<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-13462
STORAGE TRUST REALTY
(Exact name of registrant as specified in its charter)
Maryland 43-1689825
State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization
2407 Rangeline Street 65202
Columbia, Missouri (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (573) 499-4799
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
Common Shares of Beneficial registered
Interest, New York Stock Exchange
$.01 Par Value (the "Common Shares")
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
<PAGE> 2
As of March 6, 1998, the aggregate market value of the 15,234,962 Common
Shares held by non-affiliates of the registrant was approximately $380.9
million, based upon the closing price ($25.00) on The New York Stock Exchange
composite tape on such date.
As of March 6, 1998, there were 15,447,193 Common Shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1997 annual report to shareholders are
incorporated by reference into Parts I and II. Portions of the proxy
statement for the registrant's annual shareholders meeting to be held on May
12, 1998 are incorporated by reference into Part III.
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
PART I
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 19
Item 4. Submission of Matters to a Vote of Security Holders . . . 19
PART II
Item 5. Market for Registrant's Common Equity and
Related Shareholder Matters . . . . . . . . . . . . . . 19
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . 19
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . 19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19
Item 8. Financial Statements and Supplementary Data . . . . . . . 19
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . 19
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . 20
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . 20
Item 12. Security Ownership of Certain Beneficial Owners and Management 20
Item 13. Certain Relationships and Related Transactions . . . . . . 20
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 21
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 4
PART I
Item 1. Business
THE COMPANY
General
Storage Trust Realty (the Company ) was formed as a Maryland real estate
investment trust ( REIT ) on July 12, 1994 to continue the self-storage
business of Burnam Holding Companies Co. ( BHC ) and certain of its affiliates
(collectively, the Predecessor Company ) in owning, operating and managing
self-storage facilities. The Company and its subsidiaries commenced
operations effective with the completion of the Company s initial public
offering (the IPO ) on November 16, 1994. As of December 31, 1997, the
Company owned 187 self-storage facilities in 16 states and was a partner in
two joint ventures that owned two operating self-storage facilities.
Substantially all of the Company's assets and interest in self-storage
facilities are held by, and all of its operations are conducted through,
Storage Trust Properties, L.P. (the Operating Partnership ). The Company is
the sole general partner of, and thereby controls the operations of, the
Operating Partnership, holding a 94.74% ownership interest therein as of
December 31, 1997. The remaining ownership interests in the Operating
Partnership (the Units ) are held by certain owners of the Predecessor
Company, including BHC, and certain former owners of assets acquired by the
Operating Partnership subsequent to the IPO.
Storage Realty Management Co. (the Management Company ) manages self-storage
facilities owned by unrelated third parties and conducts other business, such
as the sale of locks and packaging supplies, the processing of customer
property insurance and the rental of trucks, at various facilities. Through
its ownership of the preferred stock of the Management Company, the Operating
Partnership receives substantially all of the economic benefits of the
business carried on by the Management Company.
The Company derives its revenue principally from the Operating Partnership,
which is generated primarily by (a) the Operating Partnership's rental of
self-storage units at its facilities, (b) revenues (for financial reporting
purposes) of the Management Company, and (c) earnings from joint ventures.
The statements contained in this discussion that are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are based on current expectations, estimates and
projections about the industry and markets in which the
Company operates, management s beliefs, and assumptions by management. Words
such as expects, anticipates, intends, plans, believes, seeks,
estimates; variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
( Future Factors ) which are difficult to predict. Therefore, actual outcomes
may differ materially for what is expressed or forecasted in such forward-
looking statements. Future Factors include: (a) changes in general economic
conditions in its target markets that could adversely affect demand for the
Company s facilities, (b) changes in financial markets and interest rates that
could adversely affect the Company s cost of capital and its ability to meet
its financial needs and obligations, and (c) those other factors discussed
herein. These are representations of Future Factors that could affect the
outcome of the forward-looking statements.
<PAGE> 5
General (continued)
The Company believes that it is the fifth largest operator of self-storage
facilities in the United States, based on the number of facilities operated.
As of December 31, 1997, the Company (through its interest in the Operating
Partnership) owned 187 self-storage facilities in 16 states in the Southern,
Mid-Atlantic, Midwest and Western regions of the United States. The Operating
Partnership, through joint ventures, has a 15% ownership interest in an
operating self-storage facility in Louisiana and a 25% ownership interest in
an operating self-storage facility in Missouri. Additionally, the Management
Company manages thirteen facilities for unaffiliated third parties. The
facilities which the Operating Partnership owns or in which the Operating
Partnership owns a joint venture interest, together with the facilities
managed for unrelated third parties by the Management Company are referred to
herein as the Facilities .
In 1997, the Company acquired 38 self-storage Facilities for a combined
purchase price of $105.6 million.
The following table provides information on (a) the number of Facilities owned
by the Company by state at December 31, 1997 and 1996 and (b) acquisitions and
exchanges of Facilities that occurred during 1997:
<TABLE>
<CAPTION>
1997 Activity
December 31, December 31,
1996 Acquisitions Exchanges 1997
<S> <C> <C> <C> <C>
Texas 22 12 (1) 33
South Carolina 22 2 - 24
Florida 18 6 - 24
Missouri 20 1 - 21
Georgia 17 1 - 18
Tennessee 18 2 (9) 11
North Carolina 11 1 (2) 10
Colorado 8 2 - 10
Illinois 5 5 - 10
Kansas 6 1 - 7
Kentucky 5 - - 5
Alabama 4 1 - 5
Virginia 1 2 - 3
Wisconsin 2 - - 2
Louisiana 1 1 - 2
Ohio 1 1 - 2
Mississippi 3 - (3) -
Oklahoma 1 - (1) -
165 38 (16) 187
</TABLE>
The Company is self-administered and self-managed. The Company has elected
and expects to continue to qualify as a real estate investment trust for
federal income tax purposes.
<PAGE > 6
Business Objectives and Operating Strategies
Business Objectives
The Company s primary objectives are to increase cash available for
distribution and enhance shareholder value. These objectives are accomplished
by (a) managing the Facilities and expanding them where economically
feasible, (b) acquiring existing self-storage facilities, (c) converting other
commercial real estate into self-storage facilities, and (d) developing new
self-storage facilities. The Company's strategies for accomplishing these
objectives are:
Internal Growth Strategies
The Company's internal growth strategy is to increase cash flow at the
Facilities (and any additional facilities hereafter acquired) by (a)
aggressively increasing rents on a regular basis, (b) containing costs and
improving operating leverage, and (c) selectively expanding the Facilities,
which includes the addition of climate controlled space.
Increasing Rents Revenues are increased through the use of sales and
marketing programs that are customized for each location and an aggressive
leasing program. The Company pursues an objective of being a price leader in
its local markets and will attempt to increase rents at all of the Facilities
throughout the year. The Company has a general policy that, as occupancy of
all same-size units at a particular Facility nears 90%, it will consider
increasing rents applicable to these units. The Company plans to continue
this strategy at the Facilities and to implement it at facilities that may be
acquired or developed in the future.
Containing Costs and Improving Operating Leverage - The Company seeks to
increase cash flow by containing facility operating expenses and spreading
corporate overhead expense over an increasing number of facilities. The
Company believes that new facilities can be added to the portfolio with very
little additional overhead expense because of the Company's operating
procedures, decentralized regional managers and management information
systems. Through the use of area managers and regional managers, the Company
operates with only one level of management between on-site managers and senior
management.
Expanding the Facilities - Many of the Facilities maintain levels of
occupancy that when combined with local demand may make it economically
feasible to expand existing storage space. Additionally, in several of the
Company's markets, there is increasing demand for climate controlled space
which the Company currently rents for a premium over non-climate controlled
space. The Company is exploring opportunities to add new climate controlled
space or convert existing space to climate controlled space at the Facilities
and other facilities that may be acquired in the future.
<PAGE> 7
Business Objectives and Operating Strategies (continued)
Business Objectives (continued)
External Growth Strategies
The Company's external growth strategy focuses on (a) selectively acquiring
additional self-storage facilities, (b) converting other real estate
properties into self-storage facilities, and (c) developing new facilities.
The Company's management consists of experienced acquisition, development,
operations and finance personnel who, when evaluating potential opportunities
for acquisition, development and conversion, analyze employment, population
and income trends, proximity to major transportation arteries, retail centers
and commercial services, visibility and other market data. However, certain
potential financing techniques to support acquisition, development or
conversion, such as incurrence of debt or issuance of additional equity
securities, involve potential leveraging of the Company or dilution to
existing shareholders.
Acquiring Existing Facilities - The Company intends to acquire self-storage
facilities that are (a) in the Company's geographic regions of operations
where the Company can achieve greater market penetration and economies of
scale or in attractive new markets and in new geographic regions where
the Company can acquire sufficient facilities to achieve economies of
scale, (b) available at attractive prices or currently underperforming
and (c) capable of enhanced performance through the application of the
Company's management expertise. The Company focuses on acquisitions of
Facilities of sufficient size to provide attractive operating
efficiencies. The Company believes attractive opportunities exist to
acquire self-storage facilities because of the fragmented ownership
throughout the industry and the shortage of skilled operators. By
actively targeting underperforming facilities or facilities where the
Company can apply its proven management techniques, the Company believes
that it will be able to enhance its yields by maximizing cash flows at
such properties. In addition, the Company believes it has the ability to
attract potential sellers of self-storage properties by offering Units in
exchange for such properties, thus allowing the sellers to defer taxes
which would otherwise be payable upon a profitable sale of property.
Converting Other Real Estate into Self-Storage Facilities - The Company also
has the ability to perform complex conversions of other real estate
buildings into self-storage facilities, especially in metropolitan
markets where new development or acquisitions may not be economically
feasible. The Company believes that in certain markets the costs
relating to conversion or redevelopment can be substantially less than
those of acquisition or development. Additionally, the Company believes
that conversions can simultaneously provide rapid in-fill of current
regions of the Company's markets at attractive capitalization rates.
<PAGE> 8
Previously completed conversion projects include a former automobile
dealership in St. Louis, Missouri; and a former hotel in New Orleans,
Louisiana, and a former shoe warehouse in Atlanta, Georgia.
Developing New Facilities - The Company intends to develop self-storage
facilities in certain of its markets where there are favorable
demographics and where suitable acquisitions may not be available. New
development may be done by the Company or by joint ventures in which the
Company has an interest. The Company's management (through BHC)
developed 36 self-storage facilities between 1974 and the IPO. This
development capability will allow the Company the opportunity to grow
when acquisition opportunities are not plentiful or economically
attractive. In making its decision to develop a facility, the Company
obtains information such as census data for the relevant market with
respect to population density, income levels and the relative proportions
of rental, commercial and residential space. In addition, the Company
weighs the costs of acquisition, as measured by recent market sales or
bids, versus the costs of development, including construction, land
acquisition and site preparation. The Company intends to develop self-
storage facilities where it believes there are strong barriers to entry,
such as a limited number of suitable sites with the requisite zoning.
The Company also intends to focus on development of facilities of
sufficient size to provide attractive operating efficiencies.
<PAGE> 9
Recent Developments
During 1997, the Company has expanded its portfolio of Facilities and its
operating business through acquisition, expansion and conversion of self-
storage facilities as described below. Additionally, through property
exchanges, the Company has focused on expanding in selected markets where the
Company already has a strong presence while decreasing its presence in markets
perceived by the Company to have limited opportunity for growth.
Acquisitions and Exchanges
During the period from January 1, 1997 through December 31, 1997, the Company
continued its acquisition program by adding a total of 38 Facilities to its
portfolio containing an aggregate of 2,070,000 net rentable square feet for an
aggregate purchase price of approximately $105.6 million. Twenty-eight of
these Facilities, containing 1,424,000 net rentable square feet, were
purchased for approximately $81.9 million. These acquisitions were funded by
borrowings on the Company s revolving line of credit. Ten of these
Facilities, containing 646,000 net rentable square feet, were acquired in two
separate transactions through the exchange of 16 Facilities, valued at
approximately $23.7 million, and the payment of approximately $12 million in
cash which was funded by borrowings on the Company s revolving line of credit.
These acquisitions and exchanges allowed the Company to increase its market
share in certain key markets and to create operating efficiencies in those
markets through economics of scale.
During the period from January 1, 1998 to February 28, 1998, the Company
acquired a total of 14 Facilities containing an aggregate 852,000 net rentable
square feet for an aggregate purchase price of $52.8 million. These
acquisitions were funded by borrowings on the Company s revolving line of
credit and the issuance of 191,350 Units valued at $5.0 million.
Climate-Controlled Conversions
The Company has completed the conversion of regular storage space to climate-
controlled space at 22 Facilities during 1997. The aggregate amount expended
on these conversions was $878,000. See --- Planned Acquisitions,
Developments, Expansions and Conversions below for information concerning
additional planned climate-controlled conversions.
Planned Acquisitions, Developments, Expansions and Conversions
As of March 15, 1998, the Company has executed two contracts with respect to
14 self-storage facilities with an aggregate estimated purchase price of $41.9
million, with one of the contracts being for 13 facilities and a total
purchase price of $38.7 million. Such contracts are expected to close no
later than May 15, 1998. Additionally, the Company has executed non-binding
letters of intent with respect to three additional self-storage facilities and
<PAGE> 10
one expansion parcel with a total expected purchase price of $4.7 million.
The Company expects to enter into contracts with respect to these purchases by
May 1, 1998 and to close no later than July 31, 1998. Further, as part of one
of the contracts mentioned above, the Company has options to acquire six
additional facilities (at an estimated purchase price of $25.0 million) that
are currently under construction or going through their initial lease-up
period. These options are expected to be exercised over the next twelve
months. Also, the Company expects to exercise, by May 1, 1998, an option to
acquire a facility for an estimated purchase price of $1.7 million on which
the Company has a note receivable with a balance of $1.5 million. The Company
is currently conducting due diligence on all of the above transactions and,
therefore, there can by no assurance that the acquisition of any of these
facilities will occur. The Company intends to continue to grow through
acquisitions and believes that acquired facilities can be effectively
integrated into its operations because of management s experience in operating
and acquiring self-storage facilities and the Company s centralized operating
procedures and management information systems.
<PAGE> 11
Recent Developments (continued)
Planned Acquisitions, Developments, Expansions and Conversions (continued)
In addition, the Company is currently developing a site near Ft. Lauderdale,
Florida, with the purchase price for such land was $1.1 million and estimated
construction and development costs of $3.4 million. The Company is also
developing a site in Austin, Texas, with the purchase price for such site was
$730,000 and estimated construction and development costs of $2.5 million.
The Company has plans to complete the expansion of six Facilities totaling
77,200 net rentable square feet during the year ending December 31, 1998 at an
estimated aggregate cost of $2.1 million. Additionally, the Company acquired
land in 1997 located in Jacksonville, Florida for the expansion of a nearby
Facility by 36,125 net rentable square feet. The purchase price for the land
was $747,000 and the Company expects to spend an additional $1.5 million in
connection with construction and development of this site. Facilities are
generally expanded when levels of occupancy combined with local demand make it
economically feasible in management s judgement to expand existing self-
storage space.
The Company also plans to complete climate-controlled conversions at 39
Facilities totaling 224,250 during 1998 at an estimated aggregate cost of $2.0
million. In addition, the Company in 1998 has acquired a former moving
company warehouse in the Miami, Florida area that the Company intends to
convert to climate-controlled self-storage space. The purchase price for this
building was $750,000 and conversion costs should approximate $750,000. In
1998, the Company has also acquired a former auto dealership in Kansas City,
Missouri that the Company intends to convert to a site with climate-controlled
and non climate-controlled space. The purchase price for this building was
$725,000 with estimated conversion costs of $2.0 million. In several of the
Company s markets, there is increasing demand for climate-controlled space
which the Company currently rents for a premium over non-climate-controlled
space.
Dispositions and Exchanges
Management constantly reviews the Facilities comprising the Company s
portfolio and may dispose of any of the Facilities in the future. Any
decision to dispose of a particular Facility would be based on a number of
factors, including, but not limited to, (a) the strategic fit with the rest of
the Company s portfolio, (b) the potential to continue to increase cash flow
and value in the particular market, (c) the current market value and (d)
alternate uses of capital.
The Company may dispose of Facilities for cash or other consideration or may
exchange Facilities with other entities, including other publicly-held self-
storage REITs.
<PAGE> 12
Capital Strategy
Mortgages and Notes Payable:
The Company intends to maintain a conservative capital strategy and currently
has a policy of limiting the amount of debt related to the Facilities as
reflected on the Company's consolidated balance sheet, including debt of joint
ventures in which the Company owns an interest, ( Company Debt ) to less than
50% of the market value of the issued and outstanding Common Shares (including
interests exchangeable for Common Shares) plus Company Debt ( Total Market
Capitalization ). At December 31, 1997 and 1996, the Company s Debt-to-Total
Market Capitalization was 19.8% and 15.4%, respectively. The Company does not
believe that this limit will restrict its operations or have a material
adverse effect on its financial condition or results of operations, although
there can be no assurance that it will not do so in the future. The Board of
Trustees can change the policy at any time in light of then current economic
conditions and other relevant factors.
<PAGE> 13
Capital Strategy (continued)
Mortgages and Notes Payable: (continued)
The expansion of existing facilities, the acquisition, conversion and
development of additional self-storage facilities, and the repayment of
indebtedness, including amounts outstanding on the revolving line of credit,
represent the Company s principal liquidity requirements.
The Company expects to meet its short-term liquidity requirements by using (a)
net cash provided by operating activities and (b) borrowings under the
revolving line of credit. The Company intends to meet its long-term liquidity
requirements primarily through (a) borrowings under the revolving line of
credit, (b) the issuance of new debt and (c) the sale of Common Shares. The
Company believes that its future net cash flow will be adequate to meet
operating requirements and provide for payment of distributions by the Company
in accordance with tax requirements relating to a REIT in the short-term and
in the long-term.
The Company had a $100 million unsecured revolving line of credit that was
used to fund the acquisition, development or conversion of additional
facilities. The credit line expired on January 25, 1998 and bore interest at
a floating rate of LIBOR plus 137.5 basis points.
The Company has entered into a new revolving line of credit that commenced on
January 26, 1998 and will expire on January 25, 2001. The total commitment on
the new revolving line of credit is $150 million and will bear interest at a
floating rate of LIBOR plus 1.20%.
In December 1996, the Company received commitments from various institutional
investors for the private placement of $100 million of unsecured Senior Notes.
The Company funded $75 million of the Senior Notes on January 22, 1997 and the
remaining $25 million was funded on April 15, 1997. The fixed rate debt has
two separate series - Series A Senior Notes totaling $44 million with a final
maturity of seven years, an average maturity of six years and a fixed interest
rate of 7.47% (125 basis points over comparable Treasuries at the date of
pricing) and Series B Senior Notes totaling $56 million with a final maturity
of ten years, an average maturity of eight years and a fixed interest rate of
7.66% (135 basis points over comparable Treasuries at the date of pricing).
The proceeds of the financing were utilized to repay indebtedness under the
Company s revolving line of credit and to finance the acquisition of
additional facilities.
Issuance of Common Shares and Units:
During July 1996, the Company completed a public offering of 4,140,000 Common
Shares at $20.25 per Common Share. Net of underwriting discounts and offering
<PAGE> 14
costs, the Company received $78,894,000 from this offering. The net proceeds
were used to repay indebtedness under the revolving line of credit and a
short-term acquisition loan, which was incurred in connection with the
acquisition of facilities.
During October and November 1997, the Company completed an offering of
2,530,000 Common Shares at $24-11/16 per Common Share. Net of transaction
discounts and offering costs, the Company received $59,680,000 from this
offering. The net proceeds were used to repay indebtedness under the
revolving line of credit and finance the acquisition of facilities.
In November 1996, the Company filed a shelf registration statement covering
$150,000,000 of equity securities. This registration statement has been
declared effective and should permit the Company to access the equity markets
efficiently when it deems appropriate. The balance remaining on this shelf
registration statement as of December 31, 1997 was approximately $87,541,000.
However, no assurance can be given that market conditions will be favorable
for such an offering.
<PAGE> 15
Issuance of Common Shares and Units: (continued)
In connection with the acquisition of Facilities during 1995, the Company
issued 183,774 Units valued at $3,652,000. In connection with the acquisition
of Facilities during 1996, the Company issued 406,759 Units valued at
$8,743,000. During 1997, the Company issued 11,372 Units valued at $294,000
due to the terms of an earn-out agreement on a Facility acquired in 1996.
The Units in the Operating Partnership not held by the Company can be
exchanged for Common Shares of the Company on a one-for-one basis or redeemed
in cash at the Company's option. During 1997, 32,829 Units were converted to
Common Shares.
The Company amended its Stock Option plan in 1997 to allow for the payment of
the regular quarterly fees to its Trustees in Common Shares. During the last
two quarters of 1997, the Company issued 924 Common Shares valued at $24,000
to its Trustees.
Competition
All of the Facilities are located in developed areas that include other self-
storage facilities. The number of competitive self-storage facilities in a
particular area could have a material effect on the Company's ability to lease
self-storage units at the Facilities or at any newly developed or acquired
facilities and on the rents charged. The Company may be competing with others
that have greater resources than the Company and whose officers and directors
have more experience than the Company's officers and Trustees. In addition,
other forms of storage properties, warehouses and single-family housing
provide alternatives to potential customers of self-storage facilities.
Regulation
Environmental Matters
The Company is subject to federal, state, and local environmental laws,
ordinances and regulations that apply to the development of real property,
including construction activities, the ownership of real property, and the
operation of self-storage facilities.
In developing properties and constructing facilities, the Company utilizes
environmental consultants to determine whether there are any flood plains or
wetlands or environmentally sensitive areas that are part of the property to
be developed. If flood plains are identified, development and construction
are planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with federal and local flood plain
management requirements.
<PAGE> 16
Stormwater discharge from a construction facility is evaluated in connection
with the requirements for stormwater permits under the Clean Water Act. This
is an evolving program in most states. It is anticipated that general
stormwater permits will be applicable to the Company's activities, and
individual permits will not be required for existing or new development.
<PAGE> 17
Regulation (continued)
Environmental Matters (continued)
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real property may become liable for the costs of removal
or remediation of certain hazardous or toxic substances on, under or in such
property. Such laws, ordinances and regulations often impose liability
without regard to whether the owner or operator knew of, or was responsible
for, the presence of such hazardous or toxic substances. The presence of
hazardous or toxic substances, or the failure to properly remediate such
substances, when released, may adversely affect the owner's ability to sell or
lease such real estate or to borrow using such real estate as collateral, and
may cause the property owner to incur substantial remediation costs. In
addition to claims for cleanup costs, the presence of hazardous substances on
a property could result in a claim by a private party for personal injury or a
claim by an adjacent property for property damage.
The Company has not been notified by any governmental authority of any
material noncompliance, claim, or liability in connection with any of the
Facilities. The Company has not been notified of a claim for personal injury
or property damage by a private party in connection with any of the Facilities
in connection with environmental conditions.
A Phase I environmental assessment for each of the Facilities has been
prepared by an independent environmental consultant. The purpose of each such
report was to identify, to the extent reasonably possible and based on
reasonably available information, whether the environmental quality of the
Facility had been affected by hazardous or toxic substances, including
petroleum products and asbestos.
The scope of the Phase I environmental assessment for each such Facility
generally included: (a) a review of reasonably available maps, aerial
photographs and other public information to analyze the past and present uses
of the site; (b) limited inquiries of federal, state and local agencies having
jurisdiction over certain environmental matters; and (c) an on-site assessment
of the Facility to inspect for evidence of past or present on-site waste
disposal, visible surface contamination, above-surface and subsurface storage
tanks, drums, barrels and other storage containers, current waste streams and
management practices, ACMs, and PCB transformers. In addition, as part of
the Phase I environmental assessment, abutting properties and nearby sources
of potential contamination were identified and evaluated for potential impact
to the Facility, to the extent reasonably possible.
In connection with the acquisition of 25 facilities (the Balcor/Colonial
Facilities ) from Balcor/Colonial Storage Income Fund 86 (the Seller ) in
May 1996, the Seller had a Phase I environmental assessment for each of the
Balcor/Colonial Facilities prepared by an independent environmental
<PAGE> 18
consultant. The purpose and scope of such assessments was generally the same
as set forth above with respect to Phase I environmental assessments of the
other Facilities. None of these Phase I environmental assessments recommended
any further investigation (except, in one instance, to confirm radon test
results which was subsequently confirmed) at any of the Balcor/Colonial
Facilities. However, based on the historical use of two of the sites, the
Company engaged environmental consultants to conduct a limited subsurface soil
and groundwater investigation to confirm the opinions expressed in the Phase I
assessments of these sites. The results of such investigations indicated the
presence of certain substances, the presence of which may require monitoring,
reporting or remediation. Based on the investigations, remedial action plans
were prepared based on the maximum remediation effort that could be required
under the appropriate state law. The Seller had placed $250,000 into escrow
to be used towards a portion of the cost of remediation of these sites. Based
on the remedial action plans, the Company received the full $250,000 held in
escrow. Based upon the information which the Company has obtained and the
receipt of the escrowed funds, the Company does not currently expect the
aggregate cost of the remedying environmental conditions at these two
Balcor/Colonial Facilities to have a material adverse effect on the financial
condition or results of operations of the Company, although there can be no
assurance that this will be the case.
<PAGE> 19
Regulation (continued)
Environmental Matters (continued)
The environmental assessments, and in certain circumstances further
investigation, have not revealed, nor is the Company aware of, any
environmental condition with respect to the Facilities that is expected to
have a material adverse effect on the Company's financial condition or results
of operations. No assurances can be given, however, that (a) the
environmental assessments and further investigation which have been conducted
with respect to the Facilities or which will be conducted with respect to the
facilities that may be acquired or developed in the future, have revealed, or
will reveal, all potential environmental liabilities, (b) any prior owner or
operator of the real property on which the Facilities are located did not
create any material environmental condition not known to the Company, or (c)
an environmental condition does not otherwise exist as to any one or more of
the Facilities, which liabilities or conditions could have a material adverse
effect upon the financial condition or results of operations of the Company.
Americans with Disability Act
Under the Americans with Disability Act ( ADA ), all public accommodations are
required to meet certain federal requirements related to physical access and
use by disabled persons. While the Company believe that the Facilities comply
in all material respects with these physical requirements (or would be
eligible for applicable exemptions from material requirements because of
adaptive assistance provided), a determination that the Company is not in
compliance with the ADA could result in the imposition of fines, injunctive
relief, damages or attorney's fees. If the Company were required to make
modifications to comply with the ADA, the Company's ability to make expected
distributions to its shareholders could be adversely affected; however,
management believes that such effect would be minimal.
Local Regulation
As with all real property, self-storage facilities must conform to local
zoning ordinances. The Facilities' operations have not been subjected to any
material zoning complaints. Typically, self-storage facilities are not a
permitted use within the commercial and retail areas desired by the Company
for the development of a new facility. Therefore, the Company must generally
obtain a variance to undertake the development of a new facility. The zoning
classifications for self-storage have been narrowed repeatedly so that new
self-storage development within major metropolitan areas is becoming
increasingly difficult. The restrictive zoning regulations may keep the
industry restricted to all but those who have the expertise to show the
benefits of self-storage to a community and have the credentials necessary to
persuade zoning boards to rezone or grant variances.
<PAGE> 20
Insurance
Management believes that each of the Facilities is covered by adequate fire,
flood and property insurance provided by reputable companies and with
commercially reasonable deductibles and limits. The Company maintains
comprehensive liability, all-risk property insurance coverage with respect to
the Facilities with policy specifications, limits and deductibles customarily
carried for similar properties. In addition, the Company maintains a policy
insuring against environmental liabilities resulting from tenant storage on
terms customary and standard for the industry. The Company also has obtained
or continued existing title insurance insuring fee title to each of the
Facilities owned by the Company in an aggregate amount which the Company
believes to be adequate.
Employees
As of March 1, 1998, the Company (through the Operating Partnership and the
Management Company) employed a total of 569 persons of which (a) 501 work at
the Facilities, (b) 24 work in the regional and district offices and (c) 44
work at the home office. The Company believes that relations with their
employees are good.
Storage Realty Management Co.
The Management Company manages thirteen Facilities owned by unrelated third
parties and one facility in which the Company has an ownership interest
through a joint venture. The managed Facilities contain 702,000 net rentable
square feet and are located in the following seven states: Missouri (4),
Florida (3), Kansas (2), Texas (2), Kentucky (1), Georgia (1) and Virginia
(1). While the Management Company does not intend to actively expand this
aspect of its operations, management of additional facilities in the future
may be considered as a precursor to acquisition by the Operating Partnership
or in order for the Company to become familiar with an attractive new market.
Additionally, the Management Company conducts various other businesses, such
as the sale of locks and packaging supplies, the processing of customer
property insurance and the rental of trucks, at various Facilities.
BHC owns 95% of the voting common stock of the Management Company, which is
generally entitled to dividends equal to 4.75% of all distributions. The
remaining 5% of the voting common stock, entitled to .25% of all
distributions, is owned by the Operating Partnership. The Operating
Partnership owns 100% of the nonvoting preferred stock of the Management
Company. The nonvoting preferred stock is entitled to dividends equal to 95%
of all distributions of the Management Company. The charter of the Management
Company requires the quarterly distribution as dividends of its net cash flow,
subject to the discretion of the board of directors that there are funds
legally available therefor. Such provision may not be changed without the
consent of the holder of the preferred stock. Accordingly, the Operating
Partnership expects to receive substantially all of the available net cash
flow from the Management Company through ownership of the preferred stock and
thereby will receive substantially all of the economic benefit of the
operations carried on by the Management Company.
<PAGE> 21
The Industry
The self-storage industry is an integral part of the commercial and
residential real estate markets, serving the storage needs of businesses and
consumers. Initially developed in the early 1960s in the southwestern portion
of the United States, self-storage facilities were built in response to the
growing need for low-cost accessible storage. A number of factors have
accelerated the demand for storage facilities including, among others, a more
mobile society, with individuals moving to new homes and new cities needing
short-term storage for their belongings, the increasing cost of residential
housing (resulting in smaller houses), the increased popularity of apartments
and condominiums, more individuals with growing discretionary income
(resulting in the accumulation of more possessions and the purchase of items
such as boats and recreational vehicles which cannot be stored at residences),
the growing number of small businesses and the escalating cost of other
storage alternatives. In addition to traditional use by consumers, many
retail stores and other businesses use self-storage facilities to store goods
received from warehouses or, in some instances, directly from manufacturers,
through just-in-time delivery systems. Self-storage facilities serve as
additional storage capacity for households acquiring goods or businesses
building inventory or producing storable items, such as new products or
records.
In addition to providing affordable, accessible storage space for personal and
business use, many facilities offer climate controlled units as well as
outside storage pads for vehicles and boats. With the advent of resident
managers, storing goods became a far more convenient process for customers
(i.e. tenants renting self-storage space), resulting in increased customer
awareness and appreciation. Rental units are usually secured by customer
locks and only the customer has the key, thus ensuring controlled access.
Facilities are generally fenced, have locked gates and are lighted at night.
Computerized access gates for self-storage have made the overall storage
process more convenient for the customer.
The successful development of self-storage facilities is becoming increasingly
sophisticated. Specialized skills in areas such as site selection, design and
unit mix are critical to the development of successful new self-storage
projects on a cost efficient basis. Furthermore, new development in
self-storage has become more difficult due to the lack of available capital,
pressure from zoning boards and municipalities, and increases in building
costs as new facilities are required to meet rigorous landscaping and other
aesthetically oriented standards.
<PAGE> 22
Item 2. Properties
As of December 31, 1997, the Facilities owned by the Company consisted of 187
self-storage facilities located in 16 states containing approximately
9,894,000 net rentable square feet and 85,000 units. For these Facilities,
the average net rentable square footage per property was approximately 52,900
and the average number of units per property was approximately 455. As of
December 31, 1997, the weighted-average occupancy in these owned Facilities on
a square footage basis was approximately 83%.
As of December 31, 1997, the Company, through joint ventures, had a 15%
ownership interest in an operating self-storage facility and a 25% ownership
interest in an operating self-storage facility.
As of December 31, 1997, the Facilities managed by the Management Company
consisted of 14 self-storage facilities located in seven states containing
approximately 702,000 rentable square feet.
The table on the following pages sets forth the location of and other
information relating to the Company's portfolio of owned Facilities and those
Facilities in which the Company has a joint venture interest. The table does
not include those Facilities managed by the Management Company.
<PAGE> 23
FACILITIES OWNED BY OPERATING PARTNERSHIP:
FACILITIES OWNED BY OPERATING PARTNERSHIP:
<TABLE>
<CAPTION>
Net Percentage
Rentable Month/Year Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
<S> <C> <C> <C> <C> <C>
ALABAMA:
Hillcrest Road Mobile, AL 298 34,670 11/94 93
Azalea Road Mobile, AL 287 31,965 6/95 95
Moffat Road Mobile, AL 441 42,838 12/95 95
Grelot Road Mobile, AL 426 49,150 2/96 100
Government Blvd. Mobile, AL 415 42,275 3/97 91
COLORADO:
Colorado Springs Area:
North Powers Blvd. Colorado Springs, CO 501 93,664 9/95 90
Parkmoor Village Drive Colorado Springs, CO 492 60,355 6/95 73
Van Teylingen Drive Colorado Springs, CO 361 76,850 6/95 92
Centennial Blvd. Colorado Springs, CO 438 80,200 9/96 87
Astrozon Court Colorado Springs, CO 614 74,896 6/97 92
Denver Area:
South Clinton Street Denver, CO 282 31,660 8/96 96
North Washington Street Denver, CO 384 56,150 9/96 80
Other Areas:
College Avenue Ft. Collins, CO 577 57,140 3/95 86
Wedgewood Avenue Longmont, CO 426 51,020 3/95 85
Park Avenue Basalt, CO 710 81,887 1/97 91
FLORIDA:
Jacksonville Area:
Phillips Highway Jacksonville, FL 387 59,155 11/94 81
Roosevelt Blvd. Jacksonville, FL 471 54,280 10/95 88
Ft. Caroline Road Jacksonville, FL 664 67,745 5/96 88
Southside Blvd. Jacksonville, FL 795 90,030 8/96 91
Park Avenue Orange Park, FL 393 52,950 11/94 98
Palm Valley Rd. Ponte Vedra Beach, FL 206 22,975 3/97 99
Orlando Area:
South Orange Blossom Trail Apopka, FL 462 25,777 5/97 76
Semoran Blvd. Casselberry, FL 637 66,625 5/96 93
Orange Blossom Trail Orlando, FL 750 83,500 6/95 84
McLeod Road Orlando, FL 300 27,592 10/95 90
South Semoran Blvd. Orlando, FL 345 30,200 5/96 90
Pensacola Area:
Brent Lane Pensacola, FL 316 34,346 11/94 92
Creighton Blvd. Pensacola, FL 431 46,277 11/94 94
South Florida:
U.S. Highway 1 Big Coppitt, FL 227 15,311 9/95 91
S.W. 10th St. Deerfield Beach, FL 835 79,279 5/97 78
Third Street, Stock Island Key West, FL 324 29,415 11/94 92
N.W. 14th St. Miami, FL 789 62,349 10/95 89
N.W. 7th Ave. Miami, FL 812 23,286 2/97 91
N.W. 153 St. Miami Lakes, FL 374 13,491 3/97 89
South U.S. Highway 1 Vero Beach, FL 464 37,075 3/97 89
<PAGE> 24
<CAPTION>
FACILITIES OWNED BY OPERATING PARTNERSHIP:
Net Percentage
Rentable Monthly/Year Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
<S> <C> <C> <C> <C>
FLORIDA: (continued)
Tampa Bay Area:
North Highland Clearwater, FL 422 55,876 4/96 89
Alt. Highway 19 South Tarpon Springs, FL 385 60,491 12/94 92
Highway 19 North Tarpon Springs, FL 746 80,670 5/96 92
Other Area:
Cleveland Avenue Ft. Myers, FL 550 65,129 5/96 85
GEORGIA:
Atlanta Area:
2064 Briarcliff Road Atlanta, GA 225 46,230 5/96 79
2080 Briarcliff Road Atlanta, GA 442 49,172 11/94 79
Spring Street Atlanta, GA 460 47,641 7/95 50
North Decatur Road Decatur, GA 463 53,234 11/94 86
McElroy Road Doraville, GA 627 75,810 4/95 69
Westmoreland Plaza Douglasville, GA 380 45,670 4/95 61
Dura Lee Lane Douglasville, GA 379 42,910 10/95 68
Highway 5 Douglasville, GA 356 50,400 10/95 91
Jonesboro Road Forest Park, GA 505 44,345 10/95 84
Tara Blvd. Jonesboro, GA 386 62,625 11/94 83
Whitlock Place Marietta, GA 548 63,075 12/95 78
Cobb Parkway Marietta, GA 431 47,980 5/96 82
Jones Mill Rd. Norcross, GA 567 66,360 2/97 72
Alpharetta Highway Roswell, GA 690 113,030 5/96 77
Augusta Area:
Old Petersburg Road Augusta, GA 354 41,115 11/94 72
Peach Orchard Road Augusta, GA 544 69,238 11/94 81
Other Areas:
Atlanta Highway Bogart, GA 411 43,530 11/95 73
North Columbia Street Milledgeville, GA 400 45,000 10/95 89
ILLINOIS:
Chicago Area:
Phillips Court Carol Stream, IL 424 51,025 12/94 71
North Broadway Chicago, IL 464 20,194 11/94 78
West Jarvis Chicago, IL 298 12,772 11/94 81
Cermak Road Chicago, IL 792 63,644 5/97 85
26
North Natchez Avenue Chicago, IL 900 91,950 5/97 88
West Lake Street Hanover Park, IL 482 66,875 11/94 83
Palmer Drive Schaumburg, IL 604 80,616 5/97 87
Roselle Road Schaumburg, IL 369 38,630 3/97 93
Brennen Highway Tinley Park, IL 546 59,660 3/97 88
Roosevelt Road Winfield, IL 539 48,050 5/96 82
<PAGE> 25
<CAPTION>
Net Percentage
Rentable Monthly/Year Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
KANSAS:
Kansas City Area (See Kansas City, MO Below):
<S> <C> <C> <C> <C> <C>
State Avenue Kansas City, KS 366 39,560 8/96 82
Long Avenue Lenexa, KS 345 51,895 9/96 77
Santa Fe Trail Lenexa, KS 319 53,760 2/97 77
Foxridge Lane Mission, KS 563 79,075 9/96 87
Hemlock Avenue Overland Park, KS 375 54,375 9/96 93
Hedge Lane Terrace Shawnee, KS 302 57,000 9/96 86
Other Area:
Haskell Avenue Lawrence, KS 447 61,920 9/95 78
KENTUCKY:
Lexington Area:
Twilight Trail Frankfort, KY 289 37,200 11/94 77
Winchester Road Lexington, KY 451 55,700 5/96 84
Louisville Area:
Breckenridge Lane Louisville, KY 319 34,590 5/96 87
4301 Poplar Level Louisville, KY 437 44,305 5/96 76
4324 Poplar Level Louisville, KY 357 37,525 5/96 93
LOUISIANA:
Church Street Lake Charles, LA 356 65,620 3/95 84
Tchoupitoulas Street New Orleans, LA 677 69,007 5/97 79
MISSOURI:
Columbia Area:
Paris Road Columbia, MO 302 36,924 11/94 71
Rangeline Street Columbia, MO 504 122,300 11/94 85
I-70 Drive SE Columbia, MO 210 29,625 3/95 77
Providence Road Columbia, MO 271 37,550 3/95 92
Kansas City Area (See Kansas City, KS Above):
South Highway M291 Independence, MO 557 59,192 9/95 87
East 67th Terrace Kansas City, MO 665 77,834 9/95 88
James A. Reed Road Kansas City, MO 456 51,152 9/95 76
47th Street Kansas City, MO 342 42,673 3/96 87
Woodson Road Raytown, MO 431 66,165 9/96 89
St. Louis Area:
9291 West Florissant Ferguson, MO 499 49,885 4/96
9400 West Florissant Ferguson, MO 10 13,200 6/97 90
New Halls Ferry Florissant, MO 650 68,044 12/94 80
North Highway 67 Florissant, MO 405 54,061 4/96 84
1550 North Lindbergh St. Louis, MO 670 73,055 11/94 91
2956 North Lindbergh St. Louis, MO 438 75,600 11/94 88
Third Street/Annex St. Louis, MO 698 76,857 3/95,9/95 82
World Parkway Center St. Louis, MO 466 56,195 3/95 74
North Vandeventer St. Louis, MO 527 33,381 4/96 88
<PAGE> 26
<CAPTION>
FACILITIES OWNED BY OPERATING PARTNERSHIP:
Net Percentage
Rentable Monthly/Year Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
<S> <C> <C> <C> <C> <C>
MISSOURI: (continued)
Other Areas:
St. Mary's Blvd. Jefferson City, MO 344 34,750 11/94 82
Florida Street Springfield, MO 239 32,814 11/94 76
NORTH CAROLINA:
Charlotte Area:
East W. T. Harris Blvd Charlotte, NC 362 36,790 11/94 91
South Blvd. Charlotte, NC 318 36,074 11/94 83
North Tryon Charlotte, NC 690 69,375 11/94 68
York Road Gastonia, NC 362 38,400 12/95 76
Oregon Street Kannapolis, NC 409 45,900 11/94 67
Raleigh / Durham Area:
North Duke Street Durham, NC 284 34,000 11/94 96
Kangaroo Drive Durham, NC 669 47,973 5/96 86
East Club Avenue Durham, NC 456 50,450 8/97 86
Maitland Raleigh, NC 332 38,800 11/94 88
Other Areas:
O'Henry Blvd. Greensboro, NC 393 37,180 11/94 82
OHIO:
2719 Morse Road Columbus, OH 516 60,575 5/96 75
2715 Morse Road Columbus, OH 701 67,104 9/97 75
SOUTH CAROLINA:
Charleston Area:
2560 Ashley Phosphate Road Charleston, SC 292 33,514 11/94 86
2840 Ashley Phosphate Road Charleston, SC 214 22,322 11/94 86
5715 Dorchester Road Charleston, SC 184 33,010 11/94 95
6654 Dorchester Road Charleston, SC 354 43,074 11/94 65
Sam Rittenburg Blvd. Charleston, SC 251 31,230 11/94 97
Ashley River Road Charleston, SC 624 63,608 5/97 83
Columbia Area:
2832 Broad River Road Columbia, SC 319 38,088 11/94 88
3034 Broad River Road Columbia, SC 505 58,119 5/97 87
Buckner Road Columbia, SC 499 56,830 11/94 87
Decker Park Road Columbia, SC 263 34,339 11/94 87
Rosewood Drive Columbia, SC 265 31,744 11/94 96
River Drive Columbia, SC 377 51,725 4/96 91
Plumbers Road Columbia, SC 336 30,900 3/95 73
Airport Blvd. West Columbia, SC 280 34,416 11/94 89
Orchard Drive West Columbia, SC 253 24,447 11/94 83
Hilton Head Area:
Office Park Road Hilton Head, SC 420 46,925 11/94 93
Yacht Cove Drive Hilton Head, SC 481 58,925 10/95 73
<PAGE> 27
<CAPTION>
FACILITIES OWNED BY OPERATING PARTNERSHIP:
Net Percentage
Rentable Montyly/Year Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
<S> <C> <C> <C> <C> <C>
SOUTH CAROLINA: (continued)
Greenville Area:
Whitehorse Road Greenville, SC 448 49,700 11/94 91
Wood Lake Road Greenville, SC 280 30,300 11/94 79
Pineknoll Road Greenville, SC 439 50,265 5/96 80
North Main Street Mauldin, SC 329 42,950 11/94 80
Grand View Drive Simpsonville, SC 362 48,375 11/94 64
Chesnee Highway Spartanburg, SC 422 51,815 10/95 80
Wade Hampton Blvd. Taylors, SC 297 37,394 11/94 82
TENNESSEE:
Chattanooga Area:
Gadd Road Hixson, TN 292 35,190 11/94 52
Highway 153 Hixson, TN 443 46,450 11/94 76
Harding Road Red Bank, TN 342 37,980 11/94 79
Nashville Area:
Cane Ridge Road Antioch, TN 253 34,800 3/97 75
Central Court Hermitage, TN 351 47,050 3/97 90
Myatt Drive Madison, TN 300 32,490 11/94 78
Williams Avenue Madison, TN 949 136,699 9/96 67
Lafayette Street Nashville, TN 342 37,775 11/94 80
Metroplex Drive Nashville, TN 401 49,780 11/94 56
Welshwood Drive Nashville, TN 514 60,475 10/95 77
McNally Drive Nashville, TN 542 86,035 9/96 75
TEXAS:
Dallas / Ft. Worth Area:
Inwood Road Addison, TX 558 79,192 6/95 84
3006 West Division Arlington, TX 23 46,000 11/94 86
3008 West Division Arlington, TX 301 49,315 11/94 86
South Cooper Street Arlington, TX 467 57,525 11/97 92
West Trinity Mills Carrollton, TX 385 45,816 11/94 84
Marsh Lane Carrollton, TX 715 78,225 10/97 75
Inwood Road Dallas, TX 662 71,665 9/97 71
Forest Central Drive Dallas, TX 765 72,075 10/97 47
South Cedar Ridge Duncanville, TX 327 36,000 11/94 94
Spaceway / Cedar Ridge Duncanville, TX 482 73,654 6/95,7/95 94
Granbury Road Fort Worth, TX 369 49,125 7/97 79
East Loop 820 Fort Worth, TX 468 47,800 9/97 87
Jackson Drive Garland, TX 598 72,520 5/96 84
East Buckingham Road Garland, TX 318 40,700 5/96 94
Bolen Road Kennedale, TX 290 33,230 11/94 78
East Highway 121 Lewisville, TX 472 47,100 3/97 87
Avenue K Plano, TX 851 87,247 5/96 90
<PAGE> 28
<CAPTION>
FACILITIES OWNED BY OPERATING PARTNERSHIP:
Net Percentage
Rentable Monthly/Year Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
<S> <C> <C> <C> <C> <C>
TEXAS: (continued)
Houston Area:
Fondren Houston, TX 393 41,538 11/94 99
Wallisville Road Houston, TX 415 44,944 11/94 98
Addicks Satsuma Houston, TX 321 38,726 3/95 97
South Main Houston, TX 604 68,638 12/95 92
Bingle Road Houston, TX 697 63,200 12/95 78
Hayes Road Houston, TX 744 67,475 11/95 85
Mangum Road Houston, TX 466 33,250 12/95 94
6222 S.W. Freeway Houston, TX 1,431 109,783 6/95 87
2510 FM 1960 West Houston, TX 514 50,355 11/96 74
Milwee Street Houston, TX 402 64,950 3/97 92
Loch Katrine Houston, TX 728 61,120 3/97 84
Westheimer Road Houston, TX 540 53,000 6/97 97
4341 S.W. Freeway Houston, TX 738 79,617 7/97 94
Dominion Drive Katy, TX 486 72,975 12/96 91
Highway 3 Webster, TX 493 47,030 12/97 90
VIRGINIA:
Washington Area:
Lee Highway Centerville, VA 522 52,725 10/97 76
South Sterling Blvd. Sterling, VA 373 33,750 10/97 85
Other Area:
Western Branch Blvd. Chesapeake, VA 654 75,300 5/96 89
WISCONSIN:
Milwaukee Area:
West Dean Road Milwaukee, WI 1,101 205,190 5/96 71
Foster Court Waukesha, WI 217 49,432 5/96 93
Total/Weighted Average 85,183 9,893,611 83
<CAPTION>
FACILITIES OWNED BY JOINT VENTURES (Interest of Company):
Net Monthly/Year Percentage
Rentable Interest Occupancy
Square Acquired by as of
Units Footage Storage Trust 12/31/97
<S> <C> <C> <C> <C> <C>
Tulane Avenue (15%) New Orleans, LA 821 153,986 11/94 96
Marian Ridge (25%) Kansas City, MO 483 70,650 10/96 68
Total/Weighted Average 1,304 224,636 87
</TABLE>
<PAGE> 29
Item 3. Legal Proceedings
The Company and its subsidiaries are not subject to any pending material legal
proceedings. The Company and its subsidiaries are parties to a variety of
legal proceedings arising in the ordinary course of their business. It is
management's opinion that the ultimate resolution of these matters will not
have a material adverse impact on the financial condition, results of
operations or liquidity of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the Company's shareholders for a vote since
the last annual meeting of shareholders held on May 7, 1997.
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters
The information required by this item is hereby incorporated by reference to
the material appearing on pages 24 and 25 of the Company's 1997 Annual Report
(the Annual Report ) under the caption Shareholder and Investor
Information.
Item 6. Selected Financial Data
The information required by this item is hereby incorporated by reference to
the data appearing on the inside front cover of the Annual Report under the
caption Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information required by this item is hereby incorporated by reference to
the material appearing on pages 9 through 12 of the Annual Report under the
caption Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 7A. Qualitative and Quantitative Disclosures About Market Risk
Based on the instructions, the Company is not subject to the disclosure
requirements of Item 305 of Regulation S-X for the year ended December 31,
1997.
Item 8. Financial Statements and Supplementary Data
The information required by this item is hereby incorporated by reference to
the Report of Independent Auditors, Storage Trust Realty Consolidated
Balance Sheets as of December 31, 1997 and 1996, Storage Trust Realty
Consolidated Statements of Operations for the Years Ended December 31, 1997,
1996 and 1995, Storage Trust Realty Consolidated Statements of Shareholders'
Equity for the Years Ended December 31, 1997, 1996 and 1995, Storage Trust
Realty Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1996 and 1995 and Storage Trust Realty Notes to Consolidated Financial
Statements appearing in the Annual Report on pages 13 through 24.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
<PAGE> 30
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item is hereby incorporated by reference to
the material appearing on pages 2 through 5of the Company's Proxy Statement
for the Annual Meeting of Shareholders to be held on May 12, 1998 (the Proxy
Statement ), under the captions Election of Trustees and Management -
Trustees and Executive Officers and page 23 of the Proxy Statement under the
caption Section 16(a) Beneficial Ownership Reporting Compliance.
Item 11. Executive Compensation
The information required by this item is hereby incorporated by reference to
the material appearing on pages 7 through 18 of the Proxy Statement under the
captions Executive Compensation - Summary Compensation Table, - Option
Grants, - Aggregated Option Exercises in 1997 and Year-End Option Values,
- - Option Plan, - Incentive Compensation, - Retirement Savings Plan,
- - Compensation of Trustees, - Non-competition Agreements and Termination of
Employment, Compensation Committee Interlocks and Insider Participation,
- - Executive Compensation Committee Report on Executive Compensation and -
Performance Graph.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this item is hereby incorporated by reference to
the material appearing on pages 20 through 23 of the Proxy Statement under the
caption Security Ownership.
Item 13. Certain Relationships and Related Transactions
The information required by this item is hereby incorporated by reference to
the material appearing on page 19 of the Proxy Statement under the caption
Certain Relationships and Related Transactions.
<PAGE> 31
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) The following documents are filed as part of this
report:
(1) Financial Statements
The consolidated balance sheets as of December 31,
1997 and 1996 and the consolidated statements of
operations, shareholders' equity and cash flows for
each of the three years in the period ended December
31, 1997, together with related notes and the
independent auditors report dated January 23, 1998,
except for the last three paragraphs of Note 10,
which is dated February 9, 1998, appearing on
pages 13 through 24 of the Annual Report, which
is filed as Exhibit 13.1 to this report.
(2) Financial Statement Schedules and Independent
Auditors Report
Title Schedule
Real Estate and Accumulated Depreciation III
The independent auditors' report with respect to the
financial statement schedule appears on page 26
herein.
(3) Exhibits
3.1 Second Amended and Restated Declaration
of Trust of the Registrant is hereby
incorporated by reference to Exhibit
3.5 to the Registrant sregistration
Statement on Form S-11 (No. 33-83016).
3.2 Amended and Restated Bylaws of the Registrant
are hereby incorporated by reference to
Exhibit 3.4 to the Registrant's Registration
Statement on Form S-11 (No. 33-83016).
4.1 Form of Common Share Certificate is hereby
incorporated by reference to Exhibit 4.1 to
the Registrant's Registration Statement on
Form S-11 (No. 33-83016).
10.1 Amended and Restated Agreement of Limited
Partnership of Storage Trust Properties, L.P.
is hereby incorporated by reference to Exhibit
10.1 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994.
10.1(a) First Amendment to the Amended and
Restated Agreement of Limited Partnership,
dated November 12, 1996, is hereby
incorporated by reference to Exhibit 10 to
the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996.
<PAGE> 32
(3) Exhibits (continued)
10.2 Non-competition Agreement between the
Registrant and each of Gordon Burnam, Michael
G. Burnam and P. Crismon Burnam are hereby
incorporated by reference to Exhibit 10.2 to
the Registrant's Registration Statement on
Form S-11 (No. 33- 92556). Reference is made
to the Employment Agreement filed as Exhibit
10.15.
10.3 Storage Trust Realty 1994 Share Option Plan is
hereby incorporated by reference to Exhibit
10.3 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1995.
10.3(a) First Amendment to 1994 Share Option Plan
is hereby incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996.
10.3(b) Storage Trust Realty 1994 Share Incentive
Plan (formerly known as the 1994 Share Option
Plan) (as Amended and Restated).
10.4 Retirement Savings Plan is hereby incorporated
by reference to Exhibit 10.4 to the
Registrant's Registration Statement on Form
S-11 (No. 33- 83016).
10.4(a) Amendment to Retirement Savings Plan,
dated October 31, 1996, is hereby incorporated
by reference to Exhibit 10.4(a) to the
Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996.
10.5 Indemnification Agreement between the
Registrant and its Trustees and officers is
hereby incorporated by reference to Exhibit
10.5 to the Registrant's Registration
Statement on Form S-11 (No. 33-92556).
10.6 Registration Rights and Lock-Up Agreement
between the Registrant and certain investors
is hereby incorporated by reference to
Exhibit 10.6 to the Registrant's Registration
Statement on Form S-11 (No. 33-92556).
<PAGE> 33
(3) Exhibits (continued)
10.11 Corporate Services Agreement, dated as of
November 16, 1994, among Storage Trust
Management Co., Storage Trust Properties,
L.P. and the Registrant is hereby
incorporated by reference to Exhibit 10.11
to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994.
10.11(a) Amendment to Corporate Services Agreement,
dated as of January 1, 1996, is hereby
incorporated by reference to Exhibit 10.11
(a) to the Registrant's Annual Report on
Form 10-K for the year ended December 31,
1996.
10.11(b) Second Amendment to Corporate Services
Agreement, dated as of January 1, 1997.
10.13 Revolving Credit Agreement, dated January 25,
1996, by and among Storage Trust Properties,
L.P., The First National Bank of Boston,
Bank of America Illinois and the other
lending institutions which may become
parties thereto, and The First National Bank
of Boston, as agent is hereby incorporated
by reference to the Exhibit 10.13 to the
Registrant's Registration Statement on Form
S-3 (No. 333-01576).
10.13(a) Unconditional Guaranty of Payment and
Performance, dated January 25, 1996,
executed by Storage Trust Realty, is hereby
incorporated by reference to Exhibit 10.13(a)
to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996.
10.13(b) First Amendment to the Revolving Credit
Agreement and Guaranty, dated December 13,
1996, is hereby incorporated by reference to
Exhibit 10.13(b) to the Registrant's Annual
Report on Form 10-K for the year ended
December 31, 1996.
10.13[c] Revolving Credit Agreement, dated January
25, 1998, by and among Storage Trust
Properties, L.P., The First National Bank of
Boston, Bank of America Illinois and the
other lending institutions which may become
parties thereto, and The First National Bank
of Boston, as agent.
10.13(d) Unconditional Guaranty of Payment and
Performance, dated January 25, 1998,
executed by Storage Trust Realty.
10.13(e) First Amendment to the Revolving Credit
Agreement and Guaranty, dated January 25,
1997.
10.14 Note Purchase Agreement and Guaranty
Agreement with respect to $100,000,000 of
Senior Notes of Storage Trust Properties,
L.P., guaranteed by the Registrant, is
hereby incorporated by reference to Exhibit
10.11(a) to the Registrant's Annual Report
on Form 10-K for the year ended December 31,
1996.
<PAGE> 34
(3) Exhibits (continued)
10.15 Employment Agreement between the Registrant
and each of Michael G. Burnam, P. Crismon
Burnam and Stephen M. Dulle, dated as of
December 31, 1997.
13.1 1997 annual report to shareholders.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
(b) Reports on Form 8-K
A report on Form 8-K (Items 5 and 7), dated October 14, 1997, was
filed to report that Storage Trust Properties, L.P. completed the
acquisition of nine self-storage facilities and exchange of eight
self-storage facilities during the period from May 21, 1997 and
September 30, 1997. Historical Summaries of Combined Gross Revenue
and Direct Operating Expenses for the year ended December 31, 1996
and for the six months ended June 30, 1997 (unaudited) were filed
with the Form 8-K for six of the nine facilities acquired. In
addition, an unaudited Pro Forma Consolidated Balance Sheet as of
June 30, 1997 and unaudited Pro Forma Consolidated Statements of
Operations for the year ended December 31, 1996 and the six months
ended June 30, 1997 were presented.
A report on Form 8-K (Item 5), dated October 15, 1997, was filed
to report the press release issued by the Company on October 14,
1997 that disclosed earnings information for the three and nine
months ended September 30, 1997 and the declaration of the
dividend for the fourth quarter of 1997.
<PAGE> 35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
STORAGE TRUST REALTY
Date: March 20, 1998 By /s/ Michael G.Burnam
Michael G. Burnam
Chief Executive Officer and Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Michael G. Burnam Chief Executive Officer and Trustee March 20, 1998
Michael G. Burnam (Principal Executive Officer)
/s/ Stephen M. Dulle Chief Financial Officer March 20, 1998
Stephen M. Dulle (Principal Accounting and
Financial Officer)
/s/ Daniel C. Staton Chairman of the Board of Trustees March 20, 1998
Daniel C. Staton
/s/ Gordon Burnam Chairman Emeritus and March 20, 1998
Gordon Burnam Trustee
/s/ P. Crismon Burnam Chief Operating Officer and March 20, 1998
P. Crismon Burnam Trustee
/s/ Blake Eagle Trustee March 20, 1998
Blake Eagle
/s/ Randall K. Rowe Trustee March 20, 1998
Randall K. Rowe
/s/ Fredrick W. Petri Trustee March 20, 1998
Fredrick W. Petri
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
Storage Trust Realty
We have audited the consolidated balance sheets of Storage Trust Realty (the
Company ) as of December 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows of Storage Trust
Realty for each of the three years in the period ended December 31, 1997, and
have issued our report thereon dated January 23, 1998 (except for the last
three paragraphs of Note 10, as to which the date is February 9, 1998); such
consolidated and combined financial statements and report are included in the
Company's 1997 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the financial statement schedule of
Storage Trust Realty listed in Item 14. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion on the schedule based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated and combined financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Chicago, Illinois
January 23, 1998
<PAGE>
<TABLE>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
<CAPTION>
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3008 West Division Arlington, TX $ 150 $ 945 $ - $ 26 $ 150 $ 971 $ 1,121 $ 79 11/1994 40
3006 West Division Arlington, TX 163 741 - 32 163 773 936 74 11/1994 40
2080 Briarcliff
Road Atlanta, GA 465 2,303 - 113 465 2,416 2,881 195 11/1994 40
Peach Orchard
Road Augusta, GA 367 1,531 - 42 367 1,573 1,940 183 11/1994 40
Old Petersburg
Road Augusta, GA 71 1,050 - 67 71 1,117 1,188 90 11/1994 40
Phillips Court Carol Stream, IL 345 1,409 - 77 345 1,486 1,831 113 12/1994 40
West Trinity Mills Carrollton, TX 320 1,642 - 17 320 1,659 1,979 135 11/1994 40
Sam Rittenburg
Blvd. Charleston, SC 200 929 - 15 200 944 1,144 79 11/1994 40
5715 Dorchester
Road Charleston, SC 58 820 - 76 58 896 954 72 11/1994 40
6654 Dorchester
Road Charleston, SC 175 676 - 25 175 701 876 61 11/1994 40
2840 Ashley
Phosphate Road Charleston, SC 37 572 - 63 37 635 672 52 11/1994 40
2560 Ashley
Phosphate Road Charleston, SC 113 539 - 24 113 563 676 49 11/1994 40
North Tyron Charlotte, NC 119 1,797 - 120 119 1,917 2,036 154 11/1994 40
East W.T. Harris
Blvd. Charlotte, NC 320 1,099 - 33 320 1,132 1,452 96 11/1994 40
South Blvd. Charlotte, NC 275 1,075 - 19 275 1,094 1,369 93 11/1994 40
North Broadway Chicago, IL 60 610 - 146 60 756 816 65 11/1994 40
West Jarvis Chicago, IL 40 419 - 82 40 501 541 38 11/1994 40
Rangeline Street Columbia, MO 205 2,840 (30) 377 175 3,217 3,392 257 11/1994 40
Home and Regional
Offices Columbia, MO 33 252 - 1,114 33 1,366 1,399 238 11/1994 40
Paris Road Columbia, MO 175 981 - 30 175 1,011 1,186 85 11/1994 40
Rosewood Drive Columbia, SC 245 1,227 - 45 245 1,272 1,517 104 11/1994 40
Decker Park Road Columbia, SC 205 970 - 50 205 1,020 1,225 86 11/1994 40
2832Broad River
Road Columbia, SC 213 946 - 27 213 973 1,186 82 11/1994 40
Buckner Road Columbia, SC 211 883 - 85 211 968 1,179 75 11/1994 40
North Decatur Road Decatur, GA 325 1,304 - 93 325 1,397 1,722 109 11/1994 40
South Cedar Ridge Duncanville, TX 173 910 - 30 173 940 1,113 80 11/1994 40
North Duke Street Durham, NC 300 1,228 - 18 300 1,246 1,546 102 11/1994 40
New Halls Ferry Florissant, MO 390 1,551 - 86 390 1,637 2,027 131 12/1994 40
Twilight Trial Frankfort, KY 64 929 - 99 64 1,028 1,092 84 11/1994 40
27
<PAGE>
<CAPTION>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
O'Henry Blvd. Greensboro, NC $ 64 $ 978 $ - $ 95 $ 64 $ 1,073 $ 1,137 $ 89 11/1994 40
Whitehorse Road Greenville, SC 310 1,269 - 38 310 1,307 1,617 131 11/1994 40
Wood Lake Road Greenville, SC 171 686 - 19 171 705 876 56 11/1994 40
West Lake Street Hanover Park, IL 493 2,015 - 59 493 2,074 2,567 163 11/1994 40
Office Park Road Hilton Head, SC (f) 482 1,965 - 25 482 1,990 2,472 191 11/1994 40
Highway 153 Hixson, TN 270 1,084 - 48 270 1,132 1,402 89 11/1994 40
Gadd Road Hixson, TN 170 960 - 90 170 1,050 1,220 82 11/1994 40
Wallisville Road Houston, TX 313 1,550 - 25 313 1,575 1,888 130 11/1994 40
Fondren Houston, TX 240 1,096 - 10 240 1,106 1,346 92 11/1994 40
Phillips Highway Jacksonville, FL 335 1,465 - 89 335 1,554 1,889 248 11/1994 40
St. Mary's Blvd. Jefferson City, MO 60 892 - 83 60 975 1,035 79 11/1994 40
Tara Boulevard Jonesboro, GA 320 1,361 - 131 320 1,492 1,812 203 11/1994 40
Oregon Street Kannapolis, NC 353 1,416 - 15 353 1,431 1,784 112 11/1994 40
Bolen Road Kennedale, TX 175 951 - 16 175 967 1,142 81 11/1994 40
Third Street,
Stock Island Key West, FL 320 1,280 - 319 320 1,599 1,919 185 11/1994 40
Myatt Drive Madison, TN 233 936 - 17 233 953 1,186 81 11/1994 40
North Main Street Mauldin, SC 212 881 - 28 212 909 1,121 111 11/1994 40
Hillcrest Road Mobile, AL 153 699 - 99 153 798 951 146 11/1994 40
Lafayette Street Nashville, TN 270 1,122 - 65 270 1,187 1,457 126 11/1994 40
Metroplex Drive Nashville, TN 267 1,445 - 21 267 1,466 1,733 123 11/1994 40
Park Avenue Orange Park, FL 310 1,320 - 46 310 1,366 1,676 185 11/1994 40
Brent Lane Pensacola, FL 127 613 - 32 127 645 772 153 11/1994 40
Creighton Blvd. Pensacola, FL 65 994 - 183 65 1,177 1,242 87 11/1994 40
Maitland Raleigh, NC 275 1,368 - 29 275 1,397 1,672 117 11/1994 40
Harding Road Red Bank, TN 157 935 - 12 157 947 1,104 82 11/1994 40
28
<PAGE>
<CAPTION>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Grand View Drive Simpsonville, SC $ 157 $ 641 $ 87 $ 439 $ 244 $ 1,080 $ 1,324 $ 67 11/1994 40
Florida Street Springfield, MO 97 637 - 20 97 657 754 56 11/1994 40
2956 North
Lindburgh St. Louis, MO 554 2,269 - 112 554 2,381 2,935 243 11/1994 40
1550 North
Lindburgh St. Louis, MO 339 1,362 - 75 339 1,437 1,776 120 11/1994 40
Alt. Highway 19
South Tarpon Springs, FL 448 1,092 - 589 448 1,681 2,129 109 12/1994 40
Wade Hampton
Blvd. Taylors, SC 190 917 - 21 190 938 1,128 79 11/1994 40
Airport Blvd. West Columbia, SC 145 847 - 21 145 868 1,013 75 11/1994 40
Orchard Drive West Columbia, SC 42 643 - 100 42 743 785 61 11/1994 40
Inwood Road Addison, TX 650 2,603 - 91 650 2,694 3,344 215 6/1995 40
Spring Street Atlanta, GA 379 1,526 - 1,235 379 2,761 3,140 230 7/1995 40
U.S. Highway 1 Big Coppit, FL 230 930 - 16 230 946 1,176 73 9/1995 40
Atlanta Highway Bogart, GA 278 1,110 - 45 278 1,155 1,433 83 11/1995 40
Van Teylingen Colorado Springs,
Drive CO 580 2,316 - 40 580 2,356 2,936 192 6/1995 40
North Powers Colorado Springs,
CO 680 2,722 - 40 680 2,762 3,442 188 9/1995 40
Parkmoor Village Colorado Springs,
Drive CO 415 1,661 - 161 415 2,237 1,822 141 6/1995 40
Providence Road Columbia, MO 220 891 - 22 220 913 1,133 75 3/1995 40
I-70 Drive SE Columbia, MO 150 662 - 38 150 700 850 59 3/1995 40
Plumbers Road Columbia, SC 140 315 - 43 140 358 498 28 3/1995 40
McElroy Road Doraville, GA 395 1,584 - 100 395 1,684 2,079 129 4/1995 40
Westmoreland
Plaza Douglasville, GA 260 1,052 - 91 260 1,143 1,403 95 4/1995 40
Highway 5 Douglasville, GA 283 1,136 - 159 283 1,295 1,578 94 10/1995 40
Dura Lee Lane Douglasville, GA 251 1,008 - 105 251 1,113 1,364 84 10/1995 40
Spaceway Duncanville, TX 200 809 - 69 200 878 1,078 78 6/1995 40
South Cedar
Ridge Duncanville, TX 220 887 - 7 220 894 1,114 71 7/1995 40
Jonesboro Road Forest Park, GA 321 1,286 - 41 321 1,327 1,648 98 10/1995 40
College Avenue Fort Collins, CO 415 1,667 - 66 415 1,733 2,148 142 3/1995 40
York Road Gastonia, NC 200 802 - 32 200 834 1,034 60 12/1995 40
Yacht Cove Drive Hilton Head, SC 868 3,477 - 83 868 3,560 4,428 259 10/1995 40
S.W. Freeway Houston, TX 600 2,884 - 468 600 3,352 3,952 258 6/1995 40
South Main Houston, TX 737 2,951 - 46 737 2,997 3,734 209 12/1995 40
Mangum Road Houston, TX 420 1,684 - 59 420 1,743 2,163 122 12/1995 40
Hayes Road Houston, TX 409 1,641 - 87 409 1,728 2,137 126 11/1995 40
29
<PAGE>
<CAPTION>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Addicks Satsuma Houston, TX $ 248 $ 1,000 $ - $ 102 $ 248 $ 1,102 $ 1,350 $ 95 3/1995 40
Bingle Road Houston, TX 321 1,286 - 41 321 1,327 1,648 93 12/1995 40
South Highway M291 Independence, MO 352 1,460 - 65 352 1,525 1,877 118 9/1995 40
Roosevelt Blvd. Jacksonville, FL 305 1,225 - 70 305 1,295 1,600 95 10/1995 40
East 67th Terrace Kansas City, MO 404 1,680 101 487 505 2,167 2,672 153 9/1995 40
James A. Reed Road Kansas City, MO 323 1,343 - 61 323 1,404 1,727 108 9/1995 40
Church Street Lake Charles, LA 215 869 - 40 215 909 1,124 83 3/1995 40
Haskell Avenue Lawrence, KS 379 1,574 - 67 379 1,641 2,020 122 9/1995 40
Wedgewood Avenue Longmont, CO 300 1,709 - 27 300 1,736 2,036 150 3/1995 40
Whitlock Place Marietta, GA 483 1,931 - 114 483 2,045 2,528 140 12/1995 40
N.W. 14th Street Miami, FL 703 3,090 - 64 703 3,154 3,857 236 10/1995 40
North Columbia
Street Milledgeville, GA 325 1,303 - 46 325 1,349 1,674 100 10/1995 40
Moffat Road Mobile, AL 300 1,199 - 64 300 1,263 1,563 92 12/1995 40
Azalea Road Mobile, AL 210 839 - 65 210 904 1,114 72 6/1995 40
Welshwood Drive Nashville, TN 601 2,407 - 63 601 2,470 3,071 181 10/1995 40
McLeod Road Orlando, FL 234 936 - 53 234 989 1,223 74 10/1995 40
Orange Blossom
Trial Orlando, FL 482 1,939 - 147 482 2,086 2,568 153 6/1995 40
Chesnee Highway Spartanburg, SC 283 1,136 - 133 283 1,269 1,552 102 10/1995 40
Third Street St. Louis, MO 670 2,770 - 65 670 2,835 3,505 223 3/1995 40
Bus Barn St. Louis, MO 256 9 - 154 256 163 419 19 9/1995 40
World Parkway
Center St. Louis. MO 320 1,315 - 26 320 1,341 1,661 107 3/1995 40
--------------------------------------------------------------------
TOTAL 1994 AND
1995 ACQUISITION 30,949 138,491 158 11,099 31,107 149,590 180,697 12,627
--------------------------------------------------------------------
30
<PAGE>
<CAPTION>
STORAGE TRUST REALTY AND PREDECESSOR COMPANY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 ACQUISITIONS
2064 Briarcliff
Road Atlanta, GA $ 738 $ 2,223 $ - $ 25 $ 738 $ 2,248 $ 2,986 $ 111 5/1996 40
Semoran Blvd. Casselberry, FL 640 1,948 - 50 640 1,998 2,638 99 5/1996 40
Western Branch
Blvd. Chesapeake, VA 798 2,410 - 25 798 2,435 3,233 120 5/1996 40
North Highland Clearwater, FL 368 1,472 - 84 368 1,556 1,924 78 4/1996 40
Centennial Blvd. Colorado Springs,
CO 670 2,748 - 23 670 2,771 3,441 120 9/1996 40
River Drive Columbia, SC 252 1,038 - - 252 1,038 1,290 55 4/1996 40
Morse Road Columbus, OH 530 1,598 - 32 530 1,630 2,160 81 5/1996 40
North Washington
Street Denver, CO 431 1,731 - 20 431 1,751 2,182 77 9/1996 40
South Clinton
Street Denver, CO (g) 260 1,065 - 30 260 1,095 1,355 31 9/1996 40
Kangaroo Drive Durham, NC 638 1,925 - 29 638 1,954 2,592 97 5/1996 40
9291 West
Florissant Ferguson, MO 302 1,206 - 580 302 1,786 2,088 160 4/1996 40
North Highway 67 Florissant, MO 441 1,737 - 6 441 1,743 2,184 92 4/1996 40
Cleveland Avenue Ft. Myers, FL 563 1,715 - 104 563 1,819 2,382 90 5/1996 40
East Buckingham
Road Garland, TX 443 1,346 - 33 443 1,379 1,822 71 5/1996 40
Jackson Drive Garland, TX 686 2,076 - 39 686 2,115 2,801 106 5/1996 40
Pineknoll Road Greenville, SC 495 1,499 - 56 495 1,555 2,050 82 5/1996 40
2510 FM 1960 West Houston, TX 325 1,305 - 42 325 1,347 1,672 53 11/1996 40
Southside Blvd. Jacksonville, FL 750 3,030 - 65 750 3,095 3,845 144 8/1996 40
Ft. Caroline Road Jacksonville, FL 835 2,537 - 45 835 2,582 3,417 128 5/1996 40
State Avenue Kansas City, KS 211 841 - 72 211 913 1,124 50 8/1996 40
47th Street Kansas City, MO 223 904 - 69 223 973 1,196 53 2/1996 40
Dominion Drive Katy, TX 550 1,877 - 306 550 2,183 2,733 73 12/1996 40
Long Avenue Lenexa, KS 480 1,951 - 15 480 1,966 2,446 86 9/1996 40
Winchester Road Lexington, KY 706 2,119 - 47 706 2,166 2,872 109 5/1996 40
4324 Poplar Road Louisville, KY 454 1,369 - 36 454 1,405 1,859 71 5/1996 40
4301 Poplar Road Louisville, KY 577 1,740 - 35 577 1,775 2,352 90 5/1996 40
Breckenridge Lane Louisville, KY 521 1,571 - 27 521 1,598 2,119 81 5/1996 40
Williams Avenue Madison, TN 1,154 4,633 - 87 1,154 4,720 5,874 211 9/1996 40
Cobb Parkway Marietta, GA 800 2,409 - 51 800 2,460 3,260 122 5/1996 40
West Dean Road Milwaukee, WI 830 2,490 - 113 830 2,603 3,433 127 5/1996 40
Foxridge Lane Mission, KS 500 2,032 - 16 500 2,048 2,548 90 9/1996 40
31
<PAGE>
<CAPTION>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Grelot Road Mobile, AL $ 378 $ 1,519 $ - $ 43 $ 378 $ 1,562 $ 1,940 $ 91 2/1996 40
McNally Drive Nashville, TN 621 2,494 - 169 621 2,663 3,284 121 9/1996 40
South Semoran
Blvd. Orlando, FL 272 832 - 43 272 875 1,147 47 5/1996 40
Hemlock Avenue Overland Park, KS 560 2,275 - 21 560 2,296 2,856 101 9/1996 40
Avenue K Plano, TX 1,072 3,232 - 152 1,072 3,384 4,456 172 5/1996 40
Woodson Road Raytown, MO 720 2,920 - 16 720 2,936 3,656 128 9/1996 40
Alpharetta Highway Roswell, GA 1,678 5,051 - 40 1,678 5,091 6,769 248 5/1996 40
Hedge Lane Terrace Shawnee, KS 340 1,385 - 17 340 1,402 1,742 61 9/1996 40
North Vandeventer St. Louis, MO 186 745 - 340 186 1,085 1,271 50 4/1996 40
Highway 19 North Tarpon Springs, FL 710 2,158 - 31 710 2,189 2,899 109 5/1996 40
Foster Court Waukesha, WI 457 1,381 - (55) 457 1,326 1,783 73 5/1996 40
Roosevelt Road Winfield, IL 1,012 3,037 - 47 1,012 3,084 4,096 151 5/1996 40
--------------------------------------------------------------------
TOTAL 1996
ACQUISITIONS 25,177 85,571 - 3,026 25,177 88,596 113,773 4,309
--------------------------------------------------------------------
Cane Ridge Road Antioch, TN $ 235 $ 944 $ _ $ 107 $ 235 $ 1,051 $ 1,286 $ 25 3/1997 40
South Orange
Blosson Trail Apopka, FL 330 1,320 _ 115 330 1,435 1,765 25 5/1997 40
South Cooper
Street Arlington, TX 442 1,836 _ 21 442 1,857 2,299 14 11/1997 40
Park Avenue Basalt, CO (h) 748 3,000 _ 81 748 3,081 3,829 81 Jan-97 40
Marsh Lane Carrollton, TX 997 3,990 _ 28 997 4,018 5,015 38 10/1997 40
Lee Highway Centreville, VA 1,000 3,985 _ 20 1,000 4,005 5,005 38 10/1997 40
Ashley River Road Charleston, SC 852 3,343 _ 27 852 3,370 4,222 64 5/1997 40
Cermak Road Chicago, IL 877 3,469 _ 78 877 3,547 4,424 67 5/1997 40
North Natchez
Avenue Chicago, IL 713 2,795 _ 41 713 2,836 3,549 54 5/1997 40
Astrozon Court Colorado Springs,
CO 546 1,388 _ 29 546 1,417 1,963 24 6/1997 40
Broad River Road Columbia, SC 676 2,628 _ 43 676 2,671 3,347 51 5/1997 40
2719 Morse Road Columbus, OH 710 2,848 _ 29 710 2,877 3,587 33 9/1997 40
32
<PAGE>
<CAPTION>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inwood Road Dallas, TX $ 1,060 $ 4,452 $ _ $ 26 $ 1,060 $ 4,478 $ 5,538 $ 50 9/1997 40
Forest Central
Drive Dallas, TX 610 2,444 _ 25 610 2,469 3,079 28 10/1997 40
S.W. 10th Street Deerfield Beach,
FL 1,010 4,040 _ 37 1,010 4,077 5,087 77 5/1997 40
East Club Avenue Durham, NC 530 1,999 _ 28 530 2,027 2,557 28 8/1997 40
9400 West Florissant
Ave. Ferguson, MO 110 441 _ 17 110 458 568 8 6/1997 40
East Loop 820 Fort Worth, TX 368 1,414 _ 31 368 1,445 1,813 17 9/1997 40
Grandbury Road Fort Worth, TX 432 1,626 _ 29 432 1,655 2,087 26 7/1997 40
Central Court Hermitage, TN 335 1,345 _ 77 335 1,422 1,757 34 3/1997 40
Loch Katrine Houston, TX 340 1,371 _ 85 340 1,456 1,796 32 3/1997 40
Milwee Street Houston, TX 476 1,917 _ 53 476 1,970 2,446 45 3/1997 40
4341 S.W. Freeway Houston, TX 1,264 4,758 _ 44 1,264 4,802 6,066 75 7/1997 40
Westheimer Road Houston, TX 616 2,556 _ 25 616 2,581 3,197 43 6/1997 40
Santa Fe Trail
Road Lenexa, KS 160 644 _ 169 160 813 973 19 2/1997 40
East Highway 121 Lewisville, TX 424 1,698 _ 31 424 1,729 2,153 39 3/1997 40
N.W. 153rd Street Miami Lakes, FL 140 560 _ 20 140 580 720 13 3/1997 40
N.W. 7th Avenue Miami, FL 360 1,451 _ 44 360 1,495 1,855 37 2/1997 40
Government Blvd. Mobile, AL 200 824 _ 12 200 836 1,036 19 3/1997 40
Tchoupitoulas
Street New Orleans, LA 677 2,614 _ 177 677 2,791 3,468 52 5/1997 40
Jones Mill Road Norcross, GA 650 2,605 _ 92 650 2,697 3,347 69 2/1997 40
Palm Valley Road Ponte Vedra
Beach, FL 270 1,080 _ 11 270 1,091 1,361 25 3/1997 40
Palmer Drive Schaumburg, IL 808 3,145 _ 84 808 3,229 4,037 62 5/1997 40
Roselle Road Schaumburg, IL 440 1,763 _ 31 440 1,794 2,234 41 3/1997 40
South Sterling
Blvd. Sterling, VA 820 3,272 _ 20 820 3,292 4,112 22 10/1997 40
Brennan Highway Tinley Park, IL 360 1,443 _ 129 360 1,572 1,932 37 3/1997 40
South U.S.
Highway 1 Vero Beach, FL 396 1,586 _ 40 396 1,626 2,022 37 3/1997 40
Highway 3 Webster, TX 354 1,485 _ 18 354 1,503 1,857 8 12/1997 40
--------------------------------------------------------------------
TOTAL 1997
ACQUISITIONS 21,336 84,079 - 1,974 21,336 86,053 107,389 1,456
--------------------------------------------------------------------
--------------------------------------------------------------------
TOTAL OF ALL
FACILITIES $77,462 $308,140 $158 $16,099 $77,620 $324,239 $401,859 $18,392
====================================================================
See Accompanying Notes to Schedule III
33
<PAGE>
<CAPTION>
STORAGE TRUST REALTY
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(amounts in thousands)
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS CARRYING AMOUNT
TO COMPANY ACQUISITION AT DECEMBER 31, 1997
------------------- ------------- -----------------------------------
MONTH
/YEAR
AC-
QUIRED
BUILD- ACCUM- BY BUILDING
INGS ULATED STOR- DEPRE-
BUILDINGS & BUILDINGS DE- AGE CIATION
ENCUM- & FIX- & TOTAL PRECIA- TRUST TERM IN
DESCRIPTION<Fa> BRANCES LAND FIXTURES LAND TURES LAND FIXTURES <Fb><Fd> TION<Fc> REALTY YEARS<Fe>
- ------------------------------------- ------- --------- ----- ------- ------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FACILITIES UNDER
DEVELOPMENT OR
EXPANSION:
University Avenue Davie, FL $1,067 $ - $ - $ 421 $1,067 $ 421 $1,488 $ - 12/1997 n/a
Mo-Pac Highway Austin, TX 731 - - 85 731 85 816 - 11/1997 n/a
Palm Valley Road Ponte Vedra
Beach, FL 747 - - 56 747 56 803 - 11/1997 n/a
------------------------------------------------------------------
TOTAL $2,545 $ _ $ _ $ 562 $2,545 $ 562 $3,107 $ -
==================================================================
See Accompanying Notes to Schedule III
</TABLE>
34
<PAGE>
STORAGE TRUST REALTY
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(amounts in thousands)
(a). The land, building and fixtures detailed in Schedule III are used for
self-storage facilities, with the exception of the Home Office.
(b). The changes in land, building and fixtures for the years ended December
31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of the year $314,319 $194,216 $101,077
Additions during the year:
Cost of facilities acquired 105,415 116,064 88,541
Improvements 9,216 6,477 4,628
----------------------- ----------------------- ----------------------
Total additions during the year 114,631 122,541 93,169
Deductions during year:
Cost of facilities exchanged (23,984) (2,438) 0
Sale of land-highway expansion 0 0 (30)
----------------------- ----------------------- ----------------------
Total deductions during the year (23,984) (2,438) (30)
---------- ---------- ----------
Balance at end of year $404,966 $314,319 $194,216
========== ========== ==========
</TABLE>
(c). The changes in accumulated depreciation of buildings and fixtures for the
years ended December 31, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year $10,205 $4,197 $1,029
Depreciation expense 9,377 6,102 3,168
Facilities exchanged (1,190) (94) 0
---------- ---------- ----------
Balance at end of year $18,392 $10,205 $4,197
========== ========== ==========
</TABLE>
(d). The aggregate cost of land, buildings, and fixtures for federal income tax
basis purposes is approximately $402,783.
(e). Depreciation is computed based upon the following useful lives:
<TABLE>
<S> <C>
Building and building improvements 5-40 Years
Fixtures, furniture and equipment 10 Years
Signs/gates/fences 10-20 Years
Computer hardware 5 Years
Computer software 3 Years
</TABLE>
(f). Property secured a mortgage loan, which had a balance of $1,582 as of
December 31, 1996. This was paid off on January 17, 1997.
(g). Property secured a mortgage loan, which had a balance of $1,000 as of
December 31, 1996. This was paid off on January 31, 1997.
(h). Property secured a mortgage loan, which had a balance of $1,644 as of
January 3, 1997 (date of acquisition). This was paid off on January 17,
1997.
35
<PAGE> 1
STORAGE TRUST REALTY
1994 SHARE INCENTIVE PLAN
(formerly known as the 1994 Share Option Plan)
----------------------------------------------
(As Amended and Restated, Effective February 4, 1997)
ARTICLE 1.
BACKGROUND AND PURPOSE OF THE PLAN
1.1. Background. Storage Trust Realty, a Maryland real estate investment
----------
trust (the "REIT"), is the general partner of Storage Trust Properties, L.P.
(the "Partnership"), a Delaware limited partnership. The Partnership owns all
of the preferred stock of Storage Realty Management Co., a Delaware corporation
(the "Management Company"). The REIT, the Partnership and the Management
Company are each referred to individually as an "Affiliated Company," and
collectively as the "Affiliated Companies."
1.2. Purpose and Effective Date. The Storage Trust Realty 1994 Share
--------------------------
Option Plan was adopted in November 1994 to enable each of the Affiliated
Companies to attract, retain and motivate individuals to perform services as
directors, officers, employees and/or otherwise by providing for or increasing
the opportunity for such individuals to share in the growth and success of the
Affiliated Companies through proprietary interests in the REIT and/or the
Partnership. Effective as of February 4, 1997 (the "Effective Date"), the Plan
has been renamed the "Storage Trust Realty 1994 Share Incentive Plan," and
amended and restated as set forth herein, subject to the approval of the REIT's
shareholders.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
2.1. Definitions. In addition to the terms defined elsewhere in the
-----------
Plan, capitalized terms shall have the following meanings:
(a) "Award" means the award of Options, Shares, Units or DERs.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committees" means the REIT Committee and the Management
Company Committee (individually, each referred to as a "Committee").
(d) "Conversion Right" means the right described in Section
4.2(e)(1) of the Agreement of Limited Partnership of Storage Trust Properties,
L.P., as amended, providing for the exchange of Units for Shares.
(e) "DER" means a Dividend Equivalent Right awarded with respect
to a Share Option or a Distribution Equivalent Right awarded with respect to a
Unit Option, as described in Article 7.
(f) "Employer" means the Affiliated Company for whom an individual
provides or is expected to provide services as an employee or otherwise, and
for which services the individual is granted an Award under the Plan.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
from time to time amended.
1
<PAGE> 2
(h) "Management Company Committee" means the Board of Directors of
the Management Company, or a committee appointed by the Board of Directors for
the purpose of granting Unit Options and Unit Awards under the Plan (including
related DERs), and exercising certain administrative responsibilities with
respect thereto, composed of two or more members of the Board of Directors of
the Management Company.
(i) "Non-employee Trustee" means a member of the Board of Trustees
of the Independent REIT who is not an employee of the REIT and who also is an
"Independent Trustee" as defined in the REIT's Declaration of Trust.
(j) "Options" means Share Options and/or Unit Options. All Options
under the Plan shall be nonqualified options that are not intended to satisfy
section 422 of the Code.
(k) "Participant" means an individual who has been granted an Award
under the Plan.
(l) "Plan" means the Storage Trust Realty 1994 Share Incentive
Plan, as set forth herein and as from time to time amended.
(m) "REIT Committee" means a committee appointed by the Board of
Trustees of the REIT for the purpose of granting Awards under the Plan and
administering the Plan, composed of two or more Trustees, at least a majority
of whom are "Independent Trustees" as defined in the REIT's Declaration of
Trust, and each of whom is a "non-employee director" within the meaning
of Rule 16b-3.
(n) "Rule 16b-3" means Rule 16b-3 promulgated under Section 16 of
the Exchange Act.
(o) "Share Award" means the award of a Share or the right to
receive a Share (a "phantom share"), subject to the; restrictions, if any,
established by the REIT Committee.
(p) "Share Option" means a right granted under the Plan to purchase
Shares.
(q) "Shares" means common shares of beneficial interest, $0.01 par
value per share, of the REIT.
(r) "Trustee" means a member of the Board of Trustees of the REIT.
(s) "Unit Award" means the award of a Unit or the right to receive
a Unit (a "phantom unit"), subject to the restrictions, if any, established by
the applicable Committee.
(t) "Unit Option" means a right granted under the Plan to purchase
Units. Units purchased under a right granted under the Plan will represent
limited partnership interests in the Partnership.
(u) "Units" means units of limited partnership interest in the
Partnership.
2.2. Construction. Whenever the context so admits, the singular or
------------
plural number, and the masculine, feminine or neuter gender shall each be
deemed to include the other.
2
<PAGE> 3
ARTICLE 3.
ADMINISTRATION
3.1. Authority of Committees as to Discretionary Grants of Awards.
------------------------------------------------------------
(a) The REIT Committee shall have sole and exclusive authority to
grant Awards to persons who, at the time of grant, perform services for the
REIT and/or the Partnership, or who are officers, trustees, directors or other
persons subject to Section 16(a) of the Exchange Act with respect to the REIT;
provided, however, that in order to meet the performance-based compensation
exception of Section 162(m)(4) of the Code (as amended by the Omnibus Budget
Reconciliation Act of 1993), the REIT Committee may delegate its discretionary
authority under this Section 3.1(a) or any other provision of the Plan to a
subcommittee which consists solely of two or more "outside directors" within
the meaning of Section 162(m)(4)(C) of the Code.
(b) The Management Company Committee shall have sole and exclusive
authority to grant Unit Options and Unit Awards to persons who, at the time of
grant, perform services for the Management Company and are not officers,
trustees, directors or other persons subject to Section 16(a) of the Exchange
Act with respect to the REIT.
3.2. Authority of REIT Committee. Subject to the provisions of the
---------------------------
Plan, the REIT Committee shall have the following authority, powers, rights
and duties in addition to those vested in it elsewhere in the Plan:
(a) to maintain records regarding the granting and exercise
of Awards made under the Plan and such other matters necessary for the orderly
operation of the Plan;
(b) to interpret and construe the provisions of the Plan;
(c) to grant Awards under the Plan to the class of persons
described in Section 3.1(a), in such forms and amounts and subject to such
restrictions, limitations and conditions as it deems appropriate, including,
without limitation, awards which are made in combination with or in tandem
with other awards (whether or not contemporaneously granted) or as
compensation or in lieu of current or deferred compensation (provided,
however, that the Awards granted to any individual with respect to
the services performed for a particular Affiliated Company, together with all
other compensation amounts provided in connection with such individual's
performance of services for such Affiliated Company, shall not, in
total, exceed a reasonable amount of compensation as determined by the Board
of Trustees (with respect to the REIT) or the board of directors or similar
governing authority of any other Affiliated Company);
(d) to determine the aggregate number of Shares or Units subject
to any Award granted under the Plan during any specified time period subject
to the limitations of Section 4.1 hereof;
(e) to modify the terms of, cancel and reissue, or repurchase
outstanding Awards granted by it;
(f) to prescribe the form of agreements, certificates or other
instruments evidencing Awards granted under the Plan;
(g) to correct any defect or omission and reconcile any
inconsistency in the Plan or in any grant of Awards made by it; and
(h) to make all other determinations and take all other actions
as it deems necessary or desirable for the overall implementation and
administration of the Plan.
3.3. Authority of Management Company Committee. Subject to the
-----------------------------------------
provisions of the Plan, in exercising its authority to grant Unit Options and
Unit Awards to the classes of persons described in Section 3.1(b), the
Management Company
3
<PAGE> 4
Committee shall grant Unit Options and Unit Awards in such amounts and subject
to such restrictions, limitations and conditions as such Committee deems
appropriate, including, without limitation, awards which are made in
combination with or in tandem with other awards (whether or not
contemporaneously granted) or as compensation or in lieu of current or
deferred compensation (provided, however, that the Unit Options Unit Awards
granted to any individual with respect to the services performed for the
Management Company together with all other compensation amounts provided in
connection with such individual's performance of services for the Management
Company, shall not, in total, exceed a reasonable amount of compensation as
determined by the board of directors of the Management Company). Prior to
each granting of Unit Options or Unit Awards hereunder, the Management Company
Committee shall advise the REIT Committee of the number of Units as to which
it intends to grant Awards, and immediately after the grant of such Awards
such Committee shall notify the REIT Committee of such grants and the
principal terms thereof. For purposes of administering those Awards
granted by the Management Company Committee in accordance with the terms of
the Plan, such Committee shall have the following authority, powers, rights
and duties in addition to those vested in it elsewhere in the Plan:
(a) to modify the terms of, cancel and reissue, or repurchase
any outstanding Unit Options or Unit Awards granted by it;
(b) to correct any defect or omission and reconcile any
inconsistency in any Unit Options or Unit Awards granted by it.
3.4. General Provisions. Neither of the Committees shall have any
------------------
authority, discretion or power to select the Non-employee Trustees who will
receive Options or Share Awards under the Plan or to determine the timing,
amount or exercise price of Shares underlying any Option granted under
Section 6.2 of this Plan to such Non-employee trustees. All actions of the
Committees shall be taken by majority vote of its members or by unanimous
written consent. The determination of each Committee on matters within its
authority shall be final, conclusive and binding on the Affiliated Companies
and all other persons. No member of any Committee shall be liable for any
action or determination made with respect to the Plan.
ARTICLE 4.
SHARES AND UNITS SUBJECT TO AWARD
4.1. Number of Shares and Units Subject to Award. Subject to
-------------------------------------------
the adjustment provisions of Section 4.4, the aggregate number of
(a) Shares which may be subject to Share Options and Share
Awards, and
(b) Units which may be subject to Unit Options and Unit Awards,
shall equal 10% of the aggregate number of outstanding Shares and Units on the
Effective Date, plus such additional amount as may be determined as of each
subsequent January 1 (the "adjustment date"), so that the number of Shares and
Units reserved under the Plan shall equal 10% of the aggregate number of
outstanding Shares and Units on the adjustment date; provided, however, in the
event that the number of outstanding Shares as of any adjustment date are less
than the number of outstanding Shares on the Effective Date or any prior
adjustment date, no adjustment shall be made to the number of Shares and Units
reserved for issuance on such adjustment date. For purposes of calculating the
number of outstanding Shares and Units, securities of the REIT or Partnership
that are not Shares or Units but are convertible presently or in the future into
Shares or Units shall be deemed to be outstanding Shares or Units, as
applicable, equal to the number of Shares or Units into which such securities
are convertible. If, and to the extent, that Awards granted under the Plan
terminate, expire or are cancelled for any reason without the issuance of Shares
of Units, the Shares or Units reserved for issuance pursuant to the terminated,
expired or cancelled Award (and any Shares reserved in connection with the
Conversion Rights of the Units) shall again be available for the granting of
Awards; provided that the granting and terms of such new Awards shall in all
respects comply with the provisions of the Plan. Restricted Shares or Units
awarded under the Plan and later forfeited pursuant to the Plan shall again
become
4
<PAGE> 5
available for Awards under the Plan. No Awards of fractional Shares or
fractional Units shall be granted or issued under the Plan.
4.2. Character of Shares. Shares delivered upon the exercise
-------------------
of a Share Option or grant or vesting of a Share Award or in connection with
Conversion Rights exercised as to Units received upon the exercise of a Unit
Option or grant or vesting of a Unit Award may be acquired from authorized but
unissued Shares or issued Shares held in the REIT's treasury, or both. Units
delivered upon the exercise of a Unit Option or the grant or vesting of a Unit
Award may be acquired from the Partnership without regard to whether the
Partnership has previously set aside such Units for issuance under the Plan.
4.3. Reservation of Shares. There shall be reserved by the
---------------------
REIT at all times for sale under the Plan and for exchange pursuant to a
Conversion Right for a Unit received upon the exercise of a Unit Option an
aggregate number of Shares equal to the maximum number of Shares and Units which
may be subject to the granting of Awards under Section 4.1.
4.4. Adjustment. In the event that the REIT Committee shall
----------
determine that any extraordinary dividend or other distribution (whether in the
form of cash, Shares, Units, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares, Units or other securities, the issuance of warrants or other rights to
purchase Shares, Units or other securities, or other similar corporate, trust or
partnership transaction or event affects the Shares or Units with respect to
which Awards have been or may be issued under the Plan, such that an adjustment
is determined by the REIT Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the REIT Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of Shares
and Units that thereafter may be made the subject of Awards, (ii) the number and
type of Shares and Units subject to outstanding Awards, and (iii) the grant or
exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of any outstanding Award; provided,
in each case, that the number of Shares or Units subject to any Award shall
always be a whole number. Adjustments to Options granted pursuant to Section
6.2 shall be governed by Section 6.2.
4.5. Limitation on Grant of Awards. Notwithstanding any
-----------------------------
provision of the Plan to the contrary, in no event shall an Award be granted
under the Plan if the granting of such Award may, in the determination of the
REIT Committee, cause the REIT to lose its status as a real estate investment
trust under section 856 of the Code (including sections 856(a)(6) and 856(h)
thereof) and applicable regulations thereunder.
ARTICLE 5.
INDIVIDUALS ELIGIBLE FOR AWARDS
5.1. Employees and Service Providers. Subject to Sections
-------------------------------
6.2 and 8.2 of the Plan, the individuals eligible to receive Awards under the
Plan shall consist of such key employees or service providers of the Affiliated
Companies (including any such individuals who are also Trustees, but expressly
excluding any such individuals who are non-employee Trustees) as each
Committee, acting in accordance with its respective powers under Section 3.1,
shall select from time to time. In exercising its discretionary authority to
grant Awards to any individual, each Committee shall make its determination
based upon the contribution that such individual performing services on behalf
of a particular Affiliated Company has made or is expected to make to the
growth and success of such respective Affiliated Company. With respect to
services performed for the REIT, employees and service providers of the REIT
are eligible only for Share Options or Share Awards (including related DERs).
With respect to services performed for the Partnership or the Management
Company, employees and service providers of the Partnership or the Management
Company are eligible only for Unit Options or Unit Awards (including related
DERs).
5.2. Non-employee Trustees. Each Non-employee Trustee shall
---------------------
be granted Share Options in accordance with the formula award provisions of
Section 6.2 and Share Awards in accordance with Section 8.2.
5
<PAGE> 6
ARTICLE 6.
TERMS AND CONDITIONS OF OPTIONS
6.1. Discretionary Grants of Options to Employees and Service
--------------------------------------------------------
Providers. Subject to the provisions and limitations of the Plan, each
- -----------
Committee shall determine the number of Shares or Units, as applicable, that may
be purchased under each Option granted by it, the exercise price for the Shares
or Units underlying each Option and the schedule for exercisability of each
Option. Unless determined otherwise by the applicable Committee, each Option
granted under the Plan on or after the Effective Date shall be granted with a
DER as described in Section 7.2, subject to such additional conditions and
limitations as the Committee may determine. Subject to the adjustment
provisions of Section 4.4, the maximum number of Shares and Units subject to
Options that may be granted under the Plan to any one individual in any calendar
year shall not exceed 500,000 Shares or 500,000 Units, or any combination of the
foregoing.
6.2. Formula Awards of Options to Non-employee Trustees. At
--------------------------------------------------
the time of his initial election or appointment as a Trustee, each Non-employee
Trustee shall automatically receive an Option for 3,000 Shares, which Option
shall become exercisable one year after the date of grant, provided the Non-
employee Trustee remains in continuous service as a Non-employee Trustee until
such one-year anniversary of the date of grant. Thereafter, at the closing of
each annual meeting of the REIT's shareholders, each Non-employee Trustee who
has been reelected or who is continuing as a Trustee as of the adjournment of
the annual meeting shall automatically receive an Option for an additional 3,000
Shares, which Option shall be immediately exercisable. To the extent Options
granted under sections of the Plan other than this Section 6.2 are adjusted
pursuant to Section 4.4, Options under this Section 6.2 shall automatically
be adjusted in the same manner. All Options granted under this Section 6.2
shall provide for an exercise price per Share equal to the Fair Market Value
of a Share as of the date of grant (or par value, if greater). Each Option
granted under this Section 6.2 shall be awarded with a DER, as described
in Section 7.2.
6.3. Option Agreements. The terms of each Option shall be set
-----------------
forth in a written agreement (the "Option Agreement"), signed by the Participant
and the Employer, in such form and containing such terms and conditions as are
required under the Plan or that the Committee granting such Option (the REIT
Committee, in the case of Options awarded under Section 6.2) may in its
discretion consider appropriate and which are not inconsistent with the
provisions of the Plan. In the event that any provision of an Option Agreement
shall conflict with any provisions of the Plan as in effect on the date of grant
of such Option, the provisions of the Plan as in effect on the date of grant of
the Option shall control.
6.4. Exercise Price. The exercise price for each Share
--------------
purchasable under any Option granted to a Non-employee Trustee is set forth in
Section 6.2. The exercise price for each Share purchasable under any other
Share Option granted under the Plan shall not be less than 100% of the Fair
Market Value of a Share on the date of grant of the Share Option (or par value,
if greater). The exercise price for each Unit purchasable under any Unit Option
granted under the Plan shall not be less than 100% of the Fair Market Value of a
Unit on the date of grant of the Unit Option. An Option granted under Section
6.1 of the Plan shall be considered granted on the date the applicable Committee
acts to grant the Option or such later date as it shall specify.
6.5. Fair Market Value. The "Fair Market Value" of a Share
-----------------
or Unit shall be determined as follows:
(a) If the Shares are listed or admitted to trading on a
securities exchange registered under the Exchange Act, the Fair Market Value of
a Share is the average of the high and low price of the Shares for the day
immediately preceding the date as of which Fair Market Value is being determined
(or if there was no reported sale on such date, on the last preceding date on
which any reported sale occurred) reported on the principal securities exchange
on which the Shares are listed or admitted to trading. If the Shares are not
listed or admitted to trading on any such exchange but are listed as a national
market security on the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"), traded in the over-the counter market or
listed or traded on any similar system then in use, the Fair Market Value of a
Share shall be the average of the high and low sales price for the day
immediately preceding the date as of which the Fair Market Value is being
determined (or if there
6
<PAGE> 7
was no reported sale on such date, on the last preceding date on which any
reported sale occurred) reported on such system. If the Shares are not listed
or admitted to trading on any such exchange, are not listed as a national
market security on NASDAQ and are not traded in the over-the-counter market or
listed or traded on any similar system then in use, but are quoted on NASDAQ or
any similar system then in use, the Fair Market Value of a Share shall be the
average of the closing high bid and low asked quotations on such system for the
Shares on the date in question. In all other cases, Fair Market Value for
purposes of the Plan shall be determined by the REIT Committee in its sole
discretion using appropriate criteria.
(b) As of any date the Fair Market Value of a Unit shall equal
the Fair Market Value of a Share on such date.
6.6. Option Period. All rights to purchase Shares or Units
-------------
pursuant to any Option granted under the Plan shall cease as of the Option's
Expiration Date.
(a) The "Expiration Date" with respect to any Option granted
pursuant to Section 6.1, or any portion thereof, means the date established by
the granting Committee at the time of the grant (subject to any earlier
termination by such Committee), but in no event later than the date which is ten
years after the date on which the Option is granted. Except as provided
otherwise by the granting Committee, if the employment of a Participant who is
an employee of any of the Affiliated Companies terminates for any reason, his
Options shall terminate and may not be exercised after the earliest to occur of
(i) twelve months after termination of the Participant's employment by reason of
his death or becoming disabled (within the meaning of Section 22(e)(3) of the
Code), (ii) three months after his termination for any other reason or (iii) the
Option's Expiration Date.
(b) The "Expiration Date" with respect to any Option granted
to Non-employee Trustees pursuant to Section 6.2, or any portion thereof, means
the date which is ten years after the date on which the Option is granted. If
the Participant ceases to be a Trustee for any reason, his Options shall
terminate and may not be exercised after the earliest to occur of (i) twelve
months after his trusteeship is terminated for any reason other than death,
(ii) twelve months after his death or (iii) the option's Expiration Date.
6.7. Exercise of Options.
-------------------
(a) Options granted under the Plan shall be exercised by the
Participant (or by his executors, administrators, guardian or legal
representative) as to all or any portion of the Shares or Units then
exercisable under such Option, by giving the written notice described in
paragraph (i) below to the Committee administering such Option (the REIT
Committee, in the case of Options awarded under Section 6.2) or its designee
on or before the date such portion of the Option becomes unexercisable
under the Plan or the terms of the applicable Option Agreement, and by making
payment as provided in paragraph (ii) below within 3 business days after
delivery of the notice:
(i) A written notice of exercise, in a form complying with
any rules the applicable Committee may issue, that is signed by the
Participant and that specifies the number of Shares or Units to be
purchased; and
(ii) Payment to the Employer of the full purchase price for
the Shares or Units being purchased made in cash, by wire transfer
or by bank check.
In no event may any Option be exercised for a fraction of a Share or Unit.
(b) With respect to the exercise of any Share Option, the
REIT Committee shall provide the REIT a copy of the notice described in Section
6.7(a)(i) as soon as practicable after it is received. The REIT shall cause
delivery of the Shares purchased pursuant to the portion of the Share Option
that is exercised as soon as practicable after payment is received therefor
(including applicable withholding), and, within a reasonable time thereafter,
such transfer shall be evidenced on the books of the REIT.
(c) With respect to the exercise of any Unit Option subject
to an Option Agreement executed by the Partnership
7
<PAGE> 8
as Employer, the REIT Committee shall provide the Partnership a copy of the
notice described in Section 6.7(a)(i) as soon as practicable after it is
received. The Partnership shall deliver the Units purchased pursuant to the
portion of the Unit Option that is exercised as soon as practicable after
payment is received therefor (including applicable withholding) by the
Partnership from the Participant.
(d) With respect to the exercise of any Unit Option subject
to an Option Agreement executed by the Management Company as Employer, the
Committee receiving the notice described in Section 6.7(a)(i) shall provide the
Employer a copy of such notice as soon as practicable after it is received.
The Employer shall deliver to the Partnership, no later than 5 business days
after the date of exercise of the Unit Option, payment in cash equal to the Fair
Market Value, on the date of exercise of the Unit Option, of the Units subject
to the portion of the Option that is exercised. Upon receipt of such cash
payment, the Partnership shall deliver to the Employer the Units for which
payment is made, and the Employer shall deliver the Units to the Participant as
soon as practicable after the Participant has made payment therefor (including
applicable withholding) to the Employer.
6.8. No Rights of Owner Until Exercise and Issuance. No
----------------------------------------------
person exercising an Option shall have any of the rights of a shareholder of the
REIT or a partner in the Partnership until the Shares or Units, as applicable,
shall have been issued following the exercise of the Option. No adjustment
shall be made for cash dividends or other rights for which the record date is
prior to the date of issuance.
6.9. Non-Transferability of Option. No option shall be
-----------------------------
assignable or transferable by the Participant, other than by will or the laws of
of descent and distribution. An Option may be exercised during the life of the
Participant only by the Participant or his guardian or legal representative.
ARTICLE 7.
DIVIDEND AND DISTRIBUTION EQUIVALENT RIGHTS
7.1. Dividend and Distribution Equivalent Rights. A Dividend
-------------------------------------------
Equivalent Right with respect to a Share underlying a Share Option or Share
Award shall entitle the Participant, with respect to each dividend payment date
(with respect to Shares) related to a record date upon which such Share Option
or Share Award was outstanding, to a payment or credit in an amount equal to all
or a percentage of the dividends payable with respect to a Share, as determined
by the Committee. A Distribution Equivalent Right with respect to a Unit
underlying a Unit Option or Unit Award shall entitle the Participant, with
respect to each distribution payment date (with respect to Units) related to a
record date upon which such a Unit Option or Unit Award was outstanding, to a
payment or credit in an amount equal to all or a percentage of the distribution
payable with respect to a Unit, as determined by the Committee. The award of
DERs under this Section 7.1 shall be subject to such conditions, limitations and
restrictions as the applicable Committee shall determine.
8
<PAGE> 9
7.2. Automatic Grant of DERs. Unless determined otherwise by
-----------------------
the applicable Committee, each Share or Unit underlying an Option granted under
the Plan on and after the Effective Date shall be awarded with a DER, subject
to the following terms and conditions:
(a) The DER shall entitle the holder to a credit equal to a
percentage of the dividend or distribution paid to shareholders or unitholders,
as applicable, with respect to any calendar year determined in accordance with
the following schedule:
<TABLE>
<CAPTION>
Percentage of
Dividends or
Annual Total Shareholder Distributions
Return for the REIT: Credited:
<S> <C>
Less than 10% 0%
At least 10%, but less than 12% 25%
At least 12%, but less than 15% 50%
At least 15%, but less than 18% 75%
18% or more 100%
</TABLE>
(b) The Annual Total Shareholder Return of the REIT with
respect to any calendar year shall be determined by the REIT Committee as soon
as practicable after the end of the calendar year, and each Share and Unit
underlying an Option that is outstanding on the date such Annual Total
Shareholder Return is determined, and was outstanding on the record date with
respect to the applicable dividend or distribution payment during such calendar
year, will receive a DER credit equal to the dividends or distributions, as
applicable, payable on such dividend or distribution payment date during such
calendar year multiplied by the applicable percentage.
(c) The DER credits accumulated under this Section 7.2 with
respect to any Share or Unit may only be used to pay a portion or all of the
exercise price of the applicable Share or Unit Option and do not entitle the
Participant to cash or any other form of payment.
(d) In no event may a DER credit be used to pay any portion
of the exercise price of an Option if the Fair Market Value of a Share or Unit
on the date of exercise of the Option is less than the exercise price of the
Option determined without regard to the DER credit.
ARTICLE 8.
SHARE AWARDS AND UNIT AWARDS
8.1. Description of Awards. Subject to the terms of this
---------------------
Section 8.1, a Share Award or Unit Award under the Plan is a grant of Shares or
Units to a Participant, the earning, vesting or distribution of which is subject
to one or more conditions established by the applicable Committee. Such
onditions may relate to events (such as performance or continued employment)
occurring before or after the date the Share Award or Unit Award is granted, or
the date the Shares or Units are earned by, vested in or delivered to the
Participant. If the vesting of Share Awards or Units Awards are subject to
conditions occurring after the date of grant, the period beginning on the date
of grant of such Award and ending on the vesting or forfeiture of such Award (as
applicable) is referred to as the "Restricted Period". Share Awards and Unit
Awards may provide for delivery of the Shares or Units, as applicable, at the
time of grant or may provide for a deferred delivery date, including delivery at
the end of the Restricted Period. The Committee, in its sole discretion, may
provide with respect to a Unit Award that Conversion Rights be immediately
exercised upon delivery of the Units.
9
<PAGE> 10
8.2. Share Awards to Non-employee Trustees. Subject to the
-------------------------------------
terms and conditions of the Plan, commencing with the calendar quarter ending
June 30, 1997, as of the last day of each calendar quarter, a "Share Retainer"
shall be paid to each Non-employee Trustee who was a Non-employee Trustee during
such calendar quarter, which Share Retainer shall be payable in that number of
Shares equal to $3,000 (or the quarterly retainer payable with respect to such
calendar quarter, as specified by the Board from time to time) divided by the
Fair Market Value of a Share as of the last day of the calendar quarter, pro
rated in the case of an individual who did not serve as a Non-employee Trustee
during the entire calendar quarter. Any fractional Share shall be rounded up to
the nearest whole Share.
ARTICLE 9.
GENERAL PROVISIONS
9.1. Amendment and Termination of the Plan. The Board
-------------------------------------
of Trustees of the REIT may, at any time and in any manner, amend, suspend or
terminate the Plan or any award outstanding under the Plan; provided, however,
that no such amendment or discontinuance shall, without the approval of the
shareholders of the REIT:
(a) increase the number of Shares or Units that may be the
subject of Awards under the Plan (except for automatic adjustments pursuant to
Section 4.1 and other adjustments pursuant to Section 4.4);
(b) increase the maximum permissible term of any Option
specified by Section 6.6; or
(c) be made to the extent shareholder approval is required by
law, agreement or the rules of any exchange or automated quotation system upon
which the Shares are listed or quoted.
Notwithstanding the foregoing, no amendment shall alter or impair the rights of
Participants with respect to awards previously made under the Plan without the
consent of the Participant (except for any amendment made to cause the Plan to
qualify for an exemption provided by Rule 16b-3).
9.2. No Employment and Trustee Rights. The Plan does not
--------------------------------
constitute a contract of employment or continued service, and participation in
the Plan shall not confer upon any employee or other individual the right to be
retained in the employ or service of any of the Affiliated Companies or the
right to continue as a Trustee or director any right or claim to any benefit
under the Plan unless such right or claim has specifically accrued under the
terms of the Plan or the terms of any grant made under the Plan.
9.3. Tax Withholding. The Employer of a Participant shall
---------------
notify the Participant of any income tax withholding requirements arising as a
result of the exercise of an Option or grant of an Award. The Employer shall
have the right to require the Participant to pay such withholding taxes. If the
Participant shall fail to make such tax payments as are required, the Employer
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to such Participant or to take such
other action as may be necessary to satisfy such withholding obligations,
including, but not limited to, withholding of Shares or Units sufficient to
satisfy the Employer's tax withholding obligations.
9.4. Nature of Payments. All Awards made pursuant to the Plan
------------------
are in consideration of services performed for one or more of the Affiliated
Companies. Any income or gain realized pursuant to an Award under the Plan
constitutes a special incentive payment to the Participant and shall not be
taken into account, to the extent permissible under applicable law, as
compensation for purposes of any of the employee benefit plans of any of the
Affiliated Companies except as may be determined by the Board of Trustees or
board of directors or similar governing authority, as applicable, of the
employee benefit plan's sponsoring employer.
9.5. Severability. If any provision of the Plan shall be held
------------
unlawful or otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of the Plan or part thereof, each of which remain in full force and
effect. If the making of any payment or the provision of any other benefit
required under the
10
<PAGE> 11
Plan shall be held unlawful or otherwise invalid or unenforceable, such
unlawfulness, invalidity or unenforceability shall not prevent any other
payment or benefit from being made or provided under the Plan, and if the
making of any payment in full or the provision of any other benefit required
under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or unenforceability shall
not prevent such payment or benefit from being made or provided in part, to the
extent that it would not be unlawful, invalid or unenforceable, and the maximum
payment or benefit that would not be unlawful, invalid or unenforceable shall
be made or provided under the Plan.
9.6. Governing Law. The Plan and all determinations made and
-------------
actions taken thereunder, to the extent not otherwise governed by the Code or
the laws of the United States, shall be governed by the internal laws of the
State of Maryland and construed accordingly.
9.7. Headings. Section headings are for convenience of
--------
reference only, and are not intended to narrow, limit or affect the meaning or
interpretation of the Plan as set forth herein.
9.8. Limitation of Liability of Shareholders and Officers of the
-----------------------------------------------------------
REIT. ANY OBLIGATION OR LIABILITY WHATSOEVER OF THE REIT WHICH MAY ARISE AT
- ------
ANY TIME UNDER THIS PLAN OR ANY OBLIGATION OR LIABILITY WHICH MAY BE INCURRED
BY IT PURSUANT TO ANY OTHER INSTRUMENT, TRANSACTION OR UNDERTAKING
CONTEMPLATED HEREBY SHALL BE SATISFIED, IF AT ALL, OUT OF THE REIT'S ASSETS
BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE
PROPERTY OF ANY OF ITS SHAREHOLDERS, TRUSTEES, OFFICERS, EMPLOYEES OR AGENTS,
REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN THE NATURE OF
CONTRACT, TORT OR OTHERWISE.
11
<PAGE> 1
SECOND AMENDMENT TO
CORPORATE SERVICES AGREEMENT
----------------------------
This Amendment, which is dated and shall be effective as of January 1,
1997, amends the Corporate Services Agreement dated as of November 16, 1994,
as amended by the First Amendment thereto dated as of January 1, 1996 (the
"Agreement"), by and among Storage Trust Realty, a Maryland real estate
investment trust (the "Company"), Storage Trust Properties, L.P., a Delaware
limited partnership (the "Operating Partnership"), and Storage Realty
Management Co., a Delaware corporation (the "Subsidiary Company").
W I T N E S S E T H:
WHEREAS, the Company, the Operating Partnership and the Subsidiary
Company desire to amend the Agreement set forth in this Amendment;
NOW, THEREFORE, the Company, the Operating Partnership, and the
Subsidiary Company, being all of the parties to the Agreement, hereby amend
the Agreement as follows:
1. Amendment.
---------
Effective as of the date hereof, Section 2.4.2 of the Agreement
is hereby deleted in its entirety and replaced with the following:
2.4.2 After each quarter, the Operating Partnership shall
submit to the Subsidiary Company a calculation, certified by one
of its executive officers as to its accuracy, of the amount owed
by the Subsidiary Company for services listed on Exhibit A that
the Operating Partnership provided for the Subsidiary Company
during that quarter. The amount owed by the Subsidiary Company
under subsection 2.2.3 and for services listed on Exhibit A shall
be the greater of: (i) $50,000.00 per quarter; or (ii) the amount
-------
owed under subsection 2.2.3 plus the amount based on the following
formula:
<TABLE>
<S> <C> <C> <C>
10% of Gross Receipts from
Sales of Locks, Boxes, and Number of Properties Managed
Other Items and the by Subsidiary Company Total Operating
Total Processing of Insurance ----------------------------- Partnership General
Amount Amount Owed and 45% of Subsidiary Total Number of Properties Administrative
Due = under 2.2.3 + Company's Gross Income + Owned or Managed by Operating x Expenses for the x 105%
from Truck Rental Partnership and Subsidiary Quarter, Minus such
Business (Including Company Expenses Reimbursed
Compensation Received in by the Company
Respect of Doing Proper
Paperwork for Truck
Rentals) at Properties
Owned by Operating
Partnership
</TABLE>
2. Continuing Effectiveness. As herein amended, the Agreement shall
------------------------
remain in full force and effect and is hereby ratified and confirmed in all
respects.
<PAGE> 2
3. Defined Terms. Capitalized terms used and not defined herein
-------------
shall have the respective meanings assigned such terms in the Agreement.
4. Governing Law. This Amendment shall be governed in all respects,
-------------
whether as to validity, construction, capacity, performance, or otherwise, by
the laws of the state of Missouri, in which it has a situs.
5. Severability. If any provision of this Amendment shall be held
------------
invalid by a court with jurisdiction over the parties to this Amendment, then
such provision shall be deleted from the Amendment, which shall then be
construed to give effect to the remaining provisions thereof. If any one or
more of the provisions contained in this Amendment or in any other instrument
referred to herein shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, then, to the maximum extent permitted by law,
such invalidity, illegality, or enforceability shall not affect any other
provisions of this Amendment, the Agreement or any other such instrument.
6. Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
taken together shall be considered one and the same instrument.
7. Limitation of Liability of Shareholders and Officers of the
-----------------------------------------------------------
Company. ANY OBLIGATION OR LIABILITY WHATSOEVER OF THE COMPANY WHICH MAY ARISE
- -------
AT ANY TIME UNDER THIS AMENDMENT OR THE AGREEMENT OR ANY OBLIGATION OR
LIABILITY WHICH MAY BE INCURRED BY IT PURSUANT TO ANY OTHER INSTRUMENT,
TRANSACTION, OR UNDERTAKING CONTEMPLATED HEREBY OR THEREBY SHALL BE SATISFIED,
IF AT ALL, OUT OF THE COMPANY'S ASSETS ONLY. NO SUCH OBLIGATION OR LIABILITY
SHALL BE PERSONALLY BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF
BE HAD TO, THE PROPERTY OR ANY OF ITS SHAREHOLDERS, TRUSTEES, OFFICERS,
EMPLOYEES, OR AGENTS, REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN
THE NATURE OF CONTRACT, TORT, OR OTHERWISE.
- Page 2 -
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
STORAGE TRUST REALTY
By: /s/ Michael G. Burnam
-----------------------------
Michael G. Burnam,
Chief Executive Officer
STORAGE TRUST PROPERTIES, L.P.
By: Storage Trust Realty, General Partner
By: /s/ Michael G. Burnam
-----------------------------
Michael G. Burnam,
Chief Executive Officer
STORAGE REALTY MANAGEMENT CO.
By: /s/ Michael G. Burnam
---------------------------------
Michael G. Burnam, President
- Page 3 -
<PAGE> 1
REVOLVING CREDIT AGREEMENT
DATED AS OF JANUARY 25, 1998
among
STORAGE TRUST PROPERTIES, L.P.
and
BANKBOSTON, N.A.,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
and
THE OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.,
AS AGENT
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<S> <C>
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . . . -1-
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . -1-
Section 1.2. Rules of Interpretation . . . . . . . . . . . . -15-
Section 2. THE REVOLVING CREDIT FACILITY. . . . . . . . . . . . . . . . . . -16-
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . -16-
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . -17-
Section 2.3. Reduction and Termination of Commitment . . . . -17-
Section 2.4. Notes . . . . . . . . . . . . . . . . . . . . . -18-
Section 2.4A Swing Loan Commitments. . . . . . . . . . . . . -18-
Section 2.5. Interest on Loans . . . . . . . . . . . . . . . -20-
Section 2.6. Requests for Loans. . . . . . . . . . . . . . . -21-
Section 2.7. Funds for Loans . . . . . . . . . . . . . . . . -22-
Section 2.8. Loan Tranches . . . . . . . . . . . . . . . . . -23-
Section 3. REPAYMENT OF THE LOANS . . . . . . . . . . . . . . . . . . . . . -24-
Section 3.1. Stated Maturity . . . . . . . . . . . . . . . . -24-
Section 3.2. Mandatory Prepayments . . . . . . . . . . . . . -24-
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . -24-
Section 3.4. Partial Prepayments . . . . . . . . . . . . . . -24-
Section 3.5. Effect of Prepayments . . . . . . . . . . . . . -24-
Section 3.6. Proceeds from Debt or Equity Offering . . . . . -24-
Section 4. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . -25-
Section 4.1. Conversion Options. . . . . . . . . . . . . . . -25-
Section 4.2. Closing Fee . . . . . . . . . . . . . . . . . . -25-
Section 4.2A. Additional Fees . . . . . . . . . . . . . . . . -26-
Section 4.3. Agent's Fee . . . . . . . . . . . . . . . . . . -26-
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . -26-
Section 4.5. Computations. . . . . . . . . . . . . . . . . . -27-
Section 4.6. Inability to Determine LIBOR Rate . . . . . . . -27-
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . -27-
Section 4.8. Additional Interest . . . . . . . . . . . . . . -27-
Section 4.9. Additional Costs, Etc.. . . . . . . . . . . . . -28-
Section 4.10. Capital Adequacy. . . . . . . . . . . . . . . . -29-
Section 4.11. Indemnity of Borrower . . . . . . . . . . . . . -29-
Section 4.12. Interest on Overdue Amounts; Late Charge. . . . -30-
Section 4.13. Certificate . . . . . . . . . . . . . . . . . . -30-
Section 4.14. Limitation on Interest. . . . . . . . . . . . . -30-
Section 5. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
Section 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . -31-
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . -31-
Section 6.2. Governmental Approvals. . . . . . . . . . . . . -32-
Section 6.3. Title to Properties; Leases . . . . . . . . . . -32-
Section 6.4. Financial Statements. . . . . . . . . . . . . . -32-
Section 6.5. No Material Changes . . . . . . . . . . . . . . -33-
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . -33-
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . -33-
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . -33-
Section 6.9. Compliance with Other Instruments, Laws, Etc. . -33-
<PAGE> 3
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . . . -34-
Section 6.11. No Event of Default . . . . . . . . . . . . . . -34-
Section 6.12. Holding Company and Investment Company Acts . . -34-
Section 6.13. Absence of UCC Financing Statements, Etc. . . . -34-
Section 6.14. Certain Transactions. . . . . . . . . . . . . . -34-
Section 6.15. Employee Benefit Plans. . . . . . . . . . . . . -34-
Section 6.16. Regulations U and X . . . . . . . . . . . . . . -35-
Section 6.17. Environmental Compliance. . . . . . . . . . . . -35-
Section 6.18. Subsidiaries. . . . . . . . . . . . . . . . . . -36-
Section 6.19. Loan Documents and the Guarantor. . . . . . . . -36-
Section 6.20. Property. . . . . . . . . . . . . . . . . . . . -37-
Section 6.21. Brokers . . . . . . . . . . . . . . . . . . . . -37-
Section 6.22. Other Debt. . . . . . . . . . . . . . . . . . . -37-
Section 6.23. Solvency. . . . . . . . . . . . . . . . . . . . -37-
Section 6.24. Partners and Guarantor. . . . . . . . . . . . . -38-
Section 6.25. No Fraudulent Intent. . . . . . . . . . . . . . -38-
Section 6.26. Transaction in Best Interests of Borrower;
Consideration . . . . . . . . . . . . . . . . . -38-
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . . -38-
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . -38-
Section 7.2. Maintenance of Office . . . . . . . . . . . . . -38-
Section 7.3. Records and Accounts. . . . . . . . . . . . . . -38-
Section 7.4. Financial Statements, Certificates and
Information . . . . . . . . . . . . . . . . . . -39-
Section 7.5. Notices . . . . . . . . . . . . . . . . . . . . -41-
Section 7.6. Existence; Maintenance of Properties. . . . . . -42-
Section 7.7. Insurance . . . . . . . . . . . . . . . . . . . -42-
Section 7.8. Taxes . . . . . . . . . . . . . . . . . . . . . -42-
Section 7.9. Inspection of Properties and Books. . . . . . . -43-
Section 7.10. Compliance with Laws, Contracts, Licenses,
and Permits . . . . . . . . . . . . . . . . . . -43-
Section 7.11. Use of Proceeds . . . . . . . . . . . . . . . . -43-
Section 7.12. Further Assurances. . . . . . . . . . . . . . . -44-
Section 7.13. Management; Business Operations . . . . . . . . -44-
Section 7.14. Unencumbered Operating Properties . . . . . . . -44-
Section 7.15. Limiting Agreements . . . . . . . . . . . . . . -45-
Section 7.16. Limiting Agreements . . . . . . . . . . . . . . -45-
Section 7.17. Ownership of Real Estate. . . . . . . . . . . . -46-
Section 7.18. Distributions of Income to the Borrower . . . . -46-
Section 7.19. Additional Guarantors. . . . . . . . . . . . . -46-
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER . . . . . . . . . . . -47-
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . -47-
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . -48-
Section 8.3. Restrictions on Investments . . . . . . . . . . -49-
Section 8.4. Merger, Consolidation . . . . . . . . . . . . . -51-
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . . . -51-
Section 8.6. Compliance with Environmental Laws. . . . . . . -51-
Section 8.7. Distributions . . . . . . . . . . . . . . . . . -52-
Section 8.8. Asset Sales . . . . . . . . . . . . . . . . . . -53-
Section 8.9. Development Activity. . . . . . . . . . . . . . -53-
Section 8.10. Sources of Capital. . . . . . . . . . . . . . . -53-
Section 8.11. Restriction on Prepayment of Indebtedness . . . -53-
Section 8.12. Restrictions on Dilution. . . . . . . . . . . . -54-
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<PAGE> 4
Section 9. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . -54-
Section 9.1. Liabilities to Assets Ratio . . . . . . . . . . -54-
Section 9.2. Debt Coverage . . . . . . . . . . . . . . . . . -54-
Section 9.3. Fixed Charge Coverage . . . . . . . . . . . . . -54-
Section 9.4. Shareholder's Equity. . . . . . . . . . . . . . -54-
Section 9.5. Borrowing Base. . . . . . . . . . . . . . . . . -55-
Section 10. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . -55-
Section 10.1. Loan Documents. . . . . . . . . . . . . . . . . -55-
Section 10.2. Certified Copies of Organizational Documents. . -55-
Section 10.3. Bylaws; Resolutions . . . . . . . . . . . . . . -55-
Section 10.4. Incumbency Certificate; Authorized Signers. . . -55-
Section 10.5. Opinion of Counsel. . . . . . . . . . . . . . . -56-
Section 10.6. Payment of Fees . . . . . . . . . . . . . . . . -56-
Section 10.7. Performance; No Default . . . . . . . . . . . . -56-
Section 10.8. Representations and Warranties. . . . . . . . . -56-
Section 10.9. Proceedings and Documents . . . . . . . . . . . -56-
Section 10.10. Compliance Certificate. . . . . . . . . . . . . -56-
Section 10.11. Other . . . . . . . . . . . . . . . . . . . . . -56-
Section 11. CONDITIONS TO ALL BORROWINGS . . . . . . . . . . . . . . . . . . -56-
Section 11.1. Prior Conditions Satisfied. . . . . . . . . . . -56-
Section 11.2. Representations True; No Default. . . . . . . . -57-
Section 11.3. No Legal Impediment . . . . . . . . . . . . . . -57-
Section 11.4. Governmental Regulation . . . . . . . . . . . . -57-
Section 11.5. Proceedings and Documents . . . . . . . . . . . -57-
Section 11.6. Borrowing Documents . . . . . . . . . . . . . . -57-
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . . -57-
Section 12.1. Events of Default and Acceleration. . . . . . . -57-
Section 12.1A. Limitation of Cure Periods. . . . . . . . . . . -60-
Section 12.2. Termination of Commitments. . . . . . . . . . . -61-
Section 12.3. Remedies. . . . . . . . . . . . . . . . . . . . -61-
Section 12.4. Distribution of Proceeds. . . . . . . . . . . . -61-
Section 13. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
Section 14. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
Section 14.1. Authorization . . . . . . . . . . . . . . . . . -63-
Section 14.2. Employees and Agents. . . . . . . . . . . . . . -63-
Section 14.3. No Liability. . . . . . . . . . . . . . . . . . -63-
Section 14.4. No Representations. . . . . . . . . . . . . . . -63-
Section 14.5. Payments. . . . . . . . . . . . . . . . . . . . -64-
Section 14.6. Holders of Notes. . . . . . . . . . . . . . . . -65-
Section 14.7. Indemnity . . . . . . . . . . . . . . . . . . . -65-
Section 14.8. Agent as Bank . . . . . . . . . . . . . . . . . -65-
Section 14.9. Resignation . . . . . . . . . . . . . . . . . . -65-
Section 14.10. Duties in the Case of Enforcement . . . . . . . -65-
Section 15. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . -66-
Section 16. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . -67-
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<PAGE> 5
Section 17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . . . . -67-
Section 18. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . . . . -68-
Section 18.1. Conditions to Assignment by Banks . . . . . . . -68-
Section 18.2. Register. . . . . . . . . . . . . . . . . . . . -69-
Section 18.3. New Notes . . . . . . . . . . . . . . . . . . . -69-
Section 18.4. Participations. . . . . . . . . . . . . . . . . -70-
Section 18.5. Pledge by Bank. . . . . . . . . . . . . . . . . -70-
Section 18.6. No Assignment by Borrower . . . . . . . . . . . -70-
Section 18.7. Disclosure. . . . . . . . . . . . . . . . . . . -70-
Section 19. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 20. RELATIONSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. . . . . . . -72-
Section 22. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 23. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 24. ENTIRE AGREEMENT, ETC.. . . . . . . . . . . . . . . . . . . . . -73-
Section 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. . . . . . . . . -73-
Section 26. DEALINGS WITH THE BORROWER. . . . . . . . . . . . . . . . . . . -73-
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . . . . -73-
Section 28. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . -74-
Section 29. NO UNWRITTEN AGREEMENTS . . . . . . . . . . . . . . . . . . . . -74-
Section 30. TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . -74-
Section 31. LIMITATION ON LIABILITY . . . . . . . . . . . . . . . . . . . . -75-
EXHIBITS AND SCHEDULES:
EXHIBIT A Form of Note
EXHIBIT B Form of Swing Loan Note
EXHIBIT C Form of Request for Note
EXHIBIT D Form of Request for Activation of Tranche B
EXHIBIT E Form of Compliance Certificate
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<PAGE> 6
SCHEDULE 1 Banks and Commitments
SCHEDULE 2 Example of Test Debt Service Coverage Amount
SCHEDULE 6.17 Environmental Matters
SCHEDULE 6.18 Subsidiaries of the Borrower
SCHEDULE 7.14 Unencumbered Operating Properties
SCHEDULE 9.1 Defined Terms
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<PAGE> 7
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of the 25th day
of January, 1998 by and among STORAGE TRUST PROPERTIES, L.P. (the
"Borrower"), a Delaware limited partnership having its principal
place of business at 2407 Rangeline, Columbia, Missouri 65202,
BANKBOSTON, N.A., BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, individually and as Syndication Agent, and the other
lending institutions which may become parties hereto pursuant to
Section 18 (the "Banks"), and BANKBOSTON, N.A., as Managing and
Administrative Agent for the Banks (the "Agent").
RECITALS.
WHEREAS, Borrower has requested that the Banks provide a
revolving credit facility to Borrower; and
WHEREAS, Agent and the Banks are willing to provide such
facility to Borrower upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the recitals herein and
the mutual covenants contained herein, the parties hereto hereby
covenant and agree as follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions. The following terms shall have
the meanings set forth in this Section l or elsewhere in the
provisions of this Agreement referred to below:
Actual Scheduled Principal Payments. For any period, the
sum of all scheduled or mandatory principal payments due and
payable during such period with respect to all Indebtedness of
the Borrower excluding any balloon payments due upon maturity of
any Indebtedness.
Additional Guarantor. See Section 7.19.
Affiliates. An Affiliate, as applied to any Person, shall
mean any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person. For
purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means
(a) the possession, directly or indirectly, of the power to vote
ten percent (10%) or more of the stock, shares, voting trust
certificates, beneficial interest, partnership interests, member
interests or other interests having voting power for the election
of directors of such Person or otherwise to direct or cause the
direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or
otherwise, or (b) the ownership of (i) a general partnership
interest, (ii) a managing member's interest in a limited
liability company or (iii) a limited partnership interest or
preferred stock (or other ownership interest) representing ten
percent (10%) or more of the outstanding limited partnership
interests, preferred stock or other ownership interests of such
Person.
<PAGE> 8
Notwithstanding the foregoing, an Affiliate shall not include a
Subsidiary of such Person. For the purposes of determining whether
a Person is an Affiliate of Borrower or Storage Trust Guarantor, a
Person which merely owns an interest in Storage Trust Guarantor and
which is not otherwise engaged in business with Storage Trust
Guarantor or Borrower shall not be considered an Affiliate thereof.
Agent. BankBoston, N.A. acting as managing and
administrative agent for the Banks, its successors and assigns.
Agent's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other
location as the Agent may designate from time to time by notice
to the Borrower and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such
other counsel as may be approved by the Agent.
Agreement. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto, as the same may be modified or
amended.
Agreement Regarding Fees. The Agreement Regarding Fees
dated of even date herewith between the Borrower and BKB.
Applicable Margin. The Applicable Margin for LIBOR Rate
Loans shall be determined as follows:
</TABLE>
<TABLE>
<CAPTION>
Applicable Margin for
Rating LIBOR Rate Loans
<S> <C>
Investment Grade Rating from 1.10%
S&P or Moody's
Investment Grade Rating from 1.20%
DCR (and no Investment Grade
Rating obtained from S&P or
Moody's or lower of such
ratings is not an Investment
Grade Rating)
No Investment Grade Rating 1.50%
(or DCR rating is not an
Investment Grade Rating and
lower of S&P and Moody's
rating is not an Investment
Grade Rating)
</TABLE>
-2-
<PAGE> 9
In the event of any change in an Implied Rating of either
the Borrower or Storage Trust Guarantor by any of the Rating
Agencies or if either the Borrower's or Storage Trust Guarantor's
Implied Rating shall cease at any time to be an Investment Grade
Rating by any of the Rating Agencies (but subject to the
provisions within the definition of the term "Investment Grade
Rating") and the effect thereof would be an increase in the
Applicable Margin, such change shall effect an increase in the
Applicable Margin on the first Business Day after the Rating
Notice Date; provided, further, that if any such event shall
occur which would result in a reduction of the Applicable Margin,
such event shall effect a reduction in the Applicable Margin as
to each LIBOR Rate Loan only upon the commencement of a new
Interest Period applicable to such Loan. It is the intention of
the parties that if either the Borrower or Storage Trust
Guarantor shall only obtain an Investment Grade Rating from one
of the applicable Rating Agencies without seeking an Investment
Grade Rating from the other Rating Agencies, the Borrower shall
be entitled to the benefit of the rate reductions described above
(it being the intent of the parties that the Borrower shall be
entitled to the benefit of the rate reductions described above if
only one of the Borrower or Storage Trust Guarantor obtains an
applicable Investment Grade Rating); provided that if one of the
Borrower or Storage Trust Guarantor shall have obtained an
Investment Grade Rating from one or more of the Rating Agencies,
the lowest of the ratings (or the loss of the Investment Grade
Rating from any of the Rating Agencies thereafter), shall control
as provided above; and provided further that if only one of the
Borrower or Storage Trust Guarantor shall have obtained an
Investment Grade Rating from one of the Rating Agencies, the loss
of the Investment Grade Rating from such Rating Agency shall
control as provided above. It is further the intention of the
parties that if both the Borrower and Storage Trust Guarantor
shall have obtained an Investment Grade Rating from one or more
of the Rating Agencies, the lowest of any of such ratings (or the
loss of the Investment Grade Rating from any of the Rating
Agencies thereafter as to either the Borrower or Storage Trust
Guarantor), shall control as provided above.
Asset Value shall mean the purchase price of Real Estate
(including improvements and related fixtures, personal property
and intangibles) and ordinary related purchase transaction costs
without deduction for depreciation, or if the Real Estate has
been developed by such Person, the completed construction costs
determined in accordance with generally accepted accounting
principles without deduction for depreciation. If the Real
Estate is purchased as a part of a group of properties, the Asset
Value shall be calculated based upon a reasonable allocation by
the Borrower of the aggregate purchase price among all Real
Estate purchased in such transaction.
Balance Sheet Date. December 31, 1997.
Banks. BKB, BOA, the other lending institutions party to
this Agreement, and any other Person who becomes an assignee of
any rights of a Bank pursuant to Section 18 (but not including
any Participant, as defined in Section 18).
-3-
<PAGE> 10
Base Rate. The higher of (a) the annual rate of interest
announced from time to time by Agent at Agent's Head Office as
its "base rate", and (b) one half of one percent (0.5%) above the
Federal Funds Effective Rate (rounded upwards, if necessary, to
the next one-eighth of one percent). Any change in the rate of
interest payable hereunder resulting from a change in the Base
Rate shall become effective as of the opening of business on the
day on which such change in the Base Rate becomes effective.
Base Rate Loans. Those Loans bearing interest calculated by
reference to the Base Rate.
BKB. BankBoston, N.A.
BOA. Bank of America National Trust and Savings
Association.
Borrower. As defined in the preamble hereto.
Borrowing Base. The Borrowing Base shall be the amount
which is the lesser of (a) the maximum amount which, when added
to the total outstanding balance of all unsecured Indebtedness of
the Borrower and its Subsidiaries (including the Loans), would
not exceed fifty percent (50%) of the aggregate Asset Value of
the Unencumbered Operating Properties, and (b) the maximum amount
which would not cause the Test Debt Service Coverage Amount for
the Unencumbered Operating Properties to be less than two (2).
Business Day. Any day on which banking institutions located
in the same city and State as Agent's Head Office are located and
are open for the transaction of banking business and, in the case
of LIBOR Rate Loans, which also is a LIBOR Business Day.
Capital Improvement Reserve. With respect to an
Unencumbered Operating Property, a reserve in the amount of ten
cents ($0.10) per annum multiplied by the average Net Rentable
Area contained therein.
Capitalized Lease. A lease under which a Person is the
lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the
balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.
CERCLA. See Section 6.17.
Closing Date. The first date on which all of the conditions
set forth in Section 10 and Section 11 have been satisfied.
Code. The Internal Revenue Code of 1986, as amended.
-4-
<PAGE> 11
Commitment. With respect to each Bank, the amount set forth
on Schedule 1 hereto as the amount of such Bank's Commitment to
make or maintain Loans (other than Swing Loans) to the Borrower,
as the same may be changed from time to time in accordance with
the terms of this Agreement.
Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's
percentage of the aggregate Commitments of all of the Banks.
Compliance Certificate. See Section 7.4(c).
Consolidated or combined. With reference to any term
defined herein, that term as applied to the accounts of the
Borrower and its Subsidiaries, consolidated or combined in
accordance with generally accepted accounting principles.
Consolidated Total Assets. The amount which is equal to
(i) all assets of the Borrower and its Subsidiaries determined on
a consolidated basis in accordance with generally accepted
accounting principles minus (ii) the net book value of all
assets, after deducting any reserves applicable thereto, which
would be treated as intangible under generally accepted
accounting principles, including, without limitation, good will,
trademarks, trade names, service marks, brand names, copyrights,
patents and unamortized debt discount and expense, organizational
expenses and the excess of the equity in any Subsidiary over the
cost of the investment in each Subsidiary. All real estate
assets shall be valued on an undepreciated cost basis. The
assets of the Borrower and its Subsidiaries on the consolidated
financial statements of the Borrower and its Subsidiaries shall
be adjusted to reflect the Borrower's allocable share of such
asset, for the relevant period or as of the date of
determination, taking into account (a) the relative proportion of
each such item derived from assets directly owned by the Borrower
and from assets owned by their respective Subsidiaries, and
(b) the Borrower's respective ownership interest in its
Subsidiaries.
Consolidated Total Liabilities. All liabilities of the
Borrower and its Subsidiaries determined on a consolidated basis
in accordance with generally accepted accounting principles and
all Indebtedness of the Borrower and its Subsidiaries, whether or
not so classified. In the event that a Person has an ownership
or other equity interest in any other Person, which investment is
not consolidated in accordance with generally accepted accounting
principles (that is, such interest is a "minority interest"),
then the liabilities of such first Person and its Subsidiaries
shall include such Person's or its Subsidiaries' allocable share
of all Indebtedness of such second Person in which a minority
interest is owned based on such first Person's respective
ownership interest in such second Person.
Contribution Agreement. A Contribution Agreement among the
Borrower and the Additional Guarantors, such agreement to be in
form and substance satisfactory to Agent.
-5-
<PAGE> 12
Conversion Request. A notice given by the Borrower to the
Agent of its election to convert or continue a Loan in accordance
with Section 4.1.
DCR. Duff & Phelps Credit Rating Co.
Debt Offering. The issuance and sale by the Borrower or
Storage Trust Guarantor of any debt securities of the Borrower or
Storage Trust Guarantor.
Debt Service. For any period, the sum of all interest
(including capitalized interest) and the Actual Scheduled
Principal Payments that are due and payable during such period.
Default. See Section 12.1.
Distribution. The declaration or payment of any dividend or
distribution on or in respect of any shares of any class of stock
or other beneficial interest of a Person, other than dividends or
distributions payable solely in equity securities of such Person;
the purchase, redemption, exchange or other retirement of any
shares of any class of stock or other beneficial interest of a
Person, directly or indirectly through a Subsidiary of such
Person or otherwise; the return of capital by a Person to its
shareholders or other owners of beneficial interest as such; or
any other distribution on or in respect of any shares of any
class of stock or other beneficial interest of a Person.
Dollars or $. Dollars in lawful currency of the United
States of America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other
office of such Bank, if any, located within the United States
that will be making or maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to
be made, and the date on which any Loan which is made prior to
the Maturity Date is converted or combined in accordance with
Section 4.1.
EBITDA. With respect to any Person (or any asset of any
Person) for any period, an amount equal to the sum of (a) the Net
Income of such Person (or attributable to such asset) for such
period plus (b) depreciation and amortization, interest expense,
state taxes (if any) and any extraordinary or non-recurring
losses deducted in calculating such Net Income minus (c) any
extraordinary or nonrecurring gains included in calculating such
Net Income all as determined in accordance with generally
accepted accounting principles.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by
the Borrower or any ERISA Affiliate, other than a Multiemployer
Plan.
Environmental Laws. See Section 6.17(a).
-6-
<PAGE> 13
Equity Offering. The issuance and sale by the Borrower or
Storage Trust Guarantor of any equity securities of the Borrower
or Storage Trust Guarantor.
ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time and any rules and
regulations promulgated pursuant thereto.
ERISA Affiliate. Any Person which is treated as a single
employer with the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to
a Guaranteed Pension Plan within the meaning of Section 4043 of
ERISA and the regulations promulgated thereunder as to which the
requirement of notice has not been waived.
Eurocurrency Reserve Rate. For any day with respect to a
LIBOR Rate Loan, the maximum rate (expressed as a decimal) at
which any lender subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D or any
successor or similar regulation), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in
the Eurocurrency Reserve Rate.
Event of Default. See Section 12.1.
Federal Funds Effective Rate. For any day, the rate per
annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent.
Funds Available for Distribution. With respect to any
Person for any fiscal period, an amount equal to Funds from
Operations minus the Actual Scheduled Principal Payments for
such period minus the Capital Improvement Reserve.
Funds from Operations. With respect to any Person for any
fiscal period, the net income (or deficit) of such Person
computed in accordance with generally accepted accounting
principles, excluding financing costs and gains (or losses) from
debt restructuring and sales of property, plus depreciation and
amortization and other non-cash items.
Generally accepted accounting principles. Principles that
are (a) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as
in effect from time to time and (b) consistently applied with
past financial
-7-
<PAGE> 14
statements of the Borrower adopting the same principles; provided
that a certified public accountant would, insofar as the use of
such accounting principles is pertinent, be in a position to
deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly
applied.
Guaranteed Pension Plan. Any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or
contributed to by the Borrower or any ERISA Affiliate the
benefits of which are guaranteed on termination in full or in
part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
Guarantor. Collectively, Storage Trust Guarantor and each
Additional Guarantor, or individually any one of such Persons.
Guaranty. The Unconditional Guaranty of Payment and
Performance dated of even date herewith made by Storage Trust
Guarantor in favor of Agent and the Banks, and each Unconditional
Guaranty of Payment and Performance made by each Additional
Guarantor in favor of Agent and the Banks, as the same may be
modified or amended, such Guaranty to be in form and substance
satisfactory to the Agent.
Hazardous Substances. See Section 6.17(b).
Implied Rating. With respect to a Person, the most recent
rating issued from time to time by the Rating Agencies as is
applicable to such Person's senior unsecured long-term debt, or
if no such senior unsecured long-term debt is outstanding, then
the most recent rating issued from time to time by the Rating
Agencies as would hypothetically be applicable to such Person's
senior unsecured long-term debt (i.e., an implied rating).
Indebtedness. All obligations, contingent and otherwise,
that in accordance with generally accepted accounting principles
should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes
thereto, including in any event and whether or not so classified:
(a) all debt and similar monetary obligations, whether direct or
indirect (including, without limitation, any obligations
evidenced by bonds, debentures, notes or similar debt instruments
and the obligations described in Section 8.1(h)); (b) all
liabilities secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (c) all guarantees, endorsements
and other contingent obligations whether direct or indirect in
respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest directly or indirectly
in a Person, to purchase indebtedness, or to assure the owner of
indebtedness against loss through an agreement to purchase goods,
supplies or services for the purpose of enabling the debtor to
make payment of the indebtedness held by such owner or otherwise,
and the obligation to reimburse the issuer in respect of any
letter of credit; (d) any obligation as a lessee or obligor under
a Capitalized Lease; (e) all obligations to purchase under
agreements
-8-
<PAGE> 15
to acquire, or otherwise to contribute money with respect to,
properties under "development" within the meaning of Section 8.9;
and (f) a Person's pro rata share of any of the above-described
obligations of its unconsolidated affiliates. Notwithstanding the
foregoing, in the event that a Person has incurred Indebtedness
with respect to which another Person included within the
consolidated financial statements of the first Person is also
liable (by reason of a guaranty or otherwise), such Indebtedness
shall only be counted once for the purposes of such consolidated
financial statements.
Interest Payment Date. As to each Loan, the first day of
each calendar month during the term of such Loan, and with
respect to each LIBOR Rate Loan, the last day of the Interest
Period relating thereto.
Interest Period. With respect to each LIBOR Rate Loan (a)
initially, the period commencing on the Drawdown Date of such
Loan and ending one, two, three or six months thereafter, and (b)
thereafter, each period commencing on the day following the last
day of the next preceding Interest Period applicable to such Loan
and ending on the last day of one of the periods set forth above,
as selected by the Borrower in a Conversion Request; provided
that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period with respect to a LIBOR
Rate Loan would otherwise end on a day that is not a LIBOR
Business Day, that Interest Period shall end and the next
Interest Period shall commence on the next preceding or
succeeding LIBOR Business Day as determined conclusively by
the Reference Bank in accordance with the then current bank
practice in the applicable LIBOR interbank market;
(ii) if the Borrower shall fail to give notice as
provided in Section 4.1, the Borrower shall be deemed to
have requested a conversion of the affected LIBOR Rate Loan
to a Base Rate Loan on the last day of the then current
Interest Period with respect thereto; and
(iii) no Interest Period relating to any LIBOR Rate
Loan shall extend beyond the Maturity Date.
Investment Grade Rating. With respect to any Person, an
Implied Rating equal to or more favorable than BBB- with respect
to a rating issued by S&P or DCR (or in the case of a rating
issued by Moody's, a rating of Baa3). If, at any time after a
Person obtains an Investment Grade Rating, (a) no Implied Rating
for such Person's senior unsecured long-term debt shall have been
issued or confirmed in writing by either of the Rating Agencies
within the previous 365 days, or (b) the rating system of either
of the Rating Agencies (as opposed to the rating of a Person)
shall change, or (c) either of the Rating Agencies shall no
longer perform the functions of a securities rating agency, then
the Borrower and the Agent shall promptly negotiate in good faith
to amend the reference to the specific ratings in this definition
for the determination of the Investment Grade Rating, and pending
such amendment, the applicable rating in effect as of the date
the event described in this paragraph occurred shall continue to
apply.
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Investments. With respect to any Person, all shares of
capital stock, evidences of Indebtedness and other securities
issued by any other Person, all loans, advances, or extensions of
credit to, or contributions to the capital of, any other Person,
all purchases of the securities or business or integral part of
the business of any other Person and commitments and options to
make such purchases, all interests in real property, and all
other investments; provided, however, that the term "Investment"
shall not include (i) equipment, inventory and other tangible
personal property acquired in the ordinary course of business, or
(ii) current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in
accordance with customary trade terms. In determining the
aggregate amount of Investments outstanding at any particular
time: (a) the amount of any investment represented as a guaranty
shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be
included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each
such Investment any amount received as a return of capital (but
only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (d) there
shall not be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as dividends,
interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid;
and (e) there shall not be deducted from the aggregate amount of
Investments any decrease in the value thereof.
LIBOR Business Day. Any day on which commercial banks are
open for international business (including dealings in Dollar
deposits) in the London interbank market.
LIBOR Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other
office of such Bank, if any, that shall be making or maintaining
LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a LIBOR
Rate Loan, the rate per annum equal to the quotient (rounded
upwards to the nearest 1/16 of one percent) of (a) the rate per
annum as determined by the Reference Bank's LIBOR Lending Office
to be the rate at which Dollar deposits are offered to prime
banks by such banks in the London Interbank Market as are
selected by the Reference Bank at approximately 11:00 a.m. London
time two LIBOR Business Days prior to the beginning of such
Interest Period for delivery on the first day of such Interest
Period for the number of days comprised therein and in an amount
comparable to the amount of the LIBOR Rate Loan to which such
Interest Period applies, divided by (b) a number equal to 1.00
minus the Eurocurrency Reserve Rate.
LIBOR Rate Loans. Loans bearing interest calculated by
reference to a LIBOR Rate.
Liens. See Section 8.2.
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<PAGE> 17
Loan Documents. This Agreement, the Notes, the Guaranty and
all other documents, instruments or agreements now or hereafter
executed or delivered by or on behalf of the Borrower or the
Guarantor evidencing or securing the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans (including Swing Loans) to be
made by the Banks hereunder.
Majority Banks. As of any date, the Bank or Banks whose
aggregate Commitment Percentage is equal to or greater than the
required percentage, as determined by the Banks, required to
approve such matter, as disclosed by the Agent to the Borrower
from time to time.
Maturity Date. January 25, 2001, or such earlier date on
which the Loans shall become due and payable pursuant to the
terms hereof.
Moody's. Moody's Investors Services, Inc.
Multiemployer Plan. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to by
the Borrower or any ERISA Affiliate.
Net Capital Expenditures. With respect to any Person or
asset for any fiscal period, an amount equal to the amount of
capital expenditures incurred by such Person or with respect to
such asset during such fiscal period determined in accordance
with generally accepted accounting principles.
Net Income (or Deficit). With respect to any Person (or any
asset of any Person) for any fiscal period, the net income (or
deficit) of such Person (or attributable to such asset), after
deduction of all expenses, taxes and other proper charges,
determined in accordance with generally accepted accounting
principles.
Net Operating Income. Net Operating Income shall mean,
during any period for any Unencumbered Operating Property, the
sum of (a) the Net Income attributable to such Unencumbered
Operating Property for such period plus (b) depreciation and
amortization, interest expense, and any extraordinary or
non-recurring losses deducted in calculating such Net Income plus
(c) corporate general and administrative expense deducted in
calculating such Net Income minus (d) any extraordinary or
nonrecurring gains included in calculating such Net Income all as
determined in accordance with generally accepted accounting
principles.
Net Rentable Area. With respect to any Real Estate, the
floor area of any buildings, structures or improvements available
for leasing to tenants determined in accordance with the Rent
Roll for such Real Estate, the manner of such determination to be
consistent for all Real Estate unless otherwise approved by the
Agent.
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Notes. Collectively, the Revolving Credit Notes and the
Swing Loan Note.
Notice. See Section 1.9.
Obligations. All indebtedness, obligations and liabilities
of the Borrower to any of the Banks and the Agent, individually
or collectively, under this Agreement or any of the other Loan
Documents or in respect of any of the Loans or the Notes, or
other instruments at any time evidencing any of the foregoing,
whether existing on the date of this Agreement or arising or
incurred hereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise.
Operating Cash Flow. With respect to any Person for any
period, an amount equal to the sum of (a) EBITDA of such Person
for such period minus (b) the Capital Improvement Reserve.
Outstanding. With respect to the Loans, the aggregate
unpaid principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by
Section 4002 of ERISA and any successor entity or entities having
similar responsibilities.
Permitted Liens. Liens, security interests and other
encumbrances permitted by Section 8.2.
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and
any government or any governmental agency or political
subdivision thereof.
Prospectus Supplement. The S-3 of Storage Trust Guarantor
dated October 15, 1997 and filed with the SEC.
Rating Agencies. S&P, Moody's and DCR.
Rating Notice. See Section 7.4(i).
Rating Notice Date. The earlier of (a) the date a Rating
Notice is received by the Agent, or (b) the date the Agent,
having received actual notice of a change by one of the Rating
Agencies of its Implied Rating, sends notice to the Borrower of
such change, provided that nothing contained herein shall imply
any obligation of the Agent to monitor such rating changes.
Real Estate. All real property at any time owned or leased
(as lessee or sublessee) by the Borrower or any of its
Subsidiaries.
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<PAGE> 19
Record. The grid attached to any Note, or the continuation
of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Loan referred
to in such Note.
Reference Bank. BKB.
Register. See Section 18.2.
REIT Status. With respect to the Storage Trust Guarantor,
its status as a real estate investment trust as defined in
Section 856(a) of the Code.
Release. See Section 6.17(c)(iii).
Rent Roll. A report prepared by the Borrower showing for
each Unencumbered Operating Property, its location, Net Rentable
Area, occupancy status, rent and other information in
substantially the form presented to the Banks prior to the date
hereof or in such other form as may have been approved by the
Agent, such approval not to be unreasonably withheld.
Revolving Credit Notes. See Section 2.4.
S&P. Standard & Poor's Corporation.
SEC. The federal Securities and Exchange Commission.
Secured Indebtedness. Indebtedness of a Person that is
pursuant to a Capitalized Lease or is directly or indirectly
secured by a lien, pledge or other encumbrance.
Shareholder's Equity. At any date, the total consolidated
shareholder's equity of Storage Trust Guarantor and its
Subsidiaries (including minority interest), determined in
accordance with generally accepted accounting principles.
Short-term Investments. Investments described in
subsections (a) through (g), inclusive, of Section 8.3. For all
purposes of this Agreement and the other Loan Documents, the
value of Eligible Short-term Investments at any time shall be the
current market value thereof determined in a manner reasonably
satisfactory to the Agent.
State. A state of the United States of America.
Storage Trust Guarantor. Storage Trust Realty, a Maryland
real estate investment trust, having a usual place of business at
2407 Rangeline, Columbia, Missouri 65202.
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<PAGE> 20
Subsidiary. Any corporation, association, partnership,
trust, or other business entity of which the designated parent
shall at any time own directly or indirectly through a Subsidiary
or Subsidiaries at least a majority (by number of votes or
controlling interests) of the outstanding Voting Interests, or
any other Person the accounts of which are consolidated with the
accounts of Storage Trust Guarantor or Borrower, as applicable,
in accordance with generally accepted accounting principles.
Swing Loan. See Section 2.4A.
Swing Loan Bank. BKB, in its capacity as Swing Loan Bank.
Swing Loan Commitment. The sum of $10,000,000.00, as the
same may be changed from time to time in accordance with the
terms of this Agreement.
Swing Loan Note. See Section 2.4A.
Syndication Agent. BOA, provided that BOA shall have no
rights, liabilities or obligations deriving from its status as
Syndication Agent; the rights, liabilities and obligations of BOA
being its rights, obligations and liabilities as a Bank and as
otherwise provided herein, in any other Loan Document or in an
intercreditor or similar agreement executed in connection
herewith.
Test Debt Service Coverage Amount. At any time determined
by Agent, an amount obtained by dividing an amount equal to
(a) the sum of (i) the aggregate Net Operating Income from the
Unencumbered Operating Properties for the preceding two (2)
fiscal quarters multiplied by two (2) less (ii) the Capital
Improvement Reserve for the Unencumbered Operating Properties, by
(b) the annual amount of principal and interest that would be
payable on the total outstanding balance of all unsecured
Indebtedness of the Borrower and its Subsidiaries (including the
Loans and any requested Loans) when bearing interest at a rate
per annum equal to the then-current annual yield on ten (10) year
obligations issued by the United States Treasury most recently
prior to the date of determination plus two percent (2.0%) and
payable based on a twenty year mortgage style amortization
schedule (expressed as a mortgage constant percentage). An
example of the calculation of the Test Debt Service Coverage
Amount is set forth in Schedule 2 attached hereto. In the event
that the Borrower or a Guarantor shall have owned a property
within the Unencumbered Operating Properties for less than two
(2) consecutive fiscal quarters, then for the purposes of
performing such calculation, the Net Operating Income with
respect to such property shall be annualized in such manner as
the Agent shall reasonably determine.
Test Period. See Section 9.2.
Total Commitment. The sum of the Commitments of the Banks,
as in effect from time to time. As of the date of this
Agreement, the Total Commitment is $100,000,000.00 with such
amount comprising the Tranche A Commitment (with BKB having a
Commitment of $83,333,333.33 and BOA having a Commitment of
$16,666,666.67), provided that the Total Commitment shall
increase up to a maximum of $150,000,000.00 if, as and when
Borrower activates Tranche B as provided in Section 2.8; provided
that the face amount of the Revolving Credit Notes shall equal
$150,000,000.00 as of the date hereof without increasing the
Total Commitment as provided in Section 2.4.
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<PAGE> 21
Tranche A. See Section 2.8.
Tranche B. See Section 2.8.
Type. As to any Loan, its nature as a Base Rate Loan or a
LIBOR Rate Loan.
Unencumbered Operating Properties. Unencumbered Operating
Properties shall mean Real Estate which is owned one hundred
percent (100%) in fee simple by the Borrower which satisfies all
of the following conditions:
(a) each of the Unencumbered Operating Properties shall be
free and clear of all Liens other than the Liens permitted in
Section 8.2(i), (iii) and (vi);
(b) to the best of the Borrower's knowledge and belief,
none of the Unencumbered Operating Properties shall have any
material title, survey, environmental or other defects that would
give rise to a materially adverse effect as to the value, use of
or ability to sell or refinance such property; and
(c) each of the Unencumbered Operating Properties shall
consist solely of Real Estate (i) which are income producing
operating properties utilized principally as a self-storage
facility or mini-warehouse, and (ii) with respect to which valid
certificates of occupancy or the equivalent for all buildings
thereon have been issued and are in full force and effect.
Notwithstanding anything herein to the contrary, Unencumbered
Operating Properties having an Asset Value of not more than
twenty percent (20%) of the total Asset Value of the Unencumbered
Operating Properties may be owned by Subsidiaries of the Borrower
which are directly or indirectly fully owned by the Borrower
and/or Storage Trust Guarantor and which are Additional
Guarantors; provided, that each such property shall otherwise
satisfy the foregoing conditions applicable to Unencumbered
Operating Properties, and each and every covenant contained in,
and each and every warranty and representation made in, this
Agreement with respect to Real Estate shall be complied with and
be true and correct, as applicable, with respect to such Real
Estate owned by such Additional Guarantor, provided further, that
as and when the Borrower shall acquire any additional Real Estate
which satisfies the requirements in this Agreement for an
Unencumbered Operating Property, the Borrower shall promptly
substitute such Real Estate for any Unencumbered Operating
Properties which are owned by a Subsidiary of Borrower. The
foregoing shall not be deemed to prohibit the Borrower from later
including Real Estate owned by a Subsidiary of the Borrower as an
Unencumbered Operating Property subject to the limitations in
this Agreement after Real Estate owned by the Borrower has been
substituted for Real Estate owned by a Subsidiary of the Borrower
previously included as an Unencumbered Operating Property, nor
shall the foregoing require the conveyance of Real Estate by a
Subsidiary to the Borrower nor preclude a Subsidiary from
acquiring Real Estate.
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Voting Interests. Stock or similar ownership interests, of
any class or classes (however designated), the holders of which
are at the time entitled, as such holders, (a) to vote for the
election of a majority of the directors (or persons performing
similar functions) of the corporation, association, partnership,
trust or other business entity involved, or (b) to control,
manage, or conduct the business of the corporation, partnership,
association, trust or other business entity involved.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement
shall include such document or agreement as amended, modified or
supplemented from time to time in accordance with its terms and
the terms of this Agreement.
(b) The singular includes the plural and the
plural includes the singular. Without limiting the foregoing, a
reference to the Guarantor shall be a reference to any or all
Guarantors as the context may permit or require.
(c) A reference to any law includes any amendment
or modification to such law.
(d) A reference to any Person includes its
permitted successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting entity
to which they refer.
(f) The words "include", "includes" and "including"
are not limiting.
(g) The words "approval" and "approved", as
the context so determines, means an approval in writing given to
the party seeking approval after full and fair disclosure to the
party giving approval of all material facts necessary in order to
determine whether approval should be granted.
(h) All terms not specifically defined herein or
by generally accepted accounting principles, which terms are defined
in the Uniform Commercial Code as in effect in the Commonwealth
of Massachusetts, have the meanings assigned to them therein.
(i) Reference to a particular "Section ", refers
to that section of this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder"
and words of like import shall refer to this Agreement as a whole
and not to any particular section or subdivision of this Agreement.
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Section 2. THE REVOLVING CREDIT FACILITY
Section 2.1. Commitment to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks
severally agrees to lend to the Borrower, and the Borrower may
borrow (and repay and reborrow) from time to time between the
Closing Date and the Maturity Date upon notice by the Borrower to
the Agent given in accordance with Section 2.6, such sums as are
requested by the Borrower for the purposes set forth in Section
7.11 up to the lesser of (a) a maximum aggregate principal amount
outstanding (after giving effect to all amounts requested) at any
one time equal to such Bank's Commitment and (b) such Bank's
Commitment Percentage of the Borrowing Base, provided, that, in
all events no Default or Event of Default shall have occurred and
be continuing; and provided, further, that the outstanding
principal amount of the Loans (after giving effect to all amounts
requested) shall not at any time exceed the Total Commitment.
The Loans (other than Swing Loans) shall be made pro rata in
accordance with each Bank's Commitment Percentage. The funding
of a Loan hereunder shall constitute a representation and
warranty by the Borrower that all of the conditions set forth in
Section 10 and Section 11, in the case of the initial Loan, and
Section 11, in the case of all other Loans, have been satisfied
on the date of such funding. Notwithstanding anything herein to
the contrary, the Banks shall have no obligation to make Loans to
the Borrower in excess of the aggregate principal amount
outstanding of more than $100,000,000.00, provided that the
Commitment shall be increased up to a maximum of $150,000,000.00
if, as and when Borrower activates Tranche B as provided in
Section 2.8.
Section 2.2. Facility Fee. The Borrower agrees to pay to
the Agent for the accounts of the Banks in accordance with their
respective Commitment Percentages a facility fee calculated at
the rate of one-eighth of one percent (0.125%) per annum on the
average amount by which the Total Commitment (as same may be
reduced as provided in this Agreement) exceeds the outstanding
principal amount of Loans during each calendar quarter or portion
thereof commencing on the date hereof and ending on the Maturity
Date. Notwithstanding the foregoing, in the event that the ratio
of (a) the average amount of the outstanding principal amount of
the Loans during such quarter to (b) the Total Commitment is less
than or equal to fifty percent (50%), then the facility fee shall
be calculated at the rate of fifteen one-hundredths of one
percent (0.150%) per annum. The facility fee shall be payable
quarterly in arrears on the first day of each calendar quarter
for the immediately preceding calendar quarter or portion
thereof, and on any earlier date on which the Commitments shall
be reduced or shall terminate as provided in Section 2.3, with a
final payment on the Maturity Date (and in no event beyond the
date on which the Commitments are terminated and the Obligations
are paid in full). For the purposes of this Section 2.2, the
Total Commitment shall include Tranche A and Tranche B (whether
or not Tranche B has been activated), but shall no longer include
Tranche B at such time as Tranche B expires as provided in
Section 2.8 without the Borrower having activated Tranche B.
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<PAGE> 24
Section 2.3. Reduction and Termination of Commitment. The
Borrower shall have the right at any time and from time to time
upon five Business Days' prior written notice to the Agent to
reduce by $5,000,000 or an integral multiple of $1,000,000 in
excess thereof (provided that in no event shall the Total
Commitment be reduced in such manner to an amount less than
$75,000,000.00) or to terminate entirely the unborrowed portion
of the Commitments, whereupon the Commitments of the Banks shall
be reduced pro rata in accordance with their respective
Commitment Percentages of the amount specified in such notice or,
as the case may be, terminated, any such termination or reduction
to be without penalty (unless such termination or reduction
requires repayment of a LIBOR Rate Loan); provided, however, that
no such termination or reduction shall be permitted if, after
giving effect thereto, the Outstanding Loans would exceed the
Commitments of the Banks as so terminated or reduced. Promptly
after receiving any notice of the Borrower delivered pursuant to
this Section 2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction
or termination, the Borrower shall pay to the Agent for the
respective accounts of the Banks the full amount of any facility
fee under Section 2.2 then accrued on the amount of the
reduction. No reduction or termination of the Commitment may be
reinstated.
Section 2.4. Notes. The Loans (other than Swing Loans)
shall be evidenced by separate promissory notes of the Borrower
in substantially the form of Exhibit A hereto (collectively, the
"Revolving Credit Notes"), dated the date of this Agreement and
completed with appropriate insertions. One Revolving Credit Note
shall be payable to the order of each Bank in the principal face
amount equal to such Bank's Commitment and shall be payable as
set forth below (provided that, without increasing the Commitment
of each Bank, the initial Revolving Credit Note delivered to each
Bank shall be in the principal amount equal to the sum of such
Bank's active Tranche A Commitment and such Bank's pro rata share
of the inactive Tranche B Commitment). The Borrower irrevocably
authorizes each Bank to make or cause to be made, at or about the
time of the Drawdown Date of any Loan (other than Swing Loans) or
at the time of receipt of any payment of principal thereof, an
appropriate notation on such Bank's Record reflecting the making
of such Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Loans (other than Swing Loans) set
forth on such Bank's Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Bank, but the
failure to record, or any error in so recording, any such amount
on such Bank's Record shall not limit or otherwise affect the
obligations of the Borrower hereunder or under any Revolving
Credit Note to make payments of principal of or interest on any
Revolving Credit Note when due. The face amount of each
Revolving Credit Note includes an allocable amount of Tranche B
(based on each Bank's Commitment Percentage), which as of the
date hereof is not available to be borrowed by the Borrower.
Section 2.4A Swing Loan Commitments.
(a) Subject to the terms and conditions set
forth in this Agreement, and if necessary to meet the Borrower's
funding deadlines, Swing Loan Bank agrees to lend to the Borrower
(the "Swing Loans"), and the Borrower may borrow (and repay and
reborrow) from time to time between the Closing Date and the date
which is five (5) Business Days prior to
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<PAGE> 25
the Maturity Date upon notice by the Borrower to the Swing Loan
Bank given in accordance with this Section 2.4A, such sums as are
requested by the Borrower for the purposes set forth in Section
7.11 in an aggregate principal amount at any one time outstanding
not exceeding the Swing Loan Commitment; provided that at no time
shall the aggregate principal balance of Swing Loans then
outstanding, when added to the Swing Loan Bank's Commitment
Percentage of all other Outstanding Loans (after giving effect to
all amounts requested), exceed the lesser of (i) such Bank's
Commitment and (ii) such Bank's Commitment Percentage of the
Borrowing Base, provided, further, that in all events no Default
or Event of Default shall have occurred and be continuing; and
provided, further, that the outstanding principal amount of the
Loans (after giving effect to all amounts requested) shall not at
any time exceed the Total Commitment. Swing Loans shall
constitute "Loans" for all purposes hereunder, but shall not be
considered the utilization of a Bank's Commitment. The funding
of a Swing Loan hereunder shall constitute a representation and
warranty by the Borrower that all of the conditions set forth in
Section 10 and Section 11, in the case of the initial Swing Loan,
and Section 11, in the case of all other Swing Loans, have been
satisfied on the date of such funding.
(b) The Swing Loans shall be evidenced by a separate
promissory note of the Borrower in substantially the form of
Exhibit B hereto (the "Swing Note"), dated the date of this
Agreement and completed with appropriate insertions. The Swing
Loan Note shall be payable to the order of the Swing Loan Bank in
the principal face amount equal to the Swing Loan Commitment and
shall be payable as set forth below. The Borrower irrevocably
authorizes the Swing Loan Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Swing Loan or at the
time of receipt of any payment of principal thereof, an
appropriate notation on the Swing Loan Bank's Record reflecting
the making of such Swing Loan or (as the case may be) the receipt
of such payment. The outstanding amount of the Swing Loans set
forth on the Swing Loan Bank's Record shall be prima facia
evidence of the principal amount thereof owing and unpaid to the
Swing Loan Bank, but the failure to record, or any error in so
recording, any such amount on the Swing Loan Bank's Record shall
not limit or otherwise affect the obligations of the Borrower
hereunder or under the Swing Loan Note to make payments of
principal of or interest on any Swing Loan Note when due.
(c) Each borrowing of Swing Loan shall be subject
to the limits for Base Rate Loans and LIBOR Rate Loans set forth
in Section 2.6. Borrower shall request a Swing Loan by delivering
to the Swing Loan Bank a Loan Request no later than 9:00 a.m.
(Boston time) on the requested Drawdown Date specifying the
amount of the requested Swing Loan. The Loan Request shall also
contain the statements and certifications required by Section
2.6(i)-(ii). Each such Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to accept
such Swing Loan on the Drawdown Date. Notwithstanding anything
herein to the contrary, a Swing Loan shall either be a Base Rate
Loan or a LIBOR Rate Loan having an Interest Period of one month,
and in the event that the Borrower fails to specify whether it
has selected a Base Rate Loan or a LIBOR Rate Loan, the Borrower
shall be deemed conclusively to have selected a LIBOR Rate Loan
with an Interest Period of one month. Notwithstanding the
foregoing, upon the date that the Banks shall be required to fund
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<PAGE> 26
the Loans pursuant to Section 2.4A(d) to refund such Swing Loan,
the interest rate shall be reset to a LIBOR Rate Loan with an
Interest Period as specified in the Loan Request given by the
Borrower to the Agent in connection with such Swing Loan, or if
no Interest Period is specified, then as a Base Rate Loan. The
proceeds of the Swing Loan will be made available by the Swing
Loan Bank to the Borrower at the Agent's Head Office by crediting
the account of the Borrower at such office with such proceeds.
(d) The Swing Loan Bank shall within three (3)
Business Days after the Drawdown Date with respect to such Swing
Loan, request each Bank, including the Swing Loan Bank, to make a
Loan pursuant to Section 2.1 in an amount equal to such Bank's
Commitment Percentage of the amount of the Swing Loan outstanding
on the date such notice is given. Borrower hereby irrevocably
authorizes and directs the Swing Loan Bank to so act on its
behalf, and agrees that any amount advanced to the Agent for the
benefit of the Swing Loan Bank pursuant to this Section 2.4A(d)
shall be considered a Loan pursuant to Section 2.1. Unless any
of the events described in paragraph (h), (i) or (j) of Section
12.1 shall have occurred (in which event the procedures of
Section 2.4A(e) shall apply), each Bank shall make the proceeds
of its Loan available to the Swing Loan Bank for the account of
the Swing Loan Bank at the Agent's Head Office prior to 12:00
noon (Boston time) in funds immediately available no later than
the third (3rd) Business Day after the date such notice is given
just as if the Banks were funding directly to the Borrower, so
that thereafter such Obligations shall be evidenced by the
Revolving Credit Notes. The proceeds of such Loan shall be
immediately applied to repay the Swing Loans.
(e) If prior to the making of a Loan pursuant to
Section 2.4A(d) by all of the Banks, one of the events described
in Section 12.1(h), (i) or (j) shall have occurred, each Bank will,
on the date such Loan pursuant to Section 2.4A(d) was to have
been made, purchase an undivided participating interest in the
Swing Loan in an amount equal to its Commitment Percentage of
such Swing Loan. Each Bank will immediately transfer to the
Swing Loan Bank in immediately available funds the amount of its
participation and upon receipt thereof the Swing Loan Bank will
deliver to such Bank a Swing Loan participation certificate dated
the date of receipt of such funds and in such amount.
(f) Whenever at any time after the Swing Loan Bank
has received from any Bank such Bank's participating interest in
a Swing Loan, the Swing Loan Bank receives any payment on account
thereof, the Swing Loan Bank will distribute to such Bank its
participating interest in such amount (appropriately adjusted in
the case of interest payments to reflect the period of time
during which such Bank's participating interest was outstanding
and funded); provided, however, that in the event that such
payment received by the Swing Loan Bank is required to be
returned, such Bank will return to the Swing Loan Bank any
portion thereof previously distributed by the Swing Loan Bank to
it.
(g) Each Bank's obligation to fund a Loan as provided
in Section 2.4A(d) or to purchase participating interests pursuant
to Section 2.4A(e) shall be absolute and unconditional and shall
not be affected by any circumstance, including, without
limitation, (i) any setoff, counterclaim, recoupment, defense or
other right which such Bank or the Borrower or Guarantor may have
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against the Swing Loan Bank, the Borrower or Guarantor or anyone
else for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the
Borrower or Guarantor or any of their respective Subsidiaries;
(iv) any breach of this Agreement or any of the other Loan
Documents by the Borrower or Guarantor or any Bank; or (v) any
other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. Any portions of a Swing Loan
not so purchased or converted may be treated by the Swing Loan
Bank as a Loan which was not funded by the non-purchasing Bank as
contemplated by Section 2.7 and Section 12.4. Each Swing Loan,
once so sold or converted, shall cease to be a Swing Loan for the
purposes of this Agreement, but shall be a Loan made by each Bank
under its Commitment.
Section 2.5. Interest on Loans
(a) Each Base Rate Loan shall bear interest for
the period commencing with the Drawdown Date thereof and ending on
the date on which such Base Rate Loan is repaid or converted to a
LIBOR Rate Loan at the rate per annum equal to the sum of two-
tenths of one percent (0.20%) plus the Base Rate.
(b) Each LIBOR Rate Loan shall bear interest for
the period commencing with the Drawdown Date thereof and ending on
the last day of the Interest Period with respect thereto at the
rate per annum equal to the sum of the Applicable Margin plus the
LIBOR Rate determined for such Interest Period.
(c) The Borrower promises to pay interest on each
Loan in arrears on each Interest Payment Date with respect thereto.
(d) Base Rate Loans and LIBOR Rate Loans may be
converted to Loans of the other Type as provided in Section 4.1.
Section 2.6. Requests for Loans. Except with respect to
the initial Loan on the Closing Date and Swing Loans, the
Borrower (a) shall notify the Agent of a potential request for a
Loan as soon as possible, and (b) shall give to the Agent written
notice in the form of Exhibit C hereto (or telephonic notice
confirmed in writing in the form of Exhibit C hereto) of each
Loan requested hereunder (a "Loan Request") no less than four (4)
Business Days prior to the proposed Drawdown Date if the
requested Loan is a LIBOR Rate Loan or prior to 1:00 p.m. (Boston
time) one (1) Business Day prior to the proposed Drawdown Date if
the requested Loan is a Base Rate Loan. The Agent shall promptly
notify each of the Banks following the receipt of a Loan Request
relating to a Loan other than a Swing Loan, but in any event not
later than 1:00 p.m. (Boston time) three (3) Business Days prior
to the proposed Drawdown Date if the Loan Request is for a LIBOR
Rate Loan or not later than 3:00 p.m. (Boston time), one (1)
Business Day prior to the proposed Drawdown Date if such Loan
Request is for a Base Rate Loan. Each such notice shall specify
with respect to the requested Loan the proposed principal amount,
Drawdown Date, Interest Period (if applicable) and Type. Each
such notice shall also contain (i) a statement as to the purpose
for which such advance shall
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be used (which purpose shall be in accordance with the terms of
Section 7.11), and (ii) a certification by the chief financial
officer of the sole general partner of the Borrower and the chief
financial officer of Storage Trust Guarantor that since the date
of the last Compliance Certificate delivered under this Agreement
there has been no material changes in the matters certified in such
Compliance Certificate that could cause a Default or Event of
Default to occur after giving effect to the making of such Loan.
Promptly upon receipt of any such notice, the Agent shall notify
each of the Banks thereof. Except as provided in this Section
2.6, each such Loan Request shall be irrevocable and binding on
the Borrower and shall obligate the Borrower to accept the Loan
requested from the Banks on the proposed Drawdown Date, provided
that, in addition to the Borrower's other remedies against any
Bank which fails to advance its proportionate share of a
requested Loan, such Loan Request may be revoked by the Borrower
by notice received by the Agent no later than the Drawdown Date
if any Bank fails to advance its proportionate share of the
requested Loan in accordance with the terms of this Agreement,
provided further that the Borrower shall be liable in accordance
with the terms of this Agreement to any Bank which is prepared to
advance its proportionate share of the requested Loan for any
costs, expenses or damages incurred by such Bank as a result of
the Borrower's election to revoke such Loan Request (including,
without limitation, the items described in Section 4.8, as
applicable, but not including any damages for lost interest
earnings as a result of such Loan not being made). Nothing
herein shall prevent the Borrower from seeking recourse against
any Bank that fails to advance its proportionate share of a
requested Loan as required by this Agreement. The Borrower may
without cost or penalty revoke a Loan Request for a LIBOR Rate
Loan by delivering notice thereof to each of the Banks no later
than 9:00 a.m. (Boston time) three (3) Business Days prior to the
Drawdown Date. The Borrower may without cost or penalty revoke a
Loan Request for a Base Rate Loan by notifying the Agent no later
than 3:00 p.m. (Boston time) one (1) Business Day prior to the
Drawdown Date, and the Agent shall notify the other Banks prior
to 4:00 p.m. (Boston time) on the date of such notice is received
from the Borrower. Each Loan Request shall be (a) for a Base
Rate Loan in a minimum aggregate amount of $500,000 or an
integral multiple of $100,000 in excess thereof, or (b) for a
LIBOR Rate Loan in a minimum aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof; provided,
however, that there shall be no more than ten (10) LIBOR Rate
Loans outstanding at any one time.
Section 2.7. Funds for Loans.
(a) Not later than 12:00 noon (Boston time) on
the proposed Drawdown Date of any Loans (other than Swing Loans),
each of the Banks will make available to the Agent, at the
Agent's Head Office, in immediately available funds, the amount
of such Bank's Commitment Percentage of the amount of the
requested Loans which may be disbursed pursuant to Section 2.1.
Upon receipt from each Bank of such amount, and upon receipt of
the documents required by Section 10 and Section 11 and the
satisfaction of the other conditions set forth therein, to the
extent applicable, the Agent will make available to the Borrower
the aggregate amount of such Loans made available to the Agent by
the Banks by crediting such amount to the account of the Borrower
maintained at the Agent's Head Office. The failure or refusal of
any Bank to make available to the Agent at the aforesaid time and
place on any Drawdown
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Date the amount of its Commitment Percentage of the requested Loans
shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of such other
Bank's Commitment Percentage of any requested Loans, including any
additional Loans that may be requested subject to the terms and
conditions hereof to provide funds to replace those not advanced by
the Bank so failing or refusing, provided that the Borrower may by
notice received by the Agent no later than the Drawdown Date refuse
to accept any Loan which is not fully funded in accordance with the
Borrower's Loan Request subject to the terms of Section 2.6. In
the event of any such failure or refusal, the Banks not so
failing or refusing shall be entitled to a priority position as
against the Bank or Banks so failing or refusing for such Loans
as provided in Section 12.4.
(b) Unless Agent shall have been notified by any
Bank prior to the applicable Drawdown Date that such Bank will not
make available to Agent such Bank's pro rata share of a proposed
Loan, Agent may in its discretion assume that such Bank has made
such pro rata share of such Loan available to Agent in accordance
with the provisions of this Agreement and Agent may, if it
chooses, in reliance upon such assumption make such pro rata
share of such Loan available to Borrower, and such Bank shall be
liable to the Agent for the amount of such advance.
Section 2.8. Loan Tranches.
(a) The Loan consists of two components:
(i) A tranche of $100,000,000 which is
available to be disbursed to the Borrower subject to the terms
of this Agreement (hereinafter referred to as "Tranche A");
and
(ii) A tranche of $50,000,000 which
is not available to be borrowed by the Borrower until the
satisfaction of the following conditions precedent on or
prior to January 25, 1999 (hereinafter referred to as
"Tranche B").
(b) Provided that no Default or Event of Default
shall occur and be continuing, the Borrower shall have the option, to
be exercised by giving written notice to the Agent in the form of
Exhibit D hereto on or before January 18, 1999, subject to the
terms and conditions set forth in the Agreement, to activate
Tranche B, at which point such amount shall be available to be
disbursed subject to the terms of this Agreement. The request by
the Borrower for activation of Tranche B shall constitute a
representation and warranty by the Borrower that all the
conditions set forth in this Section shall have been satisfied on
the date of such request.
(c) The obligations of the Agent and the Banks
to activate Tranche B shall be subject to the satisfaction of the
following conditions precedent on or prior to January 25, 1999:
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(i) Payment of Activation Fee. The
Borrower shall pay to the Agent a fee as set forth in the
Agreement Regarding Fees, which fee shall, when paid, be fully
earned and non-refundable under any circumstances. The Agent
shall pay to the Banks certain fees pursuant to their separate
agreement;
(ii) No Default. On the date such notice
is given, there shall exist no Default or Event of Default; and
(iii) Representations and Warranties.
The representations and warranties made by the Borrower or
the Guarantor in the Loan Documents or otherwise made by or
on behalf of the Borrower, the Guarantor or any of their
respective Subsidiaries in connection therewith or after the
date thereof shall have been true and correct in all
material respects, when made and shall also be true and
correct in all material respects on the date of such notice,
other than for changes in the ordinary course of business
permitted by this Agreement that have not had any material
adverse effect on the business of the Borrower, the
Guarantor or any of their respective Subsidiaries.
(d) In the event that the Borrower does not
activate Tranche B as provided in this Section, such Tranche shall
terminate. Tranche B may be activated in whole, but not in part.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrower promises to
pay on the Maturity Date and there shall become absolutely due
and payable on the Maturity Date, all of the Loans outstanding on
such date, together with any and all accrued and unpaid interest
thereon.
Section 3.2. Mandatory Prepayments. If at any time the
aggregate outstanding principal amount of the Loans exceeds the
Total Commitment or the Borrowing Base, then the Borrower shall
immediately pay the amount of such excess to the Agent for the
respective accounts of the Banks for application to the Loans,
except that the amount of any Swing Loans shall be paid solely to
the Swing Loan Bank.
Section 3.3. Optional Prepayments. The Borrower shall
have the right, at its election, to prepay the outstanding amount
of the Loans, as a whole or in part, at any time without penalty
or premium; provided, that the full or partial prepayment of the
outstanding amount of any LIBOR Rate Loans pursuant to this
Section 3.3 may be made only on the last day of the Interest
Period relating thereto unless the payment required pursuant to
Section 4.8 is made together with such prepayment. The Borrower
shall give the Agent, no later than 10:00 a.m., Boston time, at
least three Business Days prior written notice of any prepayment
pursuant to this Section 3.3 of any Base Rate Loans and at least
four LIBOR Business Days notice of any proposed repayment
pursuant to this Section 3.3 of LIBOR Rate Loans, in each case
specifying the proposed date of payment of Loans and the
principal amount to be paid. Notwithstanding the foregoing, no
prior notice shall be required for the prepayment of any Swing
Loan.
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Section 3.4. Partial Prepayments. Each partial prepayment
of the Loans under Section 3.2 and Section 3.3 shall be in an
integral multiple of $300,000, shall be accompanied by the
payment of accrued interest on the principal prepaid to the date
of payment and, after payment of such interest, shall be applied,
in the absence of instruction by the Borrower, first to the
principal of any Outstanding Swing Loans, and next to the
principal of Base Rate Loans and then to the principal of LIBOR
Rate Loans.
Section 3.5. Effect of Prepayments. Amounts of the Loans
prepaid under Section 3.2 and Section 3.3 prior to the Maturity
Date may be reborrowed as provided in Section 2.
Section 3.6. Proceeds from Debt or Equity Offering. The
Borrower shall cause not less than ninety percent (90%) of the
sum of all gross proceeds of each and every Debt Offering and
Equity Offering, less all reasonable costs, fees, expenses,
underwriting commissions, fees and discounts incurred in
connection therewith, to be paid by the Borrower to the Agent for
the account of the Banks as a prepayment of the Loans to the
extent of the outstanding balance of the Loans within thirty (30)
days of the receipt of such proceeds.
Section 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Conversion Options.
(a) The Borrower may elect from time to time
to convert any outstanding Loan to a Loan of another Type and such
Loan shall thereafter bear interest as a Base Rate Loan or a
LIBOR Rate Loan, as applicable; provided that (i) with respect to
any such conversion of a LIBOR Rate Loan to a Base Rate Loan, the
Borrower shall give the Agent at least three Business Days' prior
written notice of such election, and such conversion shall only
be made on the last day of the Interest Period with respect to
such LIBOR Rate Loan; (ii) with respect to any such conversion of
a Base Rate Loan to a LIBOR Rate Loan, the Borrower shall give
the Agent at least four LIBOR Business Days' prior written notice
of such election and the Interest Period requested for such Loan,
the principal amount of the Loan so converted shall be in a
minimum aggregate amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof and, after giving effect to the making
of such Loan, there shall be no more than ten (10) LIBOR Rate
Loans outstanding at any one time; and (iii) no Loan may be
converted into a LIBOR Rate Loan when any Default or Event of
Default has occurred and is continuing. All or any part of the
outstanding Loans of any Type may be converted as provided
herein, provided that no partial conversion shall result in a
Base Rate Loan in an aggregate principal amount of less than
$500,000 or a LIBOR Rate Loan in an aggregate principal amount of
less than $1,000,000 and that the aggregate principal amount of
each Loan shall be in an integral multiple of $100,000. On the
date on which such conversion is being made, each Bank shall take
such action as is necessary to transfer its Commitment Percentage
of such Loans to its Domestic Lending Office or its LIBOR Lending
Office, as the case may be. Each Conversion Request relating to
the conversion of a Base Rate Loan to a LIBOR Rate Loan shall be
irrevocable by the Borrower.
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<PAGE> 32
(b) Any Loan may be continued as such Type
upon the expiration of an Interest Period with respect thereto
by compliance by the Borrower with the terms of Section 4.1;
provided that no LIBOR Rate Loan may be continued as such when
any Default of the type described in subsections (a), (b), (c) or
(d) of Section 12.1 or Event of Default has occurred and is
continuing, but shall be automatically converted to a Base Rate
Loan on the last day of the Interest Period relating thereto
ending during the continuance of any Default or Event of Default.
(c) In the event that the Borrower does not
notify the Agent of its election hereunder with respect to any
Loan, such Loan shall be automatically converted to a Base Rate
Loan at the end of the applicable Interest Period.
Section 4.2. Closing Fee. The Borrower shall pay to BKB
on or before the Closing Date the closing fees pursuant to the
Agreement Regarding Fees. BKB shall pay to BOA certain fees
pursuant to their separate agreement.
Section 4.2A. Additional Fees. The Borrower agrees to pay
to BKB certain fees for services rendered or to be rendered in
connection with the Loan as provided pursuant to the Agreement
Regarding Fees. All such fees shall be solely for the account of
BKB as provided in such Agreement.
Section 4.3. Agent's Fee. The Borrower shall pay to the
Agent, for the Agent's own account, an Agent's fee as and when
provided in the Agreement Regarding Fees.
Section 4.4. Funds for Payments.
(a) All payments of principal, interest,
facility fees, Agent's fees, closing fees, and any other amounts
due hereunder or under any of the other Loan Documents shall be
made to the Agent, for the respective accounts of the Banks and the
Agent, as the case may be, at the Agent's Head Office, not later
than 1:00 p.m. (Boston time) on the day when due, in each case in
immediately available funds. The Agent is hereby authorized to
charge the account of the Borrower with BKB, on the dates when
the amount thereof shall become due and payable, with the amounts
of the principal of and interest on the Loans and all fees,
charges, expenses and other amounts owing to the Agent and/or the
Banks (including the Swing Loan Bank) under the Loan Documents.
(b) All payments by the Borrower hereunder and
under any of the other Loan Documents shall be made without setoff
or counterclaim and free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other
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<PAGE> 33
authority therein unless the Borrower is compelled by law to make
such deduction or withholding. If any such obligation is imposed
upon the Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrower
will pay to the Agent, for the account of the Banks (including the
Swing Loan Bank) or (as the case may be) the Agent, on the date on
which such amount is due and payable hereunder or under such other
Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Agent to receive the same
net amount which the Banks or the Agent would have received on
such due date had no such obligation been imposed upon the
Borrower. The Borrower will deliver promptly to the Agent
certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.
(c) Each Bank organized under the laws of a
jurisdiction outside the United States, if requested in writing
by the Borrower (but only so long as such Bank remains lawfully
able to do so), shall provide the Borrower with such duly
executed form(s) or statement(s) which may, from time to time, be
prescribed by law and, which, pursuant to applicable provisions
of (i) an income tax treaty between the United States and the
country of residence of such Bank, (ii) the Code, or (iii) any
applicable rules or regulations in effect under (i) or (ii)
above, indicates the withholding status of such Bank; provided
that nothing herein (including without limitation the failure or
inability to provide such form or statement) shall relieve the
Borrower of its obligations under Section 4.4(b). In the event
that the Borrower shall have delivered the certificates or
vouchers described above for any payments made by the Borrower
and such Bank receives a refund of any taxes paid by the Borrower
pursuant to Section 4.4(b), such Bank will pay to the Borrower
the amount of such refund promptly upon receipt thereof; provided
that if at any time thereafter such Bank is required to return
such refund, the Borrower shall promptly repay to such Bank the
amount of such refund.
Section 4.5. Computations. All computations of interest
on the Loans and of other fees to the extent applicable shall be
based on a 360-day year and paid for the actual number of days
elapsed. Except as otherwise provided in the definition of the
term "Interest Period" with respect to LIBOR Rate Loans, whenever
a payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business
Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the records of
the Agent from time to time shall be considered prima facie
evidence of such amount.
Section 4.6. Inability to Determine LIBOR Rate. In the
event that, prior to the commencement of any Interest Period
relating to any LIBOR Rate Loan, the Agent shall determine that
adequate and reasonable methods do not exist for ascertaining the
LIBOR Rate for such Interest Period, the Agent shall forthwith
give notice of such determination (which shall be conclusive and
binding on the Borrower and the Banks) to the Borrower and the
Banks. In such event (a) any Loan Request with respect to LIBOR
Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans, and (b) each LIBOR Rate Loan will
automatically, on the last day of the then current Interest
Period
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thereof, become a Base Rate Loan, and the obligations of the Banks
to make LIBOR Rate Loans shall be suspended until the Agent
determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrower and
the Banks.
Section 4.7. Illegality. Notwithstanding any other
provisions herein, if any present or future law, regulation,
treaty or directive or the interpretation or application thereof
shall make it unlawful, or any central bank or other governmental
authority having jurisdiction over a Bank or its LIBOR Lending
Office shall assert that it is unlawful, for any Bank to make or
maintain LIBOR Rate Loans, such Bank shall forthwith give notice
of such circumstances to the Agent and the Borrower and thereupon
(a) the commitment of the Banks to make LIBOR Rate Loans or
convert Loans of another type to LIBOR Rate Loans shall forthwith
be suspended and (b) the LIBOR Rate Loans then outstanding shall
be converted automatically to Base Rate Loans on the last day of
each Interest Period applicable to such LIBOR Rate Loans or
within such earlier period as may be required by law.
Section 4.8. Additional Interest. If any LIBOR Rate Loan
or any portion thereof is repaid or is converted to a Base Rate
Loan for any reason on a date which is prior to the last day of
the Interest Period applicable to such LIBOR Rate Loan, the
Borrower will pay to the Agent upon demand for the account of the
Banks in accordance with their respective Commitment Percentages
(or to the Swing Loan Bank with respect to a Swing Loan), in
addition to any amounts of interest otherwise payable hereunder,
any amounts required to compensate the Banks for any losses,
costs or expenses which may reasonably be incurred as a result of
such payment or conversion, including, without limitation, an
amount equal to daily interest for the unexpired portion of such
Interest Period on the LIBOR Rate Loan or portion thereof so
repaid or converted at a per annum rate equal to the excess, if
any, of (a) the interest rate calculated on the basis of the
LIBOR Rate applicable to such LIBOR Rate Loan minus (b) the yield
obtainable by the Agent upon the purchase of debt securities
customarily issued by the Treasury of the United States of
America which have a maturity date most closely approximating the
last day of such Interest Period (it being understood that the
purchase of such securities shall not be required in order for
such amounts to be payable and that a Bank shall not be obligated
or required to have actually obtained funds at the LIBOR Rate or
to have actually reinvested such amount as described above).
Section 4.9. Additional Costs, Etc. Notwithstanding
anything herein to the contrary, if any future applicable law or
any amendment or modification of present applicable law which
expression, as used herein, includes statutes, rules and
regulations thereunder and legally binding interpretations
thereof by any competent court or by any governmental or other
regulatory body or official with appropriate jurisdiction charged
with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or
from time to time hereafter made upon or otherwise issued to any
Bank or the Agent by any central bank or other fiscal, monetary
or other authority (whether or not having the force of law),
shall:
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<PAGE> 35
(a) subject any Bank or the Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any
nature with respect to this Agreement, the other Loan Documents,
such Bank's Commitment or the Loans (other than taxes based upon or
measured by the income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation
(except for changes in taxes on income or profits) of payments to
any Bank of the principal of or the interest on any Loans or any
other amounts payable to any Bank under this Agreement or the
other Loan Documents, or
(c) impose or increase or render applicable any
special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of
law) against assets held by, or deposits in or for the account
of, or loans by, or letters of credit from, or commitments of any
Bank beyond those in effect as of the date hereof, or
(d) impose on any Bank or the Agent any other
conditions or requirements with respect to this Agreement, the
other Loan Documents, the Loans, such Bank's Commitment, or any
class of loans or commitments of which any of the Loans or such
Bank's Commitment forms a part; and the result of any of the
foregoing is
(i) to increase the cost to any Bank of
making funding, issuing, renewing, extending or maintaining any of
the Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal,
interest or other amount payable to such Bank or the Agent hereunder
on account of such Bank's Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to
make any payment or to forego any interest or other sum payable
hereunder, the amount of which payment or foregone interest or
other sum is calculated by reference to the gross amount of any
sum receivable or deemed received by such Bank or the Agent from
the Borrower hereunder, then, and in each such case, the Borrower
will, within fifteen (15) days of demand made by such Bank or (as
the case may be) the Agent at any time and from time to time and
as often as the occasion therefor may arise, pay to such Bank or
the Agent such additional amounts as such Bank or the Agent shall
determine in good faith to be sufficient to compensate such Bank
or the Agent for such additional cost, reduction, payment or
foregone interest or other sum. Each Bank and the Agent in
determining such amounts may use any reasonable averaging and
attribution methods, generally applied by such Bank or the Agent.
Section 4.10. Capital Adequacy. If after the date hereof
any Bank determines that (a) the adoption of or change in any
law, rule, regulation or guideline regarding capital requirements
of general application for banks or bank holding companies (as
opposed to a particular bank) or any change in the interpretation
or application thereof by any governmental authority
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<PAGE> 36
charged with the administration thereof, or (b) compliance by such
Bank or its parent bank holding company with any such future
guideline, request or directive of any such entity regarding
capital adequacy or any amendment or change in interpretation of
any existing guideline, request or directive (whether or not
having the force of law) of general application for banks or bank
holding companies (as opposed to a particular bank), has the
effect of reducing the return on such Bank's or such holding
company's capital as a consequence of such Bank's commitment to
make Loans hereunder to a level below that which such Bank or
holding company could have achieved but for such adoption, change
or compliance (taking into consideration such Bank's or such
holding company's then existing policies with respect to capital
adequacy and assuming the full utilization of such entity's
capital) by any amount deemed by such Bank to be material, then
such Bank may notify the Borrower thereof. The Borrower agrees
to pay to such Bank the amount of such reduction in the return on
capital which is attributable to such Bank's commitment to make
Loans hereunder as and when such reduction is determined, upon
presentation by such Bank of a statement of the amount setting
forth the Bank's calculation thereof. In determining such
amount, such Bank may use any reasonable averaging and
attribution methods, generally applied by such Bank.
Section 4.11. Indemnity of Borrower. The Borrower agrees
to indemnify each Bank and to hold each Bank harmless from and
against any loss, cost or expense that such Bank may sustain or
incur as a consequence of (a) default by the Borrower in payment
of the principal amount of or any interest on any LIBOR Rate
Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain its LIBOR
Rate Loans, or (b) default by the Borrower in making a borrowing
or conversion after the Borrower has given (or is deemed to have
given) a Loan Request or a Conversion Request; provided, however,
that the Borrower shall not be required to so indemnify any Bank
pursuant to clause (b) above which fails or refuses to fund its
proportionate share of a Loan in accordance with the terms of
this Agreement.
Section 4.12. Interest on Overdue Amounts; Late Charge.
Overdue principal and (to the extent permitted by applicable law)
interest on the Loans and all other overdue amounts payable
hereunder or under any of the other Loan Documents shall bear
interest payable on demand at a rate per annum equal to four
percent (4.00%) above the Base Rate until such amount shall be
paid in full (after as well as before judgment). In addition,
the Borrower shall pay a late charge equal to three percent (3%)
of any amount of interest and/or principal payable on the Loans
or any other amounts payable hereunder or under the Loan
Documents, which is not paid within ten days of the date when
due.
Section 4.13. Certificate. A certificate prepared in good
faith setting forth any amounts payable pursuant to Section 4.8,
Section 4.9, Section 4.10, Section 4.11 or Section 4.12 and a
brief explanation of such amounts which are due, submitted by any
Bank or the Agent to the Borrower, shall be conclusive in the
absence of manifest error.
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Section 4.14. Limitation on Interest. Notwithstanding
anything in this Agreement to the contrary, all agreements
between the Borrower and the Banks and the Agent, whether now
existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of
acceleration of the maturity of any of the Obligations or
otherwise, shall the interest contracted for, charged or received
by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest
would otherwise be payable to the Banks in excess of the maximum
lawful amount, the interest payable to the Banks shall be reduced
to the maximum amount permitted under applicable law; and if from
any circumstance the Banks shall ever receive anything of value
deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive
interest exceeds the unpaid balance of principal of the
Obligations, such excess shall be refunded to the Borrower. All
interest paid or agreed to be paid to the Banks shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in
full of the principal of the Obligations (including the period of
any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount
permitted by applicable law. This section shall control all
agreements between the Borrower and the Banks and the Agent.
Section 5. SECURITY.
The Banks have agreed to make the Loans to the Borrower on
an unsecured basis. Notwithstanding the foregoing, the
Obligations shall be guaranteed by Guarantor pursuant to the
Guaranty.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the
Banks as follows:
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower
(i) is a Delaware limited partnership duly organized pursuant to a
Limited Partnership Agreement dated November 16, 1994 filed with
the Secretary of State of Delaware and is validly existing and in
good standing under the laws of Delaware, and (ii) is in good
standing as a foreign entity and is duly authorized to do
business in the jurisdictions where the Unencumbered Operating
Properties are located and in each other jurisdiction where a
failure to be so qualified in such other jurisdiction would
reasonably be expected to have a materially adverse effect on the
consolidated business, assets or financial condition of the
Borrower. Storage Trust Guarantor is a Maryland real estate
investment trust duly organized pursuant to its organizational
documents and amendments thereto filed with the Secretary of
State of Maryland and is validly existing and in good standing
under the laws of Maryland, and is in good standing as a foreign
entity and is duly authorized to do business in the jurisdictions
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where the Unencumbered Operating Properties are located and in
each other jurisdiction where a failure to be so qualified in
such other jurisdiction could have a materially adverse effect on
the business, assets or financial condition of Storage Trust
Guarantor. Each of the Borrower and the Guarantor has all
requisite power to own its respective property and conduct its
respective business as now conducted and as presently
contemplated. Storage Trust Guarantor is a real estate
investment trust in full compliance with and entitled to the
benefits of Section 856 of the Code.
(b) Subsidiaries. Each of the Subsidiaries of
the Borrower (i) is a corporation, limited partnership, limited
liability company or trust duly organized under the laws of its
State of organization and is validly existing and in good
standing under the laws thereof, (ii) has all requisite power to
own its property and conduct its business as now conducted and as
presently contemplated and (iii) is in good standing and is duly
authorized to do business in each jurisdiction where a failure to
be so qualified would reasonably be expected to have a materially
adverse effect on the consolidated business, assets or financial
condition of the Borrower or such Subsidiary.
(c) Authorization. The execution, delivery
and performance of this Agreement and the other Loan Documents and
the transactions contemplated hereby and thereby (i) are within
the authority of the Borrower and the Guarantor, (ii) have been
duly authorized by all necessary proceedings on the part of such
Person, (iii) do not and will not conflict with or result in any
breach or contravention of any provision of law, statute, rule or
regulation to which such Person is subject or any judgment,
order, writ, injunction, license or permit applicable to such
Person, (iv) do not and will not conflict with or constitute a
default (whether with the passage of time or the giving of
notice, or both) under any provision of the charter documents,
partnership agreement, declaration of trust or other charter
documents or bylaws of, or any agreement or other instrument
binding upon, such Person or any of its properties, and (v) do
not and will not result in or require the imposition of any lien
or other encumbrance on any of the properties, assets or rights
of such Person.
(d) Enforceability. The execution and delivery
of this Agreement and the other Loan Documents are valid and legally
binding obligations of the Borrower and the Guarantor enforceable
in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to
or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of
the court before which any proceeding therefor may be brought.
Section 6.2. Governmental Approvals. The execution,
delivery and performance by the Borrower and the Guarantor of
this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby do not require the approval or
consent of, or filing with, any governmental agency or authority
other than those already obtained.
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Section 6.3. Title to Properties; Leases. The Borrower
and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower as at the Balance
Sheet Date or acquired since that date (except property and
assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others,
including any mortgages, leases, conditional sales agreements,
title retention agreements, liens or other encumbrances except
Permitted Liens. Without limiting the foregoing, the Borrower
and its Subsidiaries have good and marketable fee simple title to
all real property reasonably necessary for the operation of its
business in whole, free from all liens or encumbrances of any
nature whatsoever, except for Permitted Liens. The Borrower or
its Subsidiary, as the case may be, is the insured under owner's
policies of title insurance covering all real property owned by
it, in each case in an amount not less than the purchase price
for such real property.
Section 6.4. Financial Statements. The Borrower has
furnished or caused Storage Trust Guarantor to furnish to each of
the Banks: (a) an unaudited consolidated balance sheet of the
Guarantor and its Subsidiaries as of the Balance Sheet Date and
the related unaudited consolidated statements of operations and
cash flows for the period then ended, certified by an officer of
the Borrower and the Guarantor, and (b) an unaudited statement of
operating income for each of the properties within the
Unencumbered Operating Properties as of the Closing Date for the
fiscal quarter ended December 31, 1997 satisfactory in form to
the Agent and BOA and certified by the chief financial officer
of the sole general partner of the Borrower as fairly presenting
the operating income for such parcels for such periods. Such
balance sheet and statements of operations and cash flows have
been prepared in accordance with generally accepted accounting
principles and fairly present the financial condition of the
Borrower and the Guarantor and their respective Subsidiaries as
of such dates and the results of the operations of the Borrower
and the Guarantor and their respective Subsidiaries for such
periods. There are no liabilities, contingent or otherwise, of
the Borrower, the Guarantor or any of their respective
Subsidiaries involving material amounts not disclosed in said
financial statements and the related notes thereto.
Section 6.5. No Material Changes. Since the Balance Sheet
Date, there has occurred no materially adverse change in the
consolidated financial condition or business of the Borrower and
its Subsidiaries or the Guarantor and its Subsidiaries taken as a
whole as shown on or reflected in the consolidated balance sheet
of the Borrower and the Guarantor as of the Balance Sheet Date,
or their respective consolidated statement of income or cash
flows for the fiscal year then ended, other than changes in the
ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the
consolidated business or financial condition of such Person.
Section 6.6. Franchises, Patents, Copyrights, Etc. The
Borrower and its Subsidiaries possess all franchises, patents,
copyrights, trademarks, trade names, servicemarks, licenses and
permits, and rights in respect of the foregoing, adequate for the
conduct of their business substantially as now conducted without
known conflict with any rights of others.
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Section 6.7. Litigation. There are no actions, suits,
proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries or the Guarantor
before any court, tribunal or administrative agency or board
that, if adversely determined, might, either in any case or in
the aggregate, materially adversely affect the properties,
assets, financial condition or business of such Person or
materially impair the right of such Person to carry on business
substantially as now conducted by it, or result in any liability
not adequately covered by insurance, or for which adequate
reserves are not maintained on the balance sheet of such Person,
or which question the validity of this Agreement or any of the
other Loan Documents, any action taken or to be taken pursuant
hereto or thereto or any lien or security interest created or
intended to be created pursuant hereto or thereto, or which will
adversely affect the ability of the Borrower or the Guarantor to
pay and perform the Obligations in the manner contemplated by
this Agreement and the other Loan Documents.
Section 6.8. No Materially Adverse Contracts, Etc.
Neither the Borrower, any of its Subsidiaries nor the Guarantor
is subject to any charter, corporate or other legal restriction,
or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the
business, assets or financial condition of such Person. Neither
the Borrower, any of its Subsidiaries nor the Guarantor is a
party to any contract or agreement that has or is expected, in
the judgment of the officers or partners of such Person, to have
any materially adverse effect on the business of any of them.
Section 6.9. Compliance with Other Instruments, Laws, Etc.
Neither the Borrower, any of its Subsidiaries nor the Guarantor
is in violation of any provision of its charter or other
organizational documents, by-laws, or any agreement or instrument
to which it may be subject or by which it or any of its
properties may be bound or any decree, order, judgment, statute,
license, rule or regulation, in any of the foregoing cases in a
manner that could result in the imposition of substantial
penalties or materially and adversely affect the consolidated
financial condition, properties or business of such Person.
Section 6.10. Tax Status. The Borrower and each of its
Subsidiaries and the Guarantor (a) has made or filed all federal
and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(b) has paid all taxes and other governmental assessments and
charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and
by appropriate proceedings and (c) has set aside on its books
provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any
jurisdiction, and the officers or partners of such Person know of
no basis for any such claim.
Section 6.11. No Event of Default. No Default or Event of
Default has occurred and is continuing.
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Section 6.12. Holding Company and Investment Company Acts.
Neither the Borrower, any of its Subsidiaries nor the Guarantor
is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935;
nor is it an "investment company", or an "affiliated company" or
a "principal underwriter" of an "investment company", as such
terms are defined in the Investment Company Act of 1940.
Section 6.13. Absence of UCC Financing Statements, Etc.
Except with respect to Permitted Liens, there is no financing
statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing
records, registry, or other public office, that purports to
cover, affect or give notice of any present or possible future
lien on, or security interest or security title in, any property
of the Borrower or its Subsidiaries or rights thereunder.
Section 6.14. Certain Transactions. Except as set forth
in the Prospectus Supplement, none of the officers, trustees,
directors, or employees of the Borrower, the Guarantor or any of
the Borrower's Subsidiaries is a party to any transaction with
the Borrower or any of its Subsidiaries requiring or permitting
the payment of annual consideration in excess of $500,000.00
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from any officer, trustee, director or such
employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, trustee,
director, or any such employee has a substantial interest or is
an officer, director, trustee or partner.
Section 6.15. Employee Benefit Plans. The Borrower and
each ERISA Affiliate has fulfilled its obligations under the
minimum funding standards of ERISA and the Code with respect to
each Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan and is in compliance in all material respects with
the presently applicable provisions of ERISA and the Code with
respect to each Employee Benefit Plan, Multiemployer Plan or
Guaranteed Pension Plan. Neither the Borrower nor any ERISA
Affiliate has (a) sought a waiver of the minimum funding standard
under Section 412 of the Code in respect of any Employee Benefit
Plan, Multiemployer Plan or Guaranteed Pension Plan, (b) failed
to make any contribution or payment to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan, or made any
amendment to any Employee Benefit Plan, Multiemployer Plan or
Guaranteed Pension Plan, which has resulted or could result in
the imposition of a Lien or the posting of a bond or other
security under ERISA or the Code, or (c) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA. None of the Unencumbered
Operating Properties constitutes a "plan asset" of any Employee
Plan, Multiemployer Plan or Guaranteed Pension Plan.
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Section 6.16. Regulations U and X. No portion of any Loan
is to be used for the purpose of purchasing or carrying any
"margin security" or "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.
Section 6.17. Environmental Compliance. The Borrower has
conducted or caused to be conducted Phase I environmental site
assessments with respect to the past usage and condition of the
Real Estate and the operations conducted thereon, and is familiar
with the present condition and usage of the Real Estate and the
operations conducted thereon and, based upon such reports and
knowledge, makes the following representations and warranties.
(a) To the best of the Borrower's knowledge,
except as set forth in Schedule 6.17, none of the Borrower or
its Subsidiaries or any operator of the Real Estate, or any
operations thereon is in violation, or alleged violation, of any
judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including, without
limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to the
environment (hereinafter "Environmental Laws"), which violation
involves the Real Estate and would have a material adverse effect
on the environment or the consolidated business, assets or
financial condition of the Borrower.
(b) Neither the Borrower nor any of its
Subsidiaries has received notice from any third party, including,
without limitation, any federal, state or local governmental
authority, (i) that it has been identified by the United States
Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on
the National Priorities List, 40 C.F.R. Part 300 Appendix B
(1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
Section 9601(5), any hazardous substances as defined by 42 U.S.C.
Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) or any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has
generated, transported or disposed of have been found at any site
at which a federal, state or local agency or other third party
has conducted or has ordered that the Borrower or any of its
Subsidiaries conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that
it is or shall be a named party to any claim, action, cause of
action, complaint, or legal or administrative proceeding (in each
case, contingent or otherwise) arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous
Substances.
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(c) To the best of the Borrower's knowledge,
or, in the case of Real Estate acquired after the date hereof, to
the best of the Borrower's knowledge except as may be disclosed
in writing to the Agent upon the acquisition of the same: (i)
no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws, and no underground
tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in
the course of any activities conducted by the Borrower, its
Subsidiaries or the operators of its properties, no Hazardous
Substances have been generated or are being used on the Real
Estate except in the ordinary course of business and in
accordance with applicable Environmental Laws; (iii) there has
been no past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping (a "Release") or threatened Release of
Hazardous Substances on, upon, into or from the Real Estate, or,
to the best of the Borrower's knowledge, on, upon, into or from
the other properties of the Borrower or its Subsidiaries, which
Release would have a material adverse effect on the value of any
of the Real Estate or adjacent properties or the environment;
(iv) to the best of the Borrower's knowledge, there have been no
Releases on, upon, from or into any real property in the vicinity
of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would
have a material adverse effect on the value of, the Real Estate;
and (v) any Hazardous Substances that have been generated on any
of the Real Estate have been transported off-site only by
carriers having an identification number issued by the EPA or
approved by a state or local environmental regulatory authority
having jurisdiction regarding the transportation of such
substance and, to the best knowledge of the Borrower without
independent investigation, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as
required under all applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the
Borrower's knowledge without independent investigation, operating
in compliance with such permits and applicable Environmental
Laws.
(d) Neither the Borrower, its Subsidiaries
nor any Real Estate is subject to any applicable Environmental
Law requiring the performance of Hazardous Substances site
assessments, or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency or
the recording or delivery to other Persons of an environmental
disclosure document or statement by virtue of the transactions
set forth herein and contemplated hereby, or as a condition to
the effectiveness of any other transactions contemplated hereby.
Section 6.18. Subsidiaries. Schedule 6.18 sets forth all
of the Subsidiaries of the Borrower. The form and jurisdiction
of organization of each of the Subsidiaries, and the Borrower's
ownership interest therein, is set forth in said Schedule 6.18.
Section 6.19. Loan Documents and the Guarantor. All of
the representations and warranties of the Borrower and the
Guarantor made in this Agreement and the other Loan Documents or
any document or instrument delivered to the Agent or the Banks
pursuant to or in connection with any of such Loan Documents are
true and correct in all material respects, and neither the
Borrower nor the Guarantor has failed to disclose such
information as is necessary to make such representations and
warranties not misleading.
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Section 6.20. Property. All of the Borrower's and its
Subsidiaries' properties are in good repair and condition,
subject to ordinary wear and tear, other than with respect to
deferred maintenance existing as of the date of acquisition of
such property as permitted in this Section 6.20. The Borrower
further has completed an appropriate investigation of the
environmental condition of each such property as of the later of
the date of the Borrower's or such Subsidiaries' purchase thereof
or the date upon which such property was last security for
Indebtedness of the Borrower or such Subsidiary, including
preparation of a "Phase I" report and, if appropriate, a "Phase
II" report, in each case prepared by a recognized environmental
engineer in accordance with customary standards which discloses
that such property is not in violation of the representations and
covenants set forth in this Agreement, unless satisfactory
remediation actions are being taken or have been completed.
There are no unpaid or outstanding real estate or other taxes or
assessments on or against any property of the Borrower or any of
its Subsidiaries which are payable by the Borrower or its
Subsidiaries (except only real estate or other taxes or
assessments, that are not yet due and payable). There are no
pending eminent domain proceedings against any property of the
Borrower or its Subsidiaries or any part thereof, and, to the
knowledge of the Borrower, no such proceedings are presently
threatened or contemplated by any taking authority which may
individually or in the aggregate have any materially adverse
effect on the consolidated business or financial condition of the
Borrower. None of the property of Borrower or its Subsidiaries
is now damaged or injured as a result of any fire, explosion,
accident, flood or other casualty in any manner which
individually or in the aggregate would have any materially
adverse effect on the consolidated business or financial
condition of the Borrower.
Section 6.21. Brokers. Neither the Borrower nor any of
its Subsidiaries has engaged or otherwise dealt with any broker,
finder or similar entity in connection with this Agreement or the
Loans contemplated hereunder.
Section 6.22. Other Debt. Neither the Borrower, any of
its Subsidiaries nor the Guarantor is in default in the payment
of any other Indebtedness or under any agreement, mortgage, deed
of trust, security agreement, financing agreement, indenture or
lease to which any of them is a party. The Borrower is not a
party to or bound by any agreement, instrument or indenture that
may require the subordination in right or time of payment of any
of the Obligations to any other indebtedness or obligation of the
Borrower.
Section 6.23. Solvency. After giving effect to the
transactions contemplated by this Agreement and the other Loan
Documents, including all of the Loans made hereunder, neither the
Borrower nor the Guarantor is insolvent on a balance sheet basis
such that the sum of such Person's assets exceeds the sum of such
Person's liabilities, the Borrower and the Guarantor are able to
pay their respective debts as they become due, and the Borrower
and the Guarantor have sufficient capital to carry on their
respective businesses.
Section 6.24. Partners and Guarantor. Storage Trust
Guarantor is the sole general partner of the Borrower and owns a
94.74% partnership interest in the Borrower. Storage Trust
Guarantor owns no assets other than its general partnership
interest in the Borrower and Short-term Investments.
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Section 6.25. No Fraudulent Intent. Neither the execution
and delivery of this Agreement or any of the other Loan Documents
nor the performance of any actions required hereunder or
thereunder is being undertaken by the Borrower, Guarantor or any
of their respective Subsidiaries with or as a result of any
actual intent by any of such Persons to hinder, delay or defraud
any entity to which any of such Persons is now or will hereafter
become indebted.
Section 6.26. Transaction in Best Interests of Borrower;
Consideration. The transaction evidenced by this Agreement and
the other Loan Documents is in the best interests of the
Borrower, the Guarantor, each of their respective Subsidiaries
and the creditors of such Persons. The direct and indirect
benefits to inure to the Borrower, the Guarantor and each of
their respective Subsidiaries pursuant to this Agreement and the
other Loan Documents constitute substantially more than
"reasonably equivalent value" (as such term is used in Section
548 of the Bankruptcy Code) and "valuable consideration," "fair
value," and "fair consideration," (as such terms are used in any
applicable state fraudulent conveyance law), in exchange for the
benefits to be provided by the Borrower, the Guarantor and each
of their respective Subsidiaries pursuant to this Agreement and
the other Loan Documents, and but for the willingness of the
Guarantor to guaranty the Loan, Borrower would be unable to
obtain the financing contemplated hereunder which financing will
enable the Borrower and its Subsidiaries (including Guarantor) to
have available financing to conduct and expand their business.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan
or Note is outstanding or any Bank has any obligation to make any
Loans:
Section 7.1. Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on
the Loans and all interest and fees provided for in this
Agreement, all in accordance with the terms of this Agreement and
the Notes as well as all other sums owing pursuant to the Loan
Documents.
Section 7.2. Maintenance of Office. The Borrower will
maintain its chief executive office at 2407 Rangeline, Columbia,
Missouri, or at such other place in the United States of America
as the Borrower shall designate upon prior written notice to the
Agent and the Banks, where notices, presentations and demands to
or upon the Borrower in respect of the Loan Documents may be
given or made.
Section 7.3. Records and Accounts. The Borrower will (a)
keep, and cause each of its Subsidiaries to keep, true and
accurate records and books of account in which full, true and
correct entries will be made in accordance with generally
accepted accounting principles and (b) maintain adequate accounts
and reserves for all taxes (including income taxes), depreciation
and amortization of its properties and the properties of its
Subsidiaries, contingencies and other reserves. Neither the
Borrower nor Storage Trust Guarantor nor any of their respective
Subsidiaries shall, without the prior consent of the Majority
Banks, (x) make any material change to the accounting procedures
used by such Person in preparing financial statements and other
information described in Section 6.4 or (y) change its fiscal
year.
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Section 7.4. Financial Statements, Certificates and
Information. The Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not
later than 90 days after the end of each fiscal year of the Borrower,
the audited consolidated balance sheet of the Borrower and its
Subsidiaries at the end of such year, and the related audited
consolidated statements of income, changes in partner's equity
and cash flows for such year, each setting forth in comparative
form the figures for the previous fiscal year and all such
statements to be in reasonable detail, prepared in accordance
with generally accepted accounting principles, and accompanied by
an auditor's report prepared without qualification by Ernst &
Young LLP or by another national accounting firm approved by
Agent. At any time that the Agent has reasonable grounds to
request the same (including, without limitation, at any time that
the Compliance Certificate indicates that the Borrower is at or
near minimum compliance with the financial covenants in this
Agreement), the Agent may require that such report be accompanied
by a written statement from such accountants to the effect that
they have read a copy of this Agreement, and that, in making the
examination necessary for said certification, they have obtained
no knowledge of any Default or Event of Default or, if such
accountants shall have obtained knowledge of any then existing
Default or Event of Default, they shall disclose in such
statement any such Default or Event of Default;
(b) as soon as practicable, but in any event not
later than 60 days after the end of each of the first three fiscal
quarters of the Borrower, copies of the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as at the end
of such quarter, and the related unaudited consolidated
statements of operations and cash flows for the portion of the
Borrower's fiscal year then elapsed, all in reasonable detail and
prepared in accordance with generally accepted accounting
principles, together with a certification by the principal
financial officer of the Borrower that the information contained
in such financial statements fairly presents the financial
position of the Borrower and its Subsidiaries on the date thereof
(subject to year-end adjustments);
(c) simultaneously with the delivery of the
financial statements referred to in subsections (a) and (b) above,
within thirty (30) days of the filing by Storage Trust Guarantor
of a Form 8-K with the SEC or the filing with the SEC of any other
document amending any other filing made by Storage Trust
Guarantor, a statement (a "Compliance Certificate") certified by
the principal financial officer of the general partner of the
Borrower and the principal financial officer of Storage Trust
Guarantor in the form of Exhibit E hereto setting forth in
reasonable detail computations evidencing compliance with the
described therein, and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the
Balance Sheet Date;
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(d) concurrently with the delivery of the
financial statements described in subsection (b) above, a
certificate signed by the President or Chief Financial Officer of
the sole general partner of the Borrower to the effect that, having
read this Agreement, and based upon an examination which they deem
sufficient to enable them to make an informed statement, there does
not exist any Default or Event of Default, or if such Default or
Event of Default has occurred, specifying the facts with respect
thereto;
(e) contemporaneously with the filing or mailing
thereof, copies of all material of a financial nature sent to the
partners of the Borrower;
(f) simultaneously within the delivery of
the financial statement referred to in subsection (a) above, a
statement (i) listing the Real Estate owned by the Borrower and
its Subsidiaries (or in which Borrower or its Subsidiaries owns
an interest) and stating the location thereof, the date acquired
and the acquisition cost, (ii) listing the Indebtedness of the
Borrower and its Subsidiaries (excluding Indebtedness of the type
described in Section 8.1(b)-(e)), which statement shall include,
without limitation, a statement of the original principal amount
of such Indebtedness and the current amount outstanding, the
holder thereof, the maturity date and any extension options, the
interest rate, the collateral provided for such Indebtedness and
whether such Indebtedness is recourse or non-recourse, and
(iii) listing the properties of the Borrower and its Subsidiaries
which are under "development" (as used in Section 8.9) and
providing a brief summary of the status of such development;
(g) promptly after they are filed with the Internal
Revenue Service, copies of all annual federal income tax returns and
amendments thereto of the Borrower;
(h) as soon as available but in no event later
than 30 days after the end of each fiscal quarter, the Rent Roll for
the Unencumbered Operating Properties;
(i) not later than five (5) Business Days after
the Borrower or Storage Trust Guarantor receives notice of the same
from a Rating Agency or otherwise learns of the same, notice of
the issuance of any change in the rating by a Rating Agency in
respect of any debt of the Borrower or Storage Trust Guarantor
(including any change in an Implied Rating), together with the
details thereof, and of any announcement by a Rating Agency that
any such rating is "under review" or that any such rating has
been placed on a watch list or that any similar action has been
taken by the Rating Agency (collectively, a "Rating Notice"); and
(j) from time to time such other financial data
and information in the possession of the Borrower (including without
limitation evidence of payment of taxes, property inspection and
environmental reports and information as to zoning and other
legal and regulatory changes affecting the Borrower) as the Agent
may reasonably request.
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Notwithstanding the forgoing, unless otherwise requested by the
Agent or the Majority Banks, Borrower shall not be required to
deliver the balance sheets, statements or other matters required
by Section 7.4(a) or Section 7.4(b) to the extent the same are
incorporated in the balance sheets, other statements and other
matters delivered to the Banks by Storage Trust Guarantor as and
when required by the Guaranty.
Section 7.5. Notices.
(a) Defaults. The Borrower will promptly notify
the Agent in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice or take any other
action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement or under
any note, evidence of indebtedness, indenture or other obligation
to which or with respect to which the Borrower, any of its
Subsidiaries or the Guarantor is a party or obligor, whether as
principal or surety, and such default would permit the holder of
such note or obligation or other evidence of indebtedness to
accelerate the maturity thereof, which acceleration would have a
material adverse effect on the Borrower or the Guarantor or the
existence of which claimed default might become an Event of
Default under Section 12.1(g), the Borrower shall forthwith give
written notice thereof to the Agent and each of the Banks,
describing the notice or action and the nature of the claimed
default.
(b) Environmental Events. The Borrower will
promptly give notice to the Agent (i) upon the Borrower obtaining
knowledge of any potential or known Release, or threat of
Release, of any Hazardous Substances at or from any Real Estate
of the Borrower or its Subsidiaries; (ii) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries
reports in writing or is reportable by such Person in writing (or
for which any written report supplemental to any oral report is
made) to any federal, state or local environmental agency and
(iii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any
agency of potential environmental liability, of any federal,
state or local environmental agency or board, that in either case
involves any Real Estate of the Borrower or its Subsidiaries or
has the potential to materially affect the assets, liabilities,
financial conditions or operations of the Borrower or any
Subsidiary.
(c) Notice of Litigation and Judgments. The
Borrower will give notice to the Agent in writing within 15 days
of becoming aware of any litigation or proceedings threatened in
writing or any pending litigation and proceedings affecting the
Borrower, any of its Subsidiaries or the Guarantor or to which
any of such Persons is or is to become a party involving an
uninsured claim against such Person that could reasonably be
expected to have a materially adverse effect on the Borrower or
the Guarantor and stating the nature and status of such
litigation or proceedings. The Borrower will give notice to the
Agent, in writing, in form and detail satisfactory to the Agent
and each of the Banks, within ten days of any judgment not
covered by insurance, whether final or otherwise, against the
Borrower, any of its Subsidiaries or the Guarantor in an amount
in excess of $1,000,000.00.
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(d) Notice of Proposed Sales, Encumbrances,
Refinance or Transfer. The Borrower will give notice to the Agent of
any proposed or completed sale, encumbrance, refinance or transfer
of any Real Estate of the Borrower or its Subsidiaries within any
fiscal quarter of the Borrower, such notice to be submitted
together with the Compliance Certificate provided or required to
be provided to the Banks under Section 7.4 with respect to such
fiscal quarter. The Compliance Certificate shall with respect to
any proposed or completed sale, encumbrance, refinance or
transfer be adjusted in the best good-faith estimate of the
Borrower to give effect to such sale, encumbrance, refinance or
transfer and demonstrate that no Default or Event of Default with
respect to the covenants referred to therein shall exist after
giving effect to such sale, encumbrance, refinance or transfer.
Notwithstanding the foregoing, in the event of any sale,
encumbrance, refinance or transfer of any Real Estate of the
Borrower or its Subsidiaries involving individually or in a
series of related transactions an amount in excess of
$30,000,000.00, the Borrower shall promptly give notice to the
Agent of such transaction, which notice shall be accompanied by a
certification of the chief financial officer of the sole general
partner of the Borrower that no Default or Event of Default shall
exist after giving affect to such event.
(e) Notification of Banks. Promptly after
receiving any notice under this Section 7.5, the Agent will forward
a copy thereof to each of the Banks, together with copies of any
certificates or other written information that accompanied such
notice.
Section 7.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done
all things necessary to preserve and keep in full force and effect
its existence as a Delaware limited partnership. The Borrower
will cause each of its Subsidiaries to do or cause to be done all
things necessary to preserve and keep in full force and effect
its legal existence. The Borrower will do or cause to be done
all things necessary to preserve and keep in full force all of
its rights and franchises and those of its Subsidiaries. The
Borrower will, and will cause each of its Subsidiaries to,
continue to engage primarily in the businesses now conducted by
it and in related businesses.
(b) The Borrower (i) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct
of its business or the business of its Subsidiaries to be maintained
and kept in good condition, repair and working order (ordinary
wear and tear excepted) and supplied with all necessary
equipment, and (ii) will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof in
all cases in which the failure so to do would have a material
adverse effect on the condition of its properties or on the
financial condition, assets or operations of the Borrower and its
Subsidiaries.
Section 7.7. Insurance. The Borrower will, at its
expense, procure and maintain or cause to be procured and
maintained insurance covering the Borrower, its Subsidiaries and
their respective properties in such amounts and against such
risks and casualties as are customary for properties of similar
character and location, due regard being given to the type of
improvements thereon, their construction, location, use and
occupancy.
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Section 7.8. Taxes. The Borrower and each Subsidiary will
duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and
other governmental charges imposed upon it and upon the Real
Estate, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid might by law become a lien
or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on its books adequate reserves
with respect thereto; and provided, further, that forthwith upon
the commencement of proceedings to foreclose any lien that may
have attached as security therefor, the Borrower and each
Subsidiary of the Borrower either (i) will provide a bond issued
by a surety reasonably acceptable to the Agent and sufficient to
stay all such proceedings or (ii) if no such bond is provided,
will pay each such tax, assessment, charge, levy or claim. The
Borrower shall certify annually to the Agent that the Borrower is
in compliance with this Section 7.8 with respect to the
Unencumbered Operating Properties.
Section 7.9. Inspection of Properties and Books. The
Borrower shall permit the Banks, through the Agent or any
representative designated by the Agent, at the Borrower's expense
to visit and inspect any of the properties of the Borrower or any
of its Subsidiaries, to examine the books of account of the
Borrower and its Subsidiaries (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and
accounts of the Borrower and its Subsidiaries with, and to be
advised as to the same by, its officers, all at such reasonable
times and intervals as the Agent or any Bank may reasonably
request. The Banks shall use good faith efforts to coordinate
such visits and inspections so as to minimize the interference
with and disruption to the Borrower's normal business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses,
and Permits. The Borrower will comply with, and will cause each
of its Subsidiaries to comply in all respects with (i) all
applicable laws and regulations now or hereafter in effect
wherever its business is conducted, including all Environmental
Laws, (ii) the provisions of its corporate charter, partnership
agreement or declaration of trust, as the case may be, and other
charter documents and bylaws, (iii) all agreements and
instruments to which it is a party or by which it or any of its
properties may be bound, (iv) all applicable decrees, orders, and
judgments, and (v) all licenses and permits required by
applicable laws and regulations for the conduct of its business
or the ownership, use or operation of its properties. If at any
time while any Loan or Note is outstanding or the Banks have any
obligation to make Loans hereunder, any authorization, consent,
approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or
required in order that the Borrower may fulfill any of its
obligations hereunder, the Borrower will immediately take or
cause to be taken all steps necessary to obtain such
authorization, consent, approval, permit or license and furnish
the Agent and the Banks with evidence thereof.
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Section 7.11. Use of Proceeds. The Borrower will use the
proceeds of the Loans solely to provide short-term financing (a)
for the acquisition by the Borrower of fee interests in Real
Estate which is utilized principally for self-storage facilities
or mini-warehouses (including reasonable transaction costs
related thereto) or Investments permitted by Section 8.3(j), (b)
subject to Section 8.9, for the development by the Borrower, its
Subsidiaries or Affiliates of Real Estate to be used principally
for self-storage facilities or mini-warehouses, (c) for working
capital purposes, and (d) for such other purposes as the Majority
Banks in their discretion from time to time may agree to in
writing. Notwithstanding anything herein to the contrary, the
amount of Loans outstanding at any time which has been advanced
for the purpose described in Section 7.11(c) shall not exceed
$50,000,000.00. Any repayment of a principal portion of the
Loans at a time when any amount of Loans has been advanced for
the purpose described in Section 7.11(c) shall be first allocated
for the purposes of this Section 7.11 to reduce the amount
advanced for the purpose described in Section 7.11(c).
Section 7.12. Further Assurances. The Borrower will
cooperate with, and will cause each of its Subsidiaries to
cooperate with the Agent and the Banks and execute such further
instruments and documents as the Banks or the Agent shall
reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Loan
Documents.
Section 7.13. Management; Business Operations. The
Borrower shall cause all Unencumbered Operating Properties at all
times to be managed by Borrower and no change shall occur in such
management without the prior written approval of the Majority
Banks. The Borrower shall operate its business as described in
the Prospectus Supplement and in compliance with the terms and
conditions of this Agreement and the Loan Documents.
Section 7.14. Unencumbered Operating Properties.
(a) The Borrower shall at all times own
Unencumbered Operating Properties which satisfy all of the
following conditions:
(i) the Unencumbered Operating Properties
shall consist solely of Real Estate which has an aggregate
physical occupancy level (on a portfolio basis) of at least
seventy-five percent (75%) for the previous two (2) fiscal
quarters of the Borrower based on bona fide arms-length
tenant leases requiring current rental payments; and
(ii) no more than twenty percent (20%) of
the Asset Value of the Unencumbered Operating Properties may be
located in any one standard metropolitan statistical area.
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(b) The Borrower shall provide to the Agent as of
the Closing Date and concurrently with the delivery of the financial
statements described in Section 7.4(a) (i) a list of the
Unencumbered Operating Properties, (ii) the certification of the
chief financial officer of the sole general partner of the
Borrower of the Asset Values and that such properties are in
compliance with Section 7.14(a) and Section 9.5, (iii) operating
statements setting forth the Net Operating Income and capital
expenditures for each of the Unencumbered Operating Properties
for the previous two (2) fiscal quarters certified as true and
correct by the chief financial officer of the sole general
partner of the Borrower, and (iv) that the Unencumbered Operating
Properties comply with the terms of Sections 6.17 and 6.20. In
the event that all or any material portion of a property within
the Unencumbered Operating Properties shall be damaged or taken
by condemnation, then such property shall no longer be a part of
the Unencumbered Operating Properties unless and until any damage
to such Real Estate is repaired or restored, such Real Estate
becomes fully operational and the Agent shall receive evidence
satisfactory to the Agent of the value and Net Operating Income
of such Real Estate following such repair or restoration.
Schedule 7.14 hereto sets forth the initial Unencumbered
Operating Properties and the Person that owns such Unencumbered
Operating Properties.
(c) Nothing herein shall be construed as an
obligation of the Borrower to grant any mortgage, pledge or
security interest to the Agent or the Banks in any of the
Unencumbered Operating Properties, nor as an obligation of the
Borrower to reserve any particular Unencumbered Operating Property
as potential collateral for the Agent and the Banks.
Section 7.15. Limiting Agreements.
(a) Neither Borrower nor any of its Subsidiaries
shall enter into, any agreement, instrument or transaction which has
or may have the effect of prohibiting or limiting Borrower's or any
Additional Guarantor's ability to pledge to Agent Real Estate
which is owned one hundred percent (100%) in fee simple, by the
Borrower or an Additional Guarantor which is free and clear of
all Liens other than the Liens permitted in Section 8.2(i), (iii)
and (vi) and which has an aggregate value equal to the Borrowing
Base as security for the Loans. Borrower shall take, and shall
cause its Subsidiaries to take, such actions as are necessary to
preserve the right and ability of Borrower and the Additional
Guarantors to pledge those Real Estate assets subject to the
limitation described above, as security for the Loans without any
such pledge after the date hereof causing or permitting the
acceleration (after the giving of notice or the passage of time,
or otherwise) of any other Indebtedness of Borrower or any of its
Subsidiaries.
(b) Borrower shall, upon demand, provide to the
Agent such evidence as the Agent may reasonably require to evidence
Borrower's compliance with this Section 7.15, which evidence
shall include, without limitation, copies of any agreements or
instruments which would in any way restrict or limit the
Borrower's or any Additional Guarantor's ability to pledge assets
as security for Indebtedness, or which provide for the occurrence
of a default (after the giving of notice or the passage of time,
or otherwise) if assets are pledged in the future as security for
Indebtedness of the Borrower or any of its Subsidiaries.
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Section 7.16. Limiting Agreements. Should the Borrower or
the Guarantor or any of their respective Subsidiaries enter into
or modify any agreements or documents pertaining to any existing
or future Indebtedness permitted by Section 8.1(h), which
agreements or documents include covenants (whether affirmative or
negative), warranties, defaults or events of default (or any
other provision which may have the same practical effect as any
of the foregoing) which are individually or in the aggregate more
restrictive against the Borrower, the Guarantor or their
respective Subsidiaries than those set forth herein or in any of
the other Loan Documents, the Borrower shall promptly notify the
Agent and, if requested by the Agent or the Majority Banks, the
Borrower, the Agent, and the Banks shall promptly amend this
Agreement and the other Loan Documents to include some or all of
such more restrictive provisions as determined by the Agent or
the Majority Banks in their sole discretion, and the Borrower
shall cause the Guarantor to consent to such amendment.
Section 7.17. Ownership of Real Estate. All interests
(whether direct or indirect) of the Borrower, the Guarantor or
their respective Subsidiaries in income-producing real estate
assets acquired after the date hereof shall be owned directly by
the Borrower or, subject to Section 8.3, Subsidiaries or
Affiliates of the Borrower; provided, however that if any such
assets are acquired by a Subsidiary of the Borrower, such
Subsidiary shall as a condition to such acquisition become an
Additional Guarantor and comply with the terms of Section 7.19.
Section 7.18. Distributions of Income to the Borrower.
The Borrower shall cause all of its Subsidiaries to promptly
distribute to the Borrower (but not less frequently than once
each fiscal quarter of the Borrower, unless otherwise approved by
the Agent), whether in the form of dividends, distributions or
otherwise, all profits, proceeds or other income relating to or
arising from its Subsidiaries' use, operation, financing,
refinancing, sale or other disposition of their respective assets
and properties after (a) the payment by each Subsidiary of its
Debt Service and operating expenses for such quarter and (b) the
establishment of reasonable reserves for the payment of operating
expenses not paid on at least a quarterly basis and capital
improvements to be made to such Subsidiary's assets and
properties approved by such Subsidiary in the ordinary course of
business consistent with its past practices.
Section 7.19. Additional Guarantors. In the event that
any Subsidiary of the Borrower that is not a Guarantor owns Real
Estate which would otherwise qualify as an Unencumbered Operating
Property and the Borrower desires for the same to become an
Unencumbered Operating Property, then such property may become an
Unencumbered Operating Property but only in the event that all of
the terms and conditions of this Section 7.19 are satisfied:
(a) The Borrower and/or Storage Trust Guarantor
(i) shall and shall continue to fully own such Subsidiary (each such
entity is hereinafter referred to as an "Additional Guarantor");
(b) The organizational agreements of such
Subsidiary or such other resolutions or consents satisfactory to
Agent shall specifically authorize such Subsidiary to guaranty
the Obligations and to pledge the assets of such Subsidiary as
security for the Obligations and the Borrower shall certify to
the Agent that applicable law does not preclude such Subsidiary
from executing such guaranty or pledging its assets to secure the
Obligations;
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(c) All representations in the Loan Documents made
by or with respect to Borrower or Guarantors and their Subsidiaries
in the Loan Documents shall be true and correct with respect to
such Additional Guarantor;
(d) All covenants and agreements herein of the
Borrower and the Guarantors and their Subsidiaries shall be true
and correct with respect to such Additional Guarantor;
(e) No Default or Event of Default shall
exist or might exist in the event that such Subsidiary becomes
an Additional Guarantor or acquires such assets;
(f) Such Additional Guarantor executes and
delivers to Agent a Guaranty and either executes or becomes a party
to the Contribution Agreement. The Contribution Agreement shall
constitute the valid and legally binding obligations of such
parties enforceable against them in accordance with the terms and
provisions thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy
of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may
be brought;
(g) All of the conditions set forth in Section
10 applicable to Guarantors or Loan Documents executed by Guarantors
shall have been satisfied; and
(h) The Real Estate assets acquired or owned
by such Additional Guarantor shall qualify as Unencumbered Operating
Properties hereunder, and such assets, when taken together with
the other Real Estate assets owned by other Guarantors, shall not
cause the Borrower to be in violation of the twenty percent (20%)
limitation on the ownership of Unencumbered Operating Properties
by entities other than the Borrower.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan
or Note is outstanding or any of the Banks has any obligation to
make any Loans:
Section 8.1. Restrictions on Indebtedness. The Borrower
will not, and will not permit any of its Subsidiaries to, create,
incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks arising under any of
the Loan Documents;
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(b) current liabilities of the Borrower or its
Subsidiaries incurred in the ordinary course of business but not
incurred through (i) the borrowing of money, or (ii) the
obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with
normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time
be required to be made in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or
awards that have been in force for less than the applicable period
for taking an appeal so long as execution is not levied thereunder
or in respect of which the Borrower shall at the time in good faith
be prosecuting an appeal or proceedings for review and in respect
of which a stay of execution shall have been obtained pending
such appeal or review;
(e) endorsements for collection, deposit or
negotiation and warranties of products or services, in each case
incurred in the ordinary course of business;
(f) Indebtedness in respect of reverse repurchase
agreements having a term of not more than 180 days with respect to
Investments described in Section 8.3(d) or (e);
(g) Secured Indebtedness of the Borrower and
its Subsidiaries provided that the aggregate outstanding principal
amount of such Indebtedness shall not exceed twenty percent (20%)
of the Borrower's Consolidated Total Assets;
(h) subject to the provisions of Section 9,
unsecured subordinated debt or senior unsecured long-term debt of
the Borrower and its Subsidiaries (which senior unsecured long term
debt of the Borrower may rank pari passu with the Obligations),
provided that (i) the aggregate outstanding principal amount of
such Indebtedness shall not exceed thirty-five percent (35%) of
the Borrower's Consolidated Total Assets, and (ii) at the time
such Indebtedness is issued the scheduled maturity date of such
Indebtedness is not sooner than 180 days after the Maturity Date,
and provided further that neither the Borrower nor any of its
Subsidiaries shall incur any of the Indebtedness described in
this Section 8.1(h) unless it shall have provided to the Banks
(A) prior written notice of the proposed issuance of such
Indebtedness, a statement that no Default or Event of Default
exists and a certificate that the Borrower will be in compliance
with its covenants referred to therein after giving effect to
such incurrence, (B) evidence reasonably satisfactory to the
Agent that the Rating Agency has been advised of the issuance of
such Indebtedness within five (5) days of such issuance, and (C)
upon the request of Agent, evidence that the annual rating
maintenance fee has been paid to the Rating Agency; and
(i) subject to the provisions of Sections 8
and 9, Indebtedness under agreements to purchase property or any
interest therein.
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Section 8.2. Restrictions on Liens, Etc. The Borrower
will not, and will not permit any of its Subsidiaries to, (a)
create or incur or suffer to be created or incurred or to exist
any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired,
or upon the income or profits therefrom; (b) transfer any of its
property or assets or the income or profits therefrom for the
purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its
general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other
title retention or purchase money security agreement, device or
arrangement; (d) suffer to exist for a period of more than 30
days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge
or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper or instruments, with or without
recourse; or (f) incur or maintain any obligation to any holder
of Indebtedness of the Borrower or such Subsidiary which
prohibits the creation or maintenance of any lien securing the
Obligation (collectively "Liens"); provided that the Borrower and
any Subsidiary of the Borrower may create or incur or suffer to
be created or incurred or to exist:
(i) liens on properties to secure taxes,
assessments and other governmental charges or claims for
labor, material or supplies in respect of obligations not
overdue except as otherwise permitted by Section 8.1(c);
(ii) liens on properties in respect of
judgments, awards or indebtedness, the Indebtedness with
respect to which is permitted by Section 8.1(d) or Section
8.1(g);
(iii) encumbrances on properties consisting of
easements, rights of way, zoning restrictions, restrictions
on the use of real property and defects and irregularities
in the title thereto, landlord's or lessor's liens under
leases to which the Borrower or a Subsidiary of the Borrower
is a party, and other minor non-monetary liens or
encumbrances none of which interferes materially with the
use of the property affected in the ordinary conduct of the
business of the Borrower and its Subsidiaries or with
respect to which a nationally recognized title insurance
company has insured the Borrower against loss or damage
resulting therefrom, which defects do not individually or in
the aggregate have a materially adverse effect on the
business of the Borrower individually or of the Borrower and
its Subsidiaries on a consolidated basis;
(iv) liens on Real Estate and Short-term
Investments securing Indebtedness permitted by Section 8.1(g);
(v) with the prior approval of the Majority
Banks, liens on Real Estate acquired by the Borrower after the
date of this Agreement secured by previously existing mortgages,
deeds of trust or deeds to secure debt; and
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(vi) liens in favor of the Agent and the Banks as
security for the Obligations.
Section 8.3. Restrictions on Investments. The Borrower
will not, and will not permit any of its Subsidiaries to, make or
permit to exist or to remain outstanding any Investment except
Investments in:
(a) marketable direct or guaranteed obligations of
the United States of America that mature within one (1) year from the
date of purchase by the Borrower or its Subsidiary;
(b) marketable direct obligations of any of the
following: Federal Home Loan Mortgage Corporation, Student Loan
Marketing Association, Federal Home Loan Banks, Federal National
Mortgage Association, Government National Mortgage Association,
Bank for Cooperatives, Federal Intermediate Credit Banks, Federal
Financing Banks, Export-Import Bank of the United States, Federal
Land Banks, or any other agency or instrumentality of the United
States of America;
(c) demand deposits, certificates of deposit,
bankers acceptances and time deposits of United States banks having
total assets in excess of $100,000,000; provided, however, that
the aggregate amount at any time so invested with any single bank
having total assets of less than $1,000,000,000 will not exceed $200,000;
(d) securities commonly known as "commercial
paper" issued by a corporation organized and existing under the
laws of the United States of America or any State which at the
time of purchase are rated by Moody's Investors Service, Inc. or
by Standard & Poor's Corporation at not less than "P 1" if then
rated by Moody's Investors Service, Inc., and not less than
"A 1", if then rated by Standard & Poor's Corporation;
(e) mortgage-backed securities guaranteed by
the Government National Mortgage Association, the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation and other mortgage-backed bonds which at the time of
purchase are rated by Moody's Investors Service, Inc. or by
Standard & Poor's Corporation at not less than "Aa" if then rated
by Moody's Investors Service, Inc. and not less than "AA" if then
rated by Standard & Poor's Corporation;
(f) repurchase agreements having a term not
greater than 90 days and fully secured by securities described in
the foregoing subsection (a), (b) or (e) with banks described in the
foregoing subsection (c) or with financial institutions or other
corporations having total assets in excess of $500,000,000;
(g) shares of so-called "money market funds"
registered with the SEC under the Investment Company Act of 1940
which maintain a level per-share value, invest principally in
investments described in the foregoing subsections (a) through
(f) and have total assets in excess of $50,000,000;
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(h) Investments in fee interests in Real
Estateutilized principally for self-storage facilities or
mini-warehouses, including earnest money deposits relating
thereto and transaction costs;
(i) Subject to Section 8.3(l), Investments in
wholly-owned Subsidiaries of the Borrower and Storage Trust Guarantor;
(j) Investments in Subsidiaries of the Borrower
that are not wholly-owned by the Borrower and Storage Trust Guarantor
and in Affiliates of the Borrower which Investments are not
properly included within Section 8.3(l), provided that in no
event shall the aggregate of such Investments exceed ten percent
(10%) of the Borrower's Consolidated Total Assets;
(k) Investments in purchase money notes payable
to the order of Borrower or any of its Subsidiaries which are
received in connection with the sale by Borrower or any of its
Subsidiaries of Real Estate and in other notes which are not
properly included within Section 8.3(l), provided that the
aggregate outstanding principal balance of such purchase money
notes and other notes shall not at any time exceed five percent
(5%) of Borrower's Consolidated Total Assets; and
(l) (i) Investments in Subsidiaries and Affiliates
of the Borrower, which Subsidiaries and Affiliates are engaged in
development activity pursuant to Section 8.9, (ii) Investments in
mortgages and notes receivables from such Subsidiaries and
Affiliates, and (iii) Investments in mortgages and notes
receivables from parties other than Subsidiaries and Affiliates
of the Borrower which parties are engaged in the development of
self-storage facilities or mini-warehouses which are to be sold
to Borrower or a Subsidiary or Affiliate of the Borrower and
which notes are adequately secured; provided that in no event
shall such Investments (including the principal amount payable
pursuant to such notes) exceed twenty percent (20%) of the
Borrower's Consolidated Total Assets. For the purposes hereof,
notes receivable shall be valued at face value (subject to
reduction as a result of payments thereon).
Section 8.4. Merger, Consolidation. The Borrower will
not, and will not permit any of its Subsidiaries to, become a
party to any merger or consolidation without the prior written
consent of the Majority Banks except (i) the merger or
consolidation of one or more of the Subsidiaries of the Borrower
with and into the Borrower and (ii) the merger or consolidation
of two or more Subsidiaries of the Borrower.
Section 8.5. Sale and Leaseback. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby the Borrower or any
Subsidiary of the Borrower shall sell or transfer any Real Estate
owned by it in order that then or thereafter the Borrower or any
Subsidiary shall lease back such Real Estate.
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Section 8.6. Compliance with Environmental Laws. The
Borrower will not, and will not permit any of its Subsidiaries,
to do any of the following: (a) use any of the Real Estate or
any portion thereof as a facility for the handling, processing,
storage or disposal of Hazardous Substances, except for small
quantities of Hazardous Substances used in the ordinary course of
business and in compliance with all applicable Environmental
Laws, (b) cause or permit to be located on any of the Real Estate
any underground tank or other underground storage receptacle for
Hazardous Substances except in full compliance with Environmental
Laws, (c) generate any Hazardous Substances on any of the Real
Estate except in full compliance with Environmental Laws, (d)
conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a Release of Hazardous Substances on,
upon or into the Real Estate or any surrounding properties or any
threatened Release of Hazardous Substances which might give rise
to liability under CERCLA or any other Environmental Law, or
(e) directly or indirectly transport or arrange for the transport
of any Hazardous Substances (except in compliance with all
Environmental Laws).
The Borrower shall:
(i) in the event of any change in Environmental Laws
governing the assessment, release or removal of Hazardous
Substances, which change would lead a prudent lender to require
additional testing to avail itself of any statutory insurance or
limited liability, take all action (including, without
limitation, the conducting of engineering tests at the sole
expense of the Borrower) to confirm that no Hazardous Substances
are or ever were Released or disposed of on the Real Estate; and
(ii) if any Release or disposal of Hazardous Substances
shall occur or shall have occurred on the Real Estate (including
without limitation any such Release or disposal occurring prior
to the acquisition of such Real Estate by the Borrower), cause
the prompt containment and removal of such Hazardous Substances
and remediation of the Real Estate in full compliance with all
applicable laws and regulations and to the satisfaction of the
Majority Banks; provided, that the Borrower shall be deemed to be
in compliance with Environmental Laws for the purpose of this
clause (ii) so long as it or a responsible third party with
sufficient financial resources is taking reasonable action to
remediate or manage any event of noncompliance to the
satisfaction of the Majority Banks and no action shall have been
commenced by any enforcement agency. The Majority Banks may
engage their own Environmental Engineer to review the
environmental assessments and the Borrower's compliance with the
covenants contained herein.
At any time after an Event of Default shall have occurred
hereunder, or, whether or not an Event of Default shall have
occurred, at any time that the Agent or the Majority Banks shall
have reasonable grounds to believe that a Release or threatened
Release of Hazardous Substances may have occurred, relating to
any Real Estate, or that any of the Mortgaged Properties is not
in compliance with the Environmental Laws, the Agent may at its
election (and will at the request of the Majority Banks) obtain
such environmental assessments of such Real Estate prepared by an
Environmental Engineer as may be necessary or advisable for the
purpose of evaluating or confirming (i) whether any Hazardous
Substances are present in the soil or water at or adjacent to
such Real Estate and (ii) whether the use and operation of such
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Real Estate comply with all Environmental Laws. Environmental
assessments may include detailed visual inspections of such Real
Estate including, without limitation, any and all storage areas,
storage tanks, drains, dry wells and leaching areas, and the
taking of soil samples, as well as such other investigations or
analyses as are necessary or appropriate for a complete
determination of the compliance of such Real Estate and the use
and operation thereof with all applicable Environmental Laws.
All such environmental assessments shall be at the sole cost and
expense of the Borrower.
Section 8.7. Distributions. The Borrower will not pay any
Distribution to the partners of the Borrower if such Distribution
is in excess of the greater of the amount which, when added to
the amount of all other Distributions paid in the same fiscal
quarter and the preceding fiscal quarter would exceed (i) ninety
percent (90%) of its Funds from Operations for the two (2)
consecutive fiscal quarters ending prior to the quarter in which
such Distribution is paid, or (ii) one hundred percent (100%) of
its Funds Available for Distribution for the two (2) consecutive
fiscal quarters ending prior to the quarter in which such
Distribution is paid. The foregoing limitation on Distributions
shall not preclude the Borrower from paying Distributions to
Storage Trust Guarantor in an amount equal to the minimum
Distributions required under the Code to maintain the REIT Status
of Storage Trust Guarantor.
Section 8.8. Asset Sales. Neither the Borrower nor any
Subsidiary shall sell, transfer or otherwise dispose of any Real
Estate or any of the Unencumbered Operating Properties in excess
of $20,000,000.00 (except as the result of a condemnation or
casualty and except for the granting of Permitted Liens, as
applicable) unless there shall have been delivered to the Banks a
statement that no Default or Event of Default exists and a
certification that the Borrower will be in compliance with its
covenants referred to therein after giving effect to such sale,
transfer or other disposition.
Section 8.9. Development Activity. Neither the Guarantor,
the Borrower nor any Subsidiary or Affiliate thereof shall
engage, directly or indirectly, in the development, construction
or substantial renovation or rehabilitation of Real Estate,
except that the Borrower or a Subsidiary or Affiliate may develop
for its own account during a fiscal year of the Borrower
properties to be used principally for self-storage facilities or
mini-warehouses provided that in any fiscal year such development
shall be limited to the lesser of (i) any number of projects with
respect to which the aggregate cost of acquiring the Real Estate
and developing the improvements thereon (assuming the full costs
of developing such properties) is not reasonably anticipated to
exceed twenty percent (20%) of the Asset Value of the Borrower's
Consolidated Total Assets and (ii) any number of projects with
respect to which the aggregate Net Rentable Area to be developed
that would be available for leasing upon completion does not
exceed ten percent (10%) of the Net Rentable Area within the Real
Estate owned in fee by the Borrower and its Subsidiaries for the
preceding four fiscal quarters (excluding such projects under
development). Any Investments pursuant to Section 8.3(l) shall
be counted against the foregoing limits. For purposes of this
Section 8.9, the term "development" shall include the new
construction of a self-storage facility or mini-warehouse, but
shall not include the addition of related facilities to existing
Real Estate which is already used principally for a self-storage
facility or mini-warehouse. A project shall be considered to be
under development until final certificates of occupancy or the
equivalent have been issued for the entire project.
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Section 8.10. Sources of Capital. The Borrower shall, at
all times that the Borrower or any of its Subsidiaries is
engaging in any development as provided in Section 8.9 or has
entered into any agreement to acquire properties under purchase
agreements, maintain available sources of capital equal to the
total cost to acquire and complete such developments and to
purchase such properties, which sources of capital shall be
acceptable to the Agent in its reasonable discretion. Amounts
available to be disbursed for such purposes pursuant to this
Agreement may be considered as a source of capital for the
purposes of this Section 8.10.
Section 8.11. Restriction on Prepayment of Indebtedness.
The Borrower shall not prepay the principal amount, in whole or
in part, of any Indebtedness other than the Obligations after the
occurrence of any Event of Default; provided, however, that this
Section 8.11 shall not prohibit the prepayment of Indebtedness
which is financed solely from the proceeds of a new loan which
would otherwise be permitted by the terms of Section 8.1.
Section 8.12. Restrictions on Dilution. The Borrower
shall not permit Storage Trust Guarantor to directly own and
control less than fifty percent (50%) of the ownership and voting
interests in the Borrower.
Section 9. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan
or Note is outstanding or any Bank has any obligation to make any
Loans it will comply with the following:
Section 9.1. Liabilities to Assets Ratio.
(a) The Borrower will not, at the end of any
fiscal quarter, permit the ratio of Consolidated Total Liabilities
to Consolidated Total Assets of the Borrower to exceed 0.50 to 1.
(b) The Borrower will not permit the Consolidated
Debt of the Borrower and its Subsidiaries to exceed forty-five percent
(45%) of Consolidated Adjusted Capitalization of the Borrower and
its Subsidiaries.
(c) The Borrower will not permit the Consolidated
Debt of Storage Trust Guarantor and its Subsidiaries to exceed forty-
five percent (45%) of Consolidated Adjusted Capitalization of
Storage Trust Guarantor and its Subsidiaries.
(d) Capitalized terms used in Section 9.1(b) and
(c) that are not otherwise defined in Section 1.1 shall have the
meanings set forth on Schedule 9.1 hereof.
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Section 9.2. Debt Coverage. The Borrower will not, at the
end of any fiscal quarter, permit the Consolidated Operating Cash
Flow of the Borrower and its Subsidiaries for such quarter and
the preceding quarter (treated as a single accounting period)
(the "Test Period") to be less than 2.25 times the Debt Service
for the Test Period.
Section 9.3. Fixed Charge Coverage. The Borrower will
not, at the end of any fiscal quarter, permit the sum equal to
(a) Funds from Operations plus (b) interest expense of the
Borrower and its Subsidiaries minus (c) the Capital Improvement
Reserve minus (d) the minimum Distributions required under the
Code to maintain the REIT Status of the Guarantor minus (e) the
Actual Scheduled Principal Payments for the Test Period, to be
less than 1.25 times the interest expense of the Borrower and its
Subsidiaries (including capitalized interest) for the Test
Period.
Section 9.4. Shareholder's Equity. The Borrower will not,
at the end of any fiscal quarter, permit the Shareholder's Equity
to be less than the sum of (a) $240,000,000.00 plus (b) ninety
percent (90%) of the net proceeds from any Equity Offering of
Storage Trust Guarantor made after the Closing Date.
Section 9.5. Borrowing Base. Borrower will not, at the
end of any fiscal quarter, permit the outstanding principal
balance of the Loans as of the date of determination to be
greater than the Borrowing Base as determined as of the same
date.
Section 10. CLOSING CONDITIONS.
The obligations of the Agent and the Banks to make the
initial Loans shall be subject to the satisfaction of the
following conditions precedent on or prior to January 25, 1998:
Section 10.1. Loan Documents. Each of the Loan Documents
shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be
in form and substance satisfactory to the Majority Banks. The
Agent shall have received a fully executed copy of each such
document, except that each Bank shall have received a fully
executed counterpart of its Note.
Section 10.2. Certified Copies of Organizational
Documents. The Agent shall have received from the Borrower a
copy, certified as of a recent date by the appropriate officer of
each State in which the Borrower and the Guarantor is organized
and a duly authorized officer or partner of Borrower and the
Guarantor, as applicable, to be true and complete, of the
partnership agreement or declaration of trust of the Borrower and
the Guarantor, as applicable, or its qualification to do
business, as applicable, as in effect on such date of
certification.
Section 10.3. Bylaws; Resolutions. All action on the part
of the Borrower and the Guarantor necessary for the valid
execution, delivery and performance by the Borrower and the
Guarantor of this Agreement and the other Loan Documents to which
it is or is to become a
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party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Agent shall have been provided to the
Agent. The Agent shall have received from the Borrower and the
Guarantor true copies of their respective bylaws and the
resolutions adopted by its partners or board of trustees
authorizing the transactions described herein, each certified by
its general partner or secretary as of a recent date to be true and
complete.
Section 10.4. Incumbency Certificate; Authorized Signers.
The Agent shall have received from the Borrower and the Guarantor
an incumbency certificate, dated as of the Closing Date, signed
by a duly authorized partner or officer of the Borrower and the
Guarantor, as applicable, and giving the name and bearing a
specimen signature of each individual who shall be authorized to
sign, in the name and on behalf of the Borrower and the
Guarantor, each of the Loan Documents to which the Borrower and
the Guarantor is or is to become a party. The Agent also shall
have received from the Borrower a certificate, dated as of the
Closing Date, signed by a duly authorized partner of the Borrower
and giving the name of and specimen signature of each individual
who shall be authorized to make Loan and Conversion Requests and
to give notices and to take other action on behalf of the
Borrower under the Loan Documents.
Section 10.5. Opinion of Counsel. The Agent shall have
received a favorable opinion addressed to the Banks and the Agent
and dated as of the Closing Date, in form and substance
satisfactory to the Agent, from Craig A. Van Matre, counsel of
the Borrower and the Guarantor, as to such matters as the Agent
shall reasonably request.
Section 10.6. Payment of Fees. The Borrower shall have
paid to the Agent the fees required to be paid as of the Closing
Date pursuant to Section 4.2 and Section 4.2A.
Section 10.7. Performance; No Default. The Borrower shall
have performed and complied with all terms and conditions herein
required to be performed or complied with by it on or prior to
the Closing Date, and on the Closing Date there shall exist no
Default or Event of Default.
Section 10.8. Representations and Warranties. The
representations and warranties made by the Borrower and the
Guarantor in the Loan Documents or otherwise made by or on behalf
of the Borrower, the Guarantor or any Subsidiaries in connection
therewith or after the date thereof shall have been true and
correct in all material respects when made and shall also be true
and correct in all material respects on the Closing Date.
Section 10.9. Proceedings and Documents. All proceedings
in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be reasonably
satisfactory to the Agent and the Agent's Special Counsel in form
and substance, and the Agent shall have received all information
and such counterpart originals or certified copies of such
documents and such other certificates, opinions or documents as
the Agent and the Agent's Special Counsel may reasonably require.
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Section 10.10. Compliance Certificate. A Compliance
Certificate dated as of the date of the Closing Date
demonstrating compliance with each of the covenants calculated
therein as of the most recent fiscal quarter end for which the
Borrower and the Guarantor have provided financial statements
under Section 6.4 adjusted in the best good faith estimate of the
Borrower and the Guarantor dated as of the date of the Closing
Date shall have been delivered to the Agent.
Section 10.11. Other. The Agent shall have reviewed such
other documents, instruments, certificates, opinions, assurances,
consents and approvals as the Agent or the Agent's Special
Counsel may reasonably have requested.
Section 11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or
after the Closing Date, shall also be subject to the satisfaction
of the following conditions precedent:
Section 11.1. Prior Conditions Satisfied. All conditions
set forth in Section 10 shall continue to be satisfied as of the
date upon which any Loan is to be made.
Section 11.2. Representations True; No Default. Each of
the representations and warranties of the Borrower and the
Guarantor contained in this Agreement, the other Loan Documents
or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of
which they were made and shall also be true at and as of the time
of the making of such Loan, with the same effect as if made at
and as of that time (except to the extent of changes resulting
from transactions contemplated or permitted by this Agreement and
the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and
be continuing.
Section 11.3. No Legal Impediment. No change shall have
occurred in any law or regulations thereunder or interpretations
thereof that in the reasonable opinion of any Bank would make it
illegal for such Bank to make such Loan.
Section 11.4. Governmental Regulation. Each Bank shall
have received such statements in substance and form reasonably
satisfactory to such Bank as such Bank shall reasonably require
for the purpose of compliance with any applicable regulations of
the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
Section 11.5. Proceedings and Documents. All proceedings
in connection with the Loan shall be satisfactory in substance
and in form to the Agent, and the Agent shall have received all
information and such counterpart originals or certified or other
copies of such documents as the Agent may reasonably request.
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Section 11.6. Borrowing Documents. In the case of any
request for a Loan, the Agent shall have received a copy of the
request for a Loan required by Section 2.6 in the form of Exhibit
C hereto, fully completed.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any
of the following events ("Events of Default" or, if the giving of
notice or the lapse of time or both is required, then, prior to
such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal
of the Loans when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity
or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest
on the Loans or any other sums due hereunder or under any of the other
Loan Documents, when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(c) the Borrower shall fail to comply with any
covenant contained in Section 7.14 or Section 7.15;
(d) the Borrower shall fail to comply with any
covenant contained in Section 9, and such failure shall continue
for 30 days after written notice thereof shall have been given to
the Borrower by the Agent;
(e) the Borrower or any of its Subsidiaries
or the Guarantor shall fail to perform any other term, covenant or
agreement contained herein or in any of the other Loan Documents
(other than those specified above in this Section 12);
(f) any representation or warranty of the Borrower
or any of its Subsidiaries or the Guarantor in this Agreement or any
other Loan Document, or in any report, certificate, financial
statement, request for a Loan, or in any other document or
instrument delivered pursuant to or in connection with this
Agreement, any advance of a Loan or any of the other Loan
Documents shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(g) the Borrower or any of its Subsidiaries or
the Guarantor shall fail to pay when due or at maturity, or within
any applicable period of grace, any obligation for borrowed money
or credit received or other Indebtedness, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing any such
borrowed money or credit received or other Indebtedness for such
period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or
of any obligations issued thereunder to accelerate the maturity
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thereof; provided that the events described in this Section
12.1(g) shall not constitute an Event of Default unless such
failure to pay or perform, together with any other failures to
pay or perform, involve singly or in the aggregate obligations
for borrowed money or credit received or other Indebtedness
totaling in excess of $5,000,000.00;
(h) the Borrower or any of its Subsidiaries
or the Guarantor, (i) shall make an assignment for the benefit of
creditors, or admit in writing its general inability to pay or
generally fail to pay its debts as they mature or become due, or
shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of the Borrower or any of its
Subsidiaries or the Guarantor or of any substantial part of the
assets of any thereof, (ii) shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries or
the Guarantor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or
(iii) shall take any action to authorize or in furtherance of any
of the foregoing;
(i) a petition or application shall be filed
for the appointment of a trustee or other custodian, liquidator or
receiver of the Borrower or any of its Subsidiaries or the
Guarantor or any substantial part of the assets of any thereof,
or a case or other proceeding shall be commenced against the
Borrower or any of its Subsidiaries or the Guarantor under any
bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, and the Borrower or any
of its Subsidiaries or the Guarantor shall indicate its approval
thereof, consent thereto or acquiescence therein or such
petition, application, case or proceeding shall not have been
dismissed within 60 days following the filing or commencement
thereof;
(j) a decree or order is entered appointing any
such trustee, custodian, liquidator or receiver or adjudicating the
Borrower or any of its Subsidiaries or the Guarantor bankrupt or
insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect
of the Borrower or any of its Subsidiaries or the Guarantor, in
each case of the foregoing in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(k) there shall remain in force, undischarged,
unsatisfied and unstayed, for more than 60 days, whether or not
consecutive, any uninsured final judgment against the Borrower or
any of its Subsidiaries or the Guarantor that, with other
outstanding uninsured final judgments, undischarged, against the
Borrower or any of its Subsidiaries or the Guarantor exceeds in
the aggregate $5,000,000.00;
(l) if any of the Loan Documents shall be
canceled, terminated, revoked or rescinded otherwise than in
accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Banks, or any action
at law, suit in equity or other legal proceeding to cancel, revoke
or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower or the Guarantor or any of its holders of
Voting
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Interests, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof in
any material respect as determined by the Majority Banks;
(m) any dissolution, termination, partial or
complete liquidation, merger or consolidation of the Borrower or
the Guarantor, or any sale, transfer or other disposition of the
assets of the Borrower or the Guarantor, other than as permitted
under the terms of this Agreement or the other Loan Documents;
(n) any suit or proceeding shall be filed against
the Borrower or the Guarantor or any of their respective assets which
in the good faith business judgment of the Majority Banks after
giving consideration to the likelihood of success of such suit or
proceeding and the availability of insurance to cover any
judgment with respect thereto and based on the information
available to them, if adversely determined, would have a
materially adverse affect on the ability of the Borrower or the
Guarantor to perform each and every one of their respective
obligations under and by virtue of the Loan Documents;
(o) the Borrower or the Guarantor shall be
indicted for a federal crime, a punishment for which could include
the forfeiture of any assets of the Borrower or the Guarantor; or
(p) the Guarantor denies that the Guarantor has
any liability or obligation under the Guaranty, or shall notify the
Agent or any of the Banks of the Guarantor's intention to attempt
to cancel or terminate the Guaranty, or shall fail to observe or
comply with any term, covenant, condition or agreement under the
Guaranty; or
(q) Gordon Burnam shall cease to be the Chairman/
Board of Trustees of, or Michael G. Burnam shall cease to be the Chief
Executive Officer of, Storage Trust Guarantor, and a competent
and experienced successor for such Person shall not be approved
by the Majority Banks within six (6) months of such event, such
approval not to be unreasonably withheld or delayed; or
(r) Gordon Burnam, Michael G. Burnam and
Stephen M. Dulle shall no longer own directly or beneficially,
on a combined basis, at least two hundred thousand (200,000) issued
and outstanding shares of stock of Storage Trust Guarantor or
partnership units of Borrower convertible into an equivalent
number of shares of stock of Storage Trust Guarantor;
then, and in any such event, the Agent may, and upon the request
of the Majority Banks shall, by notice in writing to the Borrower
declare all amounts owing with respect to this Agreement, the
Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without
presentment, demand, protest or
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other notice of any kind, all of which are hereby expressly waived
by the Borrower; provided that in the event of any Event of Default
specified in Section 12.1(h), Section 12.1(i) or Section 12.1(j),
all such amounts shall become immediately due and payable
automatically and without any requirement of notice from any of the
Banks or the Agent. The Borrower and any other Person shall be
entitled to conclusively rely on a statement from the Agent that it
has the authority to act for and bind the Banks pursuant to this
Agreement and the other Loan Documents.
Section 12.1A. Limitation of Cure Periods.
(a) Notwithstanding anything contained in
Section 12.1 to the contrary, (i) no Event of Default shall exist
hereunder upon the occurrence of any failure described in Section
12.1(a) or Section 12.1(b) in the event that the Borrower cures
such default within five (5) days following receipt of written
notice of such default, provided, however, that Borrower shall not
be entitled to receive more than two (2) notices in the aggregate
pursuant to this clause (i) in any period of 365 days ending on
the date of any such occurrence of default, and provided further
that no such cure period shall apply to any payments due upon the
maturity of the Notes, and (ii) no Event of Default shall exist
hereunder upon the occurrence of any failure described in Section
12.1(e) in the event that the Borrower cures such default with
thirty (30) days following receipt of written notice of such
default, provided that the provisions of this clause (ii) shall
not pertain to any default consisting of a failure to comply with
Section 7.4(c), or to any default excluded from any provision of
cure of defaults contained in any other of the Loan Documents.
(b) Notwithstanding the provisions of subsections
(d) and (e) of Section 12.1, the cure periods provided therein shall
not be allowed and the occurrence of a Default thereunder immediately
shall constitute an Event of Default for all purposes of this
Agreement and the other Loan Documents if, within the period of
twelve months immediately preceding the occurrence of such Default,
there shall have occurred two periods of cure or portions thereof
under any one or more of said subsections.
Section 12.2. Termination of Commitments. If any one or
more Events of Default specified in Section 12.1(h), Section
12.1(i) or Section 12.1(j) shall occur, then immediately and
without any action on the part of the Agent or any Bank any
unused portion of the credit hereunder shall terminate and the
Banks shall be relieved of all obligations to make Loans to the
Borrower. If any other Event of Default shall have occurred and
be continuing, the Agent, upon the election of the Majority
Banks, may by notice to the Borrower terminate the obligation to
make Loans to the Borrower. No termination under this Section
12.2 shall relieve the Borrower of its obligations to the Banks
arising under this Agreement or the other Loan Documents.
Section 12.3. Remedies. In case any one or more of the
Events of Default shall have occurred and be continuing, and
whether or not the Banks shall have accelerated the maturity of
the Loans pursuant to Section 12.1, the Agent on behalf of the
Banks, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce their rights and
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remedies under this Agreement, the Notes or any of the other Loan
Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant
or agreement contained in this Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations are
evidenced, including to the full extent permitted by applicable
law the obtaining of the ex parte appointment of a receiver, and,
if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other
legal or equitable right. No remedy herein conferred upon the
Agent or the holder of any Note is intended to be exclusive of
any other remedy and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or
any other provision of law. In the event that all or any portion
of the Obligations is collected by or through an attorney-at-law,
the Borrower shall pay all costs of collection including, but not
limited to, reasonable attorney's fees not to exceed fifteen
percent (15%) of such portion of the Obligations.
Section 12.4. Distribution of Proceeds. In the event
that, following the occurrence or during the continuance of any
Event of Default, any monies are received in connection with the
enforcement of any of the Loan Documents, or otherwise with
respect to the realization upon any of the assets of the
Borrower, such monies shall be distributed for application as
follows:
(a) First, to the payment of, or (as the case
may be) the reimbursement of, the Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall
have been incurred or sustained by the Agent in connection with
the collection of such monies by the Agent, for the exercise,
protection or enforcement by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this
Agreement or any of the other Loan Documents or in support of any
provision of adequate indemnity to the Agent against any taxes or
liens which by law shall have, or may have, priority over the
rights of the Agent to such monies;
(b) Second, to all other Obligations in such
order or preference as the Majority Banks shall determine; provided,
however, that (i) Swing Loans shall be repaid first, (ii)
distributions in respect of such other Obligations shall be made
pari passu among Obligations with respect to the Agent's fee
payable pursuant to Section 4.3 and all other Obligations,
(iii) in the event that any Bank shall have wrongfully failed or
refused to make an advance under Section 2.7 and such failure or
refusal shall be continuing, advances made by other Banks during
the pendency of such failure or refusal shall be entitled to be
repaid as to principal and accrued interest in priority to the
other Obligations described in this subsection (b), and (iv)
Obligations owing to the Banks with respect to each type of
Obligation such as interest, principal, fees and expenses (but
excluding Swing Loans), shall be made among the Banks pro rata;
and provided, further that the Majority Banks may in their
discretion make proper allowance to take into account any
Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned
to the Borrower or to such other Persons as are entitled thereto.
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Section 13. SETOFF.
Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or
specific, time or demand, provisional or final, regardless of
currency, maturity, or the branch of where such deposits are
held) or other sums credited by or due from any of the Banks to
the Borrower or the Guarantor and any securities or other
property of the Borrower or the Guarantor in the possession of
such Bank may be applied to or set off against the payment of
Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, of the Borrower to such Bank.
Each of the Banks agrees with each other Bank that if such Bank
shall receive from the Borrower or the Guarantor, whether by
voluntary payment, exercise of the right of setoff, or otherwise,
and shall retain and apply to the payment of the Note or Notes
held by such Bank (but excluding the Swing Loan Note) any amount
in excess of its ratable portion of the payments received by all
of the Banks with respect to the Notes held by all of the Banks,
such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of
the Notes held by it its proportionate payment as contemplated by
this Agreement; provided that if all or any part of such excess
payment is thereafter recovered from such Bank, such disposition
and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
Section 14. THE AGENT.
Section 14.1. Authorization. The Agent is authorized to
take such action on behalf of each of the Banks and to exercise
all such powers as are hereunder and under any of the other Loan
Documents and any related documents delegated to the Agent,
together with such powers as are reasonably incident thereto,
provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the
Agent. The obligations of the Agent are primarily administrative
in nature, and nothing contained in this Agreement or any of the
other Loan Documents shall be construed to constitute the Agent
as a trustee for any Bank or to create an agency or fiduciary
relationship. The Borrower and any other Person shall be
entitled to conclusively rely on a statement from the Agent that
it has the authority to act for and bind the Banks pursuant to
this Agreement and the other Loan Documents.
Section 14.2. Employees and Agents. The Agent may
exercise its powers and execute its duties by or through
employees or agents and shall be entitled to take, and to rely
on, advice of counsel concerning all matters pertaining to its
rights and duties under this Agreement and the other Loan
Documents. The Agent may utilize the services of such Persons as
the Agent may reasonably determine, and all reasonable fees and
expenses of any such Persons shall be paid by the Borrower.
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Section 14.3. No Liability. Neither the Agent nor any of
its shareholders, directors, officers or employees nor any other
Person assisting them in their duties nor any agent, or employee
thereof, shall be liable for any waiver, consent or approval
given or any action taken, or omitted to be taken, in good faith
by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the
consequences of any oversight or error of judgment whatsoever,
except that the Agent or such other Person, as the case may be,
may be liable for losses due to its willful misconduct or gross
negligence.
Section 14.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of
this Agreement, the Notes, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by
or on behalf of the Borrower or any of its Subsidiaries or the
Guarantor, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
covenants or agreements herein or in any other of the Loan
Documents. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the
Borrower or the Guarantor or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete. The
Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability
to the Banks, with respect to the creditworthiness or financial
condition of the Borrower or any of its Subsidiaries or the
Guarantor. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon
such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other
Bank, based upon such information and documents as it deems
appropriate at the time, continue to make its own credit analysis
and decisions in taking or not taking action under this Agreement
and the other Loan Documents.
Section 14.5. Payments.
(a) A payment by the Borrower or the Guarantor to
the Agent hereunder or under any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. The
Agent agrees to distribute to each Bank not later than one
Business Day after the Agent's receipt of good funds, determined
in accordance with the Agent's customary practices, such Bank's
pro rata share of payments received by the Agent for the account
of the Banks except as otherwise expressly provided herein or in
any of the other Loan Documents. In the event that the Agent
fails to distribute such amounts within one Business Day as
provided above, the Agent shall pay interest on such amount at a
rate per annum equal to the Federal Funds Effective Rate from
time to time in effect.
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(b) If in the opinion of the Agent the distribution
of any amount received by it in such capacity hereunder, under the
Notes or under any of the other Loan Documents might involve it
in liability, it may refrain from making distribution until its
right to make distribution shall have been adjudicated by a court
of competent jurisdiction. If a court of competent jurisdiction
shall adjudge that any amount received and distributed by the
Agent is to be repaid, each Person to whom any such distribution
shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or
shall pay over the same in such manner and to such Persons as
shall be determined by such court.
(c) Notwithstanding anything to the contrary
contained in this Agreement or any of the other Loan Documents, any
Bank that fails (i) to make available to the Agent its pro rata share
of any Loan or (ii) to comply with the provisions of Section 13
with respect to making dispositions and arrangements with the
other Banks, where such Bank's share of any payment received,
whether by setoff or otherwise, is in excess of its pro rata
share of such payments due and payable to all of the Banks, in
each case as, when and to the full extent required by the
provisions of this Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until
such time as such delinquency is satisfied. A Delinquent Bank
shall be deemed to have assigned any and all payments due to it
from the Borrower and the Guarantor, whether on account of
outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their
respective pro rata shares of all outstanding Loans. The
Delinquent Bank hereby authorizes the Agent to distribute such
payments to the nondelinquent Banks in proportion to their
respective pro rata shares of all outstanding Loans. A
Delinquent Bank shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans of the nondelinquent
Banks or as a result of other payments by the Delinquent Banks to
the nondelinquent Banks, the Banks' respective pro rata shares of
all outstanding Loans have returned to those in effect
immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency.
Section 14.6. Holders of Notes. Subject to the terms of
Article 18, the Agent may deem and treat the payee of any Note as
the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different
name by such payee or by a subsequent holder, assignee or
transferee.
Section 14.7. Indemnity. The Banks ratably agree hereby
to indemnify and hold harmless the Agent from and against any and
all claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (including any expenses for
which the Agent has not been reimbursed by the Borrower as
required by Section 15), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes,
or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's
actions taken hereunder or thereunder, except to the extent that
any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
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Section 14.8. Agent as Bank. In its individual capacity,
BKB shall have the same obligations and the same rights, powers
and privileges in respect to its Commitment and the Loans made by
it, and as the holder of any of the Notes as it would have were
it not also the Agent.
Section 14.9. Resignation. Subject to the terms of
Section 18.1, the Agent may resign at any time by giving 60 days'
prior written notice thereof to the Banks and the Borrower. Upon
any such resignation, the Majority Banks shall have the right to
appoint as a successor Agent any Bank or any other bank whose
senior debt obligations are rated not less than "A" or its
equivalent by Moody's Investors Service, Inc. or not less than
"A" or its equivalent by Standard & Poor's corporation and which
has total assets in excess of $10 billion. Unless a Default or
Event of Default shall have occurred and be continuing, such
successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within 30
days after the retiring Agent's giving of notice of resignation,
then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a bank whose debt obligations are
rated not less than "A" or its equivalent by Moody's Investors
Service, Inc. or not less than "A" or its equivalent by Standard
& Poor's Corporation and which has total assets in excess of $10
billion. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder as Agent. After any retiring Agent's
resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as Agent.
Section 14.10. Duties in the Case of Enforcement. In case
one or more Events of Default have occurred and shall be
continuing, and whether or not acceleration of the Obligations
shall have occurred, the Agent shall, if (a) so requested by the
Majority Banks and (b) the Banks have provided to the Agent such
additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to
exercise all or any legal and equitable and other rights or
remedies as it may have. The Majority Banks may direct the Agent
in writing as to the method and the extent of any such exercise,
the Banks hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions
taken or omitted in accordance with such directions, provided
that the Agent need not comply with any such direction to the
extent that the Agent reasonably believes the Agent's compliance
with such direction to be unlawful or commercially unreasonable
in any applicable jurisdiction.
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Section 15. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Agreement, the other Loan
Documents and the other agreements and instruments mentioned
herein, (b) any taxes (including any interest and penalties in
respect thereto) payable by the Agent or any of the Banks (other
than taxes based upon the Agent's or any Bank's gross or net
income), including any recording, mortgage, documentary or
intangibles taxes in connection with the Loan Documents, or other
taxes payable on or with respect to the transactions contemplated
by this Agreement, including any such taxes payable by the Agent
or any of the Banks after the Closing Date (the Borrower hereby
agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of
the counsel to the Agent incurred in connection with the
preparation, execution and delivery of the Loan Documents and the
initial closing hereunder; provided, however, that such fees
payable by the Borrower pursuant to this (c) shall not exceed an
amount agreed upon by Borrower and BKB, (d) the reasonable fees,
expenses and disbursements of the counsel to the Agent, and any
local counsel to the Agent incurred in connection with the
interpretation of the Loan Documents and other instruments
mentioned herein (excluding, however, the preparation of
agreements evidencing participations granted under Section 18.4),
and amendments, modifications, approvals, consents or waivers
hereto or hereunder (provided that the Agent shall notify the
Borrower on or about the time such costs are incurred that such
costs are being or are to be incurred), (e) the reasonable fees,
expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation or interpretation of the Loan
Documents and other instruments mentioned herein, and the making
of each advance hereunder, (f) all reasonable out-of-pocket
expenses (including reasonable attorneys' fees and costs, which
attorneys may be employees of any Bank or the Agent and the fees
and costs of appraisers, engineers, investment bankers or other
experts retained by any Bank or the Agent) incurred by any Bank
or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against
the Borrower or the Guarantor or the administration thereof after
the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Agent's or any of the Bank's
relationship with the Borrower or the Guarantor, and (g) all
reasonable fees, expenses and disbursements of any Bank or the
Agent incurred in connection with UCC searches, UCC filings,
title rundowns or title searches; provided, however, that the
fees of counsel to the Agent payable by the Borrower with respect
to the execution and delivery of this Agreement shall not exceed
an amount agreed upon by Borrower and BKB (provided that such
amount shall not include fees and expenses incurred after the
date of this Agreement). The covenants of this Section 15 shall
survive payment or satisfaction of payment of amounts owing with
respect to the Notes.
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Section 16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent
and the Banks and each director, officer, employee, agent and
Person who controls the Agent or any Bank from and against any
and all claims, actions and suits, whether groundless or
otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of
or relating to this Agreement or any of the other Loan Documents
or the transactions contemplated hereby and thereby including,
without limitation, (a) any leasing fees and any brokerage,
finders or similar fees asserted against any Person indemnified
under this Section 16 based upon any agreement, arrangement or
action made or taken, or alleged to have been made or taken, by
the Borrower or any of its Subsidiaries or the Guarantor, (b) any
condition of the Real Estate (c) any actual or proposed use by
the Borrower of the proceeds of any of the Loans, (d) any actual
or alleged infringement of any patent, copyright, trademark,
service mark or similar right of the Borrower or any of its
Subsidiaries or the Guarantor, (e) the Borrower and the Guarantor
entering into or performing this Agreement or any of the other
Loan Documents, (f) any actual or alleged violation of any law,
ordinance, code, order, rule, regulation, approval, consent,
permit or license relating to the Real Estate, or (g) with
respect to the Borrower and its Subsidiaries and the Guarantor
and their respective properties and assets, the violation of any
Environmental Law, the Release or threatened Release of any
Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to claims with respect to
wrongful death, personal injury or damage to property), in each
case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel
incurred in connection with any such investigation, litigation or
other proceeding; provided, however, that the Borrower shall not
be obligated under this Section 16 to indemnify any Person for
liabilities arising from such Person's own gross negligence or
willful misconduct. In litigation, or the preparation therefor,
the Banks and the Agent shall be entitled to select a single law
firm as their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable
fees and expenses of such counsel. If, and to the extent that
the obligations of the Borrower under this Section 16 are
unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The
provisions of this Section 16 shall survive the repayment of the
Loans and the termination of the obligations of the Banks
hereunder.
Section 17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties
made herein, in the Notes, in any of the other Loan Documents or
in any documents or other papers delivered by or on behalf of the
Borrower or any of its Subsidiaries or the Guarantor pursuant
hereto or thereto shall be deemed to have been relied upon by the
Banks and the Agent, notwithstanding any investigation heretofore
or hereafter made by any of them, and shall survive the making by
the Banks of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under
this Agreement or the Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any
Loans. The indemnification obligations of the Borrower provided
herein and the other Loan Documents shall survive the full
repayment of amounts due and the termination of the obligations
of the Banks hereunder and thereunder to the extent provided
herein and therein. All statements contained in any certificate
or other paper delivered to any Bank or the Agent at any time by
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or on behalf of the Borrower or any of its Subsidiaries or the
Guarantor pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and
warranties by the Borrower or such Subsidiary or the Guarantor
hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. Conditions to Assignment by Banks. Except
as provided herein, each Bank may assign to one or more banks or
other entities all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of
its Commitment Percentage and Commitment and the same portion of
the Loans at the time owing to it, and the Notes held by it);
provided that (a) the Agent shall have given its prior written
consent to such assignment, which consent shall not be
unreasonably withheld or delayed (provided that such consent
shall not be required for any assignment to another Bank, to a
bank which is under common control with the assigning Bank or to
a wholly-owned Subsidiary of such Bank provided that such
assignee shall remain a wholly-owned Subsidiary of such Bank),
(b) the Borrower shall have given its prior written consent to
such assignment, which consent shall not be unreasonably withheld
or delayed (provided that such consent shall not be required if a
Default or Event of Default shall have occurred and be continuing
or for any assignment to another Bank, to a bank which is under
common control with the assigning Bank or to a wholly-owned
Subsidiary of such Bank provided that such assignee shall remain
a wholly-owned Subsidiary of such Bank), (c) each such assignment
shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Agreement,
(d) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter
defined), a notice of such assignment, together with any Notes
subject to such assignment, (e) in no event shall any voting,
consent or approval rights of a Bank be assigned to any Person
controlling, controlled by or under common control with, or which
is not otherwise free from influence or control by, the Borrower
or the Guarantor, which rights shall instead be allocated pro
rata among the other remaining Banks, (f) such assignee shall
have a net worth as of the date of such assignment of not less
than $500,000,000, (g) if such assignee is not incorporated under
the laws of the United States of America or any State, it shall
prior to such assignment deliver to the Borrower and the Agent
certification as to its exemption from deduction or withholding
of any United States federal income taxes, and (h) such assignee
shall acquire an interest in the Loans of not less than
$10,000,000. Prior to the activation of Tranche B as provided in
Section 2.8, any assignment by a Bank of a portion of its Note
shall also include a pro rata assignment of such Bank's
Commitment with respect to Tranche B. Upon such execution,
delivery, acceptance and recording, of such notice of assignment,
(i) the assignee thereunder shall be a party hereto and all other
Loan Documents executed by the Banks and, to the extent provided
in such assignment, have the rights and obligations of a Bank
hereunder, (ii) the assigning Bank shall, to the extent provided
in such assignment and upon payment to the Agent of the
registration fee referred to in Section 18.2, be released from
its obligations under this Agreement, and (iii) the Agent may
unilaterally amend Schedule 1 to reflect such assignment. In
connection with each assignment, the assignee shall represent and
warrant to the Agent, the assignor and each other Bank as to
whether such assignee is controlling, controlled by, under common
control with or is not
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<PAGE> 77
otherwise free from influence or control by, the Borrower and the
Guarantor. Notwithstanding anything herein to the contrary, in the
event that BKB desires to assign all of its interest in the Loan
and its position as Agent under the Loan Documents, or desires to
assign or enter into a participation for, all or a part of its
interest in the Loan which, upon consummation of such assignment or
participation, would result in BKB having a Commitment which is
less than the largest Commitment held by any Bank other than BKB,
then BKB shall first provide written notice thereof to each other
Bank and allow the Majority Banks a period of fifteen (15) Business
Days following receipt of such notice within which to select a Bank
to serve as Agent. In the event that the Majority Banks shall so
select a successor Agent, such Agent shall succeed to the rights
and duties of Agent as otherwise provided in this Agreement. In
the event that a successor Agent among the Banks is not selected
by the Majority Banks within fifteen (15) Business Days following
receipt of such notice from Agent, the Agent shall be thereafter
be free to resign as Agent as provided in this Agreement.
Section 18.2. Register. The Agent shall maintain a copy
of each assignment delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses
of the Banks and the Commitment Percentages of, and principal
amount of the Loans owing to the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Banks may
treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower and the Banks
at any reasonable time and from time to time upon reasonable
prior notice. Upon each such recordation, the assigning Bank
agrees to pay to the Agent a registration fee in the sum of
$2,000; provided that the foregoing registration fee shall not be
applicable to assignments by the Syndication Agent.
Section 18.3. New Notes. Upon its receipt of an
assignment executed by the parties to such assignment, together
with each Note subject to such assignment, the Agent shall (a)
record the information contained therein in the Register, and (b)
give prompt notice thereof to the Borrower and the Banks (other
than the assigning Bank). Within five Business Days after
receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent, in exchange for each
surrendered Note, a new Note to the order of such assignee in an
amount equal to the amount assumed by such assignee pursuant to
such assignment and, if the assigning Bank has retained some
portion of its obligations hereunder, a new Note to the order of
the assigning Bank in an amount equal to the amount retained by
it hereunder, and shall cause the Guarantor to deliver to the
Agent an acknowledgment in form and substance satisfactory to the
Agent to the effect that the Guaranty extends to and is
applicable to each new Note. Such new Notes shall provide that
they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal
amount of the surrendered Notes, shall be dated the effective
date of such assignment and shall otherwise be in substantially
the form of the assigned Notes. The surrendered Notes shall be
canceled and returned to the Borrower.
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<PAGE> 78
Section 18.4. Participations. Each Bank may sell
participations to one or more banks or other entities in all or a
portion of such Bank's rights and obligations under this
Agreement and the other Loan Documents; provided that (a) any
such sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Borrower, (b) such sale and
participation shall not entitle such participant to any rights or
privileges under this Agreement or the Loan Documents (including,
without limitation, the right to approve waivers, amendments or
modifications), (c) such participant shall have no direct rights
against the Borrower or the Guarantor except the rights granted
to the Banks pursuant to Section 13, (d) such sale is effected in
accordance with all applicable laws, and (e) such participant
shall not be a Person controlling, controlled by or under common
control with, or which is not otherwise free from influence or
control by, the Borrower or the Guarantor.
Section 18.5. Pledge by Bank. Any Bank may at any time
pledge all or any portion of its interest and rights under this
Agreement (including all or any portion of its Note) to any of
the twelve Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
Section 18.6. No Assignment by Borrower. The Borrower
shall not assign or transfer any of its rights or obligations
under any of the Loan Documents without the prior written consent
of each of the Banks.
Section 18.7. Disclosure. The Borrower agrees that in
addition to disclosures made in accordance with standard banking
practices any Bank may disclose information obtained by such Bank
pursuant to this Agreement to assignees or participants and
potential assignees or participants hereunder.
Section 19. NOTICES.
Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement (hereinafter in
this Section 19 referred to as "Notice"), but specifically
excluding to the maximum extent permitted by law any notices of
the institution or commencement of foreclosure proceedings, must
be in writing and shall be deemed to have been properly given or
served by personal delivery or by sending same by overnight
courier or by depositing same in the United States Mail, postpaid
and registered or certified, return receipt requested, or as
expressly permitted herein, by telegraph, telecopy, telefax or
telex, and addressed as follows:
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<PAGE> 79
If to the Agent or BKB:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
Telecopier No.: 770/390-8434
If to BOA:
Bank of America National Trust
and Savings Association
231 South LaSalle Street
12th Floor
Chicago, Illinois 60697
Attn: George W. Kirtland, Jr.
Telecopier No.: 312/974-4970
If to the Borrower:
Storage Trust Properties, L.P.
2407 Rangeline
Columbia, Missouri 65202
Attn: Stephen M. Dulle
Telecopier No.: 573/442-5554
and to each other Bank which may hereafter become a party to this
Agreement at such address as may be designated by such Bank.
Each Notice shall be effective upon being personally delivered or
upon being sent by overnight courier or upon being deposited in
the United States Mail as aforesaid. The time period in which a
response to such Notice must be given or any action taken with
respect thereto (if any), however, shall commence to run from the
date of receipt if personally delivered or sent by overnight
courier, or if so deposited in the United States Mail, the
earlier of three (3) Business Days following such deposit or the
date of receipt as disclosed on the return receipt. Rejection or
other refusal to accept or the inability to deliver because of
changed address for which no notice was given shall be deemed to
be receipt of the Notice sent. By giving at least fifteen (15)
days prior Notice thereof, the Borrower, a Bank or Agent shall
have the right from time to time and at any time during the term
of this Agreement to change their respective addresses and each
shall have the right to specify as its address any other address
within the United States of America.
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<PAGE> 80
Section 20. RELATIONSHIP.
Neither the Agent nor any Bank has any fiduciary
relationship with or fiduciary duty to the Borrower or its
Subsidiaries or Guarantor arising out of or in connection with
this Agreement or the other Loan Documents or the transactions
contemplated hereunder or thereunder, and the relationship
between each Bank and the Borrower is solely that of a lender and
borrower, and nothing contained herein or in any of the other
Loan Documents shall in any manner be construed as making the
parties hereto partners, joint venturers or any other
relationship other than lender and borrower.
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND
SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT
AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
THE ADDRESS SPECIFIED IN SECTION 19. THE BORROWER HEREBY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
Section 22. HEADINGS.
The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions
hereof.
Section 23. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an
original, and all of which together shall constitute one
instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
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<PAGE> 81
Section 24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in
connection herewith or therewith express the entire understanding
of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except as provided in
Section 27.
Section 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY
PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK
OR THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
BANK OR THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE AGENT
AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG
OTHER THINGS, THE WAIVER AND CERTIFICATIONS CONTAINED IN THIS
SECTION 25. BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY
TO REVIEW THIS SECTION 25 WITH ITS LEGAL COUNSEL AND THAT
BORROWER AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND
VOLUNTARY ACT.
Section 26. DEALINGS WITH THE BORROWER.
The Banks and their affiliates may accept deposits from,
extend credit to and generally engage in any kind of banking,
trust or other business with the Borrower, its Subsidiaries, the
Guarantor or any of their affiliates regardless of the capacity
of the Bank hereunder.
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement,
any consent or approval required or permitted by this Agreement
may be given, and any term of this Agreement or of any other
instrument related hereto or mentioned herein may be amended, and
the performance or observance by the Borrower of any terms of
this Agreement or such other
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<PAGE> 82
instrument or the continuance of any Default or Event of Default
may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the
written consent of the Majority Banks. Notwithstanding the
foregoing, none of the following may occur without the written
consent of each Bank: a change in the rate of interest on and the
term of the Notes; a change in the amount of the Commitments of the
Banks (except as provided in Section 2.8); a forgiveness, reduction
or waiver of the principal of any unpaid Loan or any interest
thereon or fee payable under the Loan Documents; a change in the
amount of any fee payable to a Bank hereunder; the postponement of
any date fixed for any payment of principal of or interest on the
Loan; an extension of the Maturity Date; a change in the manner of
distribution of any payments to the Banks or the Agent; the release
of the Borrower or the Guarantor except as otherwise provided
herein; an amendment of the definition of Majority Banks or of any
requirement for consent by all of the Banks; an amendment to this
Section 27; or an amendment of any provision of this Agreement or
the Loan Documents which requires the approval of the Majority
Banks to require a lesser number of Banks to approve such action.
The amount of the Agent's fee payable for the Agent's account and
the provisions of Section 14 may not be amended without the
written consent of the Agent. There shall be no amendment,
modification or waiver of any provision in the Loan Documents
with respect to Swing Loans without the consent of the Swing Loan
Bank. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Agent
or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
Section 28. SEVERABILITY.
The provisions of this Agreement are severable, and if any
one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement
in any jurisdiction.
Section 29. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Section 30. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every
covenant, agreement and obligation of the Borrower under this
Agreement and the other Loan Documents.
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<PAGE> 83
Section 31. LIMITATION ON LIABILITY.
NO OBLIGATION OR LIABILITY WHATSOEVER OF STORAGE TRUST
GUARANTOR (WHETHER AS GUARANTOR OR AS GENERAL PARTNER OF THE
BORROWER) WHICH MAY ARISE AT ANY TIME UNDER THIS AGREEMENT OR ANY
OBLIGATION OR LIABILITY WHICH MAY BE INCURRED BY IT PURSUANT TO
ANY OTHER LOAN DOCUMENT SHALL BE PERSONALLY BINDING UPON, NOR
SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE PRIVATE
PROPERTY OF ANY OF STORAGE TRUST GUARANTOR'S SHAREHOLDERS,
TRUSTEES, OFFICERS OR EMPLOYEES, REGARDLESS OF WHETHER SUCH
OBLIGATION OR LIABILITY IS IN THE NATURE OF CONTRACT, TORT OR
OTHERWISE. NOTHING HEREIN SHALL DIMINISH OR IMPAIR THE RIGHTS OF
AGENT AND THE BANKS TO PURSUE ANY REMEDY AGAINST ANY ASSETS OF
STORAGE TRUST GUARANTOR.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument as of the date first set forth
above.
STORAGE TRUST PROPERTIES, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Storage Trust Realty,
a Maryland real estate
investment trust
By:----------------------------
Name:-----------------------
Title:----------------------
[SEAL]
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<PAGE> 84
BANKBOSTON, N.A.,
individually and as Agent
By:----------------------------
Jeffrey L. Warwick, Director
[BANK SEAL]
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<PAGE> 85
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: ---------------------------
Its: --------------------------
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<PAGE> 86
EXHIBIT A
FORM OF NOTE
$-------------- January --, 1998
FOR VALUE RECEIVED, the undersigned STORAGE TRUST
PROPERTIES, L.P., a Delaware limited partnership, hereby promises
to pay to ------------------------------ or order, in accordance
with the terms of that certain Revolving Credit Agreement dated
as of January 25, 1998 (the "Credit Agreement"), as from time to
time in effect, among the undersigned, BankBoston, N.A., for
itself and as Agent, and such other Banks as may be from time to
time named therein, to the extent not sooner paid, on or before
the Maturity Date the principal sum of
- -------------------------------------------------------------
DOLLARS ($--------------), or such amount as may be advanced by
the payee hereof under the Credit Agreement (but excluding Swing
Loans made pursuant to Sections 2.4A(a) through (c) of the Credit
Agreement) with daily interest from the date hereof, computed as
provided in the Credit Agreement, on the principal amount hereof
from time to time unpaid, at a rate per annum on each portion of
the principal amount which shall at all times be equal to the
rate of interest applicable to such portion in accordance with
the Credit Agreement, and with interest on overdue principal and,
to the extent permitted by applicable law, on overdue
installments of interest and late charges at the rates provided
in the Credit Agreement. Interest shall be payable on the dates
specified in the Credit Agreement, except that all accrued
interest shall be paid at the stated or accelerated maturity
hereof or upon the prepayment in full hereof. Capitalized terms
used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as
Agent for the payee hereof, 100 Federal Street, Boston,
Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings
under and is entitled to the benefits and subject to the
provisions of the Credit Agreement. The principal of this Note
may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the
amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in
part, all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all
agreements between the Borrower and the Banks and the Agent,
whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any of the Obligations
or otherwise, shall the interest
<PAGE> 87
contracted for, charged or received by the Banks exceed the maximum
amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Banks in
excess of the maximum lawful amount, the interest payable to the
Banks shall be reduced to the maximum amount permitted under
applicable law; and if from any circumstance the Banks shall ever
receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the
principal balance of the Obligations and to the payment of interest
or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the
Borrower. All interest paid or agreed to be paid to the Banks
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until
payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest
thereon for such full period shall not exceed the maximum amount
permitted by applicable law. This paragraph shall control all
agreements between the Borrower and the Banks and the Agent.
In case an Event of Default shall occur, the entire
principal amount of this Note may become or be declared due and
payable in the manner and with the effect provided in said Credit
Agreement.
This Note shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts (without
giving effect to the conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers,
hereby waive presentment, demand, notice, protest, notice of
intention to accelerate the indebtedness evidenced hereby, notice
of acceleration of the indebtedness evidenced hereby and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and
assent to extensions of time of payment or forbearance or other
indulgence without notice.
IN WITNESS WHEREOF the undersigned has executed this Note
under seal as of the day and year first above written.
STORAGE TRUST PROPERTIES, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Storage Trust Realty,
a Maryland real estate
investment trust
By:----------------------
Name:-----------------
Title:----------------
[SEAL]
<PAGE> 88
EXHIBIT B
FORM OF SWING LOAN NOTE
$-------------- January --, 1998
FOR VALUE RECEIVED, the undersigned STORAGE TRUST
PROPERTIES, L.P., a Delaware limited partnership, hereby promises
to pay to ------------------------------ or order, in
accordance with the terms of that certain Revolving Credit
Agreement dated as of January 25, 1998 (the "Credit
Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, and
such other Banks as may be from time to time named therein, to
the extent not sooner paid, on or before the Maturity Date the
principal sum of
- -------------------------------------------------------------
DOLLARS ($--------------), or such amount as may be advanced by
the payee hereof under the Credit Agreement as Swing Loans with
daily interest from the date hereof, computed as provided in the
Credit Agreement, on the principal amount hereof from time to
time unpaid, at a rate per annum on each portion of the principal
amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the
extent permitted by applicable law, on overdue installments of
interest and late charges at the rates provided in the Credit
Agreement. Interest shall be payable on the dates specified in
the Credit Agreement, except that all accrued interest shall be
paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as
Agent for the payee hereof, 100 Federal Street, Boston,
Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings
under and is entitled to the benefits and subject to the
provisions of the Credit Agreement. The principal of this Note
may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the
amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in
part, all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all
agreements between the Borrower and the Banks and the Agent,
whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by
reason of acceleration of the maturity of any of the Obligations
or otherwise, shall the interest contracted for, charged or
received by the Banks exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest
would otherwise be payable to the Banks in excess of the maximum
lawful amount, the interest payable to the Banks shall be reduced
to the maximum amount permitted under applicable law; and if from
<PAGE> 89
any circumstance the Banks shall ever receive anything of value
deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal balance of the
Obligations and to the payment of interest or, if such excessive
interest exceeds the unpaid balance of principal of the
Obligations, such excess shall be refunded to the Borrower. All
interest paid or agreed to be paid to the Banks shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full period until payment in
full of the principal of the Obligations (including the period of
any renewal or extension thereof) so that the interest thereon
for such full period shall not exceed the maximum amount
permitted by applicable law. This paragraph shall control all
agreements between the Borrower and the Banks and the Agent.
In case an Event of Default shall occur, the entire
principal amount of this Note may become or be declared due and
payable in the manner and with the effect provided in said Credit
Agreement.
This Note shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts (without
giving effect to the conflict of laws rules of any jurisdiction).
The undersigned maker and all guarantors and endorsers,
hereby waive presentment, demand, notice, protest, notice of
intention to accelerate the indebtedness evidenced hereby, notice
of acceleration of the indebtedness evidenced hereby and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and
assent to extensions of time of payment or forbearance or other
indulgence without notice.
IN WITNESS WHEREOF the undersigned has executed this Note
under seal as of the day and year first above written.
STORAGE TRUST PROPERTIES, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Storage Trust Realty,
a Maryland real estate
investment trust
By:----------------------
Name:-----------------
Title:----------------
[SEAL]
<PAGE> 90
EXHIBIT C
FORM OF REQUEST FOR LOAN
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the Revolving
Credit Agreement dated as of January 25, 1998, as from time to
time in effect (the "Credit Agreement"), among Storage Trust
Properties, L.P. (the "Borrower"), BankBoston, N.A., for itself
and as Agent and the other Banks from time to time party thereto,
the Borrower hereby requests and certifies as follows:
1. Loan. The Borrower hereby requests a [Loan under
Section 2.1] [Swing Loan under Section 2.4A] of the Credit
Agreement [strike inapplicable language]:
Principal Amount: $
LIBOR or Base Rate:
Drawdown Date: , 19
Interest Period:
by credit to the general account of the Borrower with the Agent
at the Agent's Head Office.
[IF THE REQUESTED LOAN IS A SWING LOAN AND THE BORROWER
DESIRES FOR SUCH LOAN TO BE A LIBOR RATE LOAN FOLLOWING ITS
CONVERSION AS PROVIDED IN SECTION 2.4A(D), SPECIFY THE INTEREST
PERIOD FOLLOWING CONVERSION:--------------------]
2. Use of Proceeds. Such Loan shall be used for the
following purposes permitted by Section 7.11 of the Credit
Agreement:
[Describe]
3. No Default. The undersigned chief financial officer of
the sole general partner of the Borrower certifies that since the
date of the last Compliance Certificate delivered pursuant to the
Credit Agreement, there have been no material changes in the
matters certified in such Compliance Certificate that could cause
a Default or Event of Default to occur after giving effect to the
making of the Loan requested hereby.
<PAGE> 91
4. Representations True. Each of the representations and
warranties made by or on behalf of the Borrower and its
Subsidiaries and the Guarantor contained in the Credit Agreement,
in the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with the Credit Agreement
was true as of the date as of which it was made and shall also be
true at and as of the Drawdown Date for the Loan requested
hereby, with the same effect as if made at and as of such
Drawdown Date (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement
and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are
not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier
date) and no Default or Event of Default has occurred and is
continuing.
5. Other Conditions. All other conditions to the making
of the Loan requested hereby set forth in Section 11 of the
Credit Agreement have been satisfied.
6. Drawdown Date. Except to the extent, if any, specified
by notice actually received by the Agent prior to the Drawdown
Date specified above, the foregoing representations and
warranties shall be deemed to have been made by the Borrower on
and as of such Drawdown Date.
7. Definitions. Terms defined in the Credit Agreement are
used herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this -----
day of ---------------, 199---.
STORAGE TRUST PROPERTIES, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Storage Trust Realty,
a Maryland real estate
investment trust
By:-----------------------
Chief Financial Officer
<PAGE> 92
The undersigned chief financial officer of Storage Trust
Guarantor joins in the execution hereof to certify that since the
date of the last Compliance Certificate delivered pursuant to the
Credit Agreement, there have been no material changes that could
cause a Default or Event of Default to occur after giving effect
to the making of the Loan requested hereby.
STORAGE TRUST REALTY,
a Maryland real estate investment
trust
By:----------------------------
Chief Financial Officer
<PAGE> 93
EXHIBIT D
FORM OF REQUEST FOR ACTIVATION OF TRANCHE B
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.8 of the Revolving
Credit Agreement dated as of January 25, 1998, as from time to
time in effect (the "Credit Agreement"), among Storage Trust
Properties, L.P. (the "Borrower"), BankBoston, N.A., for itself
and as Agent, and the other Banks from time to time party
thereto, the Borrower hereby requests and certifies as follows:
1. Activation Request. The Borrower hereby irrevocably
requests that Tranche B in the amount of $50,000,000.00 be
activated as provided in Section 2.8 of the Credit Agreement.
2. Activation Fee. The Borrower has paid to the Agent the
activation fee required by Section 2.8(c)(i) of the Credit
Agreement.
3. No Default. The undersigned chief financial or chief
accounting officer of the sole general partner of Borrower
certifies that the Borrower is and will be in compliance with all
covenants under the Loan Documents after giving effect to the
request evidenced hereby.
4. Representations True. Each of the representations and
warranties made by or on behalf of the Borrower, the Guarantor
and their Subsidiaries contained in the Credit Agreement, in the
other Loan Documents or in any document or instrument delivered
pursuant to or in connection with the Credit Agreement was true
as of the date as of which it was made and shall also be true at
and as of the date hereof with the same effect as if made at and
as of the date hereof (except to the extent of changes resulting
from transactions contemplated or permitted by the Credit
Agreement and the other Loan Documents and changes occurring in
the ordinary course of business that singly or in the aggregate
are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier
date) and no Default or Event of Default has occurred and is
continuing.
5. Other Conditions. All other conditions to the
extension to the Loan requested hereby set forth in Section 2.8
of the Credit Agreement have been satisfied.
<PAGE> 94
6. Definitions. Terms defined in the Credit Agreement are
used herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this -----
day of --------------, 199--.
STORAGE TRUST PROPERTIES, L.P.,
a Delaware limited partnership, by
its sole general partner
By: Storage Trust Realty,
a Maryland real estate
investment trust
By:---------------------------
Chief Financial or
Chief Accounting Officer
<PAGE> 95
EXHIBIT E
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
Bank of America National Trust
and Savings Association
231 South LaSalle Street
12th Floor
Chicago, Illinois 60697
Attn: George W. Kirtland, Jr.
[INSERT NAMES AND ADDRESSES
OF OTHER BANKS]
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement dated as
of January 25, 1998 (the "Credit Agreement") by and among Storage
Trust Properties, L.P. (the "Borrower"), BankBoston, N.A., for
itself and as Agent, and the other Banks from time to time party
thereto. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein as defined in the Credit
Agreement.
Pursuant to the Credit Agreement, the Borrower and Storage
Trust Guarantor are furnishing to you herewith (or has most
recently furnished to you) the financial statements of Storage
Trust Guarantor and Borrower and their respective Subsidiaries
for the fiscal period ended --------------- (the "Balance Sheet
Date"). Such financial statements have been prepared in
accordance with generally accepted accounting principles and
present fairly the financial position of Storage Trust Guarantor
and Borrower and the Subsidiaries covered thereby at the date
thereof and the results of their operations for the periods
covered thereby, subject in the case of interim statements only
to normal year-end audit adjustments.
This certificate is submitted in compliance with
requirements of Section 7.4(c), Section 7.5(d) and Section 10.10
of the Credit Agreement. If this certificate is provided under a
provision other than Section 7.4(c), the calculations provided
below are made using the financial statements of Storage Trust
Guarantor and the Borrower and their Subsidiaries as of the
Balance Sheet Date adjusted in the best good-faith estimate of
the Borrower and Storage Trust Guarantor to give
<PAGE> 96
effect to the making of a Loan, extension of the Maturity Date,
acquisition or disposition of property or other event that
occasions the preparation of this certificate; and the nature of
such event and the Borrower's and Storage Trust Guarantor's
estimate of its effects are set forth in reasonable detail in an
attachment hereto. The undersigned officers are the chief
financial officer of the sole general partner of the Borrower and
the chief financial officer of Storage Trust Guarantor,
respectively.
The undersigned officers have caused the provisions of the
Credit Agreement and the Guaranty to be reviewed and have no
knowledge of any Default or Event of Default. (Note: If the
signers do have knowledge of any Default or Event of Default, the
form of certificate should be revised to specify the Default or
Event of Default, the nature thereof and the actions taken, being
taken or proposed to be taken by the Borrower and Storage Trust
Guarantor with respect thereto.)
The Borrower and Storage Trust Guarantor are providing the
information set forth in the schedule attached hereto to
demonstrate compliance as of the date hereof with the covenants
described therein.
IN WITNESS WHEREOF, we have hereunto set our hands this ---
day of ----------------, 199--.
STORAGE TRUST PROPERTIES, L.P., a
Delaware limited partnership, by
its sole general partner
By: Storage Trust Realty, a
Maryland real estate
investment trust
By:------------------------------
Chief Financial Officer
STORAGE TRUST REALTY, a Maryland
real estate investment trust
By:--------------------------------
Chief Financial Officer
<PAGE> 97
SCHEDULE 1
<TABLE>
BANKS AND COMMITMENTS
<CAPTION>
Commitment Commitment Commitment
(Tranche A) (Tranche B) Percentage
<S> <C> <C> <C>
BankBoston, N.A. $ 83,333,333.33 $41,666,666.67 83.33%
100 Federal Street
Boston, Massachusetts 02110
LIBOR Lending Office
Same as above
Bank of America National Trust $ 16,666,666.67 $ 8,333,333.33 16.67%
and Savings Association
231 South LaSalle Street
12th Floor
Chicago, Illinois 60679
Attn: George W. Kirtland, Jr.
LIBOR Lending office
Same as above
--------------- -------------- -----
$100,000,000.00 $50,000,000.00 100.0%
</TABLE>
<PAGE> 98
SCHEDULE 2
EXAMPLE OF TEST DEBT SERVICE AMOUNT
<PAGE> 99
SCHEDULE 6.17
ENVIRONMENTAL MATTERS
<PAGE> 100
SCHEDULE 6.18
SUBSIDIARIES OF THE BORROWER
<PAGE> 101
SCHEDULE 7.14
UNENCUMBERED OPERATING PROPERTIES
<PAGE> 102
SCHEDULE 9.1
DEFINED TERMS
As used in Section 9.1(b) and (c) and elsewhere in this
Schedule 9.1, the following terms have the respective meanings
set forth below:
Capital Lease. A Capital Lease shall mean, at any time, a
lease with respect to which the lessee is required concurrently
to recognize the acquisition of an asset and the incurrence of a
liability in accordance with generally accepted accounting
principles.
Consolidated Adjusted Capitalization. Consolidated Adjusted
Capitalization as of any date means the sum of Consolidated
Adjusted Tangible Net Worth and Consolidated Debt as of such
date.
Consolidated Adjusted Tangible Net Worth. Consolidated
Adjusted Tangible Net Worth means, at any time,
(a) the sum of (i) the par value (or value stated on the
books of the Borrower or Storage Trust Guarantor, as applicable)
of the capital stock or other equity interests (but excluding
treasury stock, capital stock subscribed and unissued and
mandatorily redeemable Preferred Stock or corresponding equity
interests) of the Borrower and its Subsidiaries or Storage Trust
Guarantor and its Subsidiaries, as applicable, at such time plus
(ii) the amount of the paid-in capital and retained earnings of
such Person and its Subsidiaries at such time, in each case as
such amounts would be shown on a consolidated balance sheet of
such Person and its Subsidiaries as of such time prepared in
accordance with generally accepted accounting principles, minus
(b) to the extent included in clause (a), all amounts
properly attributable to minority interests, if any, in the stock
or other equity interests and surplus of Subsidiaries (other than
the Borrower when determining such amount for Storage Trust
Guarantor and its Subsidiaries), minus
(c) the net book value of all assets, after deducting any
reserves applicable thereto, which would be treated as intangible
under generally accepted accounting principles, including,
without limitation, good will, trademarks, trade names, service
marks, brand names, copyrights, patents and unamortized debt
discount and expense, organizational expenses and the excess of
the equity in any Subsidiary over the cost of the investment in
such Subsidiary, plus
(d) accumulated depreciation on real estate properties as
such amount would be shown on a consolidated balance sheet of
such Person and its Subsidiaries as of such time prepared in
accordance with generally accepted accounting principles.
Consolidated Debt. Consolidated Debt means, as of any date
of determination, the total of all Debt of the Borrower and its
Subsidiaries or Storage Trust Guarantor and its Subsidiaries, as
applicable, outstanding on such date, after eliminating all
offsetting debits and credits among such Person and its
Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of
such Person and its Subsidiaries in accordance with generally
accepted accounting principles.
Debt. With respect to any Person, Debt means, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
<PAGE> 103
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in
accordance with generally accepted accounting principles in
respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
Debt of any Person shall include all obligations of such Person
of the character described in clauses (a) through (g) to the
extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under generally accepted accounting principles.
Guaranty. Guaranty means, with respect to any Person, any
obligation (except the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection) of
such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in
any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent
or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to maintain
any working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of
such indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to
make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
Preferred Stock. Preferred Stock means any class of capital
stock of a corporation that is preferred over any other class of
capital stock of such corporation as to the payment of dividends
or the payment of any amount upon liquidation or dissolution of
such corporation.
Swaps. With respect to any Person, Swaps means payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligations
under
-2-
<PAGE> 104
any Swap shall be the amount determined in respect thereof as
of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so
determined.
-3-
<PAGE> 1
UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE
-------------------------------------------------
FOR AND IN CONSIDERATION OF the sum of Ten and No/100 Dollars ($10.00)
and other good and valuable consideration paid or delivered to the
undersigned STORAGE TRUST REALTY, a Maryland real estate investment trust
(hereinafter referred to as "Guarantor"), the receipt and sufficiency whereof
are hereby acknowledged by Guarantor, and for the purpose of seeking to
induce BANKBOSTON, N. A. A national banking association (hereinafter
referred to as "BKB"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, A national banking association (hereinafter referred to as
"BOA"; BKB and BOA are hereinafter referred to collectively as "Lender",
which term shall also include each other Bank which may now or hereafter
become party to the "Credit Agreement" (as hereinafter defined) and shall
also include any such individual Bank acting as agent for all of the Banks),
to extend credit or otherwise provide financial accommodations to STORAGE
TRUST PROPERTIES, L.P., A Delaware limited partnership (hereinafter
referred to as "Borrower"), which extension of credit and provision of
financial accommodations will be to the direct interest, advantage and
benefit of Guarantor, Guarantor does hereby absolutely, unconditionally and
irrevocably guarantee to Lender:
(a) the full and prompt payment when due, whether by acceleration or
otherwise, either before or after maturity thereof, of that certain Note of
even date herewith made by Borrower to the order of BKB in the principal face
amount of One Hundred Twenty-Five Million and No/100 Dollars
($125,000,000.00) and that certain Swing Loan Note of even date herewith made
by Borrower to the order of BKB in the principal face amount of Ten Million
and No/100 Dollars ($10,000,000.00) (hereinafter referred to collectively as
the "BKB Note") together with interest as provided in the BKB Note, together
with any replacements, supplements, renewals, modifications, consolidations,
restatements and extensions thereof; and
(b) the full and prompt payment when due, whether by acceleration or
otherwise, either before or after maturity thereof, of that certain Note of
even date herewith made by Borrower to the order of BOA in the principal face
amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00)
(hereinafter referred to as the "BOA Note") together with interest as
provided in the BOA Note, together with any replacements, supplements,
renewals, modifications, consolidations, restatements and extensions thereof;
and
(c) the full and prompt payment when due, whether by acceleration or
otherwise, either before or after maturity thereof, of each other note as may
be issued under that certain Revolving Credit Agreement dated of even date
herewith (hereinafter referred to as the "Credit Agreement") among Borrower,
BKB, for itself and as agent, and BOA, together with interest as provided in
each such note, together with any replacements, supplements, renewals,
modifications, consolidations, restatements and extensions thereof (the BKB
Note, the BOA Note and each of the notes described in this subparagraph (c)
is hereinafter referred to collectively as the "Note"); and
(d) the full and prompt payment and performance of all obligations of
Borrower to Lender under the terms of the Credit Agreement, together with any
replacements, supplements, renewals, modifications, consolidations,
restatements and extensions thereof; and
(e) the full and prompt payment and performance of any and all other
obligations of Borrower to Lender under any other agreements, documents or
instruments now or hereafter evidencing, securing or otherwise relating to
the indebtedness evidenced by the Note or the Credit Agreement (the Note, the
Credit Agreement and said other agreements, documents and instruments, are
hereinafter collectively referred to as the "Loan Documents" and individually
<PAGE> 2
referred to as a "Loan Document"). All terms used herein and not otherwise
defined herein shall have the meanings set forth in the Credit Agreement.
1. Agreement to Pay and Perform; Costs of Collection. Guarantor does
-------------------------------------------------
hereby agree that if the Note is not paid by Borrower in accordance with its
terms, or if any and all sums which are now or may hereafter become due from
Borrower to Lender under the Loan Documents are not paid by Borrower in
accordance with their terms, or if any and all other obligations of Borrower
to Lender under the Note and the Loan Documents are not performed by Borrower
in accordance with their terms, Guarantor will immediately make such payments
and perform such obligations. Guarantor further agrees to pay Lender on
demand all reasonable costs and expenses (including court costs and
reasonable attorneys' fees and disbursements) paid or incurred by Lender in
endeavoring to collect the indebtedness guaranteed hereby, to enforce any of
the other obligations of Borrower guaranteed hereby, or any portion thereof,
or to enforce this Guaranty, and until paid to Lender, such sums shall bear
interest at the default rate set forth in the Credit Agreement unless
collection from Guarantor of interest at such rate would be contrary to
applicable law, in which event such sums shall bear interest at the highest
rate which may be collected from Guarantor under applicable law.
2. Reinstatement of Refunded Payments. If, for any reason, any
----------------------------------
payment to Lender of any of the obligations guaranteed hereunder is required
to be refunded by Lender to Borrower, or paid or turned over to any other
person, including, without limitation, by reason of the operation of
bankruptcy, reorganization, receivership or insolvency laws or similar laws
of general application relating to creditors' rights and remedies now or
hereafter enacted, Guarantor agrees to pay the amount so required to be
refunded, paid or turned over (the "Turnover Payment"), the obligations of
Guarantor shall not be treated as having been discharged by the original
payment to Lender giving rise to the Turnover Payment, and this Guaranty
shall be treated as having remained in full force and effect for any such
Turnover Payment so made by Lender, as well as for any amounts not
theretofore paid to Lender on account of such obligations.
3. Rights of Lender to Deal with Collateral, Borrower and Other
------------------------------------------------------------
Persons. Guarantor hereby consents and agrees that Lender may at any time,
- -------
and from time to time, without thereby releasing Guarantor from any liability
hereunder and without notice to or further consent from Guarantor, either
with or without consideration: release or surrender any lien or other
security of any kind or nature whatsoever held by it or by any person, firm
or corporation on its behalf or for its account, securing any indebtedness or
liability hereby guaranteed; substitute for any collateral so held by it,
other collateral of like kind, or of any kind; modify the terms of the Note
or the Loan Documents; extend or renew the Note for any period; grant
releases, compromises and indulgences with respect to the Note or the Loan
Documents and to any persons or entities now or hereafter liable thereunder
or hereunder; release any other Guarantor, surety, endorser or accommodation
party of the Note or any other Loan Documents; or take or fail to take any
action of any type whatsoever. No such action which Lender shall take or
fail to take in connection with the Note or the Loan Documents, or any of
them, or any security for the payment of the indebtedness of Borrower to
Lender or for the performance of any obligations or undertakings of Borrower,
nor any course of dealing with Borrower or any other person, shall release
Guarantor's obligations hereunder, affect this Guaranty in any way or afford
Guarantor any recourse against Lender. The provisions of this Guaranty shall
extend and be applicable to all replacements, supplements, renewals,
amendments, extensions, consolidations, restatements and modifications of the
Note and the Loan Documents, and any and all references herein to the Note
and the Loan Documents shall be deemed to include any such replacements,
supplements, renewals, extensions, amendments, consolidations, restatements
or modifications thereof. Without limiting the generality of the foregoing,
Guarantor acknowledges the terms of Section 18.3 of the Credit Agreement and
agrees
-2-
<PAGE> 3
that this Guaranty shall extend and be applicable to each new or replacement
note delivered by Borrower pursuant thereto without notice to or further
consent from Guarantor.
4. No Contest with Lender; Subordination. So long as any obligation
-------------------------------------
hereby guaranteed remains unpaid or undischarged, Guarantor will not, by
paying any sum recoverable hereunder (whether or not demanded by Lender) or
by any means or on any other ground, claim any set-off or counterclaim
against Borrower in respect of any liability of Guarantor to Borrower or, in
proceedings under federal bankruptcy law or insolvency proceedings of any
nature, prove in competition with Lender in respect of any payment hereunder
or be entitled to have the benefit of any counterclaim or proof of claim or
dividend or payment by or on behalf of Borrower or the benefit of any other
security for any obligation hereby guaranteed which, now or hereafter, Lender
may hold or in which it may have any share. Guarantor hereby expressly waives
any right of contribution from or indemnity against Borrower, whether at law
or in equity, arising from any payments made by Guarantor pursuant to the
terms of this Guaranty, and Guarantor acknowledges that Guarantor has no
right whatsoever to proceed against Borrower for reimbursement of any such
payments. In connection with the foregoing, Guarantor expressly waives any
and all rights of subrogation to Lender against Borrower, and Guarantor
hereby waives any rights to enforce any remedy which Lender may have against
Borrower and any rights to participate in any collateral for Borrower's
obligations under the Loan Documents. Guarantor hereby subordinates any and
all indebtedness of Borrower now or hereafter owed to Guarantor to all
indebtedness of Borrower to Lender, and agrees with Lender that (a) Guarantor
shall not demand or accept any payment from Borrower on account of such
indebtedness, (b) Guarantor shall not claim any offset or other reduction of
Guarantor's obligations hereunder because of any such indebtedness, and (c)
Guarantor shall not take any action to obtain any interest in any of the
security described in and encumbered by the Loan Documents because of any
such indebtedness; provided, however, that, if Lender so requests, such
indebtedness shall be collected, enforced and received by Guarantor as
trustee for Lender and be paid over to Lender on account of the indebtedness
of Borrower to Lender, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty except to
the extent the principal amount of such outstanding indebtedness shall have
been reduced by such payment.
5. Waiver of Defenses. Guarantor hereby agrees that its obligations
------------------
hereunder shall not be affected or impaired by, and hereby waives and agrees
not to assert or take advantage of any defense based on:
(a) any statute of limitations in any action hereunder or for
the collection of the Note or for the payment or performance of any
obligation hereby guaranteed;
(b) the incapacity or lack of authority of Borrower or any other
person or entity, or the failure of Lender to file or enforce a claim against
the estate (either in administration, bankruptcy or in any other proceeding)
of Borrower, Guarantor, any Additional Guarantor or any other person or
entity;
(c) the dissolution or termination of existence of Borrower,
Guarantor or any Additional Guarantor;
(d) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of Borrower;
(e) the voluntary or involuntary receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
assignment, composition, or readjustment
-3-
<PAGE> 4
of, or any similar proceeding affecting, Borrower, Guarantor or any
Additional Guarantor, or any of Borrower's, Guarantor's or any Additional
Guarantor's properties or assets;
(f) the damage, destruction, condemnation, foreclosure or
surrender of all or any part of the Real Estate or any of the improvements
located thereon;
(g) the failure of Lender to give notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or
of any action or nonaction on the part of any other person whomsoever in
connection with any obligation hereby guaranteed;
(h) any failure or delay of Lender to commence an action against
Borrower, to assert or enforce any remedies against Borrower under the Note
or the Loan Documents, or to realize upon any security;
(i) any failure of any duty on the part of Lender to disclose
to Guarantor any facts it may now or hereafter know regarding Borrower, the
Real Estate or any of the improvements located thereon, whether such facts
materially increase the risk to Guarantor or not;
(j) failure to accept or give notice of acceptance of this
Guaranty by Lender;
(k) failure to make or give notice of presentment and demand for
payment of any of the indebtedness or performance of any of the obligations
hereby guaranteed;
(l) failure to make or give protest and notice of dishonor or of
default to Guarantor or to any other party with respect to the indebtedness
or performance of obligations hereby guaranteed;
(m) except as otherwise specifically provided in this Guaranty,
any and all other notices whatsoever to which Guarantor might otherwise be
entitled;
(n) any lack of diligence by Lender in collection, protection or
realization upon any collateral securing the payment of the indebtedness or
performance of obligations hereby guaranteed;
(o) the invalidity or unenforceability of the Note or any of
the Loan Documents;
(p) the compromise, settlement, release or termination of any or
all of the obligations of Borrower or any Additional Guarantor under the Note
or the Loan Documents;
(q) any transfer by Borrower of all or any part of the security
encumbered by the Loan Documents;
(r) the failure of Lender to perfect any security or to extend
or renew the perfection of any security; or
(s) to the fullest extent permitted by law, any other legal,
equitable or surety defenses whatsoever to which Guarantor might otherwise be
entitled (other than the defense of payment), it being the intention that the
obligations of Guarantor hereunder are absolute, unconditional and
irrevocable.
6. Guaranty of Payment and Performance and Not of Collection. This
---------------------------------------------------------
is a Guaranty of payment and performance and not of collection. The
liability of Guarantor under this Guaranty shall be primary, direct and
immediate and not conditional or contingent upon the pursuit of any
-4-
<PAGE> 5
remedies against Borrower or any other person, nor against securities or
liens available to Lender, its successors, successors in title, endorsees or
assigns. Guarantor hereby waives any right to require that an action be
brought against Borrower or any other person or to require that resort be had
to any security or to any balance of any deposit account or credit on the
books of Lender in favor of Borrower or any other person.
7. Rights and Remedies of Lender. In the event of a default under
-----------------------------
the Note or the Loan Documents, or any of them, Lender shall have the right
to enforce its rights, powers and remedies thereunder or hereunder or under
any other agreement, document or instrument now or hereafter evidencing,
securing or otherwise relating to the indebtedness evidenced by the Note or
secured by the Loan Documents, in any order, and all rights, powers and
remedies available to Lender in such event shall be nonexclusive and
cumulative of all other rights, powers and remedies provided thereunder or
hereunder or by law or in equity. Accordingly, Guarantor hereby authorizes
and empowers Lender upon the occurrence of any event of default under the
Note or the Loan Documents, at its sole discretion, and without notice to
Guarantor, to exercise any right or remedy which Lender may have, including,
but not limited to, judicial foreclosure, exercise of rights of power of
sale, acceptance of a deed or assignment in lieu of foreclosure, appointment
of a receiver to collect rents and profits, exercise of remedies against
personal property, or enforcement of any assignment of leases, as to any
security, whether real, personal or intangible. At any public or private
sale of any security or collateral for any indebtedness or any part thereof
guaranteed hereby, whether by foreclosure or otherwise, Lender may, in its
discretion, purchase all or any part of such security or collateral so sold
or offered for sale for its own account and may apply against the amount bid
therefor all or any part of the balance due it pursuant to the terms of the
Note or any other Loan Document without prejudice to Lender's remedies
hereunder against Guarantor for deficiencies. If the indebtedness guaranteed
hereby is partially paid by reason of the election of Lender to pursue any of
the remedies available to Lender, or if such indebtedness is otherwise
partially paid, this Guaranty shall nevertheless remain in full force and
effect, and Guarantor shall remain liable for the entire balance of the
indebtedness guaranteed hereby even though any rights which Guarantor may
have against Borrower may be destroyed or diminished by the exercise of any
such remedy.
8. Application of Payments. Guarantor hereby authorizes Lender,
-----------------------
without notice to Guarantor, to apply all payments and credits received from
Borrower or from Guarantor or any other Person or realized from any security
in such manner and in such priority as Lender in its sole judgment shall see
fit to the indebtedness, obligation and undertakings which are the subject of
this Guaranty.
9. Business Failure, Bankruptcy or Insolvency. In the event of the
------------------------------------------
business failure of Guarantor or if there shall be pending any bankruptcy or
insolvency case or proceeding with respect to Guarantor under federal
bankruptcy law or any other applicable law or in connection with the
insolvency of Guarantor, or if a liquidator, receiver, or trustee shall have
been appointed for Guarantor or Guarantor's properties or assets, Lender may
file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of Lender allowed in any proceedings
relative to Guarantor, or any of Guarantor's properties or assets, and,
irrespective of whether the indebtedness or other obligations of Borrower
guaranteed hereby shall then be due and payable, by declaration or otherwise,
Lender shall be entitled and empowered to file and prove a claim for the
whole amount of any sums or sums owing with respect to the indebtedness or
other obligations of Borrower guaranteed hereby, and to collect and receive
any moneys or other property payable or deliverable on any such claim.
Guarantor covenants and agrees that upon the commencement of a voluntary or
involuntary bankruptcy proceeding by or against Borrower or any Additional
Guarantor, Guarantor shall not seek a supplemental stay or otherwise pursuant
to 11 U.S.C. '105 or any other provision of the Bankruptcy Reform Act of
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<PAGE> 6
1978, as amended, or any other debtor relief law (whether statutory, common
law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter
in effect, which may be or become applicable, to stay, interdict, condition,
reduce or inhibit the ability of Lender to enforce any rights of Lender
against Guarantor by virtue of this Guaranty or otherwise.
10. Financial Statements and Other Information. Guarantor hereby
------------------------------------------
represents and warrants to Lender that all financial statements of Guarantor
heretofore delivered by Guarantor to Lender are true and correct in all
material respects, have been prepared in accordance with generally accepted
accounting principles consistently applied, and fairly present the financial
condition of Guarantor as at the close of business on the date thereof and
the results of operations for the period then ended; that no material adverse
change has occurred in the assets, liabilities, financial condition or
business of Guarantor as shown or reflected therein since the date thereof;
and that Guarantor has no liabilities or known contingent liabilities
involving material amounts which are not reflected in such financial
statements or referred to in the notes thereto other than Guarantor's
obligations under this Guaranty. Guarantor hereby agrees that until all
indebtedness guaranteed hereby has been completely repaid, all obligations
and undertakings of Borrower under, by reason of, or pursuant to the Note and
the Loan Documents have been completely performed and Lender has no further
obligation to make Loans to Borrower pursuant to the Credit Agreement,
Guarantor will deliver to Lender:
(a) as soon as practicable and in any event within 90 days after
the end of each fiscal year of Guarantor, the audited consolidated balance
sheet of Guarantor and its Subsidiaries as of the end of such year, and the
related audited consolidated statement of operations and statement of cash
flows for such year, each setting forth in comparative form the figures for
the previous fiscal year and all such statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
accompanied by an auditor's report prepared without qualification by Ernst &
Young or by another national accounting firm approved by Agent, the Form 10K
filed with the SEC (unless the SEC has approved an extension, in which event
the Guarantor will deliver to each Lender a copy of the Form 10K
simultaneously with delivery to the SEC). At any time that the Agent has
reasonable grounds to request the same (including, without limitation, at any
time that the Compliance Certificate indicates that the Guarantor is at or
near the minimum compliance with the financial covenants in this Guaranty),
the Agent may require that such report be accompanied by a written statement
from such accountants to the effect that they have read a copy of this
Guaranty and the Credit Agreement, and that, in making the examination
necessary to said certification, they have obtained no knowledge of any
Default or Event of Default under this Guaranty, or, if such accountants
shall have obtained knowledge of any then existing Default or Event of
Default they shall disclose in such statement any such Default or Event of
Default;
(b) as soon as practicable and in any event within 60 days after
the end of each of the first three fiscal quarters of Guarantor, copies of
the unaudited consolidated balance sheet of Guarantor and its Subsidiaries as
of the end of such quarter, and the related unaudited consolidated statement
of operations and statement of cash flows for the portion of Guarantor's
fiscal year then elapsed, all in reasonable detail and prepared in accordance
with generally accepted accounting principles (which may be provided by
inclusion in the Form 10-Q of the Guarantor for such period provided pursuant
to subsection (c) below), together with a certification by the principal
financial or accounting officer of Guarantor that the information contained
in such financial statements fairly presents the financial position of
Guarantor and its Subsidiaries on the date thereof (subject to year end
adjustment);
(c) contemporaneously with the delivery of the financial
statements referred to in clause (a) above, a statement of all contingent
liabilities of Guarantor which are not reflected in
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<PAGE> 7
such financial statements or referred to in the notes thereto (including,
without limitation, all guarantees, endorsements and other contingent
obligations in respect of indebtedness of others, and obligations to
reimburse the issuer in respect of any letters of credit), and a statement of
projected cash flows of Guarantor for the current fiscal year, all in
reasonable detail and certified by the principal financial or accounting
officer of Guarantor;
(d) contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the SEC or sent to the
shareholders of Guarantor;
(e) as soon as practicable, but in any event not later than 60
days after the end of each fiscal quarter of the Guarantor (including the
fourth fiscal quarter in each year), copies of Form 10Q filed with the SEC
(unless the SEC has approved an extension in which event the Guarantor will
deliver such copies of the Form 10Q to each of Lender simultaneously with
delivery to the SEC);
(f) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and amendments
thereto of Guarantor;
(g) not later than 60 days after the end of each fiscal quarter
of Guarantor (including the fourth fiscal quarter in each year), a statement,
certified as true and correct by the principal financial or accounting
officer of Guarantor, of all Indebtedness of Guarantor as of the end of such
fiscal quarter, which statement shall include the original principal amount
of such Indebtedness and the current amount outstanding, the holder thereof,
the maturity date and any extension options, the interest rate, the
collateral provided for such Indebtedness and whether such Indebtedness is
recourse or non-recourse;
(h) concurrently with the delivery of the financial statements
described in subsections (b) and (e) above, a certificate signed by the
President or Chief Financial Officer of Guarantor to the effect that, having
read this Guaranty, and that based upon an examination which they deem
sufficient to enable them to make an informed statement, there does not exist
any Default or Event of Default, or if such Default or Event of Default has
occurred, specifying the facts with respect thereto;
(i) not later than five (5) Business Days after the Guarantor
receives notice of the same from a Rating Agency or otherwise learns of the
same, notice of the issuance of any change in the rating by such Rating
Agency in respect of any debt of the Guarantor (including any change in an
Implied Rating), together with the details thereof, and of any announcement
by a Rating Agency that any such rating is "under review" or that any such
rating has been placed on a watch list or that any similar action has been
taken by a Rating Agency (collectively a "Rating Notice");
(j) promptly upon becoming aware thereof, written notice from
Guarantor of any event or condition which might have a material adverse
effect on the business, operations, assets, condition (financial or
otherwise) or prospects of Guarantor or the ability of Guarantor to perform
under this Guaranty (including but not limited to, litigation commenced or
threatened in writing against Guarantor, judgments rendered against
Guarantor, liens filed against any property of Guarantor, defaults claimed
under indebtedness for borrowed money for which Guarantor is primarily or
secondarily liable, or bankruptcy, insolvency or trustee or receivership
proceedings commenced against Guarantor), such notice to specify the nature
and the period of existence of such event or condition, the anticipated
effect thereof, and what action Guarantor is taking or proposes to take with
respect thereto; and
-7-
<PAGE> 8
(k) with reasonable promptness, such other information
respecting the business, operations, assets, liabilities and financial
condition of Guarantor as Lender may from time to time reasonably request.
Notwithstanding anything herein to the contrary, Guarantor shall not be
required to deliver any statements or reports described in this Paragraph 10
to the extent the same are delivered to the Banks by the Borrower as and when
required by this Guaranty. Guarantor will permit any officer designated by
Lender, at Guarantor's expense, to visit and inspect any of the properties of
Guarantor, to examine the records and books of account of Guarantor (and to
make copies thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of Guarantor with, and to be advised as to the same by,
its officers, all at such reasonable times and intervals Lender may
reasonably request.
11. Covenants of Guarantor. Guarantor hereby covenants and agrees
----------------------
with Lender that until all indebtedness guaranteed hereby has been completely
repaid and all obligations and undertakings of Borrower under, by reason of,
or pursuant to the Note and the Loan Documents have been completely performed
and Lender has no further obligations to make Loans to Borrower pursuant to
the Credit Agreement:
(a) Guarantor will, and will cause each of its Subsidiaries to,
do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate or legal existence, material rights and
franchises, as applicable, to effect and maintain its foreign qualifications,
licensing, domestication or authorization, and to comply with all applicable
laws and regulations (including, without limitation, environmental laws);
(b) Guarantor will have as its sole business purpose being the
sole general partner of the Borrower and will own no assets other than its
general partnership interest in the Borrower, Short-term Investments, its
ownership of the stock of the corporate general partners of Subsidiaries of
the Borrower and other assets (such as prepaid insurance) reasonably
necessary for the operation of Guarantor's business in the ordinary course of
business consistent with the terms of this Guaranty and the other Loan
Documents;
(c) Guarantor will, and will cause each of its Subsidiaries to,
duly pay and discharge, before the same shall become in arrears, all taxes,
assessments and other governmental charges imposed upon it and its
properties, sales or activities, or upon the income or profits therefrom, as
well as claims for labor, material, or supplies which if unpaid might become
a lien or charge on any of its property; provided that any such tax,
assessment, charge or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if Guarantor or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto; and provided further that Guarantor
or such Subsidiary shall pay all such taxes, assessments, charges and claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor;
(d) Guarantor will, and will cause each of its Subsidiaries to,
maintain and keep the properties used or deemed by it to be useful in its
business in first-class repair, working order and condition, and make or
cause to be made all necessary and proper repairs thereto and replacements
thereof;
(e) Guarantor will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers, insurance with
respect to its properties and business against such casualties and
contingencies and in such types and amounts as shall be in accordance with
sound business practices for companies in similar business similarly
situated;
-8-
<PAGE> 9
(f) Guarantor will keep, and will cause each of its Subsidiaries
to keep, complete, proper and accurate records and books of account in which
full, true and correct entries will be made in accordance with generally
accepted accounting principles consistent with the preparation of the
financial statements heretofore delivered to Lender and will maintain
adequate accounts and reserves for all taxes (including income taxes), all
depreciation, depletion, and amortization of its properties and the
properties of its Subsidiaries, all other contingencies, and all other proper
reserves;
(g) Guarantor will not create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness
other than:
(i) Indebtedness to Lender arising under any of the Note,
the Loan Documents and this Guaranty;
(ii) current liabilities of Guarantor incurred in the
ordinary course of business but not incurred through the borrowing of
money or the obtaining of credit except for credit on an open account
basis customarily extended and in fact extended in connection with
normal purchases of goods and services;
(iii) Indebtedness in respect of taxes, assessments and
governmental charges to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of
subparagraph (c) of this paragraph;
(iv) Indebtedness in respect of judgments or awards that
have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of
which Guarantor shall at the time in good faith be prosecuting an appeal
or proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(v) endorsements for collection, deposit or negotiation
and warranties of products or services, in each case incurred in the
ordinary course of business; and
(vi) Indebtedness evidenced by the guaranty by the
Guarantor of the obligations of the Borrower with respect to the senior
notes of the Borrower issued as of January 20, 1997 in a principal
amount of $100,000,000.00 pursuant to a Note Purchase Agreement dated as
of January 20, 1997 among Borrower, Guarantor and certain other parties.
-9-
<PAGE> 10
(h) Guarantor will not, and will not permit any of its
Subsidiaries to, create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or
profits therefrom; or transfer any of such property or assets or the income
or profits therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority of payment of
its general creditors; or acquire, or agree to have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, devise or arrangement; or suffer to exist for a
period of more than 30 days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever
over its general creditors; or sell, assign, pledge or otherwise transfer any
accounts, contract rights, general intangibles, chattel paper or instruments,
with or without recourse, or incur or maintain any obligation to any holder
of Indebtedness of Guarantor or such Subsidiary which prohibits the creation
or maintenance of any lien securing the Obligations; provided that Guarantor
and any Subsidiary of Guarantor may create or incur or suffer to be created
or incurred or to exist:
(i) liens in favor of Guarantor on all or part of the
assets of Subsidiaries of Guarantor securing Indebtedness owing by
Subsidiaries of Guarantor to Guarantor;
(ii) liens to secure taxes, assessments and other
governmental charges or claims for labor, material or supplies in
respect of obligations not overdue;
(iii) liens with respect of judgments or awards, the
Indebtedness with respect to which is permitted by subparagraph (g)(iv)
of this paragraph;
(iv) liens in favor of Lender; and
(v) liens specifically permitted pursuant to Section 8.2
of the Credit Agreement.
(i) Guarantor will not, and will not permit any of its
Subsidiaries to, become a party to any merger, consolidation or other
business combination, or agree to effect any asset acquisition, stock
acquisition or other acquisition, except (A) the merger or consolidation or
one or more of the Subsidiaries of Guarantor with and into Guarantor, or (B)
the merger or consolidation of two or more Subsidiaries of Guarantor;
(j) Guarantor will not, and will not permit any of its
Subsidiaries to, become a party to or agree to or affect any disposition of
assets, other than Distributions to its shareholders as permitted in this
Guaranty;
(k) Guarantor will not make or permit to be made, by voluntary
or involuntary means, any transfer or encumbrance of its interest in
Borrower, or any dilution of its interest in Borrower;
(l) Guarantor shall contribute or otherwise downstream to
Borrower any cash or other assets received by Guarantor from third parties
(including, without limitation, the proceeds from any Debt Offering or Equity
Offering);
(m) The Guarantor shall at all times comply with all
requirements of applicable laws and regulations necessary to maintain REIT
Status and shall operate its business as described in the Prospectus and in
compliance with the terms and conditions of this Guaranty and the other Loan
Documents;
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<PAGE> 11
(n) Guarantor will be self-directed and will not retain or
otherwise rely on any other Person for investment advisory services;
(o) Guarantor shall not pay any Distribution to the shareholders
of the Guarantor if such Distribution is in excess of the amount which, when
added to the amount of all other Distributions paid in the same fiscal
quarter and the preceding fiscal quarter will exceed (i) ninety percent (90%)
of its Funds from Operations for the two (2) consecutive fiscal quarters
ending prior to the quarter in which such Distribution is paid, or (ii) one
hundred percent (100%) of its Funds Available for Distribution for the two
(2) consecutive fiscal quarters ending prior to the quarter in which such
Distribution is paid. The foregoing limitation on Distributions shall not
preclude the Guarantor from paying Distributions necessary to maintain its
REIT Status; and
(p) Guarantor will cooperate with Lender and execute such
further instruments and documents as Lender shall reasonably request to carry
out to their satisfaction the transactions contemplated by this Guaranty and
the other Loan Documents.
12. Security and Rights of Set-off. Guarantor hereby grants to
------------------------------
Lender, as security for the full and prompt payment and performance of
Guarantor's obligations hereunder, a continuing lien on and security interest
in any and all securities or other property belonging to Guarantor now or
hereafter held by Lender and in any and all deposits (general or specific,
time or demand, provisional or final, regardless of currency, maturity, or
the branch of Lender where the deposits are held) now or hereafter held by
Lender and other sums credited by or due from Lender to Guarantor or subject
to withdrawal by Guarantor; and regardless of the adequacy of any collateral
or other means of obtaining repayment of such obligations, during the
continuance of any Event of Default under the Note or the Loan Documents,
Lender may at any time and without notice to Guarantor set-off and apply the
whole or any portion or portions of any or all such deposits and other sums
against amounts payable under this Guaranty, whether or not any other person
or persons could also withdraw money therefrom. Any security now or
hereafter held by or for Guarantor and provided by Borrower, or by anyone on
Borrower's behalf, in respect of liabilities of Guarantor hereunder shall be
held in trust for Lender as security for the liabilities of Guarantor
hereunder.
13. Changes in Writing; No Revocation. This Guaranty may not be
---------------------------------
changed orally, and no obligation of Guarantor can be released or waived by
Lender except by a writing signed by a duly authorized officer of Lender.
This Guaranty shall be irrevocable by Guarantor until all indebtedness
guaranteed hereby has been completely repaid and all obligations and
undertakings of Borrower under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed.
14. Notices. All notices, demands or requests provided for or
-------
permitted to be given pursuant to this Guaranty (hereinafter in this
paragraph referred to as "Notice") must be in writing and shall be deemed to
have been properly given or served by personal delivery or by sending same by
overnight courier or by depositing the same in the United States mail,
postpaid and registered or certified, return receipt requested, at the
addresses set forth below. Each Notice shall be effective upon being
delivered personally or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. The time period in which a
response to any such Notice must be given or any action taken with respect
thereto, however, shall commence to run from the date of receipt if
personally delivered or sent by overnight courier or, if so deposited in the
United States Mail, the earlier of three (3) Business Days following such
deposit and the date of receipt as disclosed on the return receipt.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no Notice was given shall be deemed to be receipt of
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<PAGE> 12
the Notice sent. By giving at least fifteen (15) days prior Notice thereof,
Guarantor or Lender shall have the right from time to time and at any time
during the term of this Guaranty to change their respective addresses and
each shall have the right to specify as its address any other address within
the United States of America. For the purposes of this Guaranty:
The address of Lender is:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
with a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
and to:
Bank of America National Trust and Savings Association
231 South LaSalle Street
12th Floor
Chicago, Illinois 60697
Attn: George W. Kirtland, Jr.
and a copy to each other Lender which may now or hereafter become a party to
the Credit Agreement at such address as may be designated by such Lender.
The address of Guarantor is:
Storage Trust Realty
2407 Rangeline
Columbia, Missouri 65202
Attn: Stephen M. Dulle
15. Governing Law. GUARANTOR ACKNOWLEDGES AND AGREES THAT
-------------
THIS GUARANTY AND THE OBLIGATIONS OF GUARANTOR HEREUNDER SHALL BE
GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
16. CONSENT TO JURISDICTION; WAIVERS. GUARANTOR HEREBY
--------------------------------
IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY,
AND (B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, (II) TO OBJECT
TO JURISDICTION
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<PAGE> 13
WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY
PARTICULAR FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS, AND
(III) TO THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN ACTUAL DAMAGES. GUARANTOR AGREES THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW,
ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY
BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO GUARANTOR AT THE ADDRESS SET FORTH IN PARAGRAPH 14
ABOVE, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER
THE SAME SHALL BE SO MAILED. NOTHING CONTAINED HEREIN, HOWEVER,
SHALL PREVENT LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST
GUARANTOR PERSONALLY, AND AGAINST ANY PROPERTY OF GUARANTOR,
WITHIN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR
PROCEEDING OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN THE RIGHTS
AND OBLIGATIONS OF GUARANTOR AND LENDER HEREUNDER OR OF THE
SUBMISSION HEREIN MADE BY GUARANTOR TO PERSONAL JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS. GUARANTOR HEREBY WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT. GUARANTOR CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH LENDER WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THEIR FOREGOING WAIVERS AND ACKNOWLEDGES THAT
LENDER HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS,
THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS PARAGRAPH 16.
GUARANTOR ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW
THIS PARAGRAPH 16 WITH ITS LEGAL COUNSEL AND THAT GUARANTOR AGREES
TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.
17. Successors and Assigns. The provisions of this Guaranty shall be
----------------------
binding upon Guarantor and its heirs, successors, successors in title, legal
representatives, and assigns, and shall inure to the benefit of Lender, its
successors, successors in title, legal representatives and assigns.
18. Assignment by Lender. This Guaranty is assignable by Lender in
--------------------
whole or in part in conjunction with any assignment of the Note or portions
thereof, and any assignment hereof or any transfer or assignment of the Note
or portions thereof by Lender shall operate to vest in any such assignee the
rights and powers, in whole or in part, as appropriate, herein conferred upon
and granted to Lender.
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<PAGE> 14
19. Severability. If any term or provision of this Guaranty shall be
------------
determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by law.
20. Disclosure. Guarantor agrees that in addition to disclosures made
----------
in accordance with standard banking practices, any Lender may disclose
information obtained by such Lender pursuant to this Guaranty to assignees or
participants and potential assignees or participants hereunder.
21. No Unwritten Agreements. THIS GUARANTY REPRESENTS THE FINAL
-----------------------
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
22. Time of the Essence. Time is of the essence with respect to each
-------------------
and every covenant, agreement and obligation of Guarantor under this
Guaranty.
23. Ratification. Guarantor does hereby restate, reaffirm and ratify
------------
each and every warranty and representation regarding Guarantor or its
Subsidiaries set forth in the Credit Agreement as if the same were more fully
set forth herein.
24. Limitation on Liability. NO OBLIGATION OR LIABILITY
-----------------------
WHATSOEVER OF THE GUARANTOR (WHETHER AS GUARANTOR OR AS GENERAL
PARTNER OF THE BORROWER) WHICH MAY ARISE AT ANY TIME UNDER THIS
GUARANTY OR ANY OBLIGATION OR LIABILITY WHICH MAY BE INCURRED BY
IT PURSUANT TO ANY OTHER LOAN DOCUMENT SHALL BE PERSONALLY BINDING
UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF BE HAD TO, THE
PRIVATE PROPERTY OF ANY OF THE GUARANTOR'S SHAREHOLDERS, TRUSTEES,
OFFICERS OR EMPLOYEES, REGARDLESS OF WHETHER SUCH OBLIGATION OR
LIABILITY IS IN THE NATURE OF CONTRACT, TORT OR OTHERWISE.
NOTHING HEREIN SHALL DIMINISH OR IMPAIR THE RIGHTS OF AGENT AND
THE BANKS TO PURSUE ANY REMEDY AGAINST ANY ASSETS OF THE
GUARANTOR.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as
of the 25th day of January, 1998.
STORAGE TRUST REALTY,
a Maryland real estate investment trust
By:------------------------------
Name:---------------------------
[SEAL]
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<PAGE> 1
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this
"Amendment") made this ---- day of March, 1998 by and among
STORAGE TRUST PROPERTIES, L. P., a Delaware limited partnership
("Borrower"), STORAGE TRUST REALTY, a Maryland real estate
investment trust ("Storage Trust Guarantor"), the undersigned
Additional Guarantors (collectively the "Additional Guarantors";
Storage Trust Guarantor and the Additional Guarantors are
sometimes hereinafter referred to collectively as the
"Guarantors"), BANKBOSTON, N.A., individually ("BankBoston"),
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BOA;
BankBoston and BOA are hereinafter referred to collectively as
the "Banks"), and BANKBOSTON, N.A., as Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower, Agent and the Banks entered into that
certain Revolving Credit Agreement dated as of January 25, 1998
(the "Credit Agreement"); and
WHEREAS, Storage Trust Guarantor has executed and
delivered to the Agent and the Banks that certain Unconditional
Guaranty of Payment and Performance dated as of January 25, 1998
(the "Storage Trust Guaranty"); and
WHEREAS, Additional Guarantors have executed and delivered
to the Agent and the Banks that certain Unconditional Guaranty of
Payment and Performance dated as of January 25, 1998 (the
"Additional Guarantors Guaranty"; the Storage Trust Guaranty and
the Additional Guarantors Guaranty are sometimes hereinafter
referred to collectively as the "Guaranty"); and
WHEREAS, Borrower has requested that Agent and the Banks
modify and amend certain terms and provisions of the Credit
Agreement and release Storage Trust Investments-Georgia, L.P.
("Storage Trust-Georgia") from its obligations as an Additional
Guarantor;
NOW, THEREFORE, for and in consideration of the sum of TEN
and NO/100 DOLLARS ($10.00), and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby covenant and agree as
follows:
1. Definitions. All the terms used herein which are not
otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
2. Modification of the Credit Agreement. Borrower, Banks
and Agent do hereby modify and amend the Credit Agreement as
follows:
(a) By deleting the words "twenty percent (20%)"
appearing in the second (2nd) line of the last paragraph of the
definition of the term "Unencumbered Operating
<PAGE> 2
Property" appearing in Section 1.1 of the Credit Agreement, and
inserting in lieu thereof the words "twenty-five percent (25%)";
(b) By deleting the words "twenty percent (20%)"
appearing in the first (1st) line of Section 7.14(a)(ii) of the
Credit Agreement and inserting in lieu thereof the words "twenty-
five percent (25%)";
(c) By deleting the words "twenty percent (20%)"
appearing in the fourth (4th) line of Section 7.19(h) of the
Credit Agreement, and inserting in lieu thereof the words
"twenty-five percent (25%)"; and
(d) By deleting the name "Gordon Burnam" appearing in
the first (1st) line of Section 12.1(q) of the Credit Agreement,
and inserting in lieu thereof the name "Daniel C. Staton".
3. Release of Storage Trust-Georgia. The Agent and the
Banks hereby release Storage Trust-Georgia from its obligations
under the Additional Guarantors Guaranty, and from and after the
date hereof, Storage Trust-Georgia shall no longer be an
Additional Guarantor. The obligations of the remaining
Guarantors shall not be affected by such release.
4. References to Credit Agreement. All references in the
Loan Documents to the Credit Agreement shall be deemed a
reference to the Credit Agreement as modified and amended herein.
5. Representations and Warranties. Borrower and
Guarantors represent and warrant to the Banks and Agent as
follows:
(a) Authorization. The execution, delivery and
performance of this Amendment and the transactions contemplated
hereby and thereby (i) are within the authority of Borrower and
Guarantors, (ii) have been duly authorized by all necessary
proceedings on the part of such Persons, (iii) do not and will
not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which any of
such Persons is subject or any judgment, order, writ, injunction,
license or permit applicable to such Persons, (iv) do not and
will not conflict with or constitute a default (whether with the
passage of time or the giving of notice, or both) under any
provision of the charter documents, partnership agreement,
declaration of trust or other charter documents or bylaws of, or
any agreement or other instrument binding upon any of such
Persons or any of its properties, and (v) do not and will not
result in or require the imposition of any lien or other
encumbrance on any of the properties, assets or rights of such
Persons.
(b) Enforceability. The execution and delivery of
this Amendment is valid and legally binding obligations of
Borrower and Guarantors enforceable in accordance with the terms
and provisions hereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy
of specific
-2-
<PAGE> 3
performance or injunctive relief is subject to the discretion of
the court before which any proceeding therefor may be brought.
(c) Approvals. The execution, delivery, and
performance of this Amendment and the transactions contemplated
hereby and thereby do not require the approval or consent of any
Person or the authorization, consent, approval of or any license
or permit issued by, or any filing or registration with, or the
giving of any notice to, any court, department, board, commission
or other governmental agency or authority other than those
already obtained.
6. Consent of Guarantors. By execution of this Amendment,
each Guarantor hereby expressly consents to the modifications and
amendments relating to the Credit Agreement as set forth herein
and the release of Storage Trust-Georgia, and each Guarantor
hereby acknowledges, represents and agrees that the Guaranty
remains in full force and effect and constitutes the valid and
legally binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms, and that the
execution and delivery of this Amendment does not constitute, and
shall not be deemed to constitute, a release, waiver or
satisfaction of such Guarantor's obligations under the Guaranty.
7. No Default. By execution hereof, the Borrower and each
Guarantor certifies that the Borrower and Guarantors are and will
be in compliance with all covenants under the Loan Documents
after the execution and delivery of this Amendment, and that no
Default or Event of Default has occurred and is continuing.
8. Waiver of Claims. Borrower and Guarantors acknowledge,
represent and agree that Borrower and Guarantors have no
defenses, setoffs, claims, counterclaims or causes of action of
any kind or nature whatsoever with respect to the Loan Documents,
the administration or funding of the Loans or with respect to any
acts or omissions of Agent or any of the Banks, or any past or
present officers, agents or employees of Agent or any of the
Banks, and each of Borrower and Guarantors does hereby expressly
waive, release and relinquish any and all such defenses, setoffs,
claims, counterclaims and causes of action, if any.
9. Ratification. Except as hereinabove set forth, all
terms, covenants and provisions of the Credit Agreement remain
unaltered and in full force and effect, and the parties hereto do
hereby expressly ratify and confirm the Credit Agreement as
modified and amended herein. Nothing in this Amendment shall be
deemed or construed to constitute, and there has not otherwise
occurred, a novation, cancellation, satisfaction, release,
extinguishment or substitution of the indebtedness evidenced by
the Notes or the other obligations of Borrower and Guarantors
under the Loan Documents.
10. Amendment as Loan Document. This Amendment shall
constitute a Loan Document.
-3-
<PAGE> 4
11. Counterparts. This Amendment may be executed in any
number of counterparts which shall together constitute but one
and the same agreement.
12. Miscellaneous. This Amendment shall be construed and
enforced in accordance with the laws of the Commonwealth of
Massachusetts. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
permitted successors, successors-in-title and assigns as provided
in the Credit Agreement and the Guaranty.
IN WITNESS WHEREOF, the parties hereto have hereto set their
hands and affixed their seals as of the day and year first above
written.
BORROWER:
STORAGE TRUST PROPERTIES, L.P., a
Delaware limited partnership, by its
sole general partner
By: Storage Trust Realty, a Maryland
real estate investment trust
By:
----------------------------------
Name:
Title:
[SEAL]
-4-
<PAGE> 5
GUARANTOR:
STORAGE TRUST REALTY, a Maryland real
estate investment trust
By:
------------------------------------
Name:
Title:
[SEAL]
-5-
<PAGE> 6
ADDITIONAL GUARANTORS:
STORAGE TRUST INVESTMENTS, L.P., a Missouri
limited partnership, by its sole general partner
By: STR Management Corp., a Missouri corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-6-
<PAGE> 7
STORAGE TRUST INVESTMENTS - TENNESSEE,
L.P., a Tennessee limited partnership, by its sole
general partner
By: STR Management Corporation of Tennessee,
a Tennessee corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-7-
<PAGE> 8
STORAGE TRUST INVESTMENTS - FLORIDA,
LIMITED PARTNERSHIP, a Florida limited partnership,
by its sole general partner
By: STR Management Corporation of Florida, a Florida
corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-8-
<PAGE> 9
STORAGE TRUST INVESTMENTS - KENTUCKY,
LTD., a Kentucky limited partnership, by its sole
general partner
By: STR Management Corporation of Kentucky, a
Kentucky corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-9-
<PAGE> 10
STORAGE TRUST INVESTMENTS - KANSAS, L.P., a
Kansas limited partnership, by its sole general partner
By: STR Management Corp. of Kansas, a
Kansas corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-10-
<PAGE> 11
STORAGE T INVESTMENTS - WISCONSIN,
LIMITED PARTNERSHIP, a Wisconsin limited
partnership, by its sole general partner
By: STR Management Corporation of Wisconsin, a
Wisconsin corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-11-
<PAGE> 12
STORAGE T INVESTMENTS - ILLINOIS, L.P., an
Illinois limited partnership, by its sole general
partner
By: STR Management Corporation of
Illinois, an Illinois corporation
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
[CORPORATE SEAL]
-12-
<PAGE> 13
BANKBOSTON, N.A., individually and as Agent
By:
----------------------------------------------
Jeffrey L. Warwick, Director
[BANK SEAL]
-13-
<PAGE> 14
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
----------------------------------------------
Title:
[BANK SEAL]
-14-
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into as
of the 7th day of May, 1997, between STORAGE TRUST PROPERTIES, L.P., a
Delaware limited partnership, acting by and through its general partner,
STORAGE TRUST REALTY, A Maryland Real Estate Investment Trust (the "Company")
and MICHAEL G. BURNAM, Chief Executive Officer (the "Executive").
WHEREAS, the Company recognizes that the Executive's contribution to the
growth and success of the Company has been substantial and desires to assure
the Company of the Executive's continued employment; and
WHEREAS, the Company and the Executive previously executed an Employment
Agreement dated November 15, 1994, which they now wish to wholly replace and
restate through this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set forth,
the parties agree as follows:
1. EMPLOYMENT: The Company agrees to continue to employ the
-----------
Executive, and the Executive agrees to continue to be employed by the Company,
subject to the terms and conditions set forth herein.
2. TERM: The employment of the Executive by the Company as
-----
provided in paragraph 1 hereof will be for a period of approximately three (3)
years and two (2) months, commencing on the date of this Agreement through and
ending on June 30, 2000, unless the term of this Agreement is extended as
provided in the following sentence of this paragraph 2 (the "Employment
Term"). Commencing on July 1, 2000, and on each anniversary of such date
thereafter (such date and each anniversary thereof is hereafter called the
"Renewal Date"), the Employment Term will be automatically extended so as to
terminate on each subsequent anniversary of the Renewal Date, unless, not less
than thirty (30) days prior to a Renewal Date, either party delivers to the
other party written notice of its or his election not to so extend the
Employment Term. If such a written notice is given in a timely manner, then
this Agreement shall terminate on the next succeeding Renewal Date subsequent
to said Notice. The Employment Term shall automatically end on the date of
the Employee's death and a Notice of Termination pursuant to paragraph 5, g,
shall be deemed to constitute a notice of nonrenewal under this paragraph 2.
Notwithstanding the foregoing provisions of this paragraph 2, if a Change in
Control (as defined in paragraph 7, a) occurs during the Employment Term, this
Agreement will automatically be extended for a period of twelve (12) months
following the date of such Change in Control.
3. POSITION AND DUTIES: During the Employment Term, while the
--------------------
Executive is employed by the Company, the Executive shall serve as Chief
Executive Officer of the Company or in such other executive capacity as a
senior officer of the Company as may be determined by
<PAGE> 2
the Company's Board of Trustees (the "Board") from time to time; provided,
however, that such duties at all times shall be consistent with the duties
normally performed by the Chief Executive Officer or such other executive
position of companies engaged in businesses similar to the business of the
Company. The Executive agrees to devote substantially all of his business
time, skill, attention, and best efforts to the business of the Company to the
extent necessary to discharge the responsibilities assigned to him during the
Employment Term; provided, that the Executive may:
a. except as provided in the noncompetition agreement between the
Executive and the Company dated as of December 31, 1997 (and effective as of May
7, 1997) invest solely as a passive investor in any business or enterprise which
is not in competition with the Company or which is not a supplier or vendor to
the Company;
b. serve on civic or charitable boards or committees that involve
limited commitments of time and do not interfere with the fulfillment of the
Executive's duties with respect to the Company, or, with the prior consent of
the Board, on other corporate boards;
c. take usual, ordinary, and customary periods of vacation; and
d. unless totally disabled (as hereafter defined) be absent due to
illness or other disability.
4. COMPENSATION:
-------------
a. Base Salary: During the Employment Term, while the Executive
------------
is employed by the Company, the Executive shall receive a base salary ("Base
Salary") at an annual rate of One Hundred Fifty Thousand Dollars ($150,000.00)
per year. The Board, in its sole discretion, may increase the Executive's
Base Salary effective as of January 1 of each calendar year subsequent to
December 31, 1997, in an amount the Board deems appropriate, provided that the
Board shall increase the Executive's Base Salary with respect of each
remaining calendar year of the Employment Term by a percentage not less than
the ratio of the "CPI" for the month of October in the calendar year ending
immediately prior to a new calendar year as compared to the "CPI" for the
month of October in the calendar year two years prior to such new calendar
year. As used in this paragraph, the term "CPI" means the Consumer Price
Index for All Items for the United States (CP-U; All items; 1982-1984=100) as
published by the Bureau of Labor Statistics, United States Department of
Labor. Any increase in the Executive's Base Salary or other compensation
which is based on increases in the CPI shall in no way limit or reduce any
other obligation of the Company hereunder, and, once established at an
increased specified rate, the Executive's adjusted Base Salary shall not be
reduced thereafter. The Executive's Base Salary shall be paid in accordance
with the normal payroll practices of the Company, but in no event less
frequently than monthly.
-Page 2-
<PAGE> 3
b. Incentive Compensation; Bonuses: In addition to the Base
--------------------------------
Salary specified above, during the Employment Term, while the Executive is
employed by the Company, the Executive shall be eligible to:
(1) participate in the Bonus Incentive Compensation
Plan as adopted May 9, 1995, as amended;
(2) participate in the 1994 Share Incentive Plan as
adopted by the Company, and as amended February 4, 1997;
(3) participate in any other incentive plan for
executive employees in effect from time to time hereafter;
(4) exercise such share options pursuant to their terms
as have been and as may be awarded to Executive from time to
time hereafter which vest at any time hereafter; and
(5) receive such other bonuses or discretionary
compensation payments as the Board may determine from time to
time hereafter.
The bonus and incentive plans described above in this subparagraph 4, b, are
referred to herein collectively as the "Incentive Plans." Nothing in this
Agreement shall require the Company to adopt or continue any specific
Incentive Plan.
c. Expenses: The Executive shall be entitled to receive prompt
---------
reimbursement for all reasonable out-of-pocket expenses incurred by the
Executive during the Employment Term while the Executive is employed by the
Company in the normal course of the Company's business in accordance with the
policies and procedures of the Company.
d. Benefit Plans: During the Employment Term, while the Executive
--------------
is employed by the Company, the Executive shall be entitled to continue to
participate in or receive benefits under all of the Company's employee benefit
plans, policies, practices, and arrangements ("Benefit Plans") on the same
basis as other executive officers of the Company.
e. Vacations: The Executive shall be entitled to paid vacations
----------
in accordance with the Company's vacation policy as in effect from time to
time. The Executive also shall be entitled to all paid holidays given by the
Company to its executive officers.
f. Fringe Benefits: The Executive shall be entitled to all fringe
----------------
benefits generally provided by the Company to its executive officers.
g. Location of Employment: The Executive shall be based at the
-----------------------
Company's corporate headquarters, except for required travel on the Company's
business in accordance with the Company's management practices.
-Page 3-
<PAGE> 4
5. TERMINATION:
------------
The Executive's employment with the Company during the Employment Term
may be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in subparagraphs 5, a,
through 5, f, next below.
a. Death: The Executive's employment shall terminate
------
automatically upon the death of the Executive.
b. Total Disability: The Company may terminate the Executive's
-----------------
employment by reason of the Executive's total disability. The term "total
disability" means a physical or mental condition which, in the judgment of the
Executive's attending physician, and based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive even with
reasonable accommodation by the Company from satisfactorily performing his
usual duties for the Company. The receipt of Social Security Disability
payments shall be presumptive evidence of total disability.
c. Cause or Inadequate Performance: The Company may terminate the
--------------------------------
Executive's employment for cause or inadequate performance; provided, however,
the Executive's employment may not be terminated for inadequate performance
during the twelve (12) month period following a Change in Control. The term
"cause" in this Agreement means the Executive's conviction of a felony or his
conviction of any misdemeanor involving moral turpitude (but only in the event
that such misdemeanor adversely impacts the Company), excessive use of
alcohol, the use of illegal drugs, acts of fraud or dishonesty, or any
material breach by the Executive of this Agreement. The term "inadequate
performance" means, in the good faith opinion of a majority of the Company's
Board of Trustees, a significant deviation from the Executive's past
performance under similar business conditions and not resulting from factors
beyond the reasonable control of the Executive.
d. Termination by the Executive Because of Change in Control or
------------------------------------------------------------
Good Reason: The Executive may terminate his employment for any reason at
- ------------
any time during the twelve (12) month period following a Change in Control or
upon the occurrence at any time of any event constituting Good Reason (as
hereafter defined). For the purposes of this Agreement, "Good Reason" shall
mean:
(1) the assignment to the Executive by the Company of any
duties materially inconsistent with the position of a senior officer
with the Company;
(2) a change by the Company in the Executive's responsibilities
to the Company such that the Executive is not acting as a senior officer
of the Company, as such responsibilities are ordinarily and customarily
required from time to time of an individual employed as a senior officer
with a corporation engaged in the Company's business; or
-Page 4-
<PAGE> 5
(3) any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its material obligations hereunder.
e. Termination by Executive for other than Good Reason or following
----------------------------------------------------------------
a Change in Control: The Executive may terminate his employment hereunder at
- --------------------
any time for any reason not specified in subparagraph 5, d, above, by giving
the Company a written Notice of Termination in accordance with subparagraph 5,
g, below.
f. Termination by Company for other than Cause or Inadequate
---------------------------------------------------------
Performance. The Company may terminate the Executive's employment at any
- ------------
time for any reason not specified in subparagraphs 5, a, b, or c, above, by
giving the Executive a written Notice of Termination in accordance with
subparagraph 5, g, below.
g. Notice of Termination: Any termination of the Executive's
----------------------
employment for any reason other than the Executive's death, whether initiated
by the Company or by the Executive, shall be communicated by a written "Notice
of Termination" to the other party hereto. The "Notice of Termination" shall
specify which termination provision in this Agreement is relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the provision so
indicated. Such Notice of Termination shall be effective immediately or, in
the case of a termination described in subparagraphs 5, d, or f, above, such
later date as is specified in such notice.
h. Date of Termination: "Date of Termination" shall mean the last
--------------------
date the Executive is employed by the Company, provided that the Executive's
employment is terminated in accordance with the foregoing provisions of this
paragraph 5.
6. COMPENSATION AND OTHER RIGHTS UPON TERMINATION: The
-----------------------------------------------
Executive's right to payments and benefits under this Agreement for any
period after his Date of Termination shall be determined in accordance with
the following provisions of this paragraph 6.
a. Termination Because of Death or Total Disability of Executive:
--------------------------------------------------------------
If the Executive's Date of Termination occurs during the Employment Term by
reason of the Executive's death or total disability, the Executive, or in the
event of his death, the Executive's estate, heirs or designated beneficiaries
shall be entitled to receive the benefits specified in subparagraphs (1), (2)
and (3), below of this paragraph a. The amounts specified in subparagraphs (2)
and (3) shall be paid in a lump sum cash payment as soon after the Executive's
Date of Termination as is reasonably possible. Such payments shall be in
addition to any other benefits specifically provided under the terms of any
Incentive Plans or Benefit Plans. The benefits payable pursuant to this
paragraph shall be:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
-Page 5-
<PAGE> 6
(2) an amount equal to 12 months of the Executive's Base
Salary at the rate in effect on his Date of Termination; plus
(3) an amount equal to the annual bonus payable to the
Executive, if any, under the Incentive Plans for the calendar year
immediately preceding the calendar year in which the Executive's Date of
Termination occurs. In the event of the Executive's death, any sum which
would have been paid to a participant's account in a qualified
retirement plan for the Executive by the Company shall instead be
included as a part of this payment.
The Executive's "estate, heirs, and beneficiaries" shall mean the trustee of
any trust or the personal representative of the Executive's estate or such
other person or persons who may be designated by the Executive to receive such
benefits on such documents or forms as the Company provides for this purpose.
b. Termination Following a Change in Control: If the Executive's
------------------------------------------
Date of Termination occurs within twelve (12) months following a Change in
Control for any reason other than death, total disability or for cause, the
Executive shall be entitled to the following:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable.
(3) a lump sum cash payment in an amount equal to two and
one-half (2.5) times (250% of) of the sum of (i) the Executive's Base
Salary; plus (ii) bonuses paid during the twelve (12) full calendar
months immediately preceding the calendar month in which the Executive's
employment terminated. Such total amount shall be paid within ten (10)
days following the Date of Termination.
In addition, if the Executive's Date of Termination occurs for reasons other
than cause within twelve (12) months following a Change in Control or
following any event constituting Good Reason, and on such date the Executive
is party to any agreement with the Company restricting the Executive's ability
to obtain employment with a competitor of the Company or to engage in
activities which are competitive to the Company, such competition restrictions
shall lapse on the Date of Termination.
-Page 6-
<PAGE> 7
c. Voluntary Termination by Executive: If the Executive's Date of
-----------------------------------
Termination occurs under subparagraph 5, e, (relating to a voluntary
termination not within twelve (12) months following a Change in Control and
---
not for Good Reason), then the Company shall promptly pay the Executive his
- ---
full Base Salary through the Date of Termination at the rate in effect on his
Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans.
d. Termination for Cause or Inadequate Performance: If the
------------------------------------------------
Executive's Date of Termination shall occur under subparagraph 5, c, for
reasons of (i) cause, or (ii) inadequate performance provided such termination
for inadequate performance does not occur within twelve (12) months of a
Change in Control, the Company shall promptly pay the Executive his full Base
Salary through the Date of Termination at the rate in effect on his Date of
Termination and any amounts earned but unpaid as of the Date of Termination
under the Incentive Plans and Benefit Plans, in accordance with the terms of
such Plans. Such termination shall not impair the Company's remedies for any
breach of this Agreement by the Executive.
e. Other Termination by the Company or by the Executive for Good
-------------------------------------------------------------
Reason: If the Executive's Date of Termination occurs under subparagraph 5,
- -------
f, (relating to termination by the Company for reasons other than total
disability, cause or inadequate performance) or the Executive shall terminate
his employment for Good Reason under subparagraph 5, d, and such termination
is not during the 12 month period following a Change in Control, then the
Company shall pay to the Executive the following amounts:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable;
plus
(3) a lump sum cash payment in an amount equal to one times
(100% of) the sum of (i) the Executive's Base Salary; plus (ii) bonuses,
paid during the twelve (12) full calendar months immediately preceding
the calendar month in which the Executive's employment is terminated.
Such total amount shall be paid within ten (10) days following the Date
of Termination.
f. Additional Benefits for Certain Terminations: Notwithstanding
---------------------------------------------
any provisions to the contrary contained in this Agreement, in any Incentive
Plan or in any other agreement between the Company and the Executive, if the
Executive's Date of Termination occurs for any
-Page 7-
<PAGE> 8
reason other than a termination by the Company for cause or inadequate
performance under subparagraph 5, c, or a voluntary termination by the
Executive under subparagraph 5, e, (relating to voluntary terminations which
are not for Good Reason or within 12 months of a Change in Control), then
effective immediately prior to such Date of Termination and continuing
thereafter:
(1) All share options and share appreciation rights which the
Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(2) All shares of restricted shares which the Executive holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested and all restrictions applicable to such shares under such
plans shall immediately terminate;
(3) All performance share awards, performance unit awards and
other similar performance-based awards which the Executive then holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested, all performance measures applicable to such awards shall
be deemed to have been fully satisfied through the Date of Termination,
and payment of the then value of such awards shall be made to the
Executive as soon as administratively feasible following the Date of
Termination or such Change in Control, with the value of such awards to
be based, to the extent applicable, on the Market Value (as hereinafter
defined) or the Change in Control Value (as hereinafter defined) of the
common shares of the Company, whichever is applicable; and
(4) All other incentive compensation awards, including
deferred cash bonuses or share awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable.
g. Benefits Delayed if Necessary to Assure Full Payment:
-----------------------------------------------------
Notwithstanding any other provisions of this Agreement, if applicable law or
any material agreement by which the Company is bound imposes any restrictions
on the Company's fulfilling its obligations under this paragraph 6 at the time
provided, the Company shall fulfill its obligations to the maximum extent
possible at that time without violating such restrictions, and such remaining
and unfulfilled obligations shall survive until the Company is able to fulfill
them and the Company shall use its best efforts to fulfill such obligations as
soon as reasonably practicable thereafter.
h. Continuation of Benefit Plans: If the Executive's employment
-------------------------------
is terminated under the circumstances described in subparagraph 6, b, hereof
(relating to termination following a Change in Control), then for a period of
eighteen (18) months following the Date of Termination, the Company shall
maintain in full force and effect for the continued benefit of the Executive
and his eligible dependents and beneficiaries, the employee benefits under the
Benefit Plans which they were eligible to receive immediately prior to the
Date of Termination, subject to the terms and conditions of the Benefit Plans,
at no greater cost to the Executive than he would have incurred had he
remained in the employ of the Company; provided that the Executive's continued
participation or the participation of such eligible dependents or
beneficiaries must be permissible
-Page 8-
<PAGE> 9
under the general terms and provisions of such Benefit Plans and shall not
jeopardize the Plans' qualified status under the Internal Revenue Code or the
rules and regulations promulgated thereunder. In the event that the
Executive's participation or the participation of such eligible dependents or
beneficiaries in any such Benefit Plan is barred pursuant to the preceding
sentence, the Company shall arrange to provide the Executive or such eligible
dependents or beneficiaries, for the period of coverage specified in the
preceding sentence, with benefits substantially similar to those which the
Executive and such eligible dependents or beneficiaries were entitled to
receive under such Benefit Plans immediately prior to the Date of Termination,
or with cash approximately equal in value to the benefit which otherwise would
have been made available. Upon the Executive obtaining other employment or
becoming self-employed, the Company's obligations under this subparagraph 6,
h, hereof shall cease effective upon the date of the Executive's eligibility
to participate in his new employer's benefits plans or in any benefit plans
established by the Executive pursuant to his self-employment, irrespective of
whether such benefit plans are comparable to the Company's Benefit Plans;
provided, however, that in the case of limited self-employment the Company
may, in its sole discretion, agree to waive the foregoing provisions of this
sentence.
7. CERTAIN DEFINITIONS:
--------------------
a. Change in Control: For purposes of this Agreement, the term
------------------
"Change in Control" means a change in the beneficial ownership of the
Company's voting shares or a change in the composition of the Company's Board
of Trustees which occurs as follows:
(1) any "person" (as such term is used in paragraph 13 (d) and
14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange Act"))
other than:
(a) a trustee or other fiduciary of securities held
under an employee benefit plan of the Company;
(b) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same
proportions as their ownership of the Company; or
(c) any person in which the Executive has a substantial
equity interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of shares of the Company representing twenty-five
percent (25%) or more of the total voting power of the Company's then
outstanding shares; or
(2) a tender offer is made for the shares of the Company by a
person other than a person described in subparagraph (1), (a), (b), or
(c), and the person making the offer owns or has accepted for payment
shares of the Company representing twenty-five percent (25%) or more of
the total voting power of the Company's shares; or
-Page 9-
<PAGE> 10
(3) the shareholders of the Company approve a sale of all or
substantially all of the Company's assets or a merger or consolidation
of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the Company's voting shares outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting shares of the surviving
entity) more than fifty-one percent (51%) of the combined voting
power of the Company's or such surviving entity's outstanding
voting shares immediately after such merger or consolidation; or
(b) such an asset sale or a merger or consolidation
which would result in the Trustees of the Company who were
Trustees immediately prior thereto continuing to constitute at
least fifty percent (50%) of the Trustees of the surviving
entity immediately after such merger or consolidation; or
(4) a majority of the members of the Board of Trustees is
comprised of individuals whose initial assumption of office occurred as
a result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11.
For purposes of this paragraph 7, "surviving entity" shall mean only an
entity in which all of the Company's shareholders become shareholders by
the terms of such merger or consolidation, and the phrase "Trustees of
the Company who were Trustees immediately prior thereto" shall not
include:
1) any Trustee of the Company who was designated by a
person who has entered into an agreement with the Company to
effect a transaction described in this paragraph or in paragraph
(1) above; or
2) any Trustee who was not a Trustee at the beginning
of the 12-consecutive-month period preceding the date of such
merger or consolidation
unless his or her election by the Board of Trustees or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the Trustees then still in office who were Trustees
before the beginning of such period or two-thirds (2/3) of the
shareholders voting for the election of Trustees, as the case may be.
b. Change in Control Value: For purposes of this Agreement, the
------------------------
term "Change in Control Value" means the greatest of the amounts determined
--------
in subparagraphs (1), (2), or (3), below, unless any one or more of such
values are not applicable, to-wit:
(1) the per share price offered to shareholders of the Company
in any merger, consolidation, sale of assets or reorganization
transaction;
-Page 10-
<PAGE> 11
(2) the highest per share price offered the shareholders of
the Company in any tender offer or exchange offer whereby a Change in
Control takes place; or
(3) if a Change in Control occurs other than as described in
subparagraphs (1) or (2), the Market Value per share, as of the date of
the Change in Control, as determined by the Board in Good faith. If the
consideration offered to shareholders of the Company in a transaction
consists of anything other than cash, the Board shall determine in Good
faith the fair cash equivalent of the portion of the consideration
offered which is other than cash.
8. ADJUSTMENT FOR TAX EFFECTS: If any payments under this
---------------------------
Agreement, after taking into account all other payments to which the Executive
is entitled from the Company, or any affiliate thereof, are subject to an
excise tax under section 4999 of the Internal Revenue Code of 1986 or any
successor provision to that section, such payments shall be reduced to the
extent required to avoid such excise tax if, and only if, such reduction would
result in a larger after-tax benefit to the Executive, taking into account all
applicable local, state, federal and foreign income and excise taxes. The
Executive shall be entitled to select the order in which payments are to be
reduced in accordance with the preceding sentence. If requested by the
Executive, the Company shall provide complete compensation and tax data on a
timely basis to the Executive and to tax counsel designated by the Executive
in order to enable the Executive to determine the extent to which payments
from the Company and its affiliates may result in an excise tax, and the
Company shall reimburse the Executive for any reasonable fees and expenses
incurred by the Executive for such purpose. If the Executive and the Company
shall disagree as to whether a payment under this Agreement will result in an
excise tax or whether a reduction in any payment will result in a larger
after-tax benefit to the Executive, the matter shall be resolved by an opinion
of tax counsel chosen by the Executive. The Company shall pay the fees and
expenses of such tax counsel, and shall make available such information as may
be reasonably requested by such advisor to prepare the opinion. If, by reason
of the adjustments under this paragraph 8, the amount payable to the Executive
under paragraph 6 above cannot be determined prior to the due date for such
payment, the Company shall pay on the due date the minimum amount which it in
good faith determines to be payable and the Company shall pay the remaining
amount (or the Executive shall repay any excess), with interest at a rate,
compounded semi-annually, equal to 120% of the applicable Federal rate
determined under section 1274(d) of the Internal Revenue Code of 1986, as soon
as such remaining amount is determined in accordance with this paragraph 8.
9. NON-DISCLOSURE AND REMEDIES:
----------------------------
a. The Executive shall not, during the Executive's employment
hereunder or at any time thereafter, disclose or reveal to anyone (other than
persons within the Company) any information relating to the business,
techniques, operations, condition (financial or otherwise), prospects or
affairs of the Company which is not generally known or recognized as a
standard industry practice. The Executive confirms that all confidential
information regarding the business of the Company received by him during his
employment is and shall remain the exclusive
-Page 11-
<PAGE> 12
property of the Company. All business records, papers and documents kept or
made by the Executive relating to the business of the Company shall be and
remain its property. Upon the termination of his employment with the Company
or upon the Company's request at any time, the Executive shall promptly
deliver to the Company, and shall not, without the consent of the Company,
retain copies of any written materials not previously made available to the
public made by the Executive or coming into his possession concerning the
business or any of its affiliates. Notwithstanding the preceding provisions of
this subparagraph 9, a, or any other provision of this Agreement, the
Executive shall be entitled to retain any written materials received by the
Executive in the capacity as a shareholder of the Company or the Company's
affiliates.
b. Without limiting its other remedies at law or equity for any
breach of subparagraph 9, a, hereof, the Executive agrees that in the event of
such breach, the Company shall be entitled to a temporary restraining order
and a preliminary and permanent injunction to specifically enforce
subparagraph 9, a, hereof, which shall be enforceable by the Company,
irrespective of the reason for the Executive's termination of employment.
10. SUCCESSORS; BINDING AGREEMENT:
------------------------------
a. The Company shall require any successor to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken
place; provided that (i) any such assignment and assumption shall not relieve
the Company of its liability hereunder, and (ii) with respect to the Company's
Incentive Plans and Benefit Plans, the Company's obligations under this
subparagraph 10, a, shall be deemed satisfied if the Executive is entitled to
participate in the incentive and benefit plans of the successor company which
are generally offered to the other executives of such successor company. As
used in this Agreement, "Company" shall mean the Company as hereinabove
defined and any successors to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this subparagraph 10, a,
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
b. This Agreement shall inure to the benefit of and be enforceable
by:
(1) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees; and
(2) the Company's successors and assigns.
11. NOTICES: For the purposes of this Agreement, notices and all
--------
other communications provided for in this Agreement shall be in writing and
shall be delivered by certified mail, return provide receipt requested,
postage prepaid, addressed as follows:
-Page 12-
<PAGE> 13
If to Executive: Michael G. Burnam
1020 Bourn Avenue
Columbia, MO 65203
If to the Company: Storage Trust Realty
2407 Rangeline Road
Columbia, MO 65202
12. MISCELLANEOUS: No provisions of this Agreement may be
--------------
modified, waived, or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and approved by the
Company. No modification, waiver or discharge by the Company shall be
effective unless it is approved by a majority of the Independent Trustees (as
defined in Article 5 of the Company's Declaration of Trust). No waiver by a
party at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same time or at any prior or subsequent time. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the state of Maryland.
13. VALIDITY: The invalidity or unenforceability of any
---------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
14. HEADINGS: The headings contained herein are for reference
---------
purposes only and shall not in any way affect the meaning or interpretation of
any provision of this Agreement.
15. SUPERSESSION OF PRIOR AGREEMENT: This Agreement
--------------------------------
supersedes and wholly replaces any previous employment agreements between the
Company or its predecessor corporations and the Executive, and any amendments
and supplements thereto.
16. ENTIRE AGREEMENT: This Agreement constitutes the entire
-----------------
agreement of the parties hereto relating, to the subject matter hereof and
there are no written or oral terms or representations made by either party
other than those contained herein.
17. ATTORNEYS' FEES AND COSTS: In the event there is any
--------------------------
legal action or arbitration between the parties hereto with respect to this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with such
action or proceeding in addition to any other relief to which such party may
be entitled.
18. SURVIVAL: Except as otherwise expressly provided in this
---------
Agreement, the rights and obligations of the parties hereunder shall survive
the expiration or termination of the term of the Executive's employment
hereunder.
19. NO EFFECT ON OTHER CONTRACTUAL RIGHTS: The provisions
--------------------------------------
of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the
-Page 13-
<PAGE> 14
Executive, or in any way diminish the Executive's rights as an employee of the
Company, whether existing now or hereafter, under any employee benefit plan,
program, or arrangement or other contract or agreement of the Company
providing benefits to the Executive.
20. ARBITRATION: The parties agree that any disputes arising
------------
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association, but subject to the following terms and conditions:
a. Purpose. The parties recognize that during the term of this
-------
Agreement, it is to their mutual benefit for there to be a mechanism to avoid
litigation. Rather than resort to litigation, the parties agree that the
disputes which may arise between the parties during the term of this Agreement
shall be resolved by mediation and arbitration as prescribed by this
paragraph.
b. Term of Arbitration Obligation. The arbitration obligation set
------------------------------
forth in this paragraph shall exist during the term of this Agreement.
c. Mediation. Before any dispute between the Parties is referred
---------
to an arbitrator or arbitration panel for resolution, the Parties shall use
reasonable and good faith efforts to resolve said dispute on an informal basis
or through the use of a mediator mutually agreeable to both Parties. The
mediator selected for this purpose shall not have any power to render a decree
or to enter any judgment binding upon the Parties, but instead said mediator
shall be selected in an effort to achieve a consensus and agreement between
the Parties with respect to the issue or issues in dispute. In the event
either Party believes an issue has not been resolved to said Party's
satisfaction and that said dispute potentially may be the subject of
arbitration if not resolved, said Party shall have the right to demand that
said issue be presented to a mediator for mediation and conciliation. In such
event, said Party desiring such mediation (the "Electing Party") shall give
notice to the other Party (the "Notice Party") as to the Electing Party's
desire to refer said issue to a mediator for resolution. Said written notice
to the Notice Party shall specify the names of at least three (3) persons who
would be acceptable to the Electing Party as a mediator for this purpose. The
Notice Party shall have the right to agree to any one (1) of the three (3)
persons so named to serve as mediator or shall have the right to reject all
said persons named and suggest three (3) prospective mediators in return. If
both Parties are unable to agree as to the name of a mediator who will serve
as such in connection with said mediation proceedings within thirty (30) days
of the date the Electing Party first gives notice to the Notice Party in this
regard, then the issue involved shall not be required to be mediated, but
instead may be the subject of arbitration pursuant to the provisions hereafter
specified. If the Parties are able to agree as to a person who can serve as
mediator, then the parties shall meet with said mediator and attempt to
resolve that issue to their mutual satisfaction. If the parties are unable to
achieve a resolution of the issue through said mediation proceeding, then
either Party may thereafter invoke the arbitration proceedings hereafter
specified.
-Page 14-
<PAGE> 15
d. Arbitration Procedures. If the Parties are unable to resolve
----------------------
an issue or issues about which they disagree through the mediation process
described above, then either Party shall have the right to require the binding
arbitration of such issue by demanding that said issue be arbitrated. In such
event, the Parties shall proceed as follows:
(1) The Party desiring arbitration (the "Electing Party")
shall given written notice to the other Party (the "Notice Party") as to
the Electing Party's election to invoke the binding arbitration
provisions of this paragraph. Said written notice shall identify the
issue or issues about which the Parties disagree, the fact of the
Electing Party's desire that said issues be arbitrated pursuant to this
Agreement, and the name of the arbitrator which the Electing Party has
selected to arbitrate said dispute.
(2) The Notice Party shall have ten (10) days following
receipt of the above-described written notice concerning the Electing
Party's decision to demand arbitration in which to select an arbitrator
to serve as such and who is acceptable to the Notice Party for this
purpose. The arbitrator selected by the Electing Party and the
arbitrator selected by the Notice Party shall thereafter meet within
five (5) days of the date the Notice Party indicates to the Electing
Party the name of the Notice Party's arbitrator and shall attempt to
agree upon a third arbitrator who shall be selected by said two (2)
previously named arbitrators. In the event said two (2) previously
named arbitrators are unable to agree upon a third arbitrator, then
either Party may communicate this fact to the American Arbitration
Association which shall thereupon name and select the third arbitrator.
(3) Any arbitrator selected by a Party must be independent of
the Party who has selected said arbitrator, i.e., said arbitrator may
not be an employee of that Party, may not be related within the third
degree of consanguinity to any employee or member of that Party or that
Party's Affiliate, and may not be an investor in, member of, or
Affiliate of any Party.
(4) Any arbitrator selected for the foregoing purposes must
agree in writing, to base said arbitrator's decision on the principles
hereafter set forth in subparagraph e of this paragraph.
(5) The Parties shall thereafter proceed to submit their
issues and disputes to the arbitrators selected in the foregoing manner
and shall thereafter be bound by any decision reached by said
arbitrators (so long as said decision is reached and determined in
accordance with the principles hereafter set forth in subparagraph e of
this paragraph).
(6) In lieu of the foregoing procedure, if the Parties are
able to agree on a single person to serve as arbitrator of the issue or
issues involved, then the
-Page 15-
<PAGE> 16
Parties may submit the issues involved to said single arbitrator who
shall thereupon have the power to make a decision in the case which is
binding upon both Parties.
e. Governing Principles Applicable to Arbitration Proceedings. In
----------------------------------------------------------
any arbitration proceeding conducted pursuant to this Agreement and pursuant
to the foregoing provisions of this paragraph, the Arbitrator shall be bound
and governed by the following principles:
(1) The arbitration proceedings shall be stayed for a
reasonable period of time during which the Parties shall be permitted to
conduct such discovery (including depositions, interrogatories, requests
for admissions, and the like) in the same manner as if the issue or
issues involved were pending before the Circuit Court of Boone County,
Missouri, and pursuant to the Missouri Rules of Civil Procedure then in
effect.
(2) Following said period of discovery, the issues shall be
presented to the arbitrator or arbitrators. However, in presenting such
issues and such evidence as may be involved, the arbitrator shall be
bound and obligated to apply the rules of evidence which are then in
effect with respect to Circuit Courts in Boone County, Missouri, and
shall be governed by the rules of evidence with respect to the
admissibility of evidence in the Missouri courts in the same manner as
if said issues where then being tried to a Circuit Judge in the Circuit
Court of Boone County, Missouri. The arbitrators may not consider (and
shall not consider) evidence which would not be admissible before the
Circuit Court of Boone County, Missouri, were the issues being tried to
said Circuit Court in said case.
(3) Any decision rendered by the arbitrators must be a
decision which could be entered by the Circuit Court of Boone County,
Missouri, under the same or similar circumstances. In this regard, the
arbitration panel shall have such equitable authority and powers as the
Circuit Court of Boone County, Missouri, would have under the same or
similar circumstances, but shall not have the ability to fashion any
relief or decision which would be beyond the authority of the Circuit
Court of Boone County, Missouri, to render under the same or similar
circumstances (assuming personal jurisdiction over both Parties).
(4) In the event no member of the arbitration panel is an
attorney licensed to practice law in the state of Missouri, then the
arbitration panel shall have the authority to retain the services of an
attorney who is licensed to practice law in the state of Missouri, and
who has no conflict of interest with respect to the Parties to advise
the arbitration panel concerning the legal issues coming before the
arbitration panel. However, because of the need for the arbitration
panel to be familiar with legal principles under the laws of the state
of Missouri, the arbitration panelists selected by the Parties (and by
the arbitrators) shall, if at all
-Page 16-
<PAGE> 17
possible, be practicing attorneys in the state of Missouri or Judges or
former Judges of the courts of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
[THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.]
STORAGE TRUST PROPERTIES, L.P., ("Company")
By: Storage Trust Realty, a Maryland
Real Estate Investment Trust, Sole
General Partner
By: /s/ P. Crismon Burnam
-------------------------------------
P. Crismon Burnam, Chief Operating
Officer
/s/ Michael G. Burnam
-------------------------------------
MICHAEL G. BURNAM, ("Executive")
-Page 17-
<PAGE> 18
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into
as of the 31st day of December, 1997 and effective as of the 7th day of May,
1997, between STORAGE TRUST PROPERTIES, L.P., a Delaware limited partnership,
acting by and through its general partner, STORAGE TRUST REALTY, A Maryland
Real Estate Investment Trust (the "Company") and STEPHEN M. DULLE, Chief
Financial Officer (the "Executive").
WHEREAS, the Company recognizes that the Executive's contribution to
the growth and success of the Company has been substantial and desires to
assure the Company of the Executive's continued employment; and
WHEREAS, the Company and the Executive previously executed an
Employment Agreement dated November 15, 1994, which they now wish to wholly
replace and restate through this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set forth,
the parties agree as follows:
1. EMPLOYMENT: The Company agrees to continue to employ the
-----------
Executive, and the Executive agrees to continue to be employed by the
Company, subject to the terms and conditions set forth herein.
2. TERM: The employment of the Executive by the Company as
-----
provided in paragraph 1 hereof will be for a period of approximately three
(3) years and two (2) months, commencing on the date of this Agreement
through and ending on June 30, 2000, unless the term of this Agreement is
extended as provided in the following sentence of this paragraph 2 (the
"Employment Term"). Commencing on July 1, 2000, and on each anniversary of
such date thereafter (such date and each anniversary thereof is hereafter
called the "Renewal Date"), the Employment Term will be automatically
extended so as to terminate on each subsequent anniversary of the Renewal
Date, unless, not less than thirty (30) days prior to a Renewal Date, either
party delivers to the other party written notice of its or his election not
to so extend the Employment Term. If such a written notice is given in a
timely manner, then this Agreement shall terminate on the next succeeding
Renewal Date subsequent to said Notice. The Employment Term shall
automatically end on the date of the Employee's death and a Notice of
Termination pursuant to paragraph 5, g, shall be deemed to constitute a
notice of nonrenewal under this paragraph 2. Notwithstanding the foregoing
provisions of this paragraph 2, if a Change in Control (as defined in
paragraph 7, a) occurs during the Employment Term, this Agreement will
automatically be extended for a period of twelve (12) months following the
date of such Change in Control.
3. POSITION AND DUTIES: During the Employment Term, while
--------------------
the Executive is employed by the Company, the Executive shall serve as Chief
Financial Officer of the Company
<PAGE> 19
or in such other executive capacity as a senior officer of the Company as may be
determined by the Company's Board of Trustees (the "Board") from time to time;
provided, however, that such duties at all times shall be consistent with the
duties normally performed by the Chief Financial Officer or such other executive
position of companies engaged in businesses similar to the business of the
Company. The Executive agrees to devote substantially all of his business time,
skill, attention, and best efforts to the business of the Company to the extent
necessary to discharge the responsibilities assigned to him during the
Employment Term; provided, that the Executive may:
a. except as provided in the noncompetition agreement between the
Executive and the Company dated as of December 31, 1997 (and effective as of
May 7, 1997) invest solely as a passive investor in any business or
enterprise which is not in competition with the Company or which is not a
supplier or vendor to the Company;
b. serve on civic or charitable boards or committees that involve
limited commitments of time and do not interfere with the fulfillment of the
Executive's duties with respect to the Company, or, with the prior consent of
the Board, on other corporate boards;
c. take usual, ordinary, and customary periods of vacation; and
d. unless totally disabled (as hereafter defined) be absent due to
illness or other disability.
4. COMPENSATION:
-------------
a. Base Salary: During the Employment Term, while the Executive
------------
is employed by the Company, the Executive shall receive a base salary ("Base
Salary") at an annual rate of One Hundred Thirty-Five Thousand ($135,000.00)
per year. The Board, in its sole discretion, may increase the Executive's
Base Salary effective as of January 1 of each calendar year subsequent to
December 31, 1997, in an amount the Board deems appropriate, provided that
the Board shall increase the Executive's Base Salary with respect of each
remaining calendar year of the Employment Term by a percentage not less than
the ratio of the "CPI" for the month of October in the calendar year ending
immediately prior to a new calendar year as compared to the "CPI" for the
month of October in the calendar year two years prior to such new calendar
year. As used in this paragraph, the term "CPI" means the Consumer Price
Index for All Items for the United States (CP-U; All items; 1982-1984=100) as
published by the Bureau of Labor Statistics, United States Department of
Labor. Any increase in the Executive's Base Salary or other compensation
which is based on increases in the CPI shall in no way limit or reduce any
other obligation of the Company hereunder, and, once established at an
increased specified rate, the Executive's adjusted Base Salary shall not be
reduced thereafter. The Executive's Base Salary shall be paid in accordance
with the normal payroll practices of the Company, but in no event less
frequently than monthly.
-Page 2-
<PAGE> 20
b. Incentive Compensation; Bonuses: In addition to the Base
--------------------------------
Salary specified above, during the Employment Term, while the Executive is
employed by the Company, the Executive shall be eligible to:
(1) participate in the Bonus Incentive Compensation Plan as
adopted May 9, 1995, as amended;
(2) participate in the 1994 Share Incentive Plan as adopted
by the Company, and as amended February 4, 1997;
(3) participate in any other incentive plan for executive
employees in effect from time to time hereafter;
(4) exercise such share options pursuant to their terms as
have been and as may be awarded to Executive from time to time hereafter
which vest at any time hereafter; and
(5) receive such other bonuses or discretionary compensation
payments as the Board may determine from time to time hereafter.
The bonus and incentive plans described above in this subparagraph 4, b, are
referred to herein collectively as the "Incentive Plans." Nothing in this
Agreement shall require the Company to adopt or continue any specific
Incentive Plan.
c. Expenses: The Executive shall be entitled to receive prompt
---------
reimbursement for all reasonable out-of-pocket expenses incurred by the
Executive during the Employment Term while the Executive is employed by the
Company in the normal course of the Company's business in accordance with the
policies and procedures of the Company.
d. Benefit Plans: During the Employment Term, while the
--------------
Executive is employed by the Company, the Executive shall be entitled to
continue to participate in or receive benefits under all of the Company's
employee benefit plans, policies, practices, and arrangements ("Benefit
Plans") on the same basis as other executive officers of the Company.
e. Vacations: The Executive shall be entitled to paid vacations
----------
in accordance with the Company's vacation policy as in effect from time to
time. The Executive also shall be entitled to all paid holidays given by the
Company to its executive officers.
f. Fringe Benefits: The Executive shall be entitled to all
----------------
fringe benefits generally provided by the Company to its executive officers.
g. Location of Employment: The Executive shall be based at the
-----------------------
Company's corporate headquarters, except for required travel on the Company's
business in accordance with the Company's management practices.
-Page 3-
<PAGE> 21
5. TERMINATION:
------------
The Executive's employment with the Company during the Employment Term
may be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in subparagraphs 5, a,
through 5, f, next below.
a. Death: The Executive's employment shall terminate
------
automatically upon the death of the Executive.
b. Total Disability: The Company may terminate the Executive's
-----------------
employment by reason of the Executive's total disability. The term "total
disability" means a physical or mental condition which, in the judgment of
the Executive's attending physician, and based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive even
with reasonable accommodation by the Company from satisfactorily performing
his usual duties for the Company. The receipt of Social Security Disability
payments shall be presumptive evidence of total disability.
c. Cause or Inadequate Performance: The Company may terminate
--------------------------------
the Executive's employment for cause or inadequate performance; provided,
however, the Executive's employment may not be terminated for inadequate
performance during the twelve (12) month period following a Change in
Control. The term "cause" in this Agreement means the Executive's conviction
of a felony or his conviction of any misdemeanor involving moral turpitude
(but only in the event that such misdemeanor adversely impacts the Company),
excessive use of alcohol, the use of illegal drugs, acts of fraud or
dishonesty, or any material breach by the Executive of this Agreement. The
term "inadequate performance" means, in the good faith opinion of a majority
of the Company's Board of Trustees, a significant deviation from the
Executive's past performance under similar business conditions and not
resulting from factors beyond the reasonable control of the Executive.
d. Termination by the Executive Because of Change in Control or
------------------------------------------------------------
Good Reason: The Executive may terminate his employment for any reason at
- ------------
any time during the twelve (12) month period following a Change in Control or
upon the occurrence at any time of any event constituting Good Reason (as
hereafter defined). For the purposes of this Agreement, "Good Reason" shall
mean:
(1) the assignment to the Executive by the Company of any
duties materially inconsistent with the position of a senior officer
with the Company;
(2) a change by the Company in the Executive's
responsibilities to the Company such that the Executive is not acting as
a senior officer of the Company, as such responsibilities are ordinarily
and customarily required from time to time of an individual employed as
a senior officer with a corporation engaged in the Company's business; or
-Page 4-
<PAGE> 22
(3) any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its material obligations hereunder.
e. Termination by Executive for other than Good Reason or
------------------------------------------------------
following a Change in Control: The Executive may terminate his employment
- ------------------------------
hereunder at any time for any reason not specified in subparagraph 5, d,
above, by giving the Company a written Notice of Termination in accordance
with subparagraph 5, g, below.
f. Termination by Company for other than Cause or Inadequate
---------------------------------------------------------
Performance. The Company may terminate the Executive's employment at any
- ------------
time for any reason not specified in subparagraphs 5, a, b, or c, above, by
giving the Executive a written Notice of Termination in accordance with
subparagraph 5, g, below.
g. Notice of Termination: Any termination of the Executive's
----------------------
employment for any reason other than the Executive's death, whether initiated
by the Company or by the Executive, shall be communicated by a written
"Notice of Termination" to the other party hereto. The "Notice of
Termination" shall specify which termination provision in this Agreement is
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Such Notice of Termination
shall be effective immediately or, in the case of a termination described in
subparagraphs 5, d, or f, above, such later date as is specified in such
notice.
h. Date of Termination: "Date of Termination" shall mean the
--------------------
last date the Executive is employed by the Company, provided that the
Executive's employment is terminated in accordance with the foregoing
provisions of this paragraph 5.
6. COMPENSATION AND OTHER RIGHTS UPON TERMINATION: The
-----------------------------------------------
Executive's right to payments and benefits under this Agreement for any
period after his Date of Termination shall be determined in accordance with
the following provisions of this paragraph 6.
a. Termination Because of Death or Total Disability of Executive:
--------------------------------------------------------------
If the Executive's Date of Termination occurs during the Employment Term by
reason of the Executive's death or total disability, the Executive, or in the
event of his death, the Executive's estate, heirs or designated beneficiaries
shall be entitled to receive the benefits specified in subparagraphs (1), (2)
and (3), below of this paragraph a. The amounts specified in subparagraphs
(2) and (3) shall be paid in a lump sum cash payment as soon after the
Executive's Date of Termination as is reasonably possible. Such payments
shall be in addition to any other benefits specifically provided under the
terms of any Incentive Plans or Benefit Plans. The benefits payable pursuant
to this paragraph shall be:
(1) the right to exercise and obtain the benefits specified
in paragraph 6, f, below;
-Page 5-
<PAGE> 23
(2) an amount equal to 12 months of the Executive's Base
Salary at the rate in effect on his Date of Termination; plus
(3) an amount equal to the annual bonus payable to the
Executive, if any, under the Incentive Plans for the calendar year
immediately preceding the calendar year in which the Executive's Date of
Termination occurs. In the event of the Executive's death, any sum which
would have been paid to a participant's account in a qualified retirement
plan for the Executive by the Company shall instead be included as a part
of this payment.
The Executive's "estate, heirs, and beneficiaries" shall mean the trustee of
any trust or the personal representative of the Executive's estate or such
other person or persons who may be designated by the Executive to receive
such benefits on such documents or forms as the Company provides for this
purpose.
b. Termination Following a Change in Control: If the Executive's
------------------------------------------
Date of Termination occurs within twelve (12) months following a Change in
Control for any reason other than death, total disability or for cause, the
Executive shall be entitled to the following:
(1) the right to exercise and obtain the benefits specified
in paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable.
(3) a lump sum cash payment in an amount equal to two and
one-half (2.5) times (250% of) of the sum of (i) the Executive's Base
Salary; plus (ii) bonuses paid during the twelve (12) full calendar
months immediately preceding the calendar month in which the Executive's
employment terminated. Such total amount shall be paid within ten (10)
days following the Date of Termination.
In addition, if the Executive's Date of Termination occurs for reasons other
than cause within twelve (12) months following a Change in Control or
following any event constituting Good Reason, and on such date the Executive
is party to any agreement with the Company restricting the Executive's
ability to obtain employment with a competitor of the Company or to engage in
activities which are competitive to the Company, such competition
restrictions shall lapse on the Date of Termination.
-Page 6-
<PAGE> 24
c. Voluntary Termination by Executive: If the Executive's Date
-----------------------------------
of Termination occurs under subparagraph 5, e, (relating to a voluntarily
termination not within twelve (12) months following a Change in Control and
---
not for Good Reason), then the Company shall promptly pay the Executive his
- ---
full Base Salary through the Date of Termination at the rate in effect on his
Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans.
d. Termination for Cause or Inadequate Performance: If the
------------------------------------------------
Executive's Date of Termination shall occur under subparagraph 5, c, for
reasons of (i) cause, or (ii) inadequate performance provided such
termination for inadequate performance does not occur within twelve (12)
months of a Change in Control, the Company shall promptly pay the Executive
his full Base Salary through the Date of Termination at the rate in effect on
his Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans. Such termination shall not impair the Company's
remedies for any breach of this Agreement by the Executive.
e. Other Termination by the Company or by the Executive for Good
-------------------------------------------------------------
Reason: If the Executive's Date of Termination occurs under subparagraph 5,
- -------
f, (relating to termination by the Company for reasons other than total
disability, cause or inadequate performance) or the Executive shall terminate
his employment for Good Reason under subparagraph 5, d, and such termination
is not during the 12 month period following a Change in Control, then the
Company shall pay to the Executive the following amounts:
(1) the right to exercise and obtain the benefits specified
in paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable;
plus
(3) a lump sum cash payment in an amount equal to one times
(100% of) the sum of (i) the Executive's Base Salary; plus (ii) bonuses,
paid during the twelve (12) full calendar months immediately preceding
the calendar month in which the Executive's employment is terminated.
Such total amount shall be paid within ten (10) days following the Date
of Termination.
f. Additional Benefits for Certain Terminations: Notwithstanding
---------------------------------------------
any provisions to the contrary contained in this Agreement, in any Incentive
Plan or in any other agreement between the Company and the Executive, if the
Executive's Date of Termination occurs for any
-Page 7-
<PAGE> 25
reason other than a termination by the Company for cause or inadequate
performance under subparagraph 5, c, or a voluntary termination by the Executive
under subparagraph 5, e, (relating to voluntary terminations which are not for
Good Reason or within 12 months of a Change in Control), then effective
immediately prior to such Date of Termination and continuing thereafter:
(1) All share options and share appreciation rights which the
Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(2) All shares of restricted shares which the Executive holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested and all restrictions applicable to such shares under such
plans shall immediately terminate;
(3) All performance share awards, performance unit awards and
other similar performance-based awards which the Executive then holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested, all performance measures applicable to such awards shall
be deemed to have been fully satisfied through the Date of Termination,
and payment of the then value of such awards shall be made to the
Executive as soon as administratively feasible following the Date of
Termination or such Change in Control, with the value of such awards to
be based, to the extent applicable, on the Market Value (as hereinafter
defined) or the Change in Control Value (as hereinafter defined) of the
common shares of the Company, whichever is applicable; and
(4) All other incentive compensation awards, including
deferred cash bonuses or share awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable.
g. Benefits Delayed if Necessary to Assure Full Payment:
-----------------------------------------------------
Notwithstanding any other provisions of this Agreement, if applicable law or
any material agreement by which the Company is bound imposes any restrictions
on the Company's fulfilling its obligations under this paragraph 6 at the
time provided, the Company shall fulfill its obligations to the maximum
extent possible at that time without violating such restrictions, and such
remaining and unfulfilled obligations shall survive until the Company is able
to fulfill them and the Company shall use its best efforts to fulfill such
obligations as soon as reasonably practicable thereafter.
h. Continuation of Benefit Plans: If the Executive's employment
------------------------------
is terminated under the circumstances described in subparagraph 6, b, hereof
(relating to termination following a Change in Control), then for a period of
eighteen (18) months following the Date of Termination, the Company shall
maintain in full force and effect for the continued benefit of the Executive
and his eligible dependents and beneficiaries, the employee benefits under
the Benefit Plans which they were eligible to receive immediately prior to
the Date of Termination, subject to the terms and conditions of the Benefit
Plans, at no greater cost to the Executive than he would have incurred had he
remained in the employ of the Company; provided that the Executive's
continued participation or the participation of such eligible dependents or
beneficiaries must be permissible
-Page 8-
<PAGE> 26
under the general terms and provisions of such Benefit Plans and shall not
jeopardize the Plans' qualified status under the Internal Revenue Code or the
rules and regulations promulgated thereunder. In the event that the Executive's
participation or the participation of such eligible dependents or beneficiaries
in any such Benefit Plan is barred pursuant to the preceding sentence, the
Company shall arrange to provide the Executive or such eligible dependents or
beneficiaries, for the period of coverage specified in the preceding
sentence, with benefits substantially similar to those which the Executive
and such eligible dependents or beneficiaries were entitled to receive under
such Benefit Plans immediately prior to the Date of Termination, or with cash
approximately equal in value to the benefit which otherwise would have been
made available. Upon the Executive obtaining other employment or becoming
self-employed, the Company's obligations under this subparagraph 6, h, hereof
shall cease effective upon the date of the Executive's eligibility to
participate in his new employer's benefits plans or in any benefit plans
established by the Executive pursuant to his self-employment, irrespective of
whether such benefit plans are comparable to the Company's Benefit Plans;
provided, however, that in the case of limited self-employment the Company
may, in its sole discretion, agree to waive the foregoing provisions of this
sentence.
7. CERTAIN DEFINITIONS:
--------------------
a. Change in Control: For purposes of this Agreement, the term
------------------
"Change in Control" means a change in the beneficial ownership of the
Company's voting shares or a change in the composition of the Company's Board
of Trustees which occurs as follows:
(1) any "person" (as such term is used in paragraph 13 (d)
and 14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) other than:
(a) a trustee or other fiduciary of securities held
under an employee benefit plan of the Company;
(b) a corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the same
proportions as their ownership of the Company; or
(c) any person in which the Executive has a
substantial equity interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of shares of the Company representing
twenty-five percent (25%) or more of the total voting power of the Company's
then outstanding shares; or
(2) a tender offer is made for the shares of the Company by a
person other than a person described in subparagraph (1), (a), (b), or
(c), and the person making the offer owns or has accepted for payment
shares of the Company representing twenty-five percent (25%) or more of
the total voting power of the Company's shares; or
-Page 9-
<PAGE> 27
(3) the shareholders of the Company approve a sale of all or
substantially all of the Company's assets or a merger or consolidation
of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the Company's voting shares outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting shares of the surviving
entity) more than fifty-one percent (51%) of the combined voting
power of the Company's or such surviving entity's outstanding
voting shares immediately after such merger or consolidation; or
(b) such an asset sale or a merger or consolidation
which would result in the Trustees of the Company who were
Trustees immediately prior thereto continuing to constitute at
least fifty percent (50%) of the Trustees of the surviving
entity immediately after such merger or consolidation; or
(4) a majority of the members of the Board of Trustees is
comprised of individuals whose initial assumption of office occurred as
a result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11.
For purposes of this paragraph 7, "surviving entity" shall mean only an
entity in which all of the Company's shareholders become shareholders by
the terms of such merger or consolidation, and the phrase "Trustees of
the Company who were Trustees immediately prior thereto" shall not
include:
1) any Trustee of the Company who was designated by
a person who has entered into an agreement with the Company to
effect a transaction described in this paragraph or in paragraph
(1) above; or
2) any Trustee who was not a Trustee at the
beginning of the 12-consecutive-month period preceding the date
of such merger or consolidation
unless his or her election by the Board of Trustees or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the Trustees then still in office who were Trustees
before the beginning of such period or two-thirds (2/3) of the shareholders
voting for the election of Trustees, as the case may be.
b. Change in Control Value: For purposes of this Agreement, the
------------------------
term "Change in Control Value" means the greatest of the amounts determined
--------
in subparagraphs (1), (2), or (3), below, unless any one or more of such
values are not applicable, to-wit:
(1) the per share price offered to shareholders of the
Company in any merger, consolidation, sale of assets or reorganization
transaction;
-Page 10-
<PAGE> 28
(2) the highest per share price offered the shareholders of
the Company in any tender offer or exchange offer whereby a Change in
Control takes place; or
(3) if a Change in Control occurs other than as described in
subparagraphs (1) or (2), the Market Value per share, as of the date of
the Change in Control, as determined by the Board in Good faith. If the
consideration offered to shareholders of the Company in a transaction
consists of anything other than cash, the Board shall determine in Good
faith the fair cash equivalent of the portion of the consideration
offered which is other than cash.
8. ADJUSTMENT FOR TAX EFFECTS: If any payments under this
---------------------------
Agreement, after taking into account all other payments to which the
Executive is entitled from the Company, or any affiliate thereof, are subject
to an excise tax under section 4999 of the Internal Revenue Code of 1986 or
any successor provision to that section, such payments shall be reduced to
the extent required to avoid such excise tax if, and only if, such reduction
would result in a larger after-tax benefit to the Executive, taking into
account all applicable local, state, federal and foreign income and excise
taxes. The Executive shall be entitled to select the order in which payments
are to be reduced in accordance with the preceding sentence. If requested by
the Executive, the Company shall provide complete compensation and tax data
on a timely basis to the Executive and to tax counsel designated by the
Executive in order to enable the Executive to determine the extent to which
payments from the Company and its affiliates may result in an excise tax, and
the Company shall reimburse the Executive for any reasonable fees and
expenses incurred by the Executive for such purpose. If the Executive and
the Company shall disagree as to whether a payment under this Agreement will
result in an excise tax or whether a reduction in any payment will result in
a larger after-tax benefit to the Executive, the matter shall be resolved by
an opinion of tax counsel chosen by the Executive. The Company shall pay the
fees and expenses of such tax counsel, and shall make available such
information as may be reasonably requested by such advisor to prepare the
opinion. If, by reason of the adjustments under this paragraph 8, the amount
payable to the Executive under paragraph 6 above cannot be determined prior
to the due date for such payment, the Company shall pay on the due date the
minimum amount which it in good faith determines to be payable and the
Company shall pay the remaining amount (or the Executive shall repay any
excess), with interest at a rate, compounded semi-annually, equal to 120% of
the applicable Federal rate determined under section 1274(d) of the Internal
Revenue Code of 1986, as soon as such remaining amount is determined in
accordance with this paragraph 8.
9. NON-DISCLOSURE AND REMEDIES:
----------------------------
a. The Executive shall not, during the Executive's employment
hereunder or at any time thereafter, disclose or reveal to anyone (other than
persons within the Company) any information relating to the business,
techniques, operations, condition (financial or otherwise), prospects or
affairs of the Company which is not generally known or recognized as a
standard industry practice. The Executive confirms that all confidential
information regarding the business of the Company received by him during his
employment is and shall remain the exclusive
-Page 11-
<PAGE> 29
property of the Company. All business records, papers and documents kept or
made by the Executive relating to the business of the Company shall be and
remain its property. Upon the termination of his employment with the Company or
upon the Company's request at any time, the Executive shall promptly deliver to
the Company, and shall not, without the consent of the Company, retain copies of
any written materials not previously made available to the public made by the
Executive or coming into his possession concerning the business or any of its
affiliates. Notwithstanding the preceding provisions of this subparagraph 9,
a, or any other provision of this Agreement, the Executive shall be entitled
to retain any written materials received by the Executive in the capacity as
a shareholder of the Company or the Company's affiliates.
b. Without limiting its other remedies at law or equity for any
breach of subparagraph 9, a, hereof, the Executive agrees that in the event
of such breach, the Company shall be entitled to a temporary restraining
order and a preliminary and permanent injunction to specifically enforce
subparagraph 9, a, hereof, which shall be enforceable by the Company,
irrespective of the reason for the Executive's termination of employment.
10. SUCCESSORS; BINDING AGREEMENT:
------------------------------
a. The Company shall require any successor to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place; provided that (i) any such assignment and assumption shall not relieve
the Company of its liability hereunder, and (ii) with respect to the
Company's Incentive Plans and Benefit Plans, the Company's obligations under
this subparagraph 10, a, shall be deemed satisfied if the Executive is
entitled to participate in the incentive and benefit plans of the successor
company which are generally offered to the other executives of such successor
company. As used in this Agreement, "Company" shall mean the Company as
hereinabove defined and any successors to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
subparagraph 10, a, or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
b. This Agreement shall inure to the benefit of and be enforceable by:
(1) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees; and
(2) the Company's successors and assigns.
11. NOTICES: For the purposes of this Agreement, notices and
--------
all other communications provided for in this Agreement shall be in writing
and shall be delivered by certified mail, return provide receipt requested,
postage prepaid, addressed as follows:
-Page 12-
<PAGE> 30
If to Executive: Stephen M. Dulle
5502 Carrick Court
Columbia, MO 65203
If to the Company: Storage Trust Realty
2407 Rangeline Road
Columbia, MO 65202
12. MISCELLANEOUS: No provisions of this Agreement may be
--------------
modified, waived, or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and approved by the
Company. No modification, waiver or discharge by the Company shall be
effective unless it is approved by a majority of the Independent Trustees (as
defined in Article 5 of the Company's Declaration of Trust). No waiver by a
party at any time of any breach by the other party of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time. The
validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the state of Maryland.
13. VALIDITY: The invalidity or unenforceability of any
---------
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
14. HEADINGS: The headings contained herein are for reference
---------
purposes only and shall not in any way affect the meaning or interpretation
of any provision of this Agreement.
15. SUPERSESSION OF PRIOR AGREEMENT: This Agreement
--------------------------------
supersedes and wholly replaces any previous employment agreements between the
Company or its predecessor corporations and the Executive, and any amendments
and supplements thereto.
16. ENTIRE AGREEMENT: This Agreement constitutes the entire
-----------------
agreement of the parties hereto relating, to the subject matter hereof and
there are no written or oral terms or representations made by either party
other than those contained herein.
17. ATTORNEYS' FEES AND COSTS: In the event there is any
--------------------------
legal action or arbitration between the parties hereto with respect to this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with such
action or proceeding in addition to any other relief to which such party may
be entitled.
18. SURVIVAL: Except as otherwise expressly provided in this
---------
Agreement, the rights and obligations of the parties hereunder shall survive
the expiration or termination of the term of the Executive's employment
hereunder.
19. NO EFFECT ON OTHER CONTRACTUAL RIGHTS: The provisions
--------------------------------------
of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the Executive, or in any way diminish the
Executive's rights as an employee of the Company,
-Page 13-
<PAGE> 31
whether existing now or hereafter, under any employee benefit plan, program, or
arrangement or other contract or agreement of the Company providing benefits to
the Executive.
20. ARBITRATION: The parties agree that any disputes arising
------------
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association, but subject to the following terms and conditions:
a. Purpose. The parties recognize that during the term of this
-------
Agreement, it is to their mutual benefit for there to be a mechanism to avoid
litigation. Rather than resort to litigation, the parties agree that the
disputes which may arise between the parties during the term of this
Agreement shall be resolved by mediation and arbitration as prescribed by
this paragraph.
b. Term of Arbitration Obligation. The arbitration obligation
------------------------------
set forth in this paragraph shall exist during the term of this Agreement.
c. Mediation. Before any dispute between the Parties is referred
---------
to an arbitrator or arbitration panel for resolution, the Parties shall use
reasonable and good faith efforts to resolve said dispute on an informal
basis or through the use of a mediator mutually agreeable to both Parties.
The mediator selected for this purpose shall not have any power to render a
decree or to enter any judgment binding upon the Parties, but instead said
mediator shall be selected in an effort to achieve a consensus and agreement
between the Parties with respect to the issue or issues in dispute. In the
event either Party believes an issue has not been resolved to said Party's
satisfaction and that said dispute potentially may be the subject of
arbitration if not resolved, said Party shall have the right to demand that
said issue be presented to a mediator for mediation and conciliation. In
such event, said Party desiring such mediation (the "Electing Party") shall
give notice to the other Party (the "Notice Party") as to the Electing
Party's desire to refer said issue to a mediator for resolution. Said
written notice to the Notice Party shall specify the names of at least three
(3) persons who would be acceptable to the Electing Party as a mediator for
this purpose. The Notice Party shall have the right to agree to any one (1)
of the three (3) persons so named to serve as mediator or shall have the
right to reject all said persons named and suggest three (3) prospective
mediators in return. If both Parties are unable to agree as to the name of a
mediator who will serve as such in connection with said mediation proceedings
within thirty (30) days of the date the Electing Party first gives notice to
the Notice Party in this regard, then the issue involved shall not be
required to be mediated, but instead may be the subject of arbitration
pursuant to the provisions hereafter specified. If the Parties are able to
agree as to a person who can serve as mediator, then the parties shall meet
with said mediator and attempt to resolve that issue to their mutual
satisfaction. If the parties are unable to achieve a resolution of the issue
through said mediation proceeding, then either Party may thereafter invoke
the arbitration proceedings hereafter specified.
-Page 14-
<PAGE> 32
d. Arbitration Procedures. If the Parties are unable to resolve
----------------------
an issue or issues about which they disagree through the mediation process
described above, then either Party shall have the right to require the
binding arbitration of such issue by demanding that said issue be arbitrated.
In such event, the Parties shall proceed as follows:
(1) The Party desiring arbitration (the "Electing Party")
shall given written notice to the other Party (the "Notice Party") as to
the Electing Party's election to invoke the binding arbitration
provisions of this paragraph. Said written notice shall identify the
issue or issues about which the Parties disagree, the fact of the
Electing Party's desire that said issues be arbitrated pursuant to this
Agreement, and the name of the arbitrator which the Electing Party has
selected to arbitrate said dispute.
(2) The Notice Party shall have ten (10) days following
receipt of the above-described written notice concerning the Electing
Party's decision to demand arbitration in which to select an arbitrator
to serve as such and who is acceptable to the Notice Party for this
purpose. The arbitrator selected by the Electing Party and the
arbitrator selected by the Notice Party shall thereafter meet within
five (5) days of the date the Notice Party indicates to the Electing
Party the name of the Notice Party's arbitrator and shall attempt to
agree upon a third arbitrator who shall be selected by said two (2)
previously named arbitrators. In the event said two (2) previously
named arbitrators are unable to agree upon a third arbitrator, then
either Party may communicate this fact to the American Arbitration
Association which shall thereupon name and select the third arbitrator.
(3) Any arbitrator selected by a Party must be independent of
the Party who has selected said arbitrator, i.e., said arbitrator may
not be an employee of that Party, may not be related within the third
degree of consanguinity to any employee or member of that Party or that
Party's Affiliate, and may not be an investor in, member of, or
Affiliate of any Party.
(4) Any arbitrator selected for the foregoing purposes must
agree in writing, to base said arbitrator's decision on the principles
hereafter set forth in subparagraph e of this paragraph.
(5) The Parties shall thereafter proceed to submit their
issues and disputes to the arbitrators selected in the foregoing manner
and shall thereafter be bound by any decision reached by said
arbitrators (so long as said decision is reached and determined in
accordance with the principles hereafter set forth in subparagraph e of
this paragraph).
(6) In lieu of the foregoing procedure, if the Parties are
able to agree on a single person to serve as arbitrator of the issue or
issues involved, then the
-Page 15-
<PAGE> 33
Parties may submit the issues involved to said single arbitrator who shall
thereupon have the power to make a decision in the case which is binding
upon both Parties.
e. Governing Principles Applicable to Arbitration Proceedings. In
----------------------------------------------------------
any arbitration proceeding conducted pursuant to this Agreement and pursuant
to the foregoing provisions of this paragraph, the Arbitrator shall be bound
and governed by the following principles:
(1) The arbitration proceedings shall be stayed for a
reasonable period of time during which the Parties shall be permitted to
conduct such discovery (including depositions, interrogatories, requests
for admissions, and the like) in the same manner as if the issue or
issues involved were pending before the Circuit Court of Boone County,
Missouri, and pursuant to the Missouri Rules of Civil Procedure then in
effect.
(2) Following said period of discovery, the issues shall be
presented to the arbitrator or arbitrators. However, in presenting such
issues and such evidence as may be involved, the arbitrator shall be
bound and obligated to apply the rules of evidence which are then in
effect with respect to Circuit Courts in Boone County, Missouri, and
shall be governed by the rules of evidence with respect to the
admissibility of evidence in the Missouri courts in the same manner as
if said issues where then being tried to a Circuit Judge in the Circuit
Court of Boone County, Missouri. The arbitrators may not consider (and
shall not consider) evidence which would not be admissible before the
Circuit Court of Boone County, Missouri, were the issues being tried to
said Circuit Court in said case.
(3) Any decision rendered by the arbitrators must be a
decision which could be entered by the Circuit Court of Boone County,
Missouri, under the same or similar circumstances. In this regard, the
arbitration panel shall have such equitable authority and powers as the
Circuit Court of Boone County, Missouri, would have under the same or
similar circumstances, but shall not have the ability to fashion any
relief or decision which would be beyond the authority of the Circuit
Court of Boone County, Missouri, to render under the same or similar
circumstances (assuming personal jurisdiction over both Parties).
(4) In the event no member of the arbitration panel is an
attorney licensed to practice law in the state of Missouri, then the
arbitration panel shall have the authority to retain the services of an
attorney who is licensed to practice law in the state of Missouri, and
who has no conflict of interest with respect to the Parties to advise
the arbitration panel concerning the legal issues coming before the
arbitration panel. However, because of the need for the arbitration
panel to be familiar with legal principles under the laws of the state
of Missouri, the arbitration panelists selected by the Parties (and by
the arbitrators) shall, if at all
-Page 16-
<PAGE> 34
possible, be practicing attorneys in the state of Missouri or Judges or
former Judges of the courts of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
[THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.]
STORAGE TRUST PROPERTIES, L.P., ("Company")
By: Storage Trust Realty, a Maryland
Real Estate Investment Trust, Sole
General Partner
By: /s/ Michael G. Burnam
---------------------------------------
Michael G. Burnam, Chief
Executive Officer
/s/ Stephen M. Dulle
---------------------------------------
STEPHEN M. DULLE, ("Executive")
-Page 17-
<PAGE> 35
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into
as of the 31st day of December, 1997 and effective as of the 7th day of May,
1997, between STORAGE TRUST PROPERTIES, L.P., a Delaware limited partnership,
acting by and through its general partner, STORAGE TRUST REALTY, A Maryland
Real Estate Investment Trust (the "Company") and P. CRISMON BURNAM, Chief
Operating Officer (the "Executive").
WHEREAS, the Company recognizes that the Executive's contribution to
the growth and success of the Company has been substantial and desires to
assure the Company of the Executive's continued employment; and
WHEREAS, the Company and the Executive previously executed an
Employment Agreement dated November 15, 1994, which they now wish to wholly
replace and restate through this Agreement.
NOW, THEREFORE, in consideration of the promises hereafter set forth,
the parties agree as follows:
1. EMPLOYMENT: The Company agrees to continue to employ the
-----------
Executive, and the Executive agrees to continue to be employed by the
Company, subject to the terms and conditions set forth herein.
2. TERM: The employment of the Executive by the Company as
-----
provided in paragraph 1 hereof will be for a period of approximately three
(3) years and two (2) months, commencing on the date of this Agreement
through and ending on June 30, 2000, unless the term of this Agreement is
extended as provided in the following sentence of this paragraph 2 (the
"Employment Term"). Commencing on July 1, 2000, and on each anniversary of
such date thereafter (such date and each anniversary thereof is hereafter
called the "Renewal Date"), the Employment Term will be automatically
extended so as to terminate on each subsequent anniversary of the Renewal
Date, unless, not less than thirty (30) days prior to a Renewal Date, either
party delivers to the other party written notice of its or his election not
to so extend the Employment Term. If such a written notice is given in a
timely manner, then this Agreement shall terminate on the next succeeding
Renewal Date subsequent to said Notice. The Employment Term shall
automatically end on the date of the Employee's death and a Notice of
Termination pursuant to paragraph 5, g, shall be deemed to constitute a
notice of nonrenewal under this paragraph 2. Notwithstanding the foregoing
provisions of this paragraph 2, if a Change in Control (as defined in
paragraph 7, a) occurs during the Employment Term, this Agreement will
automatically be extended for a period of twelve (12) months following the
date of such Change in Control.
3. POSITION AND DUTIES: During the Employment Term, while
--------------------
the Executive is employed by the Company, the Executive shall serve as Chief
Operating Officer of the Company or in such other executive capacity as a
senior officer of the Company as may be determined by
<PAGE> 36
the Company's Board of Trustees (the "Board") from time to time; provided,
however, that such duties at all times shall be consistent with the duties
normally performed by the Chief Operating Officer or such other executive
position of companies engaged in businesses similar to the business of the
Company. The Executive agrees to devote substantially all of his business
time, skill, attention, and best efforts to the business of the Company to the
extent necessary to discharge the responsibilities assigned to him during the
Employment Term; provided, that the Executive may:
a. except as provided in the noncompetition agreement between the
Executive and the Company dated as of December 31, 1997 (and effective as of
May 7, 1997), invest solely as a passive investor in any business or
enterprise which is not in competition with the Company or which is not a
supplier or vendor to the Company;
b. serve on civic or charitable boards or committees that involve
limited commitments of time and do not interfere with the fulfillment of the
Executive's duties with respect to the Company, or, with the prior consent of
the Board, on other corporate boards;
c. take usual, ordinary, and customary periods of vacation; and
d. unless totally disabled (as hereafter defined) be absent due to
illness or other disability.
4. COMPENSATION:
-------------
a. Base Salary: During the Employment Term, while the Executive
------------
is employed by the Company, the Executive shall receive a base salary ("Base
Salary") at an annual rate of One Hundred Forty-Two Thousand Two Hundred
Dollars ($142,200.00) per year. The Board, in its sole discretion, may
increase the Executive's Base Salary effective as of January 1 of each
calendar year subsequent to December 31, 1997, in an amount the Board deems
appropriate, provided that the Board shall increase the Executive's Base
Salary with respect of each remaining calendar year of the Employment Term by
a percentage not less than the ratio of the "CPI" for the month of October in
the calendar year ending immediately prior to a new calendar year as compared
to the "CPI" for the month of October in the calendar year two years prior to
such new calendar year. As used in this paragraph, the term "CPI" means the
Consumer Price Index for All Items for the United States (CP-U; All items;
1982-1984=100) as published by the Bureau of Labor Statistics, United States
Department of Labor. Any increase in the Executive's Base Salary or other
compensation which is based on increases in the CPI shall in no way limit or
reduce any other obligation of the Company hereunder, and, once established
at an increased specified rate, the Executive's adjusted Base Salary shall
not be reduced thereafter. The Executive's Base Salary shall be paid in
accordance with the normal payroll practices of the Company, but in no event
less frequently than monthly.
-Page 2-
<PAGE> 37
b. Incentive Compensation; Bonuses: In addition to the Base
--------------------------------
Salary specified above, during the Employment Term, while the Executive is
employed by the Company, the Executive shall be eligible to:
(1) participate in the Bonus Incentive Compensation Plan as
adopted May 9, 1995, as amended;
(2) participate in the 1994 Share Incentive Plan as adopted by
the Company, and as amended February 4, 1997;
(3) participate in any other incentive plan for executive
employees in effect from time to time hereafter;
(4) exercise such share options pursuant to their terms as
have been and as may be awarded to Executive from time to time hereafter
which vest at any time hereafter; and
(5) receive such other bonuses or discretionary compensation
payments as the Board may determine from time to time hereafter.
The bonus and incentive plans described above in this subparagraph 4, b, are
referred to herein collectively as the "Incentive Plans." Nothing in this
Agreement shall require the Company to adopt or continue any specific
Incentive Plan.
c. Expenses: The Executive shall be entitled to receive prompt
---------
reimbursement for all reasonable out-of-pocket expenses incurred by the
Executive during the Employment Term while the Executive is employed by the
Company in the normal course of the Company's business in accordance with the
policies and procedures of the Company.
d. Benefit Plans: During the Employment Term, while the
--------------
Executive is employed by the Company, the Executive shall be entitled to
continue to participate in or receive benefits under all of the Company's
employee benefit plans, policies, practices, and arrangements ("Benefit
Plans") on the same basis as other executive officers of the Company.
e. Vacations: The Executive shall be entitled to paid vacations
----------
in accordance with the Company's vacation policy as in effect from time to
time. The Executive also shall be entitled to all paid holidays given by the
Company to its executive officers.
f. Fringe Benefits: The Executive shall be entitled to all
----------------
fringe benefits generally provided by the Company to its executive officers.
g. Location of Employment: The Executive shall be based at the
-----------------------
Company's corporate headquarters, except for required travel on the Company's
business in accordance with the Company's management practices.
-Page 3-
<PAGE> 38
5. TERMINATION:
------------
The Executive's employment with the Company during the Employment Term
may be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in subparagraphs 5, a,
through 5, f, next below.
a. Death: The Executive's employment shall terminate
------
automatically upon the death of the Executive.
b. Total Disability: The Company may terminate the Executive's
-----------------
employment by reason of the Executive's total disability. The term "total
disability" means a physical or mental condition which, in the judgment of
the Executive's attending physician, and based upon medical reports and other
evidence supplied to the Company, permanently prevents the Executive even
with reasonable accommodation by the Company from satisfactorily performing
his usual duties for the Company. The receipt of Social Security Disability
payments shall be presumptive evidence of total disability.
c. Cause or Inadequate Performance: The Company may terminate
--------------------------------
the Executive's employment for cause or inadequate performance; provided,
however, the Executive's employment may not be terminated for inadequate
performance during the twelve (12) month period following a Change in
Control. The term "cause" in this Agreement means the Executive's conviction
of a felony or his conviction of any misdemeanor involving moral turpitude
(but only in the event that such misdemeanor adversely impacts the Company),
excessive use of alcohol, the use of illegal drugs, acts of fraud or
dishonesty, or any material breach by the Executive of this Agreement. The
term "inadequate performance" means, in the good faith opinion of a majority
of the Company's Board of Trustees, a significant deviation from the
Executive's past performance under similar business conditions and not
resulting from factors beyond the reasonable control of the Executive.
d. Termination by the Executive Because of Change in Control or
------------------------------------------------------------
Good Reason: The Executive may terminate his employment for any reason at
- ------------
any time during the twelve (12) month period following a Change in Control or
upon the occurrence at any time of any event constituting Good Reason (as
hereafter defined). For the purposes of this Agreement, "Good Reason" shall
mean:
(1) the assignment to the Executive by the Company of any
duties materially inconsistent with the position of a senior officer
with the Company;
(2) a change by the Company in the Executive's responsibilities
to the Company such that the Executive is not acting as a senior officer
of the Company, as such responsibilities are ordinarily and customarily
required from time to time of an individual employed as a senior officer
with a corporation engaged in the Company's business; or
-Page 4-
<PAGE> 39
(3) any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its material obligations hereunder.
e. Termination by Executive for other than Good Reason or
------------------------------------------------------
following a Change in Control: The Executive may terminate his employment
- ------------------------------
hereunder at any time for any reason not specified in subparagraph 5, d,
above, by giving the Company a written Notice of Termination in accordance
with subparagraph 5, g, below.
f. Termination by Company for other than Cause or Inadequate
---------------------------------------------------------
Performance. The Company may terminate the Executive's employment at any
- -----------
time for any reason not specified in subparagraphs 5, a, b, or c, above, by
giving the Executive a written Notice of Termination in accordance with
subparagraph 5, g, below.
g. Notice of Termination: Any termination of the Executive's
----------------------
employment for any reason other than the Executive's death, whether initiated
by the Company or by the Executive, shall be communicated by a written
"Notice of Termination" to the other party hereto. The "Notice of
Termination" shall specify which termination provision in this Agreement is
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Such Notice of Termination
shall be effective immediately or, in the case of a termination described in
subparagraphs 5, d, or f, above, such later date as is specified in such
notice.
h. Date of Termination: "Date of Termination" shall mean the
--------------------
last date the Executive is employed by the Company, provided that the
Executive's employment is terminated in accordance with the foregoing
provisions of this paragraph 5.
6. COMPENSATION AND OTHER RIGHTS UPON TERMINATION: The
-----------------------------------------------
Executive's right to payments and benefits under this Agreement for any
period after his Date of Termination shall be determined in accordance with
the following provisions of this paragraph 6.
a. Termination Because of Death or Total Disability of Executive:
--------------------------------------------------------------
If the Executive's Date of Termination occurs during the Employment Term by
reason of the Executive's death or total disability, the Executive, or in the
event of his death, the Executive's estate, heirs or designated beneficiaries
shall be entitled to receive the benefits specified in subparagraphs (1), (2)
and (3), below of this paragraph a. The amounts specified in subparagraphs
(2) and (3) shall be paid in a lump sum cash payment as soon after the
Executive's Date of Termination as is reasonably possible. Such payments
shall be in addition to any other benefits specifically provided under the
terms of any Incentive Plans or Benefit Plans. The benefits payable pursuant
to this paragraph shall be:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
-Page 5-
<PAGE> 40
(2) an amount equal to 12 months of the Executive's Base
Salary at the rate in effect on his Date of Termination; plus
(3) an amount equal to the annual bonus payable to the
Executive, if any, under the Incentive Plans for the calendar year
immediately preceding the calendar year in which the Executive's Date of
Termination occurs. In the event of the Executive's death, any sum which
would have been paid to a participant's account in a qualified
retirement plan for the Executive by the Company shall instead be
included as a part of this payment.
The Executive's "estate, heirs, and beneficiaries" shall mean the trustee of
any trust or the personal representative of the Executive's estate or such
other person or persons who may be designated by the Executive to receive
such benefits on such documents or forms as the Company provides for this
purpose.
b. Termination Following a Change in Control: If the Executive's
------------------------------------------
Date of Termination occurs within twelve (12) months following a Change in
Control for any reason other than death, total disability or for cause, the
Executive shall be entitled to the following:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable.
(3) a lump sum cash payment in an amount equal to two and
one-half (2.5) times (250% of) of the sum of (i) the Executive's Base
Salary; plus (ii) bonuses paid during the twelve (12) full calendar
months immediately preceding the calendar month in which the Executive's
employment terminated. Such total amount shall be paid within ten (10)
days following the Date of Termination.
In addition, if the Executive's Date of Termination occurs for reasons other
than cause within twelve (12) months following a Change in Control or
following any event constituting Good Reason, and on such date the Executive
is party to any agreement with the Company restricting the Executive's
ability to obtain employment with a competitor of the Company or to engage in
activities which are competitive to the Company, such competition
restrictions shall lapse on the Date of Termination.
-Page 6-
<PAGE> 41
c. Voluntary Termination by Executive: If the Executive's Date
-----------------------------------
of Termination occurs under subparagraph 5, e, (relating to a voluntarily
termination not within twelve (12) months following a Change in Control and
---
not for Good Reason), then the Company shall promptly pay the Executive his
- ---
full Base Salary through the Date of Termination at the rate in effect on his
Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans.
d. Termination for Cause or Inadequate Performance: If the
------------------------------------------------
Executive's Date of Termination shall occur under subparagraph 5, c, for
reasons of (i) cause, or (ii) inadequate performance provided such
termination for inadequate performance does not occur within twelve (12)
months of a Change in Control, the Company shall promptly pay the Executive
his full Base Salary through the Date of Termination at the rate in effect on
his Date of Termination and any amounts earned but unpaid as of the Date of
Termination under the Incentive Plans and Benefit Plans, in accordance with
the terms of such Plans. Such termination shall not impair the Company's
remedies for any breach of this Agreement by the Executive.
e. Other Termination by the Company or by the Executive for Good
-------------------------------------------------------------
Reason: If the Executive's Date of Termination occurs under subparagraph 5,
- -------
f, (relating to termination by the Company for reasons other than total
disability, cause or inadequate performance) or the Executive shall terminate
his employment for Good Reason under subparagraph 5, d, and such termination
is not during the 12 month period following a Change in Control, then the
Company shall pay to the Executive the following amounts:
(1) the right to exercise and obtain the benefits specified in
paragraph 6, f, below;
(2) all benefits under the Incentive Plans which, if the
Executive had continued in the employ of the Company, would have accrued
to his benefit on December 31 of the year in which the Executive's Date
of Termination occurs, which shall be paid in a lump sum cash payment as
soon as practicable following the Date of Termination. If any portion
of the amount specified in this subparagraph (2) is not determinable in
time to be included in such lump sum, that portion shall be paid in a
separate lump sum as soon as practicable after it becomes determinable;
plus
(3) a lump sum cash payment in an amount equal to one times
(100% of) the sum of (i) the Executive's Base Salary; plus (ii) bonuses,
paid during the twelve (12) full calendar months immediately preceding
the calendar month in which the Executive's employment is terminated.
Such total amount shall be paid within ten (10) days following the Date
of Termination.
f. Additional Benefits for Certain Terminations: Notwithstanding
---------------------------------------------
any provisions to the contrary contained in this Agreement, in any Incentive
Plan or in any other agreement between the Company and the Executive, if the
Executive's Date of Termination occurs for any
-Page 7-
<PAGE> 42
reason other than a termination by the Company for cause or inadequate
performance under subparagraph 5, c, or a voluntary termination by the
Executive under subparagraph 5, e, (relating to voluntary terminations which
are not for Good Reason or within 12 months of a Change in Control), then
effective immediately prior to such Date of Termination and continuing
thereafter:
(1) All share options and share appreciation rights which the
Executive then holds under any Incentive Plan or Benefit Plan shall
become immediately and fully vested and exercisable;
(2) All shares of restricted shares which the Executive holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested and all restrictions applicable to such shares under such
plans shall immediately terminate;
(3) All performance share awards, performance unit awards and
other similar performance-based awards which the Executive then holds
under any Incentive Plan or Benefit Plan shall become immediately and
fully vested, all performance measures applicable to such awards shall
be deemed to have been fully satisfied through the Date of Termination,
and payment of the then value of such awards shall be made to the
Executive as soon as administratively feasible following the Date of
Termination or such Change in Control, with the value of such awards to
be based, to the extent applicable, on the Market Value (as hereinafter
defined) or the Change in Control Value (as hereinafter defined) of the
common shares of the Company, whichever is applicable; and
(4) All other incentive compensation awards, including
deferred cash bonuses or share awards, then held by the Executive under
any Incentive Plan or Benefit Plan shall become immediately and fully
vested and payable.
g. Benefits Delayed if Necessary to Assure Full Payment:
-----------------------------------------------------
Notwithstanding any other provisions of this Agreement, if applicable law or
any material agreement by which the Company is bound imposes any restrictions
on the Company's fulfilling its obligations under this paragraph 6 at the
time provided, the Company shall fulfill its obligations to the maximum
extent possible at that time without violating such restrictions, and such
remaining and unfulfilled obligations shall survive until the Company is able
to fulfill them and the Company shall use its best efforts to fulfill such
obligations as soon as reasonably practicable thereafter.
h. Continuation of Benefit Plans: If the Executive's employment
------------------------------
is terminated under the circumstances described in subparagraph 6, b, hereof
(relating to termination following a Change in Control), then for a period of
eighteen (18) months following the Date of Termination, the Company shall
maintain in full force and effect for the continued benefit of the Executive
and his eligible dependents and beneficiaries, the employee benefits under
the Benefit Plans which they were eligible to receive immediately prior to
the Date of Termination, subject to the terms and conditions of the Benefit
Plans, at no greater cost to the Executive than he would have incurred had he
remained in the employ of the Company; provided that the Executive's
continued participation or the participation of such eligible dependents or
beneficiaries must be permissible
-Page 8-
<PAGE> 43
under the general terms and provisions of such Benefit Plans and shall not
jeopardize the Plans' qualified status under the Internal Revenue Code or the
rules and regulations promulgated thereunder. In the event that the
Executive's participation or the participation of such eligible dependents or
beneficiaries in any such Benefit Plan is barred pursuant to the preceding
sentence, the Company shall arrange to provide the Executive or such eligible
dependents or beneficiaries, for the period of coverage specified in the
preceding sentence, with benefits substantially similar to those which the
Executive and such eligible dependents or beneficiaries were entitled to
receive under such Benefit Plans immediately prior to the Date of Termination,
or with cash approximately equal in value to the benefit which otherwise would
have been made available. Upon the Executive obtaining other employment or
becoming self-employed, the Company's obligations under this subparagraph 6,
h, hereof shall cease effective upon the date of the Executive's eligibility
to participate in his new employer's benefits plans or in any benefit plans
established by the Executive pursuant to his self-employment, irrespective of
whether such benefit plans are comparable to the Company's Benefit Plans;
provided, however, that in the case of limited self-employment the Company
may, in its sole discretion, agree to waive the foregoing provisions of this
sentence.
7. CERTAIN DEFINITIONS:
--------------------
a. Change in Control: For purposes of this Agreement, the term
------------------
"Change in Control" means a change in the beneficial ownership of the
Company's voting shares or a change in the composition of the Company's Board
of Trustees which occurs as follows:
(1) any "person" (as such term is used in paragraph 13 (d) and
14 (d) (2) of the Securities Exchange Act of 1934 (the "Exchange Act"))
other than:
(a) a trustee or other fiduciary of securities held
under an employee benefit plan of the Company;
(b) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same
proportions as their ownership of the Company; or
(c) any person in which the Executive has a substantial
equity interest
is or becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of shares of the Company representing twenty-five
percent (25%) or more of the total voting power of the Company's then
outstanding shares; or
(2) a tender offer is made for the shares of the Company by a
person other than a person described in subparagraph (1), (a), (b), or
(c), and the person making the offer owns or has accepted for payment
shares of the Company representing twenty-five percent (25%) or more of
the total voting power of the Company's shares; or
-Page 9-
<PAGE> 44
(3) the shareholders of the Company approve a sale of all or
substantially all of the Company's assets or a merger or consolidation
of the Company with any other company other than:
(a) such a merger or consolidation which would result
in the Company's voting shares outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting shares of the surviving
entity) more than fifty-one percent (51%) of the combined voting
power of the Company's or such surviving entity's outstanding
voting shares immediately after such merger or consolidation; or
(b) such an asset sale or a merger or consolidation
which would result in the Trustees of the Company who were
Trustees immediately prior thereto continuing to constitute at
least fifty percent (50%) of the Trustees of the surviving
entity immediately after such merger or consolidation; or
(4) a majority of the members of the Board of Trustees is
comprised of individuals whose initial assumption of office occurred as
a result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-11.
For purposes of this paragraph 7, "surviving entity" shall mean only an entity
in which all of the Company's shareholders become shareholders by the terms of
such merger or consolidation, and the phrase "Trustees of the Company who were
Trustees immediately prior thereto" shall not include:
1) any Trustee of the Company who was designated by a
person who has entered into an agreement with the Company to
effect a transaction described in this paragraph or in paragraph
(1) above; or
2) any Trustee who was not a Trustee at the beginning
of the 12-consecutive-month period preceding the date of such
merger or consolidation
unless his or her election by the Board of Trustees or nomination for
election by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the Trustees then still in office who were Trustees
before the beginning of such period or two-thirds (2/3) of the shareholders
voting for the election of Trustees, as the case may be.
b. Change in Control Value: For purposes of this Agreement, the
------------------------
term "Change in Control Value" means the greatest of the amounts determined
--------
in subparagraphs (1), (2), or (3), below, unless any one or more of such
values are not applicable, to-wit:
(1) the per share price offered to shareholders of the Company
in any merger, consolidation, sale of assets or reorganization
transaction;
-Page 10-
<PAGE> 45
(2) the highest per share price offered the shareholders of
the Company in any tender offer or exchange offer whereby a Change in
Control takes place; or
(3) if a Change in Control occurs other than as described in
subparagraphs (1) or (2), the Market Value per share, as of the date of
the Change in Control, as determined by the Board in Good faith. If the
consideration offered to shareholders of the Company in a transaction
consists of anything other than cash, the Board shall determine in Good
faith the fair cash equivalent of the portion of the consideration
offered which is other than cash.
8. ADJUSTMENT FOR TAX EFFECTS: If any payments under this
---------------------------
Agreement, after taking into account all other payments to which the
Executive is entitled from the Company, or any affiliate thereof, are subject
to an excise tax under section 4999 of the Internal Revenue Code of 1986 or
any successor provision to that section, such payments shall be reduced to
the extent required to avoid such excise tax if, and only if, such reduction
would result in a larger after-tax benefit to the Executive, taking into
account all applicable local, state, federal and foreign income and excise
taxes. The Executive shall be entitled to select the order in which payments
are to be reduced in accordance with the preceding sentence. If requested by
the Executive, the Company shall provide complete compensation and tax data
on a timely basis to the Executive and to tax counsel designated by the
Executive in order to enable the Executive to determine the extent to which
payments from the Company and its affiliates may result in an excise tax, and
the Company shall reimburse the Executive for any reasonable fees and
expenses incurred by the Executive for such purpose. If the Executive and
the Company shall disagree as to whether a payment under this Agreement will
result in an excise tax or whether a reduction in any payment will result in
a larger after-tax benefit to the Executive, the matter shall be resolved by
an opinion of tax counsel chosen by the Executive. The Company shall pay the
fees and expenses of such tax counsel, and shall make available such
information as may be reasonably requested by such advisor to prepare the
opinion. If, by reason of the adjustments under this paragraph 8, the amount
payable to the Executive under paragraph 6 above cannot be determined prior
to the due date for such payment, the Company shall pay on the due date the
minimum amount which it in good faith determines to be payable and the
Company shall pay the remaining amount (or the Executive shall repay any
excess), with interest at a rate, compounded semi-annually, equal to 120% of
the applicable Federal rate determined under section 1274(d) of the Internal
Revenue Code of 1986, as soon as such remaining amount is determined in
accordance with this paragraph 8.
9. NON-DISCLOSURE AND REMEDIES:
----------------------------
a. The Executive shall not, during the Executive's employment
hereunder or at any time thereafter, disclose or reveal to anyone (other than
persons within the Company) any information relating to the business,
techniques, operations, condition (financial or otherwise), prospects or
affairs of the Company which is not generally known or recognized as a
standard industry practice. The Executive confirms that all confidential
information regarding the business of the Company received by him during his
employment is and shall remain the exclusive
-Page 11-
<PAGE> 46
property of the Company. All business records, papers and documents kept or
made by the Executive relating to the business of the Company shall be and
remain its property. Upon the termination of his employment with the Company
or upon the Company's request at any time, the Executive shall promptly
deliver to the Company, and shall not, without the consent of the Company,
retain copies of any written materials not previously made available to the
public made by the Executive or coming into his possession concerning the
business or any of its affiliates. Notwithstanding the preceding provisions
of this subparagraph 9, a, or any other provision of this Agreement, the
Executive shall be entitled to retain any written materials received by the
Executive in the capacity as a shareholder of the Company or the Company's
affiliates.
b. Without limiting its other remedies at law or equity for any
breach of subparagraph 9, a, hereof, the Executive agrees that in the event
of such breach, the Company shall be entitled to a temporary restraining
order and a preliminary and permanent injunction to specifically enforce
subparagraph 9, a, hereof, which shall be enforceable by the Company,
irrespective of the reason for the Executive's termination of employment.
10. SUCCESSORS; BINDING AGREEMENT:
------------------------------
a. The Company shall require any successor to all or substantially
all of the business and/or assets of the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise), by agreement in form and
substance reasonably satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place; provided that (i) any such assignment and assumption shall not relieve
the Company of its liability hereunder, and (ii) with respect to the
Company's Incentive Plans and Benefit Plans, the Company's obligations under
this subparagraph 10, a, shall be deemed satisfied if the Executive is
entitled to participate in the incentive and benefit plans of the successor
company which are generally offered to the other executives of such successor
company. As used in this Agreement, "Company" shall mean the Company as
hereinabove defined and any successors to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
subparagraph 10, a, or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
b. This Agreement shall inure to the benefit of and be enforceable
by:
(1) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees; and
(2) the Company's successors and assigns.
11. NOTICES: For the purposes of this Agreement, notices and
--------
all other communications provided for in this Agreement shall be in writing
and shall be delivered by certified mail, return provide receipt requested,
postage prepaid, addressed as follows:
-Page 12-
<PAGE> 47
If to Executive: P. Crismon Burnam
3300 Greenfield Court
Columbia, MO 65203
If to the Company: Storage Trust Realty
2407 Rangeline Road
Columbia, MO 65202
12. MISCELLANEOUS: No provisions of this Agreement may be
--------------
modified, waived, or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and approved by the
Company. No modification, waiver or discharge by the Company shall be
effective unless it is approved by a majority of the Independent Trustees (as
defined in Article 5 of the Company's Declaration of Trust). No waiver by a
party at any time of any breach by the other party of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time. The
validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the state of Maryland.
13. VALIDITY: The invalidity or unenforceability of any
---------
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
14. HEADINGS: The headings contained herein are for reference
---------
purposes only and shall not in any way affect the meaning or interpretation
of any provision of this Agreement.
15. SUPERSESSION OF PRIOR AGREEMENT: This Agreement
--------------------------------
supersedes and wholly replaces any previous employment agreements between the
Company or its predecessor corporations and the Executive, and any amendments
and supplements thereto.
16. ENTIRE AGREEMENT: This Agreement constitutes the entire
-----------------
agreement of the parties hereto relating, to the subject matter hereof and
there are no written or oral terms or representations made by either party
other than those contained herein.
17. ATTORNEYS' FEES AND COSTS: In the event there is any
--------------------------
legal action or arbitration between the parties hereto with respect to this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with such
action or proceeding in addition to any other relief to which such party may
be entitled.
18. SURVIVAL: Except as otherwise expressly provided in this
---------
Agreement, the rights and obligations of the parties hereunder shall survive
the expiration or termination of the term of the Executive's employment
hereunder.
19. NO EFFECT ON OTHER CONTRACTUAL RIGHTS: The provisions
--------------------------------------
of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable to the
-Page 13-
<PAGE> 48
Executive, or in any way diminish the Executive's rights as an employee of the
Company, whether existing now or hereafter, under any employee benefit plan,
program, or arrangement or other contract or agreement of the Company
providing benefits to the Executive.
20. ARBITRATION: The parties agree that any disputes arising
------------
from this Agreement shall be resolved by submission to binding and final
arbitration in accordance with the rules of the American Arbitration
Association, but subject to the following terms and conditions:
a. Purpose. The parties recognize that during the term of this
-------
Agreement, it is to their mutual benefit for there to be a mechanism to avoid
litigation. Rather than resort to litigation, the parties agree that the
disputes which may arise between the parties during the term of this
Agreement shall be resolved by mediation and arbitration as prescribed by
this paragraph.
b. Term of Arbitration Obligation. The arbitration obligation
------------------------------
set forth in this paragraph shall exist during the term of this Agreement.
c. Mediation. Before any dispute between the Parties is referred
---------
to an arbitrator or arbitration panel for resolution, the Parties shall use
reasonable and good faith efforts to resolve said dispute on an informal
basis or through the use of a mediator mutually agreeable to both Parties.
The mediator selected for this purpose shall not have any power to render a
decree or to enter any judgment binding upon the Parties, but instead said
mediator shall be selected in an effort to achieve a consensus and agreement
between the Parties with respect to the issue or issues in dispute. In the
event either Party believes an issue has not been resolved to said Party's
satisfaction and that said dispute potentially may be the subject of
arbitration if not resolved, said Party shall have the right to demand that
said issue be presented to a mediator for mediation and conciliation. In
such event, said Party desiring such mediation (the "Electing Party") shall
give notice to the other Party (the "Notice Party") as to the Electing
Party's desire to refer said issue to a mediator for resolution. Said
written notice to the Notice Party shall specify the names of at least three
(3) persons who would be acceptable to the Electing Party as a mediator for
this purpose. The Notice Party shall have the right to agree to any one (1)
of the three (3) persons so named to serve as mediator or shall have the
right to reject all said persons named and suggest three (3) prospective
mediators in return. If both Parties are unable to agree as to the name of a
mediator who will serve as such in connection with said mediation proceedings
within thirty (30) days of the date the Electing Party first gives notice to
the Notice Party in this regard, then the issue involved shall not be
required to be mediated, but instead may be the subject of arbitration
pursuant to the provisions hereafter specified. If the Parties are able to
agree as to a person who can serve as mediator, then the parties shall meet
with said mediator and attempt to resolve that issue to their mutual
satisfaction. If the parties are unable to achieve a resolution of the issue
through said mediation proceeding, then either Party may thereafter invoke
the arbitration proceedings hereafter specified.
-Page 14-
<PAGE> 49
d. Arbitration Procedures. If the Parties are unable to resolve
----------------------
an issue or issues about which they disagree through the mediation process
described above, then either Party shall have the right to require the
binding arbitration of such issue by demanding that said issue be arbitrated.
In such event, the Parties shall proceed as follows:
(1) The Party desiring arbitration (the "Electing Party")
shall given written notice to the other Party (the "Notice Party") as to
the Electing Party's election to invoke the binding arbitration
provisions of this paragraph. Said written notice shall identify the
issue or issues about which the Parties disagree, the fact of the
Electing Party's desire that said issues be arbitrated pursuant to this
Agreement, and the name of the arbitrator which the Electing Party has
selected to arbitrate said dispute.
(2) The Notice Party shall have ten (10) days following
receipt of the above-described written notice concerning the Electing
Party's decision to demand arbitration in which to select an arbitrator
to serve as such and who is acceptable to the Notice Party for this
purpose. The arbitrator selected by the Electing Party and the
arbitrator selected by the Notice Party shall thereafter meet within
five (5) days of the date the Notice Party indicates to the Electing
Party the name of the Notice Party's arbitrator and shall attempt to
agree upon a third arbitrator who shall be selected by said two (2)
previously named arbitrators. In the event said two (2) previously
named arbitrators are unable to agree upon a third arbitrator, then
either Party may communicate this fact to the American Arbitration
Association which shall thereupon name and select the third arbitrator.
(3) Any arbitrator selected by a Party must be independent of
the Party who has selected said arbitrator, i.e., said arbitrator may
not be an employee of that Party, may not be related within the third
degree of consanguinity to any employee or member of that Party or that
Party's Affiliate, and may not be an investor in, member of, or
Affiliate of any Party.
(4) Any arbitrator selected for the foregoing purposes must
agree in writing, to base said arbitrator's decision on the principles
hereafter set forth in subparagraph e of this paragraph.
(5) The Parties shall thereafter proceed to submit their
issues and disputes to the arbitrators selected in the foregoing manner
and shall thereafter be bound by any decision reached by said
arbitrators (so long as said decision is reached and determined in
accordance with the principles hereafter set forth in subparagraph of
this paragraph).
(6) In lieu of the foregoing procedure, if the Parties are able to
agree on a single person to serve as arbitrator of the issue or issues
involved, then the
-Page 15-
<PAGE> 50
Parties may submit the issues involved to said single arbitrator who
shall thereupon have the power to make a decision in the case which is
binding upon both Parties.
e. Governing Principles Applicable to Arbitration Proceedings.
----------------------------------------------------------
In any arbitration proceeding conducted pursuant to this Agreement and
pursuant to the foregoing provisions of this paragraph, the Arbitrator shall
be bound and governed by the following principles:
(1) The arbitration proceedings shall be stayed for a
reasonable period of time during which the Parties shall be permitted to
conduct such discovery (including depositions, interrogatories, requests
for admissions, and the like) in the same manner as if the issue or
issues involved were pending before the Circuit Court of Boone County,
Missouri, and pursuant to the Missouri Rules of Civil Procedure then in
effect.
(2) Following said period of discovery, the issues shall be
presented to the arbitrator or arbitrators. However, in presenting such
issues and such evidence as may be involved, the arbitrator shall be
bound and obligated to apply the rules of evidence which are then in
effect with respect to Circuit Courts in Boone County, Missouri, and
shall be governed by the rules of evidence with respect to the
admissibility of evidence in the Missouri courts in the same manner as
if said issues where then being tried to a Circuit Judge in the Circuit
Court of Boone County, Missouri. The arbitrators may not consider (and
shall not consider) evidence which would not be admissible before the
Circuit Court of Boone County, Missouri, were the issues being tried to
said Circuit Court in said case.
(3) Any decision rendered by the arbitrators must be a
decision which could be entered by the Circuit Court of Boone County,
Missouri, under the same or similar circumstances. In this regard, the
arbitration panel shall have such equitable authority and powers as the
Circuit Court of Boone County, Missouri, would have under the same or
similar circumstances, but shall not have the ability to fashion any
relief or decision which would be beyond the authority of the Circuit
Court of Boone County, Missouri, to render under the same or similar
circumstances (assuming personal jurisdiction over both Parties).
(4) In the event no member of the arbitration panel is an
attorney licensed to practice law in the state of Missouri, then the
arbitration panel shall have the authority to retain the services of an
attorney who is licensed to practice law in the state of Missouri, and
who has no conflict of interest with respect to the Parties to advise
the arbitration panel concerning the legal issues coming before the
arbitration panel. However, because of the need for the arbitration
panel to be familiar with legal principles under the laws of the state
of Missouri, the arbitration panelists selected by the Parties (and by
the arbitrators) shall, if at all
-Page 16-
<PAGE> 51
possible, be practicing attorneys in the state of Missouri or Judges or
former Judges of the courts of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
[THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.]
STORAGE TRUST PROPERTIES, L.P., ("Company")
By: Storage Trust Realty, a Maryland Real Estate
Investment Trust, Sole General Partner
By: /s/ Michael G. Burnam
------------------------------------------
Michael G. Burnam, Chief Executive Officer
/s/ P. Crismon Burnam
------------------------------------------
P. CRISMON BURNAM, ("Executive")
-Page 17-
<PAGE> 1
[STORAGE
TRUST
LOGO]
Annual Report 1997
<PAGE> 2
<TABLE>
Storage Trust Realty and Predecessor Company
Selected Financial Data<F1>
(Amounts in thousands, except for share and property information)
<CAPTION>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Operating Data
Total revenues $ 59,706 $ 43,442 $ 23,839 $ 8,033 $ 5,443
Total expenses $ 38,036 $ 26,555 $ 13,811 $ 5,769 $ 4,721
Net income before minority interest $ 21,670 $ 16,887 $ 10,028 $ 2,264 $ 722
Minority interest $ (1,293) $ (1,091) $ (471) $ (1,234) $ --
Net income $ 20,377 $ 15,796 $ 9,557 $ 1,030 $ 722
Per share data:
Net income-basic<F5> $ 1.52 $ 1.46 $ 1.30 $ 0.18<F2> $ --
Net income-diluted<F5> $ 1.51 $ 1.46 $ 1.30 $ 0.18<F2> $ --
Dividends declared $ 1.7650 $ 1.6650 $ 1.5725 $ 0.1940<F2> $ --
Other Data
EBITDA<F3> $ 39,318 $ 27,642 $ 15,468 $ 1,383<F2> $ --
Funds from operations<F4> $ 30,973 $ 22,937 $ 13,204 $ 1,348<F2> $ --
FFO per share-basic<F4>,<F5> $ 2.18 $ 2.00 $ 1.72 $ 0.22<F2> $ --
FFO per share-diluted<F4>,<F5> $ 2.16 $ 1.98 $ 1.71 $ 0.22<F2> $ --
Balance Sheet Data
Investment in storage facilities,
before depreciation $ 404,966 $ 314,319 $ 194,216 $ 101,077 $ 26,763
Total assets $ 400,295 $ 308,725 $ 194,655 $ 104,965 $ 22,511
Mortgages and notes payable $ 100,000 $ 63,255 $ 39,285 $ 8,766 $ 24,532
Total liabilities $ 111,786 $ 76,559 $ 47,779 $ 13,229 $ 24,899
Minority interest $ 15,905 $ 16,470 $ 7,837 $ 4,313 $ --
Shareholders' equity (deficit) $ 272,604 $ 215,696 $ 139,039 $ 87,423 $ (2,388)
Property Information
Wholly owned facilities 187 165 121 74 21
Net rentable square feet 9,894,000 8,491,000 5,709,000 3,182,000 1,010,000
Average rent per square foot $ 7.54 $ 6.99 $ 6.61 $ 6.20 $ 5.51
<FN>
<F1> This table sets forth selected financial data on a historic basis for
the consolidated financial statements of Storage Trust Realty and its
subsidiaries (the "Company") and the combined financial statements of
Burnam Holding Companies Co. and certain of its affiliates (the
"Predecessor Company"). Prior to November 16, 1994, this data is
taken from the combined financial statements of the Predecessor
Company. Thereafter, the data is taken from the consolidated
financial statements of the Company.
<F2> FFO, EBITDA and per share amounts for 1994 are for the period from
November 16, 1994 (closing of the IPO) to December 31, 1994.
<F3> EBITDA means operating income before minority interest, mortgage and
other interest expense, income taxes, depreciation and amortization.
The Company has included EBITDA herein because, along with cash flows
from operating activities, financing activities and investing
activities, it provides operating information relevant to the
Company's ability to incur and service debt and to make capital
expenditures. EBITDA does not represent cash generated from
operating activities in accordance with GAAP, is not to be considered
as an alternative to net income or any other GAAP measurement as a
measure of operating performance, and is not necessarily indicative
of cash available to fund all cash needs.
<F4> Funds from operations ("FFO") is defined by the National Association of
Real Estate Investment Trusts ("NAREIT") as net income (loss) before
minority interest (computed in accordance with GAAP), excluding gains
or losses from debt restructuring and sales of property, provision
for losses and real estate related depreciation and amortization
(excluding amortization of financing costs). Effective in 1996, the
definition of FFO was modified by NAREIT to exclude the add-back of
the amortization of deferred financing fees and depreciation of non
real estate assets. The Company has adopted this new definition.
Amounts for prior years have been revised to conform to the new
definition. The Company believes that FFO is helpful to investors as
a measure of the operations of an equity REIT because, along with
cash flows from operating activities, investing activities and
financing activities, it provides investors with an understanding of
the ability of the Company to incur and service debt and to make
capital expenditures. FFO is not to be considered as an alternative
to net income or any other GAAP measurement as a measure of operating
performance and is not necessarily indicative of cash available to
fund all cash needs.
<F5> The earnings and FFO per share amounts prior to 1997 have been restated
as required to comply with Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("FASB 128"). For further
discussion of earnings per share and the impact of FASB 128, see the
notes to the consolidated financial statements.
</TABLE>
[CHART]
Investment in
Storage Facilities
($ millions)
[CHART]
Revenues
($ millions)
<F*> Pro Forma
[CHART]
Funds from
Operations
($ millions)
<F*> Pro Forma
[CHART]
Number of
Facilities Owned
<PAGE> 3
Corporate Profile
At December 31, 1997, Storage Trust
owned or operated 202 self-storage
facilities in 16 states.
Storage Trust
Facilities
[MAP]
Storage Trust Realty (the "Company") is a self-administered and self-managed
real estate investment trust ("REIT"), the fifth largest operator in the
self-storage industry. Company facilities are designed to offer low-cost,
easily accessible storage space for both residential and commercial use. At
December 31, 1997, Storage Trust owned or operated 202 self-storage
facilities containing an aggregate of approximately 10.6 million net rentable
square feet in 16 states throughout the Southern, Mid-Atlantic, Midwest and
Western regions of the United States.
The Company's primary objectives are to produce capital appreciation, pay
dividends to our shareholders and increase earnings per share. We accomplish
these objectives by aggressively managing current facilities and expanding
them where economically feasible, acquiring existing self-storage facilities,
converting other commercial real estate into self-storage facilities, and
developing new self-storage facilities.
Storage Trust completed its initial public offering ("IPO") on November 16,
1994. With the IPO and three secondary offerings, the Company has raised
over $300 million through the issuance of common equity. The Company's
common shares are traded on the New York Stock Exchange under the symbol
"SEA."
Additional information on the Company can be obtained at our website at
www.storagetrust.com.
1
<PAGE> 4
Chairman's Letter
We are pleased to report that 1997 was a good year for Storage Trust Realty.
We saw increases in the results from operations of our existing facilities
and we continued to find attractive acquisition opportunities to add to the
portfolio. Storage Trust continues to demonstrate that a strategy of focused
growth in existing markets and solid managerial control can maximize
shareholder value. This is a strategy we will continue to use and refine
going into 1998.
Newly acquired
Storage Trust facility
in Houston, Texas.
[PHOTO]
[PHOTO] [PHOTO]
Gordon Burnam Dan Staton
As you review this report, we are confident you will share our satisfaction
in the results for 1997 as well as our optimism for 1998. Our highlights of
1997 included:
* Increased revenues 37.4% over 1996, reflecting acquisitions
during 1996 and 1997 and improved results at existing facilities.
* Acquired 38 facilities containing 2,070,000 net rentable square
feet for $105.6 million through the use of cash and the
exchange of 16 facilities containing 690,000 net rentable
square feet valued at $23.7 million.
* Increased funds from operations by 9.0% on a per share basis.
* Increased the dividend for the fourth quarter by 5.7% to $1.84
per share on an annual basis.
* Completed the direct sale of 2,530,000 shares of common stock in
October and November 1997, raising net proceeds of $59.7 million.
* Funded $100 million in unsecured fixed-rate debt from several
institutional investors at a weighted-average interest rate of
7.58% that was funded in January and April 1997. The debt
received an investment grade rating of BBB- from Duff & Phelps
Credit Rating Co.
* Reduced the interest rate on the Company's unsecured line of
credit during the year by 25 basis points.
* Negotiated a new line of credit that went into effect in late
January 1998, increasing the amount available from $100 million
to $150 million and reducing the interest rate by another 17.5
basis points.
2
<PAGE> 5
[PHOTO]
Site Guard
systems allow our
managers to assist
customers in the
rental office and
still monitor the
premises.
While we are proud of the 1997 results, we realize that same store results
are the name of the game, and in that category we did not meet our
expectations. The management structure to oversee the operations of the
facilities has been changed to put more experienced management closer to the
individual facilities. Additionally, personnel have been added in the
acquisitions, accounting, operations and information systems departments in
order to better position the Company for future growth. With these
operational changes and personnel additions, we are confident that the
necessary infrastructure is now in place to improve same store results and
maximize our 1998 results.
We have built value by concentrating on prudent and focused growth that has
enhanced the performance of the Company. This commitment and focus has been
reinforced with our new management structure and will continue in 1998 and in
the years beyond. We are well positioned to meet the challenges of the
future.
I have decided to step down as Chairman of the Board, although I will retain
a board seat and continue to be actively involved with the Company. Dan
Staton has assumed the responsibilities of chairmanship. His aggressiveness
and experience will help the Company further its leadership role in the
self-storage industry.
I would like to thank all employees of the Company for their hard work and
dedication this year. Special thanks go to our independent trustees for
their invaluable leadership and guidance, and to you, our shareholders, for
your continued support and confidence.
/s/ Gordon Burnam
Storage Trust facility in
Deerfield Beach, Florida.
[PHOTO]
3
<PAGE> 6
During 1997, the Company
continued its pattern
of growth through the
acquisition of existing
facilities in core markets.
Operating Results
The Company experienced increases in earnings each quarter in 1997 as net
income increased from $.35 per share in the first quarter to $.39 in the
fourth quarter, and FFO increased from $.52 per share in the first quarter to
$.55 in the fourth quarter. Net income for 1997 was $1.52 per share, an
increase of 4.1% over 1996. FFO for 1997 was $2.18 per share, which
represented a 9.0% increase over the $2.00 per share for 1996.
Total revenues for the year increased 37.4% to $59.7 million. This increase
resulted from the net acquisition of 22 facilities in 1997 and improved
results at existing facilities. Square footage occupancy at December 31,
1997 was 83% compared to 86% at December 31, 1996. Average revenue per
occupied square foot for the entire portfolio increased 7.9% from $6.99 in
1996 to $7.54 in 1997. These increases have primarily come at those
locations owned by the Company throughout all of 1996 and 1997.
For the 106 facilities owned by the Company throughout all of 1996 and 1997,
revenues and net operating income increased 3.1% and 4.8%, respectively.
Average revenue per occupied square foot increased 2.8% from $7.15 in 1996 to
$7.35 in 1997. Square footage occupancy on a same store basis decreased from
85% at December 31, 1996 to 83% at December 31, 1997.
EBITDA margin (defined as total revenues less property operating expenses,
real estate taxes, and general and administrative expenses divided by total
revenues) increased from 63.6% in 1996 to 65.9% in 1997. This is one of the
best percentages in the self-storage industry for this measurement.
Total assets grew 29.7% from $308.7 million at December 31, 1996 to $400.3
million at December 31, 1997. This increase reflects the net acquisition of
22 facilities during 1997.
Discussion of Operations
Acquisitions and Exchanges
During 1997, the Company continued its pattern of growth through the
acquisition of existing facilities in core markets. The Company acquired 38
facilities containing 2,070,000 net rentable square feet at a cost of $105.6
million. Our acquisition strategy is twofold: (a) gain greater market
penetration and economies of scale through the acquisition of facilities
strategically located in our current markets, and (b) find select, attractive
new markets where the Company can acquire sufficient facilities to achieve
economies of scale. The Company's "target markets" are larger metropolitan
areas exhibiting strong population and job growth where facilities are
available at attractive prices, are currently under-performing, or where our
management expertise can enhance performance.
Storage Trust facility
in Katy, Texas.
[PHOTO]
4
<PAGE> 7
Debt-to-Total Market
Capitalization
As of December 31 ($ millions)
[CHART]
Acquisitions in 1997 were primarily in our larger markets, such as seven
facilities in Dallas/Ft. Worth, TX; five in Chicago, IL; five in Houston, TX;
and four in Southeast Florida. We did enter selected new markets during the
year, such as suburban Washington, D.C. and New Orleans, LA.
During the year, we entered into two exchanges with other self-storage
operators that allowed us to reposition our resources into markets where we
see better growth opportunities. The first exchange occurred in May 1997,
when we obtained ownership of six facilities (three in Chicago, IL and one
each in Columbia, SC; Charleston, SC; and New Orleans, LA) in exchange for
eight facilities (seven in Memphis, TN and one in Tulsa, OK). The second
exchange occurred in the third quarter of 1997, when we obtained ownership of
four facilities (two in Dallas/Ft. Worth, TX and one each in Houston, TX and
Raleigh-Durham, NC) in exchange for eight facilities (three in Gulfport, MS;
two in Knoxville, TN; and one each in Fayetteville, NC; Wilmington, NC; and
Odessa, TX).
As a result of these acquisitions and exchanges in 1996 and 1997, the
Company has a strategically compatible portfolio of 187 wholly owned
facilities located in 16 states. We anticipate continued opportunities for
external growth in our current markets and for selected new markets in 1998.
We will also be on the constant lookout for opportunities to reposition
resources to accomplish our business plan.
Expansions, Development and Conversions
In addition to the acquisition of existing self-storage facilities, the
Company is planning to: (a) expand existing facilities, (b) develop several
new facilities, and (c) convert other commercial real estate buildings to be
used for self-storage.
Facilities are generally expanded when levels of occupancy combined with
local demand make it economically feasible. The Company currently has plans
to do expansions at six facilities during 1998, totalling 77,200 net rentable
square feet. The Company has also acquired land in Jacksonville, FL to
expand an existing facility (with 22,975 net rentable square feet) by 36,125
net rentable square feet.
The Company has purchased land for the development of a facility near Ft.
Lauderdale, FL, which is under construction and scheduled to open mid-1998.
The Company also has purchased land for the developmentof a new facility in
Austin, TX.
In several of the Company's markets, there is an increasing demand for
climate-controlled space, which the Company rents at a premium over
non-climate-controlled space. The Company currently plans to complete
climate-controlled conversions at 39 facilities during 1998, totalling
224,250 net rentable square feet.
In those markets where there is no land available for new development, the
Company will convert other buildings to be used for self-storage. The
Company completed the conversion of a shoe warehouse in Atlanta, GA in March
1996. The Company has acquired two buildings (a vacant moving company
warehouse in Miami, FL and a vacant auto dealership in Kansas City, MO) that
will be converted to use as self-storage during 1998.
Storage Trust facility
in Miami, Florida.
[PHOTO]
5
<PAGE> 8
Equity and Debt Financing
As a result of the favorable interest rate environment in the fourth quarter
of 1996, the Company received commitments from various institutional
investors for the private placement of $100 million of unsecured, long-term,
fixed-rate Senior Notes. The Company funded $75 million of the Senior Notes
in January 1997 and $25 million in April 1997. The Senior Notes have an
average maturity of 7.12 years and a weighted-average interest rate of 7.58%
per annum. The Company used the proceeds from the Senior Notes to reduce the
balance on the revolving line of credit and fund the acquisition of
facilities.
In connection with the issuance, the Senior Notes received an investment
grade rating of BBB- from Duff & Phelps Credit Rating Co.
In October and November 1997, the Company completed a direct sale of common
stock, which was a first for the self-storage sector. In this offering,
2,530,000 Common Shares were sold at $24-11/16 per Common Share. Net of
discounts and offering costs, the Company received $59.7 million from this
offering. The net proceeds were used to repay indebtedness under the
Company's revolving line of credit and to fund additional acquisitions.
During the year, the Company negotiated two amendments to the revolving line
of credit. These amendments gave the Company greater financial flexibility
and reduced the interest rate from LIBOR plus 1.625% at December 31, 1996 to
LIBOR plus 1.375% at December 31, 1997.
On January 25, 1998, the Company negotiated a new revolving line of credit,
increasing the amount available to the Company from $100 million to $150
million, and decreasing the interest rate to LIBOR plus 1.20%.
The Company's financial position is solid with a debt-to-total market
capitalization ratio at December 31, 1997 of 19.8% and the Company will have
its new revolving line of credit fully available for the acquisition,
conversion and development of new facilities.
The Company's financial position
is solid with a debt-to-total
market capitalization ratio
at December 31, 1997 of 19.8%.
[PHOTO]
Packing supply centers
create a "one-stop"
shop for Storage Trust
customers.
Dividends
During the fourth quarter of 1997, the dividend was increased by 5.7% to $.46
per share or $1.84 per share on an annual basis. Based on FFO for the fourth
quarter of 1997, this represents a payout ratio of 83.6%. The Company seeks
to increase dividends annually, while at the same time retaining cash
internally to invest in external growth opportunities.
Dividend Reinvestment and Share Purchase Plan
The Company now offers its shareholders a Dividend Reinvestment and Share
Purchase Plan (the "Plan"). Participants in the Plan may automatically
reinvest cash dividends on shares held in the Plan by purchasing new shares
directly from the Company at market prices.
Participants may also purchase shares on a monthly basis directly from the
Company.
A Prospectus listing all of the benefits of the Plan and an enrollment form
can be obtained from the Plan's administrator. See the inside back cover of
this report for additional information.
6
<PAGE> 9
[PHOTO]
Storage Trust facility
in Mission, Kansas.
Facility Management
While it takes skill and experience to identify and acquire suitably located,
under-performing and under-managed facilities, the real strength of the
Company is its ability to manage these facilities after acquisition. During
1997, we made some changes to our operating structure that will help the
Company continue to grow and produce better same store results in 1998.
Decentralized Management In October 1997, the Company changed its operating
structure to further decentralize management. The Company has divided its
portfolio into four districts and 18 regions. The District Manager
supervises three to five regions containing approximately 50 facilities. The
region is supervised by a Regional Manager, who has control of daily
operational issues (such as training facility managers, staffing,
implementation of capital expenditure programs, and rent increases or
equalizations) and profit and loss responsibility over 10 to 15 facilities.
Specialized Operating Software The Company and its predecessor have long
employed specialized operating software. All of the Company's facilities
operate with this automation package and all new acquisitions are
incorporated into this system as soon as possible. Through use of the system
from the home office, management is able to monitor individual facility
performance and ensure that critical decisions are carried out on a timely
basis.
Comprehensive Training Our "Storage Trust University" is the key to training
new managers and providing continuing education for existing managers. New
managers "graduate" from Storage Trust University prior to starting work.
The comprehensive curriculum exposes the new managers to sales skills (with
an emphasis on telephone techniques), computer operations, marketing,
customer service and property maintenance. This training occurs both in the
classroom and at a designated training facility. Once the new managers are
at their own facilities, they continue training under the guidance of the
Regional Manager. A part of this extended training includes the updating of
the facility's competition book, which analyzes the amenities, rental rates
and policies of competing facilities in their market. The facility managers
and their Regional Manager use the competition book to refine their leasing
plans to promote strong occupancy and revenue increases by utilizing
demand-based pricing for each unit size.
The Company utilizes an "MBA Program" at Storage Trust University for
district and regional managers. This training is done on a quarterly basis
and in a case study format to help maintain the skills of these important
managers.
The Company periodically holds a convention in order to bring all district,
regional and facility managers together to publicly recognize outstanding
managers as well as to address specific areas of focus through updated
training sessions. About 350 managers attended the most recent convention
held in February 1997 in Atlanta, GA.
Pro-Active Marketing We expect our facility managers to act as though they
are owners and not merely caretakers of our facilities. As "owners,"
facility managers actively market their facility in the local community by
calling on other businesses and distributing promotional materials.
New managers complete a
comprehensive training
program prior to investiture
at their designated facility.
[PHOTO]
7
<PAGE> 10
[PHOTO]
Storage Trust Management (clockwise from
upper left): Steve Dulle, Cris Burnam,
Mike Burnam, Gordon Burnam.
Truck Rentals and Product Sales
Throughout the year, the Company has expanded the number of facilities that
offer truck rentals to customers from 63 facilities at year-end 1996 to 116
at year-end 1997. Having rental trucks at our facilities not only generated
revenue from the rental of trucks, but also helped us rent more storage
units.
The Company has also embarked on a program to upgrade the quality and
quantity of moving and packing supplies at all facilities. Our goal is to
have our facilities be a "one-stop" location for customers to obtain the
products and services they need to move and store their belongings when they
are in transition.
The Self-Storage Industry
We still see remarkable potential in the self-storage industry. According to
industry sources, there are an estimated 23,000 to 25,000 facilities in the
United States containing approximately 1.1 billion square feet. Despite
these numbers, however, it is estimated that the ten largest owners control
less than 20% of the total facilities. This fragmentation provides an
abundant source of acquisition opportunities for the Company.
Other factors that affect the supply and demand are currently in the favor of
self-storage facility owners. The demand for self-storage has continued to
increase due to an increasingly mobile society, the construction of smaller
apartments and homes without basements, and business use of self-storage
facilities for record retention and as mini-distribution facilities.
Although certain markets have seen increases in the construction of new
facilities, greater consumer awareness of the benefits of inexpensive
self-storage has kept demand ahead of supply in most areas.
Outlook
Storage Trust Realty's strategies are to grow funds from operations through:
(a) higher occupancy and rental rates, (b) the expansion of selected
facilities, and (c) the addition of new facilities through acquisitions,
conversions and new development. With our integrated management system, the
Company is constantly analyzing the portfolio to achieve these strategies and
thereby improve investor returns. Additionally, through our strong capital
structure, our proven ability to successfully complete debt and equity
offerings and the ability to purchase facilities for equity, the Company has
financing options available to acquire new facilities.
These operational and financing opportunities will allow Storage Trust Realty
to continue to pursue strategies for focused growth that enhance shareholder
value and position us for growth in the future.
Our goal is to have our facilities
be a "one-stop" location for
customers to obtain the products
and services they need to move
and store their belongings when
they are in transition.
8
<PAGE> 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussions should be read in conjunction with the financial
statements and notes appearing elsewhere herein.
Storage Trust Realty (the "Company") was formed as a Maryland real estate
investment trust ("REIT") on July 12, 1994 to continue the self-storage
business of Burnam Holding Companies Co. ("BHC") and certain of its
affiliates (collectively, the "Predecessor Company") in owning, operating and
managing self-storage facilities. The Company and its subsidiaries commenced
operations effective with the completion of the Company's initial public
offering (the "IPO") on November 16, 1994. As of December 31, 1997, the
Company owned 187 self-storage facilities in 16 states and owned an interest
in two joint ventures that owned two self-storage facilities.
Substantially all of the Company's assets and interests in self-storage
facilities are held by, and all of its operations are conducted through,
Storage Trust Properties, L.P. (the "Operating Partnership").
The Company is the sole general partner of, and thereby controls the
operations of, the Operating Partnership, holding a 94.74% ownership interest
therein as of December 31, 1997. The remaining ownership interests in the
Operating Partnership (the "Units") are held by certain owners of the
Predecessor Company, including BHC, and certain former owners of assets
acquired by the Operating Partnership subsequent to the IPO.
Storage Realty Management Co. (the "Management Company") manages self-storage
facilities owned by unrelated third parties and conducts other business, such
as the sale of locks, the processing of customer property insurance and the
rental of trucks, at various facilities. At December 31, 1997, 14
self-storage facilities were managed by the Management Company, including one
of the facilities owned by a joint venture in which the Company has an ownership
interest. Through its ownership of the preferred stock of the Management
Company, the Operating Partnership receives substantially all of the economic
benefits of the business carried on by the Management Company.
The Company derives its revenues principally from the Operating Partnership,
which is generated primarily by: (a) the Operating Partnership's rental of
self-storage units at its facilities, (b) revenues (for financial reporting
purposes) of the Management Company, and (c) earnings from joint ventures.
The following discussion is based on the consolidated financial statements
that include, from the IPO on November 16, 1994 to December 31, 1997, the
accounts of the Company, the Operating Partnership and the Management
Company. Unless the context indicates otherwise, references to the Company
are to Storage Trust Realty, Storage Trust Properties, L.P., and Storage
Realty Management Co. on a consolidated basis.
The statements contained in this discussion that are not historical facts are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements are based on current expectations,
estimates and projections about the industry and markets in which the Company
operates, management's beliefs, and assumptions made by management. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates;" variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions ("Future Factors") which are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements. Future Factors include: (a)
changes in general economic conditions in its target markets that could
adversely affect demand for the Company's facilities, (b) changes in
financial markets and interest rates that could adversely affect the
Company's cost of capital and its ability to meet its financial needs and
obligations, and (c) those other factors discussed herein. These are
representative of the Future Factors that could affect the outcome of the
forward-looking statements.
Results of Operations
1997 Compared to 1996
Rental income increased $15,360,000 (36.1%) in 1997 compared to 1996 as a
result of the net addition of 22 facilities during 1997 and 44 facilities
during 1996 ($14,662,000) and increased average revenue per square foot
associated with those facilities owned for all of 1997 and 1996 ($698,000).
The average revenue per occupied square foot for the portfolio increased 7.9%
to $7.54 in 1997 from $6.99 in 1996. Occupancy for the portfolio decreased
from 86% at December 31, 1996 to 83% at December 31, 1997.
Other income increased $843,000 (124.9%) primarily from increased product
sales (locks and packaging supplies) and increased commissions from rental
trucks, which are at many of the Company's facilities.
Total revenues on a same store basis (106 facilities) increased $963,000 or
3.1%. Revenues on a same store basis include rental income, administrative
fees, late fees, product sales (locks and packaging supplies), commissions
from rental trucks and other income. On a same store basis, average revenue
per occupied square foot increased 2.8% to $7.35 in 1997 from $7.15 in 1996,
while occupancy decreased from 85% at December 31, 1996 to 83% at December
31, 1997.
Property operating expenses increased $2,391,000 (25.1%) as a result of the
acquisitions in 1997 and 1996 ($2,560,000), net of decreases at those
facilities owned for all of 1997 and 1996. Property operating expenses
decreased on a same store basis by $169,000 or 2.5%, reflecting lower
property insurance costs, reduced advertising expenses and lower telephone
and data transfer costs. These decreases were partially offset by: (a)
additional payroll costs at the facilities, due to higher base pay, incentive
compensation and amounts earned from product sales and truck rental activity,
and (b) higher repairs and maintenance.
Real estate taxes increased $1,594,000 (43.0%) as a result of acquisitions in
1997 and 1996 ($1,493,000) and increases at those facilities owned for all of
1997 and 1996. Real estate taxes on a same store basis increased by $101,000
or 4.0%, reflecting higher tax assessments and higher tax rates on those
facilities.
General and administrative expenses increased $603,000 (23.7%) due to the
expansion of the operations of the Company. The addition of personnel at the
Company's headquarters and the addition of district managers in October 1997
to handle this growth, increased travel costs and higher professional fees
accounted for the majority of this increase.
Interest expense increased $3,456,000 (82.5%) due to the increase in
borrowings primarily to fund the acquisition of self-storage facilities. The
Company funded $100,000,000 of Senior Notes in
9
<PAGE> 12
January and April 1997 and raised $59,680,000 from the private sale of 2,530,000
Common Shares in October and November 1997 to reduce amounts outstanding on the
Company's revolving line of credit.
Depreciation increased $3,275,000 (53.7%) due to the increased investment in
self-storage facilities.
Amortization of deferred financing costs increased $162,000 (35.0%) in 1997
due to the amortization of the costs of the Senior Notes.
Net income increased $4,495,000 (28.5%) and basic net income per share
increased $.06 (4.1%) as a result of the factors noted above.
1996 Compared to 1995
Rental income increased $19,583,000 (82.2%) in 1996 compared to 1995 as a
result of the net addition of 47 facilities during 1995 and 44 facilities
during 1996 ($18,009,000) and increases in the average revenue per occupied
square foot and occupancy levels associated with those facilities owned for
all of 1996 and 1995. Average annualized revenue per occupied square foot
for the portfolio increased 5.7% to $6.99 in 1996 from $6.61 in 1995, while
occupancy increased to 86% as of December 31, 1996 compared to 81% as of
December 31, 1995.
Revenues on a same store basis (72 facilities) increased $1,574,000 or 9.0%.
Revenues on a same store basis include rental income, administrative fees,
late fees and other income. On a same store basis, average revenue per
occupied square foot increased 6.2% to $7.06 in 1996 from $6.65 in 1995,
while occupancy increased from 81% at December 31, 1995 to 84% at December
31, 1996.
Management income and equity in earnings in joint ventures decreased a
combined $189,000 (41.4%) in 1996 due to the Company's acquisition of its
partners' interests in five facilities previously held in joint ventures with
such partners, which resulted in the Company owning 100% of these facilities.
Prior to the acquisition, the Operating Partnership managed these five
facilities for the respective joint ventures.
Property operating expenses increased $4,621,000 (93.9%) as a result of
acquisitions in 1996 and 1995 ($4,026,000) and increases at those facilities
owned for all of 1996 and 1995. Property operating expenses on a same store
basis increased $595,000 or 16.5% in 1996, reflecting: (a) additional
payroll costs at the facilities, due to higher base pay and incentive
compensation, (b) additional costs for regional managers, due to more
regions, (c) higher training costs, and (d) increased advertising and
marketing efforts.
Real estate taxes increased $1,832,000 (97.6%) as a result of acquisitions in
1996 and 1995 ($1,766,000) and increases at those facilities owned for all of
1996 and 1995. Real estate taxes on a same store basis increased $66,000 or
4.8% in 1996, reflecting higher tax assessments and increased tax rates.
General and administrative expenses increased $976,000 (62.0%) due to the
rapid expansion of the Company. The addition of personnel at the Company's
headquarters to handle this growth, as well as additional state and local
taxes and professional fees, accounted for the majority of this increase.
Interest expense increased $2,856,000 (214.1%) due to the increase in
borrowings under the Company's line of credit primarily to fund the
acquisition of self-storage facilities.
Depreciation increased $2,934,000 (92.6%) due to the increased investment in
self-storage facilities.
Amortization of deferred financing costs decreased $475,000 (50.6%) in 1996.
In 1995, the Company wrote-off $518,000 of deferred financing costs due to
the replacement of the Company's line of credit.
Net income increased $6,239,000 (65.3%) and basic net income per share
increased $.16 (12.3%) as a result of the factors noted above.
Liquidity and Capital Resources
Funds from Operations
The Company believes that Funds from Operations ("FFO") is helpful to
investors as a measure of the performance of an equity REIT because, along
with cash flows from operating activities, financing activities and investing
activities, it provides investors with an understanding of the ability of the
Company to incur and service debt and to make capital expenditures. FFO is
not to be considered as an alternative to net income or any other GAAP
measurement as a measure of operating performance and is not necessarily
indicative of cash available to fund all cash needs.
FFO is defined by National Association of Real Estate Investment Trusts
("NAREIT") as income (loss) before the minority interest of holders of Units
in the Operating Partnership and the common stock of the Management Company
(computed in accordance with GAAP), excluding gains or losses from debt
restructuring and sales of property, provision for losses, and real estate
related depreciation and amortization (excluding amortization of financing
costs). Effective in 1996, the definition of FFO was modified by NAREIT to
exclude the add-back of amortization of deferred financing fees and
depreciation of non real estate assets. The Company has adopted this new
definition. Prior years' amounts have been revised to conform to the new
definition.
Funds from Operations is determined as follows (amounts in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net income before minority interest $21,670 $16,887 $10,028
Depreciation of revenue-producing assets 9,287 6,028 3,135
Company's share of joint ventures' depreciation 16 22 41
------- ------- -------
Funds from Operations $30,973 $22,937 $13,204
======= ======= =======
</TABLE>
The weighted-average number of Common Shares and Units for the years ended
December 31, 1997, 1996 and 1995 were 14,238,157, 11,488,213 and 7,674,092,
respectively.
The Company includes Units in these amounts as Units can be exchanged for
Common Shares of the Company on a one-for-one basis or redeemed in cash at
the Company's option.
FFO increased $8,036,000 (35.0%) in 1997 over 1996 due to the acquisition of
facilities in 1997 and 1996 and the increased results from those facilities
owned for all of 1996 and 1997. Net operating income, defined as revenues
less property operating expenses and real estate taxes, increased on a same
store basis by $1,031,000 or 4.8%. These increases were partially offset by
increases in general and administrative expenses and interest expense, as
previously discussed.
10
<PAGE> 13
FFO increased $9,733,000 (73.7%) in 1996 over 1995 due to the acquisition of
facilities in 1996 and 1995 and the increased results from those facilities
owned for all of 1996 and 1995. Net operating income, defined as revenues
less property operating expenses and real estate taxes, increased on a same
store basis by $913,000 or 7.3%. These increases were offset by increases in
general and administrative expenses and interest expense, as previously
discussed.
FFO increased $3,480,000 (11.2%) for the pro forma year 1997 as compared to
the actual results for this time period due primarily to the the effect of
the offering of 2,530,000 Common Shares assumed to have occurred on January
1, 1997. This increase was offset by the operations of seven facilities
acquired in 1997 which were in their initial lease-up period.
Mortgages and Notes Payable
The Company's formal policy on the incurrence of debt is to limit Company
debt (including the indebtedness of joint ventures) to 50% of total market
capitalization, which is defined as the market value of the issued and
outstanding Common Shares (including Units exchangeable for Common Shares)
plus Company debt. At December 31, 1997 and 1996, the Company's
debt-to-total market capitalization was 19.8% and 15.4%, respectively. The
Company does not believe that this limit will restrict its operations or have
a material adverse effect on its financial condition or results of operations,
although there can be no assurance that it will not do so in the future. The
Board of Trustees can change the policy at any time in light of then current
economic conditions and other relevant factors.
At December 31, 1997, the Company had outstanding borrowings of $100,000,000
from the Senior Notes (see description below). There were no outstanding
borrowings on the Company's revolving line of credit. The revolving line of
credit may be used to fund the acquisition, development or conversion of
additional facilities. The previous revolving line of credit, with a total
commitment of $100,000,000, expired on January 25, 1998 and bore interest at
a floating rate of LIBOR plus 1.375%. The Company has entered into a new
revolving line of credit that commenced on January 25, 1998 and will expire
on January 25, 2001. The total commitment on the new revolving line of
credit is $150,000,000 and will bear interest at a floating rate of LIBOR
plus 1.20%
In December 1996, the Company received commitments from various institutional
investors for the private placement of $100,000,000 of unsecured Senior
Notes. The Company funded $75,000,000 of the Senior Notes on January 22,
1997 and the remaining $25,000,000 was funded on April 15, 1997. The fixed
rate debt has two separate series--Series A Senior Notes totaling $44,000,000
with a final maturity of seven years, an average maturity of six years and a
fixed interest rate of 7.47% (125 basis points over comparable Treasuries at
the date of pricing), and Series B Senior Notes totaling $56,000,000 with a
final maturity of ten years, an average maturity of eight years and a fixed
interest rate of 7.66% (135 basis points over corresponding Treasuries at the
time of pricing). The proceeds of the financing were utilized to repay
indebtedness under the Company's revolving line of credit and to finance the
acquisition of facilities.
At December 31, 1997, the Company has joint and several liability, but does
not guarantee, the $3,908,000 indebtedness of the joint venture in New
Orleans, LA in which the Company has a 15% ownership interest. In 1996, the
Company acquired a 25% ownership interest in a joint venture that is
operating a self-storage facility in Kansas City, MO that was constructed in
1997. The Company has guaranteed 25% of the joint venture's construction
loan, which is for a total of $2,046,000. The balance outstanding under this
construction loan as of December 31, 1997 was $1,900,000.
Issuance of Common Shares and Units
During October and November 1997, the Company completed an offering of
2,530,000 Common Shares at $24-11/16 per Common Share. Net of transaction
discounts and offering costs, the Company received $59,680,000 from this
offering. The net proceeds were used to repay indebtedness under the
revolving line of credit and finance the acquisition of facilities.
In November 1996, the Company filed a shelf registration statement covering
$150,000,000 of equity securities. This registration statement has been
declared effective and should permit the Company to access the equity market
efficiently when it deems appropriate. The balance remaining on this shelf
registration statement as of December 31, 1997 was approximately $87,541,000.
However, no assurance can be given that market conditions will be favorable
for such an offering.
During 1997, the Company issued 11,372 Units valued at $294,000 due to the
terms of an "earn-out agreement" on a facility acquired in 1996.
The Units in the Operating Partnership not held by the Company can be
exchanged for Common Shares of the Company on a one-for-one basis or redeemed
in cash at the Company's option. During 1997, 32,829 Units were converted to
Common Shares.
The Company amended its Stock Option plan in 1997 to allow for the payment of
the regular quarterly fees to its Trustees in Common Shares. During the last
two quarters of 1997, the Company issued 924 Common Shares valued at $24,000
to its Trustees.
Liquidity
The Company's principal liquidity requirements are: (a) the expansion of
existing facilities, (b) the acquisition, conversion and development of
additional self-storage facilities, and (c) the repayment of indebtedness,
including any amounts outstanding on the revolving line of credit.
The Company expects to meet its short-term liquidity requirements by using:
(a) net cash provided by operating activities, and (b) borrowings under the
revolving line of credit. The Company intends to meet its long-term
liquidity requirements primarily through: (a) borrowings under the revolving
line of credit, (b) the issuance of new debt, and (c) the sale of Common
Shares.
The Company believes that its future net cash flow will be adequate to meet
operating requirements and provide for payment of distributions by the
Company in accordance with income tax requirements relating to a REIT in the
short-term and in the long-term. In order to maintain its status as a REIT,
the Company will be required to make distributions to its shareholders of at
least 95% of its taxable income, which is expected to consist primarily of
its share of income of the Operating Partnership. Differences in timing
between the recognition of taxable income and receipt of cash which would be
available for distributions could require the Company to borrow to meet the
95% distribution requirement, although the Company does not currently
anticipate the need to borrow as a result of any such difference in timing.
11
<PAGE> 14
Capital Expenditures
In 1997, the Company spent: (a) $3,107,000 on new facilities under
development, (b) $1,659,000 for expansions of existing facilities and
climate-controlled conversions, (c) $515,000 for equipment used by home
office and regional management, and (d) $2,293,000 on other capital
expenditures for the facilities.
In 1998, the Company expects to spend on the current portfolio $4,100,000 for
expansions and climate-controlled conversions and $3,400,000 on other capital
expenditures for the facilities. The Company believes that it can fund any
necessary capital expenditures through its operations or from the revolving
line of credit.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("FASB 128"), which the Company was required to
adopt on December 31, 1997. FASB 128 replaced the calculation of primary and
fully diluted earnings per Common Share with basic and diluted earnings per
Common Share. Unlike primary earnings per Common Share, basis earnings per
Common Share exclude any dilutive effects from options, warrants and
convertible securities. Diluted earnings per Common Share is very similar to
the previous fully diluted earnings per Common Share. All earnings per
Common Share amounts for all periods have been presented, and where
appropriate, restated to conform to FASB 128 requirements.
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" ("FASB 130"), which is effective for
financial statements for periods beginning after December 15, 1997. At that
time, the Company will be required to report comprehensive income and its
components in its financial statements. The Company will implement FASB 130
during the year ending December 31, 1998. The impact of FASB 130 on the
Company's financial statements is not expected to be material.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information"
("FASB 131"), which is effective for financial statements for periods
beginning after December 15, 1997. At that time, the Company will be
required to report additional information (both financial and descriptive)
about operating segments in annual and interim reports. The Company will
implement FASB 131 during the year ending December 31, 1998, including the
presentation of comparable amounts from prior periods. Management has not
completed its review of FASB 131, but does not anticipate that the adoption
of FASB 131 will have a significant effect on the Company's segment
reporting.
Information Systems and Year 2000 Compliance
The Company uses individual computers at each facility for the management of
the facilities and a network of computers at the home office for centralized
management and accounting functions. The Company uses software for these
computers that was developed by third-party vendors and, based on the
Company's knowledge of the software and discussions with the third-party
vendors, only the software for the operation of the facilities is currently
Year 2000 compliant. For the software that is not currently Year 2000
compliant, the vendors have stated they will be making modifications (at no
cost to the Company) during 1998 in order that their software will be Year
2000 compliant.
The Company uses a local bank for its normal banking services. Based on
discussions with the local bank, they are working on making the necessary
modifications to their systems to be Year 2000 compliant by the end of 1998.
Based on these factors, management believes that the Company will not incur
significant costs in order that all computer systems will be Year 2000
compliant. However, there are no guarantees that the work to be performed by
third-party vendors or the local bank will be completed on a timely basis and
would not have an adverse effect on the Company's systems.
Inflation
Substantially all of the leases at the Company's facilities have
month-to-month terms, providing the opportunity to achieve increases in
rental income as each lease matures. Such types of leases generally minimize
the risk of inflation to the Company.
Seasonality
The Company's revenues are expected to be higher during the latter part of
the year because its facilities experience greater occupancy from May through
September (due to the higher levels of residential moves during that period)
and increases in rental rates, which occur throughout the year. The Company
does not expect seasonality to materially affect distributions to
shareholders. The Company believes that its geographic diversity, tenant
mix, and rental and expense structures provide adequate protection against
significant fluctuations in cash flows and net income due to seasonality.
12
<PAGE> 15
Report of Management
The management of Storage Trust Realty has prepared the accompanying
financial statements and is responsible for their content, as well as other
information contained in this annual report. These financial statements have
been prepared in accordance with generally accepted accounting principles,
which requires certain estimates of management. The primary objective of
financial reporting is to provide users of financial statements with
sufficient and relevant information.
Management is responsible for establishing and maintaining a system of
accounting procedures and internal control designed to provide reasonable
assurance as to the integrity and reliability of the financial records. The
concept of reasonable assurance recognizes that there are inherent
limitations in any control system and that the cost of maintaining a control
system should not exceed the expected benefits to be derived therefrom.
Management believes its system of accounting procedures and internal control
effectively meets its objective of reliable financial reporting.
The Audit Committee of the Board of Trustees is composed entirely of
independent directors. The Committee meets periodically throughout the year
with management and the independent auditors to discuss the Company's
internal accounting controls, auditing and financial reporting matters. The
independent auditors have unrestricted access to the Audit Committee.
/s/ Michael G. Burnam /s/ Stephen M. Dulle
Michael G. Burnam Stephen M. Dulle
Chief Executive Officer Chief Financial Officer
Report of Independent Auditors
To the Shareholders and the Board of Trustees of Storage Trust Realty:
We have audited the accompanying consolidated balance sheets of Storage Trust
Realty as of December 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 1997 and 1996, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
January 23, 1998, except for the last three paragraphs of Note 10, as to
which the date is February 9, 1998.
13
<PAGE> 16
<TABLE>
Consolidated Balance Sheets
As of December 31, 1997 and 1996
(amounts in thousands, except for share information)
<CAPTION>
1997 1996
<S> <C> <C>
Assets
Investment in storage facilities, net $386,574 $304,114
Cash and cash equivalents 4,909 2,317
Accounts receivable, earnest deposits and other assets 5,201 1,550
Notes receivable 2,376 --
Deferred financing costs, net of amortization of $1,085 and $463 951 547
Investments in joint ventures 284 197
-------- --------
Total assets $400,295 $308,725
======== ========
Liabilities And Equity
Liabilities:
Mortgages and notes payable:
Revolving line of credit $ -- $ 60,673
Senior Notes 100,000 --
Other -- 2,582
Accounts payable and accrued expenses 5,087 4,964
Accrued interest payable 3,457 171
Tenant prepayments 3,242 2,195
Dividends and distributions payable -- 5,974
-------- --------
Total liabilities 111,786 76,559
-------- --------
Minority interest 15,905 16,470
-------- --------
Shareholders' equity:
Common shares, $.01 par value, 150,000,000 shares authorized,
15,446,125 and 12,874,932 shares issued and outstanding 155 129
Additional paid-in capital 280,324 219,868
Distributions in excess of net income (7,875) (4,301)
-------- --------
Total shareholders' equity 272,604 215,696
-------- --------
Total liabilities and shareholders' equity $400,295 $308,725
======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
14
<PAGE> 17
<TABLE>
Consolidated Statements of Operations
For the Years Ended December 31, 1997, 1996 and 1995
(amounts in thousands, except for share information)
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Rental income $ 57,859 $ 42,499 $ 22,916
Management income 236 168 339
Equity in earnings of joint ventures 93 100 118
Other income 1,518 675 466
----------- ----------- ----------
Total revenues 59,706 43,442 23,839
----------- ----------- ----------
Expenses:
Property operations 11,932 9,541 4,920
Real estate taxes 5,304 3,710 1,878
General and administrative 3,152 2,549 1,573
Interest 7,646 4,190 1,334
Depreciation 9,377 6,102 3,168
Amortization 625 463 938
----------- ----------- ----------
Total expenses 38,036 26,555 13,811
----------- ----------- ----------
Net income before minority interest 21,670 16,887 10,028
Minority interest (1,293) (1,091) (471)
----------- ----------- ----------
Net income $ 20,377 $ 15,796 $ 9,557
=========== =========== ==========
Net income per share:
Basic $ 1.52 $ 1.46 $ 1.30
=========== =========== ==========
Diluted $ 1.51 $ 1.46 $ 1.30
=========== =========== ==========
Weighted-average number of shares outstanding during the period 13,377,641 10,803,701 7,324,058
=========== =========== ==========
The accompanying notes are an integral part of these statements.
</TABLE>
15
<PAGE> 18
<TABLE>
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1997, 1996 and 1995
(amounts in thousands, except for share information)
<CAPTION>
Common Shares Distributions
------------- Additional in Excess of Shareholders'
Number Amount Paid-in Capital Net Income Equity
------ ------ --------------- ---------- ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 5,859,332 $ 59 $ 87,471 $ (107) $ 87,423
Proceeds from offering, net of offering costs of $3,939 2,875,000 28 53,533 -- 53,561
Net income -- -- -- 9,557 9,557
Dividends declared ($1.5725 per share) -- -- -- (11,502) (11,502)
---------- ---- -------- -------- --------
Balance, December 31, 1995 8,734,332 87 141,004 (2,052) 139,039
Proceeds from offering, net of offering costs of $4,941 4,140,000 42 78,852 -- 78,894
Proceeds from exercise of stock options 600 -- 12 -- 12
Net income -- -- -- 15,796 15,796
Dividends declared ($1.665 per share) -- -- -- (18,045) (18,045)
---------- ---- -------- -------- --------
Balance, December 31, 1996 12,874,932 129 219,868 (4,301) 215,696
Proceeds from offering, net of offering costs of $2,779 2,530,000 25 59,655 -- 59,680
Proceeds from exercise of stock options 7,440 -- 136 -- 136
Payment of fees to Trustees 924 -- 24 -- 24
Conversion of Units to Common Shares 32,829 1 641 -- 642
Net income -- -- -- 20,377 20,377
Dividends declared ($1.765 per share) -- -- -- (23,951) (23,951)
---------- ---- -------- -------- --------
Balance, December 31, 1997 15,446,125 $155 $280,324 $ (7,875) $272,604
========== ==== ======== ======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
16
<PAGE> 19
<TABLE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1997, 1996 and 1995
(amounts in thousands)
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 20,377 $ 15,796 $ 9,557
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 10,002 6,565 4,106
Equity in earnings of joint ventures (93) (100) (118)
Distributions from joint ventures 6 20 45
Minority interest 1,293 1,091 471
Other changes in assets and liabilities 4,039 2,181 150
--------- --------- --------
Net cash provided by operating activities 35,624 25,553 14,211
--------- --------- --------
Cash flows from investing activities:
Acquisition of storage facilities (86,062) (102,230) (82,161)
Other additions to storage facilities (7,074) (4,593) (2,792)
Funding of notes receivable (2,376) -- --
Investment in joint ventures -- (128) --
--------- --------- --------
Net cash used in investing activities (95,512) (106,951) (84,953)
--------- --------- --------
Cash flows from financing activities:
Borrowings on revolving line of credit 59,186 113,734 96,871
Payments on revolving line of credit (119,859) (86,156) (70,819)
Funding of Senior Notes 100,000 -- --
Payments on mortgages and notes payable (4,226) (7,868) (67)
Financing costs paid (1,026) (210) (649)
Proceeds from sale of Common Shares 62,459 83,835 57,500
Offering costs paid (2,779) (4,941) (3,939)
Distributions to minority interest paid (1,883) (1,022) (461)
Dividends paid (29,552) (16,025) (9,058)
Other issuances of Common Shares 160 12 --
--------- --------- --------
Net cash provided by financing activities 62,480 81,359 69,378
--------- --------- --------
Net change in cash and cash equivalents 2,592 (39) (1,364)
Cash and cash equivalents at beginning of period 2,317 2,356 3,720
--------- --------- --------
Cash and cash equivalents at end of period $ 4,909 $ 2,317 $ 2,356
========= ========= ========
The accompanying notes are an integral part of these statements.
</TABLE>
17
<PAGE> 20
<TABLE>
Consolidated Statements of Cash Flows (continued)
For the Years Ended December 31, 1997, 1996 and 1995
(amounts in thousands)
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Other changes in assets and liabilities:
Accounts receivable and other assets $ (417) $ (430) $ (499)
Accounts payable and accrued expenses 4,456 2,611 649
------- ------ ------
Total other changes in assets and liabilities $ 4,039 $2,181 $ 150
======= ====== ======
Supplemental cash flow information:
Cash paid for interest $ 4,472 $4,271 $1,086
======= ====== ======
Schedule of non-cash investing and financing activities:
Mortgages assumed on acquired facilities $ 1,644 $4,260 $4,534
======= ====== ======
Net book value of storage facilities (10 in 1997 and one in 1996) in
exchange for storage facilities (16 in 1997 and two in 1996) $22,794 $2,343 $ --
======= ====== ======
Issuance of Units in connection with the acquisition of storage facilities $ -- $8,743 $3,652
======= ====== ======
Issuance of Units in connection with the earnout provisions of contracts on
previously acquired storage facilities $ 294 $ -- $ --
======= ====== ======
Conversion of Units in the Operating Partnership held by minority
interests to Common Shares of the Company $ 642 $ -- $ --
======= ====== ======
Reclassification of investment in joint ventures to investment in storage
facilities $ -- $ 371 $ --
======= ====== ======
The accompanying notes are an integral part of these statements.
</TABLE>
18
<PAGE> 21
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
Organization
Storage Trust Realty (the "Company") was formed as a Maryland real estate
investment trust ("REIT") on July 12, 1994 to continue the self-storage
business of Burnam Holding Companies Co. ("BHC") and certain of its
affiliates (collectively, the "Predecessor Company") in owning, operating and
managing self-storage facilities. The Company and its subsidiaries commenced
operations effective with the completion of the Company's initial public
offering (the "IPO") on November 16, 1994. As of December 31, 1997, the
Company owned 187 self-storage facilities in 16 states and was a partner in
two joint ventures that owned two operating self-storage facilities.
Substantially all of the Company's assets and interests in self-storage
facilities are held by, and all of its operations are conducted through,
Storage Trust Properties, L.P. (the "Operating Partnership"). The Company is
the sole general partner of, and thereby controls the operations of, the
Operating Partnership, holding a 94.74% ownership interest therein as of
December 31, 1997. The remaining ownership interests in the Operating
Partnership (the "Units") are held by certain owners of the Predecessor
Company, including BHC (collectively "Original Investors") and certain former
owners of assets acquired by the Operating Partnership subsequent to the IPO.
Storage Realty Management Co. (the "Management Company") manages self-storage
facilities owned by unrelated third parties and conducts other business, such
as the sale of locks and packaging supplies, the processing of customer
property insurance and the rental of trucks, at various facilities. Through
its ownership of the preferred stock of the Management Company, the Operating
Partnership receives substantially all of the economic benefit of the
businesses carried on by the Management Company.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company, the Operating Partnership and the Management Company.
All significant intercompany transactions have been eliminated in the
consolidated presentations.
Certain amounts in 1996 and 1995 have been reclassified to conform with the
1997 presentation.
2. Summary of Significant Accounting Policies
Investment in Storage Facilities
Investment in storage facilities is recorded at cost. Depreciation is
computed using straight-line and accelerated methods over estimated useful
lives ranging from 5 to 40 years for buildings and improvements, and 3 to 10
years for furniture, fixtures and equipment. Expenditures for significant
renovations and improvements, which improve and/or extend the useful lives of
fixed assets, are capitalized. Maintenance and repairs are expensed as
incurred.
The purchase contracts on certain facilities acquired included "earnout
provisions" that call for additional payments to the sellers (in cash or
Units) upon the achievement of specified net operating income amounts. These
amounts are recorded when the terms of the purchase contract are met.
Long-Lived Assets
On January 1, 1996, the Company adopted FASB Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and Assets to Be Disposed Of," which
requires impairment losses to be recognized on long-lived assets used in
operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. No impairment losses
were recorded in 1997 or 1996.
Revenue Recognition
Rental income is recorded when due from tenants under operating lease
agreements.
Federal Income Taxes
No provision has been made for Federal income taxes for the Company in the
accompanying consolidated financial statements because the Company has
operated and expects to continue operating in a manner to qualify as a REIT.
Under the applicable provisions of the Internal Revenue Code for a REIT, the
Company is allowed to reduce taxable income by all or a portion of its
distributions to shareholders so long as it distributes at least 95% of its
taxable income to its shareholders and complies with certain other
requirements.
The taxation of distributions were classified as follows:
<TABLE>
<CAPTION>
Ordinary Income Return of Capital Total
--------------- ----------------- -----
<S> <C> <C> <C>
1997 $1.5885 ( 90%) $0.1765 ( 10%) $1.7650
1996 $1.6650 (100%) $ -- ( --%) $1.6650
1995 $1.5725 (100%) $ -- ( --%) $1.5725
</TABLE>
Cash and Cash Equivalents
The Company considers all demand and money market accounts and repurchase
agreements with a maturity of three months or less when purchased to be cash
and cash equivalents.
Notes Receivable
Interest income is recorded as earned under the terms of the notes. Based on
the substantial equity of the borrowers in these facilities and the Company's
option (at a fair market rate) to purchase these facilities, the amounts
funded are treated as notes receivable.
Deferred Financing Costs
Fees and related expenses incurred in connection with financing transactions
are capitalized at cost and are amortized on a straight-line basis over the
life of the related financing, which approximates the interest method. The
unamortized balance is expensed upon termination or prepayment of the
financing.
19
<PAGE> 22
Investments in Joint Ventures
Investments in joint ventures represent investments in self-storage
facilities in which the Company does not have a controlling interest. The
Company exercises significant influence over the operating and financial
policies of the joint ventures.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Operating Partnership's
interests in joint ventures.
Stock Options
The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25") and related interpretations in
accounting for its stock options because, as discussed below, the alternative
fair value accounting provided under FASB Statement No. 123, "Accounting for
Stock-Based Compensation" ("FASB 123") requires use of option valuation
models that were not developed for use in valuing stock options. Under APB
25, because the exercise price of the Company's stock options equaled the
market price of the underlying stock at the grant date, no compensation
expense is recognized.
Net Income Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("FASB 128"), which the Company was required to
adopt on December 31, 1997. FASB 128 replaced the calculation of primary and
fully diluted earnings per Common Share with basic and diluted earnings per
Common Share. Unlike primary earnings per Common Share, basic earnings per
Common Share exclude any dilutive effects from options, warrants and
convertible securities. Diluted earnings per Common Share is very similar to
the previous fully diluted earnings per Common Share. All earnings per
Common Share amounts for all periods have been presented, and where
appropriate, restated to conform to FASB 128 requirements.
Capitalized Interest
Interest is capitalized on accumulated expenditures relating to the
development or conversion of qualifying facilities. During 1997 and 1996,
the Company capitalized $20,000 and $100,000, respectively, of interest costs
for qualifying facilities.
Minority Interest
The minority interest reflects the ownership interest of the limited partners
in the Operating Partnership and the other shareholder of the Management
Company. Amounts allocated to these interests are reflected as an expense in
the statement of operations and increase the Company's liability.
Distributions to the limited partners and the other shareholder reduce this
liability. Minority interest of Unitholders in the Operating Partnership is
calculated based on the weighted-average Common Shares and Units outstanding
for the period.
The Units in the Operating Partnership held by minority interests can be
exchanged for shares of the Company on a one-for-one basis or redeemed in
cash at the Company's option.
At December 31, 1997 and 1996, the minority interest ownership in the
Operating Partnership was 857,684 Units (5.26%) and 879,141 Units (6.39%),
respectively.
Fair Value of Financial Instruments
Cash and cash equivalents are carried at amounts that approximate their fair
value as of December 31, 1997 and 1996. The fair value of the Senior Notes at
December 31, 1997 (which is the amount the Company could receive from the
issuance of new notes payable) is $102,840,000. The Company's mortgages and
notes payable are carried at amounts that approximate their fair value as of
December 31, 1996. Fair values were estimated using discounted cash flow
analysis, based on interest rates currently available to the Company for the
issuance of mortgages and notes payable with similar terms and remaining
maturities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
3. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share (amounts in thousands, except for share information):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Numerator:
Net income $ 20,377 $ 15,796 $ 9,557
Effect of dilutive securities:
Options on Common Shares -- -- --
Units in Operating Partnership 1,291 1,085 471
----------- ----------- ----------
Numerator for diluted earnings
per Common Share--net income
after assumed conversions $ 21,668 $ 16,881 $ 10,028
=========== =========== ==========
Denominator:
Denominator for basic earnings
per share--weighted-average
Common Shares outstanding 13,377,641 10,803,871 7,324,058
Effect of dilutive securities:
Options on Common Shares 135,075 83,893 47,682
Units in Operating Partnership 860,516 684,342 350,034
----------- ----------- ----------
Dilutive potential Common Shares 995,591 768,235 397,716
----------- ----------- ----------
Denominator for diluted earnings
per Common Shares--adjusted
weighted-average Common Shares
and assumed conversions 14,373,232 11,572,106 7,721,774
=========== =========== ==========
Basic earnings per Common Share $ 1.52 $ 1.46 $ 1.30
=========== =========== ==========
Diluted earnings per Common Share $ 1.51 $ 1.46 $ 1.30
=========== =========== ==========
</TABLE>
20
<PAGE> 23
4. Investment in Storage Facilities
The following summarizes the Company's investment in storage facilities
(amounts in thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Land $ 77,620 $ 60,578
Buildings 299,237 237,190
Developments and expansions in progress 3,107 --
Furniture, fixtures and equipment 25,002 16,551
-------- --------
Total cost 404,966 314,319
Accumulated depreciation (18,392) (10,205)
-------- --------
Investment in storage facilities, net $386,574 $304,114
======== ========
</TABLE>
5. Notes Receivable
The Company has two notes receivable on two facilities (one operating and one
under construction) in Houston, TX. The total commitment under the two notes
is $3,475,000. The amount outstanding at December 31, 1997 was $2,376,000
and bears interest at a rate of LIBOR plus 3.27% on the date of each draw
(9.02% at December 31, 1997). The note on the operating facility matures on
May 15, 1999 (18 months from last funding) and the note on the facility under
construction matures 30 months after commencing operations. The Company has
an option to purchase each facility during the term of each loan at an amount
based upon the net operating income of the facility and a capitalization rate
of 11%. The loans are collateralized by a first mortgage on each facility
and the borrowers' pledge of 32,238 Units.
6. Investments in Joint Ventures
Investments in joint ventures represent the Company's minority interest in
two self-storage facilities as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
New Orleans, LA 15% 15%
Kansas City, MO 25% 25%
</TABLE>
At December 31, 1997, the Company has joint and several liability, but does
not guarantee, the $3,908,000 indebtedness of the joint venture in New
Orleans, LA. In 1996, the Company acquired a 25% interest in a joint venture
that is operating a self-storage facility in Kansas City, MO that was
constructed in 1997. The Company has guaranteed 25% of the joint venture's
construction loan, which is for a total of $2,046,000. The balance
outstanding under this construction loan as of December 31, 1997 was
$1,900,000.
7. Mortgages and Notes Payable
Mortgages and notes payable consist of the following (column amounts in
thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Revolving Line of Credit:
Unsecured revolving line of credit with an aggregate
borrowing limit of $100,000,000, bearing interest at LIBOR
plus 1.375% per annum at December 31, 1997 and LIBOR
plus 1.625% per annum (7.267%) at December 31, 1996,
interest only payable monthly and a fee on the unused
portion of .25% per annum. Expiration on January 25, 1998. $ -- $60,673
======= =======
</TABLE>
The weighted-average interest rate under the revolving line of credit during
1997 and 1996 was 6.96% and 7.22%, respectively.
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Senior Notes:
Series A, unsecured, bearing interest at a fixed rate of
7.47% per annum, interest payable semi-annually on
January 15 and July 15, principal payments of $14,700,000
due on January 15, 2002 and 2003, with the remaining
principal due January 15, 2004. $ 44,000 $ --
Series B, unsecured, bearing interest at a fixed rate of
7.66% per annum, interest payable semi-annually on
January 15 and July 15, principal payments of $11,200,000
due on January 15, 2003, 2004, 2005 and 2006, with the
remaining principal due January 15, 2007. 56,000 --
-------- --------
Total $100,000 $ --
======== ========
</TABLE>
In anticipation of the Senior Notes offering, the Company entered into a
hedging transaction (the sale of Treasury securities) with the objective of
reducing its exposure to changes in interest rates. The hedge was closed
upon receiving the commitments from the institutional investors in December
1996. The Company realized net proceeds of $645,000 from this transaction.
This hedging gain is being amortized against interest expense over the
weighted-average term of the Senior Notes. The balance of the hedging gain,
which is included in accrued liabilities, at December 31, 1997 and 1996 was
$553,000 and $645,000, respectively.
21
<PAGE> 24
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Other
Mortgage loan secured by one self-storage facility,
bearing interest at 7.5%, principal and interest of
$16,000 payable monthly. Repaid on January 17, 1997. $ -- $1,582
Mortgage loan secured by one self-storage facility,
bearing interest at 5.0%, monthly interest payments
due. Repaid at maturity on January 31, 1997. -- 1,000
------ ------
$ -- $2,582
====== ======
</TABLE>
Scheduled Maturities
The scheduled maturities of mortgages and notes payable subsequent to
December 31, 1997 are as follows (amounts in thousands):
<TABLE>
<CAPTION>
Year Ending Revolving
December 31, Line of Credit Senior Notes Total
- ------------ -------------- ------------ -----
<S> <C> <C> <C>
1998 $ -- $ -- $ --
1999 to 2001 -- -- --
2002 -- 14,700 14,700
2003 -- 25,900 25,900
2004 -- 25,800 25,800
2005 -- 11,200 11,200
2006 -- 11,200 11,200
2007 -- 11,200 11,200
-------- -------- --------
Totals $ -- $100,000 $100,000
======== ======== ========
</TABLE>
8. Share Option Plan
A share option plan was adopted by the Company in November 1994 and amended
in May 1996 and May 1997. The amount of authorized Common Shares reserved
for issuance under the amended plan is 10% of total Common Shares and Units
outstanding, which was 1,375,407 for 1997 and will be 1,630,381 for 1998.
The options are exercisable at a price not less than the fair market value on
the date of grant. The options expire at the earlier of: (a) 10 years from
the date of grant, (b) 12 months after termination of employment due to death
or disability, or (c) three months after termination for any other reason.
The Company has granted options on Units of the Operating Partnership (which
are convertible to Common Shares) to key officers and employees, which vest
ratably over five years. The Company's independent trustees are each granted
options on 3,000 Common Shares upon becoming Trustees, which vest after one
year, and options on 3,000 Common Shares subsequent to the close of each of
the Company's annual shareholders' meetings, which vest immediately.
Pro forma information regarding net income and earnings per share is required
by FASB 123, and has been determined as if the Company had accounted for its
share options under the fair value method of FASB 123. The fair value of
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Risk-free interest rates 6.42% 6.79% 7.55%
Estimated dividend yields 6.81% 7.50% 8.00%
Volatility factors of the expected
market price of the Company's
Common Shares 17.0% 17.7% 10.5%
Expected life of the options 7 years 7 years 7 years
</TABLE>
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input
of highly subjective assumptions, such as the expected share price volatility
and the expected dividend yield. Because the Company's share options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its share
options.
For purposes of pro forma disclosures under FASB 123, the estimated fair
value of the options is amortized to compensation expense over the vesting
period of the options. This information is as follows (amounts in thousands,
except for share information):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Historic net income $20,377 $15,796 $9,557
Pro forma compensation expense (407) (85) (68)
------- ------- ------
Pro forma net income $19,970 $15,711 $9,489
======= ======= ======
Pro forma net income per share:
Basic $ 1.49 $ 1.44 $ 1.29
======= ======= ======
Diluted $ 1.48 $ 1.44 $ 1.29
======= ======= ======
</TABLE>
22
<PAGE> 25
A summary of the Company's share option activity and related information is
as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------- -------------------------------
Number of Weighted-Average Number of Weighted-Average
Options Exercise Price Options Exercise Price
------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Outstanding at
beginning of year 421,400 $18.10 396,100 $17.78
Granted 814,350 $25.54 38,500 $21.45
Exercised (7,440) $18.31 (600) $17.50
Forfeited (22,660) $22.01 (12,600) $18.21
---------- ------ -------- ------
Outstanding at end of year 1,205,650 $22.92 421,400 $18.10
========== ====== ======== ======
Exercisable at end of year 255,378 176,718
========== ========
Weighted-average fair
value of options
granted during the year $ $2.41 $ 1.89
========== ========
</TABLE>
Exercise prices for options outstanding as of December 31, 1997 ranged from
$17.50 to $26.1875 per share. The weighted-average remaining contractual
life of those options is 8.6 years.
9. Retirement Savings Plan
In 1995, the Company adopted a retirement savings plan (the "Plan") for its
full-time employees. The Plan is a qualified plan pursuant to Sections 401(a)
and 401(k) of the Internal Revenue Code. Participants in the Plan may elect
to contribute a portion of their earnings to the Plan and the Company is
obligated to make a matching contribution for the employee equal to 50% of
the participant's contribution to the Plan, up to 2% of the participant's
compensation. The Company's matching contribution to the Plan was $22,000 in
1997, $14,000 in 1996 and $1,000 in 1995.
10. Subsequent Events
On January 12, 1998, the Company acquired a self-storage facility containing
39,000 net rentable square feet in Manassas, VA. The purchase price of
$2,110,000 was funded from the proceeds of the private offering of Common
Shares in November 1997.
The Company entered into a new revolving line of credit that commenced on
January 25, 1998 and will expire on January 25, 2001. The total commitment
on the new revolving line of credit is $150,000,000 and will bear interest at
a floating rate of LIBOR plus 1.20%.
On January 30, 1998, the Company acquired three self-storage facilities
containing 133,000 net rentable square feet in the Miami Beach, FL area. The
combined purchase price of $15,187,000 was funded through the assumption of
existing indebtedness of $10,193,000 (paid off immediately after closing) and
the issuance of 191,350 Units valued at $4,994,000.
On February 9, 1998, the Company acquired nine self-storage facilities
containing 615,000 net rentable square feet in the Atlanta, GA area. The
combined purchase price of $32,780,000 was funded from borrowings on the
Company's revolving line of credit.
11. Acquisitions and Pro Forma Information (unaudited)
During the year ended December 31, 1997, the Company acquired 38 facilities
containing 2,070,000 net rentable square feet at a combined purchase price of
$105,600,000. The consideration included cash and the exchange of 16
facilities containing 690,000 net rentable square feet valued at $23,700,000.
The following presents the unaudited consolidated results of operations of
the Company for the year ended December 31, 1997 on a pro forma basis as if:
(a) these acquisitions and exchanges had been completed on January 1, 1997,
(b) the funding of $100,000,000 of Senior Notes had been completed on January
1, 1997, and (c) the offering of Common Shares in October and November 1997
occurred on January 1, 1997 (amounts in thousands except for share
information).
<TABLE>
<S> <C>
Revenues:
Rental income $ 62,509
Management income 236
Equity in earnings of joint ventures 93
Other income 1,724
-----------
Total revenues 64,562
-----------
Expenses:
Property operations 13,437
Real estate taxes 5,890
General and administrative 3,152
Interest 6,923
Depreciation 10,379
Amortization 633
-----------
Total expenses 40,414
-----------
Net income before minority interest 24,148
Minority interest (1,299)
-----------
Net income $ 22,849
===========
Net income per share:
Basic $ 1.48
===========
Diluted $ 1.47
===========
Weighted-average number of shares outstanding during the period 15,434,792
===========
</TABLE>
The pro forma information is not necessarily indicative of what actual
results of operations of the Company would have been assuming such
transactions had been completed as of January 1, 1997, nor does it purport to
represent the results of operations for future periods.
23
<PAGE> 26
12. Quarterly Financial Data (unaudited)
Summarized unaudited financial data by quarter for the years ended December
31, 1997 and 1996 is as follows (amounts in thousands, except for share
information):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
<S> <C> <C> <C> <C> <C>
1997
Revenues $13,178 $14,670 $15,964 $15,894 $59,706
Expenses 8,354 9,265 10,577 9,840 38,036
------- ------- ------- ------- -------
Net income before
minority interest 4,824 5,405 5,387 6,054 21,670
Minority interest (324) (329) (358) (282) (1,293)
------- ------- ------- ------- -------
Net income $ 4,500 $ 5,076 $ 5,029 $ 5,772 $20,377
======= ======= ======= ======= =======
Net income per share:
Basic $ 0.35 $ 0.39 $ 0.39 $ 0.39 $ 1.52
======= ======= ======= ======= =======
Diluted $ 0.35 $ 0.39 $ 0.39 $ 0.38 $ 1.51
======= ======= ======= ======= =======
1996
Revenues $ 7,994 $10,167 $12,303 $12,978 $43,442
Expenses 4,950 6,986 6,930 7,689 26,555
------- ------- ------- ------- -------
Net income before
minority interest 3,044 3,181 5,373 5,289 16,887
Minority interest (162) (237) (327) (365) (1,091)
------- ------- ------- ------- -------
Net income $ 2,882 $ 2,944 $ 5,046 $ 4,924 $15,796
======= ======= ======= ======= =======
Net income per share:
Basic $ 0.33 $ 0.34 $ 0.39 $ 0.38 $ 1.46
======= ======= ======= ======= =======
Diluted $ 0.33 $ 0.34 $ 0.39 $ 0.38 $ 1.46
======= ======= ======= ======= =======
</TABLE>
The net income per share amounts for 1996 and the first three quarters of
1997 have been restated to comply with FASB 128.
Shareholder and Investor Information
Annual Meeting
The 1998 Annual Meeting of Shareholders will be held at 8:00 a.m. local time
on May 12, 1998 at the Kansas City Airport Marriott in Kansas City, MO.
Price Range of Common Shares and Dividends Declared
Storage Trust Realty has been listed on the New York Stock Exchange since its
IPO in November 1994 under the symbol SEA. The following table shows the
high and low sales price for the Company's Common Shares and dividends
declared for the periods indicated.
<TABLE>
<CAPTION>
High Low Dividends
Price Price Declared
<S> <C> <C> <C>
1997
Fourth Quarter $26-9/16 $23-5/8 $.4600
Third Quarter $27 $24-1/4 $.4350
Second Quarter $27 $22-3/4 $.4350
First Quarter $27-7/8 $24-3/4 $.4350
1996
Fourth Quarter $27 $21-5/8 $.4350
Third Quarter $22-5/8 $19-7/8 $.4100
Second Quarter $22-3/8 $20 $.4100
First Quarter $24 $21-1/2 $.4100
</TABLE>
As of February 10, 1998, there were 248 direct shareholders of record.
Financial Reports
The Company's Annual Report on Form 10-K and Quarterly Reports of Form 10-Q,
as filed with the Securities and Exchange Commission, are available to
shareholders free of charge upon written request to:
Michael T. Nealon
Controller--External Reports
Storage Trust Realty
2407 Rangeline Street
Columbia, MO 65202
24
<PAGE> 27
Investor Inquiries
Security analysts, portfolio managers and other investors seeking information
about the Company's operations and financial performance are invited to
contact Stephen M. Dulle or Michael T. Nealon at (573) 499-4799, or by e-mail
at [email protected].
Additional information on the Company can be obtained at our website at
www.storagetrust.com.
Transfer Agent
ChaseMellon Shareholder Services, LLC
85 Challenger Road, Overpeck Centre
Ridgefield Park, NJ 07660
Phone: (888) 216-8118
www.chasemellon.com
Dividend Reinvestment and Share Purchase Plan
Investment Services
P.O. Box 3338
South Hackensack, NJ 07606-1938
Phone: (888) 216-8118
www.chasemellon.com
Independent Auditors
Ernst & Young LLP
Chicago, IL
Legal Counsel
Mayer, Brown & Platt
Chicago, IL
Van Matre & Harrison, PC
Columbia, MO
Executive Officers
Michael G. Burnam
Chief Executive Officer
P. Crismon Burnam
Chief Operating Officer
Stephen M. Dulle
Chief Financial Officer
Gordon Burnam
Chairman Emeritus
Timothy B. Burnam
Vice President--Construction & Development
Gregory A. Darus
Senior Vice President--Acquisitions
Board of Trustees
Daniel C. Staton <F1>, <F3>
Chairman, Storage Trust Realty; President, Walnut Capital Partners;
Director, Duke Realty Investments, Inc.
Michael G. Burnam
Chief Executive Officer, Storage Trust Realty
P. Crismon Burnam
Chief Operating Officer, Storage Trust Realty
Gordon Burnam <F1>
Chairman Emeritus, Storage Trust Realty
Blake Eagle <F1>, <F2>
Chairman, MIT Center for Real Estate
Randall K. Rowe <F3>
Managing Director and Chief Executive Officer, Transwestern Investment
Company, LLC
Fredrick W. Petri <F2>
President, Petrone, Petri & Company; Director, Simon DeBartolo Group
[FN]
<F1> Executive Committee Member
<F2> Audit Committee Member
<F3> Executive Compensation Committee Member
25
<PAGE> 28
Storage Trust Realty
2407 Rangeline Street
Columbia, MO 65202
573-499-4799 phone
573-442-5554 fax
[email protected] e-mail
www.storagetrust.com website
<PAGE> 1
<TABLE>
Exhibit 21.1
SUBSIDIARIES OF THE STORAGE TRUST REALTY AND
OWNERSHIP OF SUBSIDIARY STOCK
Subsidiaries of the Storage Trust Realty (the "Company"):
<CAPTION>
Jurisdiction of Percentage of Ownership by the
Legal Name Organization Company or other Subsidiary
- ---------------------------------- --------------- ----------------------------------
<S> <C> <C>
Storage Trust Properties, L.P. Delaware 94.74% of units (the general
(the "Operating Partnership") partnership interest) held by the
Company
Storage Realty Management Co. Delaware 5% of common stock held and
100% of preferred stock held by
the Operating Partnership
STR Management Corporation Missouri 100% of stock held by the Company
Storage Trust Investments, L.P. Missouri 1% general partnership interest held
by STR Management Corporation
99% limited partnership interest
held by the Operating Partnership
STR Management Corporation Tennessee 100% of stock held by the Company
of Tennessee
Storage Trust Investments - Tennessee 1% general partnership interest held by
Tennessee, L.P. STR Management Corporation of Tennessee
99% limited partnership interest
held by the Operating Partnership
STR Management Corporation Florida 100% of stock held by the Company
of Florida
Storage Trust Investments - Florida 1% general partnership interest held by
Florida, Limited Partnership STR Management Corporation of Florida
99% limited partnership interest
held by the Operating Partnership
<PAGE> 2
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCK
Subsidiaries of the Company: (continued)
<CAPTION>
Jurisdiction of Percentage of Ownership by the
Legal Name Organization Company or other Subsidiary
- ---------------------------------- --------------- ----------------------------------
<S> <C> <C>
STR Management Corporation Kentucky 100% of stock held by the Company
of Kentucky
Storage Trust Investments - Kentucky 1% general partnership interest held by
Kentucky, L.P. STR Management Corporation of Kentucky
99% limited partnership interest
held by the Operating Partnership
STR Management Corporation Kansas 100% of stock held by the Company
of Kansas
Storage Trust Investments - Kansas 1% general partnership interest held by
Kansas, L.P. STR Management Corporation of Kansas
99% limited partnership interest
held by the Operating Partnership
STR Management Corporation Wisconsin 100% of stock held by the Company
of Wisconsin
Storage T Investments - Wisconsin 1% general partnership interest held by
Wisconsin, Limited Partnership STR Management Corporation of Wisconsin
99% limited partnership interest
held by the Operating Partnership
STR Management Corporation Georgia 100% of stock held by the Company
of Georgia
Storage Trust Investments - Georgia 1% general partnership interest held by
Georgia, L.P. STR Management Corporation of Georgia
99% limited partnership interest
held by the Operating Partnership
<PAGE> 3
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCK
Subsidiaries of the Company: (continued)
<CAPTION>
Jurisdiction of Percentage of Ownership by the
Legal Name Organization Company or other Subsidiary
- ---------------------------------- --------------- ----------------------------------
<S> <C> <C>
Storage Management Corporation Illinois 100% of stock held by the Company
of Illinois
Storage T Investments - Illinois 1% general partnership interest held by
Illinois, L.P. Storage Management Corporation of Illinois
99% limited partnership interest
held by the Operating Partnership
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCK
Affiliates of the Company:
<CAPTION>
Jurisdiction of Percentage of Ownership by the
Legal Name Organization Company or other Subsidiary
- ---------------------------------- --------------- ----------------------------------
<S> <C> <C>
Fountainbleau Storage Associates Louisiana 15% partnership interest held by
the Operating Partnership
Marian Ridge IV, L.L.C. Missouri 25% membership interest held by
the Operating Partnership
Name of Business:
Operations at the properties are conducted under name Storage Trust Properties, L.P.
</TABLE>
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Annual Report (Form 10-K)
of Storage Trust Realty of our report dated January 23, 1998 (except for the
last three paragraphs of Note 10, as to which the date is February 9, 1998),
included in the 1997 Annual Report to Shareholders of Storage Trust Realty.
We also consent to the incorporation by reference in (a) the Registration
Statements on Form S-8 pertaining to the Storage Trust Realty 1994 Share
Option Plan and the First Amendment to 1994 Share Option Plan (33-92764 and
333-15763) and (b) the Registration Statements on Form S-3 (333-16219,
333-15765 and 333-42043) of our report described above, with respect to the
consolidated financial statements of Storage Trust Realty incorporated by
reference into the Annual Report (Form 10-K) and the financial statement
schedule of Storage Trust Realty included in the 1997 Annual Report (Form
10-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
Chicago, Illinois
March 20, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-K
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,909
<SECURITIES> 0
<RECEIVABLES> 642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,551
<PP&E> 404,966
<DEPRECIATION> (18,392)
<TOTAL-ASSETS> 400,295
<CURRENT-LIABILITIES> 11,786
<BONDS> 100,000
0
0
<COMMON> 155
<OTHER-SE> 272,449
<TOTAL-LIABILITY-AND-EQUITY> 400,295
<SALES> 57,859
<TOTAL-REVENUES> 59,706
<CGS> 0
<TOTAL-COSTS> 17,236
<OTHER-EXPENSES> 13,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,646
<INCOME-PRETAX> 20,377
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,377
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.51
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,909
<SECURITIES> 0
<RECEIVABLES> 642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,551
<PP&E> 404,966
<DEPRECIATION> (18,392)
<TOTAL-ASSETS> 400,295
<CURRENT-LIABILITIES> 11,786
<BONDS> 100,000
0
0
<COMMON> 155
<OTHER-SE> 272,449
<TOTAL-LIABILITY-AND-EQUITY> 400,295
<SALES> 15,236
<TOTAL-REVENUES> 15,894
<CGS> 0
<TOTAL-COSTS> 4,216
<OTHER-EXPENSES> 3,574
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,050
<INCOME-PRETAX> 5,772
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,772
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.38
</TABLE>
