Document:

Exhibit 10.31

 

SUBSCRIPTION
AGREEMENT

(Membership
Interests in Extra Space Development, LLC)

 

THIS SUBSCRIPTION
AGREEMENT (“Agreement”) is made this 31 day of December, 2007, by and among
Extra Space Development, LLC (“Company”), and Extra Space Storage LLC (“Subscriber”),
(the Company and the Subscriber are sometimes collectively referred to as “Parties.”)

 

WITNESSETH:

 

WHEREAS, the Company has
entered into six agreements with the Subscriber for the purchase and sale of
limited liability company interests, as identified in the attached Exhibit A (“Six
Sale Agreements”); and

 

WHEREAS, Subscriber
desires to acquire certain membership interests in the Company for the
consideration set forth herein; and

 

WHEREAS, the Parties
desire to enter into this Agreement to set forth with specificity and detail
the terms and conditions upon which the foregoing subscription and acquisition
of membership interests shall be accomplished.

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein, and
intending to be legally bound, the Parties hereto agree as follows:

 

1.             Sale of Membership
Interest. The Subscriber agrees to contribute, and the Company agrees to
accept from Subscriber, the sum of $356,718.90
as a capital contribution to Company in exchange for a membership
interest in the Company as described below.

 

2.             Admission/
Operating Agreement. Subscriber hereby consents to the Amended and Restated
Operating Agreement of the Company dated January 1, 2004 (“Operating Agreement”)
and agrees to be bound thereby, subject to the further Second Amended and
Restated Operating Agreement attached hereto as Exhibit B, which shall be
effective as of the Effective Date of this Agreement.

 

3.             Subscriber Review
of Disclosure Materials. Subscriber acknowledges that it has received no
representations or warranties from the Company, the Manager, Kenneth M. Woolley
or by any person acting on behalf of the Company, with respect to the proposed
business of the Company, or any other aspects or consequences of a purchase of
membership interests, and that Subscriber has not relied upon any information
concerning the Company, written or oral. Subscriber represents and warrants to
Company and Manager that it has had full access to Company records and has made
such inquiry regarding the Company and its business, as Subscriber deems
necessary.

 

4.             Subscriber
Representations and Warranties. The Subscriber further represents and
warrants to the Company as follows:

 

(a)           Economic Risk.
The Subscriber is aware that the membership interests are speculative
investments involving a high degree of risk.

 

(b)           Counsel.
Subscriber, its counsel, its advisors, and such other persons, with whom it has
found it necessary to consult, have sufficient knowledge and experience in
business and financial matters

 

1

 

to evaluate the Company, and the merits and risks of
the investment, and to make an informed investment decision with respect
thereto.

 

(c)           Examination. The
Company has made available to the Subscriber, its counsel and advisors, prior
to the date hereof, the opportunity to ask questions of, and to receive answers
from, the Company and its representatives, concerning the terms and conditions
of the investment, and access to obtain any information, documents, financial
statements, records and books (i) relative to the Company, the business, and an
investment in the Company, and (ii) necessary to verify the accuracy of any
information furnished to the Subscriber.

 

(d)           Transfer
Restrictions. The membership interests are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Operating Agreement, and applicable state and federal
securities laws, pursuant to registration or an exemption therefrom. Subscriber
should be aware that it might be required to bear the financial risks of this
investment for an indefinite period.

 

(e)           Correctness,
Remaking of Warranties. The foregoing representations and warranties are
true and correct as of the date hereof and each such representation and
warranty shall survive the purchase of membership interests.

 

5.             Company
Representations and Warranties: AS IS, WHERE IS. The Company represents and
warrants to the Subscriber as follows:

 

(a)           Company is a Utah
limited liability company, and duly formed, existing and in good standing in
the State of Utah

 

(b)           Company has adopted a
Plan of Dissolution in form attached as Exhibit C, which includes a plan for a
series of redemptions of the membership interests of all of the existing
members of the Company other than the Subscriber.

 

(c)           The Company, and its
members and managers, make no representations or warranties to the Subscriber
other than as specifically set forth herein. Otherwise, and in all respects, the
membership interest of the Company hereby subscribed for, and the
organizational documents of the Company, and the assets, liabilities, and
business of the Company are hereby approved by and conveyed to the Subscriber “AS
IS, WHERE IS” and without warranty of any kind.

 

6.             Miscellaneous.

 

(a)           Utah Law. This
Subscription Agreement shall be construed in accordance with and be governed by
the laws of the State of Utah. The parties hereto hereby agree to submit to the
jurisdiction of the state of federal courts in Utah to resolve all claims or
disputes arising under this Subscription Agreement.

 

(b)           Successors and
Assigns. This Subscription Agreement shall be binding upon and inure to the
benefit of the successors, heirs, assigns and personal representatives of all
parties; provided, however, that Subscriber may not assign its rights or
delegate his duties under this Subscription Agreement.

 

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(c)           Effective Date.
This Subscription Agreement shall become Effective upon execution by all
parties named below.

 

(d)           Entire Agreement.
It is expressly understood that this Subscription Agreement and the documents
referred to herein constitute the entire agreement of the parties hereto with
respect to the subject matter hereof. All prior understandings or commitments
of any kind, oral or written, pertaining thereto are hereby superseded and
canceled.

 

(end of text)

 

3

 

IN WITNESS WHEREOF, the Parties to this Agreement have
duly executed it on the date and year first above written.

 

COMPANY:

 

Extra Space Development, LLC

 

 

	
  By:

  	
  /s/ Kenneth M. Woolley

  	
   

  
	
  Its: Manager

  

 

 

SUBSCRIBER:

 

Extra Space Storage LLC

 

 

	
  By:

  	
  /s/ Kent W. Christensen

  	
   

  
	
  Its: Manager

  

 

CONSENT TO
ADMISSION OF MEMBER

 

Pursuant to Article 3.06
of the Operating Agreement, the undersigned, representing greater than 50% of
the Membership Interests in the Company waive any rights of first refusal set
forth in the Operating Agreement and consent to the transaction described above
and the admission of Extra Space Storage LLC as a Member of the Company.

 

	
  MEMBERS:

  	
  KRISPEN FAMILY HOLDINGS, L.C., Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kenneth M. Woolley

  	
   

  	
  By:

  	
  /s/ Spencer F. Kirk

  
	
  Kenneth M. Woolley, Member

  	
  Spencer F. Kirk

  
	
  Percentage Interest: 32.630%

  	
  Its: Manager

  
	
   

  	
  Percentage Interest: 20.195%

  
				

 

4

 

EXHIBIT A

 

SIX SALE
AGREEMENTS

 

1.    Agreement for Purchase and
Sale of Limited Liability Company Interest (Extra Space of Culver City LLC– ESS#
1160)

 

2.    Agreement for Purchase and
Sale of Limited Liability Company Interest (Extra Space of Middletown LLC– ESS#
1192)

 

3.    Agreement for Purchase and
Sale of Limited Liability Company Interest (Extra Space of Jamaica Plain– ESS#
1098)

 

4.    Agreement for Purchase and Sale
of Limited Liability Company Interest (Extra Space of Elk Grove LLC– ESS# 1166)

 

5.    Agreement for Purchase and
Sale of Limited Liability Company Interest (Extra Space of Extra Space West Two
LLC)

 

6.    Agreement for Purchase and
Sale of Limited Liability Company Interest (Storage Associates Holdco)

 

5

 

	
   

  	
   

  	
  LC# 029047

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RECEIVED

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLES
  OF ORGANIZATION

  	
  SEP
  22 1998

  
	
   

  	
   

  	
   

  
	
   

  	
  OF

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  EXTRA
  SPACE DEVELOPMENT, LLC

  	
   

  

 

The
undersigned hereby form a limited liability company (the “Company”) — pursuant
to the Utah Limited Liability Company Act and adopt as the Articles of
Organization of such limited liability company the following:

 

1.             Name of the Company:

 

The
name of the  Company shall be “EXTRA
SPACE DEVELOPMENT, LLC”

 

2.             Period of its Duration:

 

The
duration of the Company shall be forty (40) years from the date of filing of these
Articles of Organization with the Division of Corporations & Commercial
Code of the State of Utah.

 

3.             Purposes of the Company.

 

The
purposes for which the Company is organized are to develop, finance, lease,
construct, own, operate, maintain and sell real and personal property of all  types, and other related business within
the State of Utah. In addition, the Company shall have unlimited power to
engage in and do any lawful act concerning any or all lawful businesses for
which limited liability companies may be organized according to the laws of the
State of Utah, including all powers and purposes now and hereafter permitted by
law to a limited liability company.

 

4.             Principal Place of Business and Registered
Agent.

 

The
address of the principal place of business of the Company is as follows:

 

	
   

  	
  Extra Space Development,
  LLC

  
	
   

  	
  488 East Winchester, Suite
  150 

  
	
   

  	
  Salt Lake City, UT 84107

  

 

The
name and address of the agent for service of process is:

 

	
   

  	
  Kenneth M.Woolley

  
	
   

  	
  488 East Winchester, Suite
  150

  
	
   

  	
  Salt Lake City, UT 84107

  

 

 

However,
if the agent appointed therein cannot be found or served with the exercise of
reasonable diligence, or if said agent’s authority has been revoked, then the
Utah Division of Corporations & Commercial Code is appointed as the agent
of the company for service of process.

 

5.             Management.

 

The
Company is to be managed by a manager. The name and address of the manager who
is to serve until its successors are elected and qualify is:

 

	
   

  	
  Kenneth M. Woolley

  
	
   

  	
  488 East Winchester, Suite
  150

  
	
   

  	
  Salt Lake City, UT 84107

  

 

6.             Operations.

 

The
Company shall be governed by a written Operating Agreement, the terms of which
shall supplement the provisions of Utah law.

 

DATED:
September 17, 1998.

 

 

	
   

  	
  /s/ KENNETH M. WOOLLEY

  	
   

  
	
   

  	
  KENNETH M. WOOLLEY,
  Manager

  

 

 

ACCEPTANCE BY REGISTERED
AGENT:

 

	
  /s/ Kenneth M. Woolley

  	
   

  
	
  Kenneth M. Woolley

  

 

2

 

	
   

  	
  LL 029047

  
	
   

  	
  Nov 29 1999

  

 

 

ARTICLES OF
AMENDMENT

TO THE

ARTICLES OF ORGANIZATION

OF

EXTRA SPACE DEVELOPMENT, LLC

 

THE UNDERSIGNED, pursuant
to the Utah Limited Liability Company Act, hereby adopts these Articles of
Amendment to the Articles of Organization for Extra Space Development, LLC (the
“Company”), and certifies that:

 

	
   

  	
  FIRST:

  	
  The name of the Company is Extra Space Development, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  SECOND:

  	
  The date of registration of the Company with the
  Utah Division of Corporations and Commercial Code was September 22, 1998.

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD:

  	
  The Articles of Organization are hereby amended by
  replacing the initial Period of Duration in Article 2 with the following new
  Period of Duration:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The duration of the Company shall be sixty (60)
  years from the date of filing of the Articles of Organization with the
  Division of Corporations and Commercial Code of the State of Utah.

  
	
   

  	
   

  	
   

  
	
   

  	
  FOURTH:

  	
  Except as amended by this Certificate, the Articles
  of Organization shall remain unchanged.

  

 

IN WITNESS WHEREOF, this
Certificate of Amendment was executed on the date given below by the
undersigned member/manager of the Company, who is duly authorized to execute
and file this Certificate of Amendment and to affirm, under penalties of
perjury, that the facts stated in this Certificate of Amendment are true.

 

DATED this 16th day of November, 1999.

 

 

	
   

  	
  /s/ Kenneth M.Woolley

  	
   

  
	
   

  	
  Kenneth M.Woolley

  
	
   

  	
  Member/Manager

  

 

3

 

 

CERTIFICATE OF GOOD STANDING

FOREIGN LIMITED LIABILITY COMPANY

 

I, KEVIN SHELLEY,
Secretary of State of the State of California, hereby certify:

 

That on the 18th day of
November, 1998, EXTRA SPACE DEVELOPMENT, LLC, complied with the requirements of
California law in effect on that date for the purpose of registering to
transact intrastate business in the State of California; and further purports
to be a limited liability company organized and existing under the laws of Utah
as EXTRA SPACE DEVELOPMENT, LLC, and;

 

That the above limited
liability company is entitled to transact intrastate business in the State of
California as of the date of this certificate subject, however, to any
licensing requirements otherwise imposed by the laws of this state; and

 

That no information is
available in this office on the financial condition, business activity or
practices of this limited liability company.

 

 

	
  

  	
   

  	
  IN WITNESS WHEREOF, I execute this certificate and
  affix the Great Seal of the State of California this day of April 8, 2004.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ KEVIN SHELLEY

  
	
   

  	
  KEVIN SHELLEY

  Secretary of State

  
	
   

  	
   

  
	
   

  	
   

  

 

4

 

AMENDED AND RESTATED OPERATING AGREEMENT

FOR

EXTRA SPACE DEVELOPMENT, LLC

 

THIS AMENDED AND RESTATED
OPERATING AGREEMENT FOR EXTRA SPACE DEVELOPMENT, LLC (the “Agreement”) is made
and entered effective as of the 1st day of January, 2004, by, between, and among
the Members and the Manager(s) of the Company, as such terms are defined below.

 

RECITALS

 

a.             The Articles of
Organization for Extra Space Development, LLC (hereinafter the “Articles of
Organization”) were filed with the Division on September 22, 1998. Extra Space Storage
LLC, a Delaware limited liability company, was the sole member of the Company.

 

b.             Pursuant to that
certain Plan of Reorganization (Extra Space Development, LLC) dated effective
as of the same date as this Agreement between Extra Space Storage LLC, the Company,
and the Members, the Extra Space Storage LLC has distributed all of the
membership interests in the Company to the Members.

 

c              The Members have
each reviewed this Agreement, in its entirety, and desire to cause the same to
be adopted as and for the operating agreement of the Company, in accordance
with the Act.

 

AGREEMENT:

 

Pursuant to the Act, and
all other pertinent laws of the State of Utah and its political subdivisions,
and in exchange for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the undersigned Members mutually
agree and covenant as follows:

 

ARTICLE 1:
ORGANIZATION

 

1.01         Adoption of Operating
Agreement. The Members hereby unanimously adopt this Agreement as the
Operating Agreement for the Company pursuant to the provisions of the Act.

 

1.02         Name.  The name of the Company shall be EXTRA SPACE
DEVELOPMENT, LLC

 

1.03         Commencement of Business.
The existence of the Company commence as of the date of filing of the Company’s
Articles of Organization with the Division and shall continue thereafter until
terminated as provided herein. For purposes of this Section 1.03, the Articles
of Organization of the Company shall be deemed filed with the Division on the
date indicated by the Division as part of its stamp or seal on the original
Articles of Organization which are filed with the office of the Division.

 

1

 

1.04         Registered Office,
Registered Agent, Designated Office. The Company shall continuously
maintain a registered office and registered agent in the State of Utah as
required by the Act. The registered agent of the Company in the State of Utah
is Kenneth M. Woolley, and the registered office of the Company in the State of
Utah is 2795 E. Cottonwood Parkway, Suite 400, Salt Lake City, Utah 84121. The
designated office of the Company in the State of Utah for purposes of Section
48-2c-l11 of the Act shall be 2795  E. Cottonwood Parkway, Suite 400,
Salt Lake City, Utah 84121. The Company may designate or maintain any
registered agent, registered office or other office in any jurisdiction whether
or not required by law, and any such designation heretofore made is hereby
ratified and approved. The registered office, registered agent and designated
office of the Company may be changed at any time and from time to time by the
Manager(s).

 

1.05         Purposes. The
principal business purposes for which the Company is organized are to acquire,
own, develop, mortgage, encumber, hypothecate, lease, sell, maintain, improve,
alter, remodel, expand, manage, and otherwise operate and deal with real and
personal property from time to time acquired by the Company and for any other
lawful purpose for which a limited liability company may be organized under the
laws of the State of Utah.

 

1.06         No Liability of
Managers, Members, Organizers, Officers and Employees. Except as otherwise
agreed by such Organizer, Member, Manager officer or employee, no Organizer,
Member, Manager, officer or employee of the Company is or shall be personally
liable under a judgment, decree, or order of a court, or in any other manner,
for a debt, obligation, or liability of the Company or for the acts or
omissions of the Company or any other Organizer, Member, Manager, officer or
employee of the Company. The failure of the Company to maintain records, to
hold meetings, or to observe any formalities or requirements imposed by the Act
or by the Articles of Organization or this Agreement is not a ground for
imposing personal liability on any Member, Manager, Officer or employee of the
Company for any debt, obligation or liability of the Company.

 

1.07         Title to Property.
All real and personal property owned by the Company shall be owned by the
Company as an entity and no Member shall have any ownership interest in such
property in its individual name or right, and each Member’s interest in the
Company shall be personal property for all purposes. Except as otherwise
provided in this Agreement, the Company shall hold all of its real and personal
property in the name of the Company and not in the name of any Member.

 

1.08         Payments of Individual
Obligations. The Company’s credit and assets shall be used solely for the
benefit of the Company, and no asset of the Company shall be transferred or
encumbered for or in payment of any individual obligation of a Member.

 

1.09         Independent
Activities: Transactions With Affiliates.

 

(a)           Each Member and Manager
and any of their respective Affiliates shall be required to devote only such
time to the affairs of the Company as such Member or Manager determines in its
sole discretion may be necessary, and each Affiliate of a Member or Manager, to
the extent not otherwise directed by the Member or Manager, shall be free to
serve any other Person or enterprise in any capacity that it may deem
appropriate in its discretion.

 

2

 

(b)           Insofar as permitted by  applicable
law, any Member, Manager and their respective Affiliates may, notwithstanding
this Agreement, engage in whatever activities they choose, whether the same are
competitive with the Company or otherwise, without having or incurring any
obligation to offer any interest in such activities to the Company or any
Member, and neither this Agreement nor any activity undertaken pursuant hereto
shall prevent any Member, Manager or Affiliate of any of them from engaging in
such activities, or require any Member or Manager to permit the Company or any
Member, Manager or Affiliate of any of them to participate in any such
activities, and as a material part of the consideration for the execution of
this Agreement by each Member, each Member hereby waives, relinquishes, and
renounces any such right or claim of participation. This provision shall not be
construed to be in derogation of any obligation which any Person may have to
the Company arising out of such Person’s employment by, or position as an
officer of the Company, or any contract or agreement such Person may have with
the Company.

 

(c)           To the extent permitted
by applicable law and except as otherwise provided in this Agreement, the
Company is hereby authorized to purchase property from, sell property to, or
otherwise deal with any Member or Manager, acting on its own behalf, or any
Affiliate of any Member or Manager, provided that any such purchase, sale, or
other transaction shall be made on terms and conditions which are no less
favorable to the Company than if the sale, purchase, or other transaction had
been entered into with an independent third party.

 

ARTICLE 2:
DEFINITIONS

 

2.01         Definitions.  The
terms used in this Agreement shall have the following meanings:

 

(a)           Act means the
Utah Revised Limited Liability Company Act, Title 48, Chapter 2c, Utah Code
Annotated.

 

(b)           Adverse Act
means, with respect to any Member, any of the following:

 

(1)           A Transfer of all or
any portion of such Member’s interest in the Company except as expressly
permitted or required by this Agreement;

 

(2)           Transfer of all or any
portion of any Person’s interest in any Member except as expressly permitted or
required by this Agreement;

 

(3)           An attempt by such
Member to withdraw from the Company or dissolve the Company or take any action
in breach of Section 11.02 hereof;

 

(4)           Any termination,
dissolution or liquidation of a corporation, limited liability company, or
partnership which is a Member, or the taking of any action by its directors,
majority shareholders or general partners looking to the termination,
dissolution or liquidation of such Member, unless substantially all assets of
such Member are transferred, or are to be transferred, to a Wholly Owned
Affiliate of such Member;

 

3

 

(5)           The Bankruptcy of such
Member or the occurrence of any other event which would permit a trustee or
receiver to acquire control of the affairs or assets of such Member;

 

(6)           A determination by the
Third Judicial District Court of Salt Lake County, State of Utah, or any other
court having jurisdiction over the Company and the Members, that such Member
has taken an action, or has failed to take an action within the scope of his
duties hereunder, that results, or can reasonably be expected to result in,
such Member becoming liable to indemnify the Company for a material sum
pursuant to any provision of this Agreement or that would justify a decree of
dissolution of the Company under the Act; or

 

(7)           In the case of a Member
who is a natural person, his or her death or the entry of an order by a court
of competent jurisdiction adjudicating him or her incompetent to manage his or
her person or his or her estate.

 

(c)           Adverse Member
means any Member with respect to whom an Adverse Act pursuant to Section
2.01(b) has occurred.

 

(d)           Affiliate means,
with respect to any Person, (i) any other Person directly or indirectly
controlling, controlled by or under common control with such Person, (ii) any
other Person owning or controlling interests in such Person possessing the
right to cast ten percent (10%) or more of the total votes entitled to be cast
for the  election of management of
such Person or to be cast with respect to management decisions of such Person,
(iii) any officer, director, manager, or general partner of such Person, or
(iv) any other Person who is an Affiliate of any other Person described in
clauses (i) through (iii) of this sentence. For purposes of this definition,
the term “controls,” “is controlled by,” or “is under common control with”
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person or entity, whether
through the ownership of voting securities, by contract or otherwise.

 

(e)           Aggregate Buy-Sell
Price has the meaning set forth in Section 10.03 hereof.

 

(f)            Appraisers’ Notice
has the meaning set forth in Section 9.06 hereof.

 

(g)           Articles of
Organization means the Articles of Organization of the Company as filed
with the Division.

 

(h)           Bankruptcy
means, with respect to any Person, a “Voluntary Bankruptcy” or an “Involuntary
Bankruptcy.” A “Voluntary Bankruptcy” means, with respect to any Person, the
filing of any petition or answer by such Person seeking to adjudicate it a
bankrupt or insolvent, or seeking for itself any liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
such Person or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking, consenting to, or acquiescing
in the entry of an order for relief or the appointment of a receiver, trustee,
custodian, or other similar official for such Person or for any substantial

 

4

 

part of its property; or corporate action taken by  such Person to authorize any of the
actions set forth above. An “Involuntary Bankruptcy” means, with respect to any
Person, without the consent or acquiescence of such Person, the entering of an
order for relief or approving a petition for relief or reorganization or any other
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar statute, law or regulation, or the filing of
any such petition against such Person which petition shall not be dismissed
within ninety (90) days, or, without the consent or acquiescence of such
Person, the entering of an order appointing a trustee, custodian, receiver or
liquidator of such Person or of all or any substantial part of the property of
such Person which order shall not be dismissed within sixty (60) days.

 

(i)            Business Day
means any day  other than a
Saturday or Sunday on which banks are not required or authorized to close in
the state of Utah.

 

(j)            Capital Account
means the Capital Account of each Member as described in Section 4.01 below.

 

(k)           Capital
Contributions means collectively all contributions of cash or other
Property to the Company.

 

(l)            Code means the
Internal Revenue Code of 1986, as amended.

 

(m)          Division means the  Division of Corporations and Commercial
Code of the Department of Commerce, State of Utah.

 

(n)           Election Day has
the meaning set forth in Section 10.02 hereof.

 

(o)           Election Period
has the meaning set forth in Section 10.02 hereof.

 

(p)           First Appraiser
has the meaning set forth in Section 10.05 hereof.

 

(q)           Fiscal Year
means (i) the period commencing on the effective date of this Agreement and
ending on December 31, next following (ii) any subsequent twelve (12) month
period commencing on January 1 and ending on December 31, or (iii) any portion
of the period described in clause (ii) for which the Company is required to
allocate Profits, Losses and other items of Company income, gain, loss or
deduction pursuant to ARTICLE 4 hereof.

 

(r)            Interest or Member’s
Interest means an individual Member’s share of the Company capital, assets,
profits, surplus or losses, and all rights of a Member of a limited liability
company under the Act and all rights of a Member of the Company under this Agreement.

 

(s)           Involuntary Bankruptcy
has the meaning set forth in Section 2.01(b) hereof.

 

(t)            Liquidating Event
has the meaning set forth in Section 11.03 hereof.

 

5

 

(u)           Manager(s) shall
have the meaning set forth in Section 6.01 below.

 

(v)           Member or Members
means the persons named in ARTICLE 3 below, and such other Members as may be
admitted from time to time in accordance with this Agreement, but shall not
mean the husband, wife, child or parent of any Member unless such husband,
wife, child or parent is expressly named herein as a Member.

 

(w)          Net Cash From
Operations means the gross cash proceeds from Company operations less the
portion thereof used to pay, or establish reserves for, all Company expenses (including
without limitation, operating expenses, development expenses, debt payments,
capital improvements, replacements, and contingencies), all as determined by
the Manager(s). Net Cash From Operations does not include Net Cash From Sales
or Net Cash From Refinancings. Net Cash From Operations shall not be reduced by
depreciation, amortization, cost recovery deductions, or similar allowances,
but shall be increased by any reductions of reserves previously established
pursuant to the first sentence of this Section 2.01(w) and Sections 2.01(x) and
2.01(y).

 

(x)            Net Cash From
Refinancings means the net cash proceeds from any initial financing and all
refinancings of Property, less any portion thereof used to establish reserves,
all as determined by the Manager(s).

 

(y)           Net Cash From Sales
means the net cash proceeds from all sales and other dispositions of Property,
less any portion thereof used to establish reserves, all as determined by the
Manager(s). Net Cash From Sales shall include all principal and interest
payments with respect to any note or other obligation received by the Company
in connection with the sale or other disposition of Property.

 

(z)            Net Equity has
the meaning set forth in Section 10.04 hereof.

 

(aa)         Percentage Interest
means the Percentage Interest in the Company of each Member as set forth in
Section 3.01 below.

 

(bb)         Person means any
individual, partnership, limited liability company, corporation, trust, or
other entity.

 

(cc)         Profits and Losses
means the net profits or losses of the Company for federal income tax purposes
as determined by the accountants employed by the Company; provided, however,
that in the event the profits or losses of the Company are later adjusted in
any manner, as the result of an audit by the Internal Revenue Service, or
otherwise, then the net profits or losses of the Company shall be adjusted to
the same extent.

 

(dd)         Property means all
real and personal property acquired by the Company and any improvements
thereto, and shall include both tangible and intangible property.

 

(ee)         Purchase Notice
has the meaning set forth in Section 10.02 hereof.

 

6

 

(ff)           Regulations
means the Income Tax Regulations, including Temporary Regulations, promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

 

(gg)         Second Appraiser
has the meaning set forth in Section 10.05 hereof.

 

(hh)         Third Appraiser
has the meaning set  forth in Section 10.05 hereof.

 

(ii)           Transfer means,
as a noun, any voluntary or involuntary transfer, sale, or other disposition
and, as a verb, voluntarily or involuntarily to transfer, sell, or otherwise
dispose of.

 

(jj)           Voluntary Bankruptcy
has the meaning set forth in Section 2.01(h) hereof.

 

(kk)         Wholly Owned Affiliate
of any Person shall mean (i) an Affiliate of such Person one hundred percent
(100%) of the voting stock or beneficial ownership of which is owned directly
by such Person, or by any Person who, directly or indirectly, owns one hundred
percent (100%) of the voting stock or beneficial ownership of such Person, (ii)
an Affiliate of such Person who, directly or indirectly, owns one hundred
percent (100%) of the voting stock or beneficial ownership of such Person, and
(iii) any Wholly Owned Affiliate of any Affiliate described in clause (i) or
clause (ii) of this Section 2.01(kk).

 

ARTICLE 3: MEMBERS
OF THE COMPANY

 

3.01         Members. The
names, addresses and Percentage Interests of the  Members of the Company are set forth on 

Exhibit A attached hereto and by this reference made a part hereof. The Members
agree that the Members interests in the capital, Profits, Losses and other
items of Company income, gain, loss or deduction, and distributions from the
Company shall be in accordance with their respective Percentage Interests.

 

3.02         Classes of Members.
There shall be one class of Members. There shall be no distinction between the
rights and liabilities of Members.

 

3.03         Additional Capital
Contributions. From time to time, upon written consent of the Members
holding more than fifty percent (50%) of the Percentage Interests, each of the
Members may contribute additional cash and other properties into the Company
upon such terms as are approved by Members holding more than fifty percent
(50%) of the Percentage Interests. Such contributions shall constitute
additional Capital Contributions.

 

3.04         Withdrawal of Capital
Contributions. Except as otherwise expressly provided in this Agreement:

 

(a)           only after the
dissolution and winding-up of the Company may any of the Capital Contributions
be withdrawn;

 

(b)           no Member shall have
priority over any other Member, either as to the return of Capital
Contributions or as to Profits, Losses, or distributions;

 

7

 

(c)           no Member shall be
personally liable to any other Member for the return of any part of the Members’
Capital Contributions; and

 

(d)           Capital Contributions
shall not bear interest.

 

3.05         Member’s Compensation.
Except as otherwise approved by the Members or provided in this Agreement, no
Member shall receive any interest, salary, or drawing with respect to Capital
Contributions or for services rendered on behalf of the Company or otherwise in
the capacity as Member. The Members agree that the Manager(s) may receive such
salaries and other compensation as are approved from time to time by the
Members.

 

3.06         Admission of New
Members. Except as otherwise provided in this Section 3.06 and ARTICLE 9
hereof, relating to Transfers of Company interests, no Person shall be admitted
to the Company as a Member without the consent of Members holding more than
fifty percent (50%) of the aggregate Percentage interests of all Members. With
the approval of Members holding more than fifty percent (50%) of the Percentage
Interests, the Manager(s) may admit one or more Persons as new Members of the
Company upon such terms as are approved by Members holding more than fifty
percent (50%) of the Percentage Interests.

 

ARTICLE 4: CAPITAL
ACCOUNTS; ALLOCATIONS OF PROFITS AND LOSSES

 

4.01         Capital Accounts.
A separate Capital Account shall be maintained for each Member. Each Member’s
Capital Account shall be credited with each Member’s share of the capital of
the Company. Each Member’s Capital Account shall be increased by the additional
Capital Contributions made by such Member and by such Member’s share of gains
and profits of the Company as allocated under Section 4.01 below. Such account
shall be decreased by any distributions to such Member under Sections 5.01 and,
and by such Member’s share of losses and deductions of the Company as allocated
under Section 4.01 below. Solely for accounting purposes among the Members, a
Member may have a minus or debit balance in his or her Capital Account, but any
such minus or debit balance shall not represent a liability of such Member to
the  Company and no Member shall
have any obligation to restore a negative balance in such Member’s Capital
Account.

 

4.02         Allocation of Profits
and Losses. The Profits and Losses of the Company shall be allocated to the
Members in accordance with their Percentage Interests; provided, however, that
if a Member has contributed appreciated property to the Company in kind, and
the property is later transferred by the Company (including but not limited to
sales or distributions in kind to Members other than the contributing Member),
to the extent required by Section 704(c) of the Code, income, gain, loss or
other deductions, other than depreciation, shall be allocated to the
contributing Member.

 

ARTICLE 5:
DISTRIBUTIONS

 

5.01         Distributions of Net
Cash From Operations. Net Cash From Sales. and Net Cash From Refinancings.
Net Cash from Operations, Net Cash from Sales, and Net Cash from Refinancings
shall be distributed, at such times as the Manager(s) may determine, to the
Members in accordance with the respective Percentage Interests.

 

8

 

5.02         Reinvestment of Net
Cash From Operations and Net Cash From Sales and Net Cash From Refinancings.
The Manager(s) may, from time to time, reinvest all or any portion of Net Cash
From Operations and Net Cash From Sales and Net Cash From Refinancings.

 

5.03         Distribution in Kind.
Distributions of property other than cash shall be apportioned among the
members on the same basis as would be a distribution of Net Cash From Sales in
the amount of the fair market value of the distributed property as of the date
of distribution, with the same effect on the apportionment of the distribution
and all future distributions of cash or other property as a distribution of
cash in such amount.

 

ARTICLE 6:
MANAGEMENT

 

6.01         Management. The
business, operations and properties of the Company shall be managed by the
Manager(s). The initial Manager(s) shall be Kenneth M. Woolley. Kenneth M.
Woolley shall serve as Manager(s) of the Company until the dissolution of the
Company, as hereinafter provided, or until otherwise replaced as set forth in
this Agreement. The Manager(s) can be replaced upon a vote of the Members at a
regular meeting of the Members or special meeting of the Members called for
that purpose. If the Manager(s) should fail or cease to serve then a
replacement Manager(s) shall be elected by a vote of the Members at a regular
or special meeting of the Members, called for that purpose. At any time when
more than one Manager is serving, every action, determination, vote, consent,
or approval of the Manager(s) shall require the unanimous consent of the
Manager(s). If the Manager(s) cannot agree upon any particular matter, such
matter shall be determined by the Members.

 

6.02         General Powers of
Manager(s). The Manager(s) shall be solely responsible for the management
of the Company’s business and activities with all rights and powers generally
conferred by law or necessary, advisable or consistent in connection therewith.
In the event that the Manager(s) are unable to agree upon any matter calling
for the vote, consent, approval, action, or determination of the Manager(s),
the matter shall be determined by the Members. Except as expressly provided
otherwise in this Agreement, no Member, in the capacity of a Member, shall have
any right to participate in the management of the Company or to vote with
respect to any matter to be determined by the Members of the Company.

 

6.03         Specific Powers of the
Manager(s). In addition to any other rights and powers which a manager may
possess, the Manager(s) shall have all specific rights and powers required or
appropriate to his management of the Company business, conferred by this
Agreement, by the Act or otherwise, including by way of illustration and not by
way of limitation the following:

 

(a)           To acquire, hold and
dispose of any real or personal property, interest therein, or appurtenance
thereto, as well as personal or mixed property connected with any real
property, including the purchase, lease development, improvement, maintenance,
exchange, trade or sale of such properties, at such price, rental or amounts,
for cash, securities or other property, and upon such terms, as are deemed by
such Manager(s) to be in the best interest of the Company;

 

9

 

(b)           To authorize any entity
in which the Company holds an interest to acquire, hold and dispose of any real
or personal property, interest therein, or appurtenance thereto, as well as
personal or mixed property connected with any real property, including the
purchase, lease development, improvement, maintenance, exchange, trade or sale
of such properties, at such price, rental or amounts, for cash, securities or
other property, and upon such terms, as are deemed by such 

Manager(s) to be in the best interest of the Company;

 

(c)           To borrow money and, if
security is required therefore, to mortgage or lien any portion of the property
of the Company, to obtain replacements of any mortgage or other security
device, and to prepay, in whole or in part, refinance, increase, modify,
consolidate, or extend any mortgage or other security device, all of the
foregoing at such terms and in such amounts as are deemed by such Manager(s) to
be in the best interest of the Company;

 

(d)           To authorize any entity
in which the Company owns an interest to borrow money and, if security is
required therefore, to authorize such entity to mortgage or lien any portion of
the property of such entity, to obtain replacements of any mortgage or other
security device, and to prepay, in whole or in part, refinance, increase,
modify, consolidate, or extend any mortgage or other security device, all of
the foregoing at such terms and in such amounts as are deemed by such 

Manager(s) to be in the best interest of the Company;

 

(e)           To place record title
to, or the right to use, Company assets in the name or names of a nominee or
nominees for any purpose convenient or beneficial to the Company;

 

(f)            To acquire and enter
into any contract or insurance which the Company deems necessary and proper for
the protection of the Company, for the conservation of its assets, or for any
purpose convenient, or beneficial to the Company;

 

(g)           To employ from time to
time persons, firms or corporations for the operation and management of the
Company business, including but not limited to, supervisory and managing
agents, brokers, attorneys, accountants and other professionals, on such terms
and for such compensation as the Manager(s) shall determine;

 

(h)           To pay any and all
organizational expenses incurred in the creation of the Company;

 

(i)            To compromise,
arbitrate, or otherwise adjust claims in favor of or against the Company and to
commence or defend litigation with respect to the Company or any assets of the
Company as the Manager(s) may deem advisable, all or any of the above matters
being at the expense of the Company;

 

(j)            To borrow money from
banks, other lending institutions, and other lenders for any Company purpose
including the maintenance of a margin account with any securities broker
(except as specifically prohibited by this Agreement), and in connection
therewith issue notes, debentures and other debt securities and hypothecate the
assets of the Company to secure repayment of borrowed sums; and no bank, other
lending institution, or other lender to which application is made for loan by
the Manager(s) shall be required to inquire as to the

 

10

 

purposes for which such loan
is sought, and as between this Company and such bank, other lending
institution, or other lender, it shall be conclusively presumed that the
proceeds of such loan are to be and will be used for the purposes authorized
under this Agreement;

 

(k)           To authorize any entity
in which the Company holds an interest to borrow money from banks, other
lending institutions, and other lenders for any purpose of such entity
including the maintenance of a margin account with any securities broker
(except as specifically prohibited by this Agreement), and in connection
therewith issue notes, debentures and other debt securities and hypothecate the
assets of such entity to secure repayment of borrowed sums; and no bank, other
lending institution, or other lender to which application is made for loan by
such entity, as authorized by the Manager(s), shall be required to inquire as
to the purposes for which such loan is sought, and as between this Company and
such bank, other lending institution, or other lender, it shall be conclusively
presumed that the proceeds of such loan are to be and will be used for the
purposes authorized under this Agreement;

 

(l)            To maintain, at the
expense of the Company, accurate records and accounts of all operations and
expenditures and furnish the Members with annual statements of account as of
the end of each Company Fiscal Year, together with tax reporting information,
and quarterly reports on the operations of the Company;

 

(m)          To purchase, at the
expense of the Company, liability and other insurance to protect the Company’s
properties and business and to protect the Manager(s), his or her agents and
employees, and the Members;

 

(n)           To execute instruments,
enter into agreements and contracts with parties, and give receipts, releases
and discharges with respect to all of the foregoing matters set forth in
subsections 6.03(a) through 6.03(m) above, and any matters incident thereto as
the Manager(s) may deem advisable or appropriate;

 

(o)           To make certain
elections under the tax laws of the United States, the State of Utah, and other
relevant jurisdictions as to the treatment of items of Company income, gain,
loss, deduction and credit, and as to all other relevant matters (including
without limitation elections under Section 754 of the Code as the Manager(s)
believes necessary or desirable.

 

6.04         Limitations on Manager(s).
Notwithstanding anything in this Agreement to the contrary, without the consent
of the Members, the Manager(s) shall have no authority to:

 

(a)           Do any act in
contravention of this Agreement;

 

(b)           Do any act which would
make it impossible to carry on the ordinary business of the Company;

 

(c)           Confess a judgment
against the Company;

 

(d)           Possess Company
property or assign the rights of the Company in specific Company property for
other than a Company purpose; or

 

11

 

(e)                                  Admit a Person as a Member, except as
otherwise provided in this Agreement.

 

6.05                           Manager(s)’ Time. Each Manager shall devote such of his
time to the business of the Company as he or she may, in his or her sole
discretion, deem to be necessary to conduct the Company’s business. No Manager
shall be required to devote his or her full time to the Company’s business. The
Manager(s) shall be entitled to such compensation for their services as
may be approved, from time to time, by the Members.

 

6.06                           Reimbursement. Each Manager shall be reimbursed for
all out-of-pocket expenses incurred in organizing the Company, including all
legal and accounting fees incurred. Thereafter the Manager shall be reimbursed
for all goods and materials used for or by the Company. All expenses of the
Company shall be billed directly to and paid by the Company. The Manager(s) shall
be reimbursed for any administrative expenses including salaries, rent, travel
expenses, and other items generally within the purview of furthering the Company
business.

 

6.07                           Exculpation. The Manager(s) shall not be liable
to the Company or to any of its Members for honest mistakes of judgment or for
losses due to such mistakes or to the negligence, dishonesty or bad faith of
any employee or agent of the Company; provided that such employee or agent was
selected, engaged or retained by the Manager(s) as authorized by the
Company with reasonable care. The Manager(s) may rely upon the advice of
legal counsel to the Company in determining what acts or omissions are within
the scope of authority conferred by this Agreement. The Company shall indemnify
and hold harmless each Manager and his or her agents from and against any loss,
expense, damage or injury suffered or sustained by them by reason of or in
furtherance of the interest of the Company, including, but not limited to any
judgment, award, settlement, reasonable attorneys’ fees and other costs or
expenses incurred in connection with the defense of any action or threatened
action, proceeding or claim, provided that the acts, omissions, or alleged acts
or omissions upon which such action or threatened action, proceedings or claims
are based were performed or omitted in good faith and not fraudulently, in bad
faith, as a result of wanton and willful misconduct or gross negligence.

 

ARTICLE 7: MEETINGS OF
MEMBERS

 

7.01                           Regular Meetings. The Company may hold regular meetings
as from time to time designated by Members holding over 20% of the then issued
and outstanding Percentage Interests, or by the Manager(s). Such regular
meetings shall be held at such time and place as designated by the Members or
by the Manager(s), designating such meetings, as the case may be.

 

7.02                           Notice of Members Meetings. The Manager(s) shall, and any
Member may, give written notice stating the place, day, and hour of both
regular and special meetings, and in the case of a special meeting, the purpose
or purposes for which the meeting is called, which shall be delivered not less
than ten (10) nor more than thirty (30) days before the date of the
meeting to each Member of record entitled to vote at such meeting. Notice of
any meeting of Members, annual or special, shall be given in the manner
specified in Section 14.01.

 

If any notice addressed to a Member at the address of such Member appearing
on the books of the Company is returned to the Company by the United States
Postal Service marked to indicate

 

12

 

that the United
States Postal Service is unable to deliver the notice to the Member at such
address, all future notices or reports shall be deemed to have been duly given
without further mailing if the same shall be available to the Member upon
written demand of the Member at the principal executive office of the Company
for a period of one (1) year from the date of the giving of such notice. A
certificate or an affidavit of the mailing, transmission or other means of
giving any notice of any Members’ meeting shall be executed by a Manager, and
shall be filed and maintained in the minute book of the Company.

 

7.03                           Waiver of Notice. If,  under the provisions of the Act,
the Articles of Organization, or this Agreement, notice is required to be given
to a Member or to the Manager(s), a waiver in writing signed by the person or
persons entitled to the notice, whether made before or after the time for
notice to be given, is equivalent to the giving of notice.

 

7.04                           Quorum. Members owning more than 50% of the Percentage
Interests of the Company represented in person or by proxy, shall constitute a
quorum at a meeting of Members. If Members holding less than 50% of the
Percentage Interests of the Company are represented at a meeting, Members
holding a majority of the Percentage Interests so represented may adjourn the
meeting from time to time without further notice. At a meeting resumed after
any such adjournment at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The Members present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of Members in such number that less than a quorum remain.

 

7.05                           Voting. A holder of a Percentage Interest, entitled to vote
at a meeting, may vote at such meeting in person or by proxy. Except as may
otherwise be provided in the Articles of Organization, every Member shall be
entitled to a vote equal to the Percentage Interest in the Company of such
Member standing in his name on the records of the Company. Except as herein or
in the Articles of Organization otherwise provided, all matters which call for
a vote, consent, approval or determination of the Members shall be determined
by the concurrence of Members owning more than fifty percent (50%) of the
Percentage Interests then outstanding.

 

7.06                           Proxies/Power of Attorney. At all meetings of Members, a Member
may vote in person or by proxy executed in writing by the Member or by his duly
authorized attorney in fact. Such proxy shall be filed with the Company before
or at the time of the meeting. No proxy shall be valid after eleven months from
the date of its execution, unless otherwise provided in the proxy.

 

7.07                           Action by Written Consent. Any action which may be taken by the
Members at a Meeting held pursuant to this ARTICLE 7 or as provided elsewhere
in this Agreement may be taken without a meeting, upon the written consent to
such action of Members holding the amount of Percentage Interests as is
required to take such action.

 

ARTICLE 8: ACCOUNTING, BOOKS AND RECORDS

 

8.01                           Accounting, Books and Records. The Company shall maintain at its
principal place of business separate books of account for the Company which
shall show a true and accurate record of all costs and expenses incurred, all
charges made, all credits made and received, and all income

 

13

 

derived in
connection with the operation of the Company business in accordance with
generally accepted accounting principles consistently applied and, to the
extent inconsistent therewith, in accordance with this Agreement. The Company
shall use the cash method of accounting in preparation of its annual reports
and for tax purposes and shall keep its books accordingly. Each Member shall,
at his sole expense, have the right, at any time without notice to any other
Member, to examine, copy, and audit the Company’s books and records during
normal business hours.

 

8.02                           Records Required by the Act. The Company shall keep the following
records at its Designated Office:

 

(a)                                  a current list in alphabetical order of
the full name and last-known business, residence, or mailing address of each
member and each manager;

 

(b)                                 a copy of the  stamped articles of organization and all certificates of
amendment thereto, together with a copy of all signed powers of attorney
pursuant to which the articles of organization or any amendment has been
signed;

 

(c)                                  a copy of a writing prepared by the
Person or Persons who signed and filed the Articles of Organization which sets
forth;

 

(1)                                  the name and street address of each
initial Member of the Company;

 

(2)                                  the name and street address of each
initial Manager of the Company (if any);

 

(3)                                  a copy of the Company’s federal, state
and local income tax returns and reports, if any, for the three most recent
years;

 

(4)                                  a copy of any financial statements of the
Company, if any, for the three most recent years;

 

(5)                                  a copy of the Company’s operating
agreement, if any, and all amendments thereto; and

 

(6)                                  a copy of the minutes, if any, of each
meeting of Members and of any written consents obtained from Members.

 

8.03                           Reports. Within one hundred and twenty (120) days after the
end of each Fiscal Year, the Company shall cause each Member to be furnished
with a copy of the balance sheet of the Company as of the last day of the
applicable period, a statement of income or loss for the Company for such
period, and a statement of the Company’s cash flow for such period.

 

8.04                           Tax  Returns:
Information. The
Manager(s) shall cause the Company to prepare all income and other tax
returns of the Company and shall cause the same to be filed in a timely manner.
The Company shall furnish to each Member a copy of each such return, together
with any schedules or other information which each Member may require in
connection with such Member’s own tax affairs.

 

14

 

8.05                           Special Basis Adjustment. In connection with any Transfer of a
Company interest, the Company shall, at the written request of the transferor
or the transferee, on behalf of the Company and at the time and in the manner
provided in Regulations Section 1.754-1(b), make an election to adjust the
basis of the Company’s property in the manner provided in Sections 734(b) and 743(b) of
the Code, and such transferee shall pay all costs incurred by the Company in
connection therewith, including, without limitation, reasonable attorneys’ and
accountants’ fees.

 

8.06                           Tax Matters Partner. A “Tax Matters Partner” shall be
designated by the Members in accordance with the applicable provisions of the
Code and to act in any similar capacity under state or local law. All of the
Members shall be required to cooperate fully with the Tax Matters Partner in
the discharge of its responsibility as such. Kenneth M. Woolley is hereby
designated the Tax Matters Partner, and may be replaced as such by
determination of the Members.

 

ARTICLE 9: TRANSFER OF MEMBERSHIP INTERESTS

 

9.01                           Prohibition on Hypothecation by Members. No Member shall mortgage or grant a
security interest in his Interest in the Company.

 

9.02                           Restrictions on Transfers. Except as expressly permitted or
required by this Agreement, no Member shall Transfer all or any portion of his
interest in the Company or any rights therein without the consent of Members
holding at more than fifty percent (50%) of the aggregate Percentage Interests
of all Members. Any Transfer or attempted Transfer by any Member in violation
of the preceding sentence shall be null and void and of no force or effect
whatever. Notwithstanding anything to the contrary in this Agreement, the
Members hereby agree to consent to Transfers of interests in the Company by any
Member and agree to consent to the substitution of the transferees of such
Transfers as substitute members of the Company provided that (a) such
transfers are made to a limited liability company, trust, partnership, or other
entity for estate planning purposes, (b) such Member retains the ability,
directly or indirectly, to direct the outcome of any determination of such
transferee, whether by vote, consent or otherwise, without the vote, consent or
approval of any other Person, (c) appropriate amendments are made to this
Agreement to reflect such Transfer, and (d) such Transfer and the
transferor and transferee of such Transfer comply with the provisions of
Sections 9.04 and 9.08. Each Member hereby acknowledges the reasonableness of
the restrictions on Transfer imposed by this Agreement in view of the Company
purposes and the relationship of the Members. Accordingly, the restrictions on
Transfer contained herein shall be specifically enforceable. Each Member hereby
further agrees to hold the Company and each Member (and each Member’s
successors and assigns) wholly and completely harmless from any cost,
liability, or damage (including, without limitation, liabilities for income
taxes and costs of enforcing this indemnity) incurred by any of such
indemnified Persons as a result of a Transfer or an attempted Transfer in
violation of this Agreement.

 

9.03                           Transfers to Other Members. If, but only if, a Member (hereinafter
the “Selling Member”) receives from another Member (hereinafter the “Purchasing
Member”) a written offer to purchase all of the Interest of the Selling Member
which written offer (hereinafter the “Purchase Offer”) the Selling Member
desires to accept, the Selling Member shall give all of the other Members
written notice of that fact (hereinafter the “Sale Notice”). The Selling Member
shall attach to the Sale Notice a copy of the Purchase Offer. For a period
(hereinafter the “Election Period”)

 

15

 

ending at 11:59 P.M.
(local time at the Company’s principal place of business) on the forty-fifth
day following the day on which the Sale Notice is given (hereinafter the
“Election Day”), the Members other than the Selling Member may elect, by notice
to the Selling Member, to purchase all or any portion of the Interest of the
Selling Member, which notice shall state the maximum Percentage Interest that
such Member is willing to purchase. Said election and purchase shall be made by
giving notice thereof (the “Purchase Notice”) to all Members, which Purchase
Notice shall not be valid unless it states the maximum Percentage Interest that
such Member (a “Purchase Notice Member”) is willing to purchase. If the aggregate
Percentage Interests that Purchase Notice Members are willing to purchase
pursuant to valid Purchase Notices equals or exceeds the entire Percentage
Interests of the Selling Member, such Purchase Notice Members shall become
“Purchasing Members” and shall be obligated to purchase all of the Interest of
the Selling Member and the Selling Member shall be obligated to sell its
Interest to the Purchasing Members. Each Purchasing Member shall be obligated
to purchase that portion of the Selling Members’ Interest that corresponds to
the ratio of the Percentage Interests that such Purchasing Member indicated
willingness to purchase in his Purchase Notice to the aggregate Percentage
Interests that all such Purchasing Members indicated willingness to purchase under
all Purchase Notices. In the event that the Members other than the Selling
Member do not elect to purchase the entire Interest of the Selling Member, the
Selling Member shall be free to sell his Interest to the Purchasing Member for
the price, and on the terms specified and described in the Purchase Offer;
provided, however, that if the sale contemplated by the Purchase Offer is not
consummated within thirty (30) days after the expiration of the Election
Period, the Selling Member shall again give a Sale Notice with respect to such
Purchase Offer and follow the procedures outlined and required by this Section
9.03 as if such procedures had not previously been followed with respect to
such Purchase Offer. If the Members other than the Selling Member elect to
purchase the entire Interest of the Selling Member, the purchase price and
other terms of purchase shall be identical to those set forth in the Purchase
Offer; provided, however, that the closing shall occur on or before the date
that is thirty (30) days after the expiration of the Election Period, at the
Company’s principal place of business. A Person who acquires all or any part of
the Interest of a Selling Member (either pursuant to this Section 9.03 or
pursuant to a Purchase Offer after the Selling Member has complied with the
provisions of this Section 9.03) shall, upon satisfaction of the requirements
specified in Sections 9.04 and 9.07, acquire such Interest in the capacity as a
Member and shall have all of the rights of a Member with respect to such
Interest (or any part thereof) and particularly, without limiting the
generality of the foregoing, the Percentage Interest relating to such Interest
shall thereafter be deemed part of the total Percentage Interest owned by the
Member for all purposes of this Agreement.

 

9.04         Conditions to
Transfers. Any Transfer not approved under this ARTICLE 9 shall be null and
void and of no force or effect whatever.

 

(a)           Any transferor and
transferee shall execute such documents and instruments of conveyance and assumption
as may be necessary or appropriate in the opinion of counsel to the Company to
effect such Transfer and to confirm the Transferee’s agreement to be bound by
the provisions of this Agreement and assumption of all monetary obligations of
the transferor Member with respect to the interest being transferred and the
transferor Member’s agreement to guarantee the prompt payment and performance
of such assumed obligations.

 

16

 

(b)                                 The Company shall receive, prior to any
Transfer, an opinion of counsel satisfactory to the Company confirming that
such Transfer will not terminate the Company for federal income tax purposes.

 

(c)                                  The transferor and transferee shall
furnish the Company with the transferee’s taxpayer identification number,
sufficient information to determine the transferee’s initial tax basis in the
interest transferred, and any other information reasonably necessary to permit
the Company to file all required federal and state tax returns and other
legally required information statements or returns. Without limiting the
generality of the foregoing, the Company shall not be required to make any
distribution otherwise provided for in this Agreement with respect to any
transferred interest until it has received such information.

 

(d)                                 A Member making a Transfer of all or a
portion of his Company interest and the Transferee thereof shall pay all
reasonable costs and expenses incurred by the Company in connection with such
Transfer.

 

9.05                           Admission of Transferee as a Member. A Transferee of an interest in the
Company shall be admitted as a Member in the Company only upon the consent of
the Members owning more than fifty percent (50%) of the aggregate Percentage
Interests of all Members. The rights of a Transferee who is not admitted as a
Member shall be limited to the right to receive allocations and distributions
from the Company with respect to the interest transferred, as provided by this
Agreement. The Transferee of such interest shall not be a Member with respect
to such interest, and, without limiting the foregoing, shall not have the right
to vote as a Member, inspect the Company’s books, act for or bind the Company,
or otherwise interfere in its operations.

 

9.06                           Effect of Transfer on Company. The Members intend that the Transfer of
an interest in the Company shall not cause the dissolution of the Company under
the Act; however, notwithstanding any such dissolution, the Members shall
continue to hold the Company’s assets and operate its business in limited
liability company form under this Agreement as if no such dissolution had
occurred.

 

9.07                           Distribution Among Members. If a Transfer of an interest in the
Company approved under ARTICLE 9 occurs during any Fiscal Year, Profits,
Losses, each item thereof, and all other items attributable to such interest
for such Fiscal Year shall be divided and allocated between the transferor and
the transferee by taking into account their varying interests during the Fiscal
Year in accordance with Code Section 706(d), using any conventions
permitted by law and selected by the Members. All distributions on or before
the date of a Transfer approved under ARTICLE 9 shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.
If a Transfer was not approved under ARTICLE 9, all of such items shall be
allocated, and all distributions shall be made, to the Person who, according to
the books and records of the Company, on the last day of the Fiscal Year during
which the Transfer occurs, was the owner of the Company interest. The Members
and the Company shall incur no liability for making allocations and
distributions in accordance with the provisions of this Section 9.07,
whether or not any of the Members or the Company has knowledge of any Transfer
or purported Transfer of ownership of any interest in the Company.

 

17

 

9.08                           Additional Restrictions. Notwithstanding the provisions of this
ARTICLE 9, a Member may only sell, assign, or otherwise transfer any Interest
in the Company if:

 

(a)                                  The proposed transfer will not result in
the termination of the Company as provided in Section 708(b) of the
Code, or otherwise adversely affect the Company’s tax status as a partnership
thereunder. The Members are expressly authorized to enforce this provision by
notifying the  Selling Members that all transfers
or assignments will be suspended for a period of up to twelve (12) months
whenever interests in the Company representing aggregate interests of thirty
five percent (35%) or more in Company capital or revenues shall have been
effectively transferred in any twelve (12) month period;

 

(b)                                 Such Selling Member and his purchaser,
transferee or assignee execute such instruments of transfer and assignment with
respect to such transactions as are in form and substance satisfactory to the
non-selling Members; and

 

(c)                                  The assignor or transferor delivers to
the Company an opinion of counsel, in form acceptable to counsel to the
Company; that:

 

(1)                                  the proposed transfer or assignment of
the Interest complies with all federal and state laws and regulations,
including the Securities Act of
1933, and

 

(2)                                  the proposed transfer or assignment will
not affect the availability to the Company of the exemption from registration of
the interest provided by the Securities Act of 1933 or any Rule or
Regulation promulgated by the Securities and Exchange Commission or the similar
exemption from registration under the securities laws of any applicable state.

 

In the event of a transfer of a Member’s Interest, if it is in the best
interest of the Company to do so, the Company may make an election, as provided
for in Section 754 of the Code, to adjust the basis of the Company assets.

 

ARTICLE 10: BUY-SELL

 

10.01                     Determination of Net Equity of Adverse
Member’s Interest.
Prior to the end of the sixtieth day following the day upon which a Member (an “Adverse
Member”) commits or suffers an Adverse Act, or the sixtieth day after the day
any Member other than the Adverse Member receives actual notice of such Adverse
Act, any Member may send notice to the Adverse Member of the Adverse Act, and
such Adverse Member shall have thirty days following the date of such notice
(the “Notice Period”) within which to cure the Adverse Act which is the subject
of the notice. At any time prior to the end of the sixtieth day following the
end of the Notice Period, any Member, by notice to all other Members (“Member
Notice”), may cause the Net Equity of the Adverse Member’s interest in the
Company to be determined as of the date of such Member Notice. Such notice
shall designate the First Appraiser as required by Section 10.05 hereof
and the Adverse Member shall appoint the Second Appraiser within ten (10) Business
Days of receiving such notice designating the First Appraiser.

 

18

 

10.02                             Election to Purchase Interest of Adverse Member. For a period (the “Election Period”)
ending at 11:59 P.M. (local time at the Company’s principal place of
business) on the thirtieth day following the day on which notice of the Adverse
Member’s Net Equity is given pursuant to Section 10.04 hereof (the “Election
Day”), the Members other than the Adverse Member may elect, by notice to the
Adverse Member, to purchase all or any portion of the interest of the Adverse
Member, which notice shall state the maximum Percentage Interest that such
Member is willing to purchase. Said election and purchase shall be made by
giving notice thereof (the “Purchase Notice”) to all Members, which Purchase
Notice shall not be valid unless it states the maximum Percentage Interest that
such Member (a “Purchase Notice Member”) is willing to purchase. If the
aggregate Percentage Interests that Purchase Notice Members are willing to
purchase pursuant to valid Purchase Notices equals or exceeds the entire
Percentage Interests of the Adverse Member, the Purchase Notice Members shall
become “Purchasing Members” and shall be obligated to purchase all of the
interests of the Adverse Member and the Adverse Member shall be obligated to
sell its interests to the Purchasing Members. Each Purchasing Member shall be
obligated to purchase that portion of the Selling Members’ interests that
corresponds to the ratio of the Percentage Interests that such Purchasing
Member indicated willingness to purchase in his Purchase Notice to the
aggregate Percentage Interests that all such Purchasing Members indicated
willingness to purchase under all Purchase Notices. In the event that the other
Members do not elect to purchase the entire interest of the Adverse Member, the
Adverse Member shall be under no obligation to sell any portion of its interest
to any Member. The cost of determining Net Equity shall be borne one-half by
the Adverse Member and one-half by the Company and the amount borne by the
Company shall be treated as an expense of the Company for purposes of such
determination.

 

10.03                     Terms of Purchase: Closing. The closing of the purchase and sale of
the Adverse Member’s interests shall occur on a date and time mutually
agreeable to the Purchasing and the Adverse Members, which shall not be later
than 10:00 A.M. (local time at the place of the closing) on the first
Business Day occurring on or after the sixtieth day following the last day of
the Election Period and at such place as is mutually agreeable to the
Purchasing Members and Adverse Member, or upon the failure to agree, at the
Company’s principal place of business. At the closing each Purchasing Member
shall pay to the Adverse Member, by cash or other immediately available funds,
that portion of the Buy-Sell Price of such Adverse Member’s interest that
corresponds to a fraction, the numerator of which is the portion of the
Aggregate Buy-Sell Price for which such Purchasing Member is liable, and the
denominator of which is the Aggregate Buy-Sell Price, and the Adverse Member
shall deliver to each Purchasing Member good title, free and clear of any
liens, claims, encumbrances, security interests or options (other than those
granted by this Agreement) to the portion of the Adverse Member’s interest thus
Purchased. Each Purchasing Member shall be liable only for the Purchasing
Member’s individual portion of the Buy-Sell Price to Adverse Member. In the
event that any Purchasing Member shall fail to perform his obligation to
purchase hereunder, and no other Purchasing Member elects to purchase the
portion of the Adverse Member’s interest thus not purchased, such Adverse
Member shall not be obligated to sell any portion of his interest to any
Purchasing Member.

 

At the closing the Members shall execute such documents and instruments
of conveyance as may be necessary or appropriate to confirm the transactions
contemplated hereby, including, without limitation, the Transfer of the Company
interests of the Adverse Member to the Purchasing Members and the assumption by
each Purchasing Member of each Adverse Member’s obligation with respect

 

19

 

to the portion of
the Adverse Member’s interest transferred to such Purchasing Member. The
reasonable costs of such Transfer and closing, including, without limitation,
attorneys’ fees and filing fees, shall be divided equally between the Adverse
Member and the Purchasing Members.

 

The price at which the interest of the Adverse Member is purchased and
sold under this Section 10.03 (the “Buy-Sell Price” of such interest) is
ninety percent (90%) of the Net Equity thereof, determined as of the Election
Day, unless the Adverse Member is an Adverse Member solely because of a
transfer of an interest in a Member upon the death of any Person owning,
directly or indirectly, an interest in a Member, in which event the Buy-Sell
Price of such interest shall be one hundred percent (100%) of the Net Equity
thereof, determined as of the Election Day. The aggregate price of all
interests required to be bought and sold hereunder is the “Aggregate Buy-Sell
Price.”

 

10.04                     Net Equity. The “Net Equity” of a Member’s interest in the
Company, as of any day, shall be the amount that would be distributed to such
Member in liquidation of the Company pursuant to ARTICLE 11 hereof if (1) all
of the Company’s assets were sold for their Gross Appraised Values, (2) the
Company paid its accrued, but unpaid, liabilities and established reserves pursuant
to Section 11.06 hereof for the payment of reasonably anticipated
contingent or unknown liabilities, and (3) the Company distributed the
remaining proceeds to the Members in liquidation, all as of such day, provided
that in determining such Net Equity, no reserve for contingent or unknown liabilities
shall be taken into account if such Member (or his successor in interest)
agrees to indemnify the Company and all other Members for that portion of any
such reserve as would be treated as having been withheld pursuant to Section 11.06
hereof from the distribution such Member would have received pursuant to Section 11.05
hereof if no such reserve were established.

 

The Net Equity of a Member’s interest in the Company shall be
determined, without audit or certification, from the books and records of the
Company by a firm of independent certified public accountants designated by the
Manager(s). The Net Equity of a Member’s interest shall be determined within
sixty (60) days of the day upon which such accountants are appraised in writing
of the Gross Appraised Value of the Assets of the Company, and the amount of
such Net Equity shall be disclosed to the Company and each of the Members by
written notice, prepared and delivered by such accountants, the Manager(s), or
any Member, to the Members. The Net Equity determination of such accountants
shall be final and binding in the absence of a showing of gross negligence or
willful misconduct.

 

10.05                     Gross Appraised Value of the Assets of
the Company. “Gross
Appraised Value of the Assets of the Company,” as of any day, shall be equal to
the fair market value of all of the assets of the Company as of such day. As
used herein, as of any day, the “fair market value” of the assets of the
Company means the maximum amount that a single buyer would reasonably be
expected to pay for all of the Assets of the Company, on such day, determined
on an asset by asset basis, free and clear of all liens and encumbrances, in a
single cash purchase.

 

In situations under this Agreement in which it is necessary to
determine the Gross Appraised Value of the Assets of the Company, the provision
requiring such determination provides the manner and time for the appointment
of two appraisers (the “First Appraiser” and the “Second Appraiser”). If the
Second Appraiser is timely designated, the First and Second Appraisers shall
each, within forty-five (45) days of such appointment, give written notice to
the  Company, the Members, and the

 

20

 

firm of
independent certified public accountants designated by the Manager(s), of their
respective determinations of the Gross Appraised Value of the Assets of the
Company. If the difference between the separate determinations of the Gross
Appraised Value of the Assets of the Company of the First Appraiser and the
Second Appraiser is less than $500,000.00, the Gross Appraised Value of the
Assets of the Company shall, for purposes of this Agreement, be equal to the
average of the determinations of the Gross Appraised Value of the Assets of the
Company of the First Appraiser and the Second Appraiser. If the difference
between the separate determinations of the Gross Appraised Value of the Assets
of the Company of the First Appraiser and the Second Appraiser is more than
$500,000.00, then at any time after such period, either the Persons who
appointed the First Appraiser or the Persons who appointed the  Second Appraiser, by written notice to
the First Appraiser and Second Appraiser, may demand that they appoint a Third
Appraiser (the “Third Appraiser”). If the First Appraiser and Second Appraiser
have not appointed the Third Appraiser (who shall have agreed to serve) by the
twentieth day after such demand, either the Persons who appointed the First
Appraiser or the Persons who appointed the Second Appraiser may request any
judge of the Fourth Judicial District Court of the State of Utah to appoint the
Third Appraiser. The Third Appraiser shall, within thirty (30) days after his
or her appointment, make a determination of the Gross Appraised Value of the
Assets of the Company and provide written notice of that determination to the
Company, the members and the firm of independent certified public accountants
designated by the Manager(s). Upon the determination of the Gross Appraised
Value of the Assets of the Company by the Third Appraiser, the Gross Appraised
Value of the Assets of the Company shall, for purposes of this Agreement, be
equal to the average of the two closest determinations of the Gross Appraised
Value of the Assets of the Company by the First, Second, and Third Appraisers.

 

If a Second Appraiser is not timely appointed in the manner provided by
this Agreement, and if such Second Appraiser remains unappointed for more than
ten (10) days after the Person entitled to make such appointment is given
written notice that such Second Appraiser has not been timely appointed as
provided in this Agreement, the Gross Appraised Value of the Assets of the
Company shall be determined solely by the First Appraiser who shall give notice
of such Gross Appraised Value of the Assets of the Company to the Company, the
Members, and the firm of independent certified public accountants designated by
the Manager(s) within thirty (30) days of the last day on which the Second
Appraiser could have been timely designated.

 

Each appraiser appointed hereunder shall be disinterested and shall be
a member of the Appraisal Institute or other appropriate body and qualified to
appraise business similar to that of the Company.

 

ARTICLE 11: DISSOLUTION AND WINDING-UP

 

11.01                     Waiver of Partition. No Member shall, either directly or
indirectly, take any action to require partition, file a bill for Company
accounting or appraisement of the Company or of any of its assets or properties
or cause the sale of any Company property, and notwithstanding any provisions
of applicable law to the contrary, each Member (and each of his legal
representatives, successors, or assigns) hereby irrevocably waives any and all
rights it may have to maintain any action for partition or to compel any sale
with respect to his Company interest, or with respect to any assets or
properties of the Company, except as expressly provided in this Agreement.

 

21

 

11.02                     Covenant Not to Withdraw or Dissolve. Notwithstanding any provision of the
Act, each Member hereby covenants and agrees that the Members have entered into
this Agreement based on their mutual expectation that all Members will continue
as Members and carry out the duties and obligations undertaken by them
hereunder and that, except as otherwise expressly required or permitted hereby,
each Member hereby covenants and agrees not to (a) take any action to file
a certificate of dissolution or its equivalent with respect to itself, (b) take
any action that would cause a Voluntary Bankruptcy of such Member, (c) withdraw
or attempt to withdraw from the Company, (d) exercise any power under the
Act to dissolve the Company, (e) Transfer all or any portion of his
interest in the Company, (f) petition for judicial dissolution of the
Company, or (g) demand a return of such Member’s contributions or profits
(or a bond or other security for the return of such contributions or profits)
without the consent of the Members holding more than fifty percent (50%) of the
Percentage Interests.

 

11.03                     Dissolution and Termination of the
Company. The
Company shall be dissolved and terminated upon the first to occur of any of the
following (“Liquidating Events”):

 

(a)                                  By written agreement of Members holding
more than fifty percent (50%) of the Percentage
Interests;

 

(b)                                 The happening of any other event that
makes it unlawful or impossible to carry on the business of the Company; or

 

(c)                                  When the Company is not the successor or
survivor entity in any merger or consolidation between the Company and any one (1) or
more other entities.

 

(d)                                 If the Company has not previously been
dissolved and terminated, on the date which is thirty (30) years after the date
on which the Articles of Organization for the Company were first filed with the
Division of Corporations and Commercial Code of the Department of Commerce for
the State of Utah.

 

11.04                     Effect of Bankruptcy, Death or
Incompetency of a Member. The bankruptcy, death, dissolution, liquidation, termination or
adjudication of incompetency of a Member shall not cause the termination or
dissolution of the Company and the business of the Company shall continue. Upon
any such occurrence and unless the trustee, receiver, executor, administrator,
committee, guardian or conservator of such Member is admitted as a Member of the
Company in accordance with the Operating Agreement, the trustee, receiver,
executor, administrator, committee, guardian or conservator of such Member
shall have the rights specified in Section 9.05 of this Agreement. The
transfer by such trustee, receiver, executor, administrator, committee,
guardian or conservator of any Company Interest shall be subject to all of the
restrictions set forth in this Agreement to which such transfer would have been
subject if such transfer had been made by such bankrupt, deceased, dissolved,
liquidated, terminated or incompetent Member.

 

11.05                     Winding Up. Upon the dissolution of the Company, the Company
shall continue solely for the purpose of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Members and no Member shall take any action that is inconsistent with, or not
necessary to or appropriate for, winding up the Company’s business and

 

22

 

affairs. To the extent
not inconsistent with the foregoing, all covenants and obligations in this
Agreement shall continue in full force and effect until such time as the
Property has been distributed pursuant to this Section 11.05 and the
Company has terminated. The Members shall be responsible for overseeing the
winding up and liquidation of the Company, shall take full account of the
Company’s liabilities and Property, shall cause the Property to be liquidated
as promptly as is consistent with obtaining the fair market value thereof, and
shall cause the proceeds therefrom, to the extent sufficient therefore, to be
applied and distributed in the following order:

 

(a)                                  First, to the payment and discharge of
all of the Company’s debts and liabilities to creditors, including debts and
liabilities to creditors who are Members, and to the establishment of reserves
for the payment of the debts and liabilities of the Company in accordance with
applicable law;

 

(b)                                 The balance, if any, to the Members in
accordance with their Percentage Interests.

 

11.06                     Reserve for Liabilities. In the discretion of the Members, a pro
rata portion of the distributions that would otherwise be made to the Members
pursuant to Section 11.05(b) hereof may be:

 

(a)                                  distributed to a trust established for
the benefit of the Members for the purposes of liquidating Company assets,
collecting amounts owed to the Company, and paying any contingent or unforeseen
liabilities or obligations of the Company or of the Members arising out of or
in connection with the Company. The assets of any such trust shall be distributed
to the Members from time to time, in the reasonable discretion of the Members,
in the same proportions as the amount distributed to such trust by the Company
would otherwise have been distributed to the  Members pursuant to Section 11.05
hereof; or

 

(b)                                 withheld to provide a reasonable reserve
for Company liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company, provided that such
withheld amounts shall be distributed to the Members as soon as practicable.

 

11.07                     Deemed Distribution and Recontribution. Notwithstanding any other provisions of
this ARTICLE 11, in the event the Company is liquidated within the meaning of
Regulations Section 1.704-l(b)(2)(ii)(g) but no Liquidating Event has
occurred, the Property shall not be liquidated, the Company’s liabilities shall not be paid or discharged, and
the Company’s affairs shall not be wound up. Instead, the events described in
Regulations Section 1.708-l(b)(1)(iv) as in effect at the time of the
liquidation described in the previous sentence shall be deemed to have
occurred.

 

11.08                     Return of Capital. Each Member shall look solely to the
assets of the Company and to the Company property remaining after the payment
or discharge of the debts and liabilities of the Company to the Member. If such
assets and property are insufficient to return the Capital Contributions of
each Member, the Members shall have no recourse against any other Member or against
the Manager(s) irrespective of such Member’s capital balance, be it a
debit or credit balance. However, any Member with a debit or negative balance
in his capital balance, upon the dissolution

 

23

 

and winding up of
the Company, shall not be entitled to a distribution as to capital or his share
of profits.

 

11.09                     Winding Up of the Company. Upon a dissolution of the Company, the
winding up of the affairs of the Company and the distribution of its assets shall
be conducted by the Manager(s) who are hereby authorized to do any and all acts
and things reasonably necessary to accomplish the foregoing. In this regard,
the Manager(s) may delegate their obligation to a receiver or a trustee.

 

A reasonable time shall be allowed for the orderly liquidation of the
assets of the Company and the discharge of liabilities to creditors so as to
enable the Manager(s) to minimize the losses customarily attendant to
distressed dispositions of property. In liquidating the assets of the Company,
all assets of a saleable value which the Manager(s) determine are not suitable
for an equitable distribution shall be sold at public or private sale as the
Manager(s) deem advisable. Any Member may purchase such assets at any such
sale.

 

11.10                     Final Accounting. The Company shall furnish each of the Members
with a statement prepared by an accountant designated by the Manager(s) which
shall set forth the assets and liabilities of the Company as of the date of
termination and which shall disclose the sources and applications of Company
assets and proceeds thereof during the course of winding up the Company affairs
and dissolution. Upon completion of the winding up and termination of the
Company, the Members shall execute, acknowledge and cause to be filed Articles
of Dissolution of the Company.

 

11.11                     Method of Distribution of Assets. To the extent feasible, all
distributions in liquidations shall be made pro rata to the Members in kind.
Distribution of specific assets shall be determined by  the Manager(s).

 

11.12                     Judicial Dissolution. Notwithstanding anything to the
contrary in this Agreement, a court having jurisdiction of the Company and the
Members may, in an action commenced by a Member, decree dissolution of the
Company if in such action it is established that the Members are deadlocked in
the management of the affairs of the Company and because of such deadlock
either irreparable injury to the Company is threatened or being suffered or the
business and the affairs of the Company can no longer be conducted to the
advantage of the Members generally.

 

ARTICLE 12: AMENDMENT

 

12.01                     Amendment of Articles of Organization. The Company’s Articles of Organization
shall be amended whenever:

 

(a)                                  There is a change in the name of the
Company;

 

(b)                                 There is a change in the character of the
business of the Company from that specified in the Company’s Articles of
Organization;

 

(c)                                  There is a false or erroneous statement
in the Articles of Organization;

 

(d)                                 There is a change in the time, as stated
in the Articles of Organization, for the dissolution of the Company;

 

24

 

(e)                                  The Members determine to fix a time not
previously specified in the Articles of Organization for the dissolution of the
Company; or

 

(f)                                    The Members desire to make a change in
any of the provisions of the Articles of Organization in order for the Articles
of Organization to accurately represent the agreement among them.

 

12.02                     Amendment of Agreement. Amendments to this Agreement may be proposed
by any Member. The Member proposing such an Amendment shall submit to the
Members a verbatim statement of any proposed amendment and shah seek the
written vote of the Members on the proposed amendment or shall call a meeting
to vote thereon. A proposed amendment shall be adopted and be effective as an
amendment hereto only if it receives approval of the Members holding at least
sixty percent (60%) of the Percentage Interests.

 

ARTICLE 13: INDEMNIFICATION

 

13.01                     Agents. Proceedings and Expenses. For the purposes of this Section 13.01,
“agent” means any Person who is or was a Member, officer, employee, or other
agent of this Company, or is or was serving at the request of this Company as
an officer, employee, or agent of another foreign or domestic corporation,
company, joint venture, trust or other enterprise, or was an employee, or agent
of foreign or domestic corporation which was a Member of this Company. The term
“proceeding” means any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative, or investigative. The term “expenses”
includes, without limitation, attorney’s fees and any expenses of establishing
a right to indemnification under Subsection 13.01(d), or Subsection 13.01(e) of
this Section 13.01.

 

(a)                                  Actions Other Than By The Company. The Company shall indemnify any Person
who was or is a party, or is threatened to be made party, to any proceeding
(other than an action by or in the right of this Company) by reason of the fact
that such Person is or was an agent of this Company, against expenses,
judgments, fines, settlements and other amounts actually and reasonably
incurred in connection with such proceeding if that Person acted in good faith
and in a manner that person reasonably believed to not be contrary to the best
Interests of this Company and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of that person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of this Company or that
the Person had reasonable cause to believe that the Person’s conduct was
unlawful.

 

(b)                                 Actions By The Company. The Company shall indemnify any Person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action by or in the right of this Company to procure a
judgment in its favor by reason of the fact that Person is or was an agent of
this Company, against expenses actually and reasonably incurred by that Person
in connection with the defense or settlement of that action if that Person
acted in good faith, in a manner that person believed to not he contrary to the
best interests of this Company and with such care, including reasonable
inquiry, as an ordinarily

 

25

 

prudent person in
a like position would use under similar circumstances. No indemnification shall
be made under this Subsection 13.01(b):

 

(1)                                  In respect of any claim, issue or matter
as to which that Person shall have been adjudged to be liable to the Company in
the performance of that Person’s duty to the Company, unless and only to the extent
that the court in which that action was brought shall determine upon
application that, in view of all the  circumstances of the case, that
Person is fairly and reasonably entitled to indemnity for the expenses which the court shall determine;

 

(2)                                  Of amounts paid in settling or otherwise
disposing of a threatened or pending action, with or without court approval; or

 

(3)                                  Of expenses incurred in defending a
threatened or pending action which is settled or otherwise disposed of without
court approval.

 

(c)                                  Successful Defense By Agent. To the extent that an agent of this
Company has been successful on the merits in defense of any proceeding referred
to in Subsection 13.01(b) or 13.01 (c), or in the defense of any claim,
issue, or matter therein, the  agent shall be indemnified against
expenses actually and reasonably incurred by the agent in connection therewith.

 

(d)                                 Advance of Expenses. Expenses incurred in defending any
proceeding shall be advanced by this Company before the final disposition of
the proceeding on receipt of an agreement by or on behalf of the agent to repay
the amount of the advance unless it shall be determined ultimately that the
agent is not entitled to be indemnified as authorized in this ARTICLE 13.

 

(e)                                  Other Contractual Rights. Nothing contained in this ARTICLE 13
shall affect any right to indemnification to which persons other than Members,
any officer or agents of this Company or any subsidiary hereof may be entitled
by contract or otherwise.

 

13.02                     Other Indemnification. The indemnification herein provided
shall not be deemed exclusive of any rights to which those seeking
indemnification may be entitled under any agreement, vote of Members (whether disinterested
or not), or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such position, and shall continue as
to a person who has ceased to be a Member or employee, and shall inure to the
benefit of the heirs, executors and administrators of such person.

 

13.03                     Insurance. The Company may purchase and maintain insurance on
behalf of any person who is or was a Member, officer, or employee of the
Company, or is or was serving at the request of the Company as a member,
employee or agent of another company, joint venture, trustor other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Company
would have the power to indemnify him against liability.

 

26

 

13.04                     Settlement by Company. The right of any person to be
indemnified shall be subject always to the right of the Company, in lieu of
such indemnity, to settle any such claim, action, suit or proceeding at the
sole expense of the Company by the payment of the amount of such settlement and
the costs and expenses incurred in connection therewith.

 

ARTICLE 14: MISCELLANEOUS

 

14.01                     Notices. Each Member shall maintain with the records of the Company
an address for notices from the Company to such Member. Each Member agrees that
as of the date of this Agreement, the address for notices to such Member is set
forth in ARTICLE 3 above. Each Member may, by notice given to all of the other
Members and the Company at the designated office specified in Section 1.04
above in the manner specified in this Section 14.01 designate another
address to which notices are to be sent pursuant to this Agreement. Any notice,
payment, demand, or communication required or permitted to be given by any
provision of this Agreement shall be in writing and sent by overnight courier,
or by telephone or facsimile, if such telephone conversation or facsimile is
followed by a hard copy of the telephone conversation or facsimile
communication sent by registered mail, return receipt requested, postage
prepaid, addressed in the manner specified above in this Section 14.01.
Any such notice shall be deemed to be delivered, given, and received as of the
earlier of the date so delivered or delivery is refused.

 

14.02                     Title and Captions. Article and Section titles or captions contained
in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.

 

14.03                     Gender. Whenever the singular number is used in this
Agreement and when required by the context, the same shall include the plural,
and the masculine gender shall include the feminine and neuter genders and the
word “person” shall include corporation, firm, company, or other form of
association.

 

14.04                     Counterparts. This Agreement may be executed in
several counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.

 

14.05                     Governing Law. This Agreement and all amendments
hereto shall be governed by the laws of the State of Utah.

 

14.06                     Survival of Terms and Provisions. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the respective Members.

 

14.07                     Severability. The invalidity or unenforceability of
any part of this Agreement shall not invalidate or affect the validity or
enforceability of any other provision of this Agreement, which shall continue
to govern the rights and obligations of the parties hereto as though the
invalid or unenforceable provisions(s) were not a part hereof.

 

14.08                     Further Instruments. The Members agree that they will
execute any and all other documents or legal instruments that may be necessary
or required to carry out and effectuate all of the provisions hereof.

 

27

 

14.09                     Preparation of Agreement. The Members acknowledge that they have
all participated in the preparation of this Agreement and, in the event that
any question arises regarding its interpretation, no presumption shall be drawn
in favor of or against any Member with respect to the drafting hereof.

 

14.10                     Entire Agreement. This Agreement constitutes and
represents the entire agreement of the Members with respect to the subject
matter hereof, and all other prior agreements, covenants, promises and
conditions, verbal or written, between the Members are incorporated herein. No
Member hereto has relied upon any other promise, representation or warranty,
other than those contained herein, in executing this Agreement.

 

14.11                     Waiver of Lis Pendens and Partition. The Members recognize that no Member
has any direct right in any Company property, but only an interest in the
Company which is personal property. Accordingly, because the Company may suffer
irreparable financial loss if a lis pendens were filed or an action for
partition were brought with respect to Company property by a Member arising out
of a Company dispute, each Member does hereby waive any such right to file a lis
pendens against any property of the Company or bring an action for partition
thereof.

 

14.12                     Litigation. In the event any Member or the Company finds it
necessary to bring an action at law or other proceeding against any Member to
enforce any of the terms, covenants or conditions hereof, or by reason of any
breach or difficulty hereunder, the party prevailing in any such action or
other proceeding shall be entitled to recover against the other party all
reasonable attorney’s fees and associated costs. In the event any judgment is
secured by such prevailing party, all such attorneys’ fees and associated costs
shall be determined by the court and not a jury and shall be included in any
judgment.

 

14.13                     Qualification in Other States. If the business of the Company is
conducted in states in addition to the State of Utah, then the Members agree
that this Company shall exist under the laws of each state in which such
business is actually conducted to the extent that it is necessary in order to
do business in such state but that otherwise the laws of the State of Utah
shall govern this Company and each Member agrees to execute such other and
further documents as may be required in order to qualify the Company to conduct
its business in other states. To the extent that business of the Company shall
be conducted in another state, the Members may designate a principal place of
business and other offices in such state or states.

 

14.14                     Binding Effect. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the Members and their respective
heirs, legatees, legal representatives, successors, transferees, and assigns.

 

14.15                     Construction. Every covenant, term, and provision of
this Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Member. The terms of this Agreement are intended to
embody the economic relationship among the Members and shall not be subject to
modification by, or be conformed with, any actions by the Internal Revenue
Service except as this Agreement may be explicitly so amended and except as may
relate specifically to the filing of tax returns.

 

28

 

14.16                     Time. Time is of the essence with respect to this
Agreement.

 

14.17                     Incorporation by Reference. Every exhibit, schedule, and other
appendix attached to this Agreement and referred to herein is not incorporated
in this Agreement by reference unless this Agreement expressly otherwise
provides.

 

14.18                     Further Action. Each Member agrees to perform all
further acts and execute, acknowledge, and deliver any documents which may be
reasonably necessary, appropriate, or desirable to carry out the provisions of
this Agreement.

 

14.19                     Variation of Pronouns. All pronouns and any variations thereof
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the identity of the person or persons may require.

 

[The Rest of This Page Is Intentionally Left
Blank]

 

29

 

DATED effective as of January 1, 2004.

 

	
   

  	
  MANAGER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kenneth M. Woolley

  
	
   

  	
  Kenneth M. Woolley

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEMBERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kenneth M. Woolley

  
	
   

  	
  Kenneth M. Woolley

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles L. Allen

  
	
   

  	
  Charles L. Allen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dean A. Anderson

  
	
   

  	
  Dean A. Anderson

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Timothy Arthurs

  
	
   

  	
  Timothy Arthurs

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kenneth R. Beck

  
	
   

  	
  Kenneth R. Beck

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  K. Bruce Boucher

  

 

30

 

	
   

  	
  /s/ Robert L. Burns

  
	
   

  	
  Robert L. Burns

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Larendee B. Call

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kent W. Christensen

  
	
   

  	
  Kent W. Christensen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Monty J. Conrad

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Alex Engel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  James Hafen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Russell Brent Hardy

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ William E. Hoban

  
	
   

  	
  Bill Hoban

  

 

31

 

	
   

  	
  KRISPEN FAMILY HOLDINGS,
  L.C., a Utah

  
	
   

  	
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Spencer F. Kirk

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mark M. Landes

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Todd A. Lucas

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Diane Manning

  	
   

  
	
   

  	
  Diane Manning

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ James L. Overturf

  	
   

  
	
   

  	
  James L. Overturf

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ David L. Rasmussen

  	
   

  
	
   

  	
  David L. Rasmussen

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Brian G. Sheppard

  	
   

  
	
   

  	
  Brian G. Sheppard

  	
   

  
						

 

32

 

	
   

  	
  SSA VENTURES, L.L.C., a Utah limited liability 

  
	
   

  	
  company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen C. Aldous

  	
   

  
	
   

  	
  Name:

  	
  Stephen C. Aldous

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jim M. Stevens

  	
   

  
	
   

  	
  Jim M. Stevens

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Robert Strandt

  	
   

  
	
   

  	
  Robert Strandt

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Peter Scott Stubbs

  	
   

  
	
   

  	
  Peter Scott Stubbs

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Richard S. Tanner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ann Maureen King, as
  Trustee of the Ann Maureen

  
	
   

  	
  King Trust dated June 26, 1998

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Kenneth M. High, as
  Trustee of the High Family

  
	
   

  	
  Trust dated December 31, 2000

  	
   

  
						

 

33

 

	
   

  	
   

  	
   

  
	
   

  	
  Sandra J. High, as Trustee of the High Family Trust

  
	
   

  	
  dated December 31, 2000

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE KIRK 101 TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David R. Spafford, Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen C.
  Aldous, Trustee

  	
   

  
	
   

  	
   

  	
  Stephen C. Aldous, Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Thomas P. Pecht, as Trustee of the Pecht Family

  
	
   

  	
  Trust dated April 11, 1997

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Karen M. Pecht, as Trustee of the Pecht Family

  
	
   

  	
  Trust dated April 11, 1997

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE SFKC KIRK CHARITABLE REMAINDER TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Leland S. McCullough, Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  David R. Spafford, Trustee

  	
   

  
					

 

34

 

	
   

  	
   

  	
   

  
	
   

  	
  Robert C. Weiss, in his capacity as Trustee of the

  
	
   

  	
  Weiss Trust dated August 2, 1996

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Gwynneth F. Weiss, in her capacity as Trustee of

  
	
   

  	
  the Weiss Trust dated August 2, 1996

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Kenneth T. Woolley

  	
   

  
	
   

  	
  Kenneth T. Woolley

  	
   

  

 

35

 

EXHIBIT B

 

SECOND AMENDED AND
RESTATED OPERATING AGREEMENT

OF

EXTRA SPACE DEVELOPMENT, LLC

 

 

SECOND AMENDED AND
RESTATED OPERATING AGREEMENT

FOR

EXTRA SPACE DEVELOPMENT, LLC

 

THIS SECOND AMENDED AND
RESTATED OPERATING AGREEMENT (this “Agreement”) is made as of December 31, 2007
(the “Effective Date”) by and between KENT W. CHRISTENSEN and CHARLES L. ALLEN,
as the Managers, and EXTRA SPACE STORAGE LLC (referred to as the “Member”),
with reference to the following facts:

 

A.              Extra Space
Development, LLC (“Company”) a limited liability company organized under the
laws of the State of Utah, has previously filed Articles of Organization (the “Articles”),
with the Utah Secretary of State.

 

B.              The Member has
entered into a Subscription Agreement of even date herewith, whereby Member has
acquired membership interests in the Company.

 

C.              By operation of a
Membership Interest Redemption Agreement, Member is now the sole member of the
Company.

 

D.              The Member desires
to adopt and approve a Second Amended and Restated Operating Agreement for the
Company under the Revised Utah Limited Liability Company Act as currently or
hereinafter in effect in the State of Utah (the “Act”).

 

NOW, THEREFORE,
the Member by this Agreement sets forth the Operating Agreement for the Company
upon the terms and subject to the conditions of this Agreement.

 

ARTICLE I

ORGANIZATIONAL MATTERS

 

1.1             Name. The name
of the company shall be “Extra Space Development, LLC.” The Company may conduct
business under that name or any other name approved by the Member.

 

1.2             Term. This
Agreement shall be effective from the date of the adoption of this Agreement by
all of the Members and the term of this Agreement shall continue until
dissolution of the Company as hereinafter provided.

 

1.3             Office and Agent.
The Company shall continuously maintain an office and registered agent in the
State of Utah as required by the Act. At the time of its formation, the
registered office and registered agent of the Company in the State of Utah is
Extra Space Storage LLC of2795 E, Cottonwood Parkway, #400, Salt Lake City,
Utah 84121 Attn: David L. Rasmussen. In addition, the Company shall maintain
its principal office at 2795 E. Cottonwood Parkway, Suite 400, Salt Lake City,
Utah 84121, or at such other place as the Manager(s) may determine. The
registered office, registered agent and principal office of the Company may be
changed at any time and from time to time by the Manager(s).

 

1.4             Business of the
Company. The Company shall not engage in any business other than the
following without the consent of all of the Members:

 

1

 

(a)           The purpose of the
Company is to engage in any other lawful activity for which a limited liability
company may be organized under the Act; and

 

(b)           Such other activities
directly related to the foregoing activities as may be necessary or advisable
in the reasonable opinion of the Manager to further such business.

 

ARTICLE II

CAPITAL CONTRIBUTIONS

 

2.1             Capital
Contributions. The Member shall make a contribution to the capital of the
Company in the amount shown opposite the Member’s name on Exhibit “A” attached
hereto. No Member shall be required to make any additional contributions to the
capital of the Company. Additional contributions to the capital of the Company
shall be made only with the unanimous consent of the Manager and the Member.
Except as provided in this Agreement, no Member may withdraw his or her capital
contribution.

 

2.2             Capital Accounts.
The Company shall establish an individual capital account (“Capital Account”)
for each Member. The Company shall determine and maintain each Capital Account
in accordance with Treasury Regulations Section 1.704-1 (b)(2)(iv).

 

2.3             No Interest.
The Company shall not pay any interest on capital contributions.

 

ARTICLE III

MEMBERS

 

3.1             Member. The
liability of the Member shall be limited as provided in the Act, which
generally provides that no Member is personally liable for the debts,
obligations, or liabilities of the Company.

 

3.2             Admission of
Additional Members. Additional Members may be admitted with the approval of
all Members. Additional Members will participate in the “Net Profits,” “Net
Losses” (as such terms are defined in Section 5.1), and distributions of the Company
on such terms as are determined by the Members. Exhibit “A” shall be amended
upon the admission of an additional Member to set forth such Member’s name and
capital contribution.

 

3.3             Member Services:
Reimbursement of Expenses. Unless otherwise specifically agreed among the
Members, no Member shall receive any payment or compensation for performance of
obligations under this Agreement. Subject to reasonable regulations adopted by
the Manager, the Company shall reimburse Members for all reasonable direct
out-of-pocket expenses incurred by them at the request of the Company.

 

ARTICLE IV

MANAGEMENT AND CONTROL OF THE COMPANY

 

4.1             Manager to Manage
Business.

 

(a)           The business of the
Company shall be conducted under the exclusive management of a manager or
managers (the “Manager”) elected by the Members. The initial Managers shall be
Kent W. Christensen and Charles L. Allen. At all times when there is more than
one Manager for the Company, each Manager shall have full power and authority
to act on behalf of the Company and to bind the Company

 

2

 

thereby, without the approval
of any other Manager, except as otherwise prohibited by other provisions of
this Agreement.

 

(b)           The Manager shall act on behalf of the Company. The Manager may, but
need not, act at meetings.

 

4.2             Powers of Managers. The Manager is authorized on the Company’s
behalf to make all decisions as to: (i) management of all or any part of the
Company’s assets and business; (ii) borrowing money (including borrowing from
Members), and the granting of security interests in the Company’s assets; (iii)
prepayment, refinancing, or extension of any indebtedness of the Company for
borrowed money; (iv) compromise or release of any of the Company’s claims or
debts; and (v) employment of persons, firms, or corporations for the operation
and management of the Company’s business.

 

In
the exercise of the Manager’s management powers, the Manager is authorized to
execute and deliver on behalf of the Company and in its name: (i) contracts,
conveyances, assignments, leases, subleases, franchise agreements, licensing
agreements, management contracts, and maintenance contracts covering or affecting
the Company’s business and assets; (ii) checks, drafts, and other orders for
the payment of the Company’s funds; (iii) promissory notes, mortgages, deeds of
trust, security agreements, and other similar documents; and (iv) other
instruments of any kind or character relating to the Company’s affairs, whether
like or unlike the foregoing.

 

4.3             Election of
Managers.

 

(a)           The Company shall initially have two (2) Managers. The number of
Managers of the Company shall be fixed from time to time by the affirmative
vote or written consent of a majority of the Membership Interests, provided
that in no instance shall there be less than one Manager and provided further
that if the number of Managers is reduced from more than one to one, the
Articles shall be amended to so state, and if the number of Managers is
increased to more than one, the Articles shall be amended to delete the
statement that the Company has only one Manager. Unless he or she resigns or is
removed, each Manager shall hold office until a successor shall have been
elected and qualified. Managers shall be elected by the affirmative vote or
written consent of Members holding a majority of the Membership Interests. A
Manager need not be a Member, an individual, a resident of the State of Utah,
or a citizen of the United States.

 

(b)           Any Manager may resign at any time by giving written notice to the
Members and remaining Manager, if any, without prejudice to the rights, if any,
of the Company under any contract to which the Manager is a party. The resignation
of any Manager shall take effect upon receipt of that notice or at such later
time as shall be specified in the notice. Unless otherwise specified in the
notice, the acceptance of the resignation shall not be necessary to make it
effective. The resignation of a Manager who is also a Member shall not affect
the Manager’s rights as a Member and shall not constitute a withdrawal of a
Member.

 

(c)           Any Manager may be removed at any time, with cause, by the affirmative
vote of a majority of the Membership Interest at a meeting called expressly for
that purpose, or by the written consent of a majority of the Membership
Interest. Any removal shall be without prejudice to the rights, if any, of the
Manager under any employment contract and, if the Manager is also a Member,
shall not affect the Manager’s rights as a Member or constitute a withdrawal of
a Member. For purposes of this Section, “cause” shall mean fraud, gross
negligence, willful misconduct, embezzlement or a breach of such Manager’s
obligations under this Agreement or any employment contract with the Company.

 

(d)           Any vacancy occurring for any reason in the number of Managers may be
filled by the affirmative vote or written consent of a majority of the
Membership Interest.

 

3

 

4.4             Time Devoted to
Business. The Manager shall devote such time to the business of the Company
as he in his discretion deems necessary for the efficient operation of the
Company’s business. The Manager and any person or entity controlled by,
controlling or under common control with the Manager (each such person or
entity is defined as an “Affiliate”) may engage or invest in any activity,
including, without limitation, those that might be in direct or indirect
competition with the Company. Neither the Company nor any Manager shall have
any right in or to such other activities or to the income or proceeds derived
therefrom.

 

4.5             Information
Relating to Company. On request, the Manager shall supply to any Member
information regarding the Company or its activities. Each Member or authorized
representative of a Member shall have access to and may inspect and copy all
books, records, and materials in the Manager’s possession regarding the Company
or its activities. The exercise of the rights contained in this Section shall
be at the requesting Member’s expense.

 

4.6             Exculpation.
Any act or omission of the Manager, the effect of which may cause or result in
loss or damage to the Company or the Members if done in good faith to promote the
best interests of the Company, shall not subject the Manager to any liability
to the  Members.

 

4.7             Management Fee:
Reimbursement of Expenses. The Company shall pay the Manager a management
fee and no Manager shall be prevented from receiving any fee because the
Manager is also a Member. In addition, the Company shall pay the Manager or
Affiliates of the Manager for services rendered or goods provided to the
Company. The Company shall reimburse the Manager for all reasonable direct
out-of-pocket expenses incurred by him or his Affiliates in managing the
Company.

 

ARTICLE V

ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS

 

5.1             Definitions.
When used in this Agreement, the following terms shall have the meanings set
forth below.

 

(a)           “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, the provisions of
succeeding law, and to the extent applicable, the Treasury Regulations.

 

(b)           “Company Minimum Gain”
shall have the meaning ascribed to the term “Partnership Minimum Gain” in the
Treasury Regulations Section l.704-2(d).

 

(c)           “Member Nonrecourse
Debt” shall have the meaning ascribed to the term “Partner Nonrecourse Debt” in
Treasury regulations Section 1.704-2(b)(4).

 

(d)           “Member Nonrecourse
Deductions” shall mean items of Company loss, deduction, or Code Section
705(a)(2)(B) expenditures which are attributable to Member Nonrecourse Debt.

 

(e)           “Net Profits” and “Net
Losses” shall mean the income, gain, loss, deductions, and credits of the
Company in the Aggregate or separately stated, as appropriate, determined in
accordance with the method of accounting at the close of each fiscal year
employed on the Company’s information tax return filed for federal income tax
purposes.

 

(f)            “Nonrecourse Liability”
shall have the meaning set forth in Treasury Regulations Section 1.752-l(a)(2).

 

4

 

(g)           “Treasury Regulations”
shall mean the final or temporary regulations that have been issued by the U.S.
Department of Treasury pursuant to its authority under the Code, and any
successor regulations.

 

5.2             Allocations of Net
Profit and Net Loss.

 

(a)           Net Loss. Net
Loss shall be allocated to the Members in proportion to their Membership
Interest. Notwithstanding the previous sentence, loss allocations to a Member
shall be made only to the extent that such loss allocations will not create a
deficit Capital Account balance for that Member in excess of an amount, if any,
equal to such Member’s share of Company Minimum Gain that would be realized on
a foreclosure of the Company’s property. Any loss not allocated to a Member
because of the foregoing provision shall be allocated to the other Members (to
the extent the other Members are not limited in respect of the allocation of
losses under this Section 5.2(a)). Any loss reallocated under this Section
5.2(a) shall be taken into account in computing subsequent allocations of
income and losses pursuant to this Article V, so that the net amount of
any item so allocated and the income and losses allocated to each Member
pursuant to this Article V, to the extent possible, shall be equal to
the net amount that would have been allocated to each such Member pursuant to
this Article V if no reallocation of losses had occurred under this Section 5.2(a).

 

(b)           Net Profit. Net
Profit shall be allocated to the Members in proportion to their Membership
Interests.

 

5.3             Code Section
704(c) Allocations. Notwithstanding any other provision in this Article
V, in accordance with Code Section 70-4(c) and the Treasury Regulations promulgated
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its fair market value on the date of contribution. Allocations pursuant to
this Section 5.4 are solely for purposes of federal, state and local
taxes. As such, they shall not affect or in any way be taken into account in
computing a Member’s Capital Account or share of profits, losses, or other
items of distributions pursuant to any provision of this Agreement.

 

(a)           Distribution of
Assets by the Company. Subject to applicable law and any limitations
contained elsewhere in this Agreement, Members holding at least a majority of
the Membership Interests may elect from time to time to cause the Company to
make distributions. Distributions shall be first to the Members in proportion
to their unreturned capital contributions until each Member has recovered his
or her capital contributions, and then to the Members in proportion to their
Membership Interests.

 

ARTICLE VI

CONSEQUENCES OF DISSOLUTION EVENTS AND

TERMINATION OF MEMBERSHIP INTEREST

 

6.1             Dissolution Event.
Upon the occurrence of the death, withdrawal, resignation, retirement, insanity
or dissolution of any Member (“Dissolution Event”), the Company shall dissolve
unless all of the remaining Members (“Remaining Members”) consent within ninety
(90) days of the Dissolution Event to the continuation of the business of the
Company. If the Remaining Members so consent, the Company and/or the Remaining
Members shall have the right to purchase, and if such right is exercised, the
Member (or his or her legal representative or estate) whose actions or conduct
resulted in the Dissolution Event (“Former Member”) shall sell, the Former
Member’s Membership Interest (“Former Member’s Interest”) as provided in this
Article.

 

5

 

6.2             Withdrawal.
Notwithstanding Section 6.1, upon the withdrawal by a Member such Member
shall be treated as a Former Member, and, unless the Company dissolves as a
result of such withdrawal, the Company and/or the Remaining Members shall have
the right to purchase, and if such right is exercised, the Former Member shall
sell, the Former Member’s Interest as provided in this Article.

 

6.3             Purchase Price.
The purchase price for the Former Member’s Interest shall be the fair market value
of the Former Members Interest as determined by an independent appraiser
jointly selected by the Former Member and by Remaining Members holding a
majority of the remaining Membership Interests. The Company and the Former
Member shall each pay one-half of the cost of the appraisal. Notwithstanding
the foregoing, the Dissolution Event results from a breach of this Agreement by
the Former Member, the purchase price shall be reduced by an amount equal to
the damages suffered by the Company or the Remaining Members as a result of
such breach.

 

6.4             Notice of Intent
to Purchase. Within thirty (30) days after the fair market value of the
Former Member’s Interest has been determined in accordance with Section 6.3,
each Remaining Member shall notify the Members in writing of his or her desire
to purchase a portion of the Former Member’s Interest. The failure of any
Remaining Member to submit a notice within the applicable period shall
constitute an election on the part of the Member not to purchase any of the
Former Member’s Interest. Each Remaining Member so electing to purchase shall
be entitled to purchase a portion of the Former Member’s Interest in the same
proportion that the Membership Interest of the Remaining Member bears to the
aggregate of the Membership Interests of all of the Remaining Members electing
to purchase the Former Member’s Interest.

 

6.5             Election to Purchase
Less Than All of the Former Member’s Interest. If any Remaining Member
elects to purchase none or less than all of his or her pro rata share of the
Former Member’s Interest, then the Remaining Members can elect to purchase more
than their pro rata share. If the Remaining Members fail to purchase the entire
interest of the Former Member, the Company may purchase any remaining share of
the Former Member’s Interest.

 

6.6             Payment of
Purchase Price. The Company or the Remaining Members, as the case may be,
shall pay at the closing one-fifth (1/5) of the purchase price and the balance
of the purchase price shall be paid in four equal annual principal installments,
plus accrued interest, and be payable each year on the anniversary date of the
closing. The unpaid principal balance shall accrue interest at the current
applicable federal rate as provided in the Code for the month in which the
initial payment is made, but the Company and the Remaining Members shall have
the right to prepay in full or in part at any time without penalty. The
obligation of each purchasing Remaining Member, and the Company, as applicable,
to pay its portion of the balance due shall be evidenced by a separate
promissory note executed by the respective purchasing Remaining Member or the
Company, as applicable. Each such promissory note shall be in an original
principal amount equal to the portion owed by the respective purchasing Remaining
Member or the company, as applicable. The promissory note executed by each
purchasing Remaining Member shall be secured by a pledge of that portion of the
Former Member’s Interest purchased by such Remaining Member.

 

6.7             Closing of
Purchase of Former Member’s Interest. The closing for the sale of a Former
Member’s Interest pursuant to this Article shall be held at a time and place
mutually agreed upon by the parties. At the closing, the Former Member shall
deliver to the Company or the Remaining Members an instrument of transfer
(containing warranties of title and no encumbrances) conveying the Former
Member’s Interest. The Former Member, the Company and the Remaining Members
shall do all things and execute and deliver all papers as may be reasonably necessary
fully to consummate such sale and purchase in accordance with the terms and
provisions of this Agreement.

 

6

 

ARTICLE VII

ACCOUNTING, RECORDS, REPORTING BY MEMBERS

 

7.1             Books and Records.
The books and records of the Company shall be kept in accordance with the
accounting methods followed for federal income tax purposes.

 

7.2             Reports. The
Company shall cause to be filed, in accordance with the Act, all reports and
documents required to be filed with any governmental agency. The Company shall
cause to be prepared at least annually information concerning the Company’s
operations necessary for the completion of the Members’ federal and state
income tax returns. The Company shall send or cause to be sent to each Member
within ninety (90) days after the end of each taxable year (i) such information
as is necessary to complete the Members’ federal and state income tax or
information returns and (ii) a copy of the Company’s federal, state and local
income tax or information returns for the year.

 

7.3             Bank Accounts.
The Manager shall maintain the funds of the Company in one or more separate
bank accounts in the name of the Company, and shall not permit the funds of the
Company to be commingled in fashion with the funds of any other person. The
Manager, acting alone, is authorized to endorse checks, drafts and other
evidences of indebtedness made payable to the order of the Company.

 

7.4             Tax Matters for
the Company. The Manager is designated at “Tax Matters Partner” (as defined
in Code Section 6231), to represent the Company (at the Company’s expense) in
connection with all examination of the Company’s affairs by tax authorities and
to expend Company funds for professional services and costs associated
therewith.

 

ARTICLE VIII

DISSOLUTION AND WINDING UP

 

8.1             Conditions of
Dissolution. The Company shall dissolve upon the occurrence of any of the following
events:

 

(a)           Upon the happening of
any event of dissolution specified in the Articles;

 

(b)           Upon the entry of a decree
of judicial dissolution pursuant to Section 17351 of the Corporations Code;

 

(e)           Upon the vote of
Members holding at least a majority of the Membership Interests; or

 

(d)           The sale of all or
substantially all of the assets of the Company.

 

8.2             Winding Up.
Upon the dissolution of the Company, the Company’s assets shall be disposed of
and its affairs wound up. The Company shall give written notice of the
commencement of the dissolution to all of its known creditors.

 

8.3            Order of Payment of
Liabilities Upon Dissolution. After determining that all the known debts
and liabilities of the Company have been paid or adequately provided for, the
remaining assets shall be distributed to the Members in accordance with their
positive capital account balances, after taking into account income and loss
allocations for the Company’s taxable year during which liquidation occurs.

 

8.4            Limitations on
Payments Made in Dissolution. Except as otherwise specifically provided in
this Agreement, each Member shall be entitled to look only to the assets of the
Company for the return of his or

 

7

 

her positive Capital Account balance and shall have no
recourse for his or her Capital Contribution and/or share of Net Profits
against any other Member except as provided in Article VIII.

 

8.5             Certificates.
The Company shall file with the Utah Secretary of State a Certificate of
Dissolution upon the dissolution of the Company and a Certificate of
Cancellation upon the completion of the winding up of the Company’s affairs.

 

ARTICLE IX

INDEMNIFICATION

 

9.1             Indemnification of
Agents. The Company shall indemnify any Manager and Member and may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding by reason of
the fact that he or she is or was a Manager, Member, officer, employee or other
agent of the Company or that, being or having been such a Manager, Member,
officer, employee or agent, he or she  is
or was serving at the request of the Company as a manager, director, office,
employee or other agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise (all such persons being
referred to hereinafter as an “agent”), to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater extent as
applicable law may hereafter from time to time permit.

 

ARTICLE X

INVESTMENT REPRESENTATIONS

 

Each Member hereby
represents and warrants to, and agrees with, the Manager the Members and the
Company as follows:

 

10.1            Pre-existing
Relationship or Experience. He or she has a pre-existing personal or
business relationship with the Company or one or more of its officers or
controlling persons, or by reason of his or her business or financial
experience, or by reason of the business or financial experience of his or her
financial advisor who is unaffiliated with and who is not compensated, directly
or indirectly, by the Company or any affiliate or selling agent of the Company,
he or she is capable of evaluating the risks and merits of an investment in the
Company and of protecting his or her own interests in connection with this
investment.

 

10.2            No Advertising.
He or she has not seen, received, been presented with, or been solicited by any
leaflet, public promotional meeting, article or any other form of advertising
or genera! solicitation with respect to the sale of the Membership Interest.

 

10.3            Investment Intent.
He or she is acquiring the Membership Interest for investment purposes for his
or her own account only and not with a view to or for sale in connection with
any distribution of all or any part of the Membership Interest. No other person
will have any direct or indirect beneficial interest in or right to the
Membership Interest.

 

ARTICLE XI

MISCELLANEOUS

 

11.l             Complete Agreement.
This Agreement and the Articles constitute the complete and exclusive statement
of agreement among the Members with respect to the subject matter herein and
therein and replace and supersede all prior written and oral agreements among
the  Members. To the extent that
any provision of the Articles conflict with any provision of this Agreement,
the Articles shall control.

 

8

 

11.2           Binding Effect.
Subject to the provision of this Agreement relating to transferability, this
Agreement will be binding upon and inure to the benefit of the Members, and
their respective successors and assigns.

 

11.3           Interpretation.
All pronouns shall be deemed to refer to the masculine, feminine, or neuter,
singular or plural, as the context in which they are used may required. All
headings herein are inserted only for convenience and ease of reference and are
not to be considered in the interpretation of any provision of this Agreement.
Numbered or lettered articles, sections and subsections herein contained refer
to articles, sections and subsections of this Agreement unless otherwise
expressly stated. In the event any claim is made by any Member relating to any
conflict, omission or ambiguity in this Agreement, no presumption or burden of
proof or persuasion shall be implied by virtue of the fact that this Agreement
was prepared by or at the request of a particular Member or his or her counsel.

 

11.4           Jurisdiction.
Each Member hereby consents to the exclusive jurisdiction of the state and
federal courts sitting in Utah in any action on a claim arising out of, under
or in connection with this Agreement or the transactions contemplated by this
Agreement. Each Member further agrees that personal jurisdiction over him or
her may be effected by service of process by  registered or
certified mail addressed as provided in Section 11.6, and that when so
made shall be as if served upon him or her personally within the State of Utah.

 

11.5           Severability. If
any provision of this Agreement or the application of such provision to any
person or circumstance shall be held invalid, the remainder of this Agreement
or the application of such provision to persons or circumstances other than
those to which it is held invalid shall not be affected thereby.

 

11.6          Notices. Any
notice to be given or to be served upon the Company or any party hereto in
connection with this Agreement must be in writing (which may include facsimile)
and will be deemed to have been given and received when delivered to the
address specified by the party to receive notice. Such notices will be given to
a Member at the address specified in Exhibit “A” hereto. Any party may,
at any time by given five days’ prior written notice to the other Members,
designate any other address in substitution of the foregoing address to which
such notice will be given.

 

11.7          Amendments. All
amendments to this Agreement will be in writing and signed by all of the
Members.

 

11.8          Multiple Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument.

 

11.9          Attorney Fees. In
the event that any dispute between the Company and the Members or among the
Members should result in litigation or arbitration, the prevailing party in
such dispute shall be entitled to recover from the other party all reasonable
fees, costs and expenses of enforcing any right of the prevailing party,
including without limitation, reasonable attorneys’ fees and expenses, all for
which shall be deemed to have accrued upon the commencement of such action and
shall be paid whether or not such action is prosecuted to judgment. Any
judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorney fees  and
costs incurred in enforcing such judgment and an award of prejudgment interest
from the date of the breach at the maximum rate allowed by law. For the
purposes of this Section: (a) attorney fees shall include, without limitation,
fees incurred in the following: (1) post judgment motions; (2) contempt
proceedings; (3) garnishment, levy, and debtor and third party examinations;
(4) discovery; and (5) bankruptcy litigation and (b) prevailing party shall
mean the party who is determined in the proceeding to have prevailed or who
prevails by dismissal, default or otherwise.

 

9

 

11.10         Remedies Cumulative.
The remedies under this Agreement are cumulative and shall not exclude any
other remedies to which any person may be lawfully entitled.

 

11.11         Qualification in Other
States. In the event that the business of the Company is conducted in
states in addition to the State of Utah, then the Members agree that this
Company shall exist under the laws of each state in which such business is
actually conducted to the extent that it is necessary in order to do business
in such state but that otherwise the laws of the State of Utah shall govern
this Company and each Member agrees to execute such other and further documents
as may be required in order to qualify the Company to conduct its business in
other states. To the extent that business of the Company shall be conducted in
another state, the Manager(s) may, in their discretion, designate a principal
place of business and other offices in such state or states.

 

10

 

IN  WITNESS WHEREOF, the Member and Managers
of Extra Space Development, LLC, a Utah limited liability company, have
executed this Agreement, effective as of the date written above.

 

	
   

  	
  MEMBER:

  
	
   

  	
   

  
	
   

  	
  EXTRA SPACE STORAGE LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kenneth
  M. Woolley

  	
   

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MANAGERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Kent W. Christensen

  	
   

  
	
   

  	
  Kent W. Christensen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles L. Allen

  	
   

  
	
   

  	
  Charles L. Allen

  

 

11

 

EXHIBIT “A”

 

CAPITAL
CONTRIBUTION AND ADDRESSES OF

MEMBERS AS OF THE EFFECTIVE DATE

 

	
   

  	
   

  	
  Capital

  	
   

  	
  Membership

  	
   

  
	
  Member

  	
   

  	
  Contribution

  	
   

  	
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Extra Space Storage LLC

  2795 E. Cottonwood Parkway, Suite 400

  Salt Lake City, UT 84121 

  	
   

  	
  $

  	
   

  	
   

  	
  100

  	
  %

  
							

 

12

 

EXHIBIT C

 

PLAN OF DISSOLUTION
 OF
 EXTRA SPACE DEVELOPMENT, LLC

 

 

PLAN OF DISSOLUTION
 OF
 EXTRA SPACE DEVELOPMENT, LLC

 

This
Plan of Dissolution of Extra Space Development, LLC, a Utah limited liability
company (“Company”), is made pursuant to the Amended and Restate Operating
Agreement for the Company, dated as of January 1, 2004.

 

WHEREAS,
the manager of the Company, Kenneth M. Woolley, and the undersigned holders of
a majority-in-interest of the Percentage Interests of the Company have
determined that it is in the best interests of the Company and its members for
the Company to sell all of its assets and to wind up its affairs and dissolve;

 

WHEREAS,
the Company has negotiated an agreement with Extra Space Storage, Inc and its
subsidiaries for the purchase of all of the Company assets, with provision for
the payment of Company liabilities and a reserve for the expenses of winding up
it affairs.

 

IT
IS RESOLVED, that the Company be dissolved and wind up its affairs in
accordance with the following (“Plan”):

 

1.       Enter into an agreement to sell all of the
Company’s interest in its property owning entities (subsidiaries and all joint
venture interests) to Extra Space Storage LLC, for the sum of $21,486,446.75
(which reflects the agreed upon real estate values of the Company properties,
less existing property level debts, less a reduction for the interests of the Company’s
joint venture partners, adjusted for the actual net results of operation thru 11/30/07
per the Company balance sheet, and further adjusted for the estimated results
of operations from 11/30/07 through 12/31/07).

 

2.       Pay in full the Company obligations on its
line of credit from Zions First National Bank in the approximate amount of
$9,055,000.

 

3.       Retain a reserve of approximately $357,000 in
cash and receivables, for winding up expenses and for known and contingent
liabilities and retained by the Company.

 

4.       Accept a Subscription Agreement from Extra
Space Storage LLC for a membership interest in the Company, in exchange for
payment equal to the $357,000 in retained reserves.

 

5.       Distribute all remaining net proceeds of sale
and all other cash, in the approximate amount of $8,793,000, to its current
members in proportion to their Percentage Interests and in complete redemption
of their respective membership interests in the Company.

 

6.       Authorize Kenneth M. Woolley as manager to
conduct and wind up the final affairs of the Company, including preparation of
a final accounting and tax returns, and application of the reserves to the
liabilities of the Company (which will then be a wholly-owned

 

1

 

subsidiary of Extra Space
Storage LLC, with the reserved funds and any contingent assets and liabilities
which may remain isolated in the Company).

 

THE FOREGOING PLAN IS HEREBY
APPROVED THIS December, 24 2007.

 

 

	
  MANAGER

  	
  MEMBERS
  [majority-in-interest]

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kenneth M. Woolley

  	
   

  	
  /s/ Kenneth M. Woolley

  	
   

  
	
  Kenneth M. Woolley

  	
  Kenneth M. Woolley

  
	
   

  	
  32.6300419%

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Krispen Family Holdings,
  L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Spencer F. Kirk

  	
   

  
	
   

  	
  Its:

  	
  MANAGER

  	
   

  
	
   

  	
  20.1946641%

  
					

 

2Exhibit 10.32

 

EXECUTION COPY

 

FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF EXTRA SPACE STORAGE LP

 

This First Amendment to Second Amended and Restated Agreement of
Limited Partnership of Extra Space Storage LP, dated September 18, 2008
(this “Amendment”), is entered into
by and among ESS Holdings Business Trust I, a Massachusetts business trust (the
“General Partner”) and the limited
partners listed on Exhibit A hereto (the “Limited
Partners”).

 

WHEREAS, the General
Partner and ESS Holdings Business Trust II, a Massachusetts business trust (the
“Parent Limited Partner”;  and collectively with the General Partner and the Limited
Partners, the “Partners”), entered into
that certain First Amended and Restated Agreement of Limited Partnership of
Extra Space Storage LP dated as of August 17, 2004 (the “Original Agreement”);

 

WHEREAS, the General
Partner and the Parent Limited Partner amended and restated the Original
Agreement by entering into that certain Second Amended and Restated Agreement
of Limited Partnership of Extra Space Storage LP (the “Partnership
Agreement”) dated as of June 25, 2007, in order to admit
the Limited Partners into Extra Space Storage LP (the “Partnership”),
including the admission of those Limited Partners that hold Series A
Preferred Units (as defined in the Partnership Agreement), and to set forth the
rights and responsibilities of the Partners and the Partnership;

 

WHEREAS, the
Partners wish to clarify in this Amendment the allocation provisions of the
Partnership Agreement to reflect the original economic understanding and
agreement among the parties with respect to the treatment of depreciation in
allocations of Net Income and Net Loss to Holders of Series A Preferred
Units, as set forth herein; and

 

NOW THEREFORE, in
consideration of the mutual covenants and agreements herein contained and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto, intending legally to be bound,
hereby amend the Partnership Agreement as follows:

 

1.                                       Definitions.
Capitalized terms used herein, unless otherwise defined herein, shall have the
same meanings as set forth in the Partnership Agreement.

 

1

 

2.                                       Amendments.

 

a.                                       Article I
of the Partnership Agreement is hereby amended to include the following
definition in alphabetical order:

 

“Adjusted Section 704(b) Net Income” means, for any
Partnership Year or other applicable period, (i) the Partnership’s Net
Income for such Partnership Year or other applicable period as determined under
the Code, minus (ii) that portion of the Series A Preferred
Priority Return for such Partnership Year or other applicable period that
consists of an amount, with respect to each Series A Preferred Unit, equal
to 5.00% per annum on the Series A Preferred Stated Value per Series A
Preferred Unit, commencing on the date of original issuance of the Series A
Preferred Units.”

 

b.                                      Section 6.2
of the Partnership Agreement is hereby amended by adding a new paragraph D. as
follows:

 

“D.                              Depreciation
Adjustments. Notwithstanding anything to the contrary in Section 6.2.A(a)(iv) of
this Agreement, for any Partnership year or other applicable period, (a) allocations
of Net Income to the Series A Preferred Units with respect to that portion
of their Series A Preferred Priority Return consisting of 5.00% per annum
on the Series A Preferred Stated Value per Series A Preferred Unit shall
be exclusive of Depreciation, and (b) the Series A Preferred Units shall be allocated
Depreciation on a proportionate basis with respect to the remaining portion of
their Series A Preferred Priority Return consisting of the Series A
Preferred Priority Return consisting of the Series A Preferred Return. For
purposes of Section 6.2.D.(b) above, Depreciation shall be
allocated to the Series A Preferred Units based on a fraction, the
numerator of which is that portion of the Series A Preferred Priority
Return for a Partnership Year or other applicable period that constitutes the Series A
Preferred Return, and the denominator of which is the Adjusted Section 704(b) Net
Income for such Partnership Year or other applicable period.”

 

3.                                       Effective
Date. Because this Amendment sets forth the original agreement among the parties
and is intended to be only for purposes of clarification, the parties agree
that this Amendment shall be effective as of June 25, 2007.

 

2

 

4.                                       Continuing
Effect of Partnership Agreement. Except as modified herein, the Partnership
Agreement is hereby ratified and confirmed in its entirety and shall remain and
continue in full force and effect, provided, however,
that to the extent there shall be a conflict between the provisions of the
Partnership Agreement and this Amendment, the provisions in this Amendment
shall prevail. All references in any document to the Partnership Agreement
shall mean the Partnership Agreement, as amended hereby.

 

5.                                       Counterparts.
This Amendment may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which shall constitute one and the
same agreement. Facsimile signatures shall be deemed effective execution of
this Amendment and may be relied upon as such. In the event facsimile signatures
are delivered, originals of such signatures shall be delivered within three (3) business
days after execution.

 

[Remainder of Page Left Blank
Intentionally]

 

3

 

IN WITNESS WHEREOF, this
Amendment has been executed as of the date first written above.

 

 

	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  
	
   

  	
  ESS HOLDINGS BUSINESS TRUST I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Kent W.
  Christensen

  
	
   

  	
   

  	
  Name: Kent W. Christensen

  
	
   

  	
   

  	
  Title: Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LIMITED PARTNERS:

  
	
   

  	
   

  
	
   

  	
  ESS HOLDINGS BUSINESS TRUST II

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kent W. Christensen

  
	
   

  	
   

  	
  Name: Kent W. Christensen

  
	
   

  	
   

  	
  Title: Trustee

  

 

4

 

EXHIBIT A

 

LIMITED PARTNERS

 

5

 

As
of September 15, 2008

3Q2008
Dividend Record Date 

 

Exhibit A - To The Second Amended and Restated

Agreement of Limited Partnership of Extra Space Storage, LP

(Dated June 25, 2007)

 

PARTNERS AND PARTNERSHIPS UNITS

 

	
   

  	
   

  	
  Name and Address

  	
   

  	
  as of

  	
   

  	
  OP Units

  	
   

  	
  CC Units

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Partner:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ESS
  Holdings Business Trust I 

  2795 East Cottonwood Parkway, Suite 400 

  Salt Lake City, UT 84121

  	
   

  	
   

  	
   

  	
  874,357

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Limited Partners:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ESS
  Holdings Business Trust II 

  2795 East Cottonwood Parkway, Suite 400 

  Salt Lake City, UT 84121

  	
   

  	
   

  	
   

  	
  81,462,315

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Kenneth
  M Woolley 

  2485 Haven Lane 

  Salt Lake City, UT 84117

  	
   

  	
  8/5/2008

  	
   

  	
  212,003

  	
   

  	
  27,998

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Richard
  S. Tanner 

  2875 E Newmans Lane 

  Holladay, UT 84121

  	
   

  	
  8/5/2008

  	
   

  	
  70,667

  	
   

  	
  9,333

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  SSA
  Ventures LLC 

  5120 Cottonwood Lane 

  Salt Lake City, UT 84117

  	
   

  	
  8/5/2008

  	
   

  	
  254,828

  	
   

  	
  33,655

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  David
  Husman 

  1200 North Ashland, Suite 600 

  Chicago, IL 60622

  	
   

  	
   

  	
   

  	
  92,074

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Michael
  Husman 

  1200 North Ashland, Suite 600 

  Chicago, IL 60622

  	
   

  	
   

  	
   

  	
  22,854

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Daveco
  Extra, LLC 

  53 Mountain Blvd Suite #204 

  Warren, NJ 07059

  	
   

  	
  7/21/2006

  	
   

  	
  638,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  David
  A. Lackland 

  53 Mountain Blvd Suite #204 

  Warren, NJ 07059

  	
   

  	
   

  	
   

  	
  12,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Gerald & Natalie L Marks Living Trust

  Dated August 4th, 1994 

  16224
  Meadow Ridge Way

  Encino, CA 91436

  	
   

  	
  4/16/2007

  	
   

  	
  26,773

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Johnson
  Family Trust 

  1070 Palisair Place 

  Pacific Palisades, CA 90272

  	
   

  	
   

  	
   

  	
  5,377

  	
   

  	
   

  	
   

  

 

A
- 1

 

	
  10

  	
   

  	
  Robert
  J. & Phyllis Y. Sokol Living Trust

  1155 Arrowhead Road

  Pebble Beach, CA 93953

  	
   

  	
   

  	
   

  	
  13,443

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Tamkin
  Family Partners, LP 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  232,099

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Allen
  Sackler Trust 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  249,184

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Sandra
  Tamkin 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  4,556

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Kirshner
  Family Limited Partnership 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  170,851

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  Liebes
  Family Properties, LP 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  79,847

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  Morton
  and Sally Ann Kirshner Trust 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  64,665

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  John
  and Gail Liebes Trust 

  2444 Wilshire Boulevard, Suite 200 

  Santa Monica, CA 90403

  	
   

  	
   

  	
   

  	
  64,665

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  Richard and Marsha Ifland Family Trust

  Dated 2/10/88 

  232
  Vista Bella Drive 

  Santa Cruz, CA 95060

  	
   

  	
   

  	
   

  	
  155,475

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  Morrell
  Development, Inc. 

  726 Second Street, Suite 3A 

  Annapolis, MD 21403

  	
   

  	
   

  	
   

  	
  229,499

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  Hollywood
  Industrial Associates, L.P. 

  (Richard H. Prant, General Partner) 

  80 Greenwood Avenue 

  Midland Park, NJ 07432

  	
   

  	
   

  	
   

  	
  659,993

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  ESSJBM,
  LLC 

  c/o Jesse Morgan 

  14025 Rancho Vista Bend 

  San Diego, CA 92130

  	
   

  	
  5/1/2006

  	
   

  	
  257,418

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  ESSCZM,
  LLC 

  c/o Casandra Z. Morgan 

  14025 Rancho Vista Bend 

  San Diego, CA 92130

  	
   

  	
  5/1/2006

  	
   

  	
  47,399

  	
   

  	
   

  	
   

  

 

A
- 2

 

	
  23

  	
   

  	
  Jesse
  B. Morgan

  14025 Rancho Vista Bend

  San Diego, CA 92130

  	
   

  	
  9/1/2006

  	
   

  	
  54,127

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  Casandra
  Z. Morgan 

  14025 Rancho Vista Bend 

  San Diego, CA 92130

  	
   

  	
  9/1/2006

  	
   

  	
  19,721

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  Morgan
  Operating Company LP 

  14025 Rancho Vista Bend 

  San Diego, CA 92130

  	
   

  	
  9/1/2006

  	
   

  	
  108,980

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  Arthur
  Victor II 

  5650 Greenwood Plaza Boulevard, Suite 143 

  Greenwood Village, CO 80111

  	
   

  	
   

  	
   

  	
  143,641

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27

  	
   

  	
  Barry
  Bender 

  5650 Greenwood Plaza Boulevard, Suite 143 

  Greenwood Village, CO 80111

  	
   

  	
   

  	
   

  	
  6,868

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28

  	
   

  	
  1400
  Folsom St., LLC 

  Attn: Richard L. Crocker, Manager 

  100 Aviation Way, Corp #4

  Watsonville, CA 95076

  	
   

  	
  11/13/2007

  	
   

  	
  212,027

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
  H
  James Knuppe 

  Barbara Knuppe 

  4545 Crow Canyon Place 

  Castro Valley, CA 94552

  	
   

  	
  8/1/2007

  	
   

  	
  989,980

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Number of Outside Partners: 1-29)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL:

  	
   

  	
   

  	
   

  	
  87,435,686

  	
   

  	
  70,986

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OP
  Units held by Extra Space LP:

  	
   

  	
   

  	
   

  	
  82,336,672

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OP
  Units NOT held by Extra Space LP:

  	
   

  	
   

  	
   

  	
  4,109,034

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Series A
  OP Units:

  	
   

  	
   

  	
   

  	
  989,980

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total
  Outisde OP & Series A Units:

  	
   

  	
   

  	
   

  	
  5,099,014

  	
   

  	
   

  	
   

  

 

A
- 3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]