<PAGE>

                                                                   Exhibit 10.1



                       Security Capital Group Incorporated

                               125 Lincoln Avenue

                           Santa Fe, New Mexico 87501

                                                       July 7, 2000


Mr. Dean Jernigan
Chairman, President and Chief Executive Officer
Storage USA, Inc.
165 Madison Avenue, Suite 1300
Memphis, Tennessee  38103

Dear Dean:

     Reference is made to the Strategic Alliance Agreement, dated as of March
19, 1996, by and among Storage USA, Inc., SUSA Partnership, L.P., Security
Capital Holdings S.A. and Security Capital U.S. Realty (as amended, the
"Strategic Alliance Agreement").  Capitalized terms used but not defined herein
have the meanings ascribed to such terms in the Strategic Alliance Agreement,
and if not defined therein, as defined in the Amended and Restated Charter of
the Company, as in effect as of the date hereof (the "Company Charter").

     This letter is to confirm your understanding and agreement that in the
event Security Capital Group Incorporated ("Group") or any controlled Affiliate
that is at least 98% directly or indirectly owned by Group (collectively, "SCZ",
but excluding USREALTY and Buyer and any person already included within the
definition of Investor in the Strategic Alliance Agreement) should directly or
indirectly purchase or otherwise acquire all or at least 95% of the Company
Common Stock now owned by Buyer that, subject to the conditions set forth in the
following paragraph,

     (i)  such acquisition will not constitute a Transfer prohibited or
          restricted by the Strategic Alliance Agreement (including without
          limitation by Section 5.2(a)(ii) or 5.2(a)(vii) of the Strategic
          Alliance Agreement) or by the Company Charter, but shall instead be
          permitted as if SCZ were (and SCZ shall, from and after such
          acquisition, for all purposes of the Strategic Alliance Agreement be
          considered by the Company to be and treated by the Company as) an
          "Investor" under the provisions of the Strategic Alliance Agreement
          and, based on SCZ's representation that it is an Affiliate of USREALTY
          and Buyer, a "Special Shareholder" under the Company Charter (and the
          Board of Directors of the Company has also, for the avoidance of
          doubt, taken action pursuant to Section 12.12 of the Company Charter
          to exempt SCZ and its Affiliates from the Ownership Limit, to the
          extent and with the effect that SCZ and its Affiliates will, in all
          events, notwithstanding the Ownership Limit, and regardless of the
          actual application of the Special Shareholder Limit, be permitted
          under the Company Charter to Beneficially Own such shares of Company
          Common Stock as would be permitted a Special Shareholder; in
          connection with such exemption, SCZ has provided to the Company the
          Representation Letter attached as Exhibit A to this letter);

     (ii) SCZ will from and after such acquisition be bound by the terms and
          conditions of the Strategic Alliance Agreement (and under any other
          agreements between the Company and Buyer or USREALTY) to the same
          extent as Investor is bound thereunder (and SCZ does hereby agree to
          be so bound), shall be entitled to the same benefits and rights
          thereunder (and under any other agreements between the Company and
          Buyer or USREALTY), and shall for all purposes be considered to be an
          "Investor" thereunder;

    (iii) from and after such acquisition, Section 5.1(a)(x) of the Strategic
          Alliance Agreement shall be modified to replace the words "June 5,
          2003" with the words "December 5, 2004";
<PAGE>

     (iv) from and after such acquisition, Section 5.2(a)(ii) of the Strategic
          Alliance Agreement shall be modified by adding the words "(as such
          Company Charter is in effect on the date hereof, and without giving
          effect to any challenge to the operation or legality thereof) or to
          any person who, after giving effect to such Transfer, would
          Beneficially Own more than 9.8% of the outstanding shares of Company
          Common Stock, on a primary basis" immediately prior to the semi-colon
          at the end of such Section;

     (v)  the provisions of Sections 6.1(a)(B), 6.1(a)(E), 6.1(b), 6.1(c) and
          6.2 of the Strategic Alliance Agreement shall no longer be applicable
          from and after such acquisition; and

     (vi) following such acquisition, SCZ agrees to permit the Company to submit
          to the shareholders of the Company for their consideration a proposal
          to eliminate Section 12.21 and the definition of "Non-U.S. Person"
          contained in Section 12.1 of the Company Charter, and modify
          accordingly the legend contained in Section 12.13 of the Company
          Charter, and SCZ will vote or cause to be voted all shares of Company
          Common Stock Beneficially Owned by it in favor of such proposal.

     The Company's consent to any such acquisition of Company Common Stock by
SCZ (and the application of the exemption pursuant to Section 12.12 of the
Company Charter contemplated by paragraph (i) on the first page of this letter)
is conditioned on the following:

     (i)  on or prior to such acquisition, no "change of control" of SCZ, as
          defined below, shall have occurred and SCZ shall not have agreed to
          engage in any transaction that would result in a change of control of
          SCZ;

     (ii) on or prior to such acquisition, (x) no default (or event or
          circumstance that, with the passage of time, would result in a
          default) under the Strategic Alliance Agreement shall have occurred
          on the part of Security Capital U.S. Realty or Security Capital
          Holdings S.A., and (y) each of such entities shall have confirmed
          either (A) that it has no knowledge of any such default on the part
          of the Company or the Operating Partnership or (B) shall have provided
          the Company with notice of any such default that may exist;

    (iii) on or prior to such acquisition, SCZ shall have provided to the
          Company an opinion of its counsel reasonably satisfactory to the
          Company with respect to due authorization, execution and
          enforceability of the Strategic Alliance Agreement with respect to
          SCZ; and

     (iv) SCZ shall have consummated the purchase of the Company Common Stock
          within 24 months from the date of this letter.

     In addition, the application of the exemption pursuant to Section 12.12 of
the Company Charter contemplated by the first paragraph (i) above is conditioned
on the accuracy of the representations and warranties of SCZ set forth in
Exhibit A to this letter as of the date of such acquisition of Company Common
Stock by SCZ.

For purposes of this agreement, "change of control" of SCZ shall mean:

     (i)  any person or group (within the meaning of Section 13(d) or 14(d) of
          the Securities Exchange Act of 1934, as amended) who is not already
          such an owner as of the date of this letter becomes, directly or
          indirectly, the beneficial owner of voting securities of Group
          entitled to cast 20% or more of the votes entitled to be cast in
          respect of the election of directors of Group by all outstanding
          voting securities of Group;

     (ii) the sale, lease or other transfer of all or substantially all of the
          consolidated assets of Group to any unrelated person or group; or

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<PAGE>

    (iii) Group's consolidation with or merger with or into any person if
          immediately following the consummation of such transaction persons
          owning a majority of the voting securities of Group outstanding prior
          to such transaction cease to own a majority of the voting securities
          of Group or the surviving corporation in such transaction.

     This will further confirm that in the event SCZ should not directly or
indirectly purchase or otherwise acquire all or a portion of or any interest in
the Company Common Stock now owned by Buyer, SCZ will reimburse you for your
reasonable attorney's fees incurred in connection with entering into this letter
agreement (but which shall be borne by you if such an acquisition is
consummated).

     Each of the parties to this letter agree that, from time to time, each of
them will take such actions as may be necessary or reasonably requested by
another party to carry out the purposes and intents hereof.  This letter may be
amended, modified, superseded, cancelled, renewed or extended only by a written
instrument signed by the party to be charged therewith.

     If you are in agreement with the foregoing, please sign below to indicate
your understanding and agreement regarding this matter.

                                    Sincerely,

                                    SECURITY CAPITAL GROUP INCORPORATED

                                    \s\: C. Ronald Blankenship
                                    --------------------------
                                    C. Ronald Blankenship
                                    Vice Chairman

Agreed and Acknowledged:

SUSA PARTNERSHIP, L.P.
BY:  Storage USA, Inc., its  General Partner


  By:     \s\ Dean Jernigan
          ---------------------
          Dean Jernigan
          Chairman, Chief Executive Officer and President

STORAGE USA, INC.

By:     \s\ Dean Jernigan
        ---------------------
        Dean Jernigan
        Chairman, Chief Executive Officer and President


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<PAGE>

                       Security Capital Group Incorporated
                               125 Lincoln Avenue
                           Santa Fe, New Mexico 87501

                                                  July 7, 2000

Storage USA, Inc.
165 Madison Avenue, Suite 1300
Memphis, Tennessee  38103



Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia  23219

                              Representation Letter
                              ---------------------

Ladies and Gentlemen:

     In connection with that certain letter agreement dated the date hereof by
and among Security Capital Group Incorporated ("SCZ") and Storage USA, Inc. and
SUSA Partnership, L.P. and to which this representation letter is attached
(capitalized terms used herein having the same meanings as in such letter
agreement), SCZ hereby certifies to you that, to SCZ's knowledge, no person
which would be treated as an "individual" for purposes of Section 542(a)(2) of
the Internal Revenue Code of 1986, as amended (the "Code) (as modified by
Section 856(h) of the Code) owns or would be considered to own (taking into
account the ownership attribution rules under Section 544 of the Code, as
modified by Section 856(h) of the Code) in excess of 9.8% of the value of the
outstanding equity interest in SCZ.

     SCZ agrees and acknowledges that if, as the result of its Beneficial
Ownership of shares of Company Common Stock, any person who is an "individual"
within the meaning of Section 542(a)(2) of the Code (taking into account the
ownership attribution rules under Section 544 of the Code, as modified by
Section 856(h) of the Code) and who is the Beneficial Owner of any interest in
SCZ would be considered to Beneficially Own more than 9.8% of the outstanding
shares of Company Common Stock, the percentage of Company Common Stock permitted
to be owned by SCZ pursuant to the exemption granted to SCZ pursuant to Section
12.12 of the Company Charter contemplated by the first paragraph (i) in such
letter agreement shall be reduced to such percentage as would result in such
Person not being considered to Beneficially Own more than 9.8% of the
outstanding shares of Company Common Stock.

     SCZ understands that the Company will rely on the truth and accuracy of the
foregoing statements in granting the exemption pursuant to Section 12.12 of the
Company Charter contemplated by the first paragraph (i) in such letter

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<PAGE>

agreement, that Hunton & Williams will rely on the truth and accuracy of the
foregoing statements in giving its opinion that granting such exemption will not
result in the Company being "closely held" within the meaning of Code Section
856(h), and that such exemption is subject to the provisions of Section 12.12
and otherwise of the Company Charter.

                                        Very truly yours,

                                        SECURITY CAPITAL GROUP INCORPORATED

                                        By:  \s\ C. Ronald Blankenship
                                             --------------------------
                                             Name:   C. Ronald Blankenship
                                             Its:    Vice Chairman


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<PAGE>

                               FORM OF TAX OPINION
                               -------------------



                               _________ __, 200_




Board of Directors of
Storage USA, Inc.
165 Madison Avenue, Suite 1300
Memphis, Tennessee  38103


                                Storage USA, Inc.
                                -----------------
         Exemption of Security Capital Group, Inc. from Ownership Limit
         --------------------------------------------------------------

Ladies and Gentlemen:

          We have acted as counsel to Storage USA, Inc., a Tennessee corporation
(the "Company"), in connection with the grant by the Company's Board of
Directors of an exemption (the "Exemption") to Security Capital Group
Incorporated ("SCGI") and its Affiliates (collectively, "SCZ," but excluding
Security Capital U.S. Realty ("USREALTY"), Security Capital Holdings, S.A.
("Holdings"), and any person already included within the definition of
"Investor" in the Strategic Alliance Agreement, dated as of March 19, 1996, by
and among the Company, SUSA Partnership, L.P., Holdings, and USREALTY (as
amended, the "Strategic Alliance Agreement")) from the Company's "Ownership
Limit" (as defined in Section 12 of the Amended and Restated Charter of the
Company, as in effect as of the date hereof (the "Charter")) in connection with
the proposed purchase by SCGI of all or at least 95% of the common stock of the
Company (the "Common Stock") that is owned by Holdings.  You have requested our
opinion regarding whether the grant of the Exemption will cause the Company to
be "closely held" within the meaning of section 856(h) of the Internal Revenue
Code of 1986, as amended (the "Code").

  In giving this opinion letter, we have examined the Charter, the Exemption,
and such other documents as we have deemed necessary or appropriate for purposes
of this opinion.  In addition, we have relied on the representation letter
attached hereto as Exhibit A and executed by a duly authorized officer of SCGI
(the "Representation Letter").  We also have assumed, with your consent that the
representations in the Representation Letter will continue to be true as of the
time when SCGI purchases all or at least 95% of the Common Stock that is owned
by Holdings.

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<PAGE>

  The Exemption is conditioned on (i) SCZ not beneficially owning (as determined
pursuant to Section 12 of the Company Charter) more than  the number of
outstanding shares of Common Stock specified in the Exemption at any time, and
(ii) no shareholder of SCGI owning, beneficially or constructively, 10% or more
of the outstanding shares of SCGI at any time.  Any violation or attempted
violation of the terms of the Exemption will result in the exchange of shares of
Common Stock for Excess Shares and a transfer of such Excess Shares to the
Excess Share Trust, as described in Section 12 of the Charter.

  Based on the documents set forth above and the representations in the
Representation Letter, we are of the opinion that the grant of the Exemption
will not cause the Company to be "closely held" within the meaning of section
856(h) of the Code (i.e., no more than 50% in value of the Company's outstanding
stock will be owned, directly or indirectly, by five or fewer individuals during
the last half of a taxable year).

  The foregoing opinion is based on current provisions of the Code and the
Treasury regulations thereunder, published administrative interpretations
thereof, and published court decisions.  The foregoing opinion is limited to the
U.S. federal income tax matters addressed herein, and no other opinions are
rendered with respect to other federal tax matters or to any issues arising
under the tax laws of any other country, or any state or locality.  We undertake
no obligation to update the opinion expressed herein after the date of this
letter.  This opinion letter is solely for the information and use of the
addressee, and it may not be distributed, relied upon for any purpose by any
other person, quoted in whole or in part or otherwise reproduced in any
document, or filed with any governmental agency without our express written
consent.

                                             Very truly yours,


                                       7