PURCHASE AND SALE
AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this " Agreement
") is executed by and between Security Self Storage Inc., a
Kentucky corporation (" Seller "), and Strategic
Capital Holdings, LLC, a Virginia limited liability compa ny ("
Purchaser "), formerly known as U.S. Commercial LLC.
In consideration of the mutual covenants and representations
herein contained, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Seller
and Purchaser agree as follows:
1.
PURCHASE AND SALE
1.1 Purchase and Sale
. Subject to the terms and conditions of this Agreement, Seller
hereby agrees to sell and convey to Purchaser, and Purchaser hereby
agrees to purchase from Seller, all of the following described
property (herein collectively called the " Property
"):
(a) Land . (i)
That certain tract of land located at 8080 Steilen Drive, Florence,
Kentucky, being more particularly described on
Exhibit "A-1" attached hereto and made a
part hereof (herein, " Parcel One "), and (ii) that
other certain tract of land located at 2900 Crescent Springs Road,
Erlanger, Kentucky, being more particularly described on
Exhibit "A-2" attached hereto and made a
part hereof (herein, " Parcel Two " and together with
Parcel One herein collectively called the " Land
").
(b) Easements .
All easements, if any, benefiting the Land or the Improvements (as
defined in Section 1.1(d) of this Agreement).
(c) Rights and
Appurtenances . All rights and appurtenances pertaining to the
Land, including any right, title and interest of Seller in and to
adjacent streets, alleys or rights-of-way.
(d)
Improvements . (i) All improvements and related amenities in
and on Parcel One, comprising approximately 126,250 net rentable
square feet of storage space and 888 rental units, and being
commonly known as "Security Self Storage" (herein, the "
Parcel One Improvements "), and (ii) all improvements
and related amenities in and on Parcel Two, comprising
approximately 63,725 net rentable square feet of storage space and
605 rental units, and also being commonly known as "Security Self
Storage" (herein, the " Parcel Two Improvements ",
and together with the Parcel One Improvements herein collectively
called the " Improvements ").
(e) Leases .
Seller's interest under (i) all written leases, occupancy
agreements and rental agreements (collectively, the "
Leases ") for rental units in the Property, together
with all tenant security deposits held by Seller on the Closing
Date (as defined in Section 6.1 of this Agreement), and
(ii) all cellular tower leases relating to the Property, as more
particularly described on Schedule "C" attached hereto and
incorporated herein (the "Tower Leases").
(f) Tangible
Personal Property . All appliances, fixtures, equipment,
machinery, furniture, carpet, drapes and other items of personal
property, if any, owned by Seller and located on or about the Land
and the Improvements (the " Tangible Personal
Property "), including, without limitation, those items of
personal property set forth on
Exhibit "D" attached hereto, including
the moving trucks more particularly described on Exhibit "D" hereto
(herein collectively, the " Motor Vehicles ").
(g) Contracts .
Seller's interest (to the extent the same is assignable) under the
"Contracts" (as defined below), other than the "Rejected Contracts"
(as defined below).
(h) Intangible
Property . All intangible property (the " Intangible
Property ") owned by Seller and pertaining to the Land, the
Improvements, or the Tangible Personal Property, including, without
limitation, (i) all "yellow page" advertisements, (ii) all
transferable utility contracts, (iii) all transferable telephone
exchange numbers, (iv) all plans and specifications, (v) all
licenses, permits, engineering plans and landscape plans, (vi) all
assignable warranties and guarantees relating to the Property or
any part thereof, and (vii) all of Seller's right, title and interest in and
to the trade name "Security Self Storage".
2.
PURCHASE PRICE
2.1 Purchase Price .
The purchase price (the " Purchase Price ") for the
Property shall be the sum of Nine Million Seven Hundred Thousand
and no/100 Dollars ($9,700,000.00), subject to prorations and
adjustments as set forth in this Agreement, and shall be paid by
Purchaser to Seller at the Closing by wire transfer of immediately
available funds to the Escrow Agent on the Closing Date in
accordance with wire transfer instructions to be provided by the
Escrow Agent. The Purchase Price shall be allocated among the
projects comprising the Property in the manner set forth on
Schedule "B" attached hereto and incorporated herein.
3.
EARNEST MONEY
3.1 Earnest Money .
Purchaser shall deliver to Republic Title of Texas, Inc., 2626
Howell Street, 10th Floor, Dallas, Texas 75204, Attn: Jennifer
Haden (" Escrow Agent "), as agent for a national
title underwriter acceptable to Purchaser (" Title
Company "), within three (3) business days after the date a
fully-executed copy of this Agreement is delivered to the Escrow
Agent by Seller and Purchaser, an earnest money deposit (the "
Deposit ") in the amount of One Hundred Thousand and
no/100 Dollars ($100,000.00). The Deposit, together with all
interest accrued thereon, is herein collectively called the "
Earnest Money ". The Deposit shall be invested by the
Escrow Agent in an FDIC-insured, interest-bearing account as
Purchaser shall direct. If the sale of the Property is consummated
under this Agreement, the Earnest Money shall be paid to Seller and
applied as a credit against the Purchase Price at Closing. If
Purchaser terminates this Agreement in accordance with any right to
terminate granted to Purchaser by the terms of this Agreement, the
Earnest Money shall be returned to Purchaser, and neither party
hereto shall have any further obligations under this Agreement
except for such obligations which by their terms expressly survive
the termination of this Agreement (the " Surviving
Obligations ").
4.
CONDITIONS TO CLOSING
4.1 Seller's
Obligations . Seller shall deliver to Purchaser (at Seller's
expense), within three (3) business days after the "Effective Date"
(as defined below), true, correct, complete and legible copies of
all of the due diligence items listed on Schedule "A" attached
hereto and incorporated herein with respect to each of the
properties comprising the Property (collectively, the "Due
Diligence Items"). Seller shall provide Purchaser with written
notice at such time as Seller determines that all Due Diligence
Items have been delivered to Purchaser (the " Due Diligence
Delivery Notice "). Within two (2) business days following
Purchaser's receipt of the Due Diligence Delivery Notice, Purchaser
shall confirm in writing to Seller, if such be the case, that all
required Due Diligence Deliveries have been received by Purchaser,
in which event the date that Purchaser receives the Due Diligence
Delivery Notice shall be deemed to be the "Due Diligence Receipt
Date" (herein so called) for all purposes of this Agreement. In the
event, however, that Purchaser determines that it has not been
provided with all of the Due Diligence Items, then Purchaser shall
provide Seller with written notice thereof (the " Missing Due
Diligence Notice "), within two (2) business days following
Purchaser's receipt of the Due Diligence Delivery Notice,
enumerating with specificity in such notice which Due Diligence
Items have not been provided by Seller. Within two (2) business
days following Seller's receipt of the Missing Due Diligence
Notice, Seller shall provide Purchaser with all Due Diligence Items
listed thereon together with written notice confirming such
delivery (the " Missing Due Diligence Delivery Notice ").
Within two (2) business days following Purchaser's receipt of the
Missing Due Diligence Delivery Notice, Purchaser shall confirm in
writing to Seller that Purchaser has received all required Due
Diligence Items, in which event the date that Purchaser receives
the Missing Due Diligence Delivery Notice shall be deemed to be the
Due Diligence Receipt Date for all purposes of this Agreement.
Notwithstanding the foregoing or anything to the contrary contained
in this Agreement, Purchaser may request additional information,
documentation or materials concerning the Property from Seller at
any time after the Effective Date, and Seller agrees to use
commercially reasonable efforts to provide such additional
information, documentation or materials to Purchaser, at no cost or
expense to Seller, provided it is within Seller's possession or
under its control, and further provided that the delivery or
non-delivery of any such item shall in no manner extend the
Approval Period. Notwithstanding the foregoing provisions of this
Section 4.1, should Seller (i) fail to timely deliver the Due
Diligence Delivery Notice to Purchaser, as required above, or (ii)
fail to timely deliver the Missing Due Diligence Delivery Notice
and/or the Missing Due Diligence Items to Purchaser, as required
above, then the Due Diligence Receipt Date shall not occur until
Purchaser so acknowledges in writing, and until such time as
Purchaser so acknowledges the occurrence of the Due Diligence
Receipt Date, Purchaser shall be entitled to terminate this
Agreement upon written notice to Seller, whereupon this Agreement
automatically shall terminate, the Earnest Money shall be returned
by Escrow Agent to Purchaser, without the consent or joinder of
Seller being required, and neither party shall have any further
obligations hereunder except for the Surviving
Obligations.
4.1.1 Approval Period . During the period
commencing on the Effective Date and expiring at 5:00 p.m. Central
Time on the fiftieth (50 th ) day following the Due
Diligence Receipt Date (the " Approval Period "), the
following matters shall be conditions precedent to Purchaser's
obligations under this Agreement:
(a) Purchaser's being
satisfied in Purchaser's sole discretion that the Property is
suitable for Purchaser's intended use; and
(b) Purchaser's being
satisfied, in Purchaser's sole discretion, with all of the Due
Diligence Items.
Purchaser may (but shall not be obligated to) terminate this
Agreement by delivering written notice of such termination to
Seller at any time prior to the expiration of the Approval Period,
if, in Purchaser's sole and absolute discretion, Purchaser decides
not to consummate the purchase of the Property contemplated hereby.
In such event, this Agreement will terminate as of the date of such
notice, and neither party shall have any further obligation
hereunder except for the Surviving Obligations. If, in Purchaser's
sole and absolute discretion, Purchaser determines that it desires
to consummate the purchase of the Property contemplated hereby,
then Purchaser will give written notice thereof (the "
Closing Notice ") to Seller, prior to the expiration
of the Approval Period. In the event that Purchaser provides Seller
with the Closing Notice, then Purchaser will be deemed to have
waived its termination rights under this Section 4.1.1 , and
the parties will proceed to Closing, subject to all other terms and
conditions of this Agreement. If Purchaser does not give Seller the
Closing Notice prior to the expiration of the Approval Period and
has not previously terminated this Agreement by written notice to
Seller, then this Agreement automatically shall terminate upon the
expiration of the Approval Period, and, in such event, neither
party shall have any further obligation hereunder except for the
Surviving Obligations. In either of such events terminating this
Agreement, immediately following written request from Purchaser to
the Escrow Agent, and without the consent or joinder of Seller
being required, the Escrow Agent shall return all of the Earnest
Money to Purchaser. Notwithstanding the foregoing, Purchaser shall
have the option to proceed to Closing as to less than all of the
projects constituting the Property. In the event Purchaser desires
to exercise such option, Purchaser shall provide Seller with
written notice (the "Exercise Notice") prior to the expiration of
the Approval Period, specifying (a) which project comprising the
Property that Purchaser has elected to acquire (the "Acquired
Property"), and (b) which project comprising the Property that
Purchaser has elected not to acquire (the "Non-Acquired Property").
Upon Seller's receipt of the Exercise Notice, (i) this Agreement
automatically shall be deemed modified to remove all references to
the Non-Acquired Property, (ii) the Purchase Price automatically
shall be adjusted to equal the portion of the Purchase Price
allocable to the Acquired Property, as reflected on Schedule "B"
attached hereto and incorporated herein, (iii) the portion of the
Deposit allocable to the Non-Acquired Property, as reflected on
Schedule "B" attached hereto, shall be returned to Purchaser,
without the consent or joinder of Seller being required, and (iv)
Seller and Purchaser shall proceed to Closing with respect to the
sale and purchase of the Acquired Property only, subject to all of
the other terms and conditions of this Agreement.
4.1.2 Title Commitment and Survey
. Seller shall convey good and marketable title to the
Property to Purchaser at Closing, subject only to the "Permitted
Encumbrances" (defined below). Within five (5) days following the
Effective Date, Seller shall obtain, at its sole cost and expense,
and deliver to Purchaser, a title commitment or title commitments
(whether one or more, the " Title Commitment ") for
one or more ALTA Owner's Policy or Policies of Title Insurance (the
" Title Policy "), issued by the Escrow Agent on
behalf of the Title Company, insuring good and marketable fee
simple title to the Property, together with legible copies of all
exceptions listed therein. Purchaser shall have fifteen (15) days
following its receipt of the Title Commitment, legible copies of
all exceptions listed therein and the "Survey" (defined below), to
deliver to Seller written notice of Purchaser's objections to title
(the " Title Objection Letter "). Seller shall have
the right, but not the obligation, to cure Purchaser's objections
to title; subject, however, to Seller's obligation to remove all
"Monetary Liens" (as defined below) by Closing. Seller shall notify
Purchaser in writing within five (5) days following Seller's
receipt of the Title Objection Letter concerning which title
objections, if any, Seller has agreed to cure. In the event that
Seller does not undertake to cure all of the objections in the
Title Objection Letter to Purchaser's sole satisfaction (or does
not timely respond to the Title Objection Letter), then Purchaser
shall have the right for five (5) days after receipt of Seller's
response to the Title Objection Letter (or five (5) days following
the expiration of the period within which Seller was to so respond)
to either (i) waive any such title objection in writing and
proceed to Closing (in which event such waived title objection
shall be deemed to be a "Permitted Encumbrance", as defined below),
or (ii) terminate this Agreement and receive an immediate
refund of the Earnest Money, without the consent or joinder of
Seller being required. All exceptions set forth in Schedule B of
the Title Commitment which are not objected to by Purchaser
(including matters initially objected to by Purchaser which
objections are subsequently waived in writing) are herein
collectively called the " Permitted Encumbrances ".
In the event that any update to the Title Commitment indicates the
existence of any liens, encumbrances or other defects or exceptions
(the " Unacceptable Encumbrances ") which are not
shown in the initial Title Commitment and that are unacceptable to
Purchaser, Purchaser shall within five (5) days after receipt of
any such update to the Title Commitment notify Seller in writing of
its objection to any such Unacceptable Encumbrance (the "
Unacceptable Encumbrance Notice "). Notwithstanding
anything to the contrary contained herein, Seller shall have no
obligation to take any steps or bring any action or proceeding or
otherwise to incur any expense whatsoever to eliminate or modify
any of the Unacceptable Encumbrances; provided, however, that
Seller shall, prior to Closing, eliminate by paying, bonding around
or otherwise discharging in a manner satisfactory to Purchaser (i)
any Unacceptable Encumbrances that arise by, through or under
Seller, and (ii) any mortgages, deeds of trust, deeds to secure
debt, mechanics' liens or monetary judgments that appear on the
Title Commitment (" Monetary Liens "). In the event
Seller is unable, unwilling or for any reason fails to eliminate or
modify all of the Unacceptable Encumbrances to the sole
satisfaction of Purchaser (other than the Unacceptable Encumbrances
and Monetary Liens required to be removed by Seller in accordance
with the preceding sentence), Purchaser may terminate this
Agreement by delivering notice thereof in writing to Seller by the
earliest to occur of (i) the Closing Date, (ii) five (5)
days after Seller's written notice to Purchaser of Seller's intent
to not cure one or more of such Unacceptable Encumbrances, or (iii)
ten (10) days after the Unacceptable Encumbrance Notice, in the
event Seller does not timely respond thereto. Upon a termination of
this Agreement pursuant to the immediately preceding sentence, the
Earnest Money shall be returned to Purchaser, without the consent
or joinder of Seller being required, and neither party shall have
any obligations hereunder other than the Surviving Obligations.
4.1.3 Surveys . Purchaser shall obtain,
at its sole cost and expense, current, as-built surveys of the
Property prepared by a registered surveyor acceptable to Purchaser
(collectively, the " Survey "), which may be updates
of the existing surveys delivered by Seller to Purchaser pursuant
to Section 4.1 above.
4.1.4 Contracts . Purchaser shall notify Seller prior to
the expiration of the Approval Period which of the "Contracts" (as
defined below) Purchaser will require Seller to cancel at Closing
(the " Rejected Contracts "), and Seller hereby
agrees to cancel same not later than Closing. However, if any of
the Contracts are not terminable upon thirty (30) days notice or
less, and without payment of a fee or penalty, then Purchaser
agrees to assume such Contracts at Closing, provided they are
assignable. Any Contracts which are not assignable shall be the
sole responsibility of Seller, shall be cancelled by Seller on or
before Closing, and Seller shall and hereby agrees to indemnify
Purchaser from any and all liability relating thereto, which
indemnification obligation expressly shall survive Closing.
4.2 Inspection .
During the Approval Period, at any time and from time to time
during normal business hours (and thereafter through the Closing
Date), Purchaser may inspect, test, and survey: (a) the
Property and any and all portions thereof, including physical and
mechanical inspections, (b) all financial and other records
pertaining to the operation of the Property, including, but not
limited to, all books, records, documents, accounting and
management reports of Seller, and (c) originals of all Leases
and Contracts. Notwithstanding the foregoing, Purchaser must obtain
Seller's prior written approval of the scope and method of any
environmental testing or investigation (other than a Phase I
environmental site assessment, which shall require no consent or
approval of any kind), prior to Purchaser's commencement of such
inspections or testing. Seller shall cooperate in good faith with
Purchaser, Purchaser's agents and independent contractors in
connection with all such inspections, tests and surveys, including
obtaining all necessary tenant consents and/or providing adequate
notice to tenants regarding Purchaser's entry into leased areas on
the Property, and making available during normal business hours all
relevant personnel to answer any questions which Purchaser may have
regarding the Property. Purchaser, at Purchaser's sole expense,
shall repair any and all damage resulting from any of the tests,
studies, inspections and investigations performed by or on behalf
of Purchaser pursuant to this Section 4.2 , and Purchaser
shall indemnify, defend and hold Seller harmless from and against
all claims for bodily injury or property damage which may be
asserted against Seller arising out of the tests, studies,
inspections and investigations performed by Purchaser hereunder,
which obligation of indemnification shall survive the Closing or
termination of this Agreement. Prior to any entry onto the Property
by Purchaser or any of its agents, Purchaser shall furnish Seller
with evidence that Purchaser maintains a policy of general
liability insurance providing premises/operations coverage included
under the per occurrence/general aggregate coverage, having a
combined single limit liability of not less than $1,000,000, naming
Seller as an additional insured
4.3 Purchaser's
Representations and Warranties . Purchaser represents and
warrants to Seller that (a) Purchaser has the full right,
power and authority, without the joinder of any other person or
entity, to enter into, execute and deliver this Agreement and to
perform all duties and obligations imposed on Purchaser under this
Agreement, and (b) neither the execution nor the delivery of
this Agreement, nor the consummation of the purchase and sale
contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement conflict with or will result
in the breach of any of the terms, conditions, or provisions of any
agreement or instrument to which Purchaser is a party or by which
Purchaser or any of its assets is bound. Purchaser's
representations and warranties set forth in this Section 4.3
shall survive the Closing or termination of this Agreement.
4.4 Seller's
Representations and Warranties .
- Seller represents and warrants to Purchaser
that:
(i) Seller has the full right, power, and authority,
without the joinder of any other person or entity, to enter into,
execute and deliver this Agreement, and to perform all duties and
obligations imposed on Seller under this Agreement,
(ii) neither the execution nor the delivery of this
Agreement, nor the consummation of the purchase and sale
contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement conflict with or will result
in the breach of any of the terms, conditions, or provisions of any
agreement or instrument to which Seller is a party or by which
Seller or any of Seller's assets is bound,
(iii) there is no existing or pending (or to Seller's
knowledge threatened) litigation affecting Seller or the
Property,
(iv) Seller has no knowledge of, and has not received any
written notice of, any violation of any governmental requirements
(including "Environmental Requirements", as defined below)
concerning the Property, which have not been remedied,
(v) Seller has no knowledge of, and has not received, with
respect to the Property, written notice from any governmental
authority regarding, any change to the zoning classification, any
condemnation proceedings or proceedings to widen or realign any
street or highway adjacent to the Property or that otherwise
affects the Land or the Improvements,
(vi) the list of contracts attached hereto as
Exhibit "E" (the "
Contracts "), is a true, correct and complete list of
all service contracts, equipment leases and/or maintenance
agreements affecting the Property, and there are no other such
agreements affecting the Property,
(vii) Seller is not a "foreign person" within the meaning
of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as
amended,
(viii) except for those tenants in possession of the
Property under written leases for space in the Property, as shown
on the rent roll attached hereto as
Exhibit "F" (the " Rent
Roll "), there are no parties in possession of, or claiming
any possession to, any portion of the Property,
(ix) at Closing there will be no unpaid bills or claims in
connection with any repair of the Property by or on behalf of
Seller that could result in the filing of a lien against the
Property,
(x) the Rent Roll (which is effective as of the date
indicated thereon), and as the same shall be updated and
recertified at Closing by Seller, is and shall be true, correct and
complete in all material respects and no concessions, discounts or
other periods of free or discounted rent have been given other than
those reflected on such Rent Roll,
(xi) the financial statements delivered by Seller to
Purchaser pursuant to Section 4.1 hereof, and all other
information delivered by Seller to Purchaser pursuant to Section
4.1 hereof, are true, correct and complete in all material
respects,
(xii) Seller has no knowledge, and has received no notice,
regarding any environmental contamination on, at or adjacent to the
Property,
(xiii) Seller has not received any written or verbal notice or
request from any insurance company or board of fire underwriters
(or any organization exercising functions similar thereto)
requesting the performance of any work or alterations with respect
to the Property, except those as to which Seller has completed
remedial action which has been formally accepted as sufficient by
such authority or insurer,
(xiv) there are no employment agreements of any kind to which
Seller is a party, including union or collective bargaining
agreements, which will be binding on Purchaser after the
Closing,
(xv) Seller has no knowledge of any material defects in the
drainage systems, foundations, roofs, walls, superstructures,
plumbing, air conditioning and heating equipment, electrical
wiring, boilers, hot water heaters or other portions of the
Property, and to the best of Seller's knowledge, the Improvements
were constructed substantially in accordance with the plans and
specifications for the construction thereof,
(xvi) to the best of Seller's knowledge, the Improvements are
free from the presence or suspected presence of any form of mold,
including those producing mycotoxins, specifically including,
