PROPERTY MANAGEMENT AGREEMENT
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THIS PROPERTY MANAGEMENT AGREEMENT (this "Agreement") is entered
into as of December 31, 2001 among Twenty-Three 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
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incorporated herein by reference (each such property manager is
respectively referred to herein as "U-Haul").
RECITALS
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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.
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(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
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.
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(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" REGISTERED 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 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.
(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 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.
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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" REGISTERED.
4. Compensation of U-Haul.
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(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 agrees that its
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