EXHIBIT 10.1


 


FIRST AMENDMENT TO CONTRIBUTION AGREEMENT AND TO

AGREEMENT REGARDING TRANSFER OF SERIES A UNITS


(AAAAA Rent-A-Space)


THIS
FIRST AMENDMENT TO CONTRIBUTION AGREEMENT AND TO AGREEMENT REGARDING TRANSFER
OF SERIES A UNITS (hereinafter the “First Amendment”) is executed on
the 28th day of September, 2007, but made and entered into effective as of the
25th day of June, 2007, by, between, and among AAAAA RENT-A-SPACE, ALAMEDA, LTD., LIMITED PARTNERSHIP, a
California limited partnership, AAAAA RENT-A-SPACE,
ALAMEDA II, LTD. LIMITED PARTNERSHIP, a California limited partnership, AAAAA
RENT-A-SPACE, BERKELEY I, LTD., LIMITED PARTNERSHIP, a California
limited partnership, AAAAA RENT-A-SPACE,
BERKELEY II, LTD., LIMITED PARTNERSHIP, a California limited partnership,
AAAAA RENT-A-SPACE — CASTRO VALLEY, LTD.
LIMITED PARTNERSHIP, a California limited partnership, AAAAA RENT-A-SPACE — COLMA, LTD.  LIMITED PARTNERSHIP, a California
limited partnership, AAAAA RENT-A-SPACE,
HAYWARD, LTD., LIMITED PARTNERSHIP, a California limited
partnership, AAAAA RENT-A-SPACE — MAUI,  A LIMITED PARTNERSHIP, a Hawaiian
limited partnership, AAAAA RENT-A-SPACE, SAN
LEANDRO, LTD., LIMITED PARTNERSHIP, a California limited
partnership, AAAAA RENT-A-SPACE, SAN PABLO,
LTD. LIMITED PARTNERSHIP, a California limited partnership, and AAAAA RENT-A-SPACE — VALLEJO, LTD. LIMITED
PARTNERSHIP, a California limited partnership (each hereinafter
individually referred to as a “Contributor” and collectively the “Contributors”),
H. JAMES KNUPPE (hereinafter “James
Knuppe”), BARBARA KNUPPE, and EXTRA SPACE STORAGE LP, a Delaware limited
partnership (hereinafter “Extra Space”).


R E C I T A L S:


A.                                   Pursuant to that certain
Contribution Agreement dated effective as of June 15, 2007, between
Contributors and Extra Space (hereinafter the “Contribution Agreement”), each
of the Contributors conveyed to Extra Space certain real and personal property
owned by such Contributor in exchange for certain “Series A Preferred Units”
(hereinafter collectively the “Series A Units”), as defined in the Second
Amended and Restated Agreement of Limited Partnership for Extra Space (the “Partnership
Agreement”), all as more particularly described in the Contribution Agreement.


B.                                     Pursuant to
that certain Agreement Regarding Transfer of Series A Units dated June 25,
2007, between Contributors, James Knuppe, Barbara Knuppe, Extra Space, and
others (hereinafter the “Transfer Agreement”), the parties to the Transfer
Agreement agreed that all of the Series A Units to be issued by Extra Space
pursuant to the Contribution Agreement would be issued directly to James Knuppe
and Barbara Knuppe and James Knuppe and Barbara Knuppe assumed certain
obligations of the Contributors under the Contribution Agreement with respect
to the Series A Units.


 

















 


C.                                     Pursuant to the
Partnership Agreement and the Contribution Agreement, James Knuppe and Barbara
Knuppe have certain rights to require Extra Space to redeem the Series A
Units.  The parties to this Agreement
desire to make certain amendments to the provision of the Contribution
Agreement relating to the redemption of the Series A Units.


NOW,
THEREFORE, for and in consideration of the mutual covenants and conditions set
forth in this First Amendment, the receipt and sufficiency of which are
acknowledged by the parties to this Agreement, the parties to this Agreement do
hereby agree as follows:


1.                                       Amendment
of Section 3(f) of Contribution Agreement.  Section 3(f) of the Contribution Agreement is
hereby amended by deleting said Section 3(f) in its entirety and replacing it
with the following Section 3(f):


(f)                                    Issuance of
Series A Preferred Units.  The
Series A Preferred Units shall be issued and delivered to Contributors at
Closing.  Subject to the terms and
conditions set forth in this Agreement (including this Section 3(f)) and that
certain Promissory Note dated June 25, 2007, in the original principal amount
of $100,000,000.00 and in which H. James Knuppe and Barbara Knuppe appear as
Borrowers and Acquiror appears as Lender (hereinafter the “Note”), the Series A
Preferred Units shall be redeemable for cash or exchangeable for shares (“Conversion Shares”) of the Stock in accordance with the
provisions of the Amended and Restated Partnership Agreement (hereinafter
defined).  Pursuant to Section 16.4B of the
Amended and Restated Partnership Agreement, at such time as a “Tendering Series
A Preferred Unit Holder” (as defined in the Amended and Restated Partnership Agreement)
elects (or is deemed to have elected) to require Acquiror to redeem all or any
portion of such Tendering Series A Preferred Unit Holder’s “Tendered Series A
Preferred Units” (as defined in the Amended and Restated Partnership Agreement),
“Parent” (as defined in the Amended and Restated Partnership Agreement) may
elect to acquire some or all of the Tendered Series A Preferred Units of such
Tendering Series A Preferred Unit Holder in exchange for Stock.  Notwithstanding anything to the contrary in
the Amended and Restated Partnership Agreement, if Parent elects to acquire any
Tendered Series A Preferred Units of a Tendering Series A Preferred Unit
Holder, the following provisions shall apply:


(1)                                  Parent shall
not have any obligation to issue in the aggregate to all Tendering Series A
Preferred Unit Holders more than 116,000,000 shares of the Stock (hereinafter
the “Maximum Shares of Stock”) with respect to Parent’s acquisition of any or
all of the Series A Preferred Units issued pursuant to this Agreement;


(2)                                  Parent’s
obligation to issue shares of the Stock with respect to any Tendered Series A
Preferred Unit shall be deemed to have been satisfied in full upon the issuance
by Parent of the Maximum Shares of Stock with respect to the acquisition of
Tendered Series A Preferred Units regardless of whether the Maximum Shares of
Stock were issued with respect to (A) the acquisition of such Tendered Series A
Preferred Unit, 


 


2

















 


(B) the acquisition of such Tendered Series A
Preferred Unit in combination with the acquisition of other Tendered Series A
Preferred Units, or (C) the acquisition of other Tendered Series A Preferred
Units.


(3)                                  Effective upon
the issuance of the Maximum Shares of Stock with respect to the acquisition of one
or more Tendered Series A Preferred Units issued pursuant to this Agreement,
all Series A Preferred Units issued pursuant to this Agreement shall, to the
extent not previously redeemed by Acquiror or acquired by Parent, be deemed to
have been redeemed in full and shall no longer be issued or outstanding and neither
Acquiror nor Parent shall have any obligation to pay any additional amounts
with respect to any of the Series A Preferred Units issued pursuant to this
Agreement.


Anything
in the Amended and Restated Partnership Agreement to the contrary
notwithstanding, Acquiror agrees that so long as the Series A Preferred Units
remain issued and outstanding, Acquiror shall not (i) authorize or issue any
securities in Acquiror having any preference as to or on a parity with the
dividend or redemption rights, liquidation preferences, conversion rights,
voting rights or any other rights or privileges of the Series A Preferred
Units, (ii) reclassify any partnership interests into interests having any
preference as to or on a parity with the dividend or redemption rights,
liquidation preferences, conversion rights, voting rights or any other rights
or privileges of the Series A Preferred Units, (iii) authorize or issue any
debt which is convertible into or exchangeable for, partnership interests in
Acquiror having any preference as to or on parity with the dividend or
redemption rights, liquidation preferences, conversion rights, voting rights or
any other rights or privileges of the Series A Preferred Units, or (iv) amend
or repeal any provision of, or add any provision to the Amended and Restated
Partnership Agreement if such actions would alter or change the preferences,
rights, privileges or restrictions provided for the benefit of the Series A
Preferred Units.


2.                                       Amendment
of Section 1 of Promissory Note.  The penultimate sentence of Section 1 of that
certain Promissory Note dated June 25, 2007 from James Knuppe and Barbara
Knuppe to Extra Space (hereinafter the “Promissory Note”) shall be replaced
with the following:


Borrowers and Lender agree that Lender shall
have the right, immediately and without prior demand or notice, to offset any
distributions payable to Borrowers, or either of them or any of their
respective assignees, with respect to any Series A Units (whether now owned or
hereafter acquired by Borrowers, either Borrower or any of their respective
assignees) against any amounts due and payable hereunder.  Borrowers and Lender agree that for purposes
of applying the preceding sentence:  (a)
the term “distribution” shall include payments by Lender in redemption of
Series A Units pursuant to the Partnership Agreement (hereinafter defined) and
the issuance of any “REIT Shares” (as defined in the Partnership Agreement) by “Parent”
(as defined in the Partnership Agreement) as consideration for Parent’s
acquisition of Series A Units pursuant to Section 16.4B 


 


3

















 


of the Partnership Agreement, and (b) if any Series A Units are
assigned by Borrowers, for purposes of Lender’s exercise of Lender’s right of
offset (and solely for such purpose), each assignee shall be deemed to have
assumed a proportionate share of the liability under this Note based on the
number of Series A Units that are issued and outstanding as of the date of such
determination.  Furthermore, to the
extent of any amounts then due and owing, but unpaid, by Lender with respect to
the Series A Units, Borrowers may, at Borrowers’ option and notwithstanding any
assignment by Lender of Lender’s rights under this Note to any controlled
affiliate of Lender, immediately and without prior demand or notice, offset
such amounts against amounts then due and owing under this Note; provided,
however, that Borrowers shall at all times be jointly and severally liable for
any amounts remaining owing under this Note after any exercise of such right of
offset.  Borrowers and Lender further
agree that except as provided otherwise in Section 3 below with respect to a
redemption of up to 114,500 Series A Units, an election by any “Tendering
Series A Preferred Unit Holder” (as defined in the Partnership Agreement) to
require Lender to redeem all or any portion of such Tendering Series A
Preferred Unit Holder’s “Tendered Series A Preferred Units” (as defined in the
Partnership Agreement) shall be deemed to be an election by each Borrower and
each assignee of a Borrower to require Lender to redeem all of the Series A
Units held by Borrowers and their respective assignees in the same manner and
to the same extent as if each Borrower and each such assignee had made such an election
in accordance with the provisions of the Partnership Agreement.


3.                                       Amendment
of Subsection 3(iii) of Promissory Note.  Subsection 3(iii) of the Promissory Note is
hereby amended by deleting said Section 3(iii) in its entirety and replacing it
with the following Subsection 3(iii):


                                                (iii)                               Except as
provided below in this Section 3, either of the Borrowers or any of their
respective assignees exercises such Borrower or assignee’s right under the
Second Amended and Restated Agreement of Limited Partnership of Lender dated
June 25, 2007 (the “Partnership Agreement”)
to redeem any or all of the Series A Units


4.                                       Amendment
of Section 3 of Promissory Note.  Section 3 of the Promissory Note is further
amended by adding the following at the end and as part of Section 3 of the
Promissory Note:


Notwithstanding anything to the contrary in
subsection 3(iii) above but subject to that certain Contribution Agreement
(AAAAA Rent-A-Space) dated as of June 15, 2007, between AAAAA Rent-A-Space, Alameda, Ltd., Limited Partnership, a
California limited partnership, Lender, Borrowers, and others, as amended (the “Contribution Agreement”), if (a) no default Borrowers has
occurred under this Note and no event has occurred which with the giving of
notice or lapse of time or both would constitute such a default and (b) neither
borrower has assigned or otherwise transferred any of such Borrower’s Series A
Units or any right, title, or interest therein, Borrowers shall have the right,
on a one time basis in a single 


 


4

















 


redemption, to elect to require Lender to redeem, in the aggregate, up
to, but not to exceed, 114,500 Series A Units and such redemption shall not
cause the principal amount of this Note or the accrued but unpaid interest
thereon to be due and payable.  Upon any
redemption by Borrowers pursuant to the immediately preceding sentence, Lender
shall release from the Pledge the Series A Units which are to be redeemed as a
part of such redemption.


5.                                       Examples.  For the avoidance of confusion, attached hereto
as Attachment A, and by this reference made a part hereof, are examples
illustrating the manner in which the parties intend that Section 3(f) of the
Contribution Agreement and Section 1 of the Promissory Note (both as amended by
this First Amendment) are to be applied. 
To the extent that there is a conflict between the provisions of this
Agreement and the examples attached hereto, the examples shall control.


6.                                       Ratification
by James Knuppe and Barbara Knuppe.  Each of James Knuppe and Barbara Knuppe, with
respect to the Series A Units now or hereafter held by them, hereby assumes and
agrees to be bound by the provisions of Sections 3(f), 3(g)(1), and 3(i) of the
Contribution Agreement and agrees to hold such Series A Units subject to the
provisions of Sections 3(f), 3(g)(1) and 3(i) of the Contribution Agreement in
addition to any other provisions of the Contribution Agreement to which they
have agreed to be bound.  James Knuppe
and Barbara Knuppe do each hereby ratify and confirm the Contribution Agreement,
the Transfer Agreement and the Promissory Note, as those Agreements have been
amended and modified by this First Amendment.


7.                                       Ratification
by Other Parties to Contribution Agreement.  Each of the parties to this First Amendment
other than James Knuppe and Barbara Knuppe hereby ratifies and confirms the
Contribution Agreement and the Transfer Agreement as those Agreements have been
amended and modified by this First Amendment.




[Signatures
on Following Pages]


5

















 


DATED
effective as of the effective date set forth above.


	
   

  	
  CONTRIBUTORS:

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE, ALAMEDA, LTD., LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS - ALAMEDA, INC.,
  a Nevada corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE, ALAMEDA II, LTD. LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE, BERKELEY I, LTD., LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  



 


6

















 


	
   

  	
  AAAAA
  RENT-A-SPACE, BERKELEY II, LTD., LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE — CASTRO VALLEY, LTD. LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE — COLMA, LTD. LIMITED PARTNERSHIP,
  a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS - COLMA, INC.,
  a Nevada corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  



 


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  AAAAA RENT-A-SPACE,
  HAYWARD, LTD., LIMITED PARTNERSHIP,
  a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS - HAYWARD, INC.,
  a Nevada corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE — MAUI, A LIMITED PARTNERSHIP,
  a Hawaiian limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE, SAN LEANDRO, LTD., LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS — SAN LEANDRO, INC.,
  a Nevada corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  



 


8

















 


	
   

  	
  AAAAA
  RENT-A-SPACE, SAN PABLO, LTD. LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  
	
   

  	
  AAAAA
  RENT-A-SPACE — VALLEJO, LTD. LIMITED PARTNERSHIP, a California limited partnership

  
	
   

  
	
   

  	
  By:

  	
  KN
  PRODUCTIONS CO., INC., a California
  corporation, its general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Knuppe

  
	
   

  	
   

  	
  Name:
  Michael Knuppe

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date:
  9/28/07

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  H. James Knuppe

  	
  9/28/07

  
	
   

  	
   

  	
  H. JAMES
  KNUPPE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Barbara Knuppe

  	
  9/28/07

  
	
   

  	
   

  	
  BARBARA
  KNUPPE

  
						



 


9

















 


	
   

  	
  EXTRA
  SPACE:

  
	
   

  
	
   

  	
  EXTRA SPACE STORAGE LP, a Delaware
  limited partnership

  
	
   

  
	
   

  	
  BY:

  	
  ESS HOLDINGS BUSINESS TRUST I, a
  Massachusetts business trust, its sole general partner

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Charles L. Allen

  
	
   

  	
   

  	
  Name: Charles L. Allen

  
	
   

  	
   

  	
  Title: Trustee

  



 


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ATTACHMENT A


 


Except to the
extent expressly indicated otherwise in this Attachment, capitalized terms used
in this Attachment shall have the same meaning as set forth in the First
Amendment.


 


Assumptions for
Examples:


 


	
  Face
  amount of Promissory Note:

  	
   

  	
  $100,000,000.00

  
	
  Accrued but unpaid interest owing on the
  Promissory Note:

  	
   

  	
  $0.00

  
	
  Total Number of Series A Units owned by H. James
  Knuppe and Barbara Knuppe:

  	
   

  	
  989,980

  
	
  Series A Preferred Capital

  	
   

  	
  $116.16
 (rounded from $116.1639629083)

  
	
  Maximum Shares of Stock

  	
   

  	
  116,000,000

  
	
  Adjustment Factor (as defined in the Partnership
  Agreement)

  	
   

  	
  1.0

  



 


Example No. 1:


The “Value” (as defined in the Partnership
Agreement) of the Stock (as defined in the Contribution Agreement) at the time
that H. James Knuppe and Barbara Knuppe (collectively, “Knuppe”) tender the
Series A Units for redemption is $20.00 per share of Stock, and Parent elects
to acquire all of the Tendered Series A Units in exchange for Stock.


The
“Series A Preferred Redemption Amount” (as defined in the Partnership
Agreement) payable with respect to each Series A Unit would be equal to the sum
of the Series A Preferred Capital ($116.1639629083)
plus the Value of a share of Stock ($20.00), or $136.1639629083.  The total cash amount that would be payable
with respect to such redemption (but for Parent’s election to issue Stock in
exchange for the Series A Units) would be equal to the product of the total
number of Series A Units (989,980) multiplied by the Series A Preferred
Redemption Amount ($136.1639629083), or $134,799,600.00.  Parent would have the obligation to issue
6,739,980 shares of Stock with respect to the redemption.  5,000,000 of the shares of Stock (representing
the $100,000,000.00 balance owing under the Promissory Note) would be applied
to the satisfaction of the Promissory Note and 1,739,980 of the shares of Stock
would be issued to Knuppe.  Because
the total number of shares being issued is 6,739,980, the Maximum Shares of
Stock limitation would not apply.  Knuppe
would receive consideration in exchange for the Series A Units of $100,000,000
(through the satisfaction of the Promissory Note) plus shares of Stock having a
total Value of $34,799,600.00, for total consideration of $134,799,600.00.


Example No. 2:


The Value of the Stock at the time that
Knuppe tenders the Series A Units for redemption is $5.00 per share of Stock,
and Parent elects to acquire all of the Tendered Series A Preferred Units in
exchange for Stock.


 


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The
Series A Preferred Redemption Amount payable with respect to each Series A Unit
would be equal to the sum of the Series A Preferred Capital ($116.1639629083) plus the Value of a share of
Stock ($5.00), or $121.1639629083.  The
total cash amount that would be payable with respect to such redemption (but
for Parent’s election to issue Stock in exchange for the Series A Units) would
be equal to the product of the total number of Series A Units (989,980)
multiplied by the Series A Preferred Redemption Amount ($121.1639629083), or $119,949,900.00.  Parent would have the obligation to issue 23,989,980
shares of Stock with respect to the redemption. 
20,000,000 of the shares of Stock (representing the $100,000,000.00
balance owing under the Promissory Note) would be applied to the satisfaction
of the Promissory Note and 3,989,980 of the shares of Stock would be issued to Knuppe.  Because the total number of shares being
issued is 23,989,980, the Maximum Shares of Stock limitation would not
apply.  Knuppe would receive
consideration in exchange for the Series A Units of $100,000,000 (through the
satisfaction of the Promissory Note) plus shares of Stock having a total Value
of $19,949,900.00, for total consideration of $119,949,900.00.


Example
No. 3:


The
Value of the Stock at the time that Knuppe tenders the Series A Units for
redemption is $1.00 per share of Stock, and Parent elects to acquire all of the
Tendered Series A Preferred Units in exchange for Stock.


The
Series A Preferred Redemption Amount payable with respect to each Series A Unit
would be equal to the sum of the Series A Preferred Capital ($116.1639629083) plus the Value of a share of
Stock ($1.00), or $117.1639629083.  The
total cash amount that would be payable with respect to such redemption (but
for Parent’s election to issue Stock in exchange for the Series A Units) would
be equal to the product of the total number of Series A Units (989,980)
multiplied by the Series A Preferred Redemption Amount ($117.1639629083), or
$115,989,980.00.  Parent would have the
obligation to issue 115,989,980 shares of Stock with respect to the
redemption.  100,000,000 of the shares of
Stock (representing the $100,000,000.00 balance owing under the Promissory
Note) would be applied to the satisfaction of the Promissory Note and
15,898,980 of the shares of Stock would be issued to Knuppe.  Because the total number of shares being
issued is 115,989,980, the Maximum Shares of Stock limitation would not
apply.  Knuppe would receive
consideration in exchange for the Series A Units of $100,000,000 (through the
satisfaction of the Promissory Note) plus shares of Stock having a total Value
of $15,989,980.00, for total consideration of $115,989,980.00.


Example
No. 4:


The
Value of the Stock at the time that Knuppe tenders the Series A Units for
redemption is $0.10 per share of Stock, and Parent elects to acquire all of the
Tendered Series A Preferred Units in exchange for Stock.


The Series A Preferred Redemption Amount
payable with respect to each Series A Unit would be equal to the sum of the
Series A Preferred Capital ($116.1639629083)
plus the Value of a share of Stock ($0.10), or $116.2639629083.  The total cash amount that would be payable
with respect to such redemption (but for Parent’s election to issue Stock in exchange
for the Series A Units) would be equal to the product of the total number of
Series A Units (989,980) multiplied 


 


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by the Series A Preferred Redemption Amount
($116.2639629083), or $115,098,998.00.  But
for the Maximum Shares of Stock limitation, Parent would have the obligation to
issue 1,150,989,980 shares of Stock with respect to the redemption.  Because of the Maximum Shares of Stock
limitation, Parent would only be obligated to issue 116,000,000 shares of Stock
having a Value of $11,600,000.00.  All of
the Shares of Stock would be applied the satisfaction of the Promissory Note
leaving a balance owing under the Note of $88,400,000.00.  Knuppe remains obligated for the payment of
the $88,400,000.00 on the Promissory Note.


Example
No. 5:  The facts
are the same as in Example 4, except that Parent does not elect to redeem the
Series A Units in exchange for Stock. 
After the $100,000,000.00 outstanding balance on the Promissory Note is
subtracted, Knuppe would be entitled to a cash payment in exchange for the
Series A Units of $15,098,998.00.


Example No. 6:  The Parent and Extra Space file for
bankruptcy, and the Series A Units are worthless.  Knuppe elects to tender the Series A Units
for redemption.  Because the Series A
Units are worthless, they cannot be offset against the outstanding balance on
the Promissory Note.  Knuppe remains
obligated for $100,000,000 on the Promissory Note.


 


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