1
Draft of January 20, 1997
GUARANTY AGREEMENT
Dated as of January 20, 1997
of
STORAGE TRUST REALTY
Re:
$44,000,000 7.47% Series A Senior Notes
due January 15, 2004
$56,000,000 7.66% Series B Senior Notes
due January 15, 2007
of
STORAGE TRUST PROPERTIES, L.P.
TABLE OF CONTENTS
Section Heading Page
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. GUARANTY 1
SECTION 2. PAYMENT UPON CERTAIN EVENTS 1
SECTION 3. GENERAL PROVISIONS RELATING TO THE GUARANTY 2
SECTION 4. WAIVERS; OBLIGATION UNCONDITIONAL 2
SECTION 5. NEGATIVE COVENANTS 4
Section 5.1. Consolidated Adjusted Tangible Net
Worth 4
Section 5.2. Incurrence of Debt 4
Section 5.3. Interest Charges Coverage Ratio 5
Section 5.4. Unencumbered Asset Coverage 5
Section 5.5. Liens 5
Section 5.6. Merger, Consolidation, etc 6
Section 5.7. Sales of Assets 6
Section 5.8. Line of Business 7
Section 5.9. Transactions with Affiliates 7
Section 5.10.Restricted Investments 7
Section 5.11.Defined Terms 7
SECTION 6. COLLECTION EXPENSES 17
SECTION 7. NO SUBROGATION UNTIL PAYMENT IN FULL 17
SECTION 8. INTERPRETATION 17
SECTION 9. SUCCESSORS AND ASSIGNS 18
SECTION 10. NOTICES 18
SECTION 11. COUNTERPARTS 18
SECTION 12. SEVERABILITY 18
SECTION 13. GOVERNING LAW 18
SECTION 14. NO RECOURSE TO SHAREHOLDERS ETC 18
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this Guaranty ) dated as of January 20,
1997 by STORAGE TRUST REALTY, a Maryland real estate investment
trust (the Trust ).
RECITALS:
A. Storage Trust Properties, L.P., a Delaware limited
partnership (the Operating Partnership ) and the Trust have
concurrently herewith entered into those certain Note Purchase
Agreements each dated as of January 20, 1997 (the Note Purchase
Agreements ) with the Purchasers named on Schedule A thereto (the
Purchasers ) providing for the sale by the Operating Partnership
of (i) its $44,000,000 aggregate principal amount of 7.47%
Series A Senior Notes due January 15, 2004 (the Series A Notes )
and (ii) its $56,000,000 aggregate principal amount of 7.66%
Series B Senior Notes due January 15, 2007 (the Series B Notes
and, together with the Series A Notes, the Notes ).
B. The Trust is desirous that the Purchasers enter into
the Note Purchase Agreements and by doing so the Purchasers will
be conferring financial and other benefits on the Trust. As an
inducement to enter into the Note Purchase Agreements and in
consideration therefor the Purchasers have required that the
Trust enter into this Guaranty.
C. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned in the Note Purchase
Agreements.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and to induce the Purchasers to
enter into the Note Purchase Agreements and to induce every
future holder of the Notes to be bound by the terms and entitled
to the benefits of the Note Purchase Agreements, it is hereby
agreed as follows:
SECTION 1. GUARANTY.
The Trust hereby unconditionally guarantees to each holder
of any Note (collectively the Noteholders and each individually
a Noteholder ) (a) the due and punctual payment at maturity,
whether at stated maturity, by acceleration, by notice of
prepayment or otherwise, of the principal of and premium, if any,
and interest on the Notes in accordance with the terms and
conditions thereof and of the Note Purchase Agreements, and
(b) the prompt performance and compliance by the Operating
Partnership with each of its other obligations under the Note
Purchase Agreements. This is a guaranty of payment and not a
guaranty of collection.
SECTION 2. PAYMENT UPON CERTAIN EVENTS.
The Trust agrees that, if any of the Events of Default
described in Section 11(h) or (i) of the Note Purchase Agreements
occurs, the Trust shall pay forthwith to the Noteholders, upon 30
days notice and whether or not there has been any other default
under the Note Purchase Agreements or the Notes, the whole amount
of the principal of and, to the full extent permitted by
applicable law, Make-Whole Amount, if any, on the Notes then
outstanding and any unpaid interest thereon, with interest
thereon from the date of the occurrence of such event to and
including the date of payment, so far as permitted by law, at a
rate per annum equal to the greater of (i) 9.47% in case of the
Series A Notes or 9.66% in the case of the Series B Notes and
(ii) 1.0% over the rate of interest publicly announced by The
First National Bank of Boston from time to time in Boston,
Massachusetts as its base or prime rate.
SECTION 3. GENERAL PROVISIONS RELATING TO THE GUARANTY.
Each and every Event of Default under the Note Purchase
Agreements shall give rise to a separate claim and cause of
action hereunder, and separate claims or suits may be made and
brought, as the case may be, hereunder as each such default
occurs. The obligations hereunder are independent of the
obligations of the Operating Partnership to pay the principal of
and premium, if any, and interest on the Notes, and a separate
action or actions may be brought and prosecuted against the Trust
whether such action is brought and prosecuted against the
Operating Partnership or any other guarantor, or whether the
Operating Partnership is joined in any such action or actions.
The obligations of the Trust hereunder shall be reinstated and
revived, and the rights of the Noteholders shall continue, with
respect to any amount at any time paid on account of the
obligations guaranteed hereby, which shall thereafter be required
t o be restored or returned by the Noteholders upon the
b a nkruptcy, insolvency or reorganization of the Operating
Partnership, or otherwise, all as though such amount had not been
paid.
SECTION 4. WAIVERS; OBLIGATION UNCONDITIONAL.
The Trust assents to all the terms, covenants and conditions
of the Notes and the Note Purchase Agreements, and irrevocably
waives presentation, demand for payment, or protest, of any of
the Notes, notice of acceptance of this guarantee or of the terms
and provisions thereof by any Noteholder, any requirement of
diligence or promptness on the part of any Noteholder in the
enforcement of rights under the provisions hereof, of the Note
Purchase Agreements or of the Notes, or any right to require any
Noteholder to proceed first against the Operating Partnership.
The obligations of the Trust hereunder shall be unconditional
i r r espective of the genuineness, validity, regularity or
enforceability of the Note Purchase Agreements or of the Notes or
of any other circumstance which might otherwise constitute a
legal or equitable discharge of a surety or guarantor and shall
be joint and several with those of the Operating Partnership.
The obligations of the Trust hereunder shall not be affected by:
(a) the recovery of any judgment against the Operating
Partnership, or by the levy of any writ or process of
execution under any such judgment, or by any action or
proceeding taken by any Noteholder, either under the Notes
or under the Note Purchase Agreements for the enforcement
thereof, or hereof, or in the exercise of any right or power
given or conferred thereby, or hereby, or
(b) any delay, failure or omission upon the part of
any Noteholder to enforce any of the rights or powers given
or conferred hereby or by the Note Purchase Agreements, or
by any delay, failure or omission upon the part of any
Noteholder to enforce any right of any Noteholder against
t h e Operating Partnership, or by any action by any
N o t e holder in granting indulgence to the Operating
Partnership, or in waiving or acquiescing in any default or
event of default upon the part of the Operating Partnership
under the Notes or under the Note Purchase Agreements, or
(c) the consolidation, amalgamation or merger of the
Operating Partnership or any of its Subsidiaries with or
into any other corporation or corporations or any sale,
lease or other disposition of the Operating Partnership or
any of its Subsidiaries properties as an entirety or
substantially as an entirety to any other corporation, or
(d) the acceptance of any additional security or other
guaranty, the advance of additional money to the Operating
Partnership or any other Person, the renewal or extension of
any amounts guaranteed hereby, or the sale, release,
substitution or exchange of any security for the amounts
guaranteed hereby, or
(e) any defense (other than the full and indefeasible
performance by the Operating Partnership of its obligations
under the Note Purchase Agreements and the Notes) whatsoever
that the Operating Partnership or any other Person might
have to the payment of any of the amounts or obligations
guaranteed hereby or to the performance or observance of any
of the provisions of the Note Purchase Agreements or the
N o tes, whether through the satisfaction or purported
satisfaction by the Operating Partnership or any other
Person of its debts due to any cause such as bankruptcy,
i n s olvency, receivership, merger, consolidation,
reorganization, dissolution, liquidation, winding-up or
otherwise, or
(f) impossibility or illegality of performance on the
part of the Operating Partnership or any other Person of its
obligations under the Note Purchase Agreements or the Notes,
or
(g) any renewal, extension, refunding, amendment or
modification of or addition or supplement to or deletion
from any of the terms of the Note Purchase Agreements or the
Notes, or any other agreement which may be made relating to
any such instruments which does not specifically amend or
specifically modify the terms of this Guaranty, or
(h) any amendment, compromise, release or consent or
other action or inaction in respect of any of the terms of
the Note Purchase Agreements or the Notes (other than any
such amendment, compromise, release or consent or other
action which, by its terms, expressly modifies the terms and
provisions hereof), or
(i) any bankruptcy, insolvency, reorganization,
arrangement, adjustment, composition, liquidation, or the
l i k e of the Operating Partnership or any of its
Subsidiaries, or
(j) absence of any notice to, or knowledge by, the
Trust of the existence or occurrence of any of the matters
or events set forth in the foregoing subdivisions (a)
through (i), or
(k) any other act or delay or failure to act, or any
other thing, which may or might in any manner or to any
extent vary the risk of the Trust hereunder;
it being the purpose and intent of the parties hereto that the
obligations of the Trust hereunder shall be absolute and
unconditional under any and all circumstances, and shall not be
discharged except by payment in cash as herein provided, and then
only to the extent of such payment or payments.
SECTION 5. NEGATIVE COVENANTS.
The Trust covenants that so long as any of the Notes are
outstanding:
Section 5.1. Consolidated Adjusted Tangible Net Worth. The
Trust will not at any time permit Consolidated Adjusted Tangible
Net Worth to be less than $175,000,000; provided, however, that
the Trust shall be permitted to pay dividends to the extent
required by the provisions of subchapter M of the Code to
maintain the deductibility from its income of dividends paid by
it so long as after giving effect to the payment of such
d i v idends, no Default or Event of Default described in
paragraph (a), (b), (h) or (i) of Section 11 of the Note Purchase
Agreements shall have occurred and be continuing.
Section 5.2. Incurrence of Debt. The Trust will not, and
will not permit any Subsidiary to, directly or indirectly,
create, incur, assume, guarantee, or otherwise become directly or
indirectly liable with respect to, any Debt, unless on the date
the Trust or such Subsidiary becomes liable with respect to any
such Debt and immediately after giving effect thereto and the
concurrent retirement of any other Debt,
(a) no Default or Event of Default exists,
(b) C o n s olidated Debt does not exceed 45% of
Consolidated Adjusted Capitalization, and
(c) i n the case of Priority Debt, Consolidated
Priority Debt does not exceed 30% of Consolidated Adjusted
Capitalization.
For the purposes of this Section 5.2, any Person becoming a
Subsidiary after the date hereof shall be deemed, at the time it
b e comes a Subsidiary, to have incurred all of its then
outstanding Debt, and any Person extending, renewing or refunding
any Debt shall be deemed to have incurred such Debt at the time
of such extension, renewal or refunding.
Section 5.3. Interest Charges Coverage Ratio. The Trust will
not permit the Interest Charges Coverage Ratio on any date to be
less than 2.00 to 1.00.
Section 5.4. Unencumbered Asset Coverage. The Trust will at
all times keep and maintain Unencumbered Assets at an amount not
less than 200% of Unsecured Debt.
Section 5.5. Liens. The Trust will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset
(including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Trust or any such
Subsidiary, whether now owned or held or hereafter acquired, or
any income or profits therefrom, or assign or otherwise convey
any right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental
charges the payment of which is not at the time required by
Section 9.4 of the Note Purchase Agreements;
(b) s t a tutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
similar Liens, in each case, incurred in the ordinary course
of business for sums not yet due or the payment of which is
not at the time required by Sections 9.1 or 9.4 of the Note
Purchase Agreements;
(c) any attachment or judgment Lien, provided the
judgment it secures shall, within 30 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal;
(d) Liens on properties securing security deposits of
tenants, provided that the aggregate amount of such security
deposits secured by such Liens shall not exceed 5% of
C o nsolidated Adjusted Capitalization at any time
outstanding;
(e) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in
c o n n ection with worker s compensation, unemployment
insurance and other like laws, warehousemen s and attorneys
liens and statutory landlords liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to
secure statutory obligations, surety or appeal bonds or
other Liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing
of money; provided in each case, the obligation secured is
not overdue or, if overdue, is being contested in good faith
by appropriate actions or proceedings;
(f) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for rights-
of-way, utilities and other similar purposes, or zoning or
other restrictions as to the use of real properties, which
are necessary for the conduct of the activities of the Trust
a n d its Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and
similarly situated and which do not in any event materially
impair their use in the operation of the business of the
Trust and its Subsidiaries;
(g) Liens existing on the date of this Guaranty and
securing the Debt of the Trust and its Subsidiaries referred
to in item 2 of Schedule 5.15 of the Note Purchase
Agreements and refinancing, renewal or extension of such
Debt, provided that (i) the principal amount of such Debt is
not increased over the principal amount thereof immediately
prior to such refinancing, renewal or extension, and
(ii) such Lien is not extended to other property of the
Trust or any Subsidiary;
(h) Liens securing Debt incurred within the
limitations of Section 5.2;
(i) Liens on property or assets of a Subsidiary
securing Debt owing to the Trust or to any of its
Subsidiaries; and
(j) a n y Lien existing on property of a Person
immediately prior to its being consolidated with or merged
into the Trust or a Subsidiary or its becoming a Subsidiary,
or any Lien existing on any property acquired by the Trust
or any Subsidiary at the time such property is so acquired
(whether or not the Debt secured thereby shall have been
assumed), provided that (i) no such Lien shall have been
created or assumed in contemplation of such consolidation or
merger or such Person s becoming a Subsidiary or such
acquisition of property, and (ii) each such Lien shall
extend solely to the item or items of property so acquired
and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement
to or is acquired for specific use in connection with such
acquired property.
Section 5.6. Merger, Consolidation, etc. The Trust will not
consolidate with or merge with any other entity unless (i) the
Trust or the Operating Partnership is the surviving or continuing
e n tity and (ii) immediately after giving effect to such
transaction no Default or Event of Default would exist.
Section 5.7. Sales of Assets. (a) The Trust will not, and
w i ll not permit any Subsidiary to, engage in any Asset
Disposition unless, (x) after giving effect to such Asset
Disposition, no Default or Event of Default shall have occurred
and be continuing and (y) such Asset Disposition does not involve
any substantial part of the assets of the Trust and its
Subsidiaries. An Asset Disposition shall be deemed to involve a
substantial part of the assets of the Trust and its
Subsidiaries (i) if the book value of the assets subject to such
Asset Disposition, when added to the book value of all other
assets subject to other Asset Dispositions during the same fiscal
year exceeds 15% of Consolidated Total Assets determined as of
the end of the immediately preceding fiscal year, or (ii) if the
portion of consolidated total revenue for the preceding fiscal
y e a r attributable to the assets subject to such Asset
Disposition, when added to the portion of consolidated total
revenue for the preceding fiscal year attributable to all other
assets subject to other Asset Dispositions during the same fiscal
year exceeds 15% of consolidated total revenue for the fiscal
year immediately preceding such Asset Disposition; provided,
however, that in any computation of substantial part there
shall be excluded any Asset Disposition, to the extent that the
proceeds thereof are applied within 180 days after the receipt of
the proceeds of such Asset Disposition to either (i) the
voluntary prepayment of the Notes pursuant to Section 8.2 of the
Note Purchase Agreements, or (ii) the purchase of other similar
assets for use in the business of the Trust and its Subsidiaries.
Section 5.8. Line of Business. The Trust will not, and will
not permit any of its Subsidiaries to, engage in any business if,
as a result, the general nature of the business in which the
Trust and its Subsidiaries, taken as a whole, would then be
engaged would be substantially changed from the general nature of
the business in which the Trust and its Subsidiaries, taken as a
whole, are engaged on the date of this Agreement as described in
the Memorandum.
Section 5.9. Transactions with Affiliates. The Trust will
not and will not permit any Subsidiary to enter into directly or
indirectly any Material transaction or Material group of related
transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate (other than the Trust, any
Wholly-Owned Subsidiary or Specified Affiliate), except in the
ordinary course and pursuant to the reasonable requirements of
the Trust s or such Subsidiary s business and upon fair and
reasonable terms no less favorable to the Trust or such
Subsidiary than would be obtainable in a comparable arm s-length
transaction with a Person not an Affiliate.
Section 5.10. Restricted Investments. The Trust will not, and
will not permit any Subsidiary to (i) make any Restricted
Investment if, after giving effect thereto, the aggregate amount
of Restricted Investments held by the Trust and its Subsidiaries
would exceed 10% of Consolidated Total Assets or (ii) make any
Unimproved Real Estate Investments if, after giving effect
t h e reto, the aggregate amount of Unimproved Real Estate
Investments held by the Trust and its Subsidiaries would exceed
10% of Consolidated Total Assets.
Section 5.11. Defined Terms. As used in this Section 5, the
following terms have the respective meanings set forth below:
Affiliate means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or
indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first
Person, and (b) any Person (other than a Person reporting, or
required to report, beneficial ownership on Schedule 13G)
beneficially owning or holding, directly or indirectly, 10% or
more of any class of voting or equity interests of the Trust or
any Subsidiary or any corporation of which the Trust and its
Subsidiaries beneficially own or hold, in the aggregate, directly
or indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, Control means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise. Unless the context otherwise clearly requires, any
reference to an Affiliate is a reference to an Affiliate of the
Trust.
Asset Disposition means and includes (i) a sale, lease or
other disposition of assets (other than in the ordinary course of
business) by the Trust or any Subsidiary (except by the Trust to
a Wholly-Owned Subsidiary or to a Specified Affiliate, and except
by a Subsidiary to the Trust, to a Subsidiary in which the Trust
holds, directly or indirectly, an equity or voting interest equal
to or greater than (in percentage terms) its interest in the
transferor Subsidiary, or to a Specified Affiliate), (ii) the
issuance or sale by any Subsidiary or Specified Affiliate of any
shares of stock of any class (including as stock for the
purpose of this definition, any warrants, rights or options to
p u r chase or otherwise acquire stock or other Securities
exchangeable for or convertible into stock) of such Subsidiary or
such Specified Affiliate, as the case may be, to any Person other
than the Trust, a Wholly-Owned Subsidiary or a Specified
Affiliate (except for the purpose of qualifying directors, except
in satisfaction of the validly pre-existing preemptive rights of
m i nority shareholders in connection with the simultaneous
issuance of stock to the Trust and its Subsidiaries whereby the
Trust and its Subsidiaries maintain their same proportionate
interest in such Subsidiary and except, in the case of an
issuance or sale by a Specified Affiliate, for an issuance or
s a l e subject to an arrangement assuring to the Trust
substantially all of the economic interest in, such Specified
Affiliate), and (iii) the sale, transfer or other disposition by
the Trust of any shares of stock of any Subsidiary or Specified
Affiliate (except by the Trust to a Wholly-Owned Subsidiary or a
Specified Affiliate or except to qualify directors and except, in
the case of a sale, transfer or disposition of any shares of
stock of a Specified Affiliate, for the sale, transfer or
disposition subject to an arrangement assuring to the Trust
substantially all of the economic interest in, such Specified
Affiliate) and the sale, transfer or other disposition by any
Subsidiary or by any Specified Affiliate of any shares of stock
of any other Subsidiary or other Specified Affiliate (except to
the Trust, a Subsidiary in which the Trust holds, directly or
indirectly, an equity or voting interest equal to or greater than
(in percentage terms) its interest in the transferor Subsidiary,
or a Specified Affiliate and except, in the case of a sale,
transfer or disposition of shares of stock of a Specified
Affiliate, for a sale, transfer or disposition subject to an
arrangement assuring to the Trust substantially all of the
economic interest in, such Specified Affiliate).
Capital Lease means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
Capital Lease Obligation means, with respect to any Person
and a Capital Lease, the amount of the obligation of such Person
as the lessee under such Capital Lease which would, in accordance
with GAAP, appear as a liability on a balance sheet of such
Person.
Code means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
Consolidated Adjusted Capitalization as of any date means
t h e sum of Consolidated Adjusted Tangible Net Worth and
Consolidated Debt as of such date.
Consolidated Adjusted Tangible Net Worth means, at any
time,
(a) the sum of (i) the par value (or value stated on
the books of the Trust) of the capital stock or other equity
interests (but excluding treasury stock, capital stock
subscribed and unissued and mandatorily redeemable Preferred
Stock or corresponding equity interests) of the Trust and
its Subsidiaries at such time plus (ii) the amount of the
paid-in capital and retained earnings of the Trust and its
Subsidiaries at such time, in each case as such amounts
would be shown on a consolidated balance sheet of the Trust
and its Subsidiaries as of such time prepared in accordance
with GAAP, minus
(b) to the extent included in clause (a), all amounts
properly attributable to minority interests, if any, in the
stock or other equity interests and surplus of Subsidiaries
(other than the Operating Partnership), minus
(c) the net book value of all assets, after deducting
any reserves applicable thereto, which would be treated as
intangible under GAAP, including, without limitation, good
will, trademarks, trade names, service marks, brand names,
copyrights, patents and unamortized debt discount and
expense, organizational expenses and the excess of the
equity in any Subsidiary over the cost of the investment in
such Subsidiary, plus
(d) accumulated depreciation on real estate properties
as such amount would be shown on a consolidated balance
sheet of the Trust and its Subsidiaries as of such time
prepared in accordance with GAAP.
Consolidated Cash Flow Available for Interest Charges
means, in respect of any period, the sum of (a) Consolidated Net
Income for such period, (b) the amount of all depreciation of
real estate owned and amortization allowances and other non-cash
expenses of the Trust and its Subsidiaries but only to the extent
deducted in the determination of Consolidated Net Income for such
period, (c) Interest Charges but only to the extent deducted in
the determination of Consolidated Net Income for such period and
(d) all provisions for any Federal, state or other income taxes
made by the Trust and its Subsidiaries but only to the extent
deducted in the determination of Consolidated Net Income for such
period.
Consolidated Debt means, as of any date of determination,
the total of all Debt of the Trust and its Subsidiaries
outstanding on such date, after eliminating all offsetting debits
and credits among the Trust and its Subsidiaries and all other
items required to be eliminated in the course of the preparation
of consolidated financial statements of the Trust and its
Subsidiaries in accordance with GAAP.
Consolidated Net Income means, with reference to any
p e riod, the net income (or loss) of the Trust and its
Subsidiaries for such period, as determined in accordance with
GAAP, after eliminating all offsetting debits and credits among
t h e Trust and its Subsidiaries, all earnings or losses
attributable to outstanding Minority Interests and all other
items required to be eliminated in the course of the preparation
of consolidated financial statements of the Trust and its
Subsidiaries in accordance with GAAP, provided that there shall
be excluded:
(a) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or
consolidated with the Trust or a Subsidiary, and the income
(or loss) of any Person, substantially all of the assets of
which have been acquired in any manner, realized by such
other Person prior to the date of acquisition,
(b) the income (or loss) of any Person (other than a
Subsidiary) in which the Trust or any Subsidiary has an
ownership interest, except to the extent that any such
income has been actually received by the Trust or such
Subsidiary in the form of cash dividends or similar cash
distributions,
(c) the undistributed earnings of any Subsidiary to
the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time
permitted by the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary,
(d) any restoration to income of any contingency
reserve, except to the extent that provision for such
reserve was made out of income accrued during such period,
(e) any aggregate net gain or aggregate net loss
during such period arising from the sale, conversion,
exchange or other disposition of capital assets (such term
to include, without limitation, (i) all non-current assets
and, without duplication, (ii) the following, whether or not
current: all fixed assets, whether tangible or intangible,
all inventory sold in conjunction with the disposition of
fixed assets, and all Securities),
(f) any gains resulting from any write-up of any
assets (but not any loss resulting from any write-down of
any assets),
(g) any net gain from the collection of the proceeds
of life insurance policies,
(h) any gain arising from the acquisition of any
S e c u r ity of the Trust or any Subsidiary, or the
extinguishment, under GAAP, of any Debt of the Trust or any
Subsidiary,
(i) any net income or gain (but not any net loss)
during such period from (i) any change in accounting
principles in accordance with GAAP, (ii) any prior period
a d j ustments resulting from any change in accounting
principles in accordance with GAAP, (iii) any extraordinary
i t e m s, or (iv) any discontinued operations or the
disposition thereof,
(j) any deferred credit representing the excess of
equity in any Subsidiary at the date of acquisition over the
cost of the investment in such Subsidiary,
(k) in the case of a successor to the Trust by
consolidation or merger or as a transferee of its assets,
any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets, and
(l) any portion of such net income that cannot be
freely converted into United States Dollars.
Consolidated Priority Debt means, as of any date of
determination, the total of all Priority Debt of the Trust and
its Subsidiaries outstanding on such date, after eliminating all
o f f s etting debits and credits among the Trust and its
Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of
the Trust and its Subsidiaries in accordance with GAAP.
Consolidated Total Assets means as of any date of
determination, consolidated total assets of the Trust and its
Subsidiaries, after eliminating all offsetting debits and credits
among the Trust and its Subsidiaries and all other items required
to be eliminated in the course of the preparation of consolidated
financial statements of the Trust and its Subsidiaries in
accordance with GAAP.
Constituent Companies means the Trust and the Operating
Partnership.
Debt with respect to any Person means, at any time,
without duplication,
(a) i t s liabilities for borrowed money and its
redemption obligations in respect of mandatorily redeemable
Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any
Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable
for such liabilities);
(e) all its liabilities in respect of letters of
credit or instruments serving a similar function issued or
accepted for its account by banks and other financial
institutions (whether or not representing obligations for
borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a)
through (f) hereof.
Debt of any Person shall include all obligations of such Person
of the character described in clauses (a) through (g) to the
extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
Default means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
Event of Default is defined in Section 11 of the Note
Purchase Agreements.
Exchange Act means the Securities Exchange Act of 1934, as
amended.
GAAP means generally accepted accounting principles as in
effect from time to time in the United States of America.
Guaranty means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation)
o b l igations incurred through an agreement, contingent or
otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to
m a intain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness
or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
Interest Charges means, with respect to any period, the
sum (without duplication) of the following (in each case,
eliminating all offsetting debits and credits among the Trust and
its Subsidiaries and all other items required to be eliminated in
t h e course of the preparation of consolidated financial
statements of the Trust and its Subsidiaries in accordance with
GAAP): (a) all interest in respect of Debt of the Trust and its
S u bsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for
such period, and (b) all debt discount and expense amortized or
required to be amortized in the determination of Consolidated Net
Income for such period.
Interest Charges Coverage Ratio means, at any time, the
ratio of (a) Consolidated Cash Flow Available for Interest
Charges for the period of four consecutive fiscal quarters ending
on, or most recently ended prior to, such time to (b) Interest
Charges for such period.
Investment means any investment, made in cash or by
delivery of property, by the Trust or any of its Subsidiaries
(i) in any Person, whether by acquisition of stock, Debt or other
obligation or Security, or by loan, guaranty, advance, capital
contribution or otherwise, or (ii) in any property.
Lien means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with
respect to any property or asset of such Person (including in the
case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
Material means material in relation to the business,
operations, affairs, financial condition, assets or properties of
the Trust and its Subsidiaries taken as a whole.
Memorandum is defined in Section 5.3 of the Note Purchase
Agreements.
Minority Interest shall mean any shares of stock of any
class of, or any partnership, membership or other ownership in, a
Subsidiary (other than directors qualifying shares as required by
law) that are not owned by the Trust and/or one or more of its
Subsidiaries.
Person means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
Preferred Stock means any class of capital stock of a
corporation that is preferred over any other class of capital
stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such
corporation.
Priority Debt means (i) Debt of either Constituent Company
secured by a Lien on any asset of either Constituent Company and
(ii) all Debt of Subsidiaries (except Debt of the Operating
Partnership or Debt of any other Subsidiary owed to either
Constituent Company or a Wholly-owned Subsidiary).
The term property or properties means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, xxxxxx or inchoate.
Restricted Investments means all Investments except the
following:
(a) Investments in property to be used in the ordinary
course of business of the Trust, its Subsidiaries and
Specified Affiliates;
(b) Investments in current assets arising in the
ordinary course of business of the Trust, its Subsidiaries
and Specified Affiliates;
(c) Investments directly in real property in the
ordinary course of business of the Trust, its Subsidiaries
and Specified Affiliates;
(d) Investments in entities owning real properties
provided that (i) income from such Investments in any such
entity shall be qualified dividends under the 75% gross
income test under Section 856(c)(3) of the Code or (ii) at
least 75% of income from such Investments in any such entity
shall be rents from real property under applicable
provisions of the Code;
(e) I n v e stments in (i) one or more Specified
Affiliates or any Person that concurrently with such
Investment becomes a Specified Affiliate or (ii) one or more
Subsidiaries or any Person that concurrently with such
Investment becomes a Subsidiary, provided that each such
corporate Subsidiary is a qualified REIT subsidiary of the
Trust within the meaning of section 856(i) of the Code or
any successor provision;
(f) Investments in United States Governmental
Securities, provided that such obligations mature within 365
days from the date of acquisition thereof;
(g) Investments in certificates of deposit or banker s
acceptances issued by an Acceptable Bank, provided that such
obligations mature within 365 days from the date of
acquisition thereof;
(h) Investments in commercial paper in each case rated
A-1 or better by S&P or P-1 or better by Xxxxx s or an
equivalent rating by any other credit rating agency of
recognized national standing, and maturing not more than 270
days from the date of creation thereof;
(i) Investments in Repurchase Agreements;
(j) Investments in tax-exempt obligations of any state
of the United States of America, or any municipality of any
such state with short term ratings in each case of at least
A-1 or better by S&P or P-1 or better by Xxxxx s or an
equivalent rating by any other credit rating agency of
recognized national standing, provided that such obligations
mature within 365 days from the date of acquisition thereof;
and
(k) Unimproved Real Estate Investments.
For purposes of this Agreement an Investment shall be valued at
the greater of (i) cost and (ii) the value at which such
Investment is to be shown on the books of the Trust and its
Subsidiaries in accordance with GAAP.
As used in this definition of Restricted Investments
Acceptable Bank means any bank or trust company
(i) which is organized under the laws of the United States
of America or any State thereof, (ii) which has capital,
s u r p lus and undivided profits aggregating at least
$500,000,000, and (iii) whose short-term unsecured debt
obligations (or the short-term unsecured debt obligations of
the bank holding company owning all of the capital stock of
such bank or trust company) shall have been given a rating
of A-1 or better by S&P or P-1 or better by Xxxxx s.
Acceptable Broker-Dealer means any Person other than
a natural person (i) which is registered as a broker or
dealer pursuant to the Exchange Act and (ii) whose short-
term unsecured debt obligations shall have been given a
rating of A-1 or better by S&P or P-1 or better by
Xxxxx x.
Xxxxx s means Xxxxx s Investors Service, Inc.
Repurchase Agreement means any written agreement
(a) that provides for (i) the transfer of one or
more United States Governmental Securities in an
aggregate principal amount at least equal to the amount
of the Transfer Price (defined below) to the Trust or
any of its Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds
(the Transfer Price ) by the Trust or such Subsidiary
to such Acceptable Bank or Acceptable Broker-Dealer,
and (ii) a simultaneous agreement by the Trust or such
Subsidiary, in connection with such transfer of funds,
to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar United
States Governmental Securities for a price not less
than the Transfer Price plus a reasonable return
thereon at a date certain not later than 365 days after
such transfer of funds,
(b) in respect of which the Trust or such
Subsidiary shall have the right, whether by contract or
pursuant to applicable law, to liquidate such agreement
upon the occurrence of any default thereunder, and
(c) in connection with which the Trust or such
Subsidiary, or an agent thereof, shall have taken all
action required by applicable law or regulations to
perfect a Lien in such United States Governmental
Securities.
S&P means Standard & Poor s Ratings Group, a division
of McGraw Hill, Inc.
United States Governmental Security means any direct
obligation of, or obligation guaranteed by, the United
States of America, or any agency controlled or supervised by
or acting as an instrumentality of the United States of
America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or
guarantee shall have the benefit of the full faith and
credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the
United States of America.
Securities Act means the Securities Act of 1933, as
amended from time to time.
Security has the meaning set forth in Section 2(l) of the
Securities Act.
Series is defined in Section 1 of the Note Purchase
Agreements.
Specified Affiliate means any corporation, association or
other business entity formed for the purpose of earning income
not qualified as rents from real property under applicable
provisions of the Code, in which the Trust owns, directly or
indirectly, substantially all of the economic interest but less
than 10% of the voting interests, and the charter or other
organizational documents of which contain provisions providing
the Trust, directly or indirectly, with substantially the same
r i g h t s as, or greater rights than, those provided by
A r t i c l e Fourth, Section (C)(4) of the Certificate of
Incorporation of Storage Realty Management Co., as filed with the
Secretary of State of Delaware on October 21, 1994.
Subsidiary means, as to any Person, any corporation,
association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable
i t or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership
or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one
or more of its Subsidiaries). In the case of the Trust, each
Specified Affiliate shall be deemed to be a Subsidiary of the
Trust for all purposes of this Guaranty and the Note Purchase
Agreements. Unless the context otherwise clearly requires, any
reference to a Subsidiary is a reference to a Subsidiary of the
Trust.
Swaps means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so
determined.
Unencumbered Assets means at any time the book value of
all real estate properties of the Trust and its Subsidiaries,
prior to the deduction of accumulated depreciation thereon, which
x x x x xxx of all Liens other than Liens permitted by
paragraphs (a), (b), (c), (d), (e), (f) or (i) of Section 5.5.
Unimproved Real Estate Investments means Investments in
unimproved real property and mortgages on unimproved real
property.
Unsecured Debt means at any time the aggregate unpaid
principal amount of all Debt of the Trust and its Subsidiaries
other than (i) Debt of a Subsidiary owing to the Trust, to the
Operating Partnership or to a Wholly-Owned Subsidiary and
(ii) Debt of the Trust or a Subsidiary secured by a Lien on one
or more parcels of their real property.
Wholly-Owned Subsidiary means, at any time, any Subsidiary
one hundred percent (100%) of all of the equity interests (except
directors qualifying shares) and voting interests of which are
owned by any one or more of the Trust and the Trust s other
Wholly-Owned Subsidiaries at such time.
SECTION 6. COLLECTION EXPENSES.
In the event that the Trust shall be required to make any
payment to any Noteholder pursuant to this Guaranty, it shall, in
addition to such payment, pay to such Noteholder such further
amount as shall be sufficient to cover the reasonable costs and
expenses of collection, including reasonable compensation for
legal fees actually incurred of one counsel for the Noteholders
collectively, and any expenses or liabilities incurred by any
Noteholder hereunder. The covenants contained in this Guaranty
may be enforced by any Noteholder.
SECTION 7. NO SUBROGATION UNTIL PAYMENT IN FULL.
No payment by the Trust pursuant to the provisions hereof to
any Noteholder shall entitle the Trust, by subrogation to the
rights of the holders of the Notes in respect of which such
payment is made or otherwise, to any payment by the Operating
Partnership or out of the property of the Operating Partnership,
except after payment in full of the entire principal of, premium,
if any, and interest on the Notes and any other amounts due under
the Note Purchase Agreements, or provision for such payment
satisfactory to the holders of the Notes.
SECTION 8. INTERPRETATION.
The Trust acknowledges and agrees that the obligations and
agreements contained herein are in addition to, and not in
limitation of, any limitations or restrictions to which the Trust
may be subject under the Note Purchase Agreements.
SECTION 9. SUCCESSORS AND ASSIGNS.
All covenants and agreements contained in this Guaranty by
or on behalf of the Trust shall be binding upon the Trust and its
successors and assigns and shall inure to the benefit of the
Purchasers and each and every Noteholder.
SECTION 10. NOTICES.
All notices, requests, demands, waivers or other
communications required or contemplated hereby shall be given or
made in the manner provided in Section 18 of the Note Purchase
Agreements at the Trust s address: Storage Trust Realty, 0000
Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Chief
Financial Officer.
SECTION 11. COUNTERPARTS.
This Guaranty may be executed simultaneously in several
counterparts, each of which shall be deemed an original, and all
of which together shall constitute one and the same instrument.
SECTION 12. SEVERABILITY.
In case any one or more of the provisions contained in this
Guaranty shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions of this Guaranty shall not in any way be
affected or impaired thereby.
SECTION 13. GOVERNING LAW.
This Guaranty and all rights arising hereunder shall be
construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other
than such State.
SECTION 14. NO RECOURSE TO SHAREHOLDERS ETC.
No obligation or liability whatsoever of the Trust (whether
as guarantor or as general partner of the Operating Partnership)
on account of or arising under the Notes, the Note Purchase
Agreements or this Guaranty Agreement or any other document
executed by the Trust or the Operating Partnership in connection
herewith or therewith shall be personally binding upon, nor shall
resort for the enforcement thereof be had to, the private
property of any of the Trust s shareholders, trustees, officers
or employees, regardless of whether such obligation or liability
of the Trust is in the nature of contract, tort or otherwise.
Nothing herein shall diminish or impair the rights of the
Purchasers or the holders from time to time of the Notes to
pursue any remedy against the Trust or any assets of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Guaranty to be
duly executed as of the day and year first above written.
STORAGE TRUST REALTY
By
Its
