SECOND AMENDMENT TO STRATEGIC ALLIANCE AGREEMENT

     THIS SECOND AMENDMENT TO STRATEGIC ALLIANCE AGREEMENT (the "Amendment"),
dated as of November 20, 1997, is made by and among Storage USA, Inc., a
Tennessee corporation (the "Company"), SUSA Partnership, L.P., a Tennessee
limited partnership (the "Operating Partnership"), Security Capital U.S. Realty,
a Luxembourg corporation ("USREALTY"), and Security Capital Holdings S.A., a
Luxembourg corporation and a wholly owned subsidiary of USREALTY ("Buyer") for
the purpose of amending certain provisions of the Strategic Alliance Agreement,
dated as of March 19, 1996, and amended on June 19, 1996, by and among the
Company, the Operating Partnership and USREALTY and Buyer (the "Agreement").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement.

                                     RECITAL

     WHEREAS, the Company and Buyer believe that the amendments contemplated
hereby will permit Buyer to benefit from an increased investment in the Company
and will provide the Company with increased flexibility to pursue its growth and
operating strategies;

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto agree as follows:

     Section 1. Advice of Actions. Section 3.2 of the Agreement shall be amended
and restated in its entirety as follows:

     Section 3.2. Advice of Actions. Until the 20% Termination Date, if any,
     without first having consulted with the representative of Investor
     designated by Investor pursuant to this Section 3.2, the Company will not
     seek approval by the Board of any proposal, or enter into any definitive
     agreement, relating to:

          a) the acquisition in a single transaction or group of related
          transactions, whether by merger, consolidation, purchase of stock or
          assets or other business combination, of any business or assets having
          a value in excess of $25,000,000;

          b) the sale or disposal in a single transaction or group of related
          transactions of any assets, whether by merger, consolidation, sale of
          stock or assets or other business combination having a value in excess
          of $25,000,000;


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                                       -2-


          c) the incurrence or issuance of indebtedness in a single transaction
          or group of related transactions, the entering into a guaranty, or the
          engagement in any other financing arrangement in excess of
          $150,000,000;

          d) the annual operating budget for the Company;

          e) a material change in the executive management of the Company;

          f) any new material agreements or arrangements with any members of the
          executive management of the Company; or

          g) the issuance by the Company of capital stock of the Company or of
          options, rights or warrants or other commitments to purchase or
          securities convertible into (or exchangeable or redeemable for) shares
          of capital stock of the Company, the issuance by the Operating
          Partnership of Operating Partnership Units, or the issuance by a
          Subsidiary of any equity interest, other than (i) to the Company or a
          wholly owned Subsidiary thereof, (ii) to limited partners of the
          Operating Partnership upon redemptions of Operating Partnership Units,
          (iii) to directors or employees of the Company or a Subsidiary in
          connection with any employee benefit plan approved by the shareholders
          of the Company and (iv) issuances having a value less than
          $150,000,000.

     Notwithstanding the foregoing, the Company shall have no obligation to
     accept or comply with any advice offered by Investor or its designated
     representative in any consultation referred to in this Section 3.2. The
     designated representative of Investor, for purposes of this Section 3.2,
     initially shall be David Roth. Investor shall provide the Company with ten
     days prior written notice of any replacement of the designated
     representative

     Section 2. Right to Participate. Section 4.2 of the Agreement shall be
     amended to add the following subsection (f) as follows:

          (f) Notwithstanding any provision contained in Section 4.2 to the
          contrary, the right of Investor to participate granted pursuant to
          subsection (a) hereof shall be limited, in the case of any issuance or
          sale of capital stock, to a maximum participation percentage of 35% of
          the securities to be issued or sold by the Company or a Large
          Subsidiary in such issuance or sale.

     Section 3. Standstill Period. Section 5.1 of the Agreement shall be amended
by deleting clause (x) of the introduction to Section 5.1(a) and replacing it
with the following:

     (x) June 5, 2003, or

     Section 4. Ownership Limitation. Section 5.2(a)(iii) shall be amended and
restated in its entirety as follows:


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                                      -3-


     (iii) purchase or otherwise acquire shares of Company Stock (or options,
     rights or warrants or other commitments to purchase and securities
     convertible into (or exchangeable or redeemable for) shares of Company
     Stock) as a result of which, after giving effect to such purchase or
     acquisition, Investor and its Affiliates will Beneficially Own more than
     42.5% of the outstanding shares of Company Common Stock, on a fully diluted
     basis;

     USRealty and Buyer agree that any violation or attempted violation by
USRealty, Buyer or any Affiliate thereof of the Special Shareholder Limit (as
defined in the Company Charter), as modified pursuant to this Agreement, will
result in, to the extent necessary, the exchange of shares held by such Person
for Excess Shares (as defined in the Company Charter) in accordance with Section
12.3 of Paragraph 12 of the Company Charter.

     Section 5. Waiver of Ownership Limitation. (a) Section 5.8 shall be amended
and restated in its entirety as follows:

     Section 5.8. Waiver of Ownership Limitation. Subject to the provision of
     the third sentence of this Section 5.8, the Company shall take all actions,
     including by providing any necessary exemptions from or amendments to (A)
     the ownership limitations contained in Paragraph 12 of the Company Charter
     or (B) any agreement or instrument which governs ownership of shares of
     Company stock by any person, necessary to permit Investor to Beneficially
     Own up to and including 42.5% of the outstanding shares of Company Common
     Stock. If any third party shall be given the right to Beneficially Own more
     than 42.5% of the outstanding shares of Company Common Stock, the Company
     shall take all actions (including by providing the foregoing exemptions and
     amendments) to waive any and all restrictions on and limitations to
     Investor's ownership of shares of Company Stock. From and after the 15%
     Termination Date, if any, the Company shall take all actions, including by
     providing any necessary exemptions from or amendments to (A) the ownership
     limitations contained in Paragraph 12 of the Company Charter or (B) any
     agreement or instrument which governs ownership of shares of Company Stock
     by any person, necessary to permit Investor to Beneficially Own up to and
     including 15% of the outstanding shares of Company Common Stock, but shall
     not be required to take any action to permit Investor to Beneficially Own
     more than 15% of the outstanding shares of Company Common Stock. From and
     after the first date on which Investor does not own at least 9.8% of the
     outstanding shares of Company Common Stock, if any, the Company shall take
     all actions, including by providing any necessary exemptions from or
     amendments to (A) the ownership limitation contained in Paragraph 12 of the
     Company Charter or (B) any agreement or instrument which governs ownership
     of shares of Company Stock by any person, necessary to permit Investor to
     Beneficially own up to and including 9.8% of the outstanding shares of
     Company Common Stock. Notwithstanding the foregoing, Investor or the
     Company may at any time acquire Beneficial Ownership of the securities of
     such other party or its Affiliates to the extent permitted by applicable
     law and provisions of


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                                      -4-


     the organizational documents of such party or its Affiliates, as
     applicable, and other agreements from time to time governing the ownership
     of such securities.

     (b) The Company represents and warrants to USRealty and Buyer that the
Board of Directors of the Company has adopted the resolution attached hereto as
Exhibit A and has taken all other action necessary pursuant to Section 12.12 of
the Company Charter to increase irrevocably and permanently (subject to any
contrary provision of Section 5.8 of the Strategic Alliance Agreement or Section
12.9 of the Company Charter) the Special Shareholder Limit from 37.5% to 42.5%
of the outstanding Shares (as defined in the Company Charter) of the Company.
Upon the request of USRealty and Buyer, the Board of Directors will authorize
and recommend for approval (and shall not hereafter withdraw or modify such
recommendation) by the Shareholders of the Company at the next annual meeting of
shareholders an amendment to Article 12 of the Company's Charter in a form
reasonably approved by USRealty and Buyer to change all references therein from
37.5% to 42.5% and to make such other amendments thereto as USRealty and Buyer
reasonably may request consistent with the increase in the Special Shareholder
Limit from 37.5% to 42.5%. The Company will further take action reasonably
calculated to put its shareholders and prospective shareholders on notice of the
modifications contemplated by this Amendment.

     (c) From and after the date hereof, Section 12.21 of the Company Charter
shall apply to the Special Shareholders (as defined in the Company Charter) as
if (a) the first sentence of said Section 12.21 did not contain the
parenthetical clause "(other than a Special Shareholder)" and (b) such Section
did not contain the parenthetical assumptions "(determined assuming that the
Special Shareholders are Non-U.S. Persons and own a percentage of the
outstanding shares of capital stock of the Corporation (by value) equal to
37.5%)" in the two places that they appear, and, in lieu of such assumptions,
required that Section 12.21 be applied to the Special Shareholders by taking in
account the Special Shareholders' actual share ownership and actual status under
the definition of "Non-U.S. person". The preceding sentence shall not apply from
and after the date on which the Special Shareholder notifies the Corporation by
writing that such sentence shall no longer have any force or effect.

     Section 5. Limitation on Corporate Actions. Section 6.1 of the Agreement
shall be amended to insert the following subsection immediately after Section
6.1(b);

          (c)(i) Notwithstanding the restrictions contained in Section 6.1(a)(B)
          and Section 6.1(b)(i)(C) hereof, the Company or the Operating
          Partnership shall be permitted (subject to the other restrictions set
          forth in this Agreement) to acquire or hold interests in an entity
          that (w) owns a Self-Storage Facility or Facilities in the United
          States, (x) is wholly-owned directly or indirectly by the Company, (y)
          is not a corporation and does not elect to be treated as an
          association taxable as a corporation under Treasury Regulation ss.
          301.7701-3(2)(a) and (z) will be disregarded as an entity separate
          from its owner for federal income tax purposes (an "Entity"). Subject
          to Section 6.1(c)(ii), Self-Storage Facilities that are actively
          managed by employees of the Operating Partnership or an Entity owned
          by the Company or the Operating Partnership in the manner described in
          the immediately preceding sentence shall not


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                                      -5-


          be included in determining the asset limitations of Section 6.1(a)(B)
          and 6.1(b)(i)(C) hereof and shall be considered active assets that
          give rise to active rental income for purposes of this Agreement.

          (ii) The Company and the Operating Partnership agree that, if there is
          a change in applicable law or the interpretations thereof or in
          applicable regulations or administrative interpretations promulgated
          by the Internal Revenue Service or any successor agency that USRealty
          or Buyer reasonably determines would result in the Self Storage
          Facilities held by any Entity referred to in the preceding subsection
          (i) or such Entity being considered to be "passive assets" of the
          Company or the Operating Partnership, as the case may be, or that
          would result in the income from such Entity or facilities being
          characterized as "passive income" of the Company or the Operating
          Partnership, as the case may be, in each case under the "passive
          foreign investment company" provisions of the Internal Revenue Code of
          1986, as amended, then, upon written request of USRealty or Buyer, the
          Company and SUSA Partnership promptly will cause the property-level
          management and staff at the Self-Storage Facilities to become
          employees of the property-owning entity and SUSA Partnership will
          execute and cause the property-owning entity to execute and at all
          times thereafter perform and comply with an Administrative Agreement
          in the form attached as Exhibit B to this Amendment (or in another
          form requested by USRealty or Buyer to the extent required as a result
          of any such change in law or the interpretation thereof).

     Section 7. Confirmation Representation. (a) All provisions of the Agreement
not modified by this Amendment shall remain in full force and effect and no
provision of the Agreement or any other document relating thereto is hereby
waived or modified, the Company and the Operating Partnership having represented
that they currently are in compliance with all such other provisions (as amended
or waived).

     (b) The Company represents and warrants to USREALTY and Buyer that, to the
best of the Company's knowledge, as of the date hereof and assuming that
USREALTY and Buyer own 42.5% of the outstanding Company Common Stock, the
Company is a "domestically-controlled" REIT within the meaning of Code Section
897(h)(4)(B).



                      [SIGNATURES APPEAR ON FOLLOWING PAGE]



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                                      -6-



     IN WITNESS WHEREOF, this Amendment is signed by or on behalf of each of
the parties hereto as of the day first above written.



                                        STORAGE USA, INC.


                                        By: /s/ DENNIS A. REEVE
                                            -----------------------------------
                                            Name:  Dennis A. Reeve
                                            Title: Chief Financial Officer



                                        SUSA PARTNERSHIP, L.P.
                                        By: STORAGE USA, INC., General Partner


                                        By: /s/ DENNIS A. REEVE
                                            -----------------------------------
                                            Name:  Dennis A. Reeve
                                            Title: Chief Financial Officer



                                        SECURITY CAPITAL HOLDINGS S.A.


                                        By: /s/ DAVID ROTH
                                            -----------------------------------
                                            Name:  David A. Roth
                                            Title: Vice President



                                        SECURITY CAPITAL USREALTY


                                        By: /s/ DAVID ROTH
                                            -----------------------------------
                                            Name:  David A. Roth
                                            Title: Vice President


<PAGE>



                                    EXHIBIT A



                                STORAGE USA, INC.


                           Resolutions Adopted by the
                     Board of Directors of Storage USA, Inc.
                      at a Meeting Held on November 5, 1997
                      -------------------------------------


                       Waiver of Special Shareholder Limit
                       -----------------------------------



RESOLVED, that pursuant to Paragraph 12.12 of the Corporation's Amended Charter
(the "Charter"), the Board of Directors exempts Security Capital U.S. Realty, a
Luxembourg corporation ("USREALTY"), and Security Capital Holdings S.A., a
Luxembourg corporation and wholly-owned subsidiary of USREALTY ("Buyer"), and
their Affiliates (as defined in the Charter) from the Special Shareholder Limit;
provided that the Beneficial Ownership (as defined in the Charter) of USREALTY,
Buyer and their Affiliates shall at no point exceed 42.5% of the outstanding
Shares (as defined in the Charter) of the Corporation. Any Shares purchased that
would cause the Beneficial Ownership of USREALTY, Buyer and their Affiliates to
exceed 42.5% of the Outstanding Shares shall be treated as Excess Shares in
accordance with the Charter.

RESOLVED, that the foregoing modification renders Section 12.21 of the Charter
ambiguous with respect to the calculation of the fair market value of capital
stock of the Corporation held by Non-U.S. Persons and that, pursuant to Section
12.8 of the Charter, the Board of Directors hereby determines that such
ambiguity shall be resolved by hereafter making such calculations assuming that
the Special Shareholders are Non-U.S. Persons and own a percentage of the
outstanding shares of capital stock of the corporation (by value) equal to
42.5%.

RESOLVED, that the officers of the Corporation are authorized and directed in
the name and on behalf of the Corporation to negotiate, execute and deliver such
agreements, undertakings, documents or instruments and to take all such action
as each such officer shall deem necessary or advisable to accomplish the
purposes of the foregoing resolutions.


<PAGE>


                                                                       EXHIBIT B



                            ADMINISTRATIVE AGREEMENT


                                     Between


                             SUSA PARTNERSHIP, L.P.


                                       and


                             [PROPERTY LEVEL ENTITY]



     This ADMINISTRATIVE AGREEMENT, between SUSA Partnership, L.P., a Tennessee
limited partnership ("Parent") and [Property Level Entity] ("Sub"), a
_________________, is made as of the _________ day of _____________, _____.


                                    RECITALS


     A. Parent has agreed pursuant to a Strategic Alliance Agreement, dated
March 19, 1996, and amended on June 19, 1996, by and among Storage USA, Inc.,
Parent, Security Capital USRealty ("USRealty") and Security Capital Holdings,
S.A. ("Holdings") to own and operate its properties in a manner designed to
permit USRealty or any shareholder of USRealty to avoid being classified as a
passive foreign investment company under the Internal Revenue Code of 1986, as
amended;

     B. In connection with the acquisition of Sub, Parent has agreed with
USRealty and Holdings that the property-level management and staff at the
self-storage facilities owned by Sub will be employees of Sub and that the
relationship between Parent and Sub will be governed by the terms of this
Agreement; and

     C. Sub desires Parent to provide certain payroll, recordkeeping and cash
management services to Sub;

     NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto covenant and agree as
follows:

          1. Payroll Services. Parent agrees to provide payroll processing
     services to Sub, including the preparation of federal, state and local
     employment tax returns, statements of wages and other required reports. Sub
     agrees that the filing and content of such reports are the responsibility
     of Sub. Sub agrees to reimburse Parent for all costs associated with the
     preparation of such reports and the provision of payroll processing
     services.




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                                       -2-



     2. Employee Benefits: All employees of Sub will be entitled to participate
in benefit plans maintained by Parent for employees of Parent, subject to the
same terms and conditions (including those conditions regarding vesting of
privileges) as are applicable to employees of Parent. Sub agrees to reimburse
Parent for all costs associated with the participation of Sub's employees in
such benefit plans.

     3. Rent Collection: Parent agrees to act as agent of Sub in the collection
of rents paid by tenants of Sub's self-storage facilities. Parent will process
all credit card payments and will utilize a lock-box account for the collection
of payments in the same manner as for self-storage facilities owned directly by
Parent. Parent may deposit the rents received in its own operating accounts,
provided, however, Parent will maintain separate general ledger accounts for
Sub's receipts.

     4. Accounts Payable: Parent agrees to act as agent of Sub in the payment of
all accounts payable arising in the ordinary cause of Sub's operation of its
self-storage facilities. Parent will maintain a post office box or address for
the receipt of all vendor invoices and will pay such invoices in accordance with
their terms on behalf of Sub and at Sub's expense. Parent will maintain separate
general ledger accounts for such payments.

     5. Financial Reporting: In addition to the services described above, Parent
agrees to maintain detailed revenue and expense ledgers for Sub. Such accounts
will include overhead expenses charged to Sub by Parent. In addition to
maintaining a detailed accounting system, Parent will prepare all applicable
state, local and federal tax returns of Sub. Sub agrees that the filing and
content of such returns are the responsibility of Sub. Sub will reimburse Parent
for all costs associated with such recordkeeping and tax return preparation.

     6. Indemnification: Sub agrees to hold Parent harmless from and against any
and all losses, damages, costs, expenses, liabilities, obligations and claims of
any kind, including attorneys' fees and other legal expenses (collectively,
"Losses"), that Parent may at anytime suffer or incur, or become subject to, as
a result of or in connection with the performance by Parent of its obligations
under this Agreement. Without limiting the generality of the foregoing, Sub
agrees to hold Parent harmless from and against any Losses associated with any
employee of Sub. Parent shall be entitled to offset any such Losses against
receipts collected pursuant to Section 2 hereof.

     7. Recitals: Recitals set forth on the first page of this agreement are for
reference only and will not affect the meaning or interpretation of this
Agreement.


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                                       -3-


     8. Third Party Beneficiaries: Security Capital Holdings, S.A. and Security
Capital USRealty shall be express third party beneficiaries of the provisions of
this Agreement.


     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on their behalf as of the date first written above.



                                        SUSA PARTNERSHIP, L.P.
                                        By: STORAGE USA, INC., General Partner


                                        By: ___________________________________
                                        Name:
                                        Title:



                                        [PROPERTY LEVEL ENTITY]

                                        by: ____________________ General Partner


                                        By: ___________________________________
                                        Name:
                                        Title: