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                                                                   EXHIBIT 10.28



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                               AGENCY AGREEMENT

                          Dated as of February 26, 2001

                                     between

                         SHURGARD STORAGE CENTERS, INC.,
                            as the Construction Agent

                                       and

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
             as Owner Trustee under the Storage Centers Trust 2001,
                                  as the Lessor

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
<S>                                                                                  <C>
ARTICLE I DEFINITIONS; RULES OF USAGE ..........................................       1
        1.1    Definitions .....................................................       1
        1.2    Interpretation ..................................................       2

ARTICLE II APPOINTMENT OF THE CONSTRUCTION AGENT ...............................       2
        2.1    Appointment .....................................................       2
        2.2    Acceptance and Undertaking ......................................       4
        2.3    Term ............................................................       5
        2.4    Scope of Authority ..............................................       5
        2.5    Delegation of Duties ............................................       6
        2.6    Covenants of the Construction Agent .............................       6
        2.7    Construction Period Cure Option .................................       7

ARTICLE III THE PROPERTIES .....................................................       8
        3.1    Construction ....................................................       8
        3.2    Amendments; Modifications .......................................       8
        3.3    Abandonment or Permanent Discontinuance .........................       9

ARTICLE IV PAYMENT OF FUNDS ....................................................       9
        4.1    Right to Receive Construction Cost ..............................       9

ARTICLE V EVENTS OF DEFAULT ....................................................      10
        5.1    Events of Default ...............................................      10
        5.2    Damages .........................................................      11
        5.3    Remedies; Remedies Cumulative ...................................      11

ARTICLE VI THE LESSOR'S RIGHTS .................................................      12
        6.1    Exercise of the Lessor's Rights .................................      12
        6.2    The Lessor's Right to Cure the Construction Agent's Defaults ....      12

ARTICLE VII MISCELLANEOUS ......................................................      13
        7.1    Notices .........................................................      13
        7.2    Successors and Assigns ..........................................      13
        7.3    GOVERNING LAW ...................................................      13
        7.4    SUBMISSION TO JURISDICTION; VENUE; WAIVERS ......................      13
        7.5    Amendments and Waivers ..........................................      13
        7.6    Counterparts ....................................................      13
        7.7    Severability ....................................................      14
        7.8    Headings and Table of Contents ..................................      14
        7.9    WAIVER OF JURY TRIAL ............................................      14
        7.10   Incorporation of Lease Provisions ...............................      14
</TABLE>


                                       i

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                                AGENCY AGREEMENT


        THIS AGENCY AGREEMENT, dated as of February 26, 2001 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
the "Agreement"), between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association ("FSB"), as Owner Trustee under the Storage Centers Trust
2001 (the "Lessor") and SHURGARD STORAGE CENTERS, INC., a Washington corporation
(the "Construction Agent").


                              PRELIMINARY STATEMENT

        A. The Lessor and the Construction Agent are parties to that certain
Lease Agreement dated as of even date herewith (as amended, modified, extended,
supplemented, restated and/or replaced from time to time, the "Lease"), pursuant
to which the Construction Agent, as lessee (in such capacity, the "Lessee") has
agreed to lease certain Land, Improvements and Equipment and/or to sublease a
ground leasehold in certain Properties subject to one or more Ground Leases from
the Lessor.

        B. In connection with the execution and delivery of the Participation
Agreement, the Lease and the other Operative Agreements, and subject to the
terms and conditions hereof, (i) the Lessor desires to appoint the Construction
Agent as its sole and exclusive agent in connection with the identification and
acquisition or ground lease of the Properties (provided, title to the Properties
shall be held in the name of the Lessor, except that the interest of the Lessor
in certain of the Properties shall be a ground leasehold interest pursuant to
one or more Ground Leases, if requested by the Construction Agent) and the
development, acquisition, installation, construction and testing of the
Improvements and the Equipment in accordance with the Plans and Specifications
and (ii) the Construction Agent desires, for the benefit of the Lessor, to
identify and acquire or ground lease the Properties and to cause the
development, acquisition, installation, construction and testing of the
Improvements, the Equipment and the other components of the Properties in
accordance with the Plans and Specifications and to undertake such other
liabilities and obligations as are herein set forth.

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


                                    ARTICLE I
                           DEFINITIONS; RULES OF USAGE

        1.1     DEFINITIONS.

               For purposes of this Agreement, capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned to
them in Appendix A to that certain

<PAGE>   4

Participation Agreement dated as of February 26, 2001 (as amended, modified,
extended, supplemented, restated and/or replaced from time to time in accordance
with the applicable provisions thereof, the "Participation Agreement") among the
Construction Agent, the various parties thereto from time to time, as
Guarantors, the Lessor, the various banks and lending institutions parties
thereto from time to time, as Holders, the various banks and lending
institutions parties thereto from time to time, as Lenders, and Bank of America,
N.A., as the agent for the Lenders and respecting the Security Documents, as the
agent for the Secured Parties. Unless otherwise indicated, references in this
Agreement to articles, sections, paragraphs, clauses, appendices, schedules and
exhibits are to the same contained in this Agreement.

        1.2     INTERPRETATION.

               The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Agreement.


                                   ARTICLE II
                      APPOINTMENT OF THE CONSTRUCTION AGENT

        2.1     APPOINTMENT.

        Subject to the terms and conditions hereof, the Lessor hereby
irrevocably designates and appoints the Construction Agent as its exclusive
agent and as general contractor, and the Construction Agent accepts such
appointment, in connection with the identification and acquisition from time to
time of the Properties (provided, title to the Properties shall be held in the
name of the Lessor, except that the interest of the Lessor in certain Properties
shall be a ground leasehold interest pursuant to one or more Ground Leases if
requested by the Construction Agent) and the development, acquisition,
installation, construction and testing of the Improvements, the Equipment and
the other components of the Properties in accordance with the Plans and
Specifications on the Land, and pursuant to the terms of the Operative
Agreements. Notwithstanding any provisions hereof or in any other Operative
Agreement to the contrary, the Construction Agent acknowledges and agrees that
the Lessor shall advance no more than the sum of the aggregate Available
Commitments plus the aggregate Available Holder Commitments of the Holders in
regard to the Properties.

        After the Construction Agent gains knowledge or a reasonable expectation
that the aggregate of all amounts previously requested or thereafter to be
requested as Advances with respect to any Property shall exceed the Construction
Budget for such Property (each such circumstance, a "Cost Overrun") or that
Completion for any Property shall not occur on or prior to the Construction
Period Termination Date for such Property (each such circumstance, a
"Construction Failure"), the Construction Agent shall promptly (and in any event
within ten (10) Business Days of gaining such knowledge or expectation) notify
the Agent in writing of the same. If at any time prior to the Construction
Period Termination Date for any Property, (a)(i) the Lessor or the Agent shall
have determined in its respective reasonable good faith judgment that a Cost
Overrun or a Construction Failure shall occur with respect to such Property or
(ii)


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received any notice from the Construction Agent as referenced in the preceding
provisions of this paragraph, and (b) if the Construction Agent shall have
failed to complete a Construction Period Cure for such Property within the Cure
Period with respect to such Property in accordance with Section 2.7, then, in
any such case, upon the lapse of the Cure Period (if any), the Lessor shall have
the option (at the direction of the Agent, acting with consent of the Majority
Secured Parties) to replace the Construction Agent with a new construction agent
selected by the Lessor (at the direction of the Agent, acting with consent of
the Majority Secured Parties) to finalize the Completion of the Properties. The
cost and expense incurred to finalize the Completion of the Properties as
referenced in the preceding sentence shall be the responsibility of the
Construction Agent and shall be payable by the Construction Agent on demand;
provided, in no event shall the obligations of the Construction Agent for such
costs and expenses exceed the Maximum Amount; provided, further, amounts
expended by the Lessor to finalize the Completion of the Properties as
referenced in the preceding sentence shall be added to the Property Cost.

        Costs in excess of each Construction Budget previously delivered to the
Agent for each Property shall not be the responsibility of the Construction
Agent (unless the Construction Agent elects to incur such costs as out-of-pocket
expenses) but instead shall be paid by the Lenders and the Holders to the
extent, but only to the extent, that (after taking into account such excess
costs and any other items of excess cost which are then known to the
Construction Agent or are reasonable for the Construction Agent to expect) the
conditions precedent set forth in Section 5.4 of the Participation Agreement are
satisfied.

        Subject to the Lenders and the Holders not agreeing to continue making
Advances in accordance with the provisions of the next paragraph and in the
event from time to time the Construction Agent gains knowledge or a reasonable
expectation, or the Lessor or the Agent shall have determined in its respective
reasonable good faith judgment, that a Cost Overrun or a Construction Failure
shall occur, and if the Construction Agent shall have failed to complete a
Construction Period Cure with respect to such Property in accordance with
Section 2.7, then the Construction Agent shall elect and comply (within ten (10)
days of the Construction Agent gaining such knowledge or expectation or within
ten (10) days of the Lessor's or the Agent's making such determination and
giving written notice of the same to the Construction Agent) with one of the
options set forth in the following subsections (i) or (ii) (collectively, the
"Construction Agent Options"): (i) the Construction Agent shall pay to the
Lessor, on a date designated by the Lessor, an aggregate amount equal to (A) the
Termination Value for all, but not less than all, the Properties plus (B) any
and all fees and expenses incurred by or on behalf of the Lessor or the Agent in
connection with the Properties (including without limitation the transfer
thereof) that are to be reimbursed by the Construction Agent or Lessee under the
terms of the Operative Agreements, and on such date the Lessor shall transfer
and convey to the Construction Agent all right, title and interest of the Lessor
in and to the Properties in the manner provided in the Lease or (ii) the
Construction Agent shall pay to the Lessor, on a date designated by the Lessor,
an aggregate amount equal to the Maximum Amount and on and after such date, the
Construction Agent shall be irrevocably deemed, without any further action, to
have relinquished all right, title and interest in and to all, but not less than
all, the Properties and to have transferred and conveyed all such right, title
and interest to the Lessor. In connection with any transfer of the Properties as
referenced above in this Section 2.1 by the Lessor to the Construction Agent,
the Lessor shall execute and deliver to the Construction Agent, at the cost and
expense of the


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Construction Agent (subject to the limitations described in the next sentence),
each of the following: (v) a termination or assignment (as requested by the
Construction Agent) of each applicable Ground Lease and special or limited
warranty Deeds conveying each Property (to the extent it is real property not
subject to a Ground Lease) to the Construction Agent free and clear of the Lien
of the Lease, the Lien of the Credit Documents and any Lessor Liens; (w) a Bill
of Sale conveying each Property (to the extent it is personal property) to the
Construction Agent free and clear of the Lien of the Lease, the Lien of the
Credit Documents and any Lessor Liens; (x) any real estate tax affidavit or
other document required by law to be executed and filed in order to record the
applicable Deed and/or the applicable Ground Lease termination; (y) FIRPTA
affidavits and (z) such other instruments and documents as may be necessary in
the jurisdiction in which each Property is located to consummate such transfer.
The Lessor (at the discretion of the Agent) shall elect whether the
out-of-pocket fees and expenses associated with the transfer of the Properties
shall be paid by either (i) sales proceeds from the Properties, (ii) the Lessor
(but only to the extent amounts are available therefor with respect to the
Available Commitments and the Available Holder Commitments or each Lender and
each Holder approves the necessary increases in the Available Commitments and
the Available Holder Commitments to fund such fees and expenses) or (iii) the
Construction Agent; provided, if the Construction Agent funds such fees and
expenses (as referenced in subsection (iii)) then the Maximum Amount will be
reduced accordingly, as more specifically described in the definition of
"Maximum Amount". Amounts funded by the Lenders and the Holders with respect to
the foregoing shall be added to the Property Cost. All of the foregoing
documentation must be in form and substance reasonably satisfactory to the
Lessor. Subject to the foregoing, all, but not less than all, the Properties
shall be conveyed to the Construction Agent "AS-IS", "WHERE-IS" and in then
present physical condition.

        In the event the costs in excess of any original or modified
Construction Budget previously delivered to the Agent for any Property (other
than such costs that the Construction Agent has incurred as out-of-pocket
expenses) are not funded by the Lenders and the Holders because (after taking
into account such excess costs and any other items of excess cost which are then
known to the Construction Agent or are reasonable for the Construction Agent to
expect) the conditions precedent set forth in Section 5.4 of the Participation
Agreement are not satisfied, then if, but only if, the Majority Secured Parties
agree at such time (but subject to Section 5.10 of the Participation Agreement),
(a) such excess costs shall be funded and (b) the Holder Commitments and the
Lender Commitments shall be increased accordingly.

        2.2     ACCEPTANCE AND UNDERTAKING.

        The Construction Agent hereby unconditionally accepts the agency
appointment and undertakes, for the benefit of the Lessor, to identify and
acquire certain Properties (provided, title to the Properties shall be held in
the name of the Lessor, except that the interest of the Lessor in certain
Properties shall be a ground leasehold interest pursuant to one or more Ground
Leases if requested by the Construction Agent) and the development, acquisition,
installation, construction and testing of the Improvements, the Equipment and
the other components of the Properties in accordance with the Plans and
Specifications and the Operative Agreements.


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        2.3     TERM.

        This Agreement shall commence on the date hereof and, unless the Lessor
(in its sole discretion) elects otherwise, this Agreement shall terminate with
respect to a Property on the Construction Period Termination Date for such
Property. If this Agreement expires prior to the Completion of all, but not less
than all, the Properties, then the Lessor may hire a new construction agent (at
the direction of the Agent) to finalize the Completion of all such Properties.
The cost and expense incurred to finalize the Completion of the Properties as
referenced in the preceding sentence shall be the responsibility of the
Construction Agent and shall be payable by the Construction Agent on demand;
provided, in no event shall the obligations of the Construction Agent for such
costs and expenses exceed the Maximum Amount; provided, further, amounts
expended by the Lessor to finalize the Completion of the Properties as
referenced in the preceding sentence shall be added to the Property Cost.

        2.4     SCOPE OF AUTHORITY.

                (a) The Lessor hereby expressly authorizes the Construction
        Agent, or any agent or contractor of the Construction Agent, and the
        Construction Agent unconditionally agrees for the benefit of the Lessor,
        subject to Section 2.4(b), to take all action necessary or desirable for
        the performance and satisfaction of any and all of the Lessor's
        obligations under any construction agreement and to fulfill all of the
        obligations of the Construction Agent including without limitation:

                        (i) the identification and assistance with the
                acquisition of Properties in accordance with the terms and
                conditions of the Participation Agreement;

                        (ii) all design and supervisory functions relating to
                the development, acquisition, installation, construction and
                testing of the related Improvements, Equipment and other
                components of the applicable Property and performing all
                engineering work related thereto;

                        (iii) (A) negotiating, entering into, performing and
                enforcing all contracts and arrangements to acquire or ground
                lease the Properties and to procure the equipment necessary to
                construct the Properties and (B) negotiating, executing,
                performing and enforcing all contracts and arrangements to
                develop, acquire, install, construct and test the Improvements,
                the Equipment and the other components of the Properties on such
                terms and conditions as are deemed appropriate by the
                Construction Agent in its reasonable, good faith discretion;

                        (iv) obtaining all necessary permits, licenses,
                consents, approvals, entitlements and other authorizations,
                including without limitation all of the foregoing required for
                the Properties and the use and occupancy thereof and those
                required under applicable Law (including without limitation
                Environmental Laws), from all Governmental Authorities in
                connection with the development, acquisition, installation,
                construction and testing of the Improvements, the


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                Equipment and the other components of the Properties in
                accordance with the Plans and Specifications;

                        (v) maintaining all books and records with respect to
                the Properties and the construction, operation and management
                thereof; and

                        (vi) performing any other acts necessary in connection
                with the identification and acquisition or ground leasing of the
                Properties and the development, acquisition, installation,
                construction and testing of the related Improvements, Equipment
                and all other additional components of the Properties in
                accordance with the Plans and Specifications.

                (b) The Construction Agent shall have the right to enter into
        such contracts and agreements in its own name or through one or more
        Affiliates as it deems necessary or desirable to perform its obligations
        hereunder, but neither the Construction Agent nor any of its Affiliates
        or agents shall enter into any contract or consent to any contract in
        the name of the Lessor without the Lessor's prior written consent, such
        consent to be given or withheld in the exercise of the Lessor's
        reasonable discretion; provided, however, that (i) no such contract will
        increase the obligations of the Lessor beyond the obligations of the
        Lessor as are expressly set forth in the Operative Agreements and (ii)
        each such contract shall be expressly non-recourse to the Lessor on
        terms and conditions that are reasonably acceptable to the Lessor.

                (c) Subject to the terms and conditions of this Agreement and
        the other Operative Agreements, the Construction Agent shall have sole
        management and control over the installation, construction and testing
        means, methods, sequences and procedures with respect to the Properties.

        2.5     DELEGATION OF DUTIES

        The Construction Agent may execute any of its duties under this
Agreement by or through agents, contractors, employees or attorneys-in-fact;
provided, however, that no such delegation shall limit or reduce in any way the
Construction Agent's duties and obligations under this Agreement.

        2.6     COVENANTS OF THE CONSTRUCTION AGENT.

        The Construction Agent hereby covenants and agrees that it will:

                (a) following the Construction Commencement Date for each
        Property, cause the development, acquisition, installation, construction
        and testing of such Property to be prosecuted in a good and workmanlike
        manner, and respecting each Property substantially in accordance with
        the applicable Plans and Specifications, the Construction Budget, the
        applicable contracts relating to the Improvements, the Equipment, other
        components of such Property and procurement of construction materials,
        the applicable


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        construction contracts, the applicable construction schedule, prevalent
        industry practices and otherwise in accordance with Section 3.1 hereof;

                (b) not commence construction with respect to any Improvements
        to a Property on a date that is within six (6) months prior to the
        Construction Period Termination Date for such Property;

                (c) subject to Sections 2.1 and 2.7, on or before the
        Construction Period Termination Date for any Property, cause the
        Completion Date for any Improvements to such Property to occur, in each
        case free and clear (by removal or bonding) of Liens or claims for
        materials supplied or labor or services performed in connection with the
        development, acquisition, installation, construction or testing thereof
        and otherwise in compliance with the other terms and provisions of the
        Operative Agreements;

                (d) subject to Sections 2.1 and 2.7, cause all outstanding punch
        list items with respect to any Property to be completed within six
        months following the Completion Date for such Property;

                (e) at all times subsequent to the initial Advance respecting a
        Property (i) cause good and marketable title to the applicable Property
        to vest in the Owner Trustee (except that the interest of the Lessor in
        certain Properties shall be a ground leasehold interest pursuant to one
        or more Ground Leases if requested by the Construction Agent) (ii) cause
        a valid, perfected, first priority Lien on the applicable Property to be
        in place in favor of the Agent (for the benefit of the Lenders and the
        Holders), (iii) file all necessary documents under the applicable real
        property law and Article 9 of the Uniform Commercial Code to perfect
        such title and Liens and (iv) not permit Liens (other than Permitted
        Liens) to be filed or maintained respecting the applicable Property;

                (f) no less than five (5) Business Days prior to the scheduled
        date for the initial Construction Advance to be made in connection with
        any Property, the Construction Agent shall deliver to the Agent (for the
        benefit of the Lessor) true, complete and correct copies of the
        Construction Budget therefor. Thereafter, the Construction Agent, on a
        monthly basis, shall deliver to the Lessor true, correct and complete
        copies of any material modifications of (including increases to) the
        Construction Budget and progress reports regarding the development,
        acquisition, installation, construction and testing of the Properties;
        and

                (g) procure insurance for the Properties during the Construction
        Period in accordance with the provisions of Article XIV of the Lease.

        2.7     CONSTRUCTION PERIOD CURE OPTION.

               Upon the occurrence of any Cost Overrun, Construction Failure or
any event, condition or breach described in subsection (b) of the next
paragraph, the Construction Agent


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shall promptly (and in any event within ten (10) Business Days of gaining
knowledge or any reasonable expectation thereof) notify the Agent in writing of
the same.

        Notwithstanding anything in this Agreement or any other Operative
Agreement to the contrary, upon the occurrence of (a) any Cost Overrun or
Construction Failure as defined in Section 2.1 or (b) except, in all cases, for
any breach of any payment obligation owing by the Construction Agent or the
Lessee to any Financing Party pursuant to the Operative Agreements, any breach
of any Property-related obligation, covenant or warranty or any Property-related
misrepresentation pursuant to the Operative Agreements by the Construction Agent
or the Lessee, in each case which affects an individual Construction Period
Property, if (i) the Construction Agent purchases or causes to be purchased such
Construction Period Property for its Termination Value in accordance with
subsections (v) through (z) of the fourth paragraph of Section 2.1 (the
"Construction Period Cure"), (ii) such purchase is consummated, and the
Termination Value of such Construction Period Property is paid to the Agent,
within 30 days following the earliest of (A) the date on which the Construction
Agent knows, or is deemed to know, of such occurrence and (B) the date any
Financing Party notifies the Construction Agent of such occurrence (the "Cure
Period"), and (iii) the aggregate Property Cost of all Properties subject to a
Construction Period Cure does not at any time exceed $30,000,000, then, in each
such case, neither the Lessor, the Agent nor any other Financing Party shall
have the right, during such Cure Period, (y) to replace the Construction Agent
or require the Construction Agent to elect a Construction Agent Option pursuant
to Section 2.1 (in the case of an occurrence described in subsection (a) above)
or (z) to declare a Default or an Event of Default and no such Default or Event
of Default shall be deemed to have occurred (in the case of an occurrence
described in subsection (b) above).


                                   ARTICLE III
                                 THE PROPERTIES

        3.1     CONSTRUCTION.

        The Construction Agent shall cause the Improvements, the Equipment and
all other components of the Properties to be developed, acquired, installed,
constructed and tested in compliance with all Legal Requirements, all Insurance
Requirements, all manufacturer's specifications and standards and the standards
maintained by the Construction Agent for similar properties owned or operated by
the Construction Agent, unless non-compliance, individually or in the aggregate,
shall not have and could not be reasonably expected to have a Material Adverse
Effect.

        3.2     AMENDMENTS; MODIFICATIONS.

                (a) The Construction Agent may at any time revise, amend or
        modify the Plans and Specifications with respect to any Property without
        the consent of the Lessor; provided, that any such amendment to such
        Plans and Specifications does not result (i) in the Completion Date of
        the Improvements on such Property occurring on or after the Construction
        Period Termination Date for such Property, (ii) in the cost of such


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        Improvements or the Property Cost for such Property exceeding the amount
        of the Construction Budget for such Property or (iii) the aggregate cost
        of all Improvements or the aggregate Property Costs exceeding an amount
        equal to the sum of the then aggregate Available Commitments plus the
        then aggregate Available Holder Commitments (reduced by the Unfunded
        Amount, if any).

                (b) The Construction Agent agrees that it will not implement any
        revision, amendment or modification to the Plans and Specifications for
        any Property if the aggregate effect of such revision, amendment or
        modification, when taken together with any previous or contemporaneous
        revision, amendment or modification to the Plans and Specifications for
        any Property, would cause a material reduction in value in excess of the
        cost reduction of such revision, amendment or modification of the
        Property when completed, unless such revision, amendment or modification
        is required by Legal Requirements.

        3.3     ABANDONMENT OR PERMANENT DISCONTINUANCE.

        Until termination of the Lease Agreement and the Agency Agreement, the
Construction Agent shall promptly and diligently complete the development,
acquisition, refinancing, installation, construction and testing of each
Construction Period Property substantially in accordance with the Plans and
Specifications and with the terms hereof and cause the Completion Date with
respect to such Construction Period Property to occur on or prior to the
Construction Period Termination Date.

        If the Construction Agent shall abandon or permanently discontinue the
construction and development of one or more Construction Period Properties, then
the Construction Agent shall pay to the Lessor, on a date designated by the
Lessor, an aggregate amount equal to the liquidated damages amount referenced in
Section 5.3(b) of this Agreement regarding all, but not less than all,
Properties. On such date, Lessor shall deliver the Properties to the
Construction Agent in accordance with Sections 2.1(w) through (z).

                                   ARTICLE IV
                                PAYMENT OF FUNDS

        4.1     RIGHT TO RECEIVE CONSTRUCTION COST.

                (a) In connection with the development, acquisition,
        installation, construction and testing of any Property and during the
        course of the construction of the Improvements on any Property, the
        Construction Agent may request that the Lessor advance funds for the
        payment of Property Acquisition Costs or other Property Costs, and the
        Lessor will comply with such request to the extent provided for under
        the Participation Agreement. The Construction Agent and the Lessor
        acknowledge and agree that the Construction Agent's right to request
        such funds and the Lessor's obligation to advance such funds for the
        payment of Property Acquisition Costs or other Property Costs is subject
        in all respects to the terms and conditions of the Participation
        Agreement and each of the other Operative Agreements. Without limiting
        the generality of the


                                       9
<PAGE>   12

        foregoing it is specifically understood and agreed that in no event
        shall the aggregate amounts advanced by the Lenders and the Holders for
        Property Acquisition Costs or other Property Costs and any other amounts
        due and owing hereunder or under any of the other Operative Agreements
        exceed the sum of the aggregate Commitments of the Lenders plus the
        aggregate amount of the Holder Commitments, including without limitation
        such amounts owing for (i) development, acquisition, installation,
        construction and testing of the Properties, (ii) additional amounts
        which accrue or become due and owing under the Credit Agreement or Trust
        Agreement as obligations of the Lessor prior to any Completion Date or
        (iii) any other purpose.

                (b) The proceeds of any funds made available to the Lessor to
        pay Property Acquisition Costs or other Property Costs shall be made
        available to the Construction Agent in accordance with the Requisition
        relating thereto and the terms of the Participation Agreement. The
        Construction Agent will use such proceeds only to pay the Property
        Acquisition Costs or other Property Costs set forth in the Requisition
        relating to such funds.


                                    ARTICLE V
                                EVENTS OF DEFAULT

        5.1     EVENTS OF DEFAULT.

        If any one or more of the following events (each an "Event of Default")
shall occur:

                (a) the Construction Agent fails to apply any funds paid by the
        Lessor to the Construction Agent in a manner consistent with the
        requirements of the Operative Agreements and as specified in the
        applicable Requisition for the development, acquisition, installation,
        construction and testing of the Properties and related Improvements and
        Equipment or otherwise respecting the Properties to the payment of
        Property Acquisition Costs or other Property Costs;

                (b) the Construction Agent shall fail to make any payment
        required pursuant to the terms of this Agreement (including without
        limitation pursuant to Sections 2.1 and 3.3) within three (3) Business
        Days after receipt of notice that the same has become due and payable;

                (c) any Event of Default (as such term is defined in Appendix A
        to the Participation Agreement) shall have occurred and not be cured
        within any cure period expressly permitted under the terms of the
        applicable Operative Agreement; and

                (d) the Construction Agent shall materially breach any of its
        representations or warranties under any Operative Agreement or shall
        fail to observe or perform any term, covenant or condition of any
        Operative Agreement other than as set forth in paragraphs (a), (b) or
        (c) of this Section 5.1 and such failure to observe or perform any


                                       10
<PAGE>   13

        such term, covenant or condition shall continue for more than fifteen
        (15) days after the Construction Agent either has gained knowledge
        thereof or has received notice thereof;

and if the Construction Agent shall have failed to complete a Construction
Period Cure for a Property within the Cure Period with respect to such Property
in accordance with Section 2.7 so as to eliminate the conditions giving rise to
such Event of Default, then, in any such case, upon the lapse of such Cure
Period (if any), the Lessor may, in addition to the other rights and remedies
provided for in this Agreement, terminate this Agreement by giving the
Construction Agent written notice of such termination and upon the expiration of
the time fixed in such notice and the payment of all amounts owing by the
Construction Agent hereunder (including without limitation any amounts specified
under Section 5.3 hereof), this Agreement shall terminate. The Construction
Agent shall pay all costs and expenses incurred by or on behalf of the Lessor,
including without limitation fees and expenses of counsel, as a result of any
Event of Default hereunder.

        5.2     DAMAGES.

        The termination of this Agreement pursuant to Section 5.1 shall in no
event relieve the Construction Agent of its liability and obligations hereunder,
all of which shall survive any such termination.

        5.3     REMEDIES; REMEDIES CUMULATIVE.

                (a) If an Event of Default shall have occurred and be
        continuing, the Lessor shall have all rights available to the Lessor
        under the Lease and the other Operative Agreements and all other rights
        otherwise available at law, equity or otherwise.

                (b) Upon the occurrence and during the continuation of an Event
        of Default, the Lessor shall have (in addition to its rights otherwise
        described in this Agreement or existing at law, equity or otherwise) the
        option (and shall be deemed automatically, and without any further
        action, to have exercised such option upon the occurrence of any Lease
        Event of Default arising under Sections 17.1(g), (h) or (i) of the
        Lease) to transfer and convey to the Construction Agent upon a date
        designated by the Lessor all right, title and interest of the Lessor in
        and to any Construction Period Property or Properties (including without
        limitation any Land and/or any Improvements, any interest in any
        Improvements, any Equipment and any Property then under construction).
        On any transfer and conveyance date specified by the Lessor pursuant to
        this Section 5.3(b), (i) the Lessor shall transfer and convey (at the
        cost of the Construction Agent) all right, title and interest of the
        Lessor in and to any or all such Construction Period Properties free and
        clear of the Lien of the Lease and all Lessor Liens, (ii) the
        Construction Agent hereby covenants and agrees that it will accept such
        transfer and conveyance of right, title and interest in and to the
        respective Construction Period Property or Construction Period
        Properties and (iii) the Construction Agent hereby promises to pay to
        the Lessor, as liquidated damages (it being agreed that it would be
        impossible accurately to determine actual damages), an aggregate amount
        equal to the Termination Value of any or all such Construction Period
        Properties. The Construction Agent specifically acknowledges and


                                       11
<PAGE>   14

        agrees that its obligations under this Section 5.3(b), including without
        limitation its obligations to accept the transfer and conveyance of
        Construction Period Properties and its payment obligations described in
        subparagraph (iii) of this Section 5.3(b), shall be absolute and
        unconditional under any and all circumstances and shall be performed
        and/or paid, as the case may be, without notice or demand and without
        any abatement, reduction, diminution, setoff, defense, counterclaim or
        recoupment whatsoever. Notwithstanding the foregoing provisions of this
        Section 5.3(b), the Lessor shall have the right in its sole discretion
        to rescind any exercise of its option under this Section 5.3(b) upon the
        giving of its written confirmation of such rescission to the
        Construction Agent on or prior to the earlier to occur of (a) the actual
        date of transfer and (b) the date one hundred and twenty (120) days
        after the date the Lessor has given notice of its intent to transfer and
        convey any Property to the Construction Agent as referenced above in
        this Section 5.3(b).

                (c) Without limiting Section 2.7, the Construction Agent shall
        have the right to cure an Event of Default hereunder with respect to any
        given Property by purchasing such Property from the Lessor (to the
        extent no Event of Default is continuing with respect to any other
        Property remaining subject to this Agreement or any other matter after
        such purchase) for an amount equal to the liquidated damages amount set
        forth in Section 5.3(b) of this Agreement.

                (d) No failure to exercise and no delay in exercising, on the
        part of the Lessor, any right, remedy, power or privilege under this
        Agreement or under the other Operative Agreements shall operate as a
        waiver thereof; nor shall any single or partial exercise of any right
        remedy, power or privilege under this Agreement preclude any other or
        further exercise thereof or the exercise of any other right, remedy,
        power or privilege. The rights, remedies, powers and privileges provided
        in this Agreement are cumulative and not exclusive of any rights,
        remedies, powers and privileges provided by law.


                                   ARTICLE VI
                               THE LESSOR'S RIGHTS

        6.1     EXERCISE OF THE LESSOR'S RIGHTS.

        Subject to the Excepted Payments, the Construction Agent and the Lessor
hereby acknowledge and agree that, subject to and in accordance with the terms
of the Security Agreement made by the Lessor in favor of the Agent, the rights
and powers of the Lessor under this Agreement have been assigned to the Agent.

        6.2     THE LESSOR'S RIGHT TO CURE THE CONSTRUCTION AGENT'S DEFAULTS.

        The Lessor, without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) remedy any Event of Default
for the account of and at the sole cost and expense of the Construction Agent.
All out-of-pocket costs and expenses so incurred (including without limitation
fees and expenses of counsel), together with interest thereon at the


                                       12
<PAGE>   15

Overdue Rate from the date on which such sums or expenses are paid by the
Lessor, shall be paid by the Construction Agent to the Lessor on demand.


                                   ARTICLE VII
                                  MISCELLANEOUS

        7.1     NOTICES.

        All notices required or permitted to be given under this Agreement shall
be in writing and delivered as provided in Section 12.2 of the Participation
Agreement.

        7.2     SUCCESSORS AND ASSIGNS.

        This Agreement shall be binding upon and inure to the benefit of the
Lessor, the Construction Agent and their respective successors and the assigns
of the Lessor. The Construction Agent may not assign this Agreement or any of
its rights or obligations hereunder or with respect to any Property in whole or
in part to any Person without the prior written consent of the Agent, the
Lenders, the Holders and the Lessor.

        7.3     GOVERNING LAW.

        THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF WASHINGTON (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).

        7.4     SUBMISSION TO JURISDICTION; VENUE; WAIVERS

        THE PROVISIONS OF THE PARTICIPATION AGREEMENT RELATING TO SUBMISSION TO
JURISDICTION AND VENUE ARE HEREBY INCORPORATED BY REFERENCE HEREIN, MUTATIS
MUTANDIS.

        7.5     AMENDMENTS AND WAIVERS.

        This Agreement may not be terminated, amended, supplemented, waived or
modified except in accordance with the provisions of Section 12.4 of the
Participation Agreement.

        7.6     COUNTERPARTS.

        This Agreement may be executed in any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.


                                       13
<PAGE>   16

        7.7     SEVERABILITY.

        Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

        7.8     HEADINGS AND TABLE OF CONTENTS.

        The headings and table of contents contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

        7.9     WAIVER OF JURY TRIAL.

        TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, THE LESSOR AND THE
CONSTRUCTION AGENT IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND ANY COUNTERCLAIM
THEREUNDER.

        7.10    INCORPORATION OF LEASE PROVISIONS.

        Regardless of whether the Term of the Lease has commenced, the
Construction Agent and the Lessor agree that Articles XIV, XV, XVII, XVIII,
XXIV, XXV, XXVI, XXVII, XXIX and XXX of the Lease Agreement and any other
Articles or Sections of the Lease Agreement that are referenced in any Operative
Agreement are hereby incorporated by reference into this Agreement to the same
extent and with the same effect as if set forth fully herein.

        The above-referenced incorporated provisions shall be in effect as if
the Lease Agreement were in effect for all Properties from and after the date of
this Agreement. For purposes of the above-referenced incorporated provisions,
the Construction Agent shall be responsible for all matters for which the Lessee
is referenced as a responsible party in such provisions. Any out-of-pocket
expense for which the Construction Agent is responsible pursuant to the
above-referenced incorporated provisions shall be payable with Advances to the
extent that the applicable conditions precedent for such an Advance pursuant to
the Operative Agreements have been satisfied or waived.


                            [signature page follows]


                                       14
<PAGE>   17

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.


                                        SHURGARD STORAGE CENTERS, INC.,
                                        as the Construction Agent



                                        By:           /s/ Harrell Beck
                                           -------------------------------------
                                        Name:         Harrell Beck
                                             -----------------------------------
                                        Title:        Chief Financial Officer
                                              ----------------------------------


                                        FIRST SECURITY BANK, NATIONAL
                                        ASSOCIATION, as Owner Trustee under
                                        the Storage Centers Trust 2001, as
                                        the Lessor


                                        By:           /s/ Val T. Orton
                                           -------------------------------------
                                        Name:         Val T. Orton
                                             -----------------------------------
                                        Title:        Vice President
                                              ----------------------------------