Exhibit 10.2

SECOND AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

OF

STRATEGIC STORAGE OPERATING PARTNERSHIP, L.P.

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SECOND AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

OF

STRATEGIC STORAGE OPERATING PARTNERSHIP, L.P.

TABLE OF CONTENTS

 

                         Page   ARTICLE 1  

DEFINED TERMS

     1    ARTICLE 2  

PARTNERSHIP FORMATION AND IDENTIFICATION

     14      2.1  

Formation

     14      2.2  

Name, Office and Registered Agent

     14      2.3  

Partners

     14      2.4  

Term and Dissolution

     14      2.5  

Filing of Certificate and Perfection of Limited Partnership

     15      2.6  

Certificates Describing Partnership Units

     15    ARTICLE 3  

BUSINESS OF THE PARTNERSHIP

     15    ARTICLE 4  

CAPITAL CONTRIBUTIONS AND ACCOUNTS

     16      4.1  

Capital Contributions

     16      4.2  

Additional Capital Contributions and Issuances of Additional Partnership
Interests

     16      4.3  

Additional Funding

     18      4.4  

Capital Accounts

     18      4.5  

Percentage Interests

     18      4.6  

No Interest on Contributions

     18      4.7  

Return of Capital Contributions

     18      4.8  

No Third Party Beneficiary

     18    ARTICLE 5  

PROFITS AND LOSSES; DISTRIBUTIONS

     19      5.1  

Allocation of Profit and Loss

     19      5.2  

Distributions

     21      5.3  

REIT Distribution Requirements

     25      5.4  

No Right to Distributions In Kind

     25      5.5  

Limitations of Return of Capital Contributions

     26      5.6  

Distributions Upon Liquidation

     26      5.7  

Substantial Economic Effect

     26    ARTICLE 6  

RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER

     26      6.1  

Management of the Partnership

     26      6.2  

Delegation of Authority

     28      6.3  

Indemnification and Exculpation of Indemnitees

     28      6.4  

Liability of the General Partner

     30      6.5  

Reimbursement of General Partner

     31      6.6  

Outside Activities

     31      6.7  

Employment or Retention of Affiliates

     31      6.8  

General Partner Participation

     32      6.9  

Title to Partnership Assets

     32      6.10  

Miscellaneous

     32   

 

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ARTICLE 7  

CHANGES IN GENERAL PARTNER

     33     

7.1

 

Transfer of the General Partner’s Partnership Interest

     33     

7.2

 

Admission of a Substitute or Additional General Partner

     34     

7.3

 

Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner

     35     

7.4

 

Removal of a General Partner

     35   

ARTICLE 8

 

RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS

     36     

8.1

 

Management of the Partnership

     36     

8.2

 

Power of Attorney

     36     

8.3

 

Limitation on Liability of Limited Partners

     36     

8.4

 

Exchange Right

     36   

ARTICLE 9

 

TRANSFERS OF LIMITED PARTNERSHIP INTERESTS

     38     

9.1

 

Purchase for Investment

     38     

9.2

 

Restrictions on Transfer of Limited Partnership Interests

     38     

9.3

 

Admission of Substitute Limited Partner

     39     

9.4

 

Rights of Assignees of Partnership Interests

     40     

9.5

 

Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner

     41     

9.6

 

Joint Ownership of Interests

     41     

9.7

 

Redemption of Partnership Units

     41   

ARTICLE 10

 

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

     41     

10.1

 

Books and Records

     41     

10.2

 

Custody of Partnership Funds; Bank Accounts

     41     

10.3

 

Fiscal and Taxable Year

     42     

10.4

 

Annual Tax Information and Report

     42     

10.5

 

Tax Matters Partner; Tax Elections; Special Basis Adjustments

     42     

10.6

 

Reports Made Available to Limited Partners

     42   

ARTICLE 11

 

AMENDMENT OF AGREEMENT; MERGER

     43   

ARTICLE 12

 

GENERAL PROVISIONS

     43     

12.1

 

Notices

     43     

12.2

 

Survival of Rights

     43     

12.3

 

Additional Documents

     44     

12.4

 

Severability

     44     

12.5

 

Entire Agreement

     44     

12.6

 

Pronouns and Plurals

     44     

12.7

 

Headings

     44     

12.8

 

Counterparts

     44     

12.9

 

Governing Law

     44    EXHIBIT A      

GENERAL PARTNER AND ORIGINAL LIMITED PARTNER, CAPITAL CONTRIBUTIONS AND
PERCENTAGE INTERESTS

     46    EXHIBIT B      

NOTICE OF EXERCISE OF EXCHANGE RIGHT

     47   

 

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SECOND AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

OF

STRATEGIC STORAGE OPERATING PARTNERSHIP, L.P.

Strategic Storage Operating Partnership, L.P. (the “Partnership”) was formed as
a limited partnership under the laws of the State of Delaware, pursuant to a
Certificate of Limited Partnership filed with the Office of the Secretary of
State of the State of Delaware on August 14, 2007. The First Amended and
Restated Limited Partnership Agreement was entered into effective as of
March 17, 2008. This Second Amended and Restated Limited Partnership Agreement
(“Agreement”) is entered into effective as of March 28, 2014 among Strategic
Storage Trust, Inc., a Maryland corporation (the “General Partner”), the
Original Limited Partner, the Special Limited Partners and the Limited Partners
set forth on Exhibit A hereto, and such additional Limited Partners party hereto
from time to time. Capitalized terms used herein but not otherwise defined shall
have the meanings given them in Article 1.

NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between
the parties hereto, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

ARTICLE 1

DEFINED TERMS

The following defined terms used in this Agreement shall have the meanings
specified below:

Act means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended from time to time.

Additional Funds has the meaning set forth in Section 4.3.

Additional Securities means any additional REIT Shares (other than REIT Shares
issued in connection with an exchange pursuant to Section 8.4 hereof) or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase REIT Shares, as set forth in Section 4.2(a)(ii).

Administrative Expenses means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the General Partner, including any salaries or other payments to
directors, officers or employees of the General Partner, and any accounting and
legal expenses of the General Partner, which expenses, the Partners have agreed,
are expenses of the Partnership and not the General Partner, and (iii) to the
extent not included in clause (ii) above, REIT Expenses; provided, however, that
Administrative Expenses shall not include any administrative costs and expenses
incurred by the General Partner that are attributable to Properties or
partnership interests in a Subsidiary Partnership (other than this Partnership)
that are owned by the General Partner directly.

Advisor or Advisors means the Person or Persons, if any, appointed, employed or
contracted with by the General Partner and responsible for directing or
performing the day-to-day business affairs of the General Partner, including any
Person to whom the Advisor subcontracts substantially all of such functions.

Advisory Agreement means the agreement among the Partnership, the General
Partner and the Advisor pursuant to which the Advisor will direct or perform the
day-to-day business affairs of the General Partner and the Partnership.

 

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Affiliate or Affiliated means, as to any other Person, any of the following:

(a) any Person directly or indirectly owning, controlling or holding, with power
to vote, 10% or more of the outstanding voting securities of such other Person;

(b) any Person 10% or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held, with power to vote, by such other
Person;

(c) any Person directly or indirectly controlling, controlled by or under common
control with such other Person;

(d) any executive officer, director, trustee or general partner of such other
Person; and

(e) any legal entity for which such Person acts as an executive officer,
director, trustee or general partner.

Agreed Value means the fair market value of a Partner’s non-cash Capital
Contribution as of the date of contribution as agreed to by such Partner and the
General Partner. The names and addresses of the General Partner and Original
Limited Partner, number of Partnership Units issued to each of them, and their
respective Capital Contributions as of the date of contribution is set forth on
Exhibit A.

Agreement means this Second Amended and Restated Limited Partnership Agreement,
as amended, modified supplemented or restated from time to time, as the context
requires.

Annual Distribution Cap means the maximum amount of annual cash distributions
that may be made to Limited Partners with respect to their Limited Partnership
Units of a designated class, including Class D Limited Partnership Units,
prorated for any period in which the applicable Unit is outstanding for less
than a full calendar year. The initial Annual Distribution Cap for each class of
Limited Partnership Units shall be stated in the definition of that specific
class herein. Commencing twenty-four (24) months after the applicable
contribution of a Property or Properties to the Partnership in exchange for
Partnership Units of a designated class, the General Partner shall determine the
Annual Distribution Cap for the applicable class of Limited Partnership Units in
accordance with the procedures set forth in the Master Contribution Agreement
relating to such Property or Properties contributed. Limited Partnership Units
issued but not designated as a specific class of Limited Partnership Unit shall
not be subject to any Annual Distribution Cap.

Appraised Value means value according to an appraisal made by an Independent
Appraiser.

Articles of Incorporation means the Articles of Amendment and Restatement of the
General Partner filed with the Maryland State Department of Assessments and
Taxation, as amended or restated from time to time.

Assets means the aggregate carrying value of GAAP assets including but not
limited to current, fixed, tangible and intangible assets, owned or held by, or
for the account of, the General Partner, whether directly or indirectly through
the Partnership or any Subsidiary, excluding Properties and net deferred
financing costs.

Book Value means, with respect to any Partnership asset, the asset’s adjusted
basis for federal income tax purposes, except that Book Values of all
Partnership assets shall be adjusted in the event of a revaluation of
Partnership property under Section 4.4 of this Agreement, in accordance with the
rules set forth in Section 1.704-1(b)(2)(iv)(f) and (g) of the Regulations.

 

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Capital Account has the meaning provided in Section 4.4 hereof.

Capital Contribution means the total amount of cash, cash equivalents, and the
Agreed Value of any Property or other asset (other than cash) contributed or
agreed to be contributed, as the context requires, to the Partnership by each
Partner pursuant to the terms of this Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.

Cash Amount means an amount of cash equal to the product of the Value of one
REIT Share and the REIT Shares Amount on the date of receipt by the General
Partner of a Notice of Exchange.

Certificate means any instrument or document that is required under the laws of
the State of Delaware, or any other jurisdiction in which the Partnership
conducts business, to be signed and sworn to by the Partners of the Partnership
(either by themselves or pursuant to the power-of-attorney granted to the
General Partner in Section 8.2 hereof) and filed for recording in the
appropriate public offices within the State of Delaware or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Delaware or such other
jurisdiction.

Class D Limited Partnership Unit means a Partnership Unit representing a Limited
Partnership Interest and having an initial Annual Distribution Cap of zero
percent (0%) multiplied by the combined Capital Contributions of Partners
contributed in exchange for the issuance of the Class D Limited Partnership
Units.

Code means the Internal Revenue Code of 1986, as amended, and as hereafter
amended from time to time. Reference to any particular provision of the Code
shall mean that provision in the Code at the date hereof and any successor
provision of the Code.

Common Stockholders means holders of REIT Shares.

Conversion Factor means 1.0, provided that in the event that the General Partner
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such date and, provided further, that in the event
that an entity other than an Affiliate of the General Partner shall become
General Partner pursuant to any merger, consolidation or combination of the
General Partner with or into another entity (the “Successor Entity”), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by the
number of shares of the Successor Entity into which one REIT Share is converted
pursuant to such merger, consolidation or combination, determined as of the date
of such merger, consolidation or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event; provided, however, that
if the General Partner receives a Notice of Exchange after the record date, but

 

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prior to the effective date of such dividend, distribution, subdivision or
combination, the Conversion Factor shall be determined as if the General Partner
had received the Notice of Exchange immediately prior to the record date for
such dividend, distribution, subdivision or combination.

Event of Bankruptcy as to any Person means the filing of a petition for relief
as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or
similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.

Exchange Amount means either the Cash Amount or the REIT Shares Amount, as
selected by the General Partner in its sole and absolute discretion pursuant to
Section 8.4(b) hereof.

Exchange Right has the meaning provided in Section 8.4(a) hereof.

Exchanging Partner has the meaning provided in Section 8.4(a) hereof.

Extraordinary Transaction means, whether in one or a series of transactions, the
transfer or other disposition, directly or indirectly, of all or substantially
all of the business or securities of the General Partner, whether by way of a
merger or consolidation, reorganization, recapitalization or restructuring,
tender or exchange offer, negotiated purchase, leveraged buyout or otherwise, or
any other extraordinary corporate transaction involving the General Partner,
excluding a Sale.

GAAP means generally accepted accounting principles consistently applied as used
in the United States.

General Partner means Strategic Storage Trust, Inc., a Maryland corporation, and
any Person who becomes a substitute or additional General Partner as provided
herein, and any of their successors as General Partner.

General Partnership Interest means a Partnership Interest held by the General
Partner that is a general partnership interest.

Indemnitee means (i) the General Partner or a director, officer or employee of
the General Partner or Partnership, (ii) the Advisor or a director, officer,
manager, member, employee of the Advisor or another agent of the Advisor if such
agent is an Affiliate of the Advisor and (iii) such other Persons (including
Affiliates of the General Partner, the Advisor or the Partnership) as the
General Partner may designate from time to time, in its sole and absolute
discretion.

Independent Appraiser means a person or entity, who is not an Affiliate of the
Advisor or the members of the board of directors of the General Partner, who is
engaged to a substantial extent in the business of rendering opinions regarding
the value of assets of the type held by the General Partner, and who is a
qualified appraiser of real estate as determined by the members of the board of
directors of the General Partner. Membership in a nationally recognized
appraisal society such as the American Institute of Real Estate Appraisers or
the Society of Real Estate Appraisers shall be conclusive evidence of such
qualification.

 

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Independent Director means a director of the General Partner who is not an
officer or employee of the General Partner and meets the requirements for
independence as defined by the General Partner’s Articles of Incorporation.

Joint Venture or Joint Ventures means those joint venture or general partnership
arrangements in which the General Partner or the Partnership is a co-venturer or
general partner which are established to acquire Properties.

Liabilities means the aggregate carrying value of GAAP liabilities owned or
incurred by, or for the account of, the General Partner, whether directly or
indirectly through the Partnership or any Subsidiary, including mortgage
indebtedness.

Limited Partner means any Person named as a Limited Partner on Exhibit A
attached hereto, and any Person who becomes a Substitute Limited Partner, in
such Person’s capacity as a Limited Partner in the Partnership.

Limited Partnership Interest means the ownership interest of a Limited Partner
in the Partnership at any particular time, including the right of such Limited
Partner to any and all benefits to which such Limited Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of such
Limited Partner to comply with all the provisions of this Agreement and of such
Act.

Listing means the approval of the REIT Shares for listing on a National
Securities Exchange. Upon Listing, the shares shall be deemed Listed.

Loss has the meaning provided in Section 5.1(f) hereof.

Market Value means the aggregate market value of all of the outstanding REIT
Shares, measured by taking the average closing price or average of bid and asked
price, as the case may be, during the consecutive 30-day period commencing one
hundred eighty (180) days following Listing.

National Securities Exchange means any securities exchange registered with the
SEC pursuant to Section 6 of the Securities Exchange Act of 1934, as amended.

Net Sale Proceeds means in the case of a transaction described in clause (a) of
the definition of Sale, the net proceeds of any such transaction less the amount
of all real estate commissions and closing costs paid by the Partnership. In the
case of a transaction described in clause (b) of such definition, Net Sale
Proceeds means the net proceeds of any such transaction less the amount of any
legal and other selling expenses incurred by the Partnership in connection with
such transaction. In the case of a transaction described in clause (c) of such
definition, Net Sale Proceeds means the net proceeds of any such transaction
actually distributed to the Partnership from the Joint Venture less any expenses
incurred by the Partnership in connection with such transaction. In the case of
a transaction or series of transactions described in clause (d) of the
definition of Sale, Net Sale Proceeds means the net proceeds of any such
transaction less the amount of all commissions and closing costs paid by the
Partnership. In the case of a transaction described in clause (e) of such
definition, Net Sale Proceeds means the net proceeds of any such transaction
less the amount of all selling costs and other expenses incurred by the
Partnership in connection with such transaction. Net Sale Proceeds shall also
include, in the case of any lease of a Property consisting of a building only,
any amounts from tenants, borrowers or lessees that the General Partner, as
general partner of the Partnership determines, in its discretion, to be
economically equivalent to the proceeds of a Sale. Net Sale Proceeds shall not
include any amounts used to repay outstanding indebtedness secured by the asset
disposed of in the sale.

 

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Notice of Exchange means the Notice of Exercise of Exchange Right substantially
in the form attached as Exhibit B hereto.

Offer has the meaning set forth in Section 7.1(b)(ii) hereof.

Offering means an offering of Stock that is either (a) registered with the SEC,
or (b) exempt from such registration, excluding Stock offered under any employee
benefit plan.

Original Limited Partner means the Limited Partner designated as “Original
Limited Partner” on Exhibit A hereto.

Partner means any General Partner, Limited Partner or Special Limited Partner.

Partner Nonrecourse Debt Minimum Gain has the meaning set forth in Regulations
Section 1.704-2(i). A Partner’s share of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Regulations Section 1.704-2(i)(5).

Partnership means Strategic Storage Operating Partnership, L.P., a Delaware
limited partnership.

Partnership Interest means an ownership interest in the Partnership held by a
Limited Partner, a Special Limited Partner or the General Partner and includes
any and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.

Partnership Minimum Gain has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner’s share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).

Partnership Record Date means the record date established by the General Partner
for the distribution of cash pursuant to Section 5.2 hereof, which record date
shall be the same as the record date established by the General Partner for a
distribution to its stockholders of some or all of its portion of such
distribution.

Partnership Unit means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder. The allocation of Partnership Units
among the Partners shall be as set forth on Exhibit A, as such Exhibit may be
amended from time to time.

Percentage Interest means the percentage ownership interest in the Partnership
of each Partner, as determined by dividing the Partnership Units owned by a
Partner by the total number of Partnership Units then outstanding.

Person means any individual, partnership, limited liability company,
corporation, joint venture, trust or other entity.

Profit has the meaning provided in Section 5.1(f) hereof.

 

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Property or Properties means the real properties or real estate investments
which are acquired by the General Partner either directly or through the
Partnership, Joint Ventures, partnerships or other entities.

Regulations means the Federal income tax regulations promulgated under the Code,
as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.

Regulatory Allocations has the meaning set forth in Section 5.1(i) hereof.

REIT means a real estate investment trust under Sections 856 through 860 of the
Code.

REIT Expenses means (i) costs and expenses relating to the formation and
continuity of existence and operation of the General Partner and any
Subsidiaries thereof (which Subsidiaries shall, for purposes hereof, be included
within the definition of General Partner), including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable to any
director, officer, or employee of the General Partner, (ii) costs and expenses
relating to any Offering and registration of securities by the General Partner
and all statements, reports, fees and expenses incidental thereto, including,
without limitation, underwriting discounts and sales commissions applicable to
any such Offering of securities, and any costs and expenses associated with any
claims made by any holders of such securities or any underwriters or placement
agents thereof, (iii) costs and expenses associated with any repurchase of any
securities by the General Partner, (iv) costs and expenses associated with the
preparation and filing of any periodic or other reports and communications by
the General Partner under federal, state or local laws or regulations, including
filings with the SEC, (v) costs and expenses associated with compliance by the
General Partner with laws, rules and regulations promulgated by any regulatory
body, including the SEC and any National Securities Exchange, (vi) costs and
expenses associated with any 401(k) plan, incentive plan, bonus plan or other
plan providing for compensation for the employees of the General Partner,
(vii) costs and expenses incurred by the General Partner relating to any issuing
or redemption of Partnership Interests, and (viii) all other operating or
administrative costs of the General Partner incurred in the ordinary course of
its business on behalf of or in connection with the Partnership.

REIT I means Self Storage REIT, LLC (formerly known as USA Self Storage REIT,
Inc.).

REIT I Distributions means any dividends or other distributions of money or
other property paid by REIT I or the General Partner to the REIT I Stockholders,
including distributions that may constitute a return of capital for federal
income tax purposes.

REIT I Invested Capital means the amount calculated by multiplying the total
number of shares of Stock purchased by REIT I Stockholders by (a) the offering
price for the Stock paid by such REIT I Stockholders in an Offering or (b) for
Stock not purchased in an Offering, the issue price for the Stock; in each case
reduced by any distributions attributable to Net Sale Proceeds from Sales of
REIT I Properties and any amounts paid by REIT I or the General Partner to
repurchase shares of Stock pursuant to a share redemption program.

REIT I Net Sale Proceeds means the Net Sale Proceeds received by the REIT I
Operating Partnership upon the sale of REIT I Properties as reduced by the
distribution by the REIT I Operating Partnership to the REIT I Special Limited
Partner.

REIT I Operating Partnership means USA Self Storage Operating Partnership, LP.

 

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REIT I Properties means the Properties originally purchased by REIT I.

REIT I Special Limited Partner means USA Self Storage Advisor LLC.

REIT I Stockholders means the Stockholders who purchased shares of Stock in a
private placement offering conducted by REIT I prior to merging with the General
Partner.

REIT II means Self Storage REIT II, LLC (formerly known as USA Self Storage REIT
II, Inc.).

REIT II Distributions means any dividends or other distributions of money or
other property paid by REIT II or the General Partner to the REIT II
Stockholders, including distributions that may constitute a return of capital
for federal income tax purposes.

REIT II Invested Capital means the amount calculated by multiplying the total
number of shares of Stock purchased by REIT II Stockholders by (a) the offering
price for the Stock paid by such REIT II Stockholders in an Offering or (b) for
Stock not purchased in an Offering, the issue price for the Stock; in each case
reduced by any distributions attributable to Net Sale Proceeds from Sales of
REIT II Properties and any amounts paid by REIT II or the General Partner to
repurchase shares of Stock pursuant to a share redemption program.

REIT II Net Sale Proceeds means the Net Sale Proceeds received by the REIT II
Operating Partnership upon the sale of REIT II Properties as reduced by the
distribution by the REIT II Operating Partnership to the REIT II Special Limited
Partner.

REIT II Operating Partnership means USA Self Storage Operating Partnership II,
L.P.

REIT II Properties means the Properties originally purchased by REIT II.

REIT II Special Limited Partner means USA SS REIT II Advisor, LLC.

REIT II Stockholders means the Stockholders who purchased shares of Stock in a
private placement offering conducted by REIT II prior to merging with the
General Partner.

REIT Share means a share of common stock, par value $0.001 per share, in the
General Partner (or successor entity, as the case may be), the terms and
conditions of which are set forth in the Articles of Incorporation.

REIT Shares Amount means a number of REIT Shares equal to the product of the
number of Partnership Units offered for exchange by an Exchanging Partner,
multiplied by the Conversion Factor as adjusted to and including the Specified
Exchange Date; provided that in the event the General Partner issues to all
holders of REIT Shares rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase REIT Shares,
or any other securities or property (collectively, the “rights”), and the rights
have not expired at the Specified Exchange Date, then the REIT Shares Amount
shall also include the rights issuable to a holder of the REIT Shares Amount of
REIT Shares on the record date fixed for purposes of determining the holders of
REIT Shares entitled to rights.

Sale or Sales means any transaction or series of transactions whereby: (a) the
Partnership sells, grants, transfers, conveys or relinquishes its ownership of
any Property or portion thereof, including the lease of any Property consisting
of the building only, and including any event with respect to any Property which
gives rise to a significant amount of insurance proceeds or condemnation awards;
(b) the Partnership sells, grants, transfers, conveys or relinquishes its
ownership of all or substantially all of the

 

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interest of the Partnership in any Joint Venture in which it is a co-venturer or
partner; (c) any Joint Venture in which the Partnership is a co-venturer or
partner sells, grants, transfers, conveys or relinquishes its ownership of any
Property or portion thereof, including any event with respect to any Property
which gives rise to insurance claims or condemnation awards; (d) the Partnership
sells, grants, conveys, or relinquishes its interest in any asset, or portion
thereof, including any event with respect to any asset which gives rise to a
significant amount of insurance proceeds or similar awards; or (e) the
Partnership sells or otherwise disposes of or distributes all of its assets in
liquidation of the Partnership.

SEC means the Securities and Exchange Commission.

Securities Act means the Securities Act of 1933, as amended.

Service means the Internal Revenue Service.

Special Limited Partners means the Persons designated as “Special Limited
Partners” on Exhibit A hereto, including the REIT I Special Limited Partner,
REIT II Special Limited Partner and SST Special Limited Partner.

Special Limited Partner Interest means the interest of the Special Limited
Partners in the Partnership representing its right as the holder of an interest
in distributions described in Section 5.2 hereof (and any corresponding
allocations of income, gain, loss and deduction under this Agreement).

Specified Exchange Date means the first business day of the month that is at
least 60 business days after the receipt by the General Partner of the Notice of
Exchange.

SST Distributions means any dividends or other distributions of money or other
property paid by the General Partner to the SST Stockholders, including
distributions that may constitute a return of capital for federal income tax
purposes.

SST Invested Capital means the amount calculated by multiplying the total number
of shares of Stock purchased by SST Stockholders, including shares of Stock
purchased by REIT I Stockholders and REIT II Stockholders pursuant to the
General Partner’s distribution reinvestment plan subsequent to the mergers of
REIT I and REIT II into the General Partner, by (a) the offering price for the
Stock paid by such Stockholders in an Offering or (b) for Stock not purchased in
an Offering, the issue price for the Stock; in each case reduced by any
distributions attributable to Net Sale Proceeds from Sales of SST Properties and
any amounts paid by the General Partner to repurchase shares of Stock pursuant
to a share redemption program.

SST Properties means all Properties, other than the REIT I Properties and REIT
II Properties.

SST Special Limited Partner means Strategic Storage Advisor, LLC.

SST Stockholders means all Stockholders, other than the REIT I Stockholders and
REIT II Stockholders.

Stock means shares of stock of the General Partner of any class or series,
including REIT Shares, preferred stock or shares-in-trust, and shares of stock
of REIT I and REIT II.

Stockholders means the registered holders of the General Partner’s Stock,
including the REIT I Stockholders, REIT II Stockholders and SST Stockholders.

 

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Stockholders’ 10% Return means, as of any date, an aggregate amount equal to a
10% cumulative, non-compounded, annual return on SST Invested Capital; provided,
however, that for purposes of calculating the Stockholders’ 10% Return, any
non-taxable stock dividend shall not be included as a SST Distribution; and
provided further that for purposes of determining the Stockholders’ 10% Return,
the return for each portion of the SST Invested Capital shall commence for
purposes of the calculation upon the issuance of the Stock issued in connection
with such capital.

Stockholders’ 8% Return means, as of any date, an aggregate amount equal to an
8% cumulative, non-compounded, annual return on SST Invested Capital; provided,
however, that for purposes of calculating the Stockholders’ 8% Return, any
non-taxable stock dividend shall not be included as a SST Distribution; and
provided further that for purposes of determining the Stockholders’ 8% Return,
the return for each portion of the SST Invested Capital shall commence for
purposes of the calculation upon the issuance of the Stock issued in connection
with such capital.

Stockholders’ 7% Return means, as of any date, an aggregate amount equal to a 7%
cumulative, non-compounded, annual return on REIT I Invested Capital and REIT II
Invested Capital, as applicable; provided, however, that for purposes of
calculating the Stockholders’ 7% Return, any non-taxable stock dividend shall
not be included as a REIT I Distribution or REIT II Distribution, as applicable;
and provided further that for purposes of determining the Stockholders’ 7%
Return, the return for each portion of the REIT I Invested Capital and REIT II
Invested Capital, as applicable, shall commence for purposes of the calculation
upon the issuance of the Stock issued in connection with such capital.

Stockholders’ 6% Return means, as of any date, an aggregate amount equal to a 6%
cumulative, non-compounded, annual return on SST Invested Capital; provided,
however, that for purposes of calculating the Stockholders’ 6% Return, any
non-taxable stock dividend shall not be included as a SST Distribution; and
provided further that for purposes of determining the Stockholders’ 6% Return,
the return for each portion of the SST Invested Capital shall commence for
purposes of the calculation upon the issuance of the Stock issued in connection
with such capital.

Subordinated Distribution Due Upon Extraordinary Transaction means the sum of
the following amounts:

(a) for the SST Special Limited Partner, an amount equal to:

(1) 5% of the amount by which (i) the Transaction Amount allocable to the SST
Stockholders by the General Partner pursuant to Section 5.2(e), plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) from
the General Partner’s inception until the date that Transaction Amount is
determined, exceeds (ii) the sum of (A) SST Invested Capital and (B) the total
SST Distributions required to be paid to SST Stockholders in order to pay the
Stockholders’ 6% Return or more but less than the Stockholders’ 8% Return from
inception through the date Transaction Amount is determined; and

(2) 10% of the amount by which (i) the Transaction Amount allocable to the SST
Stockholders by the General Partner pursuant to Section 5.2(e), plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) from
the General Partner’s inception until the date that Transaction Amount is
determined, exceeds (ii) the sum of (A) SST Invested Capital and (B) the total
SST Distributions required to be paid to SST Stockholders in order to pay the
Stockholders’ 8% Return or more but less than the Stockholders’ 10% Return from
inception through the date Transaction Amount is determined; and

 

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(3) 15% of the amount by which (i) the Transaction Amount allocable to the SST
Stockholders by the General Partner pursuant to Section 5.2(e), plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) from
the General Partner’s inception until the date that Transaction Amount is
determined, exceeds (ii) the sum of (A) SST Invested Capital and (B) the total
SST Distributions required to be paid to SST Stockholders in order to pay the
Stockholders’ 10% Return or more from inception through the date Transaction
Amount is determined; and

(b) for the REIT I Special Limited Partner, an amount payable by the REIT I
Operating Partnership equal to 15% of the amount by which (i) the Transaction
Amount allocable to the REIT I Stockholders by the General Partner pursuant to
Section 5.2(e), plus the total of all REIT I Distributions paid to REIT I
Stockholders (excluding any stock dividends and REIT I Distributions paid on
shares of Stock redeemed by REIT I or the General Partner) from inception until
the date that Transaction Amount is determined, exceeds (ii) the sum of (A) REIT
I Invested Capital and (B) the total REIT I Distributions required to be paid to
REIT I Stockholders in order to pay the Stockholders’ 7% Return or more from
inception through the date Transaction Amount is determined; and

(c) for the REIT II Special Limited Partner, an amount payable by the REIT II
Operating Partnership equal to 15% of the amount by which (i) the Transaction
Amount allocable to the REIT II Stockholders by the General Partner pursuant to
Section 5.2(e), plus the total of all REIT II Distributions paid to REIT II
Stockholders (excluding any stock dividends and REIT II Distributions paid on
shares of Stock redeemed by REIT II or the General Partner) from inception until
the date that Transaction Amount is determined, exceeds (ii) the sum of (A) REIT
II Invested Capital and (B) the total REIT II Distributions required to be paid
to REIT II Stockholders in order to pay the Stockholders’ 7% Return or more from
inception through the date Transaction Amount is determined.

Subordinated Distribution Due Upon Termination means the sum of the following
amounts:

(a) for the SST Special Limited Partner, an amount equal to:

(1) 5% of the amount, if any, by which (i) the Appraised Value of the SST
Properties, plus the Assets attributable to the SST Properties, less the
Liabilities attributable to the SST Properties, at the Termination Date, plus
total SST Distributions (excluding any stock dividend and SST Distributions paid
on REIT Shares redeemed by the General Partner pursuant to its share redemption
program) through the Termination Date exceeds (ii) the sum of SST Invested
Capital plus total SST Distributions required to be made to the SST Stockholders
in order to pay the Stockholders’ 6% Return or more but less than the
Stockholders’ 8% Return from inception through the Termination Date; and

(2) 10% of the amount, if any, by which (i) the Appraised Value of the SST
Properties, plus the Assets attributable to the SST Properties, less the
Liabilities attributable to the SST Properties, at the Termination Date, plus
total SST Distributions (excluding any stock dividend and SST Distributions paid
on REIT Shares redeemed by the General Partner pursuant to its share redemption
program) through the Termination Date exceeds (ii) the sum of SST Invested
Capital plus total SST Distributions required to be made to the SST Stockholders
in order to pay the Stockholders’ 8% Return or more but less than the
Stockholders’ 10% Return from inception through the Termination Date; and

(3) 15% of the amount, if any, by which (i) the Appraised Value of the SST
Properties, plus the Assets attributable to the SST Properties, less the
Liabilities attributable to the SST Properties, at the Termination Date, plus
total SST Distributions (excluding any stock dividend and SST Distributions paid
on REIT Shares redeemed by the General Partner pursuant to its share redemption
program) through the Termination Date exceeds (ii) the sum of SST Invested
Capital plus total SST Distributions required to be made to the SST Stockholders
in order to pay the Stockholders’ 10% Return or more from inception through the
Termination Date; and

 

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(b) for the REIT I Special Limited Partner, an amount payable by the REIT I
Operating Partnership equal to 15% of the amount, if any, by which (i) the
Appraised Value of the REIT I Properties, plus the Assets attributable to the
REIT I Properties, less the Liabilities attributable to the REIT I Properties,
at the Termination Date, plus total REIT I Distributions (excluding any stock
dividend and REIT I Distributions paid on shares of Stock redeemed by REIT I or
the General Partner pursuant to its share redemption program) through the
Termination Date exceeds (ii) the sum of REIT I Invested Capital plus total REIT
I Distributions required to be made to the REIT I Stockholders in order to pay
the Stockholders’ 7% Return or more from inception through the Termination Date;
and

(c) for the REIT II Special Limited Partner, an amount payable by the REIT II
Operating Partnership equal to 15% of the amount, if any, by which (i) the
Appraised Value of the REIT II Properties, plus the Assets attributable to the
REIT II Properties, less the Liabilities attributable to the REIT II Properties,
at the Termination Date, plus total REIT II Distributions (excluding any stock
dividend and REIT II Distributions paid on shares of Stock redeemed by REIT II
or the General Partner pursuant to its share redemption program) through the
Termination Date exceeds (ii) the sum of REIT II Invested Capital plus total
REIT II Distributions required to be made to the REIT II Stockholders in order
to pay the Stockholders’ 7% Return or more from inception through the
Termination Date.

Subordinated Incentive Listing Distribution means the sum of the following
amounts:

(a) for the SST Special Limited Partner, an amount equal to:

(1) 5% of the amount by which (i) the Market Value allocable to the SST
Stockholders by the General Partner pursuant to Section 5.2(c), plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) from
the General Partner’s inception until the date that Market Value is determined,
exceeds (ii) the sum of (A) SST Invested Capital and (B) the total SST
Distributions required to be paid to SST Stockholders in order to pay the
Stockholders’ 6% Return or more but less than the Stockholders’ 8% Return from
inception through the date Market Value is determined; and

(2) 10% of the amount by which (i) the Market Value allocable to the SST
Stockholders by the General Partner pursuant to Section 5.2(c), plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) from
the General Partner’s inception until the date that Market Value is determined,
exceeds (ii) the sum of (A) SST Invested Capital and (B) the total SST
Distributions required to be paid to SST Stockholders in order to pay the
Stockholders’ 8% Return or more but less than the Stockholders’ 10% Return from
inception through the date Market Value is determined; and

(3) 15% of the amount by which (i) the Market Value allocable to the SST
Stockholders by the General Partner pursuant to Section 5.2(c), plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) from
the General Partner’s inception until the date that Market Value is determined,
exceeds (ii) the sum of (A) SST Invested Capital and (B) the total SST
Distributions required to be paid to SST Stockholders in order to pay the
Stockholders’ 10% Return or more from inception through the date Market Value is
determined; and

(b) for the REIT I Special Limited Partner, an amount payable by the REIT I
Operating Partnership equal to 15% of the amount by which (i) the Market Value
allocable to the REIT I

 

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Stockholders by the General Partner pursuant to Section 5.2(c), plus the total
of all REIT I Distributions paid to REIT I Stockholders (excluding any stock
dividends and REIT I Distributions paid on shares of Stock redeemed by REIT I or
the General Partner) from inception until the date that Market Value is
determined, exceeds (ii) the sum of (A) REIT I Invested Capital and (B) the
total REIT I Distributions required to be paid to REIT I Stockholders in order
to pay the Stockholders’ 7% Return or more from inception through the date
Market Value is determined; and

(c) for the REIT II Special Limited Partner, an amount payable by the REIT II
Operating Partnership equal to 15% of the amount by which (i) the Market Value
allocable to the REIT II Stockholders by the General Partner pursuant to
Section 5.2(c), plus the total of all REIT II Distributions paid to REIT II
Stockholders (excluding any stock dividends and REIT II Distributions paid on
shares of Stock redeemed by REIT II or the General Partner) from inception until
the date that Market Value is determined, exceeds (ii) the sum of (A) REIT II
Invested Capital and (B) the total REIT II Distributions required to be paid to
REIT II Stockholders in order to pay the Stockholders’ 7% Return or more from
inception through the date Market Value is determined.

Subsidiary means, with respect to any Person, any corporation or other entity of
which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.

Subsidiary Partnership means any partnership of which the partnership interests
therein are owned by the General Partner or a direct or indirect subsidiary of
the General Partner.

Substitute Limited Partner means any Person admitted to the Partnership as a
Limited Partner pursuant to Section 9.3 hereof.

Successor Entity has the meaning provided in the definition of “Conversion
Factor” contained herein.

Surviving General Partner has the meaning set forth in Section 7.1(c) hereof.

Termination means the termination of the Advisory Agreement.

Termination Date means the date of termination of the Advisory Agreement.

Transaction has the meaning set forth in Section 7.1(b) hereof.

Transaction Amount means the aggregate value of all of the issued and
outstanding REIT Shares using a per share value equal to the per share value
paid to the Stockholders in an Extraordinary Transaction.

Transfer has the meaning set forth in Section 9.2(a) hereof.

Value means, with respect to REIT Shares, the average of the daily market price
of such REIT Share for the ten (10) consecutive trading days immediately
preceding the date of such valuation. The market price for each such trading day
shall be: (i) if the REIT Shares are Listed, the sale price, regular way, on
such day, or if no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, on such day; (ii) if the REIT Shares are not
Listed, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner; or
(iii) if the REIT Shares are not Listed and no such last reported sale price or
closing bid and asked prices are available, the average of

 

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the reported high bid and low asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or if there shall
be no bid and asked prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day (not more than ten
(10) days prior to the date in question) for which prices have been so reported;
provided that if there are no bid and asked prices reported during the ten
(10) days prior to the date in question, the value of the REIT Shares shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes rights that a holder
of REIT Shares would be entitled to receive, then the value of such rights shall
be determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.

ARTICLE 2

PARTNERSHIP FORMATION AND IDENTIFICATION

2.1 Formation. The Partnership was formed as a limited partnership pursuant to
the Act for the purposes and upon the terms and conditions set forth in this
Agreement.

2.2 Name, Office and Registered Agent. The name of the Partnership is Strategic
Storage Operating Partnership, L.P. The specified office and place of business
of the Partnership shall be 111 Corporate Drive, Suite 120, Ladera Ranch,
California 92694. The General Partner may at any time change the location of
such office, provided the General Partner gives notice to the Partners of any
such change. The name and address of the Partnership’s registered agent is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The sole duty of the registered agent as such is to
forward to the Partnership any notice that is served on him as registered agent.

2.3 Partners.

(a) The General Partner of the Partnership is Strategic Storage Trust, Inc., a
Maryland corporation. Its principal place of business is the same as that of the
Partnership.

(b) The Limited Partners are those Persons identified as Limited Partners on
Exhibit A hereto, as amended from time to time.

2.4 Term and Dissolution.

(a) The Partnership shall have perpetual duration, except that the Partnership
shall be dissolved upon the first to occur of any of the following events:

(i) The occurrence of an Event of Bankruptcy as to a General Partner or the
dissolution, death, removal or withdrawal of a General Partner unless the
business of the Partnership is continued pursuant to Section 7.3(b) hereof;
provided that if a General Partner is on the date of such occurrence a
partnership, the dissolution of such General Partner as a result of the
dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in
such partnership shall not be an event of dissolution of the Partnership if the
business of such General Partner is continued by the remaining partner or
partners, either alone or with additional partners, and such General Partner and
such partners comply with any other applicable requirements of this Agreement;

(ii) The passage of 90 days after the sale or other disposition of all or
substantially all of the assets of the Partnership (provided that if the
Partnership receives an installment obligation as consideration for such sale or
other disposition, the Partnership shall continue, unless sooner dissolved under
the provisions of this Agreement, until such time as such note or notes are paid
in full);

 

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(iii) The exchange of all Limited Partnership Interests (other than any of such
interests held by the General Partner or Affiliates of the General Partner) for
REIT Shares or the securities of any other entity; or

(iv) The election by the General Partner that the Partnership should be
dissolved.

(b) Upon dissolution of the Partnership (unless the business of the Partnership
is continued pursuant to Section 7.3(b) hereof), the General Partner (or its
trustee, receiver, successor or legal representative) shall amend or cancel the
Certificate and liquidate the Partnership’s assets and apply and distribute the
proceeds thereof in accordance with Section 5.6 hereof. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership’s debts and
obligations), or (ii) distribute the assets to the Partners in kind.

2.5 Filing of Certificate and Perfection of Limited Partnership. The General
Partner shall execute, acknowledge, record and file at the expense of the
Partnership, the Certificate any and all amendments thereto and all requisite
fictitious name statements and notices in such places and jurisdictions as may
be necessary to cause the Partnership to be treated as a limited partnership
under, and otherwise to comply with, the laws of each state or other
jurisdiction in which the Partnership conducts business.

2.6 Certificates Describing Partnership Units. At the request of a Limited
Partner, the General Partner, at its option, may issue a certificate summarizing
the terms of such Limited Partner’s interest in the Partnership, including the
number of Partnership Units owned and the Percentage Interest represented by
such Partnership Units as of the date of such certificate. Any such certificate
(i) shall be in form and substance as approved by the General Partner,
(ii) shall not be negotiable and (iii) shall bear a legend to the following
effect:

This certificate is not negotiable. The Partnership Units represented by this
certificate are governed by and transferable only in accordance with the
provisions of the Second Amended and Restated Limited Partnership Agreement of
Strategic Storage Operating Partnership, L.P., as amended from time to time.

ARTICLE 3

BUSINESS OF THE PARTNERSHIP

The purpose and nature of the business to be conducted by the Partnership is
(i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, provided, however, that such business
shall be limited to and conducted in such a manner as to permit the General
Partner at all times to qualify as a REIT, unless the General Partner otherwise
ceases to qualify as a REIT, (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or the ownership
of interests in any entity engaged in any of the foregoing and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the General Partner’s right in its sole and
absolute discretion to cease qualifying as a REIT, the Partners acknowledge that
the General Partner’s current status as a REIT and the avoidance of income and
excise taxes on the General Partner inures to the benefit of all the Partners
and not solely to the General Partner. Notwithstanding the foregoing, the
Limited Partners agree that the General Partner may terminate its

 

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status as a REIT under the Code at any time to the full extent permitted under
the Articles of Incorporation. The General Partner shall also be empowered to do
any and all acts and things necessary or prudent to ensure that the Partnership
will not be classified as a “publicly traded partnership” for purposes of
Section 7704 of the Code.

ARTICLE 4

CAPITAL CONTRIBUTIONS AND ACCOUNTS

4.1 Capital Contributions. The General Partner, the Limited Partners and the
Special Limited Partners have made Capital Contributions to the Partnership in
exchange for the Partnership Interests set forth opposite their names on Exhibit
A, as amended from time to time.

4.2 Additional Capital Contributions and Issuances of Additional Partnership
Interests. Except as provided in this Section 4.2 or in Section 4.3, the
Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.2.

(a) Issuances of Additional Partnership Interests.

(i) General. The General Partner is hereby authorized to cause the Partnership
to issue such additional Partnership Interests in the form of Partnership Units
for any Partnership purpose at any time or from time to time, to the Partners
(including the General Partner) or to other Persons for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partner. Any additional Partnership Interests issued thereby may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Delaware law, including, without limitation: (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided, however, that no additional
Partnership Interests shall be issued to the General Partner unless:

(1) (A) the additional Partnership Interests are issued in connection with an
issuance of REIT Shares of or other interests in the General Partner, which
shares or interests have designations, preferences and other rights, all such
that the economic interests are substantially similar to the designations,
preferences and other rights of the additional Partnership Interests issued to
the General Partner by the Partnership in accordance with this Section 4.2 and
(B) the General Partner shall make a Capital Contribution to the Partnership in
an amount equal to the proceeds raised in connection with the issuance of such
shares of stock of or other interests in the General Partner;

(2) the additional Partnership Interests are issued in exchange for property
owned by the General Partner with a fair market value, as determined by the
General Partner, in good faith, equal to the value of the Partnership Interests;
or

(3) additional Partnership Interests are issued to all Partners holding
Partnership Units in proportion to their respective Percentage Interests.

 

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In addition, the General Partner may acquire Partnership Interests from other
Partners pursuant to this Agreement. In the event that the Partnership issues
Partnership Interests pursuant to this Section 4.2(a), the General Partner shall
make such revisions to this Agreement (without any requirement of receiving
approval of the Limited Partners) as it deems necessary to reflect the issuance
of such additional Partnership Interests and any special rights, powers, and
duties associated therewith.

Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.

(ii) Upon Issuance of Additional Securities. The General Partner shall not issue
any Additional Securities other than to all holders of REIT Shares, unless
(A) the General Partner shall cause the Partnership to issue to the General
Partner, as the General Partner may designate, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the Additional Securities, and
(B) the General Partner contributes the net proceeds from the issuance of such
Additional Securities and from any exercise of rights contained in such
Additional Securities, directly and through the General Partner, to the
Partnership; provided, however, that the General Partner is allowed to issue
Additional Securities in connection with an acquisition of a property to be held
directly by the General Partner, but if and only if, such direct acquisition and
issuance of Additional Securities have been approved and determined to be in the
best interests of the General Partner and the Partnership by a majority of the
Independent Directors (as defined in the Articles of Incorporation). Without
limiting the foregoing, the General Partner is expressly authorized to issue
Additional Securities for less than fair market value, and to cause the
Partnership to issue to the General Partner corresponding Partnership Interests,
so long as (x) the General Partner concludes in good faith that such issuance is
in the best interests of the General Partner and the Partnership, including
without limitation, the issuance of REIT Shares and corresponding Partnership
Units pursuant to an employee share purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise, and
(y) the General Partner contributes all proceeds from such issuance to the
Partnership. For example, in the event the General Partner issues REIT Shares
for a cash purchase price and contributes all of the proceeds of such issuance
to the Partnership as required hereunder, the General Partner shall be issued a
number of additional Partnership Units equal to the product of (A) the number of
such REIT Shares issued by the General Partner, the proceeds of which were so
contributed, multiplied by (B) a fraction, the numerator of which is 100%, and
the denominator of which is the Conversion Factor in effect on the date of such
contribution.

(b) Certain Deemed Contributions of Proceeds of Issuance of REIT Shares. In
connection with any and all issuances of REIT Shares, the General Partner shall
make Capital Contributions to the Partnership of the proceeds therefrom,
provided that if the proceeds actually received and contributed by the General
Partner are less than the gross proceeds of such issuance as a result of any
underwriter’s discount or other expenses paid or incurred in connection with
such issuance, then the General Partner shall be deemed to have made Capital
Contributions to the Partnership in the aggregate amount of the gross proceeds
of such issuance and the Partnership shall be deemed simultaneously to have paid
such offering expenses in accordance with Section 6.5 hereof and in connection
with the required issuance of additional Partnership Units to the General
Partner for such Capital Contributions pursuant to Section 4.2(a) hereof.

 

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4.3 Additional Funding. If the General Partner determines that it is in the best
interests of the Partnership to provide for additional Partnership funds
(“Additional Funds”) for any Partnership purpose, the General Partner may
(i) cause the Partnership to obtain such funds from outside borrowings, or
(ii) elect to have the General Partner or any of its Affiliates provide such
Additional Funds to the Partnership through loans or otherwise.

4.4 Capital Accounts. A separate capital account (a “Capital Account”) shall be
established and maintained for each Partner in accordance with Regulations
Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an
additional Partnership Interest in exchange for more than a de minimis Capital
Contribution, (ii) the Partnership distributes to a Partner more than a de
minimis amount of Partnership property as consideration for a Partnership
Interest, (iii) the Partnership is liquidated within the meaning of Regulation
Section 1.704-1(b)(2)(ii)(g) or (iv) a Partnership Interest (other than a de
minimis interest) is granted as consideration for the provisions of services to
or for the benefit of the Partnership by an existing Partner acting in a partner
capacity, or by a new Partner acting in a partner capacity in anticipation of
being a Partner, the General Partner shall revalue the property of the
Partnership to its fair market value (as determined by the General Partner, in
its sole and absolute discretion, and taking into account Section 7701(g) of the
Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)(f). When the
Partnership’s property is revalued by the General Partner, the Capital Accounts
of the Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to
be adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital Accounts
previously) would be allocated among the Partners pursuant to Section 5.1 if
there were a taxable disposition of such property for its fair market value (as
determined by the General Partner, in its sole and absolute discretion, and
taking into account Section 7701(g) of the Code) on the date of the revaluation.

4.5 Percentage Interests. If the number of outstanding Partnership Units
increases or decreases during a taxable year, each Partner’s Percentage Interest
shall be adjusted by the General Partner effective as of the effective date of
each such increase or decrease to a percentage equal to the number of
Partnership Units held by such Partner divided by the aggregate number of
Partnership Units outstanding after giving effect to such increase or decrease.
If the Partners’ Percentage Interests are adjusted pursuant to this Section 4.5,
the Profits and Losses for the taxable year in which the adjustment occurs shall
be allocated between the part of the year ending on the day when the
Partnership’s property is revalued by the General Partner and the part of the
year beginning on the following day either (i) as if the taxable year had ended
on the date of the adjustment or (ii) based on the number of days in each part.
The General Partner, in its sole and absolute discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part shall be
based on the adjusted Percentage Interests.

4.6 No Interest on Contributions. No Partner shall be entitled to interest on
its Capital Contribution.

4.7 Return of Capital Contributions. No Partner shall be entitled to withdraw
any part of its Capital Contribution or its Capital Account or to receive any
distribution from the Partnership, except as specifically provided in this
Agreement. Except as otherwise provided herein, there shall be no obligation to
return to any Partner or withdrawn Partner any part of such Partner’s Capital
Contribution for so long as the Partnership continues in existence.

4.8 No Third Party Beneficiary. No creditor or other third party having dealings
with the Partnership shall have the right to enforce the right or obligation of
any Partner to make Capital Contributions or loans or to pursue any other right
or remedy hereunder or at law or in equity, it being

 

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understood and agreed that the provisions of this Agreement shall be solely for
the benefit of, and may be enforced solely by, the parties hereto and their
respective successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or of any
of the Partners. In addition, it is the intent of the parties hereto that no
distribution to any Limited Partner shall be deemed a return of money or other
property in violation of the Act. However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Limited Partner is obligated to return such money or property, such obligation
shall be the obligation of such Limited Partner and not of the General Partner.
Without limiting the generality of the foregoing, a deficit Capital Account of a
Partner shall not be deemed to be a liability of such Partner nor an asset or
property of the Partnership and upon a liquidation within the meaning of Treas.
Reg. Section 1.704-1(b)(2)(ii)(g), if any Partner has a deficit Capital Account
(after giving effect to all contributions, distributions, allocations and other
Capital Account adjustments for all taxable years, including the year during
which such liquidation occurs), such Partner shall have no obligation to make
any Capital Contribution to reduce or eliminate the negative balance of such
Partner’s Capital Account.

ARTICLE 5

PROFITS AND LOSSES; DISTRIBUTIONS

5.1 Allocation of Profit and Loss.

(a) General. Except as provided in the following sentence with respect to Sales,
Profit and Loss of the Partnership for each fiscal year or other applicable
period of the Partnership shall be allocated among the General Partner and the
Limited Partners (other than the Special Limited Partners) in accordance with
their respective Percentage Interests. Items of income, gain, loss, and
deduction with respect to Sales shall first be allocated among the Partners,
including the Special Limited Partners, for each fiscal year in a manner that
will as nearly as possible cause the Capital Account balance of each Partner at
the end of such fiscal year or other applicable period to equal the amount of
distributions that would be made to such Partner if the Partnership were
(i) dissolved and terminated, (ii) its affairs wound up and its assets sold for
cash equal to their Book Value, (iii) all Partnership liabilities were satisfied
(limited with respect to each nonrecourse liability to the Book Value of the
assets securing such liability); and (iv) the net assets of the Partnership were
distributed in accordance with Sections 5.2 (a) and (b) hereof to the Partners
immediately after giving effect to such allocation. The General Partner may, in
its reasonable discretion, make such other assumptions (whether or not
consistent with the above assumptions) as it deems necessary or appropriate in
order to effectuate the intended economic arrangement of the Partners.

(b) Minimum Gain Chargeback. Notwithstanding any provision to the contrary,
(i) any expense of the Partnership that is a “nonrecourse deduction” within the
meaning of Regulations Section 1.704-2(b)(1) shall be allocated in accordance
with the Partners’ respective Percentage Interests, (ii) any expense of the
Partnership that is a “partner nonrecourse deduction” within the meaning of
Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that bears
the “economic risk of loss” with respect to the “partner nonrecourse debt”
within the meaning of Regulations Section 1.704-2(b)(4) to which such partner
nonrecourse deduction is attributable in accordance with Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum
Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations
Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be
allocated among the Partners in accordance with Regulations Section 1.704-2(f)
and the ordering rules contained in Regulations Section 1.704-2(j), and (iv) if
there is a net decrease in Partner Nonrecourse Debt Minimum

 

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Gain within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations
Section 1.704-(2)(g), items of gain and income shall be allocated among the
Partners in accordance with Regulations Section 1.704-2(i)(4) and the ordering
rules contained in Regulations Section 1.704-2(j). A Partner’s “interest in
partnership profits” for purposes of determining its share of the nonrecourse
liabilities of the Partnership within the meaning of Regulations
Section 1.752-3(a)(3) shall be such Partner’s Percentage Interest.

(c) Qualified Income Offset. If a Partner unexpectedly receives in any taxable
year an adjustment, allocation, or distribution described in subparagraphs (4),
(5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases
a deficit balance in such Partner’s Capital Account that exceeds the sum of such
Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain, as determined in accordance with Regulations Sections 1.704-2(g)
and 1.704-2(i), such Partner shall be allocated specially for such taxable year
(and, if necessary, later taxable years) items of income and gain in an amount
and manner sufficient to eliminate such deficit Capital Account balance as
quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d);
provided, that an allocation pursuant to this Section 5.1(c) shall be made only
if and to the extent that such Partner would have a deficit Capital Account
balance after all other allocations provided for in Article 5 have been
tentatively made as if this Section 5.1(c) were not in this Agreement. This
Section 5.1(c) is intended to constitute a “qualified income offset” under
Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.

(d) Capital Account Deficits. Loss shall not be allocated to a Limited Partner
to the extent that such allocation would cause or increase a deficit in such
Partner’s Capital Account at the end of any fiscal year (after reduction to
reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6)) in excess of the sum of such Partner’s shares of Partnership
Minimum Gain and Partner Nonrecourse Debt Minimum Gain, as determined in
accordance with Regulations Sections 1.704-2(g) and 1.704-2(i).

(e) Allocations Between Transferor and Transferee. If a Partner transfers any
part or all of its Partnership Interest, the distributive shares of the various
items of Profit and Loss allocable among the Partners during such fiscal year of
the Partnership shall be allocated between the transferor and the transferee
Partner either (i) as if the Partnership’s fiscal year had ended on the date of
the transfer, or (ii) based on the number of days of such fiscal year that each
was a Partner without regard to the results of Partnership activities in the
respective portions of such fiscal year in which the transferor and the
transferee were Partners. The General Partner, in its sole and absolute
discretion, shall determine which method shall be used to allocate the
distributive shares of the various items of Profit and Loss between the
transferor and the transferee Partner.

(f) Definition of Profit and Loss. “Profit” and “Loss” and any items of income,
gain, expense, or loss referred to in this Agreement shall be determined in
accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not
include items of income, gain and expense that are specially allocated pursuant
to Sections 5.1(b), 5.1(c) or 5.1(d). All allocations of income, Profit, gain,
Loss and expense (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 5.1, except as otherwise required by Section 704(c) of the Code and
Regulations Section 1.704-1(b)(4). The General Partner shall have the authority
to elect the method to be used by the Partnership for allocating items of
income, gain, and expense as required by Section 704(c) of the Code including a
method that may result in a Partner receiving a disproportionately larger share
of the Partnership tax depreciation deductions, and such election shall be
binding on all Partners.

 

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(g) Curative Allocations. The allocations set forth in Section 5.1(b), (c) and
(d) of this Agreement (the “Regulatory Allocations”) are intended to comply with
certain requirements of the Regulations. The General Partner is authorized to
offset all Regulatory Allocations either with other Regulatory Allocations or
with special allocations of other items of Partnership income, gain, loss or
deduction pursuant to this Section 5.1(g). Therefore, notwithstanding any other
provision of this Section 5.1 (other than the Regulatory Allocations), the
General Partner shall make such offsetting special allocations of Partnership
income, gain, loss or deduction in whatever manner it deems appropriate so that,
after such offsetting allocations are made, each Partner’s Capital Account is,
to the extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of this Agreement and all
Partnership items were allocated pursuant to Section 5.1(a) and (e).

5.2 Distributions.

(a) Cash Available for Distribution. The Partnership shall distribute cash
(other than Net Sale Proceeds) on a quarterly (or, at the election of the
General Partner, more frequent) basis, in an amount determined by the General
Partner in its sole and absolute discretion, to the Partners (other than the
Special Limited Partners) who are Partners on the Partnership Record Date with
respect to such quarter (or other distribution period) in accordance with their
respective Percentage Interests on the Partnership Record Date; provided,
however, that if a new or existing Partner acquires an additional Partnership
Interest in exchange for a Capital Contribution on any date other than the next
day after a Partnership Record Date, the cash distribution attributable to such
additional Partnership Interest relating to the Partnership Record Date next
following the issuance of such additional Partnership Interest (or relating to
the Partnership Record Date if such Partnership Interest was acquired on a
Partnership Record Date) shall be reduced in the proportion to (i) the number of
days that such additional Partnership Interest is held by such Partner bears to
(ii) the number of days between such Partnership Record Date (including such
Partnership Record Date) and the immediately preceding Partnership Record Date.
The foregoing provisions of this Section 5.2(a) notwithstanding, cash
distributions to Partners with respect to Partnership Units of a designated
class during any given calendar year shall not exceed the Annual Distribution
Cap for such class of Partnership Interest.

(b) Net Sale Proceeds. Subject to Section 5.2(g) and subject to the right of the
General Partner to allocate the total distributions payable to the Special
Limited Partners pursuant to this Section 5.2(b) in accordance with the general
intent of the provisions below in a manner it deems fair to all Partners in its
sole discretion, Net Sale Proceeds shall be distributed as follows:

(i) Distributions Upon Sale of SST Properties. For Net Sale Proceeds
attributable to the Sale of SST Properties, such Net Sale Proceeds shall be
distributed as follows:

(1) First, 100% to the Partners (other than the Special Limited Partners) who
are Partners on the Partnership Record Date in accordance with their respective
Percentage Interests on the Partnership Record Date until the Stockholders have
received Net Sale Proceeds from the Sale of SST Properties plus the total of all
SST Distributions paid to SST Stockholders (excluding any stock dividends and
SST Distributions paid on REIT Shares redeemed by the General Partner) in an
amount equal to the sum of (A) the SST Invested Capital, plus (B) the
Stockholders’ 6% Return for SST Stockholders; and

(2) Second, (A) 95% to the Partners (other than the Special Limited Partners)
who are Partners on the Partnership Record Date in accordance with their
respective Percentage Interests on the Partnership Record Date, and (B) 5% to
the SST Special Limited Partner on the Partnership Record Date, until the
Stockholders have received Net Sale Proceeds from the Sale of SST Properties
plus the total of all SST Distributions paid to SST Stockholders (excluding any
stock dividends

 

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and SST Distributions paid on REIT Shares redeemed by the General Partner) in an
amount equal to the sum of (A) the SST Invested Capital, plus (B) the
Stockholders’ 6% Return or more but less than Stockholders’ 8% Return for SST
Stockholders; and

(3) Third, (A) 90% to the Partners (other than the Special Limited Partners) who
are Partners on the Partnership Record Date in accordance with their respective
Percentage Interests on the Partnership Record Date, and (B) 10% to the SST
Special Limited Partner on the Partnership Record Date, until the Stockholders
have received Net Sale Proceeds from the Sale of SST Properties plus the total
of all SST Distributions paid to SST Stockholders (excluding any stock dividends
and SST Distributions paid on REIT Shares redeemed by the General Partner) in an
amount equal to the sum of (A) the SST Invested Capital, plus (B) the
Stockholders’ 8% Return or more but less than Stockholders’ 10% Return for SST
Stockholders; and

(4) Fourth, (A) 85% to the Partners (other than the Special Limited Partners)
who are Partners on the Partnership Record Date in accordance with their
respective Percentage Interests on the Partnership Record Date, and (B) 15% to
the SST Special Limited Partner on the Partnership Record Date.

(ii) Distributions Upon Sale of REIT I Properties. Upon the Sale of REIT I
Properties, REIT I Net Sale Proceeds shall be received by the Partnership and
distributed 100% to the Partners (other than the Special Limited Partners) who
are Partners on the Partnership Record Date in accordance with their respective
Percentage Interests on the Partnership Record Date.

(iii) Distributions Upon Sale of REIT II Properties. Upon the Sale of REIT II
Properties, REIT II Net Sale Proceeds shall be received by the Partnership and
distributed 100% to the Partners (other than the Special Limited Partners) who
are Partners on the Partnership Record Date in accordance with their respective
Percentage Interests on the Partnership Record Date.

(c) Subordinated Incentive Listing Distribution. Upon Listing, and as soon as
practicable following the determination of Market Value, the General Partner
shall cause the Partnership to distribute to the SST Special Limited Partner in
complete redemption of the SST Special Limited Partner Interest the amount
calculated pursuant to clause (a) of the Subordinated Incentive Listing
Distribution. Such Subordinated Incentive Listing Distribution shall be due and
payable to the SST Special Limited Partner no earlier than one hundred eighty
(180) days and no later than two hundred seventy (270) days after Listing in
either cash, Partnership Units or REIT Shares (or any combination thereof) in
the sole discretion of the General Partner’s Independent Directors subject only
to the provisions of Section 5.2(f) below. Solely for purposes of determining
the amount of the Subordinated Incentive Listing Distribution allocable to each
of the SST Special Limited Partner, REIT I Special Limited Partner and REIT II
Special Limited Partner, the General Partner shall allocate the Market Value
amongst the shares of Stock outstanding held by SST Stockholders, REIT I
Stockholders and REIT II Stockholders, respectively, and such allocation by the
General Partner shall be deemed final and conclusive by the Special Limited
Partners.

(d) Subordinated Distribution Due Upon Termination. Upon a Termination, unless
such Termination is a voluntary Termination by mutual assent of the General
Partner and the SST Special Limited Partner (a “Voluntary Termination”), the
General Partner shall cause the Partnership to distribute to the SST Special
Limited Partner in complete redemption of the SST Special Limited Partner
Interest the amount calculated pursuant to clause (a) of the Subordinated
Distribution Due Upon Termination. Such Subordinated Distribution Due Upon
Termination shall be payable to the SST Special Limited Partner as follows:
(1) 1/3rd within thirty (30) days of the Termination Date; (2) 1/3rd upon the
one year anniversary of the Termination Date; and (3) 1/3rd upon the two year
anniversary of the Termination

 

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Date. The SST Special Limited Partner may elect to receive each installment of
the Subordinated Distribution Due Upon Termination in cash, Partnership Units or
REIT Shares (or any combination thereof) in its sole discretion provided that
the General Partner may limit the amount to be paid in cash to the extent
necessary to enable the General Partner to pay cash distributions to
Stockholders in amounts necessary to meet the REIT requirements for
distributions under the Code. If the General Partner consummates an
Extraordinary Transaction and the Subordinated Distribution Due Upon Termination
has not yet been paid in full, any remaining installments of the Subordinated
Distribution Due Upon Termination shall be paid in full on the closing date of
the Extraordinary Transaction. In accordance with Section 736 of the Code, the
SST Special Limited Partner shall continue to be treated as a partner in the
Partnership in respect of its SST Special Limited Partner Interest for such
purposes until the Partnership has satisfied all of its payment obligations
relating to the Subordinated Distribution Due Upon Termination. Solely for
purposes of determining the amount of the Subordinated Distribution Due Upon
Termination allocable to each of the SST Special Limited Partner, REIT I Special
Limited Partner and REIT II Special Limited Partner, the General Partner shall
allocate the Assets and Liabilities amongst the SST Properties, REIT I
Properties and REIT II Properties, respectively, based on whatever criteria the
General Partner deems appropriate under the circumstances in its sole discretion
and such determination shall be deemed final and conclusive by the Special
Limited Partners. In the event of a Voluntary Termination, no Subordinated
Distribution Due Upon Termination is payable to the SST Special Limited Partner.
Instead, the SST Special Limited Partner will be entitled to a redemption of the
SST Special Limited Partner Interest in accordance with either Section 5.2(b),
(c) or (e) hereof, as applicable.

(e) Subordinated Distribution Due Upon Extraordinary Transaction. Upon the
occurrence of an Extraordinary Transaction, the General Partner shall cause the
Partnership to distribute to the SST Special Limited Partner in complete
redemption of the SST Special Limited Partner Interest the amount calculated
pursuant to clause (a) of the Subordinated Distribution Due Upon Extraordinary
Transaction. Such Subordinated Distribution Due Upon Extraordinary Transaction
shall be paid to the SST Special Limited Partner on the closing date of the
Extraordinary Transaction. The SST Special Limited Partner may elect to receive
the Subordinated Distribution Due Upon Extraordinary Transaction in cash,
Partnership Units or REIT Shares (or any combination thereof) in its sole
discretion provided that the General Partner may limit the amount to be paid in
cash to the extent necessary to enable the General Partner to pay cash
distributions to Stockholders in amounts necessary to meet the REIT requirements
for distributions under the Code. Solely for purposes of determining the amount
of the Subordinated Distribution Due Upon Extraordinary Transaction allocable to
each of the SST Special Limited Partner, REIT I Special Limited Partner and REIT
II Special Limited Partner, the General Partner shall allocate the Transaction
Amount amongst the shares of Stock outstanding held by SST Stockholders, REIT I
Stockholders and REIT II Stockholders, respectively, and such allocation by the
General Partner shall be deemed final and conclusive by the Special Limited
Partners.

(f) Distributions of Cash to Pay Taxes. Anything in Sections 5.2(c), (d) (e) or
(h) notwithstanding, in the event that a distribution under Sections 5.2 (c),
(d), (e), or (h) is made other than in cash, the SST Special Limited Partner may
elect, by written notice to the General Partner, to receive in cash a portion of
such distribution equal to the amount the SST Special Limited Partner has
determined in good faith that it or its members will owe in federal or state
income taxes on account of such distribution for the year in which the
distribution is received. Furthermore, in the event that the SST Special Limited
Partner has determined in good faith, or a taxing authority has determined, that
the SST Special Limited Partner or its members is subject to federal or state
income tax immediately on any deferred portion of any distribution under
Sections 5.2(c), (d) or (e), the SST Special Limited Partner shall notify the
General Partner in writing of such determination and the General Partner shall
cause the Partnership to distribute, prior to the due date for payment of any
such income tax, cash, in prepayment of such deferred distributions, in an
amount at least equal to the amount of federal and state income tax reasonably
estimated by the SST Special Limited Partner to be currently payable. The SST
Special Limited Partner’s

 

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requests to be distributed cash under this Section 5.2(f) shall be honored
except, and only to the extent, that the General Partner determines that such
cash is necessary to make distributions to the Stockholders in amounts necessary
to satisfy the REIT distribution requirements under the Code.

(g) Coordination of Special Limited Partner Distributions. The following
provisions shall apply to the General Partner in connection with distributions
made pursuant to Sections 5.2(b), (c), (d) or (e) herein:

(i) Any Net Sale Proceeds paid to the SST Special Limited Partner pursuant to
Section 5.2(b) prior to Listing shall reduce dollar for dollar the amount of the
Subordinated Incentive Listing Distribution pursuant to Section 5.2(c). If the
SST Special Limited Partner receives the Subordinated Incentive Listing
Distribution pursuant to Section 5.2(c), the SST Special Limited Partner will no
longer be entitled to receive distributions of Net Sale Proceeds pursuant to
Section 5.2(b), the Subordinated Distribution Due Upon Termination pursuant to
Section 5.2(d) or the Subordinated Distribution Due Upon Extraordinary
Transaction pursuant to Section 5.2(e).

(ii) Any Net Sale Proceeds paid to the SST Special Limited Partner pursuant to
Section 5.2(b) prior to the Termination Date shall reduce dollar for dollar the
amount of the Subordinated Distribution Due Upon Termination pursuant to
Section 5.2(d). If the SST Special Limited Partner receives the Subordinated
Distribution Due Upon Termination pursuant to Section 5.2(d), (A) the SST
Special Limited Partner will no longer be entitled to receive distributions of
Net Sale Proceeds pursuant to Section 5.2(b), the Subordinated Incentive Listing
Distribution pursuant to Section 5.2(c) or the Subordinated Distribution Due
Upon Extraordinary Transaction pursuant to Section 5.2(e), and (B) any Net Sale
Proceeds received by the Partnership after the Termination Date shall be applied
first to satisfy the Partnership’s obligation to make installment distributions
of the Subordinated Distribution Due Upon Termination.

(iii) Any Net Sale Proceeds paid to the SST Special Limited Partner pursuant to
Section 5.2(b) prior to an Extraordinary Transaction shall reduce dollar for
dollar the amount of the Subordinated Distribution Due Upon Extraordinary
Transaction to be distributed pursuant to Section 5.2(e). If the SST Special
Limited Partner receives the Subordinated Distribution Due Upon Extraordinary
Transaction pursuant to Section 5.2(e), the SST Special Limited Partner will no
longer be entitled to receive distributions of Net Sale Proceeds pursuant to
Section 5.2(b), the Subordinated Incentive Listing Distribution pursuant to
Section 5.2(c) or the Subordinated Distribution Due Upon Termination pursuant to
Section 5.2(d).

(iv) If the priority distribution of Net Sale Proceeds to the SST Special
Limited Partner pursuant to this Section 5.2(g) prevents the Partnership from
being able to distribute sufficient amounts to the General Partner pursuant to
Section 5.2(b) to enable the General Partner to satisfy its REIT requirements
under the Code, the General Partner may in its sole discretion cause the
Partnership to distribute some or all of the Net Sale Proceeds otherwise subject
to the priority distribution to the SST Special Limited Partner pursuant to
Section 5.2(g) to the General Partner in an amount sufficient to enable the
General Partner to pay distributions to the Stockholders necessary to satisfy
the REIT requirements under the Code.

(h) Advisor Return of Capital Distribution. In the event that the General
Partner engages in a Sale of all or substantially all the assets of the
Partnership, a Listing or an Extraordinary Transaction resulting in a return to
the Stockholders in excess of an amount per share determined by the Independent
Directors in their sole discretion, the Partnership shall distribute cash to the
SST Special Limited Partner as part of the complete redemption of the SST
Special Limited Partner Interest (prior to the calculation and payment of the
applicable distribution payable pursuant to Section 5.2 (b), (c) or (e)

 

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hereof) an incentive distribution in an amount up to the aggregate amount of all
unreturned and unreimbursed capital invested by the Advisor and its Affiliates
into the Partnership, the General Partner, the Advisor or any Affiliate relating
in any way to the business organization of the Partnership, the General Partner
or any Offering.

(i) Withholding; Partnership Loans. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant to Sections
1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required to withhold and pay over to any taxing authority any amount resulting
from the allocation or distribution of income to any Partner or assignee
(including by reason of Section 1446 of the Code), either (i) if the actual
amount to be distributed to the Partner equals or exceeds the amount required to
be withheld by the Partnership, the amount withheld shall be treated as a
distribution of cash in the amount of such withholding to such Partner, or
(ii) if the actual amount to be distributed to the Partner is less than the
amount required to be withheld by the Partnership, the excess of the amount
required to be withheld over the actual amount to be distributed shall be
treated as a loan (a “Partnership Loan”) from the Partnership to the Partner on
the day the Partnership pays over such amount to a taxing authority. A
Partnership Loan shall be repaid through withholding by the Partnership with
respect to subsequent distributions to the applicable Partner or assignee. In
the event that a Limited Partner (a “Defaulting Limited Partner”) fails to pay
any amount owed to the Partnership with respect to the Partnership Loan within
15 days after demand for payment thereof is made by the Partnership on the
Limited Partner, the General Partner, in its sole and absolute discretion, may
elect to make the payment to the Partnership on behalf of such Defaulting
Limited Partner. In such event, on the date of payment, the General Partner
shall be deemed to have extended a loan (a “General Partner Loan”) to the
Defaulting Limited Partner in the amount of the payment made by the General
Partner and shall succeed to all rights and remedies of the Partnership against
the Defaulting Limited Partner as to that amount. Without limitation, the
General Partner shall have the right to receive any distributions that otherwise
would be made by the Partnership to the Defaulting Limited Partner until such
time as the General Partner Loan has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
received by the Defaulting Limited Partner and immediately paid to the General
Partner.

Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to
this Section 5.2(b) shall bear interest at the lesser of (i) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in The Wall Street Journal, or (ii) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date the Partnership or the General Partner, as applicable, is deemed to extend
the loan until such loan is repaid in full.

(j) Limitation on Distributions. In no event may a Partner receive a
distribution of cash with respect to a Partnership Unit if such Partner is
entitled to receive a cash distribution as the holder of record of a REIT Share
for which all or part of such Partnership Unit has been or will be exchanged.

5.3 REIT Distribution Requirements. The General Partner shall use its
commercially reasonable efforts to cause the Partnership to distribute amounts
sufficient to enable the General Partner to pay stockholder dividends that will
allow the General Partner to (i) meet its distribution requirement for
qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid
any federal income or excise tax liability imposed by the Code.

5.4 No Right to Distributions In Kind. No Partner shall be entitled to demand
property other than cash in connection with any distributions by the
Partnership.

 

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5.5 Limitations of Return of Capital Contributions. Notwithstanding any of the
provisions of this Article 5, no Partner shall have the right to receive and the
General Partner shall not have the right to make, a distribution that includes a
return of all or part of a Partner’s Capital Contributions, unless after giving
effect to the return of a Capital Contribution, the sum of all Partnership
liabilities, other than the liabilities to a Partner for the return of his
Capital Contribution, does not exceed the fair market value of the Partnership’s
assets.

5.6 Distributions Upon Liquidation. Upon liquidation of the Partnership, after
payment of, or adequate provision for, debts and obligations of the Partnership,
including any Partner loans, any remaining assets of the Partnership shall be
distributed to all Partners with positive Capital Accounts in accordance with
their respective positive Capital Account balances. For purposes of the
preceding sentence, the Capital Account of each Partner shall be determined
after all adjustments have been made in accordance with Sections 4.4, 5.1 and
5.2 resulting from Partnership operations and from all sales and dispositions of
all or any part of the Partnership’s assets. To the extent deemed advisable by
the General Partner, appropriate arrangements (including the use of a
liquidating trust) may be made to assure that adequate funds are available to
pay any contingent debts or obligations.

5.7 Substantial Economic Effect. It is the intent of the Partners that the
allocations of Profit and Loss under this Agreement have substantial economic
effect (or be consistent with the Partners’ interests in the Partnership in the
case of the allocation of losses attributable to nonrecourse debt) within the
meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article 5 and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.

ARTICLE 6

RIGHTS, OBLIGATIONS AND

POWERS OF THE GENERAL PARTNER

6.1 Management of the Partnership.

(a) Except as otherwise expressly provided in this Agreement, the General
Partner shall have full, complete and exclusive discretion to manage and control
the business of the Partnership for the purposes herein stated, and shall make
all decisions affecting the business and assets of the Partnership. Subject to
the restrictions specifically contained in this Agreement, the powers of the
General Partner shall include, without limitation, the authority to take the
following actions on behalf of the Partnership:

(i) to acquire, purchase, own, operate, lease and dispose of any real property
and any other property or assets including, but not limited to notes and
mortgages, that the General Partner determines are necessary or appropriate or
in the best interests of the business of the Partnership;

(ii) to construct buildings and make other improvements on the properties owned
or leased by the Partnership;

(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership
Interests or any securities (including secured and unsecured debt obligations of
the Partnership, debt obligations of the Partnership convertible into any class
or series of Partnership Interests, or options, rights, warrants or appreciation
rights relating to any Partnership Interests) of the Partnership;

(iv) to borrow or lend money for the Partnership, issue or receive evidences of
indebtedness in connection therewith, refinance, increase the amount of, modify,
amend or change the terms of, or extend the time for the payment of, any such
indebtedness, and secure such indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnership’s assets;

 

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(v) to pay, either directly or by reimbursement, for all Administrative Expenses
to third parties or to the General Partner or its Affiliates as set forth in
this Agreement;

(vi) to guarantee or become a co-maker of indebtedness of the General Partner or
any Subsidiary thereof, refinance, increase the amount of, modify, amend or
change the terms of, or extend the time for the payment of, any such guarantee
or indebtedness, and secure such guarantee or indebtedness by mortgage, deed of
trust, pledge or other lien on the Partnership’s assets;

(vii) to use assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with this Agreement, including, without
limitation, payment, either directly or by reimbursement, of all Administrative
Expenses of the General Partner, the Partnership or any Subsidiary of either, to
third parties or to the General Partner as set forth in this Agreement;

(viii) to lease all or any portion of any of the Partnership’s assets, whether
or not the terms of such leases extend beyond the termination date of the
Partnership and whether or not any portion of the Partnership’s assets so leased
are to be occupied by the lessee, or, in turn, subleased in whole or in part to
others, for such consideration and on such terms as the General Partner may
determine;

(ix) to prosecute, defend, arbitrate, or compromise any and all claims or
liabilities in favor of or against the Partnership, on such terms and in such
manner as the General Partner may reasonably determine, and similarly to
prosecute, settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership’s assets;

(x) to file applications, communicate, and otherwise deal with any and all
governmental agencies having jurisdiction over, or in any way affecting, the
Partnership’s assets or any other aspect of the Partnership business;

(xi) to make or revoke any election permitted or required of the Partnership by
any taxing authority;

(xii) to maintain such insurance coverage for public liability, fire and
casualty, and any and all other insurance for the protection of the Partnership,
for the conservation of Partnership assets, or for any other purpose convenient
or beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time;

(xiii) to determine whether or not to apply any insurance proceeds for any
property to the restoration of such property or to distribute the same;

(xiv) to establish one or more divisions of the Partnership, to hire and dismiss
employees of the Partnership or any division of the Partnership, and to retain
legal counsel, accountants, consultants, real estate brokers, and such other
persons, as the General Partner may deem necessary or appropriate in connection
with the Partnership business and to pay therefor such reasonable remuneration
as the General Partner may deem reasonable and proper;

(xv) to retain other services of any kind or nature in connection with the
Partnership business, and to pay therefor such remuneration as the General
Partner may deem reasonable and proper;

 

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(xvi) to negotiate and conclude agreements on behalf of the Partnership with
respect to any of the rights, powers and authority conferred upon the General
Partner;

(xvii) to maintain accurate accounting records and to file promptly all federal,
state and local income tax returns on behalf of the Partnership;

(xviii) to distribute Partnership cash or other Partnership assets in accordance
with this Agreement;

(xix) to form or acquire an interest in, and contribute property to, any further
limited or general partnerships, limited liability companies, joint ventures or
other relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to, its
Subsidiaries and any other Person in which it has an equity interest from time
to time);

(xx) to establish Partnership reserves for working capital, capital
expenditures, contingent liabilities, or any other valid Partnership purpose;

(xxi) to merge, consolidate or combine the Partnership with or into another
Person;

(xxii) to do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” for
purposes of Section 7704 of the Code; and

(xxiii) to take such other action, execute, acknowledge, swear to or deliver
such other documents and instruments, and perform any and all other acts that
the General Partner deems necessary or appropriate for the formation,
continuation and conduct of the business and affairs of the Partnership
(including, without limitation, all actions consistent with allowing the General
Partner at all times to qualify as a REIT unless the General Partner voluntarily
terminates its REIT status) and to possess and enjoy all of the rights and
powers of a general partner as provided by the Act.

(b) Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to authorize or require the
General Partner, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation
on behalf of the Partnership.

6.2 Delegation of Authority. The General Partner may delegate any or all of its
powers, rights and obligations hereunder, and may appoint, employ, contract or
otherwise deal with any Person for the transaction of the business of the
Partnership, which Person may, under supervision of the General Partner, perform
any acts or services for the Partnership as the General Partner may approve.

6.3 Indemnification and Exculpation of Indemnitees.

(a) The Partnership shall indemnify an Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise.

 

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Notwithstanding the foregoing, the Partnership shall not provide for
indemnification for an Indemnitee for any liability or loss suffered by any of
them in contravention of Delaware law and unless all of the following conditions
are met:

(i) The Indemnitee determined, in good faith, that the course of conduct that
caused the loss or liability was in the best interests of the Partnership.

(ii) The Indemnitee was acting on behalf of or performing services for the
Partnership.

(iii) Such liability or loss was not the result of:

(A) negligence or misconduct by the Indemnitee (excluding the Independent
Directors); or

(B) gross negligence or willful misconduct by the Independent Directors.

Any indemnification pursuant to this Section 6.3 shall be made only out of the
assets of the Partnership.

(b) Notwithstanding the foregoing, the Partnership shall not indemnify an
Indemnitee or any Person acting as a broker-dealer for any loss, liability or
expense arising from or out of an alleged violation of federal or state
securities laws by such party unless one or more of the following conditions are
met: (i) there has been a successful adjudication on the merits of each count
involving alleged material securities law violations as to the particular
Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular Indemnitee; or (iii) a
court of competent jurisdiction approves a settlement of the claims against a
particular Indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities were offered or sold as to indemnification for
violations of securities laws.

(c) The Partnership shall pay or reimburse reasonable legal expenses and other
costs incurred by the Indemnitee in advance of the final disposition of a
proceeding only if (in addition to the procedures required by the Act) all of
the following are satisfied: (a) the proceeding relates to acts or omissions
with respect to the performance of duties or services on behalf of the
Partnership, (b) the legal proceeding was initiated by a third party who is not
a Limited Partner or, if by a Limited Partner acting in his or her capacity as
such, a court of competent jurisdiction approves such advancement, and (c) the
Indemnitee undertakes to repay the amount paid or reimbursed by the Partnership,
together with the applicable legal rate of interest thereon, if it is ultimately
determined that the Indemnitee is not entitled to indemnification.

(d) The indemnification provided by this Section 6.3 shall be in addition to any
other rights to which an Indemnitee or any other Person may be entitled under
any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity.

(e) The Partnership may purchase and maintain insurance, on behalf of the
Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership’s activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.

 

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(f) For purposes of this Section 6.3, the Partnership shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of this Section 6.3; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

(g) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

(h) An Indemnitee shall not be denied indemnification in whole or in part under
this Section 6.3 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.

(i) The provisions of this Section 6.3 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.

(j) Neither the amendment nor repeal of this Section 6.3, nor the adoption or
amendment of any other provision of the Agreement inconsistent with Section 6.3,
shall apply to or affect in any respect the applicability with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption.

6.4 Liability of the General Partner.

(a) Notwithstanding anything to the contrary set forth in this Agreement, the
General Partner shall not be liable for monetary damages to the Partnership or
any Partners for losses sustained or liabilities incurred as a result of errors
in judgment or of any act or omission if the General Partner acted in good
faith. The General Partner shall not be in breach of any duty that the General
Partner may owe to the Limited Partners or the Partnership or any other Persons
under this Agreement or of any duty stated or implied by law or equity provided
the General Partner, acting in good faith, abides by the terms of this
Agreement.

(b) The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership, itself and its stockholders collectively,
that the General Partner is under no obligation to consider the separate
interests of the Limited Partners (including, without limitation, the tax
consequences to Limited Partners or the tax consequences of some, but not all,
of the Limited Partners) in deciding whether to cause the Partnership to take
(or decline to take) any actions. In the event of a conflict between the
interests of its stockholders on one hand and the Limited Partners on the other,
the General Partner shall endeavor in good faith to resolve the conflict in a
manner not adverse to either its stockholders or the Limited Partners; provided,
however, that for so long as the General Partner directly owns a controlling
interest in the Partnership, any such conflict that the General Partner, in its
sole and absolute discretion, determines cannot be resolved in a manner not
adverse to either its stockholders or the Limited Partner shall be resolved in
favor of the stockholders. The General Partner shall not be liable for monetary
damages for losses sustained, liabilities incurred, or benefits not derived by
Limited Partners in connection with such decisions, provided that the General
Partner has acted in good faith.

 

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(c) Subject to its obligations and duties as General Partner set forth in
Section 6.1 hereof, the General Partner may exercise any of the powers granted
to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.

(d) Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the General Partner to continue
to qualify as a REIT or (ii) to prevent the General Partner from incurring any
taxes under Section 857, Section 4981, or any other provision of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.

(e) Any amendment, modification or repeal of this Section 6.4 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the General Partner’s liability to the Partnership and the Limited Partners
under this Section 6.4 as in effect immediately prior to such amendment,
modification or repeal with respect to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when claims
relating to such matters may arise or be asserted.

6.5 Reimbursement of General Partner.

(a) Except as provided in this Section 6.5 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.

(b) The General Partner shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole and absolute discretion,
for all Administrative Expenses.

6.6 Outside Activities. Subject to the Articles of Incorporation and any
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent, trustee,
Affiliate or stockholder of the General Partner shall be entitled to and may
have business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities
substantially similar or identical to those of the Partnership. Neither the
Partnership nor any of the Limited Partners shall have any rights by virtue of
this Agreement in any such business ventures, interest or activities. None of
the Limited Partners nor any other Person shall have any rights by virtue of
this Agreement or the partnership relationship established hereby in any such
business ventures, interests or activities, and the General Partner shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures, interests and activities to the Partnership or any Limited
Partner, even if such opportunity is of a character which, if presented to the
Partnership or any Limited Partner, could be taken by such Person.

6.7 Employment or Retention of Affiliates.

(a) Any Affiliate of the General Partner may be employed or retained by the
Partnership and may otherwise deal with the Partnership (whether as a buyer,
lessor, lessee, manager,

 

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furnisher of goods or services, broker, agent, lender or otherwise) and may
receive from the Partnership any compensation, price, or other payment therefor
which the General Partner determines to be fair and reasonable.

(b) The Partnership may lend or contribute to its Subsidiaries or other Persons
in which it has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create any
right or benefit in favor of any Subsidiary or any other Person.

(c) The Partnership may transfer assets to joint ventures, other partnerships,
corporations or other business entities in which it is or thereby becomes a
participant upon such terms and subject to such conditions as the General
Partner deems are consistent with this Agreement and applicable law.

(d) Except as expressly permitted by this Agreement, neither the General Partner
nor any of its Affiliates shall sell, transfer or convey any property to, or
purchase any property from, the Partnership, directly or indirectly, except
pursuant to transactions that are on terms that are fair and reasonable to the
Partnership.

6.8 General Partner Participation. The General Partner agrees that all business
activities of the General Partner, including activities pertaining to the
acquisition, development or ownership of self-storage properties or other
properties, shall be conducted through the Partnership or one or more Subsidiary
Partnerships; provided, however, that the General Partner is allowed to make a
direct acquisition, but if and only if, such acquisition is made in connection
with the issuance of Additional Securities, which direct acquisition and
issuance have been approved and determined to be in the best interests of the
General Partner and the Partnership by a majority of the Independent Directors.

6.9 Title to Partnership Assets. Title to Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.

6.10 Miscellaneous. In the event the General Partner redeems any REIT Shares
(other than REIT Shares redeemed in accordance with the share redemption program
of the General Partner through proceeds received from the General Partner’s
distribution reinvestment plan), then the General Partner shall cause the
Partnership to purchase from the General Partner a number of Partnership Units
as determined based on the application of the Conversion Factor on the same
terms that the General Partner exchanged such REIT Shares. Moreover, if the
General Partner makes a cash tender offer or other offer to acquire REIT Shares,
then the General Partner shall cause the Partnership to make a corresponding
offer to the General Partner to acquire an equal number of Partnership Units
held by the General Partner. In the event any REIT Shares are exchanged by the
General Partner pursuant to such offer, the Partnership shall redeem an
equivalent number of the General Partner’s Partnership Units for an equivalent
purchase price based on the application of the Conversion Factor.

 

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ARTICLE 7

CHANGES IN GENERAL PARTNER

7.1 Transfer of the General Partner’s Partnership Interest.

(a) The General Partner shall not transfer all or any portion of its General
Partnership Interest or withdraw as General Partner except as provided in or in
connection with a transaction contemplated by Section 7.1(b), (c) or (d).

(b) Except as otherwise provided in Section 7.1(c) or (d) hereof, the General
Partner shall not engage in any merger, consolidation or other combination with
or into another Person or sale of all or substantially all of its assets, (other
than in connection with a change in the General Partner’s state of incorporation
or organizational form) in each case which results in a change of control of the
General Partner (a “Transaction”), unless:

(i) the approval of the holders of a majority of the Partnership Units
(including the Partnership Units held by the General Partner or an Affiliate
thereof) is obtained;

(ii) as a result of such Transaction all Limited Partners will receive for each
Partnership Unit an amount of cash, securities, or other property equal to the
product of the Conversion Factor and the greatest amount of cash, securities or
other property paid in the Transaction to a holder of one REIT Share in
consideration of one REIT Share, provided that if, in connection with the
Transaction, a purchase, tender or exchange offer (“Offer”) shall have been made
to and accepted by the holders of more than 50% of the outstanding REIT Shares,
each holder of Partnership Units shall be given the option to exchange its
Partnership Units for the greatest amount of cash, securities, or other property
which a Limited Partner would have received had it (A) exercised its Exchange
Right and (B) sold, tendered or exchanged pursuant to the Offer the REIT Shares
received upon exercise of the Exchange Right immediately prior to the expiration
of the Offer; or

(iii) the General Partner is the surviving entity in the Transaction and either
(A) the holders of REIT Shares do not receive cash, securities, or other
property in the Transaction or (B) all Limited Partners (other than the General
Partner or any Subsidiary) receive an amount of cash, securities, or other
property (expressed as an amount per REIT Share) that is no less than the
product of the Conversion Factor and the greatest amount of cash, securities, or
other property (expressed as an amount per REIT Share) received in the
Transaction by any holder of REIT Shares.

(c) Notwithstanding Section 7.1(b), the General Partner may merge with or into
or consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the “Surviving General Partner”), other than Partnership Units held by
the General Partner, are contributed, directly or indirectly, to the Partnership
as a Capital Contribution in exchange for Partnership Units with a fair market
value equal to the value of the assets so contributed as determined by the
Surviving General Partner in good faith and (ii) the Surviving General Partner
expressly agrees to assume all obligations of the General Partner, as
appropriate, hereunder. Upon such contribution and assumption, the Surviving
General Partner shall have the right and duty to amend this Agreement as set
forth in this Section 7.1(c). The Surviving General Partner shall in good faith
arrive at a new method for the calculation of the Cash Amount, the REIT Shares
Amount and Conversion Factor for a Partnership Unit after any such merger or
consolidation so as to approximate the existing method for such calculation as
closely as reasonably possible. Such calculation shall take into account, among
other things, the kind and amount of securities, cash and other property that
was receivable upon such merger or consolidation by a holder of REIT Shares or
options, warrants or other rights relating thereto, and to which a holder of
Partnership Units could have acquired had such

 

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Partnership Units been exchanged immediately prior to such merger or
consolidation. Such amendment to this Agreement shall provide for adjustment to
such method of calculation, which shall be as nearly equivalent as may be
practicable to the adjustments provided for with respect to the Conversion
Factor. The Surviving General Partner also shall in good faith modify the
definition of REIT Shares and make such amendments to Section 8.4 hereof so as
to approximate the existing rights and obligations set forth in Section 8.4 as
closely as reasonably possible. The above provisions of this Section 7.1(c)
shall similarly apply to successive mergers or consolidations permitted
hereunder.

In respect of any transaction described in the preceding paragraph, the General
Partner is required to use its commercially reasonable efforts to structure such
transaction to avoid causing the Limited Partners to recognize a gain for
federal income tax purposes by virtue of the occurrence of or their
participation in such transaction, provided such efforts are consistent with the
exercise of the General Partner’s board of directors’ fiduciary duties to the
stockholders of the General Partner under applicable law.

(d) Notwithstanding Section 7.1(b),

(i) a General Partner may transfer all or any portion of its General Partnership
Interest to (A) a wholly-owned Subsidiary of such General Partner or (B) the
owner of all of the ownership interests of such General Partner, and following a
transfer of all of its General Partnership Interest, may withdraw as General
Partner; and

(ii) the General Partner may engage in Transactions not required by law or by
the rules of any National Securities Exchange on which the REIT Shares are
listed to be submitted to the vote of the holders of the REIT Shares.

7.2 Admission of a Substitute or Additional General Partner. A Person shall be
admitted as a substitute or additional General Partner of the Partnership only
if the following terms and conditions are satisfied:

(a) the Person to be admitted as a substitute or additional General Partner
shall have accepted and agreed to be bound by all the terms and provisions of
this Agreement by executing a counterpart thereof and such other documents or
instruments as may be required or appropriate in order to effect the admission
of such Person as a General Partner, and a certificate evidencing the admission
of such Person as a General Partner shall have been filed for recordation and
all other actions required by Section 2.5 hereof in connection with such
admission shall have been performed;

(b) if the Person to be admitted as a substitute or additional General Partner
is a corporation or a partnership it shall have provided the Partnership with
evidence satisfactory to counsel for the Partnership of such Person’s authority
to become a General Partner and to be bound by the terms and provisions of this
Agreement; and

(c) counsel for the Partnership shall have rendered an opinion (relying on such
opinions from other counsel and the state or any other jurisdiction as may be
necessary) that the admission of the person to be admitted as a substitute or
additional General Partner is in conformity with the Act, that none of the
actions taken in connection with the admission of such Person as a substitute or
additional General Partner will cause (i) the Partnership to be classified other
than as a partnership for federal income tax purposes, or (ii) the loss of any
Limited Partner’s limited liability.

 

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7.3 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner.

(a) Upon the occurrence of an Event of Bankruptcy as to a General Partner (and
its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal
or dissolution of a General Partner (except that, if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners), the
Partnership shall be dissolved and terminated unless the Partnership is
continued pursuant to Section 7.3(b) hereof. The merger of the General Partner
with or into any entity that is admitted as a substitute or successor General
Partner pursuant to Section 7.2 hereof shall not be deemed to be the withdrawal,
dissolution or removal of the General Partner.

(b) Following the occurrence of an Event of Bankruptcy as to a General Partner
(and its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to continue the business of the Partnership for the balance of the term
specified in Section 2.4 hereof by selecting, subject to Section 7.2 hereof and
any other provisions of this Agreement, a substitute General Partner by consent
of a majority in interest of the Limited Partners. If the Limited Partners elect
to continue the business of the Partnership and admit a substitute General
Partner, the relationship with the Partners and of any Person who has acquired
an interest of a Partner in the Partnership shall be governed by this Agreement.

7.4 Removal of a General Partner.

(a) Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of,
a General Partner, such General Partner shall be deemed to be removed
automatically; provided, however, that if a General Partner is on the date of
such occurrence a partnership, the withdrawal, death, dissolution, Event of
Bankruptcy as to or removal of a partner in such partnership shall be deemed not
to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners. The Limited Partners
may not remove the General Partner, with or without cause.

(b) If a General Partner has been removed pursuant to this Section 7.4 and the
Partnership is continued pursuant to Section 7.3 hereof, such General Partner
shall promptly transfer and assign its General Partnership Interest in the
Partnership to the substitute General Partner approved by a majority in interest
of the Limited Partners in accordance with Section 7.3(b) hereof and otherwise
admitted to the Partnership in accordance with Section 7.2 hereof. At the time
of assignment, the removed General Partner shall be entitled to receive from the
substitute General Partner the fair market value of the General Partnership
Interest of such removed General Partner as reduced by any damages caused to the
Partnership by such General Partner. Such fair market value shall be determined
by an appraiser mutually agreed upon by the General Partner and a majority in
interest of the Limited Partners within 10 days following the removal of the
General Partner. In the event that the parties are unable to agree upon an
appraiser, the removed General Partner and a majority in interest of the Limited
Partners each shall select an appraiser. Each such appraiser shall complete an
appraisal of the fair market value of the removed General Partner’s General
Partnership Interest within 30 days of the General Partner’s removal, and the
fair market value of the removed General Partner’s General Partnership Interest
shall be the average of the two appraisals; provided, however, that if the
higher appraisal exceeds the lower appraisal by more than 20% of the amount of
the lower appraisal, the two appraisers, no later than 40

 

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days after the removal of the General Partner, shall select a third appraiser
who shall complete an appraisal of the fair market value of the removed General
Partner’s General Partnership Interest no later than 60 days after the removal
of the General Partner. In such case, the fair market value of the removed
General Partner’s General Partnership Interest shall be the average of the two
appraisals closest in value.

(c) The General Partnership Interest of a removed General Partner, during the
time after default until transfer under Section 7.4(b), shall be converted to
that of a special Limited Partner; provided, however, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership, and shall not be entitled to any portion of the income,
expense, profit, gain or loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such removed
General Partner shall receive and be entitled only to retain distributions or
allocations of such items that it would have been entitled to receive in its
capacity as General Partner, until the transfer is effective pursuant to
Section 7.4(b).

(d) All Partners shall have given and hereby do give such consents, shall take
such actions and shall execute such documents as shall be legally necessary and
sufficient to effect all the foregoing provisions of this Section.

ARTICLE 8

RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS

8.1 Management of the Partnership. The Limited Partners shall not participate in
the management or control of Partnership business nor shall they transact any
business for the Partnership, nor shall they have the power to sign for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner.

8.2 Power of Attorney. Each Limited Partner hereby irrevocably appoints the
General Partner its true and lawful attorney-in-fact, who may act for each
Limited Partner and in its name, place and stead, and for its use and benefit,
to sign, acknowledge, swear to, deliver, file or record, at the appropriate
public offices, any and all documents, certificates, and instruments as may be
deemed necessary or desirable by the General Partner to carry out fully the
provisions of this Agreement and the Act in accordance with their terms, which
power of attorney is coupled with an interest and shall survive the death,
dissolution or legal incapacity of the Limited Partner, or the transfer by the
Limited Partner of any part or all of its Partnership Interest. For the purposes
of this Section 8.2, the term “Limited Partner” shall be deemed to include the
Special Limited Partners, unless the context otherwise requires.

8.3 Limitation on Liability of Limited Partners. No Limited Partner shall be
liable for any debts, liabilities, contracts or obligations of the Partnership.
A Limited Partner shall be liable to the Partnership only to make payments of
its Capital Contribution, if any, as and when due hereunder. After its Capital
Contribution is fully paid, no Limited Partner shall, except as otherwise
required by the Act, be required to make any further Capital Contributions or
other payments or lend any funds to the Partnership.

8.4 Exchange Right.

(a) Subject to Sections 8.4(b), 8.4(c), 8.4(d), 8.4(e) and 8.4(f) and the
provisions of any agreements between the Partnership and one or more Limited
Partners with respect to Partnership Units held by them, each Limited Partner
shall have the right (the “Exchange Right”) to require the Partnership to redeem
on a Specified Exchange Date all or a portion of the Partnership Units held by
such Limited Partner at an exchange price equal to and in the form of the Cash
Amount to be paid by the Partnership, provided that such Partnership Units shall
have been outstanding for at least one year. The

 

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Exchange Right shall be exercised pursuant to a Notice of Exchange delivered to
the Partnership (with a copy to the General Partner) by the Limited Partner who
is exercising the Exchange Right (the “Exchanging Partner”); provided, however,
that the Partnership shall not be obligated to satisfy such Exchange Right if
the General Partner elects to purchase the Partnership Units subject to the
Notice of Exchange pursuant to Section 8.4(b); and provided, further, that no
Limited Partner may deliver more than two Notices of Exchange during each
calendar year. A Limited Partner may not exercise the Exchange Right for less
than 1,000 Partnership Units or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner. The
Exchanging Partner shall have no right, with respect to any Partnership Units so
exchanged, to receive any distribution paid with respect to Partnership Units if
the record date for such distribution is on or after the Specified Exchange
Date.

(b) Notwithstanding the provisions of Section 8.4(a), a Limited Partner that
exercises the Exchange Right shall be deemed to have offered to sell the
Partnership Units described in the Notice of Exchange to the General Partner,
and the General Partner may, in its sole and absolute discretion, elect to
purchase directly and acquire such Partnership Units by paying to the Exchanging
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
General Partner (in its sole and absolute discretion), on the Specified Exchange
Date, whereupon the General Partner shall acquire the Partnership Units offered
for exchange by the Exchanging Partner and shall be treated for all purposes of
this Agreement as the owner of such Partnership Units. If the General Partner
shall elect to exercise its right to purchase Partnership Units under this
Section 8.4(b) with respect to a Notice of Exchange, it shall so notify the
Exchanging Partner within five Business Days after the receipt by the General
Partner of such Notice of Exchange. Unless the General Partner (in its sole and
absolute discretion) shall exercise its right to purchase Partnership Units from
the Exchanging Partner pursuant to this Section 8.4(b), the General Partner
shall have no obligation to the Exchanging Partner or the Partnership with
respect to the Exchanging Partner’s exercise of the Exchange Right. In the event
the General Partner shall exercise its right to purchase Partnership Units with
respect to the exercise of an Exchange Right in the manner described in the
first sentence of this Section 8.4(b), the Partnership shall have no obligation
to pay any amount to the Exchanging Partner with respect to such Exchanging
Partner’s exercise of such Exchange Right, and each of the Exchanging Partner,
the Partnership, and the General Partner, as the case may be, shall treat the
transaction between the General Partner, as the case may be, and the Exchanging
Partner for federal income tax purposes as a sale of the Exchanging Partner’s
Partnership Units to the General Partner, as the case may be. Each Exchanging
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the issuance of REIT Shares upon exercise of the
Exchange Right.

(c) Notwithstanding the provisions of Section 8.4(a) and 8.4(b), a Limited
Partner shall not be entitled to exercise the Exchange Right if the delivery of
REIT Shares to such Partner on the Specified Exchange Date by the General
Partner pursuant to Section 8.4(b) (regardless of whether or not the General
Partner would in fact exercise its rights under Section 8.4(b)) would (i) result
in such Partner or any other person owning, directly or indirectly, REIT Shares
in excess of the Ownership Limit (as defined in the Articles of Incorporation
and calculated in accordance therewith), except as provided in the Articles of
Incorporation, (ii) result in REIT Shares being owned by fewer than 100 persons
(determined without reference to any rules of attribution), except as provided
in the Articles of Incorporation, (iii) result in the General Partner being
“closely held” within the meaning of Section 856(h) of the Code, or (iv) cause
the General Partner to own, directly or constructively, 9.9% or more of the
ownership interests in a tenant within the meaning of Section 856(d)(2)(B) of
the Code. The General Partner, in its sole and absolute discretion, may waive
the restriction on exchange set forth in this Section 8.4(c).

(d) Any Cash Amount to be paid to an Exchanging Partner pursuant to this
Section 8.4 shall be paid on the Specified Exchange Date; provided, however,
that the General Partner may elect to cause the Specified Exchange Date to be
delayed for up to an additional 180 days to the extent required

 

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for the General Partner to cause additional REIT Shares to be issued to provide
financing to be used to make such payment of the Cash Amount. Notwithstanding
the foregoing, the General Partner agrees to use its best efforts to cause the
closing of the acquisition of exchanged Partnership Units hereunder to occur as
quickly as reasonably possible.

(e) Notwithstanding any other provision of this Agreement, the General Partner
shall place appropriate restrictions on the ability of the Limited Partners to
exercise their Exchange Rights as and if deemed necessary to ensure that the
Partnership does not constitute a “publicly traded partnership” under section
7704 of the Code. If and when the General Partner determines that imposing such
restrictions is necessary, the General Partner shall give prompt written notice
thereof (a “Restriction Notice”) to each of the Limited Partners, which notice
shall be accompanied by a copy of an opinion of counsel to the Partnership which
states that, in the opinion of such counsel, restrictions are necessary in order
to avoid the Partnership being treated as a “publicly traded partnership” under
section 7704 of the Code.

(f) Notwithstanding anything else in this Agreement to the contrary, Strategic
Storage Advisor, LLC is prohibited from exchanging or otherwise transferring the
Partnership Units purchased by it on August 24, 2007 for $200,000 cash, so long
as it continues acting as the Advisor pursuant to the Advisory Agreement.

ARTICLE 9

TRANSFERS OF LIMITED PARTNERSHIP INTERESTS

9.1 Purchase for Investment.

(a) Each Limited Partner hereby represents and warrants to the General Partner
and to the Partnership that the acquisition of its Partnership Interests is made
as a principal for its account for investment purposes only and not with a view
to the resale or distribution of such Partnership Interest.

(b) Each Limited Partner agrees that it will not sell, assign or otherwise
transfer its Partnership Interest or any fraction thereof, whether voluntarily
or by operation of law or at judicial sale or otherwise, to any Person who does
not make the representations and warranties to the General Partner set forth in
Section 9.1(a) above and similarly agree not to sell, assign or transfer such
Partnership Interest or fraction thereof to any Person who does not similarly
represent, warrant and agree.

9.2 Restrictions on Transfer of Limited Partnership Interests.

(a) Subject to the provisions of 9.2(b), (c) and (d), no Limited Partner may
offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of its Limited Partnership Interest, or any of such Limited Partner’s
economic rights as a Limited Partner, whether voluntarily or by operation of law
or at judicial sale or otherwise (collectively, a “Transfer”) without the
consent of the General Partner, which consent may be granted or withheld in its
sole and absolute discretion. Any such purported transfer undertaken without
such consent shall be considered to be null and void ab initio and shall not be
given effect. The General Partner may require, as a condition of any Transfer to
which it consents, that the transferor assume all costs incurred by the
Partnership in connection therewith.

(b) No Limited Partner may withdraw from the Partnership other than as a result
of a permitted Transfer (i.e., a Transfer consented to as contemplated by clause
(a) above or clause (c) below or a Transfer pursuant to Section 9.5 below) of
all of its Partnership Units pursuant to this Article 9 or pursuant to an
exchange of all of its Partnership Units pursuant to Section 8.4. Upon the
permitted Transfer or redemption of all of a Limited Partner’s Partnership
Interest, such Limited Partner shall cease to be a Limited Partner.

 

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(c) Subject to 9.2(d), (e) and (f) below, a Limited Partner may Transfer, with
the consent of the General Partner, all or a portion of its Partnership Units to
(i) a parent or parent’s spouse, natural or adopted descendant or descendants,
spouse of such descendant, or brother or sister, or a trust created by such
Limited Partner for the benefit of such Limited Partner and/or any such
Person(s), of which trust such Limited Partner or any such Person(s) is a
trustee, (ii) a corporation controlled by a Person or Persons named in
(i) above, or (iii) if the Limited Partner is an entity, its beneficial owners.

(d) No Limited Partner may effect a Transfer of its Limited Partnership
Interest, in whole or in part, if, in the opinion of legal counsel for the
Partnership, such proposed Transfer would otherwise violate any applicable
federal or state securities or blue sky law (including investment suitability
standards).

(e) No Transfer by a Limited Partner of its Partnership Units, in whole or in
part, may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, the transfer would result in the Partnership’s being treated as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner to continue to qualify as a REIT or subject the General Partner
to any additional taxes under Section 857 or Section 4981 of the Code, or
(iii) such transfer is effectuated through an “established securities market” or
a “secondary market (or the substantial equivalent thereof)” within the meaning
of Section 7704 of the Code.

(f) No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Regulations
Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a
nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2)),
without the consent of the General Partner, which may be withheld in its sole
and absolute discretion, provided that as a condition to such consent the lender
will be required to enter into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Cash Amount any Partnership Units
in which a security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.

(g) Any Transfer in contravention of any of the provisions of this Article 9
shall be void and ineffectual and shall not be binding upon, or recognized by,
the Partnership.

(h) Prior to the consummation of any Transfer under this Article 9, the
transferor and/or the transferee shall deliver to the General Partner such
opinions, certificates and other documents as the General Partner shall request
in connection with such Transfer.

9.3 Admission of Substitute Limited Partner.

(a) Subject to the other provisions of this Article 9, an assignee of the
Limited Partnership Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee, or other recipient of any disposition
of such Limited Partnership Interest) shall be deemed admitted as a Limited
Partner of the Partnership only with the consent of the General Partner and upon
the satisfactory completion of the following:

(i) The assignee shall have accepted and agreed to be bound by the terms and
provisions of this Agreement by executing a counterpart or an amendment thereof,
including a revised Exhibit A, and such other documents or instruments as the
General Partner may require in order to effect the admission of such Person as a
Limited Partner.

 

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(ii) To the extent required, an amended Certificate evidencing the admission of
such Person as a Limited Partner shall have been signed, acknowledged and filed
for record in accordance with the Act.

(iii) The assignee shall have delivered a letter containing the representation
set forth in Section 9.1(a) hereof and the agreement set forth in Section 9.1(b)
hereof.

(iv) If the assignee is a corporation, partnership or trust, the assignee shall
have provided the General Partner with evidence satisfactory to counsel for the
Partnership of the assignee’s authority to become a Limited Partner under the
terms and provisions of this Agreement.

(v) The assignee shall have executed a power of attorney containing the terms
and provisions set forth in Section 8.2 hereof.

(vi) The assignee shall have paid all legal fees and other expenses of the
Partnership and the General Partner and filing and publication costs in
connection with its substitution as a Limited Partner.

(vii) The assignee has obtained the prior written consent of the General Partner
to its admission as a Substitute Limited Partner, which consent may be given or
denied in the exercise of the General Partner’s sole and absolute discretion.

(b) For the purpose of allocating Profits and Losses and distributing cash
received by the Partnership, a Substitute Limited Partner shall be treated as
having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.3(a)(ii) hereof or, if
no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.

(c) The General Partner shall cooperate with the Person seeking to become a
Substitute Limited Partner by preparing the documentation required by this
Section and making all official filings and publications. The Partnership shall
take all such action as promptly as practicable after the satisfaction of the
conditions in this Article 9 to the admission of such Person as a Limited
Partner of the Partnership.

9.4 Rights of Assignees of Partnership Interests.

(a) Subject to the provisions of Sections 9.1 and 9.2 hereof, except as required
by operation of law, the Partnership shall not be obligated for any purposes
whatsoever to recognize the assignment by any Limited Partner of its Partnership
Interest until the Partnership has received notice thereof.

(b) Any Person who is the assignee of all or any portion of a Limited Partner’s
Limited Partnership Interest, but does not become a Substitute Limited Partner
and desires to make a further assignment of such Limited Partnership Interest,
shall be subject to all the provisions of this Article 9 to the same extent and
in the same manner as any Limited Partner desiring to make an assignment of its
Limited Partnership Interest.

 

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9.5 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited
Partner. The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner, the trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.

9.6 Joint Ownership of Interests. A Partnership Interest may be acquired by two
individuals as joint tenants with right of survivorship, provided that such
individuals either are married or are related and share the same home as tenants
in common. The written consent or vote of both owners of any such jointly held
Partnership Interest shall be required to constitute the action of the owners of
such Partnership Interest; provided, however, that the written consent of only
one joint owner will be required if the Partnership has been provided with
evidence satisfactory to the counsel for the Partnership that the actions of a
single joint owner can bind both owners under the applicable laws of the state
of residence of such joint owners. Upon the death of one owner of a Partnership
Interest held in a joint tenancy with a right of survivorship, the Partnership
Interest shall become owned solely by the survivor as a Limited Partner and not
as an assignee. The Partnership need not recognize the death of one of the
owners of a jointly-held Partnership Interest until it shall have received
notice of such death. Upon notice to the General Partner from either owner, the
General Partner shall cause the Partnership Interest to be divided into two
equal Partnership Interests, which shall thereafter be owned separately by each
of the former owners.

9.7 Redemption of Partnership Units. The General Partner will cause the
Partnership to redeem Partnership Units, to the extent it shall have legally
available funds therefor, at any time the General Partner redeems shares of
capital stock in itself. The number and class or series of Partnership Units
redeemed and the redemption price shall equal the number (multiplied by the
Conversion Factor) of shares of capital stock the General Partner redeems and
the redemption price at which the General Partner redeems such shares,
respectively.

ARTICLE 10

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

10.1 Books and Records. At all times during the continuance of the Partnership,
the Partners shall keep or cause to be kept at the Partnership’s specified
office true and complete books of account in accordance with generally accepted
accounting principles, including: (a) a current list of the full name and last
known business address of each Partner, (b) a copy of the Certificate of Limited
Partnership and all certificates of amendment thereto, (c) copies of the
Partnership’s federal, state and local income tax returns and reports,
(d) copies of this Agreement and amendments thereto and any financial statements
of the Partnership for the three most recent years and (e) all documents and
information required under the Act. Any Partner or its duly authorized
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to inspect or copy such records during ordinary business
hours.

10.2 Custody of Partnership Funds; Bank Accounts.

(a) All funds of the Partnership not otherwise invested shall be deposited in
one or more accounts maintained in such banking or brokerage institutions as the
General Partner shall determine, and withdrawals shall be made only on such
signature or signatures as the General Partner may, from time to time,
determine.

 

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(b) All deposits and other funds not needed in the operation of the business of
the Partnership may be invested by the General Partner in investment grade
instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers’ acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.2(b).

10.3 Fiscal and Taxable Year. The fiscal and taxable year of the Partnership
shall be the calendar year.

10.4 Annual Tax Information and Report. Within 90 days after the end of each
fiscal year of the Partnership, the General Partner shall furnish to each person
who was a Limited Partner at any time during such year the tax information
necessary to file such Limited Partner’s individual tax returns as shall be
reasonably required by law.

10.5 Tax Matters Partner; Tax Elections; Special Basis Adjustments.

(a) The General Partner shall be the Tax Matters Partner of the Partnership
within the meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner,
the General Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters Partner.
The General Partner shall have the right to retain professional assistance in
respect of any audit of the Partnership by the Service and all out-of-pocket
expenses and fees incurred by the General Partner on behalf of the Partnership
as Tax Matters Partner shall constitute Partnership expenses. In the event the
General Partner receives notice of a final Partnership adjustment under
Section 6223(a)(2) of the Code, the General Partner shall either (i) file a
court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner’s reasons for determining not to file such a petition.

(b) All elections required or permitted to be made by the Partnership under the
Code or any applicable state or local tax law shall be made by the General
Partner in its sole and absolute discretion.

(c) In the event of a transfer of all or any part of the Partnership Interest of
any Partner, the Partnership, at the option of the General Partner, may elect
pursuant to Section 754 of the Code to adjust the basis of the Partnership’s
assets. Notwithstanding anything contained in Article 5 of this Agreement, any
adjustments made pursuant to Section 754 of the Code shall affect only the
successor in interest to the transferring Partner and in no event shall be taken
into account in establishing, maintaining or computing Capital Accounts for the
other Partners for any purpose under this Agreement. Each Partner will furnish
the Partnership with all information necessary to give effect to such election.

10.6 Reports Made Available to Limited Partners.

(a) As soon as practicable after the close of each fiscal quarter (other than
the last quarter of the fiscal year), upon written request by a Limited Partner
to the General Partner, the General Partner will make available, without cost,
to each Limited Partner a quarterly report containing financial statements of
the Partnership, or of the General Partner if such statements are prepared
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consolidated basis with the General Partner, for such fiscal quarter, presented
in accordance with generally accepted accounting principles. As soon as
practicable after the close of each fiscal year, upon written request by a
Limited Partner to the General Partner, the General Partner will make available,
without cost, to each Limited Partner an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
fiscal year, presented in accordance with generally accepted accounting
principles.

(b) Any Partner shall further have the right to a private audit of the books and
records of the Partnership at the expense of such Partner, provided such audit
is made for Partnership purposes and is made during normal business hours.

ARTICLE 11

AMENDMENT OF AGREEMENT; MERGER

The General Partner’s consent shall be required for any amendment to this
Agreement. The General Partner, without the consent of the Limited Partners, may
amend this Agreement in any respect or merge or consolidate the Partnership with
or into any other partnership or business entity (as defined in Section 17-211
of the Act) in a transaction pursuant to Section 7.1(b), (c) or (d) hereof;
provided, however, that the following amendments and any other merger or
consolidation of the Partnership shall require the consent of the holders of a
majority of the Partnership Units (excluding the Partnership Units held by the
General Partner or an Affiliate thereof):

(a) any amendment affecting the operation of the Conversion Factor or the
Exchange Right (except as provided in Section 8.4(d) or 7.1(c) hereof) in a
manner adverse to the Limited Partners;

(b) any amendment that would adversely affect the rights of the Limited Partners
to receive the distributions payable to them hereunder, other than with respect
to the issuance of additional Partnership Interests pursuant to Section 4.2
hereof;

(c) any amendment that would alter the Partnership’s allocations of Profit and
Loss to the Limited Partners, other than with respect to the issuance of
additional Partnership Interests pursuant to Section 4.2 hereof; or

(d) any amendment that would impose on the Limited Partners any obligation to
make additional Capital Contributions to the Partnership.

ARTICLE 12

GENERAL PROVISIONS

12.1 Notices. All communications required or permitted under this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or upon deposit in the United States mail, registered, postage
prepaid return receipt requested, to the Partners at the addresses set forth in
Exhibit A attached hereto; provided, however, that any Partner may specify a
different address by notifying the General Partner in writing of such different
address. Notices to the Partnership shall be delivered at or mailed to its
specified office.

12.2 Survival of Rights. Subject to the provisions hereof limiting transfers,
this Agreement shall be binding upon and inure to the benefit of the Partners
and the Partnership and their respective legal representatives, successors,
transferees and assigns.

 

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12.3 Additional Documents. Each Partner agrees to perform all further acts and
execute, swear to, acknowledge and deliver all further documents which may be
reasonable, necessary, appropriate or desirable to carry out the provisions of
this Agreement or the Act.

12.4 Severability. If any provision of this Agreement shall be declared illegal,
invalid, or unenforceable in any jurisdiction, then such provision shall be
deemed to be severable from this Agreement (to the extent permitted by law) and
in any event such illegality, invalidity or unenforceability shall not affect
the remainder hereof.

12.5 Entire Agreement. This Agreement and exhibits attached hereto constitute
the entire Agreement of the Partners and supersede all prior written agreements
and prior and contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof.

12.6 Pronouns and Plurals. When the context in which words are used in the
Agreement indicates that such is the intent, words in the singular number shall
include the plural and the masculine gender shall include the neuter or female
gender as the context may require.

12.7 Headings. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement
or any particular Article.

12.8 Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original copy and all of which together shall
constitute one and the same instrument binding on all parties hereto,
notwithstanding that all parties shall not have signed the same counterpart.

12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware; provided, however, that
causes of action for violations of federal or state securities laws shall not be
governed by this Section 12.9.

[Signatures appear on next page.]

 

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IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures
to this Second Amended and Restated Limited Partnership Agreement, all as of the
28th day of March, 2014.

 

GENERAL PARTNER: STRATEGIC STORAGE TRUST, INC. By:  

/s/ H. Michael Schwartz

  H. Michael Schwartz, President and Chief Executive Officer ORIGINAL LIMITED
PARTNER: STRATEGIC STORAGE ADVISOR, LLC By:  

/s/ H. Michael Schwartz

  H. Michael Schwartz, President SPECIAL LIMITED PARTNERS: STRATEGIC STORAGE
ADVISOR, LLC By:  

/s/ H. Michael Schwartz

  H. Michael Schwartz, President USA SELF STORAGE ADVISOR LLC By:  

/s/ H. Michael Schwartz

  H. Michael Schwartz, President USA SS REIT II ADVISOR, LLC By:  

/s/ H. Michael Schwartz

  H. Michael Schwartz, President

 

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