EXHIBIT 2.1
SUBSCRIPTION AGREEMENT, dated as of March 31, 2008 (this
"Agreement"), between SHURGARD SELF STORAGE EUROPE LIMITED, a Guernsey company
("Shurgard Guernsey"), SHURGARD SELF STORAGE SCA, a Belgian societe en
commandite par actions ("SSS SCA"), SHURGARD EUROPEAN HOLDINGS LLC, a Delaware
limited liability company (the "Company"), PUBLIC STORAGE, a Maryland real
estate investment trust ("Public Storage") and THOMAS P. DINAPOLI, COMPTROLLER
OF THE STATE OF NEW YORK, AS TRUSTEE OF THE COMMON RETIREMENT FUND (the
"Investor").
RECITALS:
WHEREAS, the Company was formed for the purposes of this
transaction under the provisions of the Delaware Limited Liability Act, 6 Del.
C. 18-101 et. seq.;
WHEREAS, the Company, SSS SCA, Shurgard Guernsey and their
Subsidiaries intend to engage in a reorganization whereby the Company will
become the holding company for their collective operations in Europe, Shurgard
Guernsey will become a direct subsidiary of the Company and SSS SCA will become
an indirect subsidiary of the Company;
WHEREAS, following the Investor's payment of the Subscription
Price (as defined below and in the manner set forth below) to the Company and
the subsequent acquisition of SSS SCA at the Closing (as defined below), the
Investor will then hold as an investment in the Company 51% of the limited
liability company interests of the Company ("Shares"); and
WHEREAS, the Investor, with the assistance of professional
advisers, has had access to a data room containing extensive information on the
Company, SSS SCA, Shurgard Guernsey and their Subsidiaries and has performed a
due diligence investigation on the basis of such information;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows. In this Agreement, the term "Transaction Documents"
refers collectively to this Agreement and the Amended and Restated Limited
Liability Company Agreement of the Company, dated March 31, 2008, by and between
the Investor, Shurgard Storage Centers, LLC, a Delaware limited liability
company and Public Storage (the "LLC Agreement").
ARTICLE I
SUBSCRIPTION AND SALE OF SHARES
1.1 SUBSCRIPTION AND SALE OF SHARES. On the terms and subject to
the conditions set forth herein, the Investor will purchase from the Company,
and the Company will issue and sell to the Investor, at the Closing immediately
upon the receipt of and in return for the Subscription Price that number of
Shares as will equal 51% of the outstanding Shares immediately following the
Closing (the "Subscription").
1.2 SUBSCRIPTION PRICE; SUBSCRIPTION PRICE ADJUSTMENTS. (a) At the
Closing, the Investor agrees to pay to the Company (euro)382,288,500, payable in
U.S. Dollars, in an amount calculated based on the exchange rate of Euros to
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Dollars for the Business Day immediately preceding the Closing Date, as
published in The Wall Street Journal (as adjusted pursuant to Section 1.2(b)
and, after the Closing, Section 1.2(e), the "Subscription Price").
(b) The payment at Closing will be increased by a working capital
adjustment equal to (euro)923,000, representing 51% of the Company's pro rata
share of the consolidated working capital as of December 31, 2007, and as
summarized on Annex C.
(c) Not later than forty-five (45) days after the Closing Date,
the Company shall prepare a consolidated statement of operations for the period
from December 31, 2007 through March 31, 2008 (the "Operating Statement") and
deliver such Operating Statement to the Investor. The Operating Statement shall
be prepared in accordance with GAAP applied on a consistent basis. The Investor
and the Investor's accountants may make reasonable inquiries of the Company and
its accountants, at reasonable times, upon reasonable advance notice, and
without unreasonable interference to the Company's operations, regarding
questions concerning or disagreements with the Operating Statement arising in
the course of such review. As used in this Agreement, "Adjusted Net Income"
means an amount equal to the consolidated net income (loss) of SSS SCA as
reflected in the Operating Statement plus (1) the Company's pro rata share of
depreciation and amortization expense from December 31, 2007 to the Closing,
plus (2) non-cash employee share-base compensation expense and any other
non-cash expense, plus (3) the amount of expenses incurred by SSS SCA, and
Public Storage and its affiliates in connection with the arbitration proceeding
relating to the joint venture entities First Shurgard Sprl and Second Shurgard
Sprl from December 31, 2007 to the Closing, plus (4) the amount of expenses
incurred by SSS SCA, Shurgard Guernsey and the Company, and Public Storage and
its affiliates in connection with the Reorganization to the extent expensed from
December 31, 2007 to the Closing, plus (5) the amount of expenses incurred by
SSS SCA, Shurgard Guernsey and the Company, and Public Storage and its
affiliates in connection with the negotiation and execution of the Loan
Agreements to the extent expensed from December 31, 2007 to the Closing, up to
$50,000, minus (6) any distributions paid to the PSA Member between December 31,
2007 and the Investor purchase of shares, minus (7) the Company's pro rata share
of maintenance capital expenditures from December 31, 2007 to the Closing. For
the avoidance of doubt, the Company shall reimburse Public Storage and its
affiliates for all fees and expenses of the Reorganization and the Loan
Agreement.
(d) If the Investor disagrees with the Company's calculation of
Adjusted Net Income, the Investor may, within thirty (30) days after delivery of
the Operating Statement, deliver a notice to the Company disagreeing with the
Company's calculation of the Adjusted Net Income amount and setting forth the
basis of such dispute. Unless the Investor delivers a notice disagreeing with
the Company's calculation of the Adjusted Net Income amount within such thirty
(30) day period, the Operating Statement as delivered by the Company shall bind
the parties. Any such notice of disagreement shall specify those items or
amounts as to which the Investor disagrees and the basis for such disagreement.
Following delivery of such a notice so disagreeing, the Investor and the Company
shall in good faith attempt promptly to resolve any disagreement as to the
computation of any item in the Operating Statement, and any items as to which
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there is no disagreement shall be deemed agreed. If a resolution of such
disagreement has not been effected within fifteen (15) days (or longer, as
mutually agreed by the parties) after delivery of such letter, then either the
Investor or the Company may submit any disagreement regarding the Operating
Statement (a "Disputed Item") to Ernst & Young or other mutually acceptable
party (the "Accountant") for determination. The Accountant shall be instructed
to, in accordance with this Agreement, determine the amount of each Disputed
Item and requested to complete such determination within thirty (30) days after
the appointment of the Accountant. The Accountant shall not serve as an
arbitrator. With respect to each Disputed Item, the Accountant shall adopt a
position that is either equal to the Company's proposed position, equal to the
Investor's proposed position, or between the positions proposed by the Company
and the Investor. The determination of the Accountant shall be final and binding
upon the Investor and the Company. Adjusted Net Income as finally determined or
deemed to be determined in accordance herewith shall be referred to as "Closing
Date Adjusted Net Income." The Investor and Public Storage shall enter into a
customary engagement letter with the Accountant, which shall provide, inter
alia, that all fees, costs and expenses of the Accountant shall be shared
equally by the Investor and Public Storage and for customary indemnification of
the Accountant by the Investor and Public Storage.
(e) Upon final determination or deemed final determination of the
Operating Statement, (a) if the Closing Date Adjusted Net Income is less than
zero, then Public Storage shall pay, or cause to be paid, to the Investor, or
its designee, the amount of (i) any such deficiency multiplied by (ii) 51%
within two (2) Business Days after the determination of the Closing Date
Adjusted Net Income, and (b) if the Closing Date Adjusted Net Income exceeds
zero, then the Investor shall pay, or cause to be paid, to Public Storage, or
its designee, (i) the amount of any such excess multiplied by (ii) 51% within
five (5) Business Days after the determination of the Closing Date Adjusted Net
Income. Any such payments shall be made in Euros, by wire transfer of
immediately available funds to the account designated in writing by the Investor
and the Company, as the case may be. Any payment made pursuant to this Section
1.2(e) shall be made with interest (such interest to be calculated on the basis
of a year of three-hundred sixty (360) days and the actual number of days
elapsed) on such amount from the Closing Date to the date of such payment at a
rate equal to eight percent (8%) per annum and shall be considered to constitute
an adjustment to the Subscription Price.
1.3 REORGANIZATION. At the Closing, immediately following the
Investor's delivery of funds and the Company's issuance of Shares pursuant to
Section 1.4(b)(1) and (2) below, Shurgard Guernsey and SSS SCA shall, and shall
cause their applicable Affiliates to, take all actions to cause the Company to
directly or indirectly own (or, with respect to the Executive Shares and Option
Shares, have agreed to buy) all of the issued and outstanding share capital and
profit certificates of SSS SCA and all of the assets held directly or indirectly
by SSS SCA as of the date of this Agreement, in substantially the form disclosed
to the Investor prior to the date hereof (such actions, together, the
"Reorganization"). At the Closing, the Investor shall receive evidence
satisfactory to them that the Reorganization will be completed at the Closing.
1.4 CLOSING. (a) The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Wachtell,
Lipton, Rosen & Katz, 51 W. 52nd Street, New York, New York, commencing at 10:00
a.m., local time on the date hereof. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date." As used in this Agreement,
"Business Day" means any day except a Saturday, Sunday or day on which banking
institutions are legally authorized to close in the City of New York.
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(b) At the Closing, the following events shall occur in the order
specified below:
(1) the Investor shall deliver by wire transfer of immediately
available funds to the Company the purchase price of the Shares in the
amount of the Subscription Price;
(2) the LLC Agreement shall be adopted and reflect that the
Investor shall own 51% of the outstanding Shares immediately following
the Closing;
(3) the Reorganization will be completed and the Company will
acquire all of the issued and outstanding share capital and profit
certificates of SSS SCA and all of the assets held directly or
indirectly by SSS SCA as of the date of this Agreement; and
(4) the Company will use the proceeds of the Subscription: (i)
first, to fund the purchase as of the Closing of all ordinary shares
of SSS SCA that are subject to options held by employees of SSS SCA
and its subsidiaries and Affiliates (the "Option Shares"); (ii)
second, to set aside the amount needed to purchase all ordinary shares
of SSS SCA owned by officers or employees of Public Storage (the
"Executive Shares"); and (iii) and third, with the remaining balance,
to make a distribution at the Closing to Shurgard Holdings (a
distribution that represents, for U.S. federal income tax purposes, a
reimbursement of part of the preformation capital expenditures
incurred in acquiring interests in SSS SCA). At or prior to the
Closing, the Company (or one or more of its subsidiaries) will enter
into a written agreement to purchase all of the Executive Shares on or
before June 20, 2008.
For the avoidance of doubt, at all times prior to the transactions
provided for in this Agreement the Investor has owned 51% of the Company, and at
all times through the steps required to complete this transaction and
immediately following the completion of those steps the Investor will own at
least 51% of the outstanding Shares of the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 DISCLOSURE. (a) On or prior to the date hereof, the Company
and SSS SCA delivered to the Investor a letter (the "Company Disclosure Letter")
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of the Company's
representations or warranties contained in Section 2.2.
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(b) The Investor represents and warrants that the Investor does
not have any Knowledge of any breach of the representations or warranties made
by Public Storage, the Company, Shurgard Guernsey or SSS SCA.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY, SSS SCA AND
SHURGARD GUERNSEY. Except as set forth in the Disclosure Letter, the Company,
SSS SCA and Shurgard Guernsey, jointly and severally, represent and warrant to
the Investor as follows:
(a) Financial Statements and Other Financial Data.
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(1) The audited consolidated financial statements (balance sheet,
income statement and statements of cash flows) of SSS SCA for the
years ended December 31, 2007 and 2006 (the "Financial Statements"),
together with the related schedules and notes, give a true and fair
view of the financial position of SSS SCA and its consolidated
Subsidiaries at the dates and for the periods indicated and are
consistent in all material respects with the books and records of SSS
SCA and its consolidated Subsidiaries. The Financial Statements have
been prepared in conformity with generally accepted accounting
principles in the United States ("U.S. GAAP") applied on a consistent
basis throughout the relevant periods. A true, correct and complete
copy of the Financial Statements has been provided to the Investor.
(2) Except for liabilities and obligations that have arisen in the
ordinary course of business consistent with past practice since
December 31, 2007, neither SSS SCA nor any of its Subsidiaries has any
material liability or obligation of any nature (whether absolute or
contingent, asserted or unasserted, or liquidated or unliquidated)
that would be required to be included on a balance sheet prepared in
accordance with U.S. GAAP applied on a consistent basis.
(b) No Material Adverse Change in Business.
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Since December 31, 2007, (1) no change has occurred and no
circumstances exist which have had, or would reasonably be expected to have, a
Material Adverse Effect, (2) there has been no dividend or distribution of any
kind declared, paid or made by SSS SCA, Shurgard Guernsey, the Company or any of
their Subsidiaries on any class of their respective share capital, (3) neither
the Company nor any Subsidiary has made any tax elections or changed its method
of tax accounting in a way that would have a Material Adverse Effect, (4) there
has been no damage, destruction or loss that is not covered by insurance with
respect to any of the properties of SSS SCA, Shurgard Guernsey, the Company or
any of their Subsidiaries, exceeding (euro)1,000,000 individually or
(euro)5,000,000 in the aggregate, (5) there has been no acquisition (by merger,
consolidation, purchase of assets or otherwise) of any Person or business, or
any sale of all or any portion of the assets of SSS SCA, Shurgard Guernsey, the
Company or any of their Subsidiaries, in each case exceeding (euro)1,000,000
individually or (euro)5,000,000 in the aggregate, (6) there has been no pledge
of any assets of SSS SCA, Shurgard Guernsey, the Company or any of their
Subsidiaries or the granting of any Lien on any of the assets SSS SCA, Shurgard
Guernsey, the Company or any of their Subsidiaries, in each case to secure
indebtedness for borrowed money exceeding (euro)5,000,000 and (7) there has been
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no incurrence of indebtedness exceeding (euro)5,000,000, other than in the
ordinary course of business or vis-a-vis an Affiliate, or any issuance of any
debt securities by SSS SCA, Shurgard Guernsey, the Company or any of their
Subsidiaries. For purposes of this Agreement, a "Material Adverse Effect" means
any circumstance, event, change or effect that, individually or in the
aggregate: (1) is material and adverse to the condition (financial or
otherwise), results of operations, business, assets or liabilities of the
Company, Shurgard Guernsey, SSS SCA and their Subsidiaries taken as a whole, or
(2) would materially impair the ability of the Company, Shurgard Guernsey or SSS
SCA to perform their obligations under this Agreement or otherwise materially
threaten or materially impede the consummation of the Subscription and the other
transactions contemplated by this Agreement; provided, however, that Material
Adverse Effect shall be deemed not to include the impact of (A) changes or
conditions (including, without limitation, changes in economic, financial
market, credit market, regulatory or political conditions, whether resulting
from acts of war or terrorism, an escalation of hostilities or otherwise)
affecting the European or United States economies, foreign economies or any
segment of the industries in which the Company or SSS SCA or their respective
Subsidiaries operate, and which do not have a materially disproportionate impact
on the Company, Shurgard Guernsey, SSS SCA and their Subsidiaries taken as a
whole as compared to similarly situated self-storage companies, (B) changes in
generally accepted accounting principles, which do not have a materially
disproportionate impact on the Company, Shurgard Guernsey, SSS SCA and their
Subsidiaries taken as a whole as compared to similarly situated self-storage
companies, (C) changes in Laws of general applicability or interpretations
thereof by any domestic or foreign governmental or regulatory authorities,
agencies, courts, commissions or other entities (collectively, "Governmental
Entities"), and which do not have a materially disproportionate impact on the
Company, Shurgard Guernsey, SSS SCA and their Subsidiaries taken as a whole as
compared to similarly situated self-storage companies, (D) actions or omissions
of either party taken with the prior written consent of the other party in
contemplation of the transactions contemplated hereby, or (E) this Agreement,
the transactions contemplated hereby or the announcement thereof.
(c) Due Formation of SSS SCA, Shurgard Guernsey and the Company.
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(1) SSS SCA is duly incorporated and is validly existing as a
societe en commandite par actions in Belgium and has all requisite
corporate power and authority to own, lease and operate its properties
and to enter into and perform its obligations under this Agreement and
the Transaction Documents and to consummate the transactions
contemplated hereby and thereby, including the Reorganization; and SSS
SCA is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing has not resulted in
and would not be reasonably likely to result in a Material Adverse
Effect.
(2) The Company is duly formed and is validly existing as a
limited liability company in the State of Delaware, is in good
standing under the Laws of the State of Delaware and has all requisite
power and authority to enter into and perform its obligations under
this Agreement and the Transaction Documents and to consummate the
transactions contemplated hereby and thereby; and the Company is duly
qualified as a foreign entity to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing has not resulted in and would not be reasonably
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likely to result in a Material Adverse Effect. The Company was formed
solely for the purposes of engaging in the transactions contemplated
by the Transaction Documents and the Reorganization and has not
engaged in any business or incurred any liabilities or obligations
other than as contemplated by the Transaction Documents or incurred in
connection with the transactions contemplated by the Transaction
Documents.
(3) Shurgard Guernsey is duly incorporated and is validly existing
as a company in Guernsey, is in good standing under the Laws of
Guernsey and has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement and the
Transaction Documents and to consummate the transactions contemplated
hereby and thereby; and Shurgard Guernsey is duly qualified as a
foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business.
(d) Subsidiaries.
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(1) Section 2.2(d) of the Company Disclosure Letter contains a
list of each Subsidiary of each of the Company, SSS SCA and Shurgard
Guernsey. Each of the Company, SSS SCA and Shurgard Guernsey owns 100%
of the outstanding equity interests of its respective Subsidiaries,
free and clear of all liens, claims, encumbrances, mortgages, pledges,
security interests and charges ("Liens").
(2) (A) Each Subsidiary has been duly organized and is validly
existing and in good standing under the Laws of its jurisdiction of
incorporation or formation where such good standing is required and no
steps have been taken or contemplated by SSS SCA, Shurgard Guernsey or
the Company, or to the Knowledge of SSS SCA, Shurgard Guernsey or the
Company, taken or threatened by a third party for its winding up,
dissolution or insolvency under the Laws of the jurisdiction of its
organization. Each Subsidiary has full corporate power and authority
under its memorandum and articles of association or other governing
documents and otherwise to own, lease and operate its properties and
to conduct its business and is duly qualified as a foreign corporation
to transact business in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property
or the conduct of business; (B) all of the issued and outstanding
ordinary shares of each Subsidiary have been duly and validly
authorized and issued, are fully paid, and not subject to the call for
the payment of further capital and non-assessable, free and clear of
all Liens; and (C) none of the outstanding ordinary shares of any
Subsidiary was issued in violation of the pre-emptive or similar
rights of any security holder of such Subsidiary.
(e) Share Capital.
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The limited liability interests of the Company are owned by the
Persons and in the amounts set forth in Section 2.2(e) of the Company Disclosure
Letter. The issued and outstanding limited liability interests of the Company
have been duly and validly authorized, issued and fully paid and is not subject
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to any call for the payment of further capital and is non-assessable; and none
of the issued and outstanding limited liability interests were issued in
violation of any pre-emptive or other similar rights of any security holder of
the Company. Except for the Executive Shares and European options which are to
be acquired in connection with the Reorganization, there are no outstanding
securities convertible into or exchangeable for, or warrants, rights or options,
or agreements to grant warrants, rights or options, to purchase from SSS SCA,
Shurgard Guernsey or the Company or any Subsidiaries or to subscribe for, or
obligations or commitments of SSS SCA, Shurgard Guernsey or the Company or any
Subsidiaries to create, issue, sell or otherwise dispose of, any securities (or
any such securities, warrants, rights, options or obligations) of SSS SCA,
Shurgard Guernsey or the Company or any Subsidiaries.
(f) Authorization of Agreement.
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The Transaction Documents and each agreement executed in
connection with the Reorganization to which it is a party have been duly
authorized, executed and delivered by the Company, SSS SCA and Shurgard Guernsey
and is a valid, binding and enforceable agreement of the Company, SSS SCA and
Shurgard Guernsey in accordance with its terms.
(g) Absence of Defaults and Conflicts.
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(1) None of SSS SCA, Shurgard Guernsey, the Company or any of
their Subsidiaries is in violation of its constitutional documents; (2) none of
SSS SCA, Shurgard Guernsey, the Company or any of their Subsidiaries is in
violation or default in the performance or observance of any obligation,
agreement, undertaking or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease, license or other
agreement or instrument to which SSS SCA, Shurgard Guernsey, the Company or any
of their Subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of SSS SCA, Shurgard Guernsey, the
Company or any of their Subsidiaries is subject and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such violation or default (collectively, "Agreements and
Instruments"), except for such defaults under any Agreements and Instruments
that have not resulted in and would not result in a Material Adverse Effect; and
(C) the execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby (including without
limitation the Reorganization), and the issuance and sale of the Shares have
been duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any Tax or Lien
upon any property or assets of SSS SCA, Shurgard Guernsey, the Company or any of
their Subsidiaries or give rise to a termination right pursuant to, the
Agreements and Instruments except for such conflicts, breaches, defaults or
Repayment Events or liens, charges or encumbrances or termination rights that,
individually or in the aggregate, have not resulted in and would not result in a
Material Adverse Effect, nor will such action result in any violation of the
provisions of the constitutional documents of SSS SCA, Shurgard Guernsey, the
Company or any Subsidiary or any applicable Law or any foreign, federal or state
judgment, order, writ, decree or ruling (collectively, "Judgments").
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As used herein, a "Repayment Event" means any event or condition that gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by SSS SCA, Shurgard
Guernsey, the Company or any Subsidiary.
(h) Labor and Employment Matters.
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(1) There is no unfair labor practice charge or grievance arising
out of a collective bargaining agreement or other grievance procedure
pending, or, to the Knowledge of the Company, threatened against the
Company or its Subsidiaries, except for such charges or grievances
that have not resulted in and would not result in a Material Adverse
Effect.
(2) There is no material Action in any forum by or on behalf of
any present or former employee, any applicant for employment or any
classes of the foregoing, alleging breach of any express or implied
contract of employment, any Law governing employment or the
termination thereof or other discriminatory, wrongful or tortious
conduct in connection with the employment relationship pending, or, to
the Knowledge of the Company, threatened against the Company or its
Subsidiaries.
(3) No employment problem, dispute, strike, slowdown, work
stoppage or disturbance involving the employees of SSS SCA, Shurgard
Guernsey, the Company or any of their Subsidiaries exists or, to the
Knowledge of SSS SCA, Shurgard Guernsey or the Company, is imminent or
threatened which has resulted in or would reasonably be expected to
result in a Material Adverse Effect. No officer or employee engaged in
a professional capacity and whose name is listed in Section 2.2(h) of
the Company Disclosure Letter has terminated or has indicated or
expressed a desire to terminate his relationship with SSS SCA,
Shurgard Guernsey or the Company.
(4) As of the date of this Agreement, there is no Action pending
or, to the Knowledge of the Company, threatened, with respect to which
any current or former director, officer, employee or agent of the
Company or its Subsidiaries is claiming indemnification from the
Company or any of its Subsidiaries.
(i) Employee Benefit Plans.
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(1) Section 2.2(i)(1) of the Company Disclosure Letter sets forth
all material employee benefit plans and arrangements maintained for
the benefit of employees of SSS SCA, Shurgard Guernsey and their
Subsidiaries and their ERISA Affiliates under which SSS SCA, Shurgard
Guernsey and their Subsidiaries are together responsible for more than
(euro)150,000 in benefits or payments (the "Employee Benefit Plans").
All Employee Benefit Plans are in compliance with all applicable Laws
and have been operated in material compliance with the terms thereof,
including funding requirements, except for such non-compliances that,
individually or in the aggregate, have not resulted in and would not
result in a Material Adverse Effect. There are no material Actions
pending with respect to any Employee Benefit Plans or any applicable
requirements relating to such Employee Benefit Plans.
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(2) Section 2.2(i)(2) of the Company Disclosure Letter sets forth
a list of all individual employment, consulting, termination,
severance and other compensation agreements, arrangements and plans
(other than statutorily mandated agreements, arrangements and plans),
between SSS SCA, Shurgard Guernsey or their Subsidiaries and any
current director, officer or employee thereof and under which the
annual compensation or severance obligation is at least (euro)200,000
(collectively, the "Employment Agreements").
(3) Each Employee Benefit Plan that is intended to be registered
or qualified for Tax purposes has been registered or qualified with
the applicable Governmental Entity, and, to the Knowledge of the SSS
SCA and Shurgard Guernsey, no fact or event has occurred since the
date of such registration or qualification that could reasonably be
expected adversely to affect such registration or qualification.
(4) Any and all contributions, premiums and other payments with
respect to compensation or service before and through the Closing
Date, or otherwise with respect to periods before and through the
Closing Date, due from SSS SCA, Shurgard Guernsey or their
Subsidiaries under or on account of each Employee Benefit Plan shall
have been paid prior to the Closing Date or shall have been fully
reserved and provided for or accrued on Financial Statements.
(5) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, whether alone,
or in connection with any other event, will (i) result in any payment
(including any retention bonuses, parachute payments or
non-competition payments) becoming due to any employee or former
employee or group of employees or former employees of SSS SCA,
Shurgard Guernsey or their Subsidiaries; (ii) increase any benefits
otherwise payable under any Employee Benefit Plan or any Employment
Agreement; or (iii) result in the acceleration of the time of payment
or vesting of any options or warrants. To the Company's Knowledge,
neither the Company, SSS SCA nor Shurgard Guernsey are deemed to hold
"plan assets" as defined by the U.S. Department Labor Regulations
2510.3-101, as modified by Section 3(42) of ERISA.
(j) Absence of Proceedings.
-----------------------
There is no material action, suit, proceeding, inquiry or
investigation before or brought by any court or Governmental Entity (each, an
"Action") now pending or, to the Knowledge of the Company, SSS SCA, and Shurgard
Guernsey, threatened against or affecting SSS SCA, Shurgard Guernsey, the
Company, any Subsidiary or any Affiliate of SSS SCA. There is no Action by the
Company, SSS SCA, Shurgard Guernsey or any Subsidiary currently pending.
(k) Possession of Intellectual Property.
------------------------------------
SSS SCA, Shurgard Guernsey, the Company and the Subsidiaries own
or have the right to use (and will own or have the right to use after giving
effect to the Reorganization) adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
10
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on their
respective businesses in each country in which SSS SCA, Shurgard Guernsey, the
Company and the Subsidiaries operate, and, to the Knowledge of the Company, none
of SSS SCA, Shurgard Guernsey, the Company or any of their Subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with, in either case threatened or otherwise in any jurisdiction, asserted
rights of others with respect to any Intellectual Property. To the Knowledge of
the Company, (1) there are no conflicts with or infringements of any
Intellectual Property rights of SSS SCA, Shurgard Guernsey or the Company by any
Person, (2) the conduct of the business of SSS SCA, Shurgard Guernsey, the
Company and their Subsidiaries does not conflict with or infringe any
Intellectual Property of any Person; and (3) there are neither any outstanding
nor threatened disputes or disagreements with respect to any of the Intellectual
Property.
(l) Absence of Further Requirements.
--------------------------------
No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or Governmental
Entity is necessary or required for the execution and delivery of this Agreement
and the Transaction Documents and the performance by SSS SCA, Shurgard Guernsey
or the Company of its obligations hereunder and thereunder (including without
limitation, the issuance or sale of the Shares hereunder) or the consummation of
the transactions contemplated by this Agreement or the Transaction Documents
(excluding any non-material formalities that may be required in relation to the
Reorganization).
(m) Possession of Licenses and Permits.
-----------------------------------
Each of SSS SCA, Shurgard Guernsey, the Company and their
Subsidiaries possess (and will possess after giving effect to the
Reorganization) such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
regulatory agencies or bodies in the European Union or any state therein,
Guernsey and other jurisdictions, as are necessary to conduct the business now
operated by them, except where the failure to so possess such Governmental
Licenses, singly or in the aggregate, has not resulted in and would not result
in a Material Adverse Effect; (2) SSS SCA, Shurgard Guernsey, the Company and
their Subsidiaries are in compliance (and will be in compliance after giving
effect to the Reorganization) with the terms and conditions of all such
Governmental Licenses, except where the failure to so comply, singly or in the
aggregate, has not resulted in and would not result in a Material Adverse
Effect; (3) all of the Governmental Licenses are (and will be after giving
effect to the Reorganization) valid and in full force and effect, except where
the invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect, singly or in the aggregate, has not
resulted in and would not result in a Material Adverse Effect; and (4) to their
Knowledge neither SSS SCA, Shurgard Guernsey, the Company nor any of their
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses.
(n) Title to Property.
------------------
11
(1) SSS SCA, Shurgard Guernsey, the Company and each of their
Subsidiaries have (and will have after giving effect to the
Reorganization) good and marketable title to all real property owned
by SSS SCA, Shurgard Guernsey, the Company and such Subsidiaries and
set forth in the Company Disclosure Letter and good title to all other
properties owned by them and set forth in the Company Disclosure
Letter (collectively, the "Properties"), in each case, free and clear
of all Liens, except such as do not, singly or in the aggregate,
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by SSS SCA, Shurgard Guernsey, the Company or any of their
Subsidiaries; and all of the leases (which expression includes any
letting, any underlease or sublease and any tenancy or license to
occupy and any agreement for any lease, letting, underlease, sublease
or tenancy under which SSS SCA, Shurgard Guernsey, the Company or any
of their Subsidiaries is the tenant) under which SSS SCA, Shurgard
Guernsey, the Company or any of their Subsidiaries holds properties
(the premises under such leases, collectively, the "Leased
Properties"), are (and will be after giving effect to the
Reorganization) valid, binding, in full force and effect, and neither
SSS SCA, Shurgard Guernsey, the Company nor any of their Subsidiaries
has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of SSS SCA, Shurgard
Guernsey, the Company or such Subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of
SSS SCA, Shurgard Guernsey, the Company or any of their Subsidiaries
to the continued possession of the premises held under any such lease.
No written termination or notice of default has been received by the
Company, SSS SCA, Shurgard Guernsey or any of their Subsidiaries under
a lease, and to the Knowledge of Company, SSS SCA and Shurgard
Guernsey no event has occurred which, with the giving of notice or
lapse of time or both, would constitute a material default or
violation thereunder or which might interfere with the quiet enjoyment
of SSS SCA, Shurgard Guernsey, the Company or any of their
Subsidiaries under any lease. After giving effect to the
Reorganization, the Company will be able to conduct business of SSS
SCA, Shurgard Guernsey and their Subsidiaries in substantially the
same manner as the business was conducted by such Persons immediately
prior to the Reorganization.
(2) There are no (i) pending or, to the Knowledge of the Company,
SSS SCA and Shurgard Guernsey, threatened (in writing) requirements by
any insurance company which has issued an insurance policy covering
any Property or Leased Property which require any repairs or work to
be done on any Property or Leased Property, (ii) eminent domain or
rezoning or proceedings that are pending or, to the Knowledge of the
Company, SSS SCA and Shurgard Guernsey, threatened (in writing) with
respect to any portion of any of the Properties or Leased Properties;
or (iii) zoning, building, land-use, fire, safety and signage Laws or
orders that are presently being violated or will be violated by the
continued maintenance, operation or use of any buildings or other
improvements on any of the Properties or Leased Properties or by the
continued maintenance, operation or use of the parking areas related
thereto, except where such matters under subsections (i), (ii) and
(iii) above, singly or in the aggregate, has not resulted in and would
not result in a Material Adverse Effect.
12
(3) To the Company's Knowledge, each Property and Leased Property
is in good operating condition and repair and is structurally sound,
with no material alterations or repairs being required thereto under
applicable Laws or insurance company requirements.
(4) The interest of SSS SCA, Shurgard Guernsey, the Company or
their Subsidiaries in any Property or Leased Property is not subject
to any sales contract, option, right of first refusal or similar
agreement or arrangement in favor of any Person.
(o) Environmental Laws.
-------------------
Except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither SSS SCA, Shurgard Guernsey, the Company nor
any of their Subsidiaries is (or will be after giving effect to the
Reorganization) in violation of an applicable Law, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, Laws relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products,
asbestos-containing materials or mold (collectively, "Hazardous Materials") or
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) SSS SCA, Shurgard Guernsey, the Company and their Subsidiaries have
(and will have after giving effect to the Reorganization) all Governmental
Licenses required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of non-compliance or violation, investigation or
proceedings relating to any Environmental Law against SSS SCA, Shurgard
Guernsey, the Company or any of their Subsidiaries, and (D) there are no events
or circumstances that would reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting SSS SCA, Shurgard
Guernsey, the Company or any of their Subsidiaries relating to Hazardous
Materials or Environmental Laws.
(p) Passive Foreign Investment Company.
-----------------------------------
The Company does not believe that Shurgard Guernsey would be a
"passive foreign investment company" within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended, and the Company does not intend
to operate it in a manner that would result in it being a "passive foreign
investment company."
(q) Foreign Corrupt Practices.
--------------------------
To their respective Knowledge, none of SSS SCA, Shurgard Guernsey,
the Company, any of their Subsidiaries or, to their respective Knowledge, any
director, officer, agent, employee or other person associated with, or acting on
behalf of, SSS SCA, Shurgard Guernsey, the Company or any of their Subsidiaries
has (A) used any corporate funds for any unlawful contribution, gift,
entertainment of unlawful expense relating to political activity; (B) made any
direct or indirect unlawful payment to any foreign or domestic government
13
official or employee from corporate funds; (C) violated any provision of the
U.S. Foreign Corrupt Practices Act or any similar Law or regulation of any other
jurisdiction; or (D) paid any bribe, rebate, pay-off, influence payment,
kick-back or other unlawful payment. Neither the Company, SSS SCA, Shurgard
Guernsey nor any of their respective Affiliates, partners, members, shareholders
or other equity owners, and none of their respective officers, directors or
representatives, is a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of the Office of Foreign Asset
Control ("OFAC") (including those named on OFAC's Specially Designated and
Blocked Persons List) or any other governmental action.
(r) Insurance.
----------
Each of SSS SCA, Shurgard Guernsey, the Company and their
Subsidiaries have obtained and maintained in full force and effect insurance in
such amounts, on such terms and covering such risks as are disclosed in the Data
Room. Each of SSS SCA, Shurgard Guernsey, the Company and their Subsidiaries
have paid, or caused to be paid, all premiums due under such policies and is not
in default with respect to any obligations under such policies. All such
policies are valid, outstanding and enforceable and neither the SSS SCA,
Shurgard Guernsey, the Company nor their Subsidiaries has agreed to modify or
cancel any of such insurance policies nor has SSS SCA, Shurgard Guernsey, the
Company nor their Subsidiaries received any notice of any actual or threatened
modification or cancellation of such insurance other than in the ordinary course
of business or such as is normal and customary in the industry of SSS SCA,
Shurgard Guernsey, the Company and their Subsidiaries.
(s) Payment of Taxes.
-----------------
(1) Each of SSS SCA, Shurgard Guernsey, the Company and each
Subsidiary have filed all Tax returns that are required to be filed in
all jurisdictions in which they are required to so file or have duly
requested extensions thereof, each such Tax return is complete and
accurate in all material respects, and each of SSS SCA, Shurgard
Guernsey, the Company and each Subsidiary have paid all Taxes
(including social security contributions and transfer Taxes and
duties) required to be paid by any of them in all jurisdictions,
except for any such Tax that is being contested in good faith and by
appropriate proceedings which in each case has been set forth in
Section 2.2(s) of the Company Disclosure Letter.
(2) The unpaid Taxes of the Company and each of the Subsidiaries
(i) as of the date of the Financial Statements, did not exceed the
reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
set forth on the face of such financial statements (rather than in any
notes thereto) and (ii) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of the Company and the Subsidiaries in filing
their tax returns. Since the date of such Financial Statements,
neither the Company nor any Subsidiary has incurred or accrued any
liability for Taxes arising outside the ordinary course of business.
(3) To the Knowledge of the Company, (i) there is no current or
threatened investigation of SSS SCA, Shurgard Guernsey or any
Subsidiary with respect to the Tax liability of any of them in any
14
jurisdiction and (ii) no claim has ever been made by a Tax authority
in a jurisdiction in which any Subsidiary does not file Tax returns
that any Subsidiary is or may be subject to taxation by that
jurisdiction.
(4) Neither the Company nor any Subsidiary (i) has ever been a
party to any Tax allocation or sharing agreement or Tax
indemnification agreement (other than with an Affiliate) nor (ii) has
any liability for or obligation to pay Taxes of any other person
(other than an Subsidiary) as a member, or prior member, of a
consolidated or affiliated group, as a transferee or successor, by
contract or otherwise.
(5) Neither the Company nor any Subsidiary has waived any statute
of limitation in respect of Taxes or agreed to any extension of time
with respect to any Tax assessment or Tax deficiency.
(6) All documents in the enforcement of which any Subsidiary is
interested have been duly stamped and all such stamp or transfer
duties, and interest and penalties thereon, have been duly paid to the
extent necessary for their enforcement.
(7) To the Company's knowledge, neither the Company nor any
Subsidiary will be liable for any Tax in connection with the
Reorganization.
(8) Neither the Company nor any Subsidiary will be liable for any
Tax in connection with the exercise, cancellation, redemption or other
disposal of any options, shares or stock that were awarded to any
employee, director or officer of the Company or any Subsidiary, where
such options, shares or stock were granted before Closing.
For avoidance of doubt, none of the Company, SSS SCA or Shurgard Guernsey is
making any representation or warranty regarding the amount or the ability to use
any net operating losses of the Company or any of its Subsidiaries against
future income or gain, or the effect of the Reorganization thereon.
(t) Internal Accounting Controls.
-----------------------------
Each of SSS SCA, Shurgard Guernsey, the Company and the
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with U.S. or other applicable GAAP and to maintain accountability for
assets; (C) access to assets is permitted only in accordance with management's
general or specific authorizations; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(u) Compliance with Laws.
---------------------
Each of SSS SCA, Shurgard Guernsey, the Company and the
Subsidiaries is in material compliance with any Judgments and all applicable
Laws, except for non-compliance where remedies, singly or in the aggregate,
would not be criminal and have not resulted in and would not reasonably be
15
expected to result in an adverse effect on the business or operations of the
Company, SSS SCA, Shurgard Guernsey, and their respective Subsidiaries, taken as
a whole. .
(v) Material Contracts.
-------------------
(1) Neither the Company, SSS SCA, Shurgard Guernsey, nor any of
its Subsidiaries is a party to or bound by:
(A) any Contract which contains restrictions with respect to
payment of dividends or any other distribution in respect of the
capital stock or other equity interests;
(B) any Contract relating to development, construction, capital
expenditures or purchases of material, supplies, equipment or other
assets or properties (other than purchase orders for such items in the
ordinary course of business) in each case requiring aggregate payments
during their remaining term following the Closing Date in excess of
(euro)7,500,000, for any Contract relating to the development of
properties, or (euro)2,000,000 for any such other Contract;
(C) any Contract, except in case of any Contract with an
Affiliate, relating to (i) indebtedness in excess of (euro)1,500,000,
(ii) any guarantee or assumption of other obligations or reimbursement
of any maker of a letter of credit except for agreements entered into
in the ordinary course of business that relate to obligations which do
not exceed (euro)1,500,000 in the aggregate for all such agreements;
(D) any Contract limiting in any material respect the ability to
engage in its current business or to compete in such business with any
Person;
(E) any Contract or executed binding letter of intent involving
the future disposition or acquisition of Properties for an amount that
exceeds (euro)7,500,000, or any merger, consolidation or similar
business combination transaction, except in connection with the
Reorganization;
(F) any Contract involving any joint venture, partnership,
strategic alliance, shareholders' agreement or joint development
arrangement (other than Contracts with respect to indebtedness), in
each case involving aggregate payments or obligations in excess of
(euro)1,000,000;
(G) any Contract involving any resolution or settlement of any
actual litigation, arbitration, claim or other dispute which has not
been fully performed, other than, in each case, any such Contracts
concerning the routine collection of debts entered into in the
ordinary course of business and other than, in each case, providing
for payments in an amount less than (euro)1,000,000;
(H) other than the constitutional documents, any Contract
providing for continuing indemnification of any of directors, officers
or employees (except, in each case, for reimbursement of employment
related costs or expenses in the ordinary course);
16
(I) any guarantee of third party obligations in excess of
(euro)750,000;
(J) any management agreement to which it is a party as a manager;
or
(K) any lease for real property in which the amount of payments
required to be made on an annual basis exceeds (euro)500,000.
The foregoing Contracts are collectively referred to herein as
the "Material Contracts." Notwithstanding anything above, Material
Contracts shall not include any Contract that (1) is terminable upon
less than 6-months notice without penalty or premium, (2) will be fully
satisfied at or prior to the Closing or (3) provides for aggregate
payments of less than (euro)750,000 during the remaining term of such
Contract following the Closing Date.
(2) Each Material Contract is (and will be after giving effect to
the Reorganization) valid and enforceable in accordance with its terms
and is in full force and effect, in each case in all material
respects. To the Knowledge of the Company, SSS SCA and Shurgard
Guernsey, neither the Company, SSS SCA, Shurgard Guernsey nor any of
its Subsidiaries are (or will be after giving effect to the
Reorganization) in material breach or default, and neither the
Company, SSS SCA, Shurgard Guernsey nor any of its Subsidiaries has
received any written notice that it, or any other party, is in
material breach or default under any of the Material Contracts.
(w) Affiliate Transactions.
-----------------------
Except as contemplated by the Reorganization or in the ordinary
course of business and at arm's length, since December 31, 2007, there have been
no transactions or series of related transactions, between an officer, director,
employee, stockholder or any other Affiliate of the Company, SSS SCA, Shurgard
Guernsey and their Subsidiaries on the one hand and any of the Company, SSS SCA,
Shurgard Guernsey and their Subsidiaries on the other hand (after reasonable
inquiry). True and complete copies of any Contracts relating to any such
consummated transactions have been delivered or made available to the Investor
prior to the date hereof.
2.3 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor
hereby represents and warrants to the Company that:
(a) ORGANIZATION AND AUTHORITY. The Investor is a governmental
plan validly existing under the Laws of the State of New York and has
all requisite power and authority to carry on its business as
presently conducted.
(b) AUTHORIZATION. The Investor has the power and authority to
enter into the Transaction Documents and to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of
the Transaction Documents by the Investor and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by the Office of the New York State Comptroller and no further
17
approval or authorization by any Person or entity is required. Subject
to such approvals of Governmental Entities as may be required by
statute or regulation, the Transaction Documents are valid and binding
obligations of the Investor enforceable against the Investor in
accordance with their respective terms.
Neither the execution, delivery and performance by the Investor of
the Transaction Documents, nor the consummation of the transactions
contemplated thereby, nor compliance by the Investor with any of the
provisions thereof, will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration
of any obligation or to the loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the
Investor under (other than Permitted Liens), any of the material terms
or provisions of any Contract to which the Investor is a party or by
which any of its properties or assets are bound, or (B) any Law or
Judgment, in each case applicable to the Investor or its properties or
assets, other than any such conflicts, violations, defaults, rights,
losses or Liens that would not, individually or in the aggregate,
reasonably be expected to have an Investor Material Adverse Effect.
As used in this Agreement, "Investor Material Adverse Effect"
means any change, effect, event, occurrence or state of facts that
prevents or materially impedes, interferes with, hinders or delays, or
would reasonably be expected to prevent, materially impede, hinder or
delay, the consummation of the Subscription by the Investor.
(c) Purchase for Investment. The Investor acknowledges that the
Shares have not been registered under the Securities Act and the rules
and regulations promulgated thereunder or under any state securities
Laws and that there is no public or other market for the Shares. The
Investor (i) is acquiring the Shares for its own account pursuant to
an exemption from registration under the Securities Act solely for
investment and not with a view to distribution in violation of the
securities Laws, (ii) will not sell or otherwise dispose of any of the
Shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any other applicable
securities Laws, (iii) has such knowledge and experience in financial
and business matters and in investments of this type that it is
capable of evaluating the merits and risks of its investment in the
Shares and of making an informed investment decision and (iv) is an
Accredited Investor (as that term is defined by Rule 501 under the
Securities Act).
(d) FINANCIAL CAPABILITY. At Closing, the Investor will have
available funds to make the Subscription on the terms and conditions
contemplated by this Agreement.
(e) LITIGATION. As of the date hereof, there is no suit, action,
proceeding investigation or review pending or, to the Knowledge of the
Investor, threatened, and no Judgment outstanding, against the
Investor or any of its Affiliates that, individually or in the
aggregate, would reasonably be expected to have an Investor Material
Adverse Effect.
(f) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity or any other
Person is necessary or required for the performance by the Investor or
18
any of its Affiliates of its obligations hereunder, in connection with
the issuance or sale of the Shares hereunder or the consummation of
the transactions contemplated by this Agreement or the Transaction
Documents, except such as have been already obtained, other than such
authorizations, approvals, consents, licenses, orders, registrations,
qualifications or decrees the failure of which to make or obtain would
not be reasonably likely to result in an Investor Material Adverse
Effect.
(g) BROKERS AND FINDERS. Neither the Investor nor its Affiliates
or any of their respective officers, directors or employees has
incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees which are or will become, in whole
or in part, an obligation of the Company, Shurgard Guernsey, SSS SCA
or any of their respective Subsidiaries or Affiliates.
(h) ACCREDITED INVESTOR. Each of the Investor and its financial
advisor has a pre-existing commercial relationship with Public Storage
or its Affiliates. The Investor has been provided with, evaluated and
relied upon certain documents and information to assist it in making a
decision with respect to the execution of the Transaction Documents.
The Investor acknowledges that it and its representatives and agents
have had a full opportunity to meet with the officers and employees of
Public Storage, SSS SCA and their Affiliates to discuss the Shurgard
Europe business. As of the Closing, the Investor acknowledges that it
has conducted to its satisfaction an independent investigation of the
Company, SSS SCA, Shurgard Guernsey and their Subsidiaries and, in
making its determination to proceed with the transaction contemplated
by this Agreement, the Investor has relied on the results of its own
independent investigation and verification and the representations and
warranties of the Company, SSS SCA, Shurgard Guernsey and Public
Storage expressly and specifically set forth in this Agreement.
2.4 REPRESENTATIONS AND WARRANTIES OF PUBLIC STORAGE. Public
Storage hereby represents and warrants to the Company and the Investor that:
(a) ORGANIZATION AND AUTHORITY. Public Storage is a real estate
investment trust duly organized and validly existing under the Laws of
its jurisdiction of organization and has all requisite corporate power
and authority to carry on its business as presently conducted.
(b) AUTHORIZATION. Public Storage has the corporate power and
authority to enter into the Transaction Documents and to carry out its
obligations hereunder and thereunder. The execution, delivery and
performance of the Transaction Documents by Public Storage and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by Public Storage's board of directors and no
further approval or authorization by any Person or entity is required.
Subject to such approvals of Governmental Entities as may be required
by statute or regulation, the Transaction Documents are valid and
binding obligations of Public Storage enforceable against Public
Storage in accordance with their respective terms.
Neither the execution, delivery and performance by Public Storage
of the Transaction Documents, nor the consummation of the transactions
contemplated thereby, nor compliance by Public Storage with any of the
19
provisions thereof, will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under
Public Storage's declaration of trust or bylaws.
(c) PURCHASE FOR INVESTMENT. Public Storage acknowledges that the
Shares have not been registered under the Securities Act and the rules
and regulations promulgated thereunder or under any state securities
Laws and that there is no public or other market for the Shares.
Public Storage (1) is acquiring the Shares for its own account
pursuant to an exemption from registration under the Securities Act
solely for investment and not with a view to distribution in violation
of the securities Laws, (2) will not sell or otherwise dispose of any
of the Shares, except in compliance with the registration requirements
or exemption provisions of the Securities Act and any other applicable
securities Laws, (3) has such knowledge and experience in financial
and business matters and in investments of this type that it is
capable of evaluating the merits and risks of its investment in the
Shares and of making an informed investment decision and (4) is an
Accredited Investor (as that term is defined by Rule 501 under the
Securities Act).
ARTICLE III
COVENANTS
3.1 FILINGS; OTHER ACTIONS. Each of the Investor and SSS SCA will
cooperate and consult with the other and use reasonable best efforts
to prepare and file all necessary documentation, to effect all
necessary applications, notices, petitions, filings and other
documents, and to obtain all necessary permits, consents, orders,
approvals and authorizations of, or any exemption by, all third
parties and Governmental Entities necessary or advisable to consummate
the transactions contemplated by this Agreement. Each of the Investor
and the SSS SCA will have the right to review in advance, and to the
extent practicable each will consult with the other, in each case
subject to applicable Laws relating to the exchange of information,
with respect to any filing made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably
and as promptly as practicable. Each party hereto agrees to keep the
other party apprised of the status of matters relating to completion
of the transactions contemplated hereby.
3.2 [RESERVED]
3.3 LEGEND. (a) The Investor agrees that all certificates or other
instruments representing the Shares subject to this Agreement will
bear a legend substantially to the following effect:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING
THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
20
LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS. THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ALSO
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THE LIMITED
LIABILITY COMPANY AGREEMENT OF THE ISSUER OF SUCH SECURITIES (THE
"COMPANY"). A COPY OF THE PROVISIONS OF SUCH AGREEMENT SETTING FORTH
SUCH RESTRICTIONS ON TRANSFER WILL BE FURNISHED WITHOUT CHARGE BY
THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.
(b) The Investor acknowledges that the Shares have not been
registered under the Securities Act or under any state securities Laws and
agrees that it will not sell or otherwise dispose of any of the Shares, except
in compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities Laws.
3.4 REORGANIZATION. At or prior to the Closing, the Company and
SSS SCA shall, and shall cause their applicable Affiliates to, take
the actions required to complete the Reorganization.
3.5 EMPLOYEE COMPENSATION PLAN. At or prior to the Closing, the
Company shall adopt an employee compensation plan substantially in the
form attached hereto as Annex A.
3.6 FEES AND EXPENSES. Except as otherwise provided herein or in
the LLC Agreement, each of the parties will bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated under the Transaction Documents or any due
diligence conducted in connection therewith, including fees and
expenses of its own financial or other consultants, investment
bankers, accountants, counsel, tax advisors, engineers and structural
consultants. Each of the Investor and the Company shall be responsible
for one-half of any transfer, sales, use, value added, stamp,
recording, registration and similar fees or taxes imposed with respect
to the Subscription .
3.7 PUBLICITY. None of Public Storage, the Company, SSS SCA,
Shurgard Guernsey, or the Investor shall issue any press releases or
otherwise make any public statements with respect to the transactions
contemplated by this Agreement except as mutually agreed to by the
Company and the Investor; except for any press release or public
announcement as may be required by applicable Law, court process or
any listing agreement with the New York Stock Exchange, in which case
such Person will use reasonable efforts not to issue any such press
release or public announcement without consulting the others.
3.8 CONFIDENTIALITY. Subject to the LLC Agreement, the Investor
will hold, and will cause its respective Subsidiaries and their
directors, officers, employees, agents, consultants and advisors to
hold, in strict confidence, unless compelled to disclose by judicial
or administrative process or, in the written opinion of its counsel,
by other requirement of Law or the applicable requirements of any
regulatory agency or relevant stock exchange, all non-public records,
books, contracts, instruments, computer data and other data and
21
information (collectively, "Information") concerning the Company,
Shurgard Guernsey, SSS SCA or any of their Subsidiaries furnished to
it by the Company or its representatives pursuant to this Agreement
(except to the extent that such information can be shown to have been
(1) previously known by the Investor on a non-confidential basis, (2)
in the public domain through no fault of the Investor or (3) later
lawfully acquired from other sources by the Investor), and the
Investor shall not release or disclose such Information to any other
person, except its to auditors, attorneys, financial advisors, and
other consultants and advisors. In addition, all information furnished
to Investor and its representatives and all analyses, compilations,
data, studies or other documents prepared by Investor or its
representatives containing or based in whole or in part on any such
furnished information or reflecting Investor's review of, or interest
in, the Company shall be subject to the Confidentiality Agreement
between the Company and the Investor (the "Confidentiality
Agreement").
3.9 LLC AGREEMENT. At the Closing, the Investor and Public Storage
shall, and shall cause the New York State Common Retirement Fund and
Shurgard Holdings to, adopt an amended and restated limited liability
company agreement for the Company substantially in the form attached
hereto as Annex B.
3.10 POSSIBLE LOCAL RULING OR RESTRUCTURING. Within 30 days of the
Closing, the parties hereto and their advisors will together assess
the advisability of applying to the relevant French tax authority for
a favorable ruling confirming that (i) the real properties located in
France and held either directly or indirectly by the Company's French
subsidiaries are used by certain or all of them for the purposes of a
non-real estate business within the meaning of Section 990 E 2(degree)
(a) of the French General Tax Code (the "FTC") and therefore that (ii)
any entity holding either directly or indirectly said real properties
located in France shall not be liable for the French 3% tax set forth
in Section 990 D et seq. of the FTC (the "3% Tax"). Unless the
Investor decides in its sole discretion not to apply for such a
ruling, or a favorable ruling has been received by December 1, 2008,
the Company will, at its expense, prior to the end of 2008,
restructure its ownership or operations in a manner designed to avoid
the application of the 3% Tax, with that restructuring to be
implemented so as to minimize adverse effects to the Company, its
Subsidiaries and the other parties hereto.
3.11 LEGAL OPINION. At the Closing, the Investor shall receive the
opinion of John S. Baumann, chief legal officer of Public Storage, and
David Goldberg, special counsel to Public Storage, addressed to the
Investor, dated as of the Closing Date, in the form attached hereto as
Exhibit A.
22
ARTICLE IV
[RESERVED]
ARTICLE V
INDEMNIFICATION
5.1 SURVIVAL PERIODS. All representations and warranties of the
parties hereto contained in this Agreement shall survive the Closing for a
period of one (1) year following the date of the Closing; provided, that the
representations and warranties contained in Sections 2.2(c), (e), (f) and (s)
and Sections 2.3(a) and (b) shall survive the Closing until the expiration of
the applicable statute of limitations underlying any such claim. In the event
that an Indemnified Party (as defined below) provides written notice in
accordance with Section 5.3 to the Indemnifying Party (as defined below) within
the applicable period of time set forth in the first sentence of this Section
5.1, and such claim shall not have been finally resolved before the expiration
of the applicable period referred to in the first sentence of this Section 5.1,
any representation or warranty that is the basis for such claim shall continue
to survive and shall remain a basis for indemnity only as to such specific claim
(but as to no other claim) until such claim is finally resolved. This Section
5.1 shall not limit any covenant or agreement of the parties contained in this
Agreement which by its terms contemplates performance after the Closing, and
shall not extend the applicability of any covenant or agreement of the parties
contained in this Agreement which by its terms solely relates to the period
between the date hereof and the Closing.
5.2 INDEMNIFICATION. (a) Subject to the other provisions of this
Article V and the accuracy of the representation in Section 2.1(b), from and
after the Closing, Public Storage shall indemnify, defend and hold harmless the
Investor and its officers, directors, members, employees, agents, successors and
assigns (the "Investor Group") from and against any and all costs and expenses
(including reasonable attorney's fees), suits, proceedings, judgments,
settlements, fines, losses, claims, liabilities, interest, awards, penalties,
demands, assessments and damages (including actual losses to the Company but
excluding punitive, special, exemplary, consequential, incidental or indirect
damages regardless of legal theory other than to the extent such amounts are
required to be paid to a third party) (collectively, "Damages") to the extent
relating to or arising out of (i) any breach of any representation or warranty
made by Public Storage, the Company, Shurgard Guernsey or SSS SCA in this
Agreement; provided that the matters disclosed in Section 2.2(j)(2)(b) - (f),
2.2(j)(3), 2.2(j)(4), 2.2(n)(5)(a), 2.2(o) or 2.2(s) of the Company Disclosure
Letter shall not constitute exceptions to the representations and warranties to
the extent that, and Public Storage shall, pursuant to this Section 5.2,
indemnify the Investor Group for the amount by which, (x) the aggregate Damages
(excluding attorneys' fees solely for purposes of determining whether the
following threshold has been met) from any breaches of any representations or
warranties made by Public Storage, the Company, Shurgard Guernsey or SSS SCA in
this Agreement relating to or arising out of such matters (A) actually incurred
on or prior to March 15, 2009 or (B) expected to be incurred as of March 15,
2009 such that the Company would be required in accordance with applicable
international accounting standards to increase the reserve for such matter
(provided that, in the case of this clause (B), Public Storage shall only be
required to indemnify the Indemnified Parties for Damages if and when such
Damages are actually incurred) exceeds (y) the aggregate amount of the reserves
23
for the matters described in clauses (A) and (B) above reserved for in the
December 31, 2007 financial statements, and, notwithstanding anything to the
contrary contained herein, the Investor's Knowledge of such matter shall not
preclude any claim for Damages hereunder, or (ii) breach of or the failure to
perform any covenant, agreement or undertaking, made by or on behalf of the
Company, Shurgard Guernsey, SSS SCA or Public Storage under this Agreement,
required to be taken prior to the Closing. For purposes of this Agreement,
Damages incurred by the Company or its Subsidiaries shall be deemed to be
Damages to the Investor in proportion to its then-current ownership percentage
of the Company.
(b) The Investor shall indemnify and hold harmless the Company,
Shurgard Guernsey, SSS SCA and their officers, directors, members, employees,
agents, successors and assigns (the "Seller Group") from any Damages to the
extent caused by (i) any breach of any representation or warranty made by the
Investor in this Agreement, or (ii) breach of or the failure to perform any
covenant, agreement or undertaking, made by or on behalf of the Investor under
this Agreement, required to be taken prior to the Closing.
(c) For purposes of this Agreement, the term "Indemnified Party"
shall mean the Investor Group or Seller Group, as applicable, that is entitled
to indemnification under Section 5.2 which shall incur or suffer any Damages in
respect of which indemnification may be sought pursuant to the terms of this
Article V. For purposes of this Agreement, Damages shall be calculated after
giving effect to any amounts actually recovered from third parties, including
amounts actually recovered under insurance policies with respect to such Damages
(net of any costs of such recovery, out-of pocket prosecution costs and similar
costs). Any Indemnified Party having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, costs, Damages
and expenses from insurers of such Indemnified Party under applicable insurance
policies so as to reduce the amount of any Damages hereunder.
5.3 CLAIMS. If an Indemnified Party intends to seek
indemnification pursuant to this Article V with respect to third party claims,
such Indemnified Party shall promptly provide written notice to the party from
whom indemnification is being sought (the "Indemnifying Party"), in writing in
accordance with Section 6.5 hereof of such claim describing such claim in
reasonable detail including the sections of this Agreement which form the basis
for such claim; copies of all material written evidence thereof and the
estimated amount of the Damages that have been or may be sustained by an
Indemnified Party; provided that the failure to provide such notice shall not
affect the obligations of the Indemnifying Party unless it is actually
materially prejudiced thereby, subject, however, to the time periods specified
in Section 5.1 hereof. The Indemnifying Party may assume the defense and control
of any third party claim if it provides notice to the Indemnified Party within
ten (10) Business Days from the date on which the Indemnifying Party received
notice of the third party claim, subject to the terms and conditions of this
Agreement, and if it so elects the Indemnifying Party will not be liable to the
Indemnified Party for legal expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof, but the Indemnifying Party shall
24
allow the Indemnified Party a reasonable opportunity to participate in the
defense of such third party claim with its own counsel and at its own expense;
provided that if the Indemnified Party is advised in writing by counsel chosen
by it that a conflict of interest would exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party, then the applicable
Indemnified Parties shall be entitled to participate in any such defense with
one separate counsel for all Indemnified Parties at the reasonable expense of
the Indemnifying Party. The Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement except with the written consent of the
Indemnified Party; provided, however, that the consent of the Indemnified Party
shall not be required if all of the following conditions are met: (i) the terms
of the judgment or proposed settlement include as an unconditional term thereof
the giving to the Indemnified Party by the third party of a release of the
Indemnified Party from all liability in respect of such third party claim, (ii)
there is no finding or admission of (A) any violation of Law by the Indemnified
Party (or any Affiliate thereof), and (B) no material effect on any other Action
or claims of a similar nature that may be made against the Indemnified Party (or
any Affiliate thereof), and (iii) the sole form of relief is monetary damages
that are paid in full by the Indemnifying Party. The Indemnified Party will
provide reasonable cooperation in the defense of the Third Party Claim.
5.4 Limitation of Liability.
------------------------
(a) In no event shall Public Storage be liable for indemnification
pursuant to Section 5.2 unless and until the amount of an individual claim
exceeds (euro)50,000 (each claim so in excess of (euro)50,000, a "Qualifying
Claim") and the aggregate of all such Qualifying Claims result in total Damages
which are incurred or suffered by the Investor Group that exceed 0.5% of the
Subscription Price (the "Threshold"), in which case the Investor shall be
entitled to indemnification for the entirety of the aggregate of all such
Qualifying Claims; and provided, however, that the aggregate liability of Public
Storage pursuant to Section 5.2 shall not be in excess of an aggregate amount of
5% of the Subscription Price (the "Cap"). Neither the Threshold nor the Cap
shall be applicable to Public Storage's liability for indemnification with
respect to Damages relating to or arising out of (i) acts of fraud or willful
misrepresentation or (ii) any breach of the representations of the Company,
Shurgard Guernsey or SSS SCA contained in Sections 2.2(c), (e) and (f).
(b) In no event shall the Investor be liable for indemnification
pursuant to Section 5.2(c) for any claim unless and until the aggregate of all
Qualifying Claims result in total Damages which are incurred or suffered by the
Seller Group exceed the Threshold, in which case the Seller Group shall be
entitled to indemnification for the entirety of the aggregate of all such
Qualifying Claims; and provided, however, that the aggregate liability of the
Investor pursuant to Section 5.2(c) shall not be in excess of the Cap. Neither
the Threshold nor the Cap shall be applicable to the Investor's liability for
indemnification with respect to Damages relating to or arising out of (i) acts
of fraud or willful misrepresentation or (ii) any breach of the representations
of the Investor contained in Sections 2.3(a) and (b); provided, however, that
the aggregate liability of the Investor for indemnification with respect to
Damages relating to or arising out of any breach of the representations of the
Investor contained in Sections 2.3(a) and (b) shall not be in excess of the
Subscription Price. Notwithstanding anything to the contrary contained in this
Agreement, the Investor's aggregate liability under this Article V shall not
exceed the Subscription Price.
(c) No Indemnified Party shall be entitled to any recovery under
this Article V in respect of any Damages to the extent that such recovery would
constitute a duplicative payment of amounts recovered as a purchase price
adjustment pursuant to Section 1.2.
25
5.5 SOLE REMEDY/WAIVER. The parties hereto acknowledge and agree
that, in the event that the Closing occurs, the remedies provided for in this
Agreement shall be the parties' sole and exclusive monetary remedy for any
breach of the representations and warranties and covenants, undertakings and
agreements contained in this Agreement other than for a claim of fraud and
except that nothing in this Section 5.5 shall prevent a party from seeking
specific performance in accordance with Section 6.12.
ARTICLE VI
MISCELLANEOUS
6.1 AMENDMENT. No amendment or waiver of any provision of this
Agreement will be effective with respect to any party unless made in writing and
signed by an officer of a duly authorized representative of such party.
6.2 WAIVER. The conditions to each party's obligation to
consummate the Subscription are for the sole benefit of such party and may be
waived by such party in whole or in part to the extent permitted by applicable
Law. No waiver will be effective unless it is in a writing signed by a duly
authorized officer of the waiving party that makes express reference to the
provision or provisions subject to such waiver.
6.3 COUNTERPARTS AND FACSIMILE. For the convenience of the parties
hereto, this Agreement may be executed in any number of separate counterparts,
each such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement. Executed signature
pages to this Agreement may be delivered by facsimile and such facsimiles will
be deemed as sufficient as if actual signature pages had been delivered.
6.4 GOVERNING LAW; JURISDICTION. This Agreement will be governed
by and construed in accordance with the Laws of the State of New York applicable
to contracts made and to be performed entirely within such State. The parties
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the state and federal courts located in the State of New York
for any actions, suits or proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby.
6.5 NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party to the other will be in writing and will be
deemed to have been duly given (a) on the date of delivery if delivered
personally or by telecopy or facsimile, upon confirmation of receipt, (b) on the
first Business Day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the third Business Day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
26
(a) If to the Investor:
New York State Common Retirement Fund
Division of Pension Investment and Cash Management
Office of the State Comptroller
59 Maiden Lane, 30th Floor
New York, NY 10038
Attention: David Riley
David Tepperman
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: Louis H. Singer, Esq.
with a copy to:
Heitman International
International Business Center
Al. Armii Ludowej 14
Warsaw, Poland 00-638
Attention: Dennis Dart
with a copy to:
Heitman
191 N. Wacker Drive
Chicago, IL 60606
Attention: Jerome J. Claeys
Howard Edelman
(b) If to the Company, SSS SCA, Shurgard Guernsey:
Shurgard Self Storage SCA
Quai du Commerce
48 Handelskaai
1000 Brussels, Belgium
Telecopy: +32-2-229-5655
Attn: Steven De Tollenaere
Kris Van Mieghem, Esq.
27
with a copy to:
Public Storage
701 Western Avenue
Glendale, California 91201
Telecopy: (818) 548-9288
Attention: John Reyes
Stephanie G. Heim, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Telecopy: (212) 403-2000
Attn: Adam O. Emmerich, Esq.
David E. Shapiro, Esq.
(c) If to the Public Storage:
Public Storage
701 Western Avenue
Glendale, California 91201
Telecopy: (818) 548-9288
Attention: John Reyes
Stephanie G. Heim, Esq.
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Telecopy: (212) 403-2000
Attn: Adam O. Emmerich, Esq.
David E. Shapiro, Esq.
6.6 ENTIRE AGREEMENT. (a) This Agreement (including the Annexes
and Disclosure Letters hereto), together with the other Transaction Documents,
constitutes the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter hereof.
6.7 ASSIGNMENT. This Agreement will not be assignable by any party
hereto, by operation of Law or otherwise, without the written consent of the
other parties hereto (any attempted assignment in contravention hereof being
null and void).
28
6.8 Definitions.
------------
(a) The term "Subsidiary" means, with respect to any Person, those
Persons of which such person owns an amount of the voting securities, other
voting rights or voting partnership interests sufficient to elect at least a
majority of the board of directors or other governing body or, if there are no
such voting interests, persons of which such person owns or controls more than
50% of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which more than 50% of the outstanding equity
securities is owned directly or indirectly by its parent. It is understood and
agreed that the Subsidiaries of the Company shall be deemed to include each
Person that is a Subsidiary of the Company after giving effect to the
Reorganization.
(b) The term "Affiliate" means, with respect to any person, any
person directly or indirectly controlling, controlled by or under common control
with, such other person. For purposes of this definition, "control" when used
with respect to any person, means the possession, directly or indirectly, of the
power to cause the direction of management and/or policies of such person,
whether through the ownership of voting securities by contract or otherwise.
(c) The term "Knowledge" or any similar formulation of Knowledge
shall mean, (i) in the case of the Company, Shurgard Guernsey, SSS SCA or any of
their Subsidiaries, the actual knowledge of Ronald L. Havner, Jr., John Reyes,
Steven De Tollenaere, Kris Van Mieghem and Jean Kreusch and (ii) in the case of
the Investor, the actual knowledge of Marjorie Tsang, David Tepperman, Jerome
Claeys, John Clement, Howard Edelman, Theresa Ranck and Byron Balch.
(d) The term "Law" shall mean any federal, state, local or foreign
law, statute, ordinance, rule, regulation, judgment, code, order, injunction,
arbitration award, agency requirement, license or permit of any Governmental
Entity.
(e) The term "Tax" or "Taxation" means all forms of taxation,
including (without limitation) any charge, tax, duty, levy, impost, withholding,
contribution or liability wherever chargeable imposed for support of national,
state, federal, municipal or local government or any other person and any
penalty, fine, surcharge, interest, charges or costs payable in connection
therewith.
(f) The term "Person" means any corporation, association,
partnership, limited liability company, joint venture, organization, individual,
business, trust or any other entity or organization of any kind or character,
including a Governmental Entity.
(g) The term "Contract" means, with respect to any Person, any
written contract, agreement, understanding or other instrument or obligation to
which such Person is a party or by which such Person or such Person's properties
or assets are or may be bound.
(h) The term "Loan Agreements" means, collectively and each
individually, (i) the Second Amended and Restated Terms and Conditions of the
Bonds Issued by SSS SCA (the "SSS SCA Bonds"), effective as of the March 31,
29
2008, (ii) the Subscription Agreement by and between Public Storage and PS LPT
Properties Investors, a Maryland business trust (together, the "Subscribers")
and SSS SCA, made on March 31, 2008, (iii) the Amendment Agreement by and
between the Subscribers, SSS SCA, and the Guarantors (as defined therein), made
on March 31, 2008, (iv) the Abstract Guarantee executed by each Guarantor in
relation to the SSS SCA Bonds, (v) the Terms and Conditions of the Bonds Issued
by SSC Lux (the "SSC Lux Bonds"), effective as of the March 31, 2008, (vi) the
Subscription Agreement by and between Public Storage and SSC Lux, made on March
31, 2008 and (vii) the Abstract Guarantee executed by the relevant Guarantors in
relation to the SSC Lux Bonds.
6.9 CAPTIONS. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and will not be deemed to limit or otherwise affect any of the provisions
hereof.
6.10 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person (including, without limitation, the officers
and directors of the Investor and the Company) or circumstance is determined by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
6.11 NO THIRD PARTY BENEFICIARIES. With the exception of Section
5.2, nothing contained in this Agreement, expressed or implied, is intended to
confer upon any person or entity other than the parties hereto or permitted
transferees of the Investor, any benefit right or remedies.
6.12 SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, the Company and the Investor acknowledge and
agree that, in addition to all other remedies to which it may be entitled, each
of the parties hereto is entitled to a decree of specific performance, provided
that such party hereto is not in material default hereunder. The parties hereto
agree that, if for any reason a party shall have failed to perform its
obligations under this Agreement, then the party seeking to enforce this
Agreement against such nonperforming party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable relief.
This provision is without prejudice to any other rights that any party may have
against another party for any failure to perform its obligations under this
Agreement including the right to seek damages for a material breach of any
provision of this Agreement.
6.13 . AUTHORSHIP. The parties agree that the terms and language
of this Agreement were the result of negotiations between the parties and their
respective advisors and, as a result, there shall be no presumption that any
30
ambiguities in this Agreement shall be resolved against any party. Any
controversy over construction of this Agreement shall be decided without regard
to events of authorship or negotiation.
[Signature pages follow]
31
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first herein above written.
SHURGARD SELF STORAGE EUROPE LIMITED
By: /s/ John Reyes
-------------------------------------------
Name: John Reyes
Title: Director
SHURGARD SELF STORAGE SCA
represented by:
By: /s/ Ronald L. Havner, Jr.
-------------------------------------------
Name: Self Storage Management Belgium BVBA
Title: Executive General Manager
represented by:
Name: Ronald L. Havner, Jr.
Title: Permanent Representative
SHURGARD EUROPEAN HOLDINGS LLC
By: Shurgard Storage Centers, LLC,
a Delaware limited liability company
its: Managing Member
By: /s/ John S. Baumann
---------------------------------------
Name: John S. Baumann
Title: Senior Vice President
PUBLIC STORAGE
By: /s/ John S. Baumann
---------------------------------------
Name: John S. Baumann
Title: Senior Vice President
Chief Legal Officer
THOMAS P. DINAPOLI, COMPTROLLER OF
THE STATE OF NEW YORK, AS TRUSTEE
OF THE COMMON RETIREMENT FUND
By: /s/ Raudline Etienne
-------------------------------------
Name: Raudline Etienne
Title:CIO and Deputy Comptroller