PROPERTY MANAGEMENT AGREEMENT
PROPERTY
MANAGEMENT
AGREEMENT
THIS
PROPERTY MANAGEMENT AGREEMENT (this "Agreement")
is
entered into as
of
September 23,
2005
among Five SAC 905, LLC, a Delaware limited liability company ("Owner"),
and
the
subsidiaries of U-Haul International. Inc. set forth on the signature block
hereto ("Manager").
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, the
parties hereto hereby agree as follows.
1.
Employment.
(a)
Owner
hereby retains Manager, and Manager agrees to act as manager of the Property
upon the terms and conditions hereinafter set forth.
(b)
Owner
acknowledges that Manager, and/or Manager affiliates, is in the business of
managing self-storage facilities and businesses conducted thereat, including,
but not limited to, the sale of packing supplies and rental of trucks and
equipment, both for its own account and for the account of others. It is hereby
expressly agreed that notwithstanding this Agreement, Manager and such
affiliates may continue to engage in such activities, may manage facilities
other than those presently managed by Manager 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 its duties under this Agreement, 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 construed as making Manager an employee of
Owner.
2.Duties
and Authority of Manager.
Subject
to the terms and conditions of this Agreement:
(a) General
Duties and Authority. Manager
shall have the sole and
exclusive
duty and authority to fully manage the Property and supervise and direct the
business and affairs associated or related to the daily operation thereof,
to
collect on behalf of Owner all
revenues
related to the Property, to pay on behalf of Owner all expenses of the Property
- and to execute on behalf of Owner such documents and instruments as, in the
sole judgment of Manager, are reasonably necessary or advisable under the
circumstances in order to fulfill Manager's duties hereunder. Such duties and
authority shall include, without limitation, those set forth
below.
(b) Renting
of the Property. Manager
shall establish policies and procedures
for the marketing activities for the Property, and shall advertise the Property
through such media as Manager deems advisable, including, without limitation,
advertising with the Yellow Pages. Manager's marketing activities for the
Property shall be consistent with the scope and quality implemented by Manager
and its affiliates at any other properties managed by Manager or its affiliates.
Manager shall have the sole discretion, which discretion shall be exercised
in
good faith, to establish the terms and conditions of occupancy by the Owners
of
the Property, and Manager is hereby authorized to enter into rental agreements
on behalf and for the account of Owner with such Owners and to collect rent
from
such Owners on behalf and for the account of Owner. Manager may jointly
advertise the Property with other properties owned or managed by Manager or
its
Affiliates, and in that event, Manager shall reasonably allocate the cost of
such advertising among such properties.
(c)
Repair,
Maintenancc and Improvemcnts.
Manager
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. Manager 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, provided, however, that such maintenance, repair
and landscaping shall be consistent with the maintenance, repair and landscaping
implemented by Manager and its affiliates at any other properties managed by
Manager or its affiliates. Manager shall, on behalf of Owner, negotiate and
contract for and supervise the installation of all capital improvements related
to the Property; provided, however, that Manager 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 Manager such emergency-related expenditures are
necessary to protect the Property from damage or to maintain services to the
Owners or self-storage licensees as called for in their respective leases or
self-storage agreements.
(d)
Personnel.
Manager
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 Manager, and shall be carried on the
payroll of Manager. Employees may include, but need 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 in the general
vicinity of each respective Property. Manager shall be responsible for all
legal
and insurance requirements relating to its employees.
2
(e)
Service
Agreements.
Manager
shall negotiate and execute on behalf of Owner such agreements which Manager
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 Manager is responsible
hereunder.
(f)
Other
Decisions.
Manager
shall make the decisions in connection with the day-to-day operations of the
Property.
(g)
Regulations
and Permits.
Manager
shall comply in all respects with any statute, ordinance, law, rule, regulation
or order of any governmental or regulatory body, having jurisdiction over the
Property (collectively, "Laws"), respecting the use of the Property or the
maintenance or operation thereof, the non-compliance with which could reasonably
be expected to have a material adverse effect on Owner or any Property. Manager
shall apply for and obtain and maintain, on behalf of Owner, all licenses and
permits required or advisable (in the reasonable judgment of Manager) in
connection with the management and operation of the Property. Notwithstanding
the foregoing, Manager shall be permitted to contest any Applicable Laws to
the
extent and pursuant to the same conditions that Owner is permitted to contest
any Laws. - To the extent that manager does not comply, manager will be
responsible for costs and penalties incurred as a result of the
non-compliance.
(h)
Records
and Reports of Disbursements and Collections.
Manager
shall establish, supervise, direct and maintain the operation of a system or
cash record keeping and bookkeeping with respect to all receipts and
disbursements in connection with the management and operation of the Property.
Manager shall be responsible for cash shortages and discrepancies incurred
in
the normal course of management operations. The books, records and accounts
shall be maintained at the Manager's office or at Owner's office, or at such
other location as Manager and Owner shall determine, and shall be available
and
open to examination and audit quarterly by Owner, its representatives, its
lender, if any and as provided by owner, and, subject to -
any
mortgagee
of the Property, and such mortgagee's representative. - Manager shall cause
to
be prepared and delivered to Owner a monthly statement on a per-Property basis,
of receipts, expenses and charges, together with a statement, on a per-Property
basis, of the disbursements made by Manager during such period on Owner's
behalf.
(i)
Collection.
Manager
shall be responsible for the billing and collection of all -receipts and for
payment of all -expenses with respect to the Property and shall be responsible
for establishing policies and procedures to minimize the amount of bad debts.
Bad debt incurred as a result of non compliance with management policies and
procedures will be the responsibility of Manager.
(j)
Legal
Actions.
Manager
shall cause to be instituted, on behalf and in its name or in the name of Owner
as appropriate, any and all legal actions or proceedings Manager deems necessary
or advisable to collect charges, rent or other income due to Owner with respect
to the Property and to oust or dispossess Owners 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 Owner,
licensee, concessionaire or occupant.
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(k)
Insurance.
-
Manager will insure, on its Master policy, against all liabilities at Manager's
cost. Manager will insure equipment at Manager's cost. If requested by Owner,
Manager will charge an expense monthly equal to 1/12 of the annual Owner's
property insurance and pay same on Owner' s behalf.
(I)
Taxes.
During
the term of this Agreement, Manager shall pay on behalf of Owner, prior to
delinquency, all real estate taxes, personal property taxes, and all other
taxes
assessed to, or levied upon, the Property. If -requested, Manager will - charge
an expense monthly equal to 1/12 annual- real property taxes.
(m) Limitations
on Manager Authority.
Notwithstanding anything to the contrary set forth in this Section 2, Manager
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 unless such lease or agreement is terminable by the giving
of
not more than thirty (30) days written notice. (ii) alter the building or other
structures of the Property in violation of loan documents executed by Owner
in
connection with the property ("Loan Documents") if and when provided by Owner;
(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) violate any term or
condition of the Loan Documents if and when provided by Owner.
(n)
Shared
Expenses.
Owner
acknowledges that certain economics may be achieved with respect to certain
expenses to be incurred by Manager on behalf of Owner hereunder if materials,
supplies, insurance or services are purchased by Manager in quantity for use
not
only in connection with Owner's business at the Property but in connection
with
other properties owned or managed by Manager or its affiliates. Manager 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 that are either inconsistent with the expenses
of
other "U-Haul branded" locations in the general vicinity of the applicable
Property or greater than would otherwise be incurred at competitive prices
and
terms available in the area where the Property is located; and provided further,
Manager shall give Owner access to records (at no cost to Owner) so Owner may
review any such expenses incurred.
(o)
Deposit
of Gross Revenues.
All
Gross Revenues (as hereinafter defined) shall be deposited into a xxxx account
maintained by U-Haul (or its parent company) as for the benefit of the Owner.
Manager shall move cash to Owner's depository account daily. To the extent
that
the Gross Revenues are deposited into a collective account maintained by U-Haul
(or its parent company) for the benefit of multiple property owners, U-Haul
(or
its parent company) shall reconcile such account daily and maintain such records
as shall clearly identify each day the respective interest of each owner in
such
collective account. Manager shall move cash from any such collection account
to
Owner's depository account daily. Gross Revenues of the Owner shall be applied
first to the repayment of Owner's senior debt with respect to the Property,
and
then to U-Haul in reimbursement of documented expenses and for management fees
as provided under Section 4 below.
4
(p)
Obligations
under Loan Documents and other Material Contracts.
Manager
shall take such actions as are necessary or appropriate under the circumstances
to ensure that Owner is in compliance with the terms of the Loan Documents
and
any other material agreement relating to the Property to which Owner is a party
if and when provided by Owner. Nothing herein contained shall be deemed to
obligate Manager to fund from its own resources any payments owed by Owner
under
the Loan Documents or otherwise be deemed to make Manager a direct obligor
under
the Loan Documents, except as may otherwise be expressly provided
therein.
(q)
Obligations
notwithstanding other Tenancy at the Property.
Manager
shall perform all of its obligations under this Agreement in a professional
manner consistent with the standards it employs at all of its managed
locations.
3.Duties
of Owner.
Owner
shall cooperate with Manager in the performance of Manager's duties under this
Agreement and to that end, upon the request of Manager, to provide, at such
rental charges, if any, as are deemed appropriate, reasonable office space
for
Manager employees on the premises of the Property (to the extent available).
-
Owner shall not unreasonably withhold or delay any consent or authorization
to
Manager required or appropriate under this Agreement.
4. Compensation
of Manager.
(a) Reimbursement
of Expenses. Manager
shall be entitled to request reimbursement, on a timely basis, for all timely
authorized and documented out-of-pocket reasonable and customary expenses
actually incurred by Manager in the discharge of its duties hereunder. Such
reimbursement shall be the obligation of Owner, whether or not Gross Revenues
are sufficient to pay such amounts. -
(b)
Management
Fee.
Owner
shall pay to Manager as the full amount due for the services herein provided
a
quarterly fee (the "Management Fee") which shall be four percent (4%) of the
Property's trailing twelve month Gross Revenue divided by four (4) ("Base Fee"),
plus an annual incentive fee (the "Incentive Fee") based upon the performance
of
the Property as set forth on Exhibit B hereto. For purposes of this Agreement,
the term "Gross Revenue" shall mean all receipts (excluding security deposits
unless and until Owner recognizes the same as income) of Manager or Owner
(whether or not received by Manager on behalf or for the account of Owner)
arising from the operation of Owner's business at the Property, including
without limitation, rental payments of self.-storage customers at the Property,
vending machine or concessionaire revenues, maintenance charges, if any, paid
by
the Owners of the Property in addition to basic rent and parking fees, if any.
Gross Revenue shall be determined on a cash basis. Subject to the terms of
Sections 2(o), the Management Fee shall be paid promptly, in arrears, within
thirty (30) days of Owner's receipt of the invoice therefor, which invoice
shall
be sent from Manager to Owner following the end of each calendar quarter. Such
invoice shall be itemized and shall include reasonable detail.
Except
as
provided in this Section 4, it is further understood and agreed that Manager
shall not be entitled to additional compensation of any kind in connection
with
the performance by it of its duties under this Agreement.
5
(c) Inspection
of Books and Records.
Owner
shall have the right, upon prior reasonable notice to Manager, to inspect
Manager's books and records with respect to the Property, to assure that proper
fees and charges are assessed hereunder. Manager shall cooperate with any such
inspection. Owner shall bear the cost of any such inspection; provided, however,
that if it is ascertained that Manager has overcharged Owner by more than 5%
in
any given quarter, the cost of such inspection shall be borne by Manager.
Manager shall promptly reimburse Owner for any overpayment.
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 (the "Manager
Trade Marks")
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 Manager and its affiliates, and that, except as expressly provided
in this Agreement, 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." - Unless Owner has elected to continue to use the Manager
Trade Marks as provided in Section 6 of this Agreement, 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 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 Manager
lease form or use other forms prepared by Manager. It is understood and agreed
that Manager 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. Default;
Termination.
(a)
Any
material failure by Manager or Owner (a "Defaulting Party") to perform their
respective duties or obligations hereunder (other than a default by Owner under
Section 4 of this Agreement), which material failure is not cured within thirty
(30) calendar days after receipt of written notice of such failure from the
non-defaulting party, shall constitute an event of default hereunder; provided,
however, the foregoing shall not constitute an event of default hereunder in
the
event the Defaulting Party commences cure of such material failure within such
thirty (30) day period and diligently prosecutes the cure of such material
failure thereafter but in no event shall such extended cure period exceed ninety
(90) days from the date of receipt by the non-defaulting party of written notice
of such material default; provided further, however, that in the event such
material failure constitutes a default under the terms of - Loan Documents,
if
and when provided by Owner and the cure period for such matter under the Loan
Documents is shorter than the cure period specified herein, the cure period
specified herein shall automatically shorten such that it shall match the cure
period for such matter as specified under the Loan Documents. In addition,
following notice to Manager of the existence of any such
6
material
failure by Manager, Owner shall each have the right to cure any such material
failure by Manager, and any sums so expended in curing shall be owed by Manager
to such curing party and may be offset against any sums owed to Manager under
this Agreement.
(b)
Any
material failure by Owner to perform its duties or obligations under Section
4,
which material failure is not cured within ten (10) calendar days after receipt
of written notice of such failure from Manager, shall constitute an event of
default hereunder.
(c)
Owner
shall have the right to terminate this Agreement, with or without cause, by
giving not less than thirty (30) days' written notice to Manager pursuant to
Section 14 hereof. Manager shall have the right to terminate this Agreement
with
or without cause, by giving not less than ninety (90) days' written notice
to
Owner pursuant to Section 14 hereof.
(d)
Upon
termination of this Agreement. (x) Manager shall promptly return to Owner all
monies, books, records and other materials held by Manager for or on behalf
of
Owner and shall otherwise cooperate with Owner to promote and ensure a smooth
transition to the new manager and (y) Manager shall be entitled to receive
its
Management Fee and reimbursement of expenses through the effective date of
such
termination, including the reimbursement of any prepaid expenses for periods
beyond the date of termination (such as Yellow Pages advertising).
7.Indemnification.
Manager
hereby agrees to indemnify, defend and hold Owner, all persons and companies
affiliated with Owner, and all officers, shareholders, directors, employees
and
agents of Owner 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 and operations thereon (including the loss of use
thereof following any damage, injury or destruction), arising from any cause
or
matter whatsoever, including, without limitation, any environmental condition
or
matter, except to the extent attributable to the wi11ful misconduct or gross
negligence on the part of the Indemnified Persons.
8.Assignment.
Manager
shall not assign this Agreement to any party without the consent of
Owner.
9.Standard
for Property Manager's Responsibility.
Manager
agrees that it will perform its obligations hereunder according to industry
standards, in good faith, and in a commercially reasonable manner.
10.
Estoppel
Certificate.
Each
of
Owner and Manager agree to execute and deliver to one another, from time to
time, within ten (10) business days of the requesting party's written request,
a
statement in writing certifying, to the extent true, that this Agreement is
in
full force and effect, and acknowledging that there are not, to such parties
knowledge, any uncured defaults or specifying
7
such
defaults if they are claimed and any such other matters as may be reasonably
requested by such requesting party.
11.Term;
Scope.
Subject
to the provisions hereof, this Agreement shall have an initial term (such term,
as extended or renewed in accordance with the provisions hereof, being called
the "Term)")
commencing on the date hereof (the "Commencement
Date")
and
ending on the last day of the one hundred and twentieth (120th) calendar month
next following the date hereof (the "Expiration
Date"),
provided however, the Term shall expire with respect to any individual Property
as to which - Loan Documents, if and when provided by Owner have terminated
in
accordance with the terms of the Loan Documents (for instance due to a
significant casualty or condemnation) .
12.
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.
13.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.
14.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 above
on
the first page of this Agreement, 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. Any notice
to Owner shall be to the attention of President, 000 Xxxxx Xxxxxxx Xxxx Xxxxx,
Xxxx, XX 00000. Any notice to Manager shall be to the attention of c/o U-Haul
International, Inc. Legal Dept, 0000 Xxxxx Xxxxxxx X xxxxx, Xxxxxxx, XX 00000,
Attn: Secretary.
15.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.
16.
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
17.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).
18.
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.
9
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the date set
forth
above.
Owner:
Five
SAC
905, LLC, a
Delaware
limited liability Company
By:
/s/ Xxxxx Xxxxxxxxxx
Xxxxx
Xxxxxxxxxx, Secretary
Manager:
U-HauI
Co. of Nevada, Inc.
U-Haul
Co. of Florida
U-Haul
Co. of Maryland, Inc.
By:
/s/ Xxxxxxxx X. Xxxxxxx
Xxxxxxxx
X. Xxxxxxx, Secretary
10
786046
U-Haul Center Citrus Park
6111
Xxxx
Hwy
Tampa
Florida
33625
818057
U-Haul Center Landover
0000
Xxxxxxxxx Xxxx Xxxxxxxx
Xxxxxxxx
00000
000000
X-Xxxx Xxxxxx Xxxxxxx Xxxxx
000
X
Xxxxxxx Xxx Xxxxxxxxx
Xxxxxx
00000
11
Exhibit
B
Management
Fee
Incentives
The
following Incentive Fee shall be calculated and, if and to the extent earned,
paid, annually after the end of each fiscal year of Owner:
In
the
event that net operating income of the Property equals or exceeds 110% (but
less
than 120%) of principal and interest under the Loan Documents ("P&I") for
the prior fiscal year being calculated, the Incentive Fee for such period shall
be 1% of the Property's Gross Revenue for such fiscal year.
In
the
event that net operating income of the Property equals or exceeds 120% (but
less
than 130%) of P&I for the prior fiscal year being calculated, the Incentive
Fee for such period shall be 2% of the Property's Gross Revenue for such fiscal
year.
In
the
event that net operating income of the Property equals or exceeds 130% (but
less
than 140%) of P&I for the prior fiscal year being calculated, the Incentive
Fee for such period shall be 3% of the Property's Gross Revenue for such fiscal
year.
In
the
event that net operating income of the Property equals or exceeds 140% (but
less
than 150%) of P&I for the prior fiscal year being calculated, the Incentive
Fee for such period shall be 4% of the Property's Gross Revenue for such fiscal
year.
In
the
event that net operating income of the Property equals or exceeds 150% of
P&I for the prior fiscal year being calculated, the Incentive Fee for such
period shall be 6% of the Property's Gross Revenue for such fiscal
year.
