Exhibit 10.1

August 1, 2006

Tedd D. Towsley
4558 Woodbridge Lane
Brecksville, OH 44141

Dear Tedd:

Reference is made to that certain Employment Agreement (the “Employment
Agreement”) dated October 27, 2004, by and between you and U-Store-It Trust (the
“Company”). Pursuant to Section 5.2 of the Employment Agreement, the Company
hereby terminates your employment, effective as of August 4, 2006. For purposes
of the Employment Agreement, your termination will be treated as a termination
by the Company without Cause. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed to them in the Employment
Agreement.

This letter agreement (the “Separation Agreement”) confirms the understanding
reached by you and the Company with respect to your termination of employment
with the Company. For purposes of this Separation Agreement, “you” is defined to
include you as an individual and your spouse, any and all of your heirs,
successors, assigns, agents, representatives, attorneys and all other affiliated
and related individuals; the “Company” is defined to include all of the
Company’s present, former and future affiliates, parents, holding companies,
subsidiaries, directors, trustees, officers, shareholders, representatives,
employees, insurers, successors, agents, attorneys, assigns, heirs,
beneficiaries, personal representatives, executors, administrators and any and
all persons acting by, through, under or in concert with any of them. Please
review this Separation Agreement carefully to make sure you are in complete
agreement.

In consideration of the execution of this Separation Agreement, and for other
good and valuable consideration, you and the Company hereby agree as follows:

1. Effective Date of the Termination. Your termination will be effective on
August 4, 2006, and pursuant to Section 5.2 of the Employment Agreement, the
Employment Agreement shall on that date be terminated. Except as otherwise set
forth in this Separation Agreement and the terms and conditions of the
Employment Agreement, you have no further rights under the Employment Agreement.

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2. Officer Status. You will no longer be an officer of the Company or of any of
its direct or indirect subsidiaries or affiliates. You will not have, and will
not hold yourself out as having, authority to bind the Company in any manner.

3. 2006 Bonus. Pursuant to Section 5.2 of the Employment Agreement, the Company
will make a cash payment to you of $79,890, which represents a pro rated amount
of your target annual bonus for your service during 2006 through the termination
of your employment. In lieu of making this bonus payment at the time that the
Company would ordinarily pay bonuses to its executive officers, the Company
agrees to accelerate the payment of your bonus and make this payment to you on
the Effective Date of this Separation Agreement as described in Section 13
hereof.

4. Severance. Pursuant to Section 5.2 of the Employment Agreement, the Company
will make a cash payment to you of $800,000, which represents two times the sum
of your current Annual Salary and your Average Annual Bonus. The Company agrees
to make this payment to you on the Effective Date of this Separation Agreement
or no later than thirty (30) days after the date of your termination, whichever
first occurs.

5. Equity Awards. All Equity Awards held by you as of the date of your
termination will become fully vested and exercisable. Your right to exercise
outstanding stock options is controlled by the terms of the option agreements.

6. Benefits.

(a) Vacation. Your vacation accrual will cease on the date of your termination.
Your accrued but unused vacation will be paid to you together with your final
payroll check.

(b) Medical, Prescription and Dental Benefits. Pursuant to Section 5.2 of the
Employment Agreement, except as otherwise provided therein, for eighteen
(18) months after your termination, the Company will continue medical,
prescription and dental benefits for you and your family at least equal to those
which would have been provided in accordance with the welfare benefit plans,
practices, policies and programs provided by the Company to the extent
applicable generally to other peer employees of the Company. You agree that for
eighteen (18) months after your termination, you will notify the Company if you
become reemployed by another employer and eligible to receive medical,
prescription and dental benefits.

(c) Defined Contribution Plan. The payout of your 401(k) Plan is governed by the
terms of the Plan. Please refer to your summary plan description for a
discussion of these benefits.

 
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(d) Company Car. You will deliver your company car and car keys within two weeks
of the date of this Separation Agreement.

7. Confidentiality; Return of Company Property; Cooperation.

(a) Confidential Company Information. Pursuant to Section 6.1 of the Employment
Agreement, you agree to keep secret and retain in strictest confidence, and not
to use for your personal benefit or the benefit of others or directly or
indirectly disclose, any Confidential Company Information.

(b) Company Documents and Proprietary Information. You agree to return to the
Company prior to your termination all memoranda, notes, lists, records (paper
and electronic), property and any other tangible product and documents (and all
copies thereof and electronic files containing any and all such information,
records, dates and/or documents) made, produced or compiled by you or made
available to you concerning the businesses and investments of the Company. You
further agree that you will not remove from the Company facilities any material
that contains Company confidential or proprietary information.

(c) Company Property; Credit Cards. You agree to return your Company-provided
credit cards immediately. You will also return any other Company property in
your possession.

(d) E-Mail Account; Computer; Blackberry. Your access to the Company’s email
services and other computer systems will cease effective August 4, 2006 and you
will return your laptop computer, blackberry and Company cell phone.

(e) Cooperation.

(i) You and the Company each mutually agree not to disparage, attempt to
discredit, or otherwise call into disrepute the other or any of the other’s
products or services in any manner that would damage the business or reputation
of the other. In the event you are required by law to testify in any matter
concerning the Company, you agree that you will testify truthfully. Upon any
inquiry of the corporate Human Resource department regarding your employment,
the Company will supply only the following information: dates of employment;
title on separation; ending salary; and advise that you were terminated without
cause from the Company.

(ii) You agree not to assist any party other than the Company in any litigation
or investigation against the Company, except as required by law. You further
agree that if you believe any

 
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such action is required by law, you will first afford the Company the
opportunity to raise and obtain a ruling on any claim of attorney-client, work
product, or other privilege or any other contractual or other defense that may
be applicable.

(iii) You agree to provide your reasonable cooperation to the Company in any
future lawsuit, administrative proceeding or other judicial, administrative or
legislative matter in which your assistance may be needed by the Company. To the
extent that you provide such cooperation, the Company shall pay all of your
reasonable out-of-pocket expenses incurred thereby.

(iv) You acknowledge and warrant that you are not aware of, or have fully
disclosed to the Company, any matters for which you were responsible or came to
your attention as an employee of the Company that might give rise to any claim
or cause of action against the Company.

(f) Other Agreements. You acknowledge and agree that, except as set forth in
this Separation Agreement, no modifications have been made to the Employment
Agreement or any noncompetition, nonsolicitation, nondisclosure or
confidentiality provisions in any other agreement between you and the Company.

8. Release.

(a) You hereby fully and forever release and discharge the Company of and from
any and all claims which you may have had, or now have, up to the date of this
Separation Agreement, whether in law or in equity, civil or criminal, vested or
contingent, before any federal, state, local or private court, agency,
arbitrator or other entity, whether for damages, wages, severance pay, front
pay, back pay, attorneys’ fees, costs, expenses and/or any other relief or
remedy under any contract and/or federal, state or local law, ordinance or
regulation, including, but not limited to, laws or regulations covering
unemployment insurance, benefits, workers’ compensation, industrial accidents,
the National Labor Relations Act, as amended (29 U.S.C. §141 et seq. and 29
U.S.C. §151 et seq.), Title VII of the Civil Rights Act of 1964, and the Civil
Rights Act of

 
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1991 (42 U.S.C. §2000e et seq.), Sections 1981 through 1988 of Title 42 of the
United States Code, Employee Retirement Income Security Act of 1974, as amended
(29 U.S.C. §1001 et seq.), the Immigration Reform and Control Act (8 U.S.C.
§1101 et seq.), the Americans with Disabilities Act of 1990 (42 U.S.C. §12101 et
seq.), the Age Discrimination in Employment Act of 1967, as amended by the Older
Workers Benefit Protection Act (29 U.S.C. §621 et seq.), the Fair Labor
Standards Act, as amended (29 U.S.C. §201 et seq.), the Occupational Safety and
Health Act, as amended (29 U.S.C. 651 et seq.), the Family and Medical Leave Act
(29 U.S.C. §2601 et seq.), the Uniformed Services Employment and Reemployment
Rights Act (43 U.S.C. §4301 et seq.), and the Sarbanes-Oxley Act (18 U.S.C.
§1514A et seq.). You further waive and release any and all claims or demands
arising under state or local law (e.g., Ohio Revised Code §4112.01 et seq.,
§4113.52 et seq., §4123.01 et seq., §4123.90, et seq. etc.) of like or similar
import, including but not limited to, any and all common law claims including,
but not limited to, breach of oral, express or implied contract, promissory
estoppel, wrongful discharge, violation of public policy, and any and all claims
of interference with lawful business relationships, intentional and/or negligent
infliction of emotional distress, loss of consortium, any claims for personal
injury, any claims for failing to obtain employment with any other person or the
Company, and any other claims under any other tort or contractual, common law or
statutory theory that you may have had or now has up to the date of this
Separation Agreement. You further agree that you have received, without incident
or interference, any and all rights afforded under the Family and Medical Leave
Act (29 U.S.C. §2601 et seq.) and the Uniformed Services Employment and
Reemployment Rights Act (43 U.S.C. §4301 et seq.).

(b) You agree that by signing this Separation Agreement, you are also knowingly
and voluntarily waiving any and all claims or causes of action you may have
under the Federal Age Discrimination in Employment Act of 1967 (29U.S.C. 521 et.
seq.) (“ADEA”), as amended, and applicable state laws.

(c) You acknowledge that you have not initiated a claim, lawsuit, charge or
discrimination or any other legal proceeding against the Company. You further
agree that although you retain the right to file a charge or complaint with or
voluntarily participate in an investigation by an administrative agency, you
agree to waive any relief from any such administrative agency.

(d) Except for a breach of this Separation Agreement, you agree to waive any
rights you would have to pursue any of the claims described herein against the
Company through U-Solve-It, or through any court; and further agree not to bring
any suit or action in any court against any of the beneficiaries of this release
arising out of or relating to the subject matter of this release.

 
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(e) You further agree never to file or otherwise initiate a claim, lawsuit or
any other legal proceeding against the Company for any conduct which occurred up
to and including the date of this Separation Agreement. If any such court
assumes jurisdiction over any such complaint against the Company, you will
direct that court to withdraw from or dismiss the matter. You further represent
that you will not encourage, solicit, cooperate or participate in the
investigation or prosecution of any action against the Company unless you are
specifically subpoenaed to appear in such proceedings. Finally, you agree that
you will not encourage, solicit or assist any former, current or future employee
of the Company to pursue any claim(s) against the Company and will not discuss
in any way with any former, current or future employees of the Company the
pursuit of such claims. In the event of a breach of this provision, you shall be
liable for all costs, including attorneys’ fees, incurred by the Company in
defending such claims.

9. Valid Consideration. The Company and you hereby acknowledge and agree that
the terms of this Separation Agreement contain good and valuable consideration,
other than the fulfillment of the Company’s obligations as set forth in
Section 5.2 of the Employment Agreement, and as such, this Separation Agreement
contains valid consideration for a binding agreement between you and the
Company.

10. Miscellaneous. You acknowledge and agree that:

(a) Breach of your obligations under this Separation Agreement, including but
not limited to those specified under Section 7 hereof, or of any of the
provisions of Section 6 of the Employment Agreement (the “Restrictive
Covenants”) would result in irreparable injury and damage for which money
damages would not provide an adequate remedy. Therefore, if you breach any of
the Restrictive Covenants, the Company shall have the right and remedy to
specifically enforce (without posting bond and without the need to prove
damages) the Restrictive Covenants by any court having equity jurisdiction,
including, without limitation, the right to an entry against you of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such
covenants. This right and remedy shall be in addition to, and not in lieu of,
any other rights and remedies available to the Company under law or in equity
(including, without limitation, the recovery of damages).

(b) The Company’s obligation to pay money pursuant to this Separation Agreement
are merely those of an unfunded and unsecured promise to pay money in the
future, and any and all of the Company’s assets will be and will remain the
general, unpledged and unrestricted assets of the Company;

 
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(c) You may not borrow against the Company’s obligations to pay money to you
pursuant to this Separation Agreement, nor may you assign or otherwise transfer
the Company’s obligations hereunder, or any interest in them, and any attempt to
do so will be ineffective;

(d) You will not seek employment or re-employment with the Company at any time
in the future. If you do seek re-employment with the Company, you agree and
understand that the Company will deny your employment and you recognize that the
Company shall have no obligation to consider your application given the terms of
this Separation Agreement.

(e) You acknowledge that by entering into this Separation Agreement, the Company
does not admit that it engaged in any wrongful or unlawful act or that it
violated any federal, state or local statute, law, ordinance or regulation. You
further acknowledge that the Company specifically denies that it engaged in any
wrongful or unlawful acts. This Separation Agreement extends to all claims of
every nature and kind whatsoever, whether known or unknown, suspected or
unsuspected, that exist or might exist at the time this Separation Agreement is
executed.

(f) It is understood that the terms of this Separation Agreement will be
governed by the laws of the State of Ohio regardless of where either party may
be domiciled.

(g) Any payments made by the Company hereunder are subject to applicable
federal, state and local tax withholding.

(h) In the event that any provision of this Separation Agreement is held to be
void, voidable, or unenforceable, the remaining portions hereof will remain in
full force and effect.

(i) You may wish to consult with your financial or tax advisor with regard to
the tax implications of any benefits. You acknowledge and agree that no
representations or warranties have been made to you with regard to the tax
consequences of any payment provided for under this Separation Agreement.

(j) In the event either you or the Company breaches this Separation Agreement
and the other party brings an action to enforce this Separation Agreement, the
party who is finally adjudged to be prevailing shall be entitled to reasonable
attorney’s fees. You agree that you are bound by the Company’s mandatory
alternative dispute resolution program called U-Solve-It.

11. Entire Agreement. Except as set forth in this Separation Agreement, you and
the Company agree that this Separation Agreement constitutes the entire
agreement and supersedes all prior agreement and understandings, whether oral or

 
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written, between you and the Company with respect to the subject matter of this
Separation Agreement. You agree that the obligations of Section 8 have been
separately negotiated and shall survive the expiration of termination of this
Separation Agreement.

12. Counsel. You understand and acknowledge that you have the right to consult
an attorney (at your personal expense) regarding the terms of this Separation
Agreement prior to your signing this Separation Agreement, that you have been
given ample time to do so, and that whether or not you have done so is totally
your choice. As additional consideration for this Separation Agreement, the
Company agrees to reimburse you for such legal fees incurred by you up to
$4,000.

13. Opportunity to Revoke. You acknowledge that you were given this Separation
Agreement on August 1, 2006, that your reviewed it, and that if you so choose,
you have twenty-one (21) calendar days to consider it prior to executing it. If
after thoughtful consideration, you are in full agreement with and understand
the terms and conditions contained in this Separation Agreement (including the
release of all claims contained in Section 8 of this Separation Agreement), if
you agree that you will be bound by it, and if you agree that it represents your
free will and choice, please indicate such agreement by signing this Separation
Agreement, dating it, and returning it to me. Please keep a copy of the signed
Separation Agreement for your files.

The Company will hold the executed Separation Agreement for seven (7) calendar
days following your execution thereof during which time you may revoke it by
notifying me in writing by the seventh (7th) day. In the absence of receipt of
your written revocation within the 7-day period, this Separation Agreement will
become effective on the eight (8th) day after your execution of this Separation
Agreement (the “Effective Date”).

14. Implementation. Unless directed otherwise, you should address any questions
about the implementation of this Separation Agreement to me.

Sincerely,

Dean Jernigan

Dean Jernigan
President and Chief Executive Officer

ACCEPTED AND AGREED TO
this 7 day of      August     , 2006

Tedd D. Towsley
Tedd D. Towsley

 
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