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8-K
Feb 18, 5:10 PM ET
SmartStop Self Storage REIT, Inc. 8-K
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Contents
121
ARTICLE IDefinitions
Section 1.01 Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
Section 1.02 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Term SOFR Loan”). Borrowings also may be classified and referred to by Type (e.g., a “Term SOFR Borrowing”).
Section 1.03 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes,” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
Section 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP (provided that, notwithstanding any provision herein to the contrary, the financial covenants set forth herein shall be calculated based on the Parent’s Equity Percentage of Subsidiaries and Affiliates which are not wholly owned directly or indirectly by the Parent, notwithstanding that GAAP requires that such Subsidiaries be consolidated), as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
Section 1.05 Exchange Rates; Currency Equivalents.
Section 1.06 Rates. The interest rate on Loans denominated in Dollars may be determined by reference to a benchmark rate that is, or may in the future become, the subject of regulatory reform or cessation. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation of, administration of, submission of, calculation of or any other matter related to the Base Rate, Daily Simple SOFR, the Term SOFR Reference Rate, Term SOFR, Daily Simple CORRA, or any other Benchmark or Canadian Benchmark or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement or Canadian Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement or Canadian Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Base Rate, Daily Simple SOFR, the Term SOFR Reference Rate, Term SOFR, Daily Simple CORRA or any other Benchmark or Canadian Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes or Canadian Benchmark Replacement Conforming Changes. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of the Base Rate, Daily Simple SOFR, the Term SOFR Reference Rate, Term SOFR, Daily Simple CORRA or any alternative, successor or replacement rate (including any Benchmark Replacement or any Canadian Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the Base Rate, Daily Simple SOFR, the Term SOFR Reference Rate, Term SOFR, Daily Simple CORRA or any other Benchmark or Canadian Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. The Administrative Agent will, in keeping with industry practice, continue using its current rounding practices in connection with the Base Rate, Daily Simple SOFR, the Term SOFR Reference Rate, Term SOFR or Daily Simple CORRA.
In connection with the use or administration of Daily Simple SOFR, Term SOFR and Daily Simple CORRA, the Administrative Agent will have the right to make Conforming Changes or Canadian Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes or Canadian Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any Conforming Changes or Canadian Benchmark Replacement Conforming Changes in connection with the use or administration of Daily Simple SOFR, Term SOFR and Daily Simple CORRA, as applicable.
Section 1.07 Amendment and Restatement. On the Effective Date, the commitment of each lender that is a party to the Existing Credit Agreement but is not a party to this Agreement (an “Exiting Lender”) will be terminated, all outstanding obligations owing to the Exiting Lenders will be repaid in full and each Exiting Lender will cease to be a Lender under the Existing Credit Agreement and will not be a Lender under this Agreement. As of the Effective Date, the remaining “Lenders” under (and as defined in) the Existing Credit Agreement shall be Lenders under this Agreement with Commitments as set forth on Schedule 2.01 hereto and by its execution and delivery of this Agreement, each such Lender hereby consents to the execution and delivery of this Agreement and to the non-pro rata reduction of commitments occurring on the Effective Date as a result of the termination of the commitments of the Exiting Lenders, and the concurrent repayment in full of all loans and other obligations owing (whether or not due) to the Exiting Lenders. The parties to this Agreement agree that, upon (i) the execution and delivery by each of the parties hereto of this Agreement and (ii) satisfaction of the conditions set forth in Section 4.01, the terms and provisions of the Existing Credit Agreement shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation, payment and reborrowing or termination of the “Obligations” (as defined in the Existing Credit Agreement). All “Loans” made and “Obligations” incurred under the Existing Credit Agreement which are outstanding on the Effective Date, if any, shall continue as, and shall constitute, Loans and Obligations under (and shall be governed by the terms of) this Agreement and the other Loan Documents. Without limiting the foregoing, upon the effectiveness hereof, all references in the “Loan Documents” (as defined in the Existing Credit Agreement) to the “Obligations” shall be deemed to refer to the Obligations hereunder.
Section 1.08 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
ARTICLE IIThe Loans
Section 2.01 Commitment to Lend.
Section 2.02 Loans and Borrowings.
Section 2.03 Requests for Borrowings.
Section 2.04 Swingline.
Section 2.05 Letters of Credit.
Section 2.06 Funding of Borrowings.
Section 2.07 Interest Elections.
Section 2.08 Termination, Reduction and Increase of Commitments.
Section 2.09 Repayment of Loans; Evidence of Debt.
Section 2.10 Prepayment of Loans.
Section 2.11 Fees.
Section 2.12 Interest.
Section 2.13 Temporary Inability to Determine Rates.. If (A) the Administrative Agent determines in good faith (which determination shall be conclusive and binding absent manifest error) that Daily Simple SOFR, Term SOFR or Daily Simple CORRA cannot be determined pursuant to the definition thereof or (B) the Majority Lenders determine that for any reason in connection with any request for a SOFR Loan or a CORRA Loan or a conversion thereto or a continuation thereof that Daily Simple SOFR, Daily Simple CORRA or Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan or CORRA Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, and the Majority Lenders have provided notice of such determination to the Administrative Agent, in each case of (A) and (B), on or prior to the first day of any Interest Period, the Administrative Agent will promptly so notify the Borrower and each Lender. Upon notice thereof by the Administrative Agent to the Borrower, (i) any obligation of the Lenders to make or continue the applicable SOFR Loans or CORRA Loans or to convert Base Rate Loans to SOFR Loans or CORRA Loans shall be suspended (to the extent of the affected Interest Periods) until the Administrative Agent revokes such notice and (ii) if such determination affects the calculation of the Base Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate without reference to clause (iii) of the definition of “Base Rate” until the Administrative Agent revokes such notice. Upon receipt of such notice, (i) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of any applicable SOFR Loans or CORRA Loans (to the extent of the affected SOFR Loans, CORRA Loans or affected Interest Periods) or, failing that,
the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Base Rate Loans in the amount specified therein and (ii) any outstanding affected SOFR Loans and CORRA Loans will be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period. Upon any such conversion, the Borrower shall also pay accrued interest on the amount so converted, together with any additional amounts required pursuant to Section 2.15. If the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that “Term SOFR” cannot be determined pursuant to the definition thereof on any given day, the interest rate on Base Rate Loans shall be determined by the Administrative Agent without reference to clause (iii) of the definition of “Base Rate” until the Administrative Agent revokes such determination.
Section 2.14 Increased Costs, Illegality, etc.
Section 2.15 Breakage Compensation. The Borrower shall compensate each Lender upon its written request (which request shall set forth the detailed basis for requesting and the method of calculating such compensation), for all reasonable losses, costs, expenses and liabilities (including, without limitation, any loss, cost, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its SOFR Loans or CORRA Loans) which such Lender may sustain in connection with any of the following:
(i) if for any reason (other than a default by such Lender or the Administrative Agent) a Borrowing of SOFR Loans or CORRA Loans does not occur on a date specified therefor in a Borrowing Request or a notice of continuation or conversion (whether or not withdrawn by the Borrower or deemed withdrawn pursuant to Section 2.14(a)); (ii) if any repayment, prepayment, conversion or continuation of any SOFR Loan or CORRA Loan occurs on a date that is not the last day of an Interest Period applicable thereto; (iii) if any prepayment of any of its SOFR Loans or CORRA Loans is not made on any date specified in a notice of prepayment given by the Borrower; (iv) as a result of an assignment by a Lender of any SOFR Loan or CORRA Loan other than on the last day of the Interest Period applicable thereto pursuant to a request by the Borrower pursuant to Section 2.19(b) or (v) as a consequence of (y) any other default by the Borrower to repay or prepay any SOFR Loans or CORRA Loans when required by the terms of this Agreement or (z) an election made pursuant to Section 2.19(b). The written request of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such request within ten (10) days after receipt thereof.
Section 2.16 Taxes.
Section 2.17 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
Section 2.18 Defaulting Lenders.
Section 2.19 Mitigation Obligations; Replacement of Lenders.
Section 2.20 Acknowledgement and Consent to Bail-In of Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of a Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
Section 2.21 Extension.
Section 2.22 Permanent Inability to Determine Rate; Benchmark Replacement.
ARTICLE IIIRepresentations and Warranties
Section 3.01 Organization; Powers. Each Credit Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.
Section 3.02 Authorization; Enforceability. The Transactions are within the corporate, partnership or limited liability company powers (as applicable) of the respective Credit Parties and have been duly authorized by all necessary corporate, partnership or limited liability company action. This Agreement and the Loan Documents have been duly executed and delivered by each Credit Party which is a party thereto and constitute the legal, valid and binding obligation of each such Person, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
Section 3.03 Governmental Approvals; No Conflicts. The Transactions (a) to the actual knowledge of the respective Credit Parties, do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect or which shall be completed at the appropriate time for such filings under applicable securities laws, (b) to the actual knowledge of the respective
Credit Parties, will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of any Credit Party or any of the Borrower’s Subsidiaries or any order of any Governmental Authority, except where such violation would not reasonably be expected to have a Material Adverse Effect, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Credit Party or any of the Borrower’s Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by any Credit Party or any of the Borrower’s Subsidiaries, except where such violation would not reasonably be expected to have a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien (other than Permitted Encumbrances) on any asset of any Credit Party or any of the Borrower’s Subsidiaries.
Section 3.04 Financial Condition; No Material Adverse Change.
Section 3.05 Properties.
Section 3.06 Intellectual Property. To the actual knowledge of each Credit Party, such Credit Party owns, or is licensed to use, all patents and other intellectual property material to its business, and the use thereof by such Credit Party does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. To the actual knowledge of each Credit Party, there are no material slogans or other advertising devices, projects, processes,
methods, substances, parts or components, or other material now employed, or now contemplated to be employed, by any Credit Party with respect to the operation of any Unencumbered Pool Property with the Lenders acknowledging that each Unencumbered Pool Property will be operated under the “SmartStop” brand and marketing program and will utilize the Manager’s “processes” and “methods”, and no claim or litigation regarding any slogan or advertising device, project, process, method, substance, part or component or other material employed, or now contemplated to be employed by any Credit Party, is pending or threatened, the outcome of which would reasonably be expected to have a Material Adverse Effect.
Section 3.07 Litigation and Environmental Matters.
Section 3.08 Compliance with Laws and Agreements. Each of the Credit Parties is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or to its knowledge, its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.
Section 3.09 Investment and Holding Company Status. Neither any of the Credit Parties nor any of the Borrower’s Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.
Section 3.10 Taxes. Each Credit Party and each of the Borrower’s Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so would not reasonably be expected to result in a Material Adverse Effect.
Section 3.11 ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect. The Borrower does not have any Plans as of the date hereof. As to any future Plan the present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) will not exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) will not exceed the fair market value of the assets of all such underfunded Plans.
Section 3.12 Disclosure. The Borrower has disclosed or made available to the Lenders all Material Contracts and material corporate or other restrictions to which it or any other Credit Party or any of its Subsidiaries is subject, and all other matters known to it, that, in the aggregate, would reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
Section 3.13 RESERVED.
Section 3.14 Margin Regulations. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board), and no proceeds of any Loan will be used to purchase or carry any margin stock.
Section 3.15 Subsidiaries; REIT Qualification. As of the Effective Date, the Parent has only the direct Subsidiaries listed on Schedule 3.15 attached hereto. The Borrower is a Delaware limited partnership taxed as a partnership for federal income tax purposes and, except as disclosed to Administrative Agent, each other Property Party is a Delaware limited liability company wholly-owned by the Borrower and is treated as a disregarded entity for federal income tax purposes. The Parent is a Maryland corporation duly organized pursuant to articles of incorporation filed with the Maryland Department of Assessments and Taxation, and is in good standing under the laws of Maryland. Parent is qualified to elect or has elected status as a real estate investment trust under Section 856 of the Code and currently is in compliance in all material respects with all provisions of the Code applicable to the qualification of Parent as a real estate investment trust.
Section 3.16 Solvency. Immediately after giving effect to the transactions contemplated by this Agreement and the other Loan Documents, including all Loans made or to be made hereunder, no Credit Party is insolvent on a balance sheet basis such that the sum of such Person’s assets exceeds the sum of such Person’s liabilities, each Credit Party is able to pay its debts as they become due, and each Credit Party has sufficient capital to carry on its business.
Section 3.17 OFAC; Anti-Corruption Laws; PATRIOT Act. None of the Borrower, any of the other Credit Parties, any of the other Subsidiaries, or, to Borrower’s actual knowledge without any independent inquiry, any other Affiliate of the Borrower is (or will be) (i) a Sanctioned Person, (ii) located, organized or resident in a Designated Jurisdiction, (iii) to the Borrower’s actual knowledge, without any independent inquiry, is or has been (within the previous five (5) years) engaged in any transaction with any Sanctioned Person or any Person who is located, organized or resident in any Designated Jurisdiction to the extent that such transactions would violate Sanctions, or (iv) in violation of any Anti-Money Laundering Law in any material respect. Each of the Credit Parties and its Subsidiaries, and to the actual knowledge of the Credit Parties, without any independent inquiry, each director, officer, employee, agent and Affiliate of the Credit Parties and each such Subsidiary, is in compliance with the Anti-Corruption Laws in all material respects. The Credit Parties use commercially reasonable efforts to maintain in effect policies and procedures designed to achieve compliance with the Anti-Corruption Laws and applicable Sanctions. No Credit Party shall knowingly permit the proceeds of any Loan or Letter of Credit: (a) to be lent, contributed or otherwise made available to fund any activity or business in any Designated Jurisdiction; (b) to fund any activity or business of any Sanctioned Person or any Person located, organized, formed, incorporated or residing in any Designated Jurisdiction or who is the subject of any Sanctions; (c) in any other manner that will result in any material violation by any Person (including any Lender or Administrative Agent) of any Sanctions; or (d) to be used in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws. Notwithstanding the foregoing, the representations given in this Section 3.17 shall not be made by
nor apply to any Person that qualifies as a corporation that is registered or incorporated under the laws of Canada or any province thereof and that carries on business in whole or in part in Canada within the meaning of Section 2 of the Foreign Extraterritorial Measures (United States) Order, 1992 passed under the Foreign Extraterritorial Measures Act (Canada) in so far as such representations would result in a violation of or conflict with the Foreign Extraterritorial Measures Act (Canada) or any similar law.
Section 3.18 Beneficial Ownership Certification. The information included in the Beneficial Ownership Certification is true and correct in all respects.
ARTICLE IVConditions
Section 4.01 Effective Date. The obligations of the Lenders to make Revolving Loans, of the Swingline Lender to make Swingline Loans hereunder, and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02) (the “Effective Date”):
Section 4.02 Each Credit Event. The obligation of each Lenders to make a Loan hereunder on the occasion of any Borrowing, of the Swingline Lender to make Swingline Loans hereunder on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew, or extend Letters of Credit hereunder, is subject, in each case, to the satisfaction of the following conditions:
ARTICLE VAffirmative Covenants
Section 5.01 Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender:
Section 5.02 Financial Tests. Throughout the term of this Agreement, the Parent shall have and maintain, tested as of the close of each fiscal quarter:
Section 5.03 Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender written notice of the following promptly after it becomes aware of same (unless specific time is set forth below):
Section 5.04 Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things reasonably necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business, except to the extent the failure to do so, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.02. Each Person that is a Property Party (other than the Borrower) must at all times be a wholly owned Subsidiary of the Borrower. Each Property Party shall at all times comply with all organizational formalities necessary to maintain its status as a single purpose entity and will hold itself out to creditors and the public as a legal entity separate and distinct from any other entity, provided the Unencumbered Pool Properties may be operated under the SmartStop Self Storage brand.
Section 5.05 Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including liabilities for Taxes, that, if not paid, would result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect.
Section 5.06 Maintenance of Properties; Insurance.
Section 5.07 Books and Records; Inspection Rights.
Section 5.08 Compliance with Laws. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority
(including, without limitation, Anti-Corruption Laws and Sanctions) applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
Section 5.09 Use of Proceeds. The proceeds of the Loans will be used for the refinance of the Unencumbered Pool Properties, and other general working capital purposes. No part of the proceeds of any Loan will be used, whether directly or indirectly, for financing, funding or completing the hostile acquisition of publicly traded Persons or for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X.
Section 5.10 Fiscal Year. The Borrower shall maintain as its fiscal year the twelve (12) month period ending on December 31 of each year.
Section 5.11 Environmental Matters.
Section 5.12 Unencumbered Pool Property Covenants.
Section 5.13 Unencumbered Pool Property.
Section 5.14 Further Assurances. At any time upon the written request of the Administrative Agent, the Borrower will (or will cause each other Credit Party to), promptly and at its expense, execute, acknowledge and deliver such further documents and perform such other acts and things as the Administrative Agent may reasonably request to evidence the Loans made hereunder and interest thereon in accordance with the terms of this Agreement.
Section 5.15 Parent Covenants. The Parent will:
Section 5.16 OFAC.
Section 5.17 Qualified ECP Party. Each Property Party and the Guarantor is a Qualified ECP Party.
Section 5.18 Eligible Ground Leases. With respect to any Eligible Ground Lease related to an Unencumbered Pool Property, the Property Party will, for so long as such Eligible Ground Lease is related to an Unencumbered Pool Property, perform and observe all of the terms and provisions of each such Eligible Ground Lease to be performed or observed by it, maintain each such Eligible Ground Lease in full force and effect, use its commercially reasonable efforts to enforce, in all material respects, each such Eligible Ground Lease in accordance with its terms, other than in each case, where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 5.19 Ownership Interests. The Borrower shall at all times own 100% of the direct and indirect ownership interests in entities that are Subsidiary Guarantors (or otherwise owners of an Unencumbered Pool Property) that are not subject to a Lien (other than in favor of the Administrative Agent, on behalf of the Lenders and the noteholders under the Private Placement Notes Facility) in any manner.
Section 5.20 Subsidiary Guaranty Termination. So long as no Default or Event of Default shall have occurred and be continuing, upon the Borrower’s written request following the occurrence of a Subsidiary Guaranty Termination Event, Administrative Agent shall promptly release the Subsidiary Guarantors from the Guaranty and no Subsidiaries of the Borrower shall thereafter be required to deliver a Guaranty hereunder for so long as Parent or the Borrower continues to maintain an Investment Grade Rating. In the event that, at any time following the occurrence of a Subsidiary Guaranty Termination Event, the Parent and the Borrower no longer maintain an Investment Grade Rating or any Property Party becomes obligated under any third party Indebtedness for borrowed money (a “Subsidiary Guaranty Reinstatement Event”), the Borrower and Parent shall, within thirty (30) days of such Subsidiary Guaranty Reinstatement Event, cause all Persons who would be required to deliver a Guaranty hereunder and otherwise become a Subsidiary Guarantor pursuant to the terms of this Agreement, to deliver a Guaranty or Joinder Agreement to the existing Guaranty and otherwise comply with the requirements of an owner of an Unencumbered Pool Property hereunder, including, without limitation Section 5.13(b) hereof. Notwithstanding the foregoing, the Parent will not be released from the Guaranty as a result of the occurrence of the Subsidiary Guaranty Termination Event, and the Guaranty shall remain in full force and effect with respect to the Parent.
Section 5.21 Beneficial Ownership. Promptly following any request therefor, the Borrower shall provide information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” requirements under the Patriot Act, the Beneficial Ownership Regulation or other applicable anti-money laundering laws.
Section 5.22 Most Favored Lender. If, as of the closing date of any other Unsecured Debt incurred after the Effective Date in an aggregate principal amount outstanding or available for borrowing equal to or greater than $50,000,000 (or the equivalent of such amount in the relevant currency of payment, determined as of the date of the closing of such facility based on the exchange rate of such other currency), such Unsecured Debt shall include any Material Covenant that is not included herein or that is more restrictive than the analogous provision contained herein (any such covenant, together with any related definitions (including any components of such definitions), an “Additional or More Restrictive Covenant”), then this Agreement, unless waived in writing by the
Majority Lenders and without any further action on the part of the Borrower, any Guarantor, the Administrative Agent and the Lenders, shall be deemed to be automatically amended to include such Additional or More Restrictive Covenant as of such closing date. However, if the applicable Unsecured Debt is subsequently amended, modified or otherwise no longer in effect, and as a result such Additional or More Restrictive Covenant is modified, excluded or terminated, then such Additional or More Restrictive Covenant shall automatically be modified, excluded or terminated in the same manner in this Agreement
ARTICLE VINegative Covenants
Section 6.01 Liens. The Property Parties will not create, incur, assume or permit to exist any Lien on any Unencumbered Pool Property now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:
Section 6.02 Fundamental Changes. Neither the Parent, the Borrower nor any other Property Party will:
Section 6.03 [Reserved].
Section 6.04 Hedging Agreements. Neither the Parent nor the Borrower will, and will not permit any of its Subsidiaries to, enter into any Hedging Agreement, other than the existing Hedging Agreement entered into with the Administrative Agent and other Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct of its business or the management of its liabilities.
Section 6.05 Restricted Payments. The Parent and the Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, during any calendar quarter, any Restricted Payment, except that any of the following Restricted Payments are permitted: (a) Restricted Payments by the Parent required to comply with Section 5.15(d) and avoid any and all income or excise Taxes; (b) provided no Event of Default shall have occurred that is continuing, Restricted Payments made by the Parent or the Borrower to its equity
holders, including, but not limited to (i) with respect to the existing rights, preferences or privileges of any class of equity securities currently outstanding, or (ii) in connection with the existing redemption and dividend reinvestment plans; and (c) Restricted Payments declared and paid ratably by Subsidiaries to the Borrower and/or Parent with respect to their capital stock or equity interest; provided that notwithstanding the foregoing, the Parent may issue warrants, options and other equity securities evidencing ownership interests and rights in the Parent; provided, further, the Parent, the Borrower or any Subsidiary may declare and make dividend payments or other distributions, and may make other Restricted Payments, in each case, payable solely in the common stock or other common Equity Interests of such Person or of the Parent (together with cash in lieu of any fractional share or other unit of such common stock or common Equity Interest).
Section 6.06 Transactions with Affiliates. The Parent will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other material transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Parent or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Parent and its wholly owned Subsidiaries not involving any other Affiliate, (c) any Restricted Payment permitted by Section 6.05, (d) any loan or advance or any purchase or acquisition of assets permitted by Section 6.03(f), (e) arrangements entered into with respect to any sponsorship and fund advisory services of the Parent, the Borrower or any Subsidiary of the Parent, including, for the avoidance of doubt, any transaction with an Affiliate that would otherwise be permitted pursuant to Sections 6.02 or 6.03, (f), payment of distributions paid to any Credit Party derived from any and all property insurance premiums made by tenants in storage facilities managed, operated or owned by any Credit Party and (g) any matter, transaction or arrangement disclosed in any report, proxy statement or other material filed by the Parent, the Borrower or any Subsidiary of the Parent with the Securities and Exchange Commission prior to the Effective Date.
Section 6.07 Parent Negative Covenants. The Parent will not (a) directly own any Property other than the ownership interests in the Borrower, and other assets (other than cash and Cash Equivalents) with no more than $20,000,000.00 in value; or (b) give or allow any Lien on the ownership interests of the Borrower (other than Permitted Encumbrances).
Section 6.08 Restrictive Agreements. The Borrower will not, and will not permit any of the Subsidiary Guarantors to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary Guarantor to create, incur or permit to exist any Lien (other than Permitted Encumbrances) upon any of its property or assets, or (b) the ability of any Subsidiary Guarantor to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary Guarantor or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement or as otherwise approved by the Administrative Agent, (ii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary Guarantor pending such sale, provided such restrictions and conditions apply only to the Subsidiary Guarantor that is to be sold and such sale is permitted hereunder, (iii) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured Indebtedness or Liens permitted by this Agreement, if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (iv) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof and (v) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to any merger or similar transaction.
Section 6.09 Indebtedness. Neither the Borrower, the Guarantor nor any Property Party shall, without the prior written consent of the Administrative Agent, create, incur, assume, guarantee or be or remain liable, contingently or otherwise with respect to any Indebtedness, except: (a) Indebtedness under this Agreement; (b) Indebtedness to Administrative Agent; (c) Indebtedness under any Hedging Obligations or any Hedging Agreements permitted by Section 6.04 hereof, (d) Indebtedness of the Borrower or the Parent whose recourse is solely for so-called “bad-boy” acts, including without limitation, (i) failure to account for a tenant’s security deposits, if any, for rent or any other payment collected by a borrower from a tenant under a lease, all in accordance with the provisions of any applicable loan documents, (ii) fraud or a material misrepresentation made by a Subsidiary or Guarantor, or the holders of beneficial or ownership interests in a Subsidiary or any Guarantor, in connection with the financing evidenced by the applicable loan documents; (iii) any attempt by a Subsidiary or any Guarantor to divert or otherwise cause to be diverted any amounts payable to the applicable lender in accordance with the applicable loan documents; (iv) the misappropriation or misapplication of any insurance proceeds or condemnation awards relating to an Unencumbered Pool Property; (v) voluntary or involuntary bankruptcy by a Subsidiary or any Guarantor; and (vi) any environmental matter(s) affecting any Property which is introduced or caused by a Subsidiary or any Guarantor or any holder of a beneficial or ownership interest in a Subsidiary or any Guarantor; (e) Indebtedness of the Borrower and/or the Parent provided that they shall remain in compliance with the provisions of Section 5.01 and Section 5.02 after giving effect to the incurrence of such Indebtedness; (f) Indebtedness for trade payables and operating expenses incurred in the ordinary course of business; (g) Indebtedness under any standard environmental indemnity; and (h) Indebtedness under any Reference Debt. Nothing contained herein shall be deemed to prohibit or prevent a Subsidiary of the Parent or of the Borrower which is not a Property Party from assuming or incurring any Indebtedness in connection with any investment allowed under Section 6.03 above. The Borrower shall use its best efforts to cause all future non-recourse carve-out guarantees and standard environmental indemnities on first mortgage or other property-related loans incurred by Subsidiaries to be provided by the Parent, but in no event shall any such guaranty or indemnity be provided by any Property Party other than the Borrower.
ARTICLE VIIEvents of Default
ARTICLE VIIIThe Administrative Agent
ARTICLE IXMiscellaneous
Section 9.01 Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:
Section 9.02 Waivers; Amendments.
Section 9.03 Expenses; Indemnity; Damage Waiver.
Section 9.04 Successors and Assigns.
Section 9.05 Survival. All covenants, agreements, representations and warranties made by the Borrower and each other Credit Party herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank, or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16, 2.17(f) and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.
Section 9.06 Counterparts; Integration; Effectiveness; Joint and Several.
Section 9.07 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 9.08 Right of Setoff. If an Event of Default shall have occurred that is continuing, each Lender, the Issuing Bank, and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits of any Borrower (general or special, time or demand, provisional or final), at any time held and other obligations at any time owing by such Lender, the Issuing Bank, or Affiliate to or for the credit or the account of a Credit Party against any of and all the obligations of the Credit Party now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender or the Issuing Bank, as applicable, shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender and the Issuing Bank agrees promptly to notify the Borrower after any such setoff and application made by such Lender or the Issuing Bank, as applicable, provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender and the Issuing Bank under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender or the Issuing Bank may have.
Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
Section 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 9.12 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in (other than a competitor of the Borrower or Guarantor), any of its rights or obligations under this Agreement; provided that such prospective assignee or participant shall agree to destroy or return all such Information if it does not become a Lender or Participant hereunder, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from any Credit Party relating to the Credit Party or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank, or any Lender on a nonconfidential basis prior to disclosure by any Credit Party or subsequently becomes publicly available other than as a result of a disclosure of such information by the Administrative Agent, the Issuing Bank, or any Lender; provided that, in the case of information received from any Credit Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Section 9.13 Interest Rate Limitation. If at any time there exists a maximum rate of interest which may be contracted for, charged, taken, received or reserved by the Lenders in accordance with applicable law (the “Maximum Rate”), then notwithstanding anything herein to the contrary, at any time the interest applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed such Maximum Rate, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been paid in respect of such Loan but were not payable as result of the operation of this Section shall be cumulated and the interest and Charges payable to the Lenders in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Overnight Rate to the date of repayment, shall have been received by the Lenders. If, for any reason whatsoever, the Charges paid or received on the Loans produces a rate which exceeds the Maximum Rate, the Lenders shall credit against the principal of the Loans (or, if such indebtedness shall have been paid in full, shall refund to the payor of such Charges) such portion of said Charges as shall be necessary to cause the interest paid on the Loans to produce a rate equal to the Maximum Rate. All sums paid or agreed to be paid to the holders of the Loans
for the use, forbearance or detention of the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread in equal parts throughout the full term of this Agreement, so that the interest rate is uniform throughout the full term of this Agreement. The provisions of this Section shall control all agreements, whether now or hereafter existing and whether written or oral, between the parties hereto. Without notice to the Borrower or any other person or entity, the Maximum Rate, if any, shall automatically fluctuate upward and downward as and in the amount by which such maximum nonusurious rate of interest permitted by applicable law fluctuates.
Section 9.14 USA PATRIOT Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of the Credit Party and other information that will allow such Lender to identify the Credit Party in accordance with the PATRIOT Act. As requested by any Lender, any Credit Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Credit Party.
Section 9.15 Fiduciary Duty/No Conflicts.
Section 9.16 ERISA Representations.
Section 9.17 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guaranty, mortgage, or otherwise, for any Hedging Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as
follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
Section 9.18 Erroneous Payments.
Section 9.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under Applicable Law). For the avoidance of doubt, all of the Borrowers’ obligations under this Section 9.19 shall survive termination of the Commitments and repayment of all other Obligations hereunder.