Document:

Exhibit 10.3

 

BEHRINGER HARVARD MULTIFAMILY REIT I, INC.

 

AMENDED AND RESTATED 2006 INCENTIVE AWARD PLAN

(ADOPTED NOVEMBER 14, 2006, AMENDED AND RESTATED MARCH 14, 2008)

 

Section 1.

PURPOSE

 

The
purpose of this Plan is to promote the interests of the Company by providing
the opportunity to purchase or receive Shares, or to receive compensation that
is based upon appreciation in the value of Shares to Eligible Recipients in
order to attract and retain Eligible Recipients by providing an incentive to
work to increase the value of Shares and a stake in the future of the Company
that corresponds to the stake of each of the Company’s stockholders.  The Plan provides for the grant of Incentive
Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Restricted
Stock Units,  Stock Appreciation Rights,
Dividend Equivalents and Other Stock-Based Awards to aid the Company in
obtaining these goals.

 

Section 2.

DEFINITIONS

 

Each
term set forth in this Section shall have the meaning set forth opposite
such term for purposes of this Plan and any Incentive Award Agreements under
this Plan (unless noted otherwise), and for purposes of such definitions, the
singular shall include the plural and the plural shall include the singular,
and reference to one gender shall include the other gender.  Note that some definitions may not be used in
this Plan, and may be inserted here solely for possible use in Incentive Award
Agreements issued under this Plan.

 

2.1           Affiliate means Behringer Harvard Holdings, LLC,
Behringer Harvard Partners, LLC, Behringer Harvard Multifamily Advisors I LP,
Behringer Securities LP, HPT Management Services LP, BHMF Partners, LLC,
Behringer Harvard Multifamily OP I LP, LLC, and BHMF Business Trust.

 

2.2           Board means the Board of Directors of the Company.

 

2.3           Cause shall mean an act or acts by an Eligible
Recipient involving (a) the use for profit or disclosure to unauthorized
persons of confidential information or trade secrets of the Company, a Parent
or a Subsidiary, (b) the breach of any contract with the Company, a Parent
or a Subsidiary, (c) the violation of any fiduciary obligation to the
Company, a Parent or a Subsidiary, (d) the unlawful trading in the
securities of the Company, a Parent or a Subsidiary, or of another corporation
based on information gained as a result of the performance of services for the
Company, a Parent or a Subsidiary, (e) a felony conviction or the failure
to contest prosecution of a felony, or (f) willful misconduct, dishonesty,
embezzlement, fraud, deceit or civil rights violations, or other unlawful acts.

 

2.4           Change of Control means either of the following:

 

(a)           any transaction or series of
transactions pursuant to which the Company sells, transfers, leases, exchanges
or disposes of substantially all (i.e., at least
eighty-five percent (85%)) of its assets for cash or property, or for a
combination of cash and property, or for other consideration; or

 

(b)           any transaction pursuant to which
persons who are not current stockholders of the Company acquire by merger, consolidation,
reorganization, division or other business combination or transaction, or by a
purchase of an interest in the Company, an interest in the Company so that
after such transaction, the stockholders of the Company immediately prior to
such transaction no longer have a controlling (i.e.,
50% or more) voting interest in the Company.

 

2.5           Code means the Internal Revenue Code of 1986,
as amended.

 

 

2.6           Committee means any committee appointed by the
Board to administer the Plan, as specified in Section 5 hereof.  Any such committee shall be comprised
entirely of Directors or such other persons as permitted under applicable law.

 

2.7           Common Stock means the common stock of the Company.

 

2.8           Company means Behringer Harvard Multifamily REIT
I, Inc., a Maryland corporation, and any successor to such organization.

 

2.9           Constructive Discharge means a termination of employment with
the Company by an Employee due to any of the following events if the termination occurs within
thirty (30) days of such event:

 

(a)           Forced Relocation or Transfer.  The Employee may continue employment with the
Company, a Parent or a Subsidiary (or a successor employer), but such
employment is contingent on the Employee’s being transferred to a site of
employment which is located further than 50 miles from the Employee’s current
site of employment.  For this purpose, an
Employee’s site of employment shall be the site of employment to which they are
assigned as their home base, from which their work is assigned, or to which
they report, and shall be determined by the Committee in its sole discretion on
the basis of the facts and circumstances.

 

(b)           Decrease in Salary or Wages. 
The Employee may continue employment with the Company, a Parent or a
Subsidiary (or a successor employer), but such employment is contingent upon
the Employee’s acceptance of a salary or wage rate which is less than the
Employee’s prior salary or wage rate.

 

(c)           Significant and Substantial Reduction in Benefits.  The Employee may continue employment with the
Company, a Parent or a Subsidiary (or a successor employer), but such
employment is contingent upon the Employee’s acceptance of a reduction in the
pension, welfare or fringe benefits provided which is both significant and
substantial when expressed as a dollar amount or when expressed as a percentage
of the Employee’s cash compensation.  The
determination of whether a reduction in pension, welfare or fringe benefits is
significant and substantial shall be made on the basis of all pertinent facts
and circumstances, including the entire benefit (pension, welfare and fringe)
package provided to the Employee, and any salary or wages paid to the
Employee.  However, notwithstanding the
preceding, any modification or elimination of benefits which results solely
from the provision of new benefits to an Employee by a successor employer as a
result of a change of the Employee’s employment from employment with the
Company to employment with such successor shall not be deemed a Significant and
Substantial Reduction in Benefits where such new benefits are identical to the
benefits provided to similarly situated Employees of the successor.

 

2.10         Director means a member of the Board.

 

2.11         Dividend Equivalents mean a right to receive payments based
on the dividends paid by the Company to its stockholders pursuant to the terms
of Section 7.6.

 

2.12         Eligible Recipient means an Employee and/or a Key Person.

 

2.13         Employee means a common law employee of the
Company, a Subsidiary, a Parent or an Affiliate.

 

2.14         Exchange Act means the Securities Exchange Act of
1934, as amended.

 

2.15         Exercise Price means the price that shall be paid to
purchase one (1) Share upon the exercise of an Option granted under this
Plan.

 

2.16         Fair Market Value of each Share on any date means the
price determined below as of the close of business on such date (provided,
however, if for any reason, the Fair Market Value per share cannot be
ascertained or is unavailable for such date, the Fair Market Value per share
shall be determined as of the nearest preceding date on which such Fair Market
Value can be ascertained):

 

2

 

(a)           If
the Share is listed or traded on any established stock exchange or a national
market system, including without limitation the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”)
System, its Fair Market Value shall be the closing sale price for the Share (or
the mean of the closing bid and ask prices, if no sales were reported), on such
exchange or system on the date of such determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; or

 

(b)           If
the Share is not listed or traded on any established stock exchange or a
national market system, its Fair Market Value shall be the average of the
closing dealer “bid” and “ask” prices of a Share as reflected on the NASDAQ
interdealer quotation system of the National Association of Securities Dealers, Inc.
on the date of such determination; or

 

(c)           In the absence of an established public trading
market for the Share, the Fair Market Value of a Share shall be determined in
good faith by the Board.

 

2.17         FLSA Exclusion means the provisions of Section 7(e) of
the Fair Labor Standards Act of 1938 (the “FLSA”) that exempt certain
stock-based compensation from inclusion in overtime determinations under the
FLSA.

 

2.18         Incentive Award means an ISO, a NQSO, a Restricted Stock
Award, a Restricted Stock Unit, a Stock Appreciation Right, a Dividend
Equivalent or an Other Stock-Based Award.

 

2.19         Incentive Award Agreement means an agreement between the Company,
a Parent or a Subsidiary, and a Participant evidencing an award of an Incentive
Award.

 

2.20         Insider means an individual who is, on the
relevant date, an officer, director or ten percent (10%) beneficial owner of
any class of the Company’s equity securities that is registered pursuant to Section 12
of the Exchange Act, all as defined under Section 16 of the Exchange Act.

 

2.21         ISO means an option granted under this Plan
to purchase Shares that is intended by the Company to satisfy the requirements
of Code §422 as an incentive stock option.

 

2.22         Key Person means (1) a member of the Board who
is not an Employee, or (2) a consultant or advisor; provided, however,
that such consultant or advisor must be a natural person who is providing or
will be providing bona fide services to the
Company, a Subsidiary, a Parent or an Affiliate, with such services (1) not
being in connection with the offer or sale of securities in a capital-raising
transaction, and (2) not directly or indirectly promoting or maintaining a
market for securities of the Company, a Subsidiary, a Parent or an Affiliate,
within the meaning of the general instructions to SEC Form S-8.

 

2.23         NQSO means an option granted under this Plan
to purchase Shares that is not intended by the Company to satisfy the
requirements of Code §422.

 

2.24         Option means an ISO or a NQSO.

 

2.25         Other Stock-Based Awards means such other Incentive Awards other
than those specifically described in the Plan that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on,
or related to, Shares and granted pursuant to the terms of Section 7.7

 

2.26         Outside Director means a Director who is not an Employee
and, effective upon the Company registering any of its equity securities under
the 1934 Act, who qualifies as (1) a “non-employee director” under Rule 16b-3(b)(3) under
the 1934 Act, as amended from time to time, and (2) an “outside director”
under Code §162(m) and the regulations promulgated thereunder.

 

2.27         Parent means any corporation (other than the
corporation employing a Participant) in an unbroken chain of corporations
ending with the corporation employing a Participant if, at the time of the
granting of the Incentive Award, each of the corporations other than the
corporation employing the Participant owns stock possessing fifty percent (50%)
or 

 

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more of the total combined voting power of all classes
of stock in one of the other corporation in such chain.  However, for purposes of interpreting any
Incentive Award Agreement issued under this Plan as of a date of determination,
Parent shall mean any corporation (other than the corporation employing a Participant)
in an unbroken chain of corporations ending with the corporation employing a
Participant if, at the time of the granting of the Incentive Award and
thereafter through such date of determination, each of the corporations other
than the corporation employing the Participant owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporation in such chain.

 

2.28         Participant
means an individual who receives an Incentive Award hereunder.

 

2.29         Performance-Based
Exception means the performance-based exception from the tax
deductibility limitations of Code §162(m).

 

2.30         Plan means
the Behringer Harvard Multifamily REIT I, Inc. Amended and Restated 2004
Incentive Award Plan, as may be amended from time to time.

 

2.31         Restricted Stock Award
means an award of Shares granted to a Participant under this Plan whereby the
Participant has immediate rights of ownership in the Shares underlying the
award, but such Shares are subject to restrictions in accordance with the terms
and provisions of this Plan and the Incentive Award Agreement pertaining to the
award and may be subject to forfeiture by the individual until the earlier of (a) the
time such restrictions lapse or are satisfied, or (b) the time such shares
are forfeited, pursuant to the terms and provisions of the Incentive Award
Agreement pertaining to the award.

 

2.32         Restricted Stock Unit means a
contractual right granted to a Participant under this Plan to receive a Share
that is subject to restrictions of this Plan and the applicable Incentive Award
Agreement.

 

2.33         SAR Exercise Price
means the amount per Share specified in an Incentive Award Agreement with
respect to a Stock Appreciation Right, the excess of the Fair Market Value of a
Share over and above such amount, the holder of such Stock Appreciation Right
may be able to receive upon the exercise or payment of such Stock Appreciation
Right.

 

2.34         Share means
a share of the Common Stock of the Company.

 

2.35         Stock Appreciation Right
means a right granted to a Participant pursuant to the terms and provisions of
this Plan whereby the individual, without payment to the Company (except for
any applicable withholding or other taxes), receives cash, Shares, a
combination thereof, or such other consideration as the Board may determine, in
an amount equal to the excess of the Fair Market Value per Share on the date on
which the Stock Appreciation Right is exercised over the exercise price per
Share noted in the Stock Appreciation Right for each Share subject to the Stock
Appreciation Right.

 

2.36         Subsidiary
means any corporation (other than the corporation employing such Participant)
in an unbroken chain of corporations beginning with the corporation employing
such Participant if, at the time of the granting of the Incentive Award, each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.  However, for purposes of interpreting any
Incentive Award Agreement issued under this Plan as of a date of determination,
Subsidiary shall mean any corporation (other than the corporation employing
such Participant) in an unbroken chain of corporations beginning with the
corporation employing such Participant if, at the time of the granting of the
Incentive Award and thereafter through such date of determination, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

2.37         Ten Percent Stockholder
means a person who owns (after taking into account the attribution rules of
Code §424(d)) more than ten percent (10%) of the total combined voting power of
all classes of shares of stock of either the Company, a Subsidiary or a Parent.

 

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Section 3.

SHARES
SUBJECT TO INCENTIVE AWARDS

 

3.1           Shares Subject to
Incentive Awards. 
The total number of Shares that may be issued pursuant to Incentive
Awards under this Plan (and the total number of Shares that may be issued
pursuant to the exercise of ISOs under this Plan) shall not exceed ten million,
as adjusted pursuant to Section 10. 
Such Shares shall be reserved, to the extent that the Company deems
appropriate, from authorized but unissued Shares, and from Shares which have
been reacquired by the Company.

 

3.2           Availability of Shares not
Delivered.  Any Shares
subject to an Incentive Award that have not been issued under such Incentive
Award as of the date of  the
cancellation, expiration or exchange of such Incentive Award thereafter shall
again become available for grant under this Plan.   If any Shares issued pursuant to an
Incentive Award are forfeited back to or repurchased by the Company, including,
but not limited to, any repurchase or forfeiture caused by the failure to meet
a contingency or condition required for the vesting of such Shares, then the
Shares forfeited back or repurchased shall revert to and again become available
for issuance under the Plan.

 

If any Incentive Award,
is settled for cash or otherwise does not result in the issuance of all or a
portion of the Shares subject to such Incentive Award, the Shares shall, to the
extent of such cash settlement or non-issuance, again be available for grant
under the Plan, subject to the last sentence of this paragraph.  Subject to the last sentence of this paragraph,
in the event that any Incentive Award granted hereunder is exercised through
the tendering of  Shares (either actually
or by attestation) or by the withholding of Shares by the Company, or
withholding tax liabilities arising from such Incentive Award are satisfied by
the tendering of Shares (either actually or by attestation) or by the
withholding of Shares by the Company, then only the number of Shares issued net
of the Shares tendered or withheld shall be counted for purposes of determining
the number of Shares issued under the Award and any Shares not tendered or
withheld shall not be considered issued and shall again be available under the
Plan.  Notwithstanding anything in this Section 3.2
to the contrary and solely for purposes of determining whether Shares are
available for the grant of ISOs, the maximum aggregate number of shares that
may be granted under this Plan shall be determined without regard to any Shares
restored pursuant to this Section 3.2 that, if taken into account, would
cause the Plan to fail the requirement under Code Section 422 that the
Plan designate a maximum aggregate number of shares that may be issued.

 

3.3           Annual Limitation on
Grants to Participants.  
Notwithstanding anything herein to the contrary, after Incentive Awards granted
under the Plan are subject to the tax deductibility limitations of Section 162(m) of
the Code, no Participant may be granted Incentive Awards covering an aggregate
number of Shares in excess of five million in any calendar year, and any Shares
subject to an Incentive Award which again become available for use under this
Plan after the cancellation, expiration or exchange of such Incentive Award
thereafter shall continue to be counted in applying this calendar year
Participant limitation.

 

Section 4.

EFFECTIVE
DATE

 

The
effective date of this Plan shall be the date it is adopted by the Board, as
noted in resolutions effectuating such adoption, provided the stockholders of
the Company approve this Plan within twelve (12) months after such effective
date.  If such effective date comes
before such stockholder approval, any Incentive Awards granted under this Plan
before the date of such approval automatically shall be granted subject to such
approval.

 

Section 5.

ADMINISTRATION

 

5.1           General Administration.  This Plan shall be administered by the
Board.  The Board, acting in its absolute
discretion, shall exercise such powers and take such action as expressly called
for under this Plan.  The Board shall
have the power to interpret this Plan and, subject to the terms and provisions
of this Plan, to take such other action in the administration and operation of
the Plan as it deems equitable under the circumstances.  The Board’s actions shall be 

 

5

 

binding on the Company, on each affected Eligible
Recipient, and on each other person directly or indirectly affected by such
actions.

 

5.2           Authority of the Board.  Except as limited by law or by the Articles
of Incorporation or Bylaws of the Company, and subject to the provisions
herein, the Board shall have full power to select Eligible Recipients who shall
participate in the Plan, to determine the sizes and types of Incentive Awards
in a manner consistent with the Plan, to determine the terms and conditions of
Incentive Awards in a manner consistent with the Plan, to construe and
interpret the Plan and any agreement or instrument entered into under the Plan,
to establish, amend or waive rules and regulations for the Plan’s
administration, and to amend the terms and conditions of any outstanding
Incentive Awards as allowed under the Plan and such Incentive Awards.  Further, the Board may make all other
determinations that may be necessary or advisable for the administration of the
Plan.

 

5.3           Delegation of Authority.  The Board may delegate its authority under
the Plan, in whole or in part, to a Committee appointed by the Board consisting
of  not less than one (1) Director
or to a Committee of one or more other persons to whom the powers of the Board
hereunder may be delegated in accordance with applicable law.  The members of the Committee and any other
persons to whom authority has been delegated shall be appointed from time to
time by, and shall serve at the discretion of, the Board.  The Committee or other delegate (if appointed)
shall act according to the policies and procedures set forth in the Plan and to
those policies and procedures established by the Board, and the Committee or
other delegate shall have such powers and responsibilities as are set forth by
the Board.  Reference to the Board in
this Plan shall specifically include reference to the Committee or other
delegate where the Board has delegated its authority to the Committee or other
delegate, and any action by the Committee or other delegate pursuant to a delegation
of authority by the Board shall be deemed an action by the Board under the
Plan.  Notwithstanding the above, the
Board may assume the powers and responsibilities granted to the Committee or
other delegate at any time, in whole or in part.  With respect to Committee appointments and
composition, only a Committee (or a sub-committee thereof) comprised solely of
two (2) or more Outside Directors may grant Incentive Awards that will
meet the Performance-Based Exception, and only a Committee comprised solely of
Outside Directors may grant Incentive Awards to Insiders that will be exempt
from Section 16(b) of the Exchange Act.

 

5.4           Decisions Binding.  All determinations and decisions made by the
Board (or its delegate) pursuant to the provisions of this Plan and all related
orders and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Directors, Eligible
Recipients, Participants, and their estates and beneficiaries.

 

5.5           Indemnification for Decisions. No member of the
Board, the Committee (or a sub-committee thereof) shall be liable in connection with or by reason of any act or omission performed or
omitted to be performed on behalf of the Company in such capacity, provided,
that the Board has determined, in good faith, that the course of conduct that
caused the loss or liability was in the best interests of the Company.  Service on the Committee (or a sub-committee
thereof) shall constitute service as a Director or an officer (as applicable)
of the Company so that the members of the Committee (or a sub-committee
thereof) shall be entitled to indemnification and reimbursement as Directors or
officers, as applicable, of the Company pursuant to its articles of
incorporation, bylaws and applicable law. 
In addition, the members of the Board, Committee (or a sub-committee
thereof) shall be indemnified by the Company against the following losses or
liabilities reasonably incurred in connection with or by reason of any act or
omission performed or omitted to be performed on behalf of the Company in such
capacity, provided, that the Board has determined, in good faith, that the
course of conduct which caused the loss or liability was in the best interests
of the Company:  (a) the reasonable
expenses, including attorneys’ fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, to which they or
any of them may be a party by reason of any action taken or failure to act
under or in connection with the Plan, any Incentive Award granted hereunder,
and (b) against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged
in such action, suit or proceeding that such individual is liable for gross
negligence or misconduct in the performance of his duties, provided that within
60 days after institution of any such action, suit or proceeding a Committee
member or delegatee shall in writing offer the Company the opportunity, at its
own expense, to handle and defend the same. 
The Company shall not indemnify or hold
harmless the member of the Board or the Committee (or a subcommittee thereof)
if: (a) in the case of a Director or other person (other than an
independent Director), the loss or liability was the result of negligence or
misconduct by the Director 

 

6

 

or other person, or (b) in the case that the
Director is an independent Director, the loss or liability was the result of
gross negligence or willful misconduct by the Director.  Any indemnification of expenses or agreement
to hold harmless may be paid only out of the net assets of the Company, and no
portion may be recoverable from the Stockholders.

 

Section 6.

ELIGIBILITY

 

Eligible
Recipients selected by the Board shall be eligible for the grant of Incentive
Awards under this Plan, but no Eligible Recipient shall have the right to be
granted an Incentive Award under this Plan merely as a result of his or her
status as an Eligible Recipient.  Only
Employees of the Company, a Parent or a Subsidiary, shall be eligible to
receive a grant of ISO’s.

 

Section 7

TERMS OF INCENTIVE AWARDS

 

7.1           Terms and Conditions of All Incentive Awards.

 

(a)           Grants of Incentive Awards. 
The Board, in its absolute discretion, shall grant Incentive Awards
under this Plan from time to time and shall have the right to grant new
Incentive Awards in exchange for outstanding Incentive Awards, including, but
not limited to, exchanges of Stock Options for the purpose of achieving a lower
Exercise Price.  Incentive Awards shall
be granted to Eligible Recipients selected by the Board, and the Board shall be
under no obligation whatsoever to grant any Incentive Awards, or to grant
Incentive Awards to all Eligible Recipients, or to grant all Incentive Awards
subject to the same terms and conditions.

 

(b)           Shares Subject to Incentive
Awards.  The number of Shares
as to which an Incentive Award shall be granted shall be determined by the
Board in its sole discretion, subject to the provisions of Section 3 as to
the total number of Shares available for grants under the Plan.

 

(c)           Incentive Award
Agreements.  Each Incentive
Award shall be evidenced by an Incentive Award Agreement executed by the
Company, a Parent or a Subsidiary, and the Participant, which shall be in such
form and contain such terms and conditions as the Board in its discretion may,
subject to the provisions of the Plan, from time to time determine.

 

(d)           Date of Grant.  The date an Incentive Award is granted shall
be the date on which the Board (1) has approved the terms and conditions
of the Incentive Award Agreement, (2) has determined the recipient of the
Incentive Award and the number of Shares covered by the Incentive Award and (3) has
taken all such other action necessary to direct the grant of the Incentive
Award.

 

7.2           Terms and Conditions of Options.

 

(a)           Necessity of Incentive Award Agreements.  Each grant of an Option shall be evidenced by
an Incentive Award Agreement that shall specify whether the Option is an ISO or
NQSO, and incorporate such other terms and conditions as the Board, acting in
its absolute discretion, deems consistent with the terms of this Plan,
including (without limitation) a restriction on the number of Shares subject to
the Option that first become exercisable during any calendar year.  The Board and/or the Company shall have
complete discretion to modify the terms and provisions of an Option in
accordance with Section 12 of this Plan even though such modification may
change the Option from an ISO to a NQSO.

 

(b)           Determining Optionees. 
In determining Eligible Recipient(s) to whom an Option shall be
granted and the number of Shares to be covered by such Option, the Board may
take into account the recommendations of the Chief Executive Officer of the
Company and its other officers, the duties of the Eligible Recipient, the
present and potential contributions of the Eligible Recipient to the success of
the Company, and other factors deemed relevant by the Board, in its sole
discretion, in connection with accomplishing the purpose of this Plan.  An Eligible Recipient who has been granted an
Option to purchase Shares, whether under this Plan or otherwise, may be granted
one or more additional 

 

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Options.  If the
Board grants an ISO and a NQSO to an Eligible Recipient on the same date, the
right of the Eligible Recipient to exercise one such Option shall not be
conditioned on his or her failure to exercise the other such Option.

 

(c)           Exercise
Price.  Subject to adjustment in
accordance with Section 10 and the other provisions of this Section, the Exercise
Price shall be as set forth in the applicable Incentive Award Agreement. 
With respect to each grant of an ISO to a Participant who is not a Ten Percent
Stockholder, the Exercise Price shall not be less than the Fair Market Value on
the date the ISO is granted.  With
respect to each grant of an ISO to a Participant who is a Ten Percent
Stockholder, the Exercise Price shall not be less than one hundred ten percent
(110%) of the Fair Market Value on the date the ISO is granted.  If an Option is a NQSO, the Exercise Price
for each Share shall be no less than the Fair Market Value on the date the NQSO
is granted, provided that an NQSO may be granted with any exercise price less
than the Fair Market Value, so long as the NQSO contains (i) such
additional terms as necessary to comply with or be exempt under Section 409A
of the Code; (ii) the exercise price is equal to or greater than the
minimum price required by applicable state law or the minimum price required by
the Company’s governing instrument and (iii) if the NQSO is intended to
meet the FLSA Exclusion, the NQSO must be granted with an Exercise Price
equivalent to or greater than eighty-five percent (85%) of the Fair Market
Value of the Shares subject thereto on the date granted determined as of the date
of such grant. Any Option intended to meet the Performance-Based Exception must
be granted with an Exercise Price equal to or greater than the Fair Market
Value of the Shares subject thereto determined as of the date of such grant.

 

(d)           Option Term.  Each Option
granted under this Plan shall be exercisable in whole or in part at such time
or times as set forth in the related Incentive Award Agreement, but no
Incentive Award Agreement shall:

 

(i)            make an Option exercisable before the
date such Option is granted; or

 

(ii)           make an Option exercisable after the
earlier of:

 

(A)          the date such Option is exercised in full, or

 

(B)           the date that is the tenth (10th)
anniversary of the date such Option is granted, if such Option is a NQSO or an
ISO granted to a non-Ten Percent Stockholder, or the date that is the fifth
(5th) anniversary of the date such Option is granted, if such Option is an ISO
granted to a Ten Percent Stockholder.  An
Incentive Award Agreement may provide for the exercise of an Option after the employment
of an Employee has terminated for any reason whatsoever, including death or
disability.  The Employee’s rights, if
any, upon termination of employment will be set forth in the applicable
Incentive Award Agreement.

 

(e)           Payment.  Options shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised
accompanied by full payment for the Shares. 
Payment for shares of Stock purchased pursuant to exercise of an Option
shall be made in (i) cash (including by check or money order), (ii) unless
the Incentive Award Agreement provides otherwise, by delivery to the Company of
a number of Shares (either previously owned Shares or Shares from those to be received
upon exercise of the Option (i.e., a “net exercise”)) having an aggregate Fair
Market Value equal to the amount to be tendered to the extent the use of such
Shares does not have any adverse consequences to the Company for financial
accounting purposes (as determined by the Committee), (iii) any other
legal form of consideration deemed acceptable by the Board, or (iv) a
combination thereof.  In addition, unless
the Incentive Award Agreement provides otherwise, the Option may be exercised
through a brokerage transaction following registration of the Company’s equity
securities under Section 12 of the Exchange Act as permitted under the
provisions of Regulation T applicable to cashless exercises promulgated by the
Federal Reserve Board, unless prohibited by Section 402 of the
Sarbanes-Oxley Act of 2002.  However,
notwithstanding the foregoing, with respect to any Option recipient who is an
Insider, a tender of shares or a cashless exercise must (1) have met the
requirements of an exemption under Rule 16b-3 promulgated under the
Exchange Act, or (2) be a subsequent transaction the terms of which were
provided for in a transaction initially meeting the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act. Unless the
Incentive Award Agreement provides otherwise, the foregoing exercise payment
methods shall be subsequent transactions approved by the original grant of an
Option.  Except as provided in
subparagraph (f) below, payment shall be made at the time that the
Option or any part thereof is exercised, and no Shares shall be issued or
delivered upon exercise of an Option until full payment has been made by the
Participant.  The holder of an Option, as such, shall have none of the
rights of a stockholder.

 

8

 

(f)            Conditions to Exercise of
an Option.  Each Option granted under the Plan shall vest and
shall be exercisable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Board shall specify in the
Incentive Award Agreement; provided, however, that subsequent to the grant of
an Option, the Board, at any time before complete termination of such Option,
may accelerate the time or times at which such Option may vest or be exercised
in whole or in part.  Notwithstanding the
foregoing, an Option intended to meet the FLSA Exclusion shall not be
exercisable for at least six (6) months following the date it is granted,
except by reason of death, disability, retirement, a change in corporate
ownership or other circumstances permitted under regulations promulgated under
the FLSA Exclusion.  Furthermore, if the
recipient of an Option receives a hardship distribution from a Code §401(k) plan
of the Company, or any Parent or Subsidiary, the Option may not be exercised
during the six (6) month period following the hardship distribution,
unless the Company determines that such exercise would not jeopardize the
tax-qualification of the Code §401(k) plan.  The Board may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable,
including, without limitation, vesting or performance-based restrictions,
rights of the Company to re-purchase Shares acquired pursuant to the exercise
of an Option, voting restrictions, investment intent restrictions, restrictions
on transfer, “first refusal” rights of the Company to purchase Shares acquired
pursuant to the exercise of an Option prior to their sale to any other person, “drag
along” rights requiring the sale of shares to a third party purchaser in
certain circumstances, “lock up” type restrictions in the case of an initial
public offering of the Company’s stock, restrictions or limitations or other
provisions that would be applied to stockholders under any applicable agreement
among the stockholders, and restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and/or under any blue sky or state
securities laws applicable to such Shares.

 

(g)           Transferability of Options. 
An Option shall not be transferable or assignable except by will or by the laws
of descent and distribution and shall be exercisable, during the Participant’s
lifetime, only by the Participant; provided, however, that in the event the
Participant is incapacitated and unable to exercise his or her Option, if such
Option is a NQSO, such Option may be exercised by such Participant’s legal
guardian, legal representative, or other representative whom the Board deems
appropriate based on applicable facts and circumstances.  The determination of incapacity of a
Participant and the determination of the appropriate representative of the
Participant who shall be able to exercise the Option if the Participant is incapacitated
shall be determined by the Board in its sole and absolute discretion.  Notwithstanding the foregoing, except as
otherwise provided in the Incentive Award Agreement, a NQSO may also be
transferred by a Participant as a bona fide gift (i) to his spouse, lineal
descendant or lineal ascendant, siblings and children by adoption, (ii) to
a trust for the benefit of one or more individuals described in clause (i) and
no other persons, or (iii) to a partnership of which the only partners are
one or more individuals described in clause (i), in which case the transferee
shall be subject to all provisions of the Plan, the Incentive Award Agreement
and other agreements with the Participant in connection with the exercise of
the Option and purchase of Shares.  In
the event of such a gift, the Participant shall promptly notify the Board of
such transfer and deliver to the Board such written documentation as the Board
may in its discretion request, including, without limitation, the written
acknowledgment of the donee that the donee is subject to the provisions of the
Plan, the Incentive Award Agreement and other agreements with the Participant.

 

(h)           Special Provisions for
Certain Substitute Options.  Notwithstanding anything to the
contrary in this Section, any Option in substitution for a stock option
previously issued by another entity, which substitution occurs in connection
with a transaction to which Code §424(a) is applicable, may provide
for an exercise price computed in accordance with Code §424(a) and the
regulations thereunder and may contain such other terms and conditions as the
Board may prescribe to cause such substitute Option to contain as nearly as
possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued stock
option being replaced thereby.

 

(i)            ISO Tax Treatment
Requirements.  With respect to
any Option that purports to be an ISO, to the extent that the aggregate Fair
Market Value (determined as of the date of grant of such Option) of stock with
respect to which such Option is exercisable for the first time by any
individual during any calendar year exceeds one hundred thousand dollars
($100,000.00), such Option shall not be treated as an ISO in accordance with Code
§422(d) and instead shall be treated as a NQSO.  The rule of the preceding sentence is
applied in the order in which Options are granted.

 

(j)            Potential
Repricing of Stock Options. 
With respect to any Option granted pursuant to, and under, this Plan,
the Board (or a committee thereof) may determine that the repricing of all or
any portion of existing outstanding Options is appropriate without the need for
any additional approval of the Stockholders of the Company.  For 

 

9

 

this purpose, “repricing”
of Options shall include, but not be limited to, any of the following actions
(or any similar action): (1) lowering the Exercise Price of an existing
Option; (2) any action which would be treated as a “repricing” under
generally accepted accounting principles; or (3) canceling of an existing
Option at a time when its Exercise Price exceeds the Fair Market Value of the
underlying stock subject to such Option, in exchange for another Option, a
Restricted Stock Award, or other equity in the Company.

 

7.3           Terms and Conditions of Stock Appreciation Rights.  A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in connection with an Option. 
A Stock Appreciation Right shall entitle the Participant to receive upon
exercise or payment the excess of the Fair Market Value of a specified
number of Shares at the time of exercise, over a SAR Exercise Price that
shall be not less than the Exercise Price for that number of Shares in the case
of a Stock Appreciation Right granted in connection with a previously or
contemporaneously granted Option, or in the case of any other Stock
Appreciation Right, not less than one hundred percent (100%) of the Fair Market
Value of that number of Shares at the time the Stock Appreciation Right was
granted.  The exercise of a Stock
Appreciation Right shall result in a pro rata surrender of the related Option
to the extent the Stock Appreciation Right has been exercised.

 

(a)           Payment.  Upon exercise or payment of a Stock
Appreciation Right, the Company shall pay to the Participant the appreciation
in cash or Shares (at the aggregate Fair Market Value on the date of payment or
exercise) as provided in the Incentive Award Agreement or, in the absence of
such provision, as the Board may determine.

 

(b)           Conditions to Exercise.  Each Stock Appreciation Right granted under
the Plan shall be exercisable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Board shall specify in the
Incentive Award Agreement; provided, however, that subsequent to the grant of a
Stock Appreciation Right, the Board, at any time before complete termination of
such Stock Appreciation Right, may accelerate the time or times at which such
Stock Appreciation Right may be exercised in whole or in part.  Furthermore,
if the recipient of a Stock Appreciation Right receives a hardship distribution
from a Code §401(k) plan of the Company, or any Parent or Subsidiary, the
Stock Appreciation Right may not be exercised during the six (6) month
period following the hardship distribution, unless the Company determines that
such exercise would not jeopardize the tax-qualification of the Code §401(k) plan.

 

(c)           Transferability of Stock
Appreciation Rights.  Except
as otherwise provided in a Participant’s Incentive Award Agreement, no Stock
Appreciation Right granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. 
Further, except as otherwise provided in a Participant’s Incentive Award
Agreement, all Stock Appreciation Rights granted to a Participant under the
Plan shall be exercisable, during the Participant’s lifetime, only by the
Participant; provided, however,
that in the event the Participant is incapacitated and unable to exercise his
or her Stock Appreciation Right, such Stock Appreciation Right may be exercised
by such Participant’s legal guardian, legal representative, or other
representative whom the Board deems appropriate based on applicable facts and
circumstances in accordance with the terms and provisions of the Incentive
Award Agreement governing such Stock Appreciation Right.  The determination of incapacity of a
Participant and the determination of the appropriate representative of the
Participant shall be determined by the Board in its sole and absolute
discretion.  Notwithstanding the
foregoing, except as otherwise provided in the Incentive Award Agreement, (A) a
Stock Appreciation Right which is granted in connection with the grant of a
NQSO may be transferred, but only with the NQSO, and (B) a Stock
Appreciation Right which is not granted in connection with the grant of a NQSO,
may be transferred by the Participant as a bona fide gift (i) to his
spouse, lineal descendant or lineal ascendant, siblings and children by
adoption, (ii) to a trust for the benefit of one or more individuals
described in clause (i), or (iii) to a partnership of which the only
partners are one or more individuals described in clause (i), in which case the
transferee shall be subject to all provisions of the Plan, the Incentive Award
Agreement and other agreements with the Participant in connection with the
exercise of the Stock Appreciation Right. 
In the event of such a gift, the Participant shall promptly notify the
Board of such transfer and deliver to the Board such written documentation as
the Board may in its discretion request, including, without limitation, the
written acknowledgment of the donee that the donee is subject to the provisions
of the Plan, the Incentive Award Agreement and other agreements with the
Participant in connection with the exercise of the Stock Appreciation Right.

 

(d)           Special Provisions for
Tandem SAR’s.  A Stock
Appreciation Right granted in connection with an Option may only be exercised
to the extent that the related Option has not been exercised.  A Stock Appreciation Right granted in
connection with an ISO (1) will expire no later than the expiration of the
underlying ISO, (2) may be for no more 

 

10

 

than the difference
between the exercise price of the underlying ISO and the Fair Market Value of
the Shares subject to the underlying ISO at the time the Stock Appreciation
Right is exercised, (3) may be transferable only when, and under the same
conditions as, the underlying ISO is transferable, and (4) may be
exercised only (i) when the underlying ISO could be exercised and (ii) when
the Fair Market Value of the Shares subject to the ISO exceeds the exercise
price of the ISO.

 

(e)           Code
§409A Requirements.  A Stock
Appreciation Right must meet certain restrictions contained in Code §409A if it
is to avoid taxation under Code §409A
as a “nonqualified deferred compensation plan.” 
No Stock Appreciation Right should be granted under this Plan without
careful consideration of the impact of Code §409A with respect to such grant
upon both the Company and the recipient of the Stock Appreciation Right.

 

7.4           Terms and Conditions of Restricted Stock Awards.

 

(a)           Grants
of Restricted Stock Awards. 
Shares awarded pursuant to Restricted Stock Awards shall be subject to
such restrictions as determined by the Board for periods determined by the
Board.  Restricted Stock Awards issued under the Plan may have
restrictions which lapse based upon the service of a Participant, or based upon
the attainment (as determined by the Board) of performance goals established by
the Board, which goals shall be pursuant to the business criteria listed in Section 14
to the extent the Board intends the Restricted Stock Award to meet the
Performance-Based Exception, or based upon any other criteria that the Board
may determine appropriate.  Any
Restricted Stock Award which becomes exercisable based on the attainment of
performance goals must be granted by a Committee, must have its performance
goals determined by such a Committee based upon one or more of the business
criteria listed in Section 14, and must have the attainment of such
performance goals certified in writing by such a Committee in order to meet the
Performance-Based Exception.  The Board
may require a cash payment from the Participant in exchange for the grant of a
Restricted Stock Award or may grant a Restricted Stock Award without the
requirement of a cash payment to the extent permitted under applicable law;
provided, however, if the recipient of a Restricted Stock Award receives a
hardship distribution from a Code §401(k) plan of the Company, or any Parent or Subsidiary,
the recipient may not pay any amount for such Restricted Stock Award during the
six (6) month period following the hardship distribution, unless the
Company determines that such payment would not jeopardize the tax-qualification
of the Code §401(k) plan.

 

(b)           Acceleration
of Award.  The Board shall
have the power to permit, in its discretion, an acceleration of the expiration
of the applicable restrictions or the applicable
period of such restrictions with respect to any part or all of the Shares
awarded to a Participant.

 

(c)           Necessity
of Incentive Award Agreement. 
Each grant of a Restricted Stock Award shall be evidenced by an
Incentive Award Agreement that shall specify the terms, conditions and
restrictions regarding the Shares awarded to a Participant, and shall
incorporate such other terms and conditions as the Board, acting in its
absolute discretion, deems consistent with the terms of this Plan.  The Board shall have complete discretion to
modify the terms and provisions of Restricted Stock Awards in accordance with Section 12
of this Plan.

 

(d)           Restrictions
on Shares Awarded.  Shares
awarded pursuant to Restricted Stock Awards shall be subject to such
restrictions as determined by the Board for periods determined by the
Board.  The Board may impose such
restrictions on any Shares acquired pursuant to a Restricted Stock Award as it
may deem advisable, including, without limitation, vesting or performance-based
restrictions, rights of the Company to re-purchase Shares acquired pursuant to
the Restricted Stock Award, voting restrictions, investment intent
restrictions, restrictions on transfer, “first refusal” rights of the Company
to purchase Shares acquired pursuant to the Restricted Stock Award prior to
their sale to any other person, “drag along” rights requiring the sale of
shares to a third party purchaser in certain circumstances, “lock up” type
restrictions in connection with public offerings of the Company’s stock,
restrictions or limitations or other provisions that would be applied to stockholders under any applicable
agreement among the stockholders, and restrictions under applicable federal
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and/or under any blue sky or
state securities laws applicable to such Shares.

 

(e)           Transferability
of Restricted Stock Awards.  Except
as otherwise permitted in the Incentive Award Agreement, a Restricted Stock
Award may not be transferred by the holder Participant, except upon the death
of the holder Participant by will or by the laws of descent and distribution.

 

11

 

(f)            Voting, Dividend & Other Rights.  Unless the applicable Incentive Award
Agreement provides otherwise, holders of Restricted Stock Awards shall be
entitled to vote and shall receive dividends during the periods of restriction.

 

7.5           Terms
and Conditions of Restricted Stock Units.

 

(a)           Grants of Restricted Stock Units.  A Restricted Stock Unit shall entitle the
Participant to receive one Share at such future time and upon such terms as
specified by the Board in the Incentive Award Agreement evidencing such
award.  Restricted Stock Units issued
under the Plan may have restrictions which lapse based upon the service of a
Participant, or based upon other criteria that the Board may determine
appropriate.  The Board may require a
cash payment from the Participant in exchange for the grant of Restricted Stock
Units or may grant Restricted Stock Units without the requirement of a cash
payment; provided, however, if the recipient of a Restricted Stock Unit
receives a hardship distribution from a Code §401(k) plan of the Company,
or any Parent or Subsidiary, no payment for the Restricted Stock Unit may be
made by the recipient during the six (6) month period following the
hardship distribution, unless the Company determines that such payment would
not jeopardize the tax-qualification of the Code §401(k) plan.

 

(b)           Vesting of Restricted Stock Units.  The Board shall establish the vesting
schedule applicable to Restricted Stock Units and shall specify the
times, vesting and performance goal requirements, if any.  Until the end of the period(s) of time
specified in the vesting schedule and/or the satisfaction of any performance
criteria, the Restricted Stock Units subject to such Incentive Award Agreement
shall remain subject to forfeiture.   The
performance goals established by the Board shall be pursuant to the terms and
the business criteria listed in Section 14 to the extent the Board intends
the Restricted Stock Unit to meet the Performance-Based Exception.

 

(c)           Acceleration of Award. 
The Board shall have the power to permit, in its sole discretion, an
acceleration of the applicable restrictions or the applicable period of such
restrictions with respect to any part or all of the Restricted Stock Units
awarded to a Participant.

 

(d)           Necessity of Incentive Award Agreement.  Each grant of Restricted Stock Unit(s) shall
be evidenced by an Incentive Award Agreement that shall specify the terms,
conditions and restrictions regarding the Participant’s right to receive Share(s) in
the future, and shall incorporate such other terms and conditions as the Board,
acting in its sole discretion, deems consistent with the terms of this
Plan.  The Board shall have sole
discretion to modify the terms and provisions of Restricted Stock Unit(s) in
accordance with Section 12 of this Plan.

 

(e)           Transferability of Restricted Stock Units.  Except as otherwise provided in a Participant’s
Restricted Stock Unit Award, no Restricted Stock Unit granted under the Plan
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated by the holder Participant, except upon the death of the holder
Participant by will or by the laws of descent and distribution.

 

(f)            Voting, Dividend & Other Rights.  Unless the applicable Incentive Award
Agreement provides for dividend equivalents pursuant to Section 7.5(h) below,
holders of Restricted Stock Units shall not be entitled to vote or to receive
dividends until they become owners of the Shares pursuant to their Restricted
Stock Units.

 

(g)           Code §409A Requirements.  A
Restricted Stock Unit must meet certain restrictions contained in Code §409A if
it is to avoid taxation under Code
§409A as a “nonqualified deferred compensation plan.”  Restricted Stock Units shall be granted with
terms that require the delivery of the Shares or cash, as applicable, no later
than two and one-half months after the respective Restricted Stock Units vest,
unless such Restricted Stock Units have been drafted to comply with or
otherwise be exempt from Code §409A.

 

(h)           Dividend Equivalents. 
Unless otherwise determined by the Board at date of grant, any Dividend
Equivalents that are granted with respect to any Award of Stock Units shall be
either (A) paid with respect to such Stock Units at the dividend payment
date in cash or in Shares of unrestricted Stock having a Fair Market Value
equal to the amount of such dividends or (B) deferred with respect to such
Stock Units and the amount or value thereof automatically deemed reinvested in
additional Stock Units, other Awards or other investment vehicles, as the Board
shall determine or permit the Participant to elect.

 

12

 

7.6           Dividend Equivalents. 
The Board is authorized to grant Dividend Equivalents to any Eligible
Recipient entitling the Eligible Recipient to receive cash, Shares, other
Awards, or other property equal in value to dividends paid with respect to a
specified number of Shares, or other periodic payments.  Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Incentive Award.  The terms of an award of Dividend Equivalents
shall be set forth in a written Incentive Award Agreement which shall contain
provisions determined by the Board and not inconsistent with the Plan.  The Board may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards, or other investment vehicles,
and subject to such restrictions on transferability and risks of forfeiture, as
the Board may specify.  Notwithstanding any
other provision of the Plan, unless otherwise exempt from Section 409A of
the Code or otherwise specifically determined by the Board, each Dividend
Equivalent shall be structured to avoid the imposition of any excise tax under Section 409A
of the Code.

 

7.7           Other Stock-Based Awards. 
The Board is authorized, subject to limitations under applicable law, to
grant to any Eligible Recipient such other Incentive Awards that may be
denominated or payable in, valued in whole or in part by reference to, or otherwise
based on, or related to, Shares, as deemed by the Board to be consistent with
the purposes of the Plan, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Incentive Awards with value and payment
contingent upon performance of the Company or any other factors designated by
the Board, and Incentive Awards valued by reference to the book value of Shares
or the value of securities of or the performance of specified Affiliates or
business units.  The Board shall
determine the terms and conditions of such Other Stock-Based Awards.  The terms of any Incentive Award pursuant to
this Section shall be set forth in a written Incentive Award Agreement
which shall contain provisions determined by the Board and not inconsistent
with the Plan.  Shares delivered pursuant
to an Incentive Award in the nature of a purchase right granted under this Section shall
be purchased for such consideration (including without limitation loans from
the Company or an Affiliate), paid for at such times, by such methods, and in
such forms, including, without limitation, cash, Shares, other Incentive Awards
or other property, as the Board shall determine.   Cash awards, as an element of or supplement
to any other Award under the Plan, may also be granted pursuant to this
Section.  Notwithstanding any other
provision of the Plan, unless otherwise exempt from Section 409A of the
Code or otherwise specifically determined by the Board, each such Award shall
be structured to avoid the imposition of any excise tax under Section 409A
of the Code.

 

Section 8.

SECURITIES
REGULATION

 

Each
Incentive Award Agreement may provide that, upon the receipt of Shares as a
result of the exercise of an Incentive Award or otherwise, the Participant
shall, if so requested by the Company, hold such Shares for investment and not
with a view of resale or distribution to the public and, if so requested by the
Company, shall deliver to the Company a written statement satisfactory to the
Company to that effect.  Each Incentive
Award Agreement may also provide that, if so requested by the Company, the
Participant shall make a written representation to the Company that he or she will
not sell or offer to sell any of such Shares unless a registration statement
shall be in effect with respect to such Shares under the Securities Act of
1933, as amended (“1933 Act”), and any applicable state securities law or,
unless he or she shall have furnished to the Company an opinion, in form and
substance satisfactory to the Company, of legal counsel acceptable to the
Company, that such registration is not required.  Certificates representing the Shares
transferred upon the exercise of an Incentive Award granted under this Plan may
at the discretion of the Company bear a legend to the effect that such Shares
have not been registered under the 1933 Act or any applicable state securities
law and that such Shares may not be sold or offered for sale in the absence of
an effective registration statement as to such Shares under the 1933 Act and
any applicable state securities law or an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required.

 

13

 

Section 9.

LIFE
OF PLAN

 

No Incentive Award shall be granted under this Plan on
or after the earlier of:

 

(a)           the tenth (10th) anniversary of the
effective date of this Plan (as determined under Section 4 of this Plan),
in which event this Plan otherwise thereafter shall continue in effect until
all outstanding Incentive Awards have been exercised in full or no longer are
exercisable, or

 

(b)           the date on which all of the Shares
reserved under Section 3 of this Plan have (as a result of the exercise of
Incentive Awards granted under this Plan or lapse of all restrictions under a
Restricted Stock Award or Restricted Stock Unit) been issued or no longer are
available for use under this Plan, in which event this Plan also shall
terminate on such date.

 

This Plan shall continue in effect until all
outstanding Incentive Awards have been exercised in full or are no longer
exercisable and all Restricted Stock Awards or Restricted Stock Units have
vested or been forfeited.

 

Section 10.

ADJUSTMENT
AND CORPORATE TRANSACTION

 

Notwithstanding
anything in Section 12 to the contrary, the number of Shares reserved
under Section 3 of this Plan, the limit on the number of Shares that may
be granted during a calendar year to any individual under Section 3 of
this Plan, the number of Shares subject to Incentive Awards granted under this
Plan, and the Exercise Price of any Options and the SAR Exercise Price of any
Stock Appreciation Rights, shall be adjusted by the Board in an equitable
manner to reflect any change in the capitalization of the Company, including,
but not limited to, such changes as stock dividends or stock splits.  Furthermore, the Board shall adjust (in a
manner that satisfies the requirements of Code §424(a)) the number of Shares
reserved under Section 3, and the number of Shares subject to Incentive
Awards granted under this Plan, and the Exercise Price of any Options and the
SAR Exercise Price of any Stock Appreciation Rights in the event of any
corporate transaction described in Code §424(a) that provides for the
substitution or assumption of such Incentive Awards.  If any adjustment under this Section creates
a fractional Share or a right to acquire a fractional Share, such fractional
Share shall be disregarded, and the number of Shares reserved under this Plan
and the number subject to any Incentive Awards granted under this Plan shall be
the next lower number of Shares, rounding all fractions downward.  An adjustment made under this Section by
the Board shall be conclusive and binding on all affected persons and, further,
shall not constitute an increase in the number of Shares reserved under Section 3.

 

In the
event of a corporate transaction described in Code §424(a) other than such
corporate transaction that also qualifies as a Change of Control, all Incentive
Awards shall be either assumed, continued or substituted for in connection with
the corporate transaction.  Any
assumption or substitution shall not result in any decrease in the benefits or
economic value provided under each Incentive Award.

 

Section 11.

CHANGE
OF CONTROL OF THE COMPANY

 

11.1         General Rule for Options. 
Except as otherwise provided in an Incentive Award Agreement, if a
Change of Control occurs, and if the agreements effectuating the Change of
Control do not provide for the assumption or substitution of all Options
granted under this Plan, with respect to any Option granted under this Plan
that is not so assumed or substituted (a “Non-Assumed Option”), the Committee,
in its sole and absolute discretion, may, with respect to any or all of such
Non-Assumed Options, take any or all of the following actions to be effective
as of the date of the Change of Control (or as of any other date fixed by the
Committee occurring within the thirty (30) day period ending on the date of the
Change of Control, but only if such action remains contingent upon the
effectuation of the Change of Control) (such date referred to as the “Action
Effective Date”):

 

14

 

(a)           Accelerate the vesting and/or
exercisability of such Non-Assumed Option; and/or

 

(b)           Unilaterally cancel any such Non-Assumed
Option which has not vested and/or which has not become exercisable as of the
Action Effective Date; and/or

 

(c)           Unilaterally cancel such Non-Assumed
Option in exchange for:

 

(i)            whole and/or fractional Shares (or for
whole Shares and cash in lieu of any fractional Share) that, in the aggregate,
are equal in value to the excess of the Fair Market Value of the Shares that
could be purchased subject to such Non-Assumed Option determined as of the
Action Effective Date (taking into account vesting and/or exercisability) over
the aggregate Exercise Price for such Shares; or

 

(ii)           cash or other property equal in value to
the excess of the Fair Market Value of the Shares that could be purchased
subject to such Non-Assumed Option determined as of the Action Effective Date
(taking into account vesting and/or exercisability) over the aggregate Exercise
Price for such Shares; and/or

 

(d)           Unilaterally cancel such Non-Assumed
Option after providing the holder of such Option with (1) an opportunity
to exercise such Non-Assumed Option to the extent vested and/or exercisable
within a specified period prior to the date of the Change of Control, and (2) notice
of such opportunity to exercise prior to the commencement of such specified
period; and/or

 

(e)           Unilaterally cancel such Non-Assumed
Option and notify the holder of such Option of such action, but only if the
Fair Market Value of the Shares that could be purchased subject to such
Non-Assumed Option determined as of the Action Effective Date (taking into
account vesting and/or exercisability) does not exceed the aggregate Exercise
Price for such Shares.

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed Option is an Insider and subject to Section 16
of the Exchange Act at the time of the Change of Control, payment of cash in
lieu of whole or fractional Shares or shares of a successor may only be made to
the extent that such payment (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of an Option.

 

11.2         General Rule for SARs. 
Except as otherwise provided in an Incentive Award Agreement, if a
Change of Control occurs, and if the agreements effectuating the Change of
Control do not provide for the assumption or substitution of all Stock
Appreciation Rights granted under this Plan, with respect to any Stock
Appreciation Right granted under this Plan that is not so assumed or
substituted (a “Non-Assumed SAR”), the Committee, in its sole and absolute
discretion, may, with respect to any or all of such Non-Assumed SARs, take
either or both of the following actions to be effective as of the date of the
Change of Control (or as of any other date fixed by the Committee occurring
within the thirty (30) day period ending on the date of the Change of Control,
but only if such action remains contingent upon the effectuation of the Change
of Control) (such date referred to as the “Action Effective Date”):

 

(a)           Accelerate the vesting and/or
exercisability of such Non-Assumed SAR; and/or

 

(b)           Unilaterally cancel any such Non-Assumed
SAR which has not vested or which has not become exercisable as of the Action
Effective Date; and/or

 

(c)           Unilaterally cancel such Non-Assumed SAR
in exchange for:

 

(i)            whole and/or fractional Shares (or for
whole Shares and cash in lieu of any fractional Share) that, in the aggregate,
are equal in value to the excess of the Fair Market Value of the Shares subject
to such 

 

15

 

Non-Assumed SAR determined as of the Action Effective Date (taking into
account vesting and/or exercisability) over the SAR Exercise Price for such
Non-Assumed SAR; or

 

(ii)           cash or other property equal in value to
the excess of the Fair Market Value of the Shares subject to such Non-Assumed
SAR determined as of the Action Effective Date (taking into account vesting
and/or exercisability) over the SAR Exercise Price for such Non-Assumed SAR;
and/or

 

(d)           Unilaterally cancel such Non-Assumed SAR
after providing the holder of such SAR with (1) an opportunity to exercise
such Non-Assumed SAR to the extent vested and/or exercisable within a specified
period prior to the date of the Change of Control, and (2) notice of such
opportunity to exercise prior to the commencement of such specified period;
and/or

 

(e)           Unilaterally cancel such Non-Assumed SAR
and notify the holder of such SAR of such action, but only if the Fair Market
Value of the Shares that could be purchased subject to such Non-Assumed SAR
determined as of the Action Effective Date (taking into account vesting and/or
exercisability) does not exceed the SAR Exercise Price for such Non-Assumed
SAR.

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed SAR is an Insider and subject to Section 16
of the Exchange Act at the time of the Change of Control, payment of cash in
lieu of whole or fractional Shares or shares of a successor may only be made to
the extent that such payment (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of a SAR.

 

11.3         General Rule for Restricted Stock Units. 
Except as otherwise provided in an Incentive Award Agreement, if a
Change of Control occurs, and if the agreements effectuating the Change of
Control do not provide for the assumption or substitution of all Restricted
Stock Units granted under this Plan, with respect to any Restricted Stock Unit
granted under this Plan that is not so assumed or substituted (a “Non-Assumed
RSU”), the Committee, in its sole and absolute discretion, may, with respect to
any or all of such Non-Assumed RSUs, take either or both of the following
actions to be effective as of the date of the Change of Control (or as of any
other date fixed by the Committee occurring within the thirty (30) day period
ending on the date of the Change of Control, but only if such action remains
contingent upon the effectuation of the Change of Control) (such date referred
to as the “Action Effective Date”):

 

(a)           Accelerate the vesting of such
Non-Assumed RSU; and/or

 

(b)           Unilaterally cancel any such Non-Assumed
RSU which has not vested as of the Action Effective Date; and/or

 

(c)           Unilaterally cancel such Non-Assumed RSU
in exchange for:

 

(i)            whole and/or fractional Shares (or for
whole Shares and cash in lieu of any fractional Share) that are equal to the
number of Shares subject to such Non-Assumed RSU determined as of the Action
Effective Date (taking into account vesting); or

 

(ii)           cash or other property equal in value to
the Fair Market Value of the Shares subject to such Non-Assumed RSU determined
as of the Action Effective Date (taking into account vesting); and/or

 

(d)           Unilaterally cancel such Non-Assumed RSU
and notify the holder of such RSU of such action, but only if the Fair Market
Value of the Shares that were subject to such Non-Assumed RSU determined as of
the Action Effective Date (taking into account vesting) is zero.

 

16

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed RSU is an Insider and subject to Section 16
of the Exchange Act at the time of the Change of Control, payment of cash in
lieu of whole or fractional Shares or shares of a successor may only be made to
the extent that such payment (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of an RSU.

 

11.4         General Rule for Restricted Stock Awards.  Except
as otherwise provided in an Incentive Award Agreement, if a Change of Control
occurs, and if the agreements effectuating the Change of Control do not provide
for the assignment of the forfeiture or repurchase rights for all Restricted
Stock Awards granted under this Plan, with respect to any Restricted Stock
Award granted under this Plan where the forfeiture or repurchase rights are not
assigned (a “Non-Assumed Restricted Stock Award”), the Committee, in its sole
and absolute discretion, may, with respect to any or all of such Non-Assumed
Restricted Stock Award, take either or both of the following actions to be
effective as of the date of the Change of Control (or as of any other date
fixed by the Committee occurring within the thirty (30) day period ending on
the date of the Change of Control, but only if such action remains contingent
upon the effectuation of the Change of Control) (such date referred to as the “Action
Effective Date”):

 

(e)           Accelerate the vesting of such
Non-Assumed Restricted Stock Award (i.e., cancel any forfeiture or repurchase
right); and/or

 

(f)            Unilaterally exercise the forfeiture or
repurchase right for any such Non-Assumed Restricted Stock Award which has not
vested as of the Action Effective Date; and/or

 

(g)           Unilaterally repurchase such Non-Assumed
Restricted Stock Award in exchange for cash or other property equal in value to
the Fair Market Value of the Shares subject to such Non-Assumed Restricted
Stock Award determined as of the Action Effective Date (taking into account
vesting); and/or

 

(h)           Unilaterally cancel such Non-Assumed
Restricted Stock Award and notify the holder of such Restricted Stock Award of
such action, but only if the Fair Market Value of the Shares that were subject
to such Non-Assumed Restricted Stock Award determined as of the Action
Effective Date (taking into account vesting) is zero.

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed Restricted Stock Award is an Insider and
subject to Section 16 of the Exchange Act at the time of the Change of
Control, payment of cash in lieu of whole or fractional Shares or shares of a
successor may only be made to the extent that such payment (1) has met the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange
Act, or (2) is a subsequent transaction the terms of which were provided
for in a transaction initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of a Restricted Stock Award.

 

11.5         General Rule for Other Incentive Award
Agreements.  If a Change of Control occurs, then, except
to the extent otherwise provided in the Incentive Award Agreement pertaining to
a particular Incentive Award or as otherwise provided in this Plan, each
Incentive Award shall be governed by applicable law and the documents
effectuating the Change of Control.

 

Section 12.

AMENDMENT
OR TERMINATION

 

This Plan may be amended by the Board from time to
time to the extent that the Board deems necessary or appropriate; provided,
however, no such amendment shall be made absent the approval of the
stockholders of the Company (a) to increase the number of Shares reserved
under Section 3, except as set forth in Section 10, (b) to
extend the maximum 

 

17

 

life of the Plan under Section 9
or the maximum exercise period under Section 7, (c) to decrease the
minimum Exercise Price under Section 7, or (d) to change the
designation of Eligible Recipients eligible for Incentive Awards under Section 6.  Stockholder approval of other material
amendments (such as an expansion of the types of awards available under the
Plan, an extension of the term of the Plan, a change to the method of
determining the Exercise Price of Options issued under the Plan, or a change to
the provisions of Section 7.2(j)) may also be required pursuant to rules promulgated
by an established stock exchange or a national market system if the Company is,
or become, listed or traded on any such established stock exchange or national
market system, or for the Plan to continue to be able to issue Incentive Awards
which meet the Performance-Based Exception. 
The Board also may suspend the granting of Incentive Awards under this
Plan at any time and may terminate this Plan at any time.  The Company shall have the right to modify,
amend or cancel any Incentive Award after it has been granted if (I) the
modification, amendment or cancellation does not diminish the rights or
benefits of the Incentive Award recipient under the Incentive Award (provided,
however, that a modification, amendment or cancellation that results solely in
a change in the tax consequences with respect to an Incentive Award shall not
be deemed as a diminishment of rights or benefits of such Incentive Award), (II) the
Participant consents in writing to such modification, amendment or
cancellation, (III) there is a dissolution or liquidation of the Company, (IV) this
Plan and/or the Incentive Award Agreement expressly provides for such
modification, amendment or cancellation, or (V) the Company would
otherwise have the right to make such modification, amendment or cancellation
by applicable law.

 

Section 13.

MISCELLANEOUS

 

13.1         Stockholder Rights. 
No Participant shall have any rights as a stockholder of the Company as
a result of the grant of an Incentive Award to him or to her under this Plan or
his or her exercise of such Incentive Award pending the actual delivery of
Shares subject to such Incentive Award to such Participant.

 

13.2         No Guarantee of Continued
Relationship.  The grant of an Incentive Award to a
Participant under this Plan shall not constitute a contract of employment and
shall not confer on a Participant any rights upon his or her termination of
employment or relationship with the Company in addition to those rights, if
any, expressly set forth in the Incentive Award Agreement that evidences his or
her Incentive Award.

 

13.3         Withholding. 
The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company as a condition precedent for the
fulfillment of any Incentive Award, an amount sufficient to satisfy Federal,
state and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of this Plan and/or
any action taken by a Participant with respect to an Incentive Award.  Whenever Shares are to be issued to a
Participant upon exercise of an Option or a Stock Appreciation Right, or
satisfaction of conditions under a Restricted Stock Unit, or grant of or
substantial vesting of a Restricted Stock Award, the Company shall have the
right to require the Participant to remit to the Company, as a condition of
exercise of the Option or Stock Appreciation Right, or as a condition to the
fulfillment of the Restricted Stock Unit, or as a condition to the grant or
substantial vesting of the Restricted Stock Award, an amount in cash (or,
unless the Incentive Award Agreement provides otherwise, in Shares) sufficient
to satisfy federal, state and local withholding tax requirements at the time of
such exercise, satisfaction of conditions, or grant or substantial
vesting.  However, notwithstanding the
foregoing, to the extent that a Participant is an Insider, satisfaction of
withholding requirements by having the Company withhold Shares may only be made
to the extent that such withholding of Shares (1) has met the requirements
of an exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is
a subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless the Incentive Award Agreement provides otherwise, the withholding
of shares to satisfy federal, state and local withholding tax requirements
shall be a subsequent transaction approved by the original grant of an
Incentive Award.  Notwithstanding the
foregoing, in no event shall payment of withholding taxes be made by a
retention of Shares by the Company unless the Company retains only Shares with
a Fair Market Value equal to the minimum amount of taxes required to be
withheld.

 

13.4         Notification of Disqualifying
Dispositions of ISO Options.  If a
Participant sells or otherwise disposes of any of the Shares acquired pursuant
to an Option that is an ISO on or before the later of (1) the date two (2) years
after the date of grant of such Option, or (2) the date one (1) year
after the exercise of such Option, then the Participant shall 

 

18

 

immediately notify the Company in writing of such sale
or disposition and shall cooperate with the Company in providing sufficient
information to the Company for the Company to properly report such sale or
disposition to the Internal Revenue Service. 
The Participant acknowledges and agrees that he may be subject to
federal, state and/or local tax withholding by the Company on the compensation
income recognized by Participant from any such early disposition, and agrees
that he shall include the compensation from such early disposition in his gross
income for federal tax purposes. 
Participant also acknowledges that the Company may condition the
exercise of any Option that is an ISO on the Participant’s express written
agreement with these provisions of this Plan.

 

13.5         Transfer. 
The transfer of an Employee between or among the Company, a Subsidiary
or a Parent shall not be treated as a termination of his or her employment
under this Plan.  However, notwithstanding
the foregoing, a termination of employment may nonetheless occur for purposes
of determining whether an Option will satisfy the requirements of the Code to
be an ISO.

 

13.6         Construction. 
This Plan shall be construed under the laws of the State of Maryland.

 

Section 14.

PERFORMANCE
CRITERIA

 

14.1         Performance Goal Business
Criteria.  Unless and until the Board proposes for
stockholder vote and stockholders approve a change in the general performance
measures set forth in this Section, the attainment of which may determine the
degree of payout and/or vesting with respect to Incentive Awards to Employees
and Key Persons pursuant to this Plan which are designed to qualify for the
Performance-Based Exception, the performance measure(s) to be used by a
Committee composed of two (2) or more Outside Directors for purposes of
such grants shall be chosen from among the following:

 

(a)           Earnings per share;

 

(b)           Net income (before or after taxes);

 

(c)           Return measures (including, but not
limited to, return on assets, equity or sales);

 

(d)           Cash flow return on investments which
equals net cash flows divided by owners equity;

 

(e)           Earnings before or after taxes,
depreciation and/or amortization;

 

(f)            Gross revenues;

 

(g)           Operating income (before or after taxes);

 

(h)           Total stockholder returns;

 

(i)            Corporate performance indicators (indices
based on the level of certain services provided to customers);

 

(j)            Cash generation, profit and/or revenue
targets;

 

(k)           Growth measures, including revenue
growth, as compared with a peer group or other benchmark;

 

(l)            Share price (including, but not limited
to, growth measures and total stockholder return); and/or

 

(m)          Pre-tax profits.

 

 

19

 

14.2         Discretion in Formulation of
Performance Goals.  The Board shall have the
discretion to adjust the determinations of the degree of attainment of the
pre-established performance goals; provided, however, that Incentive Awards
that are to qualify for the Performance-Based Exception may not be adjusted
upward (although the Committee shall retain the discretion to adjust such
Incentive Awards downward).

 

14.3         Performance Periods. 
The Board shall have the discretion to determine the period during which
any performance goal must be attained with respect to an Incentive Award.  Such period may be of any length, and must be
established prior to the start of such period or within the first ninety (90)
days of such period (provided that the performance criteria is not in any event
set after 25% or more of such period has elapsed).

 

14.4         Modifications to Performance Goal
Business Criteria.  In the event that the
applicable tax and/or securities laws change to permit Board discretion to
alter the governing performance measures noted above without obtaining
stockholder approval of such changes, the Board shall have sole discretion to
make such changes without obtaining stockholder approval.  In addition, in the event that the Board
determines that it is advisable to grant Incentive Awards that shall not
qualify for the Performance-Based Exception, the Board may make such grants
without satisfying the requirements of Code §162(m); otherwise, a Committee
composed exclusively of two (2) of more Outside Directors must make such
grants.

 

20Exhibit
10.1

 

FIRST AMENDMENT TO
CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”)
dated as of April 3, 2008 by and among U-STORE-IT, L.P. (the “Borrower”),
U-STORE-IT TRUST (the “Parent”), each of the financial institutions a party
hereto (the “Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent (the “Agent”).

 

WHEREAS, the Borrower, the Parent, Wachovia Bank,
National Association (the “Existing Lender”), the Agent and certain other
parties have entered into that certain Credit Agreement dated as of September 14, 2007
(as in effect immediately prior to the date hereof, the “Credit Agreement”);

 

WHEREAS, the Borrower has purchased the Property
commonly known as 950 and 1200 Upshur Street, Washington, D.C. (the “Additional
Bridge Loan Property”), and the Borrower has requested that this Property be
included under the Credit Agreement as a Bridge Loan Property;

 

WHEREAS, in addition to
adding the Additional Bridge Loan Property, the Borrower has requested that the
aggregate Term Commitments under the Credit Agreement will be increased from
$50,000,000 to $57,419,301.46 (the “Increase”); and

 

WHEREAS, the Borrower, the Parent, the Lenders and the
Agent also desire to amend certain provisions of the Credit Agreement on the
terms and conditions contained herein.

 

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

 

Section 1.  Specific Amendments to Credit Agreement.  The parties hereto agree that the Credit
Agreement is amended as follows:

 

(a)                               The
Credit Agreement is amended by inserting the following terms in Section 1.1.
in appropriate alphabetical order:

 

“Assignment of Lease and Rents and Negative Pledge” means the
Assignment of Lease and Rents and Negative Pledge dated as of April 3,
2008 executed by the Borrower in favor of the Agent for the benefit of the
Lenders in form and substance satisfactory to the Agent.

 

“First Amendment” means that First Amendment to Credit
Agreement dated as of April 3, 2008 by and among the Borrower, the Parent,
the Lenders party thereto and the Agent.

 

“First Amendment Effective Date” means April 3, 2008.

 

 

(b)                              The
Credit Agreement is further amended by restating in full the definitions of “Collateral,”
“Guarantor,” “Loan Document,” “Loan Party” and “Property Owner” in Section 1.1.
as follows:

 

“Collateral” means any real or personal property directly or
indirectly securing any of the Obligations or any other obligation of a Person
under or in respect of any Loan Document to which it is a party, and includes,
without limitation, all “Pledged Collateral” under and as defined in the Pledge
Agreement and the “Lease” and all “Rents” under and as defined in the
Assignment of Lease and Rents and Negative Pledge.

 

“Guarantor” means any Person that is a party to the Guaranty
as a “Guarantor” and in any event shall include the Parent, each Pledgor, each
Property Owner (other than the Borrower) and each Person that is a Guarantor
(as defined in the Existing Credit Agreement).

 

“Loan Document” means this Agreement, each Note, the
Guaranty, the Pledge Agreement, the Assignment of Lease and Rents and Negative
Pledge and each other document or instrument now or hereafter executed and delivered
by a Loan Party in connection with, pursuant to or relating to this Agreement.

 

“Loan Party” means each of the Parent, the Borrower, each
Pledgor, each Property Owner (other than the Borrower) and each other Person
who guarantees all or a portion of the Obligations and/or who pledges any
collateral security to secure all or a portion of the Obligations.  Schedule 1.1.(A) sets forth the Loan
Parties in addition to the Parent and the Borrower as of the Agreement Date.

 

“Property Owner” means the Borrower or a Subsidiary of the
Borrower which owns a Bridge Loan Property.

 

(c)                               The
Credit Agreement is further amended by deleting the table set forth in part (a) of
the definition of “Applicable Margin” set forth in Section 1.1. in its
entirety and substituting in its place the following:

 

	
  Level

  	
   

  	
  Consolidated Total Indebtedness to

  Consolidated Adjusted Asset Value

  	
   

  	
  Applicable Margin for

  LIBOR Loans

  	
   

  	
  Applicable Margin for

  Base Rate Loans

  	
   

  
	
  1

  	
   

  	
  < 0.45 to 1.00

  	
   

  	
  1.10

  	
  %

  	
  0.10

  	
  %

  
	
  2

  	
   

  	
  > 0.45 to 1.00 and < 0.55 to 1.00

  	
   

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  
	
  3

  	
   

  	
  > 0.55 to 1.00 and < 0.60 to 1.00

  	
   

  	
  1.40

  	
  %

  	
  0.40

  	
  %

  
	
  4

  	
   

  	
  > 0.60 to 1.00

  	
   

  	
  1.60

  	
  %

  	
  0.60

  	
  %

  

 

(d)                              The
Credit Agreement is further amended by deleting the table set forth in part (b) of
the definition of “Applicable Margin” set forth in Section 1.1. in its
entirety and substituting in its place the following:

 

2

 

	
  Level

  	
   

  	
  Borrower’s Credit Rating

  (S&P/Moody’s or equivalent)

  	
   

  	
  Applicable Margin for

  LIBOR Loans

  	
   

  	
  Applicable Margin for

  Base Rate Loans

  	
   

  
	
  1

  	
   

  	
  BBB+/Baa1

  	
   

  	
  0.675

  	
  %

  	
  0.00

  	
  %

  
	
  2

  	
   

  	
  BBB/Baa2

  	
   

  	
  0.850

  	
  %

  	
  0.00

  	
  %

  
	
  3

  	
   

  	
  BBB-/Baa3

  	
   

  	
  1.050

  	
  %

  	
  0.05

  	
  %

  
	
  4

  	
   

  	
  <
  BBB-/Baa3

  	
   

  	
  1.350

  	
  %

  	
  0.35

  	
  %

  

 

(e)                                  The
Credit Agreement is further amended by deleting the first sentence and the
first part of the second sentence of Section 6.1.(b) in their
entirety and substituting in their place the following:

 

“Section 6.1.  Representations and Warranties.

 

(b)         Ownership of Property
Owners.  Each of the Property Owners
(other than the Borrower) is a Wholly Owned Subsidiary of the Borrower.  Schedule 6.1.(b) sets forth for each
Property Owner (other than the Borrower) and Pledgor...”

 

(f)                                    The
Credit Agreement is further amended by deleting clause (iv) of Section 6.1.(i) in
its entirety and substituting in its place the following:

 

“Section 6.1.
Representations and Warranties.

 

(i)...(iv) is
not subject to any Lien (other than Permitted Liens described in clauses (a) through
(e) of the definition thereof) or any Negative Pledge (other than a
Negative Pledge in favor of the Administrative Agent and the Lenders)...”

 

(g)                                 The
Credit Agreement is further amended by deleting Section 6.1.(j) in
its entirety and substituting in its place the following:

 

“Section 6.1.  Representations and Warranties.

 

(j)                                     Security
Interests and Liens.  The Pledge
Agreement and the Assignment of Lease and Rents and Negative Pledge create, as
security for the Obligations, a valid and enforceable, perfected first priority
security interest in and Lien on all of the Collateral, in favor of the Agent
for the benefit of the Lenders, and subject to no other Liens other than
Permitted Liens.  Such security interest
in and Lien on the Collateral shall be superior to and prior to the rights of
all third parties in the Collateral, and, other than in connection with any
future change in the name of the Borrower or a Pledgor or the location in which
the Borrower or a Pledgor is organized or registered, no further recordings or
filings are or will be required in connection with the creation, perfection or
enforcement of such security interest and Lien, other than the filing of
continuation statements in accordance with Applicable Law or the recording of
the Assignment of Lease and Rents and Negative Pledge in the office of the
recorder of deeds or any similar office in the District of Columbia.”

 

3

 

(h)                              The
Credit Agreement is further amended by deleting the first sentence of Section 7.1.
in its entirety and substituting in its place the following:

 

“Section 7.1.  Use of Proceeds.

 

The Borrower shall
only use the proceeds of the Term Loans (i) to finance the Acquisition in
accordance with the terms of the Purchase Agreement and to pay costs and
expenses related to the Acquisition and (ii) to prepay “Loans” outstanding
under the Existing Credit Agreement.”

 

(i)                                  The
Credit Agreement is further amended by deleting clause (i) of Section 7.3.(b) in
its entirety and substituting in its place the following:

 

“Section 7.3.  New Subsidiaries;
Guarantors; Release of Guarantors.

 

(b)...(i) such Guarantor has been, or will be
simultaneously with its release from the Guaranty, released as a Guarantor (as
defined in the Existing Credit Agreement)...”

 

(j)                                  The
Credit Agreement is further amended by deleting Section 7.5. in its
entirety and substituting in its place the following:

 

“Section 7.5.  Indebtedness.

 

The Parent and the
Borrower shall not permit any Pledgor or Property Owner to create, incur,
assume or suffer to exist any Indebtedness, other than Indebtedness under the
Loan Documents and, in the case of the Borrower only, other than Indebtedness
expressly permitted by the Existing Credit Agreement.”

 

(k)                               The
Credit Agreement is further amended by deleting Section 7.6. in its
entirety and substituting in its place the following:

 

“Section 7.6.  Liens.

 

The Parent and the
Borrower shall not permit any Pledgor or Property Owner to create, assume,
incur or permit to exist any Lien (other than Permitted Liens) upon any of its
properties, assets, income or profits of any character whether now owned or
hereafter acquired, including without limitation, the Bridge Loan Properties;
provided, however, the Borrower may create, assume, incur or permit to exist
Liens expressly permitted by the Existing Credit Agreement so long as such
Liens do not encumber any Bridge Loan Property owned by the Borrower.”

 

(l)                                  The
Credit Agreement is further amended by deleting the period at the end of Section 8.2.(b) and
replacing it with “; and” and adding a new Section 8.2.(c) as
follows:

 

4

 

“Section 8.2.  Other Information.

 

(c)                                  Operating
Statements and Occupancy Reports. 
Concurrently with the delivery of each Compliance Certificate required
by Section 8.1., operating statements and occupancy reports for each
Bridge Loan Property for the fiscal quarter covered by each such Compliance
Certificate, in each case in form and substance reasonably satisfactory to the
Agent.”

 

(m)                            The
Credit Agreement is further amended by adding the following sentence to the end
of clause (iv) of Section 11.5.(b):

 

“Section 11.5.  Successors and Assigns.

 

(b)...(iv)...Notwithstanding
the foregoing, the processing and recordation fee shall be waived in the case
of any assignment from a Lender to an Affiliate of such Lender.”

 

(n)                              The
Credit Agreement is further amended by deleting the period at the end of clause
(ix) of Section 11.6.(b) and replacing it with “; or” and adding
a new clause (x) as follows:

 

“Section 11.6.  Amendments.

 

(b)...(x)           increase the aggregate
principal amount of the Term Loans from the amount outstanding on the First
Amendment Effective Date.”

 

(o)                              The
Credit Agreement is further amended by deleting Schedule I in its entirety and
substituting in its place Schedule I attached hereto.

 

(p)                              The
Credit Agreement is further amended by deleting Schedule 1.1.(B) in its
entirety and substituting in its place Schedule 1.1.(B) attached hereto.

 

Section 2.  Conditions Precedent.  The effectiveness of this Amendment is
subject to receipt by the Agent of each of the following, each in form and
substance satisfactory to the Agent:

 

(a)                               A
counterpart of this Amendment duly executed by the Borrower, the Parent and
each of the Lenders;

 

(b)                              An
Acknowledgment substantially in the form of Exhibit A attached hereto,
executed by each Guarantor;

 

(c)                               A
Joinder Agreement executed by the Agent, the Borrower and each financial
institution becoming a party to the Credit Agreement on the date hereof (each,
a “New Lender”), in form and substance satisfactory to the Agent;

 

5

 

(d)                              Term
Notes complying with the applicable provisions of Section 2.8. of the
Credit Agreement, executed by the Borrower and payable to each Lender in the
amount of such Lender’s Commitment immediately after giving effect to this
Amendment;

 

(e)                               a
ground lease of the Additional Bridge Loan Property (the “Ground Lease”) from
the Borrower to YSI RT LLC (“YSI RT”) and executed by the Borrower and YSI RT,
which shall be in form and substance satisfactory to the Agent;

 

(f)                                 a
memorandum of lease describing the Ground Lease executed by the Borrower and
YSI RT, which shall be in form and substance satisfactory to the Agent;

 

(g)                              an
Assignment of Lease and Rents and Negative Pledge by the Borrower regarding the
Ground Lease and the Additional Bridge Loan Property, executed by the Borrower,
which shall be in form and substance satisfactory to the Agent (the Assignment
of Leases and Rents, this Amendment, the Term Notes and the Ground Lease are
collectively referred to herein as the “Amendment Documents”);

 

(h)                              Evidence
that title to the Additional Bridge Loan Property is owned by the Borrower,
which evidence may include copies of owner’s title policies of insurance (or
commitments to issue the same) issued as of a recent date showing fee simple
title of the Additional Bridge Loan Property being vested in the Borrower;

 

(i)                                  A
certificate of a Responsible Officer of the Borrower certifying that (a) no
Default or Event of Default exists as of the First Amendment Effective Date or
would exist immediately after giving effect to this Amendment, and (b) the
representations and warranties made or deemed made by the Parent, the Borrower
and each other Loan Party in the Loan Documents to which any of them is a
party, shall be true and correct in all material respects on and as of the First
Amendment Effective Date with the same force and effect as if made on and as of
such date except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date) and except for changes in factual circumstances not
prohibited under the Loan Documents;

 

(j)                                  A
copy of the acquisition agreement pursuant to which the Borrower purchased the
Additional Bridge Loan Property, certified by a responsible officer of the
Borrower to be true, complete and correct;

 

(k)                               (i) Copies
certified by the Secretary of the Parent of all partnership or other necessary
action taken by the Parent as the general partner of the Borrower to authorize
the execution and delivery by the Borrower of the Amendment Documents executed
and delivered by the Borrower on the First Amendment Effective Date and (ii) copies
certified by the Secretary of YSI RT of all limited liability company or other
necessary action taken by YSI RT to authorize the execution and delivery by YSI
RT of the Ground Lease;

 

6

 

(l)                                  A
certificate of good standing or certificate of similar meaning with respect to
each of the Borrower and the Parent issued as of a recent date by the Secretary
of State (or comparable official) of the state of formation of each such Person
and a certificate of qualification to transact business or another comparable
certificate with respect to the Borrower and YSI RT issued as of a recent date
by the Secretary of State of the District of Columbia;

 

(m)                            An
opinion of counsel to the Borrower and the Parent, addressed to the Agent and
the Lenders, in form and substance reasonably satisfactory to the Agent;

 

(n)                              Fees
due and payable to the Lenders in connection with this Amendment; and

 

(o)                              Such
other documents, instruments and agreements as the Agent may reasonably
request.

 

Section 3.  Term Loans.  Subject to either the fulfillment of each of
the conditions set forth in Section 2 of this Amendment or the waiver of
such conditions by the Requisite Lenders:

 

(a)                               Each
New Lender shall purchase from the Existing Lender such New Lender’s Commitment
Percentage of the Term Loans outstanding immediately prior to the First
Amendment Effective Date, by making available to the Agent for the account of
the Existing Lender at the Principal Office not later than 1:00 p.m. on
the First Amendment Effective Date, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Term Loan to be purchased
by such New Lender.  The Borrower shall
pay to the Existing Lender amounts payable, if any, to the Existing Lender
under Section 4.4. of the Credit Agreement as a result of the prepayment
of the Term Loans.

 

(b)                              Each
New Lender, after purchasing its Commitment Percentage of the Term Loans
outstanding immediately prior to the First Amendment Effective Date from the
Existing Lender as set forth in clause (a) above, shall fund the balance
of such New Lender’s Term Commitment to the Agent at the Principal Office for
the account of the Borrower not later than 1:00 p.m. on the First
Amendment Effective Date.

 

Section 4.  Representations.  Each of the Borrower and the Parent represents
and warrants to the Agent and the Lenders that:

 

(a)                               Authorization.  Each of the Borrower, the Parent and YSI RT
has the right and power, and has taken all necessary action to authorize it, to
execute and deliver the Amendment Documents to which it is a party and to
perform its obligations thereunder and under the Credit Agreement, as amended
by this Amendment, in accordance with their respective terms.  Each of the Amendment Documents to which the
Borrower, the Parent and YSI RT are party have been duly executed and delivered
by a duly authorized officer of the Borrower, the Parent and YSI RT,
respectively, and each of the Amendment Documents to which each is a party and
the Credit Agreement, as amended by this Amendment (except in the case of YSI RT,
which is not a party to the Credit Agreement), is a legal, valid and binding
obligation of the Borrower, the Parent and YSI RT, enforceable against such
Persons in accordance with its respective terms except as (i) 

 

7

 

the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors rights generally and (ii) the availability of equitable remedies
may be limited by equitable principles of general applicability.

 

(b)                              Compliance
with Laws, etc.  The execution and
delivery by the Borrower, the Parent and YSI RT of the Amendment Documents to
which it is a party and the performance by the Borrower and the Parent of this
Amendment and the Credit Agreement, as amended by this Amendment, in accordance
with their respective terms, do not and will not, by the passage of time, the
giving of notice or otherwise:  (i) require
any Government Approvals or violate any Applicable Laws relating to the
Borrower, the Parent or YSI RT; (ii) conflict with, result in a breach of
or constitute a default under (x) the Borrower’s Certificate of Limited
Partnership or Second Amended and Restated Agreement of Limited Partnership or
any indenture, agreement or other instrument to which the Borrower is a party
or by which it or any of its properties may be bound, (y) the Parent’s
articles of incorporation or by-laws or any indenture, agreement or other
instrument to which the Parent is a party or by which it or any of its
properties may be bound, or  (z) YSI
RT’s certificate of formation or limited liability company agreement or any
indenture, agreement or other instrument to which YSI RT is a party or by which
it or any of its properties may be bound; or (iii) result in or require
the creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by the Borrower, Parent or YSI RT other than
Permitted Liens.

 

(c)                               No
Default.  No Default or Event of
Default has occurred and is continuing as of the date hereof nor will exist
immediately after giving effect to this Amendment.

 

(d)                              No
Taxes.  No recording or other tax
shall be due upon the recording of the Assignment of Lease and Rents and
Negative Pledge.

 

Section 5.  Reaffirmation of Representations by
Borrower and Parent.  Each of the
Borrower and the Parent hereby repeats and reaffirms all representations and
warranties made by it to the Agent and the Lenders in the Credit Agreement and
the other Loan Documents to which it is a party on and as of the date hereof
with the same force and effect as if such representations and warranties were
set forth in this Amendment in full.

 

Section 6.  Certain References.  Each reference to the Credit Agreement in any
of the Loan Documents shall be deemed to be a reference to the Credit Agreement
as amended by this Amendment.

 

Section 7.  Expenses.  The Borrower shall reimburse the Agent upon
demand for all costs and expenses (including reasonable attorneys’ fees)
incurred by the Agent in connection with the preparation, negotiation and
execution of this Amendment and the other agreements and documents executed and
delivered in connection herewith.

 

Section 8.  Benefits.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.

 

8

 

Section 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

 

Section 10.  Effect.  Except as expressly herein amended, the terms
and conditions of the Credit Agreement and the other Loan Documents remain in
full force and effect.  The amendments
contained herein shall be deemed to have prospective application only, unless
otherwise specifically stated herein.

 

Section 11.  Counterparts.  This Amendment may be executed in any number
of counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.

 

Section 12.  Definitions.  All capitalized terms not otherwise defined
herein are used herein with the respective definitions given them in the Credit
Agreement.

 

[Signatures on
Next Page]

 

9

 

IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to Credit Agreement to be executed as of the date first above
written.

 

	
   

  	
  THE BORROWER:

  
	
   

  	
   

  
	
   

  	
  U-STORE-IT, L.P.

  
	
   

  	
   

  
	
   

  	
  By: U-Store-It
  Trust, its general Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher P. Marr

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  THE PARENT:

  
	
   

  	
   

  
	
   

  	
  U-STORE-IT TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher P. Marr

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE AGENT AND
  THE LENDERS:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK,
  NATIONAL ASSOCIATION,

  
	
   

  	
     as
  Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA,
  N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							

 

[Signatures Continue on Following Page]

 

 

[Signature Page to First Amendment to Credit
Agreement with U-Store-It, L.P.]

 

	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

SCHEDULE I

 

Lender Term
Commitments

 

	
  Lender

  	
   

  	
  Term Commitment

  Amount

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  27,419,301.46

  	
   

  
	
  US Bank, National Association

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  57,419,301.46

  	
   

  

 

 

SCHEDULE 1.1(B)

 

Bridge Loan Properties

 

	
  Address of Bridge Loan

  Property

  	
   

  	
  Acquisition Price

  	
   

  	
  Release Price

  	
   

  
	
  55 Commercial Street

  Medford, MA

  	
   

  	
   

  	
  $

  	
  8,398,857.88

  	
   

  	
   

  	
  $

  	
  6,929,057.75

  	
   

  
	
  15910 Pearl Road

  Strongsville, OH

  	
   

  	
   

  	
  $

  	
  4,009,651.73

  	
   

  	
   

  	
  $

  	
  3,307,962.68

  	
   

  
	
  2020 M. Baldy Drive

  Riverside, CA

  	
   

  	
   

  	
  $

  	
  5,099,654.15

  	
   

  	
   

  	
  $

  	
  4,207,214.67

  	
   

  
	
  28401 Rancho California Road

  Temecula, CA

  	
   

  	
   

  	
  $

  	
  8,817,340.95

  	
   

  	
   

  	
  $

  	
  7,274,306.28

  	
   

  
	
  105 Old Peachtree Road

  Suwanee, GA

  	
   

  	
   

  	
  $

  	
  7,649,481.22

  	
   

  	
   

  	
  $

  	
  6,310,822.01

  	
   

  
	
  1201 N. State Road

  Royal Palm Beach, FL

  	
   

  	
   

  	
  $

  	
  10,131,183.14

  	
   

  	
   

  	
  $

  	
  8,358,226.09

  	
   

  
	
  12701 SW 124th

  Kendall, FL

  	
   

  	
   

  	
  $

  	
  10,335,558.59

  	
   

  	
   

  	
  $

  	
  8,526,835.84

  	
   

  
	
  3024 Plummer Cove Road

  Jacksonville, FL

  	
   

  	
   

  	
  $

  	
  8,817,340.95

  	
   

  	
   

  	
  $

  	
  7,274,306.28

  	
   

  
	
  950 and 1200 Upshur Street

  Washington, D.C.

  	
   

  	
   

  	
  $

  	
  13,300,000.00

  	
   

  	
   

  	
  $

  	
  10,972,500.00

  	
   

  
	
   

  	
   

  	
  Total:

  	
  $

  	
  76,559,068.61

  	
   

  	
  Total:

  	
  $

  	
   63,161,231.60

  	
   

  

 

 

EXHIBIT A

 

FORM OF GUARANTOR ACKNOWLEDGEMENT

 

THIS GUARANTOR
ACKNOWLEDGEMENT dated as of April       , 2008
(this “Acknowledgment”) executed by each of the undersigned (the “Guarantors”)
in favor of Wachovia Bank, National Association, as Agent (the “Agent”) and
each “Lender” a party to the Credit Agreement referred to below (the “Lenders”).

 

WHEREAS, U-Store-It, L.P. (the “Borrower”), the
Lenders, the Agent and certain other parties have entered into that certain
Credit Agreement dated as of September 14, 2007 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”);

 

WHEREAS, each of the Guarantors is a party to that
certain Guaranty dated as of September 14, 2007 (as amended,
restated, supplemented or otherwise modified from time to time, the “Guaranty”)
pursuant to which they guarantied, among other things, the Borrower’s
obligations under the Credit Agreement on the terms and conditions contained in
the Guaranty;

 

WHEREAS, the Borrower, the Agent and the Lenders are
to enter into a First Amendment to Credit Agreement dated as of the date hereof
(the “Amendment”), to amend the terms of the Credit Agreement on the terms and
conditions contained therein;

 

WHEREAS, one of the Amendments to the Credit Agreement
affected an increase of the aggregate Term Commitments under the Credit
Agreement from $50,000,000 to $57,419,301.46 (the “Increase”); and

 

WHEREAS, it is a condition precedent to the effectiveness
of the Amendment that the Guarantors execute and deliver this Acknowledgment.

 

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

 

Section 1. 
Reaffirmation.  Each
Guarantor hereby reaffirms its continuing obligations to the Agent and the
Lenders under the Guaranty and agrees that the transactions contemplated by the
Amendment (including, without limitation, the Increase) shall not in any way
affect the validity and enforceability of the Guaranty, or reduce, impair or
discharge the obligations of such Guarantor thereunder.

 

Section 2. 
Governing Law.  THIS
REAFFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NORTH CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE
FULLY PERFORMED, IN SUCH STATE.

 

 

Section 3. 
Counterparts.  This
Reaffirmation may be executed in any number of counterparts, each of which
shall be deemed to be an original and shall be binding upon all parties, their
successors and assigns.

 

[Signatures on Next Page]

 

2

 

IN WITNESS WHEREOF, each Guarantor has duly executed
and delivered this Guarantor Acknowledgement as of the date and year first
written above.

 

	
   

  	
  THE GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  U-STORE-IT TRUST

  
	
   

  	
  U-STORE-IT MINI
  WAREHOUSE CO.

  
	
   

  	
  YSI MANAGEMENT
  LLC

  
	
   

  	
  YSI RT LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

3

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