PROPERTY MANAGEMENT AGREEMENT
-----------------------------
THIS PROPERTY MANAGEMENT AGREEMENT (this "Agreement") is entered
into as of June 30, 2000 among Fourteen 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 incorportated herein
---------
by reference (each such property manager is respectively referred to herein
as "U-Haul").
RECITALS
--------
A. Owner owns the leasehold estate in 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
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.
(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 deposited into a "lock box account"
maintained by U-Haul International, Inc., parent company of U-Haul, in
accordance with the terms of a certain Cash Management Agreement
dated as of the date hereof among Owner, Xxxxx Fargo Bank, National
Association (as lender and agent) and U-Haul (the "CMA"). Borrower
and U-Haul each hereby covenant and agree that they shall comply with
the terms and provisions of the CMA.
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.
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. 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 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. Termination.
-----------
Owner or U-Haul may terminate this Agreement with or without
cause by giving not less than sixty 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 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.
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]
IN WITNESS WHEREOF, the parties hereto execute this
Agreement as of the date first above written.
"Owner"
Fourteen SAC Self-Storage Corporation,
a Nevada corporation
By: /S/ XXXXX XXXXXXXXXX
___________________________
Xxxxx Xxxxxxxxxx, Secretary
U-Haul Co. of New York
/S/ XXX XXXXXX
__________________________
U-Haul Co. of Texas
/S/ XXX XXXXXX
__________________________
U-Haul Co. of Nevada
/S/ XXX XXXXXX
__________________________
U-Haul Co. of Illinois
/S/ XXX XXXXXX
__________________________
EXHIBIT A
------------------------------------------------------------
Number Name City State Owner
____________________________________________________________
758059 U-HAUL CENTER NEW-TOWN CHICAGO NORTH IL 14 SAC
800057 U-HAUL CTR ALBANY ALBANY NY 14 SAC
803079 U-HAUL KINGS BRIDGE BRONX NY 14 SAC
806056 U-HAUL FIVE TOWNS INWOOD NY 14 SAC
