EXHIBIT 10.38
PROPERTY MANAGEMENT AGREEMENT
THIS PROPERTY MANAGEMENT AGREEMENT (this "Agreement") is entered
into as of December 31, 2001 among Twenty-One SAC Self-Storage
Corporation, a Nevada corporation, with its principal place of business at
000 Xxxxx Xxxxxxx Xxxx Xxxxx, Xxxx, XX 00000 ("Owner"), and the property
managers identified on Exhibit A attached hereto and incorporated herein
by reference (each such property manager is respectively referred to
herein as "U-Haul").
RECITALS
A. Owner owns the real property and self-storage related
improvements thereon located at the street addresses identified on Exhibit
A hereto (hereinafter, collectively the "Property").
B. Owner intends that the Property be rented on a space-by-space
retail basis to corporations, partnerships, individuals and/or other
entities for use as self-storage facilities.
C. Owner desires that U-Haul manage the Property and U-Haul desires
to act as the property manager for the Property, all in accordance with
the terms and conditions of this Agreement and as more specifically
designated on Exhibit A hereto.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, Owner and U-Haul hereby agree as follows.
1. Employment.
(a) Owner hereby retains U-Haul, and U-Haul agrees to act as manager
of the Property upon the terms and conditions hereinafter set forth.
(b) Owner acknowledges that U-Haul, and/or U-Haul affiliates, is in
the business of managing self-storage facilities, both for its own account
and for the account of others. It is hereby expressly agreed that
notwithstanding this Agreement, U-Haul and such affiliates may continue to
engage in such activities, may manage facilities other than those
presently managed by U-Haul and its affiliates (whether or not such other
facilities may be in direct or indirect competition with Owner) and may in
the future engage in other business which may compete directly or
indirectly with activities of Owner.
(c) In the performance of their respective duties under this
Agreement, each U-Haul property manager shall occupy the position of an
independent contractor with respect to Owner. Nothing contained herein
shall be construed as making the parties
1
hereto (or any of them) partners or joint venturors, nor (except as
expressly otherwise provided for herein) construed as making U-Haul an
agent or employee of Owner or of any other U-Haul property manager
hereunder.
2. Duties and Authority of U-Haul.
(a) GENERAL DUTIES AND AUTHORITY. Subject only to the restrictions
and limitations provided in paragraphs (o) and (p) of this Section 2 and
the right of Owner to terminate this Agreement as provided in Section 6
hereof, U-Haul shall have the sole and exclusive authority to fully manage
the Property and supervise and direct the business and affairs associated
or related to the daily operation thereof, and, to that end on behalf of
Owner, to execute such documents and instruments as, in the sole judgment
of U-Haul, are reasonably necessary or advisable under the circumstances
in order to fulfill U-Haul's duties hereunder. Such duties and authority
shall include, without limitation, those set forth below. Throughout the
Term of this Agreement, U-Haul shall operate the Property under the
"U-Haul"(R) name.
(b) RENTING OF THE PROPERTY. U-Haul shall establish policies and
procedures for the marketing activities for the Property, and may
advertise the Property through such media as U-Haul deems advisable,
including, without limitation, advertising with the Yellow Pages. U-Haul
shall have the sole discretion, which discretion shall be exercised in
good faith, to establish the terms and conditions of occupancy by the
tenants of the Property, and U-Haul is hereby authorized to enter into
rental agreements on behalf and for the account of Owner with such tenants
and to collect rent from such tenants. U-Haul may jointly advertise the
Property with other properties owned or managed by U-Haul, and in that
event, U-Haul shall reasonably allocate the cost of such advertising among
such properties.
(c) REPAIR, MAINTENANCE AND IMPROVEMENTS. U-Haul shall make,
execute, supervise and have control over the making and executing of all
decisions concerning the acquisition of furniture, fixtures and supplies
for the Property, and may purchase, lease or otherwise acquire the same on
behalf of Owner. U-Haul shall make and execute, or supervise and have
control over the making and executing of all decisions concerning the
maintenance, repair, and landscaping of the Property. U-Haul shall, on
behalf of Owner, negotiate and contract for and supervise the installation
of all capital improvements related to the Property; provided, however,
that U-Haul agrees to secure the prior written approval of Owner on all
such expenditures in excess of $5,000.00 for any one item, except monthly
or recurring operating charges and/or emergency repairs if in the opinion
of U-Haul such emergency-related expenditures are necessary to protect the
Property from damage or to maintain services to the tenants as called for
in their respective leases.
(d) PERSONNEL. U-Haul shall select all vendors, suppliers,
contractors, subcontractors and employees with respect to the Property and
shall hire, discharge and
2
supervise all labor and employees required for the operation and
maintenance of the Property. Any employees so hired shall be employees of
U-Haul, and shall be carried on the payroll of U-Haul. Employees may
include, but will not be limited to, on-site resident managers, on-site
assistant managers, and relief managers located, rendering services, or
performing activities on the Property in connection with its operation and
management. The cost of employing such persons shall not exceed prevailing
rates for comparable persons performing the same or similar services with
respect to real estate similar to the Property.
(e) AGREEMENTS. U-Haul shall negotiate and execute on behalf of
Owner such agreements which U-Haul deems necessary or advisable for the
furnishing of utilities, services, concessions and supplies, for the
maintenance, repair and operation of the Property and such other
agreements which may benefit the Property or be incidental to the matters
for which U-Haul is responsible hereunder.
(f) OTHER DECISIONS. U-Haul shall make all decisions in connection
with the daily operation of the Property.
(g) REGULATIONS AND PERMITS. U-Haul shall comply in all material
respects with any statute, ordinance, law, rule, regulation or order of
any governmental or regulatory body, having jurisdiction over the
Property, respecting the use of the Property or the maintenance or
operation thereof. U-Haul shall apply for and attempt to obtain and
maintain, on behalf of Owner, all licenses and permits required or
advisable (in the sole judgment of U-Haul) in connection with the
management and operation of the Property.
(h) RECORDS AND REPORTS OF DISBURSEMENTS AND COLLECTIONS. U-Haul
shall establish, supervise, direct and maintain the operation of a system
of record keeping and bookkeeping with respect to all receipts and
disbursements in connection with the management and operation of the
Property. The books, records and accounts shall be maintained at the
U-Haul office or at such other location as U-Haul shall determine, and
shall be available and open to examination and audit quarterly by Owner,
its representatives, any mortgagee of the Property, and such mortgagee's
representative. On or before thirty (30) days after the close of each
quarter, U-Haul shall cause to be prepared and delivered to Owner, a
monthly statement of receipts, expenses and charges, together with a
statement of the disbursements made by U-Haul during such period on
Owner's behalf.
(i) [Reserved].
(j) COLLECTION. U-Haul shall be responsible for the billing and
collection of all accounts receivable and for payment of all accounts
payable with respect to the Property and shall be responsible for
establishing policies and procedures to minimize the amount of bad debts.
3
(k) LEGAL ACTIONS. U-Haul shall cause to be instituted, on behalf
and in the name of Owner, any and all legal actions or proceedings U-Haul
deems necessary or advisable to collect charges, rent or other income due
to Owner with respect to the Property and to oust or dispossess tenants or
other persons unlawfully in possession under any lease, license concession
agreement or otherwise, and to collect damages for breach thereof or
default thereunder by such tenant, licensee, concessionaire or occupant.
(l) INSURANCE. U-Haul shall use its best efforts to assure that
there is obtained and maintained in force, fire, comprehensive liability
and other insurance policies in amounts generally carried with respect to
similar facilities. U-Haul may in its discretion obtain employee theft or
similar insurance in amounts and with such deductibles as U-Haul deems
appropriate. U-Haul shall promptly provide Owner with such certificates of
insurance as Owner may reasonably request in writing, evidencing such
insurance coverage.
(m) TAXES. During the term of this Agreement, U-Haul shall pay from
Owner's funds, prior to delinquency, all real estate taxes, personal
property taxes, and all other taxes assessed to, or levied upon, the
Property. If required by the holder of any note secured by the Property,
U-Haul will set aside, from Owner's funds, a reserve from each month's
rent and other income collected, in an amount required by said holder for
purposes of payment of real property taxes.
(n) [RESERVED].
(o) LIMITATIONS ON U-HAUL AUTHORITY. Notwithstanding anything to the
contrary set forth in this Section 2, U-Haul shall not, without obtaining
the prior written consent of Owner, (i) rent storage space in the Property
by written lease or agreement for a stated term in excess of one year,
(ii) alter the building or other structures of the Property in any
material manner; (iii) make any other agreements which exceed a term of
one year and are not terminable on thirty day's notice at the will of
Owner, without penalty, payment or surcharge; (iv) act in violation of any
law; or (v) act in violation of any duty or responsibility of Owner under
any mortgage loan secured by the Property.
(p) SHARED EXPENSES. Owner acknowledges that certain economies may
be achieved with respect to certain expenses to be incurred by U-Haul on
behalf of Owner hereunder if materials, supplies, insurance or services
are purchased by U-Haul in quantity for use not only in connection with
the Property but in connection with other properties owned or managed by
U-Haul or its affiliates. U-Haul shall have the right to purchase such
materials, supplies, insurance and/or services in its own name and charge
Owner a pro rata allocable share of the cost of the foregoing; provided,
however, that the pro rata cost of such purchase to Owner shall not result
in expenses greater than would otherwise be incurred at competitive prices
and terms available in the area where the
4
Property is located; and provided further, U-Haul shall give Owner access
to records so Owner may review any such expenses incurred.
(q) DEPOSIT OF GROSS REVENUES. All Gross Revenues (as hereinafter
defined) shall be remitted by U-Haul (or its parent company) on a daily
basis to a bank account maintained by UBS Warburg Real Estate Investments
Inc. ("Lender") (or an affiliate thereof) and the funds therein shall be
applied in the manner specified in that Cash Management Agreement dated
the date hereof among Owner, U-Haul and Lender. U-Haul shall maintain such
records and systems as are necessary or appropriate to enable U-Haul to
clearly identify the amount of Gross Revenue generated by each Property on
a daily basis.
3. Duties of Owner.
Owner hereby agrees to cooperate with U-Haul in the performance of
U-Haul's duties under this Agreement and to that end, upon the request of
U-Haul, to provide, at such rental charges, if any, as are deemed
appropriate, reasonable office space for U-Haul employees on the premises
of the Property and to give U-Haul access to all files, books and records
of Owner relevant to the Property. Owner shall not unreasonably withhold
or delay any consent or authorization to U-Haul required or appropriate
under this Agreement. Throughout the term hereof, Owner shall not permit
the Property to be operated under any name other than "U-Haul"(R).
4. Compensation of U-Haul.
(a) MANAGEMENT FEE. Owner shall pay to U-Haul as the full amount due
for the services herein provided a fee (the "Management Fee") equal to six
percent (6%) of the "Gross Revenue" derived from or connected with the
Property so managed by U-Haul hereunder. U-Haul shall not offset or reduce
the amount of the Management Fee payable to it at any time hereunder in
exchange for a reduction in the amount rent due from U-Haul to Owner
pursuant to any lease agreement between U-Haul and Owner. The term "Gross
Revenue" shall mean all receipts (excluding security deposits unless and
until Owner recognizes the same as income) of Owner (whether or not
received by U-Haul on behalf or for the account of Owner) arising from the
operation of the Property, including without limitation, rental payments
of lessees of space in the Property, vending machine or concessionaire
revenues, maintenance charges, if any, paid by the tenants of the Property
in addition to basic rent, parking fees, if any, and all monies whether or
not otherwise described herein paid for the use of the Property. "Gross
Revenue" shall be determined on a cash basis. The Management Fee shall be
paid promptly at the end of each calendar quarter and shall be calculated
on the basis of the "Gross Revenue" of such preceding quarter. The
Management Fee shall be paid to each U-Haul property manager herein
identified based on the Gross Revenue of each respective Property for
which such property manager is responsible as set forth on Exhibit A
hereto. Each property manager
5
agrees that its monthly Management Fee shall be subordinate to that
month's principal balance and interest payment on any first lien position
mortgage loan on the Property.
It is understood and agreed that the Management Fee will not be
reduced by the cost to Owner of those employees and independent
contractors engaged by or for Owner, including but not limited to the
categories of personnel specifically referred to in Section 2(d). Except
as provided in this Section 4, it is further understood and agreed that
U-Haul shall not be entitled to additional compensation of any kind in
connection with the performance by it of its duties under this Agreement.
(B) REIMBURSEMENT OF CERTAIN EXPENSES. In addition to the Management
Fee described above, U-Haul shall be entitled to reimbursement from Owner,
on a quarterly basis, for all out-of-pocket expenses incurred by U-Haul
hereunder in connection with the management and operation of the Property,
including, without limitation, taxes, insurance, operational expenses,
overhead, litigation and dispute resolution related expenses, capital
improvement expenses, and costs of sales.
5. Use of Trademarks, Service Marks and Related Items.
Owner acknowledges the significant value of the "U-Haul" name in the
operations of Owner's property and it is therefore understood and agreed
that the name, trademark and service xxxx, "U-Haul", and related marks,
slogans, caricatures, designs and other trade or service items shall be
utilized for the non-exclusive benefit of Owner in the rental and
operation of the Property, and in comparable operations elsewhere. It is
further understood and agreed that this name and all such marks, slogans,
caricatures, designs and other trade or service items shall remain and be
at all times the property of U-Haul and its affiliates, and that, except
during the term hereof and as expressly provided herein, Owner shall have
no right whatsoever therein. Owner agrees that during the term of this
agreement the sign faces at the property will have the name "U-Haul." The
U-Haul sign faces will be paid for by Owner. Upon termination of this
agreement at any time for any reason, all such use by and for the benefit
of Owner of any such name, xxxx, slogan, caricature, design or other trade
or service item in connection with the Property shall, in any event, be
terminated and any signs bearing any of the foregoing shall be removed
from view and no longer used by Owner. In addition, upon termination of
this Agreement at any time for any reason, Owner shall not enter into any
new leases of Property using the U-Haul lease form or use other forms
prepared by U-Haul. It is understood and agreed that U-Haul will use and
shall be unrestricted in its use of such name, xxxx, slogan, caricature,
design or other trade or service item in the management and operation of
other storage facilities both during and after the expiration or
termination of the term of this Agreement.
6
6. Termination.
Owner or U-Haul may terminate this Agreement with or without cause
by giving not less than thirty days' written notice to the other party
pursuant to Section 11 hereof. In addition, if Owner fails to pay U-Haul
any amounts owed under this Agreement when due, U-Haul may terminate this
Agreement by giving Owner not less than ten days written notice pursuant
to Section 11 hereof. Notwithstanding the foregoing, however, U-Haul shall
not resign as property manager of the Property until a nationally
recognized and reputable successor property manager is available and
prepared to assume property management responsibilities with respect to
the Property in question Upon termination of this Agreement, U-Haul shall
promptly return to Owner all monies, books, records and other materials
held by U-Haul for or on behalf of Owner. In addition, if U-Haul has
contracted to advertise the Property in the Yellow Pages, Owner shall, at
the option of U-Haul, continue to be responsible for the cost of such
advertisement and shall either (i) pay U-Haul the remaining amount due
under such contract in a lump sum; or (ii) pay U-Haul monthly for the
amount due under such contract.
7. Indemnification.
Owner hereby agrees to indemnify and hold each of U-Haul, all
persons and companies affiliated with U-Haul, and all officers,
shareholders, directors, employees and agents of U-Haul and of any
affiliated companies or persons (collectively, the "Indemnified Persons")
harmless from any and all costs, expenses, attorneys' fees, suits,
liabilities, judgments, damages, and claims in connection with the
management of the Property (including the loss of use thereof following
any damage, injury or destruction), arising from any cause except for the
willful misconduct or gross negligence on the part of the Indemnified
Persons. In addition, no Indemnified Person shall be liable for any error
of judgment or for any mistake of fact or law, or for anything which it
may do or refrain from doing hereafter, except in cases of willful
misconduct or gross negligence. U-Haul hereby agrees to indemnify and hold
Owner harmless from any and all costs, expenses, attorneys' fees, suits,
liabilities, judgments, damages and claims in connection with the
management of the Property arising from the willful misconduct of, gross
negligence of, or breach of this Agreement by the Indemnified Persons. In
addition, U-Haul shall not be liable to Owner for the acts or omissions of
U-Haul's officers, shareholders, directors, employees, and agents except
for U-Haul's own gross negligence or willful misconduct.
8. Assignment.
This Agreement may be assigned by Owner in connection with any
mortgage loan on the Property, whether pursuant to a conditional or
unconditional, absolute assignment. U-Haul shall have the right to assign
this Agreement to an affiliate or a wholly or
7
majority owned subsidiary; provided, however, any such assignee must
assume all obligations of U-Haul hereunder, Owner's rights hereunder will
be enforceable against any such assignee and U-Haul shall not be released
from its liabilities hereunder unless Owner shall expressly agree thereto
in writing.
9. Headings.
The headings contained herein are for convenience of reference only
and are not intended to define, limit or describe the scope or intent of
any provision of this Agreement.
10. Governing Law.
The validity of this Agreement, the construction of its terms and
the interpretation of the rights and duties of the parties shall be
governed by the internal laws of the State of Arizona.
11. Notices.
Any notice required or permitted herein shall be in writing and
shall be personally delivered or mailed first class postage prepaid or
delivered by an overnight delivery service to the respective addresses of
the parties set forth below their signatures on the signature page
thereof, or to such other address as any party may give to the other in
writing. Any notice required by this Agreement will be deemed to have been
given when personally served or one day after delivery to an overnight
delivery service or five days after deposit in the first class mail.
12. Severability.
Should any term or provision hereof be deemed invalid, void or
unenforceable either in its entirety or in a particular application, the
remainder of this Agreement shall nonetheless remain in full force and
effect and, if the subject term or provision is deemed to be invalid, void
or unenforceable only with respect to a particular application, such term
or provision shall remain in full force and effect with respect to all
other applications.
13. Successors.
This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto and their permitted assigns and successors in
interest.
8
14. Attorneys' Fees.
If it shall become necessary for any party hereto to engage
attorneys to institute legal action for the purpose of enforcing their
respective rights hereunder or for the purpose of defending legal action
brought by the other party hereto, the party or parties prevailing in such
litigation shall be entitled to receive all costs, expenses and fees
(including reasonable attorneys' fees) incurred by it in such litigation
(including appeals).
15. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16. Scope of Property Manager Responsibility.
The duties, obligations and liability of each property manager
identified herein shall extend only so far as to relate to the Property
for which such property manager is managing located in the domicile state
of such property manager, as more specifically described on Exhibit A
hereto, and no individual property manager hereunder shall be liable for
the acts or omissions of any other property manager hereunder. Each
property manager shall use its best efforts to assist Owner in fulfilling
Owner's obligations arising under any loan to Owner that is secured by the
Property, including but not limited to preparing and providing financial
and accounting reports, and maintaining the Property. Each property
manager agrees that it will perform its obligations hereunder according to
reasonable industry standards, in good faith, and in a commercially
reasonable manner. U-Haul agrees that, in discharging its duties
hereunder, it will not have any relationship with any of its affiliates
that would be less favorable to Owner than would reasonably be available
in a transaction with an unaffiliated party.
[Rest of page intentionally left blank]
9
IN WITNESS WHEREOF, the parties hereto execute this Agreement as of
the date first above written.
"Owner":
Twenty-One SAC Self-Storage Corporation,
a Nevada corporation
By: _______________________________
Its: ______________________________
10
"U-Haul"
U-Haul Co. of Arizona, Inc.
By: ________________________________
Xxxx X. Xxxxxxxxxxx, Secretary
U-Haul Co. of California, Inc.
By: ________________________________
Xxxx X. Xxxxxxxxxxx, Secretary
U-Haul Co. of Michigan, Inc.
By: ________________________________
Xxxx X. Xxxxxxxxxxx, Secretary
U-Haul Co. of Ohio, Inc.
By: ________________________________
Xxxx X. Xxxxxxxxxxx, Secretary
U-Haul Co. of Tennessee, Inc.
By: ________________________________
Xxxx X. Xxxxxxxxxxx, Secretary
U-Haul Co. of Texas, Inc.
By: ________________________________
Xxxx X. Xxxxxxxxxxx, Secretary
11
Exhibit A
000000 X-XXXX XXX XXXXXXXX XXXXXXX XX 00000
000000 X-XXXX XXX XXXXXXX XXXXXXX XX 00000
712032 U-HAUL CENTER DOWNTOWN LOS ANGELES CA 90006
721058 U-HAUL 00XX & XXXXXXXX XXXXXXXX XX 00000
744068 U-HAUL XXXXXX XXX XXX XXXXXXX XX 00000
752069 U-HAUL XXXXXXXX XXXX XXXXXXX XX 00000
000000 X-XXXX XXX XXXXX XXXXXX XX 00000
772061 U-HAUL HENDERSONVILLE XXXXXXXXXXXXXX XX 00000
835081 U-HAUL XXXXXXXXX XXXXXX XX 00000
12
