connection with such Change of Control) or (ii) the date such LTIP Units become vested.

 

(d) At least two weeks prior (the “Notice Period”) to any proposed Transfer of vested or unvested LTIP Units, the Participant shall provide the Company with written notice of such proposed Transfer.  Such notice of a proposed Transfer may be withdrawn at any time prior to expiration of the Notice Period.

 

4. Vesting.

 

(a) Time Vesting.  Subject to Sections 4(b) and 5 hereof, the Restrictions shall lapse and the LTIP Units shall vest and become nonforfeitable with respect to 25% of the LTIP Units on each of December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023, subject to the Participant’s continued employment or service with SmartStop Advisors or any Affiliate of the Company or the Partnership through the applicable vesting date.

 

(b) Change of Control.  In the event of a Change of Control, the vesting of the LTIP Units shall be governed by the Severance Plan, as in effect at the time of such Change of Control, or, if no such Severance Plan is in place, the Severance Plan last in effect prior to such Change of Control.  

 

5. Effect of Termination of Service.  In the event of the Participant’s termination of employment or service with the Company, the Partnership, SmartStop Advisors, or any other Affiliate for any reason, the vesting of the LTIP Units, if any, shall be governed by the Severance Plan as in effect at the time of such termination, or, if no such Severance Plan is then in place, the Severance Plan last in effect prior to such termination.

 

6. Distributions and Allocations of Profits and Losses.  

 

(a) The Participant shall be entitled to receive distributions and allocations of Profits and Losses with respect to the LTIP Units to the extent provided for in the Partnership Agreement, as modified hereby.  

 

(b) The Distribution Participation Date (as defined in the Partnership Agreement) with respect to the LTIP Units issued hereunder shall be the Effective Date.   

 

(c) All distributions paid with respect to the LTIP Units issued hereunder shall be fully vested and non-forfeitable when paid, whether or not the underlying LTIP Units have become vested pursuant to this Agreement.

 

7. Execution and Return of Documents and Certificates.  At the Company’s or the Partnership’s request, the Participant hereby agrees to promptly execute, deliver and return to the Partnership any and all documents or certificates that the Company or the Partnership deems necessary or desirable to effectuate the cancellation and forfeiture of the unvested LTIP Units (pursuant to the Restrictions) and the portion of the Award attributable thereto, and/or to effectuate the transfer or surrender of such unvested LTIP Units to the Partnership.

 

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8. Covenants, Representations and Warranties.  As a condition to the receipt of this Award, the Participant agrees to execute any investor representation or covenant determined by the Company or the Partnership to satisfy an exception under, or to otherwise comply with, the Securities Act of 1933, as amended (the “Securities Act”), including the representations attached hereto as Exhibit C.  Furthermore, the Participant hereby represents, warrants, covenants, acknowledges and agrees on behalf of the Participant and his or her spouse, if applicable, that:

 

(a) Investment.  The Participant is holding the Award and the LTIP Units for the Participant ’s own account, and not for the account of any other person.  The Participant is holding the Award and the LTIP Units for investment and not with a view to distribution or resale thereof except in compliance with applicable laws regulating securities.

 

(b) Relation to the Company and the Partnership.  The Participant is presently an executive officer of the Company and employee of SmartStop Advisors, or is otherwise providing services to or for the benefit of the Partnership and its subsidiaries, and in such capacity has become personally familiar with the business of the Partnership.

 

(c) Access to Information.  The Participant has had the opportunity to ask questions of, and to receive answers from, the Company and the Partnership with respect to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial conditions, and results of operations of the Partnership.

 

 (d) Registration.  The Participant understands that the LTIP Units have not been registered under the Securities Act, and the LTIP Units cannot be transferred by the Participant unless such transfer is registered under the Securities Act or an exemption from such registration is available.  The Partnership has made no agreements, covenants or undertakings whatsoever to register the transfer of the LTIP Units under the Securities Act.  The Partnership has made no representations, warranties, or covenants whatsoever as to whether any exemption from the Securities Act, including, without limitation, any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 of the Securities Act, shall be available.  If an exemption under Rule 144 is available at all, it shall not be available until at least six months from issuance of the Award and then not unless the terms and conditions of Rule 144 have been satisfied.  

 

(e) Public Trading.  None of the Partnership’s securities are presently publicly traded, and the Partnership has made no representations, covenants or agreements as to whether there will be a public market for any of its securities.

 

(f) Tax Advice.  The Partnership and the Participant intend that (i) the LTIP Units be treated as a “profits interest” as defined in Internal Revenue Service Revenue Procedure 93-27 (“Rev. Proc. 93-27”), as clarified by Revenue Procedure 2001-43 (“Rev. Proc. 2001-43”), (ii) the issuance of such units not be a taxable event to the Partnership or the Participant as provided in such revenue procedure, and (iii) the Partnership Agreement, the Plan and this Agreement be interpreted consistently with such intent.  In furtherance of such intent, effective immediately prior to the issuance of the LTIP Units, the Partnership may revalue all Partnership assets to their respective gross fair market values, and make the resulting adjustments to the “Capital Accounts” (as defined in the Partnership Agreement) of the partners, in each case as set forth in the Partnership Agreement.  The Company, the Partnership or any Subsidiary may withhold from the Participant’s wages, or require the Participant to pay to such entity, any applicable withholding or employment taxes resulting from the issuance of the Award hereunder, from the vesting or lapse of any restrictions imposed on the Award, or from the ownership or disposition of the LTIP Units, provided, however, that neither the Company nor the Partnership has made warranties or representations to the Participant with respect to the income tax consequences of the transactions contemplated by this 

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Agreement (including, without limitation, with respect to the decision of whether to make an election under Section 83(b) of the Code), and the Participant is in no manner relying on the Company or the Partnership or its representatives for an assessment of such tax consequences.  Participant hereby recognizes that the Internal Revenue Service has proposed regulations under Sections 83 and 704 of the Code that may affect the proper treatment of the LTIP Units for federal income tax purposes.  In the event that those proposed regulations are finalized, the Participant hereby agrees to cooperate with the Partnership in amending this Agreement and the Partnership Agreement, and to take such other action as may be required, to conform to such regulations.  The Participant is advised to consult with his or her own tax advisor with respect to such tax consequences and his or her ownership of the LTIP Units.

 

(g) Notice Regarding Transfers.  In further acknowledgement of the intended tax treatment discussed in Section 8(f) above, and notwithstanding the restrictions on transfers of the LTIP Units imposed under the terms of this Agreement, the Participant acknowledges that a Transfer of the LTIP Units within the three-year period following the date of this Agreement may result in adverse tax consequences to the Participant.  Such adverse tax consequences may include, without limitation: (i) the LTIP Units failing to be treated as a “profits interest” as defined in Rev. Proc. 93-27 and Rev. Proc. 2001-43 and (ii) gains associated with any disposition of the LTIP Units, not being taxed at the long-term capital gains rate.

 

9. Capital Account.  The Participant shall make no contribution of capital to the Partnership in connection with the Award and, as a result, the Participant’s Capital Account balance in the Partnership immediately after its receipt of the LTIP Units shall be equal to zero, unless the Participant was a Partner in the Partnership prior to such issuance, in which case the Participant’s Capital Account balance shall not be increased as a result of its receipt of the LTIP Units. 

  

10. Section 83(b) Election.  The Participant covenants that the Participant shall make a timely election under Section 83(b) of the Code (and any comparable election in the state of the Participant’s residence) with respect to the LTIP Units covered by the Award, and the Partnership hereby consents to the making of such election(s).  In connection with such election, the Participant and the Participant’s spouse, if applicable, shall promptly provide a copy of such election to the Partnership.  Instructions for completing an election under Section 83(b) of the Code and a form of election under Section 83(b) of the Code are attached hereto as Exhibit A.  The Participant represents that the Participant has consulted any tax advisor(s) that the Participant deems advisable in connection with the filing of an election under Section 83(b) of the Code and similar state tax provisions.  The Participant acknowledges that it is the Participant’s sole responsibility, and not the Company’s or the Partnership’s, to timely file an election under Section 83(b) of the Code (and any comparable state election), even if the Participant requests that the Company or the Partnership, or any representative of the Company or the Partnership, make such filing on the Participant’s behalf.  The Participant should consult his or her tax advisor to determine if there is a comparable election to file in the state of his or her residence.  

 

11. Ownership Information.  The Participant hereby covenants that so long as the Participant holds any LTIP Units, at the request of the Partnership, the Participant shall disclose to the Partnership in writing such information relating to the Participant’s ownership of the LTIP Units as the Partnership reasonably believes to be necessary or desirable to ascertain in order to comply with the Code or the requirements of any other appropriate taxing authority.

 

12. Remedies.  The Participant shall be liable to the Partnership for all costs and damages, including incidental and consequential damages, resulting from a disposition of the Award or the LTIP Units which is in violation of the provisions of this Agreement.  Without limiting the generality of the foregoing, the Participant agrees that the Partnership shall be entitled to obtain specific performance of the obligations of the Participant under this Agreement and immediate injunctive relief in the event any 

5

action or proceeding is brought in equity to enforce the same.  The Participant shall not urge as a defense that there is an adequate remedy at law.

 

13. Restrictive Legends.  Certificates evidencing the Award, to the extent such certificates are issued, may bear such restrictive legends as the Partnership and/or the Partnership’s counsel may deem necessary or advisable under applicable law or pursuant to this Agreement, including, without limitation, the following legends or any legends similar thereto:

 

“The securities represented hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).  Any transfer of such securities shall be invalid unless a Registration Statement under the Securities Act is in effect as to such transfer or in the opinion of counsel for SmartStop OP, L.P. (the “Partnership”) such registration is unnecessary in order for such transfer to comply with the Securities Act.”

 

“The securities represented hereby are subject to forfeiture, transferability and other restrictions as set forth in (i) the SmartStop Self Storage REIT, Inc. and SmartStop OP, L.P. Time-Based LTIP Unit Agreement, (ii) the Employee and Director Long-Term Incentive Plan of SmartStop Self Storage REIT, Inc. and (iii) the Third Amended and Restated Limited Partnership Agreement of SmartStop OP, L.P., in each case, as has been and as may in the future be amended (or amended and restated) from time to time, and such securities may not be sold or otherwise transferred except pursuant to the provisions of such documents.”

 

14. Restrictions on Public Sale by the Participant.  To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale or distribution of the LTIP Units or any similar security of the Company or the Partnership, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to, and for a period of up to 90 days beginning on the date of the pricing of any public or private debt or equity securities offering by the Company or the Partnership (except as part of such offering), if and to the extent requested in writing by the Partnership or the Company in the case of a non-underwritten public or private offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented to by the Partnership or the Company, which consent may be given or withheld in the Partnership’s or the Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up agreement provided by the Company, the Partnership, managing underwriter or underwriters, or initial purchaser or initial purchasers, as the case may be).

 

 15. Code Section 409A.  To the extent applicable, this Agreement shall be interpreted so that this Award is exempt from (or, to the extent that exemption is not possible, to comply with) Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this Agreement.  Notwithstanding any provision of this Agreement to the contrary, in the event that following the effective date of this Agreement, the Company or the Partnership determines that the Award must be revised to maintain exemption from or to comply with Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Agreement), the Company or the Partnership may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Company or the Partnership determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or 

6

preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however, that this Section 15 shall not create any obligation on the part of the Company, the Partnership or any Subsidiary to adopt any such amendment, policy or procedure or take any such other action, and none of the Company, the Partnership or any Subsidiary shall have any obligation to indemnify any person for any taxes imposed under or by operation of Section 409A of the Code.    

 

16. Miscellaneous.  

 

(a) Incorporation of the Plan.  This Agreement is subject to the terms and conditions of the Plan, which are incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.  The Committee may make such rules and regulations and establish such procedures for the administration of this Agreement as it deems appropriate.  Without limiting the generality of the foregoing, the Committee may interpret the Plan and this Agreement, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law.  In the event of any dispute or disagreement as to interpretation of the Plan or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the Plan or this Agreement, the decision of the Committee shall be final and binding upon all persons.

 

(b) Not a Contract of Service Relationship.  Nothing in this Agreement or in the Plan or the Partnership Agreement shall confer upon the Participant any right to continue to serve as an Employee or other service provider of SmartStop Advisors, the Company, the Partnership or any Affiliate or shall interfere with or restrict in any way the rights of SmartStop Advisors, the Company, the Partnership or any Affiliate, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between SmartStop Advisors, the Company, the Partnership or an Affiliate and the Participant.

 

(c) Governing Law.  The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

 

(d) Conformity to Securities Laws.  The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, and any and all Applicable Law.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award is granted, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by Applicable Law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

 

(e) Amendment, Suspension and Termination.  To the extent permitted by the Plan and the Partnership Agreement, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board; provided, however, that, except as may otherwise be provided by the Plan and the Partnership Agreement, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Award in any material way without the prior written consent of the Participant.

 

 (f) Notices.  Any notice to be given under the terms of this Agreement shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to the Partnership shall be addressed to the Partnership in care of the General Partner of the Partnership at the Partnership’s principal office, and any notice to be given to the Participant shall be 

7

addressed to the Participant at the Participant’s last address reflected on the Company’s records.  Any notice shall be deemed duly given when sent via email or when sent by reputable overnight courier or by certified mail (return receipt requested) through the United States Postal Service.  

 

(g) Successors and Assigns.  The Company, the Partnership or any Affiliate may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company, the Partnership and any Affiliate.  Subject to the restrictions on transfer set forth in Section 3 hereof, this Agreement shall be binding upon the Participant and his or her heirs, executors, successors and assigns.

 

(h) Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan, the Partnership or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, then the Plan, the Partnership Agreement, the Award and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

 

(i) Entire Agreement.  The Plan, the Partnership Agreement, and this Agreement (including all exhibits thereto, if any) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and any Affiliate, the Partnership and the Participant with respect to the subject matter hereof.

 

(j) Clawback.  This Award shall be subject to any clawback or recoupment policy currently in effect or as may be adopted by the Company or the Partnership, in each case, as may be amended from time to time.

 

(k) Survival of Representations and Warranties.  The representations, warranties and covenants contained in Section 8 hereof shall survive the later of the date of execution and delivery of this Agreement or the issuance of the Award.

 

(j) Spousal Consent.  As a condition to the Partnership’s, the Company’s and their Subsidiaries’ obligations under this Agreement, the spouse of the Participant, if any, shall execute and deliver to the Partnership the Consent of Spouse attached hereto as Exhibit B.

 

(k) Fractional Units.  For purposes of this Agreement, any fractional LTIP Units that vest or become entitled to distributions pursuant to the Partnership Agreement shall be rounded as determined by the Company or the Partnership; provided, however, that in no event shall such rounding cause the aggregate number of LTIP Units that vest or become entitled to such distributions to exceed the total number of LTIP Units set forth in Section 1 of this Agreement.

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

 

SMARTSTOP SELF STORAGE REIT, INC.

 

	
 By:
	

 Name: Michael S. McClure

 Title:   Chief Executive Officer

 

 

SMARTSTOP OP, L.P.

  By:SmartStop Self Storage REIT, Inc., 

its sole general partner

 

By:
Name:  Michael S. McClure
Title:    Chief Executive Officer

 

The Participant hereby accepts and agrees to be bound by all of the terms and conditions of this Agreement.

 

____________________________

Participant Name

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