PROPERTY MANAGEMENT AGREEMENT
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THIS PROPERTY MANAGEMENT AGREEMENT (this "Agreement") is entered
into as of January 29, 2001 among Fifteen SAC Self-Storage
Corporation, a Nevada corporation, with its principal place of
business at 715 South Country Club Drive, Mesa, AZ 85210 ("Owner"),
and the property managers identified on Exhibit A attached hereto and
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incorporated herein by reference (each such property manager is
respectively referred to herein as "U-Haul").
RECITALS
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A. Owner owns the real property and self-storage related
improvements thereon located at the street addresses identified on
Exhibit A hereto (hereinafter, collectively the "Property").
B. Owner intends that the Property be rented on a space-by-
space retail basis to corporations, partnerships, individuals and/or
other entities for use as self-storage facilities.
C. Owner desires that U-Haul manage the Property and U-Haul
desires to act as the property manager for the Property, all in
accordance with the terms and conditions of this Agreement and as
more specifically designated on Exhibit A hereto.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, Owner and U-Haul hereby agree as follows.
1. Employment.
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(a) Owner hereby retains U-Haul, and U-Haul agrees to act as
manager of the Property upon the terms and conditions hereinafter set
forth.
(b) Owner acknowledges that U-Haul, and/or U-Haul affiliates, is
in the business of managing self-storage facilities, both for its own
account and for the account of others. It is hereby expressly agreed
that notwithstanding this Agreement, U-Haul and such affiliates may
continue to engage in such activities, may manage facilities other
than those presently managed by U-Haul and its affiliates (whether or
not such other facilities may be in direct or indirect competition
with Owner) and may in the future engage in other business which may
compete directly or indirectly with activities of Owner.
(c) In the performance of their respective duties under this
Agreement, each U-Haul property manager shall occupy the position of
an independent contractor with respect to Owner. Nothing contained
herein shall be construed as making the parties
hereto (or any of them) partners or joint venturors, nor (except as
expressly otherwise provided for herein) construed as making U-Haul
an agent or employee of Owner or of any other U-Haul property manager
hereunder.
2. Duties and Authority of U-Haul.
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(a) GENERAL DUTIES AND AUTHORITY. Subject only to the
restrictions and limitations provided in paragraphs (o) and (p) of
this Section 2 and the right of Owner to terminate this Agreement as
provided in Section 6 hereof, U-Haul shall have the sole and
exclusive authority to fully manage the Property and supervise and
direct the business and affairs associated or related to the daily
operation thereof, and, to that end on behalf of Owner, to execute
such documents and instruments as, in the sole judgment of U-Haul,
are reasonably necessary or advisable under the circumstances in
order to fulfill U-Haul's duties hereunder. Such duties and
authority shall include, without limitation, those set forth below.
(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 trust bank account
maintained by U-Haul (or its parent company) as trustee for the
benefit of the Owner. To the extent that the Gross Revenues are
deposited into a collective trust account maintained by U-Haul (or
its parent company) for the benefit of multiple property owners, such
trust account will clearly identify the beneficiaries and 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 beneficiary in such collective trust account. 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 expenses and for management fees as provided
under Section 4 below.
3. Duties of Owner.
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Owner hereby agrees to cooperate with U-Haul in the performance
of U-Haul's duties under this Agreement and to that end, upon the
request of U-Haul, to provide, at such rental charges, if any, as are
deemed appropriate, reasonable office space for U-Haul employees on
the premises of the Property and to give U-Haul access to all files,
books and records of Owner relevant to the Property. Owner shall not
unreasonably withhold or delay any consent or authorization to U-Haul
required or appropriate under this Agreement.
4. Compensation of U-Haul.
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(a) MANAGEMEHT 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
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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.
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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 mark, "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, mark, 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, mark, 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.
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Owner or U-Haul may terminate this Agreement with or without
cause by giving not less than thirty days' written notice to the
other party pursuant to Section 11 hereof. In addition, if Owner
fails to pay U-Haul any amounts owed under this Agreement when due,
U-Haul may terminate this Agreement by giving Owner not less than ten
days written notice pursuant to Section 11 hereof. Notwithstanding
the foregoing, however, U-Haul shall not resign as property manager
of the Property until a nationally recognized and reputable successor
property manager is available and prepared to assume property
management responsibilities with respect to the Property in question
Upon termination of this Agreement, U-Haul shall promptly return to
Owner all monies, books, records and other materials held by U-Haul
for or on behalf of Owner. In addition, if U-Haul has contracted to
advertise the Property in the Yellow Pages, Owner shall, at the
option of U-Haul, continue to be responsible for the cost of such
advertisement and shall either (i) pay U-Haul the remaining amount
due under such contract in a lump sum; or (ii) pay U-Haul monthly for
the amount due under such contract.
7. Indemnification.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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IN WITNESS WHEREOF, the parties hereto execute this Agreement as
of the date first above written.
"Owner"
Fifteen SAC Self-Storage Corporation,
a Nevada corporation
By: /S/ Mark V. Shoen
________________________
Mark V. Shoen, President
U-Haul Co. of California, Inc.
By: /S/ Donald Wm. Murney
___________________________
Donald Wm. Murney, Treasurer
U-Haul Co. of Massachusetts, Inc.
By: /S/ Donald Wm. Murney
__________________________
Donald Wm. Murney, Treasurer
U-Haul Co. of New York, Inc.
By: /S/ Donald Wm. Murney
__________________________
Donald Wm. Murney, Treasurer
U-Haul Co of New Jersey, Inc.
By: /S/ Donald Wm. Murney
__________________________
Donald Wm. Murney, Treasurer
U-Haul Co. of Texas, Inc.
By: /S/ Donald Wm. Murney
___________________________
Donald Wm. Murney, Treasurer
U-Haul Co of Connecticut, Inc.
By: /S/ Donald Wm. Murney
___________________________
Donald Wm. Murney, Treasurer
U-Haul Co. of Arkansas, Inc.
By: /S/ Donald Wm. Murney
____________________________
Donald Wm. Murney, Treasurer
Exhibit A
884015 U-HAUL STORAGE 1301 ALOSTA AVENUE GLENDORA CA 91740
GLENDORA
837025 U-HAUL CENTER 6 MERRILL STREET SALISBURY MA 01952
OF SALISBURY
882053 U-HAUL STORAGE 3527 IVAR AVENUE ROSEMEAD CA 91770
IVAR AVENUE
882079 U-HAUL STORAGE 5600 BUSINESS AVENUE CLAY NY 13041
BUSINESS AVENUE
882081 U-HAUL STORAGE 611 BLACKWOOD CLEMENTON CLEMENTON NJ 08024
LAURELWOOD
883002 U-HAUL STORAGE 7225 SOUTH HULEN FORT WORTH TX 76133
SOUTH HULEN
883082 U-HAUL STORAGE 3029 FAIRFIELD AVENUE BRIDGEPORT CT 06605
BLACK ROCK
884051 U-HAUL 1103 WEST 287 BYPASS WAXHACHIE TX 75165
WAXAHACHIE
884074 U-HAUL STORAGE 9302 INTERSTATE 30 LITTLE ROCK AR 72209
I-30
884076 U-HAUL STORAGE 2455 TARRANT ROAD GRAND PRAIRIE TX 75050
TARRANT ROAD