<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 7, 1995
REGISTRATION NO. 33-63947
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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PUBLIC STORAGE, INC.
(FORMERLY STORAGE EQUITIES, INC.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-3551121
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION) HUGH W. HORNE
PUBLIC STORAGE, INC.
600 NORTH BRAND BOULEVARD 600 NORTH BRAND BOULEVARD
GLENDALE, CALIFORNIA 91203-1241 GLENDALE, CALIFORNIA 91203-1241
(818) 244-8080 (818) 244-8080
(ADDRESS, INCLUDING ZIP CODE, AND (NAME, ADDRESS, INCLUDING ZIP
TELEPHONE NUMBER, INCLUDING AREA CODE, CODE, AND TELEPHONE
OF REGISTRANT'S PRINCIPAL NUMBER, INCLUDING AREA CODE, OF
EXECUTIVE OFFICES) AGENT FOR SERVICE)
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COPIES TO:
DAVID GOLDBERG, ESQ.
PUBLIC STORAGE, INC.
600 NORTH BRAND BOULEVARD, SUITE 300
GLENDALE, CALIFORNIA 91203-1241
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(a)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT OFFERING PRICE PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE PER SHARE OR AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Preferred Stock, $.01 par value
per share....................... (1)(3) (2) (1)(2)(3) N/A
Depositary Shares................ (1)(3) (2) (1)(2)(3) N/A
Common Stock, $.10 par value per
share........................... (1)(4) (2) (1)(2)(4) N/A
Warrants......................... (1)(5) (2) (1)(2)(5) N/A
Total.......................... $363,736,925 (2) $363,736,925 $125,430(6)
</TABLE>
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(1) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $363,736,925. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder. (i) 31,200 shares of convertible
Preferred Stock, and such indeterminate number of shares of Common Stock
into which such shares of Preferred Stock may be converted, and (ii)
99,167 shares of Common Stock, at a proposed maximum aggregate offering
price of $33,009,798 being registered hereunder are being allocated to
registered resales in secondary offerings (includes any securities
issuable upon stock splits and similar transactions pursuant to Rule 416).
(2) The proposed maximum offering price per unit will be determined, from time
to time, by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder. No separate
consideration will be received for any Depositary Shares representing
shares of Preferred Stock of the Registrant.
(3) Subject to Footnote 1, there is being registered hereunder an
indeterminate number of shares of Preferred Stock, and Depositary Shares
representing a fractional interest in a share of Preferred Stock, as may
be sold, from time to time, by the Registrant. In the event Registrant
elects to offer to the public fractional interests in shares of the
Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons acquiring such fractional interests and the
shares of Preferred Stock will be issued to a Depositary under a Deposit
Agreement. There is also being registered hereunder an indeterminate
number of shares of Preferred Stock as shall be issuable upon exercise of
Warrants registered hereby.
(4) Subject to Footnote 1, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from time
to time, by the Registrant. There is also being registered hereunder an
indeterminate number of shares of Common Stock as shall be issuable upon
conversion of the Preferred Stock or exercise of Warrants registered
hereby.
(5) Subject to Footnote 1, there is being registered hereunder an
indeterminate number of Warrants representing rights to purchase Preferred
Stock or Common Stock, as the case may be, registered pursuant to this
Registration Statement.
(6) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended. $11,383 of the registration fee has
been allocated to the registration of the securities described in Footnote
(1) for registered resales in secondary offerings.
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PURSUANT TO RULE 429 OF THE RULES AND REGULATIONS UNDER THE SECURITIES ACT
OF 1933, THE PROSPECTUS WHICH IS A PART OF THIS REGISTRATION STATEMENT WILL
ALSO BE USED IN CONNECTION WITH SECURITIES REGISTERED BY REGISTRANT'S
REGISTRATION STATEMENT NO. 33-54755. IN THE EVENT ANY OF SUCH PREVIOUSLY
REGISTERED SECURITIES ARE OFFERED PRIOR TO THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT, THEY WILL NOT BE INCLUDED IN SUCH PROSPECTUS.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses, other than underwriting discounts and commissions, in
connection with the offerings of the Securities, are as follows:
<TABLE>
<S> <C>
Registration Fee--Securities and Exchange Commission............ $125,430
Depositary Fees................................................. 100,000
Rating Agency Fees.............................................. 100,000
Printing and Engraving Expenses................................. 200,000
Legal Fees and Expenses......................................... 100,000
Accounting Fees and Expenses.................................... 50,000
Blue Sky Fees and Expenses...................................... 50,000
Miscellaneous................................................... 24,570
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TOTAL......................................................... $750,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In August 1988, the Company's Articles of Incorporation were amended (as
approved by the shareholders in August 1988) to provide that the Company may
indemnify the agents of the Company to the maximum extent permitted under
California law. See Article V of the Certificate of Amendment of Articles of
Incorporation (Exhibit 3.11) and Article VII of the By-Laws (Exhibit 3.12)
which are incorporated herein by this reference. In October 1988, the Company
also entered into indemnity agreements (in the form approved by the
shareholders in August 1988) with its management and non-management directors
and executive officers. The agreements permit the Company to indemnify
directors and executive officers to the maximum extent permitted under
California law and prohibit the Company from terminating its indemnification
obligations as to acts or omissions of any director or executive officer
occurring before the termination. The indemnification and limitations on
liability permitted by the amendment to the Articles of Incorporation and the
agreements are subject to the limitations set forth by California law. The
Company believes the indemnification agreements will assist it in attracting
and retaining qualified individuals to serve as directors and executive
officers of the Company.
ITEM 16. EXHIBITS.
See Exhibit Index contained herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1)To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
II-1
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2)That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3)That, for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(4)That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5)To remove from registration by means of a post-effective amendment any of
the Securities being registered which remains unsold at the termination of the
offering.
(6)For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(7)For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Glendale, State of California, on the 5th day of
December, 1995.
PUBLIC STORAGE, INC.
By: /s/ B. WAYNE HUGHES
__________________________________
B. Wayne Hughes, Chairman of the
Board
Each person whose signature appears below hereby authorizes B. Wayne Hughes
and Harvey Lenkin, and each of them, as attorney-in-fact, to sign on his
behalf, individually and in each capacity stated below, any amendment,
including post-effective amendments to this Registration Statement, and to file
the same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
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<S> <C> <C>
/s/ B. WAYNE HUGHES Chairman of the Board, Chief December 5, 1995
____________________________________ Executive Officer and
B. Wayne Hughes Director (principal
executive officer)
/s/ HARVEY LENKIN President and Director December 5, 1995
____________________________________
Harvey Lenkin
/s/ RONALD L. HAVNER, JR. Senior Vice President and December 5, 1995
____________________________________ Chief Financial Officer
Ronald L. Havner, Jr. (principal financial officer
and principal accounting
officer)
/s/ ROBERT J. ABERNETHY Director December 5, 1995
____________________________________
Robert J. Abernethy
/s/ DANN V. ANGELOFF Director December 5, 1995
____________________________________
Dann V. Angeloff
/s/ WILLIAM C. BAKER Director December 5, 1995
____________________________________
William C. Baker
/s/ URI P. HARKHAM Director December 5, 1995
____________________________________
Uri P. Harkham
/s/ BERRY HOLMES Director December 5, 1995
____________________________________
Berry Holmes
/s/ MICHAEL M. SACHS Director December 5, 1995
____________________________________
Michael M. Sachs
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
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<C> <S>
1.1 Form of Underwriting Agreement for the Depositary Shares (the
"Depositary Shares") Each Representing 1/1,000 of a Share of
Cumulative Preferred Stock, Series G (the "Series G Preferred Stock").
1.2 Form of Underwriting Agreement.(1)
2.1 Agreement and Plan of Reorganization by and among Public Storage,
Inc., Public Storage Management, Inc. and the registrant dated as of
June 30, 1995.(2)
2.2 Amendment to Agreement and Plan of Reorganization by and among Public
Storage, Inc., Public Storage Management, Inc. and the registrant
dated as of November 13, 1995.(3)
3.1 Restated Articles of Incorporation.(4)
Certificate of Determination for the 10% Cumulative Preferred Stock,
3.2 Series A.(4)
3.3 Certificate of Determination for the 9.20% Cumulative Preferred Stock,
Series B.(4)
3.4 Amendment to Certificate of Determination for the 9.20% Cumulative
Preferred Stock,
Series B.(5)
Certificate of Determination for the 8.25% Convertible Preferred
3.5 Stock.(4)
Certificate of Determination for the Adjustable Rate Cumulative
3.6 Preferred Stock, Series C.(4)
Certificate of Determination for the 9.50% Cumulative Preferred Stock,
3.7 Series D.(6)
Certificate of Determination for the 10% Cumulative Preferred Stock,
3.8 Series E.(7)
Certificate of Determination for the 9.75% Cumulative Preferred Stock,
3.9 Series F.(8)
3.10 Certificate of Determination for the Convertible Participating
Preferred Stock.
3.11 Certificate of Amendment of Articles of Incorporation.
3.12 Bylaws, as amended.(9)
4.1 Form of Certificate of Determination for the Series G Preferred Stock.
Form of Certificate of Determination for additional series of
4.2 Preferred Stock.(1)
4.3 Form of Deposit Agreement for the Depositary Shares.
4.4 Form of Deposit Agreement.(1)
4.5 Form of Warrant Agreement.(1)
Opinion of David Goldberg as to the legality of the securities being
5.1 registered.
8.1 Opinion of Hogan & Hartson L.L.P. re tax matters.
12.1 Statement on computation of ratio of earnings to fixed charges.(10)
23.1 Consent of Independent Auditors.(11)
23.2 Consent of David Goldberg (included in Exhibit 5.1).
23.3 Consent of Hogan & Hartson L.L.P. (included in Exhibit 8.1).
</TABLE>
II-4
<PAGE>
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(1) To be filed by amendment or incorporated by reference in connection with
the offering of Securities.
(2) Filed as Appendix A to the registrant's Proxy Statement dated October 11,
1995 (filed October 13, 1995) and incorporated herein by reference.
(3) Filed with the Registrant's Current Report on Form 8-K dated November 16,
1995 and incorporated herein by reference.
(4) Filed with the registrant's Registration Statement No. 33-54557 and
incorporated herein by reference.
(5) Filed with the registrant's Registration Statement No. 33-56925 and
incorporated herein by reference.
(6) Filed with the registrant's Form 8-A/A Registration Statement relating to
the 9.50% Cumulative Preferred Stock, Series D and incorporated herein by
reference.
(7) Filed with the registrant's Form 8-A/A Registration Statement relating to
the 10% Cumulative Preferred Stock, Series E and incorporated herein by
reference.
(8) Filed with the registrant's Form 8-A/A Registration Statement relating to
the 9.75% Cumulative Preferred Stock, Series F and incorporated herein by
reference.
(9) Filed with registrant's Registration Statement No. 33-30340 and
incorporated herein by reference.
(10) Filed with registrant's Form 10-Q for the quarterly period ended September
30, 1995 and incorporated herein by reference.
(11) Previously filed.
II-5
<PAGE>
EXHIBIT 1.1
PUBLIC STORAGE, INC.
4,000,000 Depositary Shares
Each Representing 1/1,000 of a Share of
[ ]% Cumulative Preferred Stock, Series G
Liquidation Preference Equivalent to $25.00 Per Depositary Share
UNDERWRITING AGREEMENT
December [ ], 1995
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
ROBERTSON, STEPHENS & COMPANY, L.P.
THE ROBINSON-HUMPHREY
COMPANY, INC.
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Public Storage, Inc., a real estate investment trust ("REIT") and a
California corporation (the "Company"), proposes to issue and sell an aggregate
of 4,000,000 shares (the "Firm Shares") of its Depositary Shares (the
"Depositary Shares") each representing 1/1,000 of a share of [ ]% Cumulative
Preferred Stock, Series G, stated value $25,000 per share (the "Preferred
Stock"), to you and the other underwriters named in Schedule I hereto
(collectively the "Under-
<PAGE>
writers") for whom you are acting as Representatives (the "Representatives").
The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 1 hereof, up to an additional 600,000 shares
(the "Additional Shares") of Depositary Shares. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "Shares."
The shares of Preferred Stock represented by the Shares (the
"Preferred Shares") will, when issued, be deposited by the Company against
delivery of Depositary Receipts ("Depositary Receipts") to be issued by The
First National Bank of Boston, as Depositary (the "Depositary"), under a Deposit
Agreement (the "Deposit Agreement") among the Company, the Depositary, and the
holders from time to time of the Depositary Receipts issued thereunder. Each
Depositary Receipt will represent one or more Depositary Shares.
The Company wishes to confirm as follows its agreement with you and
the other several Underwriters on whose behalf you are acting, in connection
with the several purchases of the Shares by the Underwriters.
1. Agreements to Sell and Purchase.
-------------------------------
(a) On the basis of the representations, warranties and agreements of
the Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriters and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $[ ] per share (the "purchase price per share"), the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares increased as set forth in Section 9 hereof).
(b) The Company also agrees, subject to all the terms and conditions
set forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right to purchase from the Company, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised at
any time and from time to time prior to 9:00 P.M., New York City time, on the
30th day after the date of the Prospectus (as defined in Section 4) (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading), up to an
aggregate of 600,000 Additional Shares. Additional Shares may be purchased
2
<PAGE>
only for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. Upon any exercise of the over-allotment option,
each Underwriter, severally and not jointly, agrees to purchase from the
Company the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) which bears the same proportion
to the number of Additional Shares to be purchased by the Underwriters as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number of Firm Shares increased as set forth in
Section 9 hereof) bears to the aggregate number of Firm Shares.
2. Terms of Public Offering.
------------------------
The Company has been advised by you that the Underwriters propose to
make a public offering of their respective portions of the Shares as soon after
this Agreement has been entered into and the Registration Statement (as defined
herein), and, if necessary, any post-effective amendment to the Registration
Statement, has become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus (as defined
herein).
3. Delivery of the Shares and Payment Therefor.
-------------------------------------------
Delivery to the Underwriters of and payment for the Firm Shares shall
be made at the office of Smith Barney Inc., 388 Greenwich Street, New York, NY
10013, at 10:00 A.M., New York City time, on December [ ], 1995 (the "Closing
Date"). The place of closing for the Firm Shares and the Closing Date may be
varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Smith Barney Inc. at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than three nor later than ten business days after
the giving of the notice hereinafter referred to, as shall be specified in a
written notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Shares. The place of closing for any Additional Shares and the Option
Closing Date for such Shares may be varied by agreement between you and the
Company.
3
<PAGE>
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 P.M., New York City time, on the third
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks payable in New York
Clearing House (next day) funds to the order of the Company.
4. Representations and Warranties of the Company. The Company
---------------------------------------------
represents, warrants and covenants to the Underwriters as set forth below.
Certain terms used in this Section 4 are defined in paragraph (ac) hereof.
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, registration number 33-
54755 ("Registration No. 33-54755"), and a second registration statement,
registration number 33-63947 ("Registration No. 33-63947," and together with
Registration No. 33-54755, the "Registration Statement") on Form S-3, including
the related prospectus included in the Registration Statement, for the
registration under the Securities Act of 1933, as amended (the "Act"), of the
offering and sale of, inter alia, the Shares. The Company may have filed one or
----- ----
more amendments thereto, including each related prospectus, and one or more
prospectus supplements thereto, each of which has previously been furnished to
the Representatives. The Company has filed with the Commission a preliminary
prospectus supplement specifically relating to the Shares pursuant to Rule 424
under the Act and has filed with, or transmitted for filing to, or shall
promptly hereafter file with or transmit for filing to, the Commission a
prospectus supplement (the "Prospectus Supplement") specifically relating to
the Shares pursuant to Rule 424 under the Act. The Company has included or will
include in such Registration Statement, as amended at the Execution Time and in
the Prospectus Supplement all information required by the Act and the rules
thereunder to be included therein with respect to the Shares and the offering
thereof. As filed, such Registration Statement, as so amended, and form of final
prospectus contained in the Registration Statement and Prospectus Supplement, or
such final prospectus and Prospectus Supplement, contains or will contain all
required information with respect to the Shares and the offering thereof and,
except to the extent the
4
<PAGE>
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to the Underwriters prior to the
Effective Date or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus and accompanying Prospectus) as
the Company has advised the Representatives, prior to the Execution Time, will
be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus and the Prospectus Supplement is first filed in
accordance with Rule 424(b) and on the Closing Date, the Prospectus (and any
supplements thereto) will, comply in all material respects with the
requirements of the Act and the rules thereunder; on the Effective Date, the
Registration Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, on the
date of any filing pursuant to Rule 424(b) and on the Closing Date, the
Prospectus (together with any supplement thereto) will not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
-------- -------
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Prospectus (or
any supplement thereto).
(c) No stop order suspending the effectiveness of Registration No.
33-54755 is in effect and no proceedings for such purpose are, to the knowledge
of the Company, pending before or threatened by the Commission.
(d) Each of the Incorporated Documents complied, as of the date such
Incorporated Document was filed (or, if any amendment with respect to any such
document was filed, when such amendment was filed), in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder.
(e) The only subsidiaries of the Company are the Subsidiaries (as
defined below). Each of the Company, SEI Arlington Acquisition Corporation ("SEI
Arlington"), SEI Hypoluxo Acquisition Corporation ("Hypoluxo"),
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Arlington Acquisition Co. ("Arlington"), PSTI/SEI - North Bergen Acquisition
Corporation ("PSTI"), SEI-Sandy Acquisition Corporation ("Sandy"), PS Orangeco,
Inc. ("Orangeco"), Public Storage Commercial Properties Group, Inc. ("PSCPG")
and SEI - Firestone Acquisition Corporation ("SEI Firestone" and, together with
SEI Arlington, Hypoluxo, Arlington, PSTI, Sandy, Orangeco, PSCPG and SEI
Firestone, the "Subsidiaries") and PS Partners, Ltd. ("PSPI"), PS Partners II,
Ltd. ("PSPII"), PS Partners III, Ltd. ("PSPIII"), PS Partners IV, Ltd.
("PSPIV"), PS Partners V, Ltd. ("PSPV"), PS Partners VI, Ltd. ("PSPVI"), PS
Partners VII, Ltd. ("PSPVII") and PS Partners VIII, Ltd. ("PSPVIII" and,
collectively, the "Partnerships") has been duly organized and is validly
existing (in the case of the Company and each of the Subsidiaries, as a
corporation) in good standing under the laws of the jurisdiction in which it is
organized, with full power and authority to own or lease and occupy its
properties and conduct its business as described in the Prospectus, and is duly
qualified to do business, and is in good standing, in each jurisdiction which
requires such qualification, except where the failure to so qualify would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, earnings, assets or financial condition of the Company (a
"Material Adverse Effect"). All of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are owned by the Company, in the case of Orangeco
and PSCPG, 95% owned, directly, or indirectly through another Subsidiary, free
and clear of any lien, adverse claim, security interest, equity, or other
encumbrance. The Company owns as of the date hereof approximately 62%, 66%,
50%, 42%, 51%, 51%, 51% and 40% of the limited partnership units of PSPI,
PSPII, PSPIII, PSPIV, PSPV, PSPVI, PSPVII and PSPVIII, respectively.
(f) The Company, each of the Subsidiaries and each Partnership have
all requisite power and authority, and all necessary material authorizations,
approvals, orders, licenses, certificates and permits of and from all regulatory
or governmental officials, bodies and tribunals, to own or lease their
respective properties and to conduct their respective businesses as now being
conducted and as described in the Prospectus; all such authorizations,
approvals, licenses, certificates and permits are in full force and effect,
except where the failure to be in full force and effect would not have a
Material Adverse Effect on the Company, such Subsidiary or such Partnership;
and the Company, each of the Subsidiaries and each Partnership are complying
with all applicable laws, the violation of which could have a Material Adverse
Effect on the Company, such Subsidiary or such Partnership, as the case may be.
6
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(g) The Company, each Subsidiary and each Partnership have good and
marketable title to their properties, free and clear of all material liens,
charges and encumbrances and equities of record, except as set forth or
reflected in the Prospectus.
(h) The Company, each Subsidiary and each Partnership maintains
adequate insurance for the conduct of their respective business as described in
the Prospectus.
(i) The Company, either directly or through the Subsidiaries or
Partnerships, owns or licenses or otherwise has the right to use all patents,
trademarks, trade names and trade secrets material to the Company's business as
described in the Prospectus; other than routine proceedings which if adversely
determined would not materially affect the business (as described in the
Prospectus) of the Company, the Subsidiaries and the Partnerships taken as a
whole, no claims have been asserted by any person with respect to the use of any
such patents, trademarks, trade names and trade secrets or challenging or
questioning the validity or effectiveness of any such patents, trademarks, trade
names or trade secrets; to the best knowledge of the Company, the use, in
connection with the business and operations of the Company, the Subsidiaries and
the Partnerships, of such patents, trademarks and trade names does not infringe
on the rights of any person.
(j) The Company's authorized capitalization is as set forth in the
Prospectus; the capital stock of the Company conforms in all material respects
to the description thereof contained in the Prospectus; the outstanding shares
of common stock, par value $.10 per share, of the Company (the "Common Stock"),
Series A Preferred Stock, par value $.01 per share, of the Company (the "Series
A Preferred Stock"), Series B Preferred Stock, par value $.01 per share, of the
Company (the "Series B Preferred Stock"), Adjustable Rate Cumulative Preferred
Stock, Series C, stated value $25.00 per share, of the Company (the "Series C
Preferred Stock"), 9.50% Cumulative Preferred Stock, Series D, stated value
$25.00 per share, of the Company (the "Series D Preferred Stock"), 10%
Cumulative Preferred Stock, Series E, stated value $25.00 per share, of the
Company (the "Series E Preferred Stock"), 8.25% Convertible Preferred Stock,
stated value $25.00 per share, of the Company (the "Convertible Preferred
Stock"), and 9.75% Cumulative Preferred Stock, Series F, stated value of $25.00
per share, of the Company (the "Series F Preferred Stock"), have each been duly
and validly authorized and issued and are fully paid and nonassessable; the
Class B common stock, par value $.10 per share, of the Company (the "Class B
7
<PAGE>
Common Stock") to be issued in accordance with the Reorganization Agreement, has
been duly and validly authorized and, when issued in accordance with the terms
of the Agreement and Plan of Reorganization by and among the Company, Public
Storage Management, Inc. and Storage Equities, Inc. dated June 30, 1995, as
amended (the "Reorganization Agreement"), will be fully paid and nonassessable;
the Shares and the Preferred Shares have been duly and validly authorized and,
when issued and delivered pursuant to this Agreement and, in the case of the
Shares, the Deposit Agreement, will be fully paid and nonassessable; application
has been made to list the Shares on the New York Stock Exchange; prior to the
Closing Date, the form of certificate for the Shares will be in valid and
sufficient form in compliance with New York Stock Exchange requirements; and the
holders of outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the Shares or the Preferred
Stock.
(k) There is no pending or, to the best knowledge of the Company,
after due inquiry, threatened, action, suit, proceeding or investigation before
any court, governmental agency, authority or body or arbitrator involving the
Company, any of the Subsidiaries or any of the Partnerships of a character
required to be disclosed in the Registration Statement or Prospectus which is
not adequately disclosed in the Prospectus, and there is no franchise, contract
or other document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which is not described
or filed as required.
(l) The Company has full corporate power and authority to enter into
and perform its obligations under this Agreement and the Deposit Agreement and
to issue, sell and deliver the Shares and to issue and deliver the Preferred
Shares; and this Agreement and the Deposit Agreement have been duly authorized;
and this Agreement has been, and the Deposit Agreement as of the Closing Date,
will have been, duly executed and delivered by the Company. When so executed,
the Deposit Agreement will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that (i) enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether a proceeding is considered at law or in equity).
(m) No consent, approval, authorization or order of any court or
governmental agency, authority or body is required (and has not been received)
for the execution by the Company of this Agreement or the Deposit Agreement,
8
<PAGE>
the performance by the Company of its obligations hereunder or thereunder or the
consummation by the Company of the transactions contemplated herein or therein,
except such as are required under the state securities or the Blue Sky laws of
any jurisdiction in connection with the purchase and distribution of the Shares
by the Underwriters. Neither the Company nor any of its affiliates is presently
doing any business with the government of Cuba or with any person or affiliate
located in Cuba.
(n) Neither the Company nor any of the Subsidiaries is in violation
of, in conflict with, in breach of or in default under (and none of them know of
an event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default under) its charter or by-laws, and
none of the Partnerships is in violation of its respective partnership agreement
(and none of them know of an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a violation), and
neither the Company, any Subsidiary nor any Partnership is in default in the
performance of any obligation, agreement or condition contained in any loan,
note or other evidence of indebtedness or in any indenture, mortgage, deed of
trust or any other material agreement by which it or its properties are bound,
except for such defaults as could not, individually or in the aggregate, have a
Material Adverse Effect on the Company, such Subsidiary or such Partnership, as
the case may be.
(o) Neither the Company, any of the Subsidiaries nor any of the
Partnerships has violated any environmental, safety or similar law or regulation
applicable to its business relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants, nor has the Company, any of the Subsidiaries nor any of the
Partnerships violated any Federal, state or local law relating to discrimination
in the hiring, promotion or pay of employees nor any applicable wage or hour
laws, nor has the Company or any of the Partnerships engaged in any unfair labor
practice, which in each case could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on the Company, such
Subsidiary or such Partnership, as the case may be.
(p) Neither the issue and sale of the Shares nor the consummation of
any of the other transactions herein contemplated (including without limitation
the execution, delivery and performance of the Deposit Agreement, the issuance
and deposit of the Preferred Shares in accordance with the Deposit Agreement and
the consummation of the transactions contemplated therein) nor the fulfillment
of the terms hereof or thereof will conflict with, result in a breach or viola-
9
<PAGE>
tion of, or constitute a default under any law or the charter or by-laws of the
Company or any of the Subsidiaries or the partnership agreement of any of the
Partnerships or the terms of any indenture or other agreement or instrument to
which the Company, any of the Subsidiaries or any of the Partnerships is a party
or is bound or any judgment, order or decree applicable to the Company, any of
the Subsidiaries or any of the Partnerships of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
the Company, any of the Subsidiaries or any of the Partnerships.
(q) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974 ("ERISA") and the regulations and
published interpretations thereunder with respect to each "pension plan" (as
defined in ERISA and such regulations and published interpretations) in which
employees of the Company are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable provisions of
ERISA and such regulations and published interpretations (except for such
failure to so comply that would not have, singularly or in the aggregate with
all other such failures to comply, a Material Adverse Effect), and has not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA.
(r) Other than as described in the Prospectus (including the
Incorporated Documents), there are no outstanding warrants or options to
purchase any shares of capital stock of the Company and there are no
restrictions upon the voting or transfer of, or the declaration or payment of
any dividend or distribution on, any shares of capital stock of the Company
pursuant to the articles of incorporation or by-laws of the Company, any
agreement or other instrument to which the Company is a party or by which the
Company is bound, or any order, law, rule, regulation or determination of any
court, governmental agency or body (including, without limitation, any banking
or insurance regulatory agency or body), or arbitrator having jurisdiction over
the Company. No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(s) The Company is qualified, has been qualified since January 1,
1981, has been operating, since the beginning of the current fiscal year, in a
manner that would continue to permit it to be qualified, and intends to operate
so as to continue to be qualified, (i) as a REIT under Section 856 et seq. of
the -- ----
10
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Internal Revenue Code of 1986, as amended (the "Code"), and (ii) to be taxed on
its "real estate investment trust income" pursuant to Section 857 of the Code.
(t) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives is, or will be, when made,
inaccurate, untrue or incorrect in any material respect.
(u) Neither the Company nor any of its officers, directors, or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares in violation of the Act.
(v) To the best of the Company's knowledge, the firm of accountants
that have certified or shall certify the applicable financial statements and
supporting schedules filed or to be filed with the Commission as part of (or
incorporated by reference in) the Registration Statement and the Prospectus are
independent public accountants with respect to the Company and any other
applicable entity, as required by the Act. The financial statements, together
with related schedules and notes, incorporated by reference in the Prospectus
and the Registration Statement comply as to form in all material respects with
the requirements of the Act. Such financial statements fairly present the
consolidated financial position of the Company, the Subsidiaries and the
Partnerships at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated, and have
been prepared in accordance with generally accepted accounting principles,
except as otherwise expressly stated therein, as consistently applied throughout
such periods. The pro forma financial statements and the related notes thereto,
and the other pro forma financial information, included or incorporated by
reference in the Prospectus and the Registration Statement present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, in all material
respects, and the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein. The other financial and
statistical information and data included in the Prospectus and in the
Registration Statement are, in all material respects, accurately presented and
prepared on a basis consistent with applicable financial statements and the
books
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<PAGE>
and records of the Company, the Subsidiaries and the Partnerships or, with
respect to information and data relating to persons other than the Company, the
Subsidiaries and the Partnerships, other information available to the Company.
(w) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company, any of the Subsidiaries nor any of the Partnerships has incurred
any liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material to the
Company, the Subsidiaries and the Partnerships taken as a whole, and there has
not been any material change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company, any Subsidiary or any of the
Partnerships, or any material adverse change, or any development (that relates
to the Company, the Subsidiaries and the Partnerships or to any of its
respective properties or assets) which may reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company, the Subsidiaries
and the Partnerships taken as a whole.
(x) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prospectus or
other materials, if any, permitted by the Act.
(y) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that in all material respects (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) To the Company's knowledge, neither the Company, any of its
Subsidiaries nor any of the Partnerships nor any employee or agent of the
Company, any Partnership, any Subsidiary, or any Partnership has made any
payment of funds of the Company, any Partnership or any Subsidiary or received
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<PAGE>
or retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(aa) The Company, each of the Subsidiaries and each of the
Partnerships have filed all tax returns required to be filed (except to the
extent extensions have been timely filed related thereto), which returns are
complete and correct in all material respects, and neither the Company, any
Partnership nor any Subsidiary is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto.
(ab) Assuming due authorization, execution and delivery of the
Deposit Agreement by the Depositary, each Share will represent an interest in
1/1,000 of a share of a validly issued, outstanding, fully paid and
nonassessable share of Preferred Stock; assuming due execution and delivery of
the Depositary Receipts by the Depositary pursuant to the Deposit Agreement, the
Depositary Receipts will entitle the holders thereof to the benefits provided
therein and in the Deposit Agreement.
(ac) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by the parties hereto. "Pre-
liminary Prospectus" shall mean any preliminary prospectus supplement referred
to in paragraph (a) above. "Prospectus" shall mean the prospectus and Prospec-
tus Supplement relating to the Shares that is first filed pursuant to Rule
424(b) after the Execution Time. "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including exhibits
and financial statements, as amended at the Execution Time and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date,
shall also mean such registration statement as so amended. "Rule 424" refers to
such rule under the Act. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein either pursuant to the terms of
the Registration Statement or pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of such Preliminary Prospectus or the Prospectus, as
the case may be (collectively, the "Incorporated Documents"); and any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
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<PAGE>
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement, or the issue date of any
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
5. Agreements of the Company. The Company agrees with the
-------------------------
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by any Underwriter or any
dealer, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause Registration No.
33-63947 and any post-effective amendment to the Registration Statement to
become effective, and will notify the Representatives promptly, and will confirm
such advice in writing, (1) when Registration No. 33-63947 and any post-effec-
tive amendment to the Registration Statement become effective, (2) of the
receipt of any comments from or any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (3) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (4) of the happening of any
event during the period mentioned in the second sentence of Section 5(e) that in
the judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading,
and (5) of receipt by the Company or any representative or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If at
any time the Commission shall issue any order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the with-drawal of such order at the earliest possible moment.
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<PAGE>
(c) The Company will furnish to the Representatives, without charge,
four copies of the signed copies of the Registration Statement and of any post-
effective amendment thereto, including financial statements and schedules, and
all exhibits thereto (including any document filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus) and will furnish to
the Representatives, without charge, for transmittal to each of the other Under-
writers, copies of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) The Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus or any amendment or supplement thereto
as the Representatives may reasonably request. The Company consents to the use
of the Prospectus or any amendment or supplement thereto by the several
Underwriters and by all dealers to whom the Shares may be sold, both in connec-
tion with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur which
in the judgment of the Company or counsel to the Underwriters should be set
forth in the Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, subject to
the provisions of Section 5(a) hereof, the Company will forthwith prepare and
duly file with the Commission an appropriate supplement or amendment thereto,
and will deliver to the Underwriters, without charge, such number of copies
thereof as the Representatives may reasonably request. The Company shall not
file any document under the Exchange Act before the termination of the offering
of the Shares by the Underwriters if such document would be deemed to be
incorporated by reference into the Prospectus which is not approved by the
Representatives after reasonable notice thereof.
(f) Prior to any public offering of the Shares by the Underwriters,
the Company will cooperate with the Representatives and counsel to the Under-
writers in connection with the registration or qualification of the Shares and
the Preferred Shares for offer and sale under the securities or Blue Sky laws of
such jurisdictions as the Representatives may reasonably request; provided, that
--------
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to
15
<PAGE>
general service of process in any jurisdiction where it is not now so subject.
The Company will inform the Florida Department of Banking and Finance if, at any
time prior to the completion of the distribution of the Shares by the
Underwriters, it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba. Such information will be provided
within 90 days after the commencement thereof or after a change occurs with
respect to previously reported information.
(g) During the period of five years commencing on the Effective Date,
the Company will furnish to each of the Representatives and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
each of the Representatives and each other Underwriter who may so request a copy
of each annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail), with respect to the Company, the Subsidiaries and the
Partnerships, for a period of 12 months commencing after the Effective Date of
the Registration Statement, and satisfying the provisions of Section 11(a) of
the Act (including Rule 158 thereunder) and will file such earnings statement as
an exhibit to the next periodic report required by Section 13 or 15(d) of the
Exchange Act covering the period when the earnings statement is released.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 9 hereof or by notice given by you terminating this
Agreement pursuant to Section 9 or Section 10 hereof) or if this Agreement shall
be terminated by the Underwriters because of any failure or refusal on the part
of the Company to comply with the terms or fulfill any of the conditions of this
Agreement, the Company agrees to reimburse the Representatives for all out-of-
pocket expenses (including fees and expenses of counsel for the Underwriters)
reasonably incurred by you in connection herewith.
(j) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result
in,
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<PAGE>
or which will constitute, stabilization of the price of the Shares to facilitate
the sale or resale of any of the Shares in violation of the Act.
(k) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
(l) The Company will use its best efforts to have the Shares listed,
subject to notice of issuance, on the New York Stock Exchange.
6. Conditions of Underwriters' Obligations. The several
---------------------------------------
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City time, on the date hereof, or at such later date
and time as shall be consented to in writing by the Representatives, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company, the Subsidiaries
or the Partnerships not contemplated by the Prospectus, which in your opinion,
as Representatives of the several Underwriters, would materially, adversely
affect the market for the Shares, or (ii) any event or development relating to
or involving the Company or any officer or director of the Company which makes
any statement made in the Prospectus untrue in any material respect or which,
in the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or development
would, in your
17
<PAGE>
opinion, as Representatives of the several Underwriters, adversely affect the
market for the Shares.
(c) The Underwriters shall have received an opinion, dated the
Closing Date and, with respect to the Additional Shares, the Option Closing
Date, and satisfactory in form and substance to counsel for the Underwriters,
from David Goldberg, counsel for the Company, to the effect that:
(i) Each of the Company, the Subsidiaries and the Partnerships
has been duly organized and is validly existing (in the case of the Company
and each of the Subsidiaries, as a corporation) in good standing under the
laws of the jurisdiction in which it is organized, with full power and
authority to own or lease and occupy its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business, and is in good standing, in each jurisdiction which requires such
qualification, except where the failure to so qualify would not,
individually or in the aggregate, have a Material Adverse Effect;
(ii) All of the Company's ownership interests in the
Partnerships are owned free and clear of any perfected security interest
and, to my knowledge, after due inquiry, any other security interests,
claims, liens or encumbrances;
(iii) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus; the statements in the
Prospectus Supplement under the caption "Description of Preferred Stock
and Depositary Shares" and in the Prospectus under the captions
"Description of Preferred Stock" and "Description of the Depositary
Shares," insofar as such statements constitute summaries of the documents
referred to therein, have been reviewed by such counsel and fairly
summarize the matters referred to therein in all material respects; the
outstanding shares of Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock, Series F Preferred Stock and Convertible Preferred
Stock have been duly and validly authorized and issued and are fully paid
and nonassessable and the deposit of the Preferred Shares in accordance
with the Deposit Agreement has been duly
18
<PAGE>
authorized; the shares of Class B Common Stock to be issued in accordance
with the Reorganization Agreement has been duly and validly authorized and,
when issued in accordance with the terms of the Reorganization Agreement,
will be fully paid and nonassessable; the Shares and the Preferred Shares
have been duly and validly authorized, and, when issued and delivered
pursuant to the Agreement and the Deposit Agreement and, in the case of the
Shares, paid for by the Underwriters pursuant to the Agreement, will be
fully paid and nonassessable; the Shares have been duly authorized for
listing, subject to official notice of issuance, on the New York Stock
Exchange; the forms of certificates for the Shares are in valid and
sufficient form in compliance with New York Stock Exchange requirements;
and the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the Shares or
the Preferred Stock;
(iv) To the best of my knowledge, after due inquiry, there is
no pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or arbitrator involving the Company,
any of the Subsidiaries or any of the Partnerships of a character required
to be disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or other
document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which is not
described or filed as required; and, to the best of my knowledge, after due
inquiry, the statements in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, under Part II, Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
REIT Distribution Requirement" and Part III, Item 13 - "Certain
Relationships and Related Party Transactions" (other than the financial
statements and other financial and statistical information contained
therein, as to which I express no opinion) fairly summarize the matters
therein described in all material respects;
(v) The Registration Statement and the Prospectus and any
amendment or supplement thereto comply as to form in all material respects
with the requirements for the use of Form S-3
19
<PAGE>
and the rules and regulations thereunder, and the Registration Statement
and the Prospectus and any amendment or supplement thereto (other than the
financial statements and other financial information contained therein, as
to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the rules thereunder
and each of the Incorporated Documents (or, if any amendment with respect
to any such document was filed, when such document was filed), complied as
to form in all material respects with the requirements of the Exchange Act
and the rules thereunder (other than the financial statements and other
financial information contained therein, as to which such counsel need
express no opinion);
(vi) The Company has full corporate power and authority to
enter into and perform its obligations under the Agreement and the Deposit
Agreement and to issue, sell and deliver the Shares and to issue and
deliver the Preferred Stock; and the Agreement has been, and the Deposit
Agreement will have been as of the Closing Date, duly authorized, executed
and delivered by the Company;
(vii) No consent, approval, authorization or order of any
court or governmental agency, authority or body is required for the
execution by the Company of the Agreement or the Deposit Agreement, the
performance by the Company of its obligations hereunder or thereunder or
the consummation of the transactions contemplated herein or therein, except
such as have been obtained under the Act and the Exchange Act and such as
may be required under the Blue Sky laws of any jurisdiction in connection
with the purchase and distribution by the Underwriters of the Shares;
(viii) The Company, each Subsidiary and each Partnership have
all requisite power and authority, and, to the best knowledge of such
counsel, after due inquiry, all necessary material authorizations,
approvals, orders, licenses, certificates and permits of and from all
regulatory or governmental officials, bodies and tribunals, to own or lease
their respective properties and to conduct their respective businesses as
now being conducted and as described in the Prospectus; and, to the best of
my knowledge, after due inquiry, all such authorizations, approvals,
licenses, cer-
20
<PAGE>
tificates and permits are in full force and effect, except where the
failure to be in full force and effect would not have a Material Adverse
Effect on the Company, such Subsidiary or such Partnership, and the
Company, each Subsidiary and each Partnership are complying with all
applicable laws, the violation of which could have a Material Adverse
Effect on the Company, such Subsidiary or such Partnership, as the case may
be;
(ix) The Company and each of the Subsidiaries are not in
violation of its articles of incorporation or by-laws, and each of the
Partnerships is not in violation of its respective partnership agreement,
and to the best of my knowledge, after due inquiry, neither the Company,
the Subsidiaries nor any Partnership is in default in the performance of
any obligation, agreement or condition contained in any loan, note or
other evidence of indebtedness or in any indenture, mortgage, deed of trust
or any other material agreement by which it or its properties are bound,
except for such defaults as could not, individually or the aggregate, have
a Material Adverse Effect on the Company, such Subsidiary or such Partner-
ship, as the case may be;
(x) Neither the issue and sale of the Shares nor the
consummation of any of the other transactions herein contemplated
(including without limitation the execution, delivery and performance of
the Deposit Agreement, the issuance and deposit of the Preferred Shares in
accordance with the Deposit Agreement and the consummation of the
transactions contemplated therein) nor the fulfillment of the terms hereof
or thereof will conflict with, result in a breach or violation of, or
constitute a default under any law or the articles of incorporation or by-
laws of the Company or the Subsidiaries or the partnership agreement of any
of the Partnerships or the terms of any indenture or other agreement or
instrument known to me and to which the Company, any of the Subsidiaries or
any of the Partnerships is a party or is bound or any judgment, order or
decree known to me to be applicable to the Company, any of the Subsidiaries
or any of the Partnerships of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Company, any of the Subsidiaries or any of the Partnerships;
21
<PAGE>
(xi) No holders of securities of the Company have rights to
the registration of such securities under the Registration Statement,
except as provided therein;
(xii) Any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); and to the best of my
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or threatened;
(xiii) To the best of such counsel's knowledge, after
reasonable inquiry, neither the Company, any of the Subsidiaries nor any of
the Partnerships is in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company, any of the
Subsidiaries or any of the Partnerships or of any decree of any court or
governmental agency or body having jurisdiction over the Company, any of
the Subsidiaries or any of the Partnerships, the violation of which could
have a Material Adverse Effect on the Company, such Subsidiary or such
Partnership, as the case may be;
(xiv) The statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal conclusions,
are accurate and present fairly the information required to be shown in all
material respects;
(xv) The Company, the Subsidiaries and the Partnerships own or
have the right to use all patents, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets and rights described in the Prospectus
as being owned by them or any of them or necessary for the conduct of their
respective businesses, and, other than routine proceedings which if
adversely determined would not materially affect the business of the
Company, the Subsidiaries and the Partnerships taken as a whole as
described in the Prospectus, such counsel is not aware of any claim to the
contrary or any challenge by any other person to the rights of the
22
<PAGE>
Company, the Subsidiaries and the Partnerships with respect to the
foregoing;
(xvi) Except as described in the Prospectus and in Section
4(r) hereof, to the best of such counsel's knowledge, after reasonable
inquiry, there are no outstanding options, warrants or other rights calling
for the issuance of, and there are no commitments, plans or arrangements
to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable or exercisable for capital stock of the
Company;
(xvii) Except as described in the Prospectus and in Section
4(r) hereof, to the best of such counsel's knowledge, after reasonable
inquiry, there is no holder of any security of the Company or any other
person who has the right, contractual or otherwise, to cause the Company
to sell or otherwise issue to them, or to permit them to underwrite the
sale of, the Shares or the Preferred Shares or the right to have any
Common Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares
of Common Stock or other securities of the Company;
(xviii) Assuming due authorization, execution and delivery
by the Depositary, the Deposit Agreement constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that (i) enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and (regardless of whether
a proceeding is considered at law or in equity);
(xix) When the Shares evidenced by the Depositary Receipts are
issued and delivered in accordance with the terms of the Deposit Agreement
against the deposit of duly authorized and issued, fully paid and
nonassessable shares of Preferred Stock, the Depositary Receipts will
entitle the holders thereof to the benefits provided therein and in the
Deposit Agreement.
23
<PAGE>
In addition, such counsel shall state that he has participated in
conferences with representatives of the Underwriters, and with officers and
other representatives of the Company and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, on the basis of the
foregoing (relying as to certain factual matters on the information provided to
such counsel by the Company and not on an independent investigation, but in the
absence of information to the contrary), no facts have come to such counsel's
attention which leads such counsel to believe that the Registration Statement,
as of its effective date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as of its
date and as of the date hereof, contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that such counsel need not express any comment with respect to the
- --------
financial statements and other financial data included in the Registration
Statement or Prospectus.
(d) The Underwriters shall have received an opinion, dated the
Closing Date and, with respect to the Additional Shares, the Option Closing
Date, and satisfactory in form and substance to counsel for the Underwriters,
from Hogan & Hartson, counsel for the Company, to the effect that:
(i) The statements in the Prospectus under the heading
"Certain Federal Income Tax Considerations" and "Risk Factors - Tax Risks"
fairly summarize the federal income tax considerations likely to be
material to a holder of the Shares.
(ii) Based upon current law, including relevant statutes,
regulations and judicial and administrative precedent (which law is subject
to change on a retroactive basis), and subject to the limitations and
qualifications set forth in our tax opinion filed as Exhibit 8.1 to the
Registration Statement, the Company will continue to qualify as a REIT
under sections 856 through 860 of the Code following the Merger of Public
Storage Management, Inc. ("PSMI") into the Company (the "Merger") so long
-- ----
as (A) the Company has met at all times since the Merger and continues to
--
24
<PAGE>
meet the stock ownership and gross income requirements applicable to REITs
and (B) either PSMI at the time of (and after giving effect to) the Merger
was not considered to have any current or accumulated earnings and profits
for tax purposes or the Company makes distributions prior to the end of
1995 in an amount sufficient to eliminate such earnings and profits. You
may rely upon our tax opinion filed as Exhibit 8.1 to the Registration
Statement to the same extent as if it were set forth in full herein.
(e) The Underwriters shall have received an opinion, dated the
Closing Date and, with respect to the Additional Shares, the Option Closing
Date, from Skadden, Arps, Slate, Meagher & Flom, counsel to the Underwriters,
with respect to the Registration Statement, the Prospectus and this Agreement,
which opinion shall be satisfactory in all respects to the Representatives, and
such counsel shall have been provided by the Company with such documents and
information as they may reasonably request to enable them to pass on such
matters.
(f) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from Ernst & Young, independent certified public accountants,
substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any material change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other than
in the ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company, the
Subsidiaries and the Partnerships taken as a whole; (iv) the Company, the
Subsidiaries and the Partnerships shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company, the
25
<PAGE>
Subsidiaries, and the Partnerships, taken as a whole, other than those reflected
in the Registration Statement or the Prospectus (or any amendment or supplement
thereto); and (v) all the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date, and you shall have received a certificate, dated the
Closing Date and signed by the chief executive officer and the chief financial
officer of the Company (or such other officers as are acceptable to you), to the
effect set forth in this Section 6(g) and in Section 6(h) hereof.
(h) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained or
contained in the Deposit Agreement and required to be performed or complied with
by it hereunder or thereunder at or prior to the Closing Date.
(i) Prior to the Closing Date the Shares shall have been listed,
subject to notice of issuance, on the New York Stock Exchange.
(j) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company to
each Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 6, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c), (d) and
(e) shall be revised to reflect the sale of Additional Shares.
26
<PAGE>
7. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each of you and
each other Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification con tained in this paragraph (a) with respect
to any Preliminary Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Shares by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the several Underwriters in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Compa-
27
<PAGE>
ny has agreed in writing to pay such fees and expenses, (ii) the Company has
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Company and such Under-
writer or such controlling person shall have been advised by its counsel that
representation of such indemnified party and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed) due
to actual or potential differing interests between them (in which case the
Company shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Underwriter or such controlling person). It is
understood, however, that the Company shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Smith Barney Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The Company
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter,
to the extent provided in the preceding paragraph, and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the Regis-
tration Statement, and any person who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only with
respect to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you expressly for use in the Registration
Statement, the Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, or any such controlling
person based on the Registration Statement, the Prospectus or any Preliminary
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Underwriter pursuant to this paragraph (c),
such
28
<PAGE>
Underwriter shall have the rights and duties given to the Company by paragraph
(b) above (except that if the Company shall have assumed the defense thereof
such Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such Underwriter's expense), and the Company, its
directors, any such officer, and any such controlling person shall have the
rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraph (a) or (c) hereof in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then an indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the
29
<PAGE>
equitable considerations referred to in paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule I
hereto (or such numbers of Firm Shares increased as set forth in Section 9
hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
30
<PAGE>
8. Expenses.
--------
The Company agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by it of its obligations
hereunder: (i) the preparation, printing or reproduction, and filing with the
Commission of the Registration Statement (including financial statements and
exhibits thereto), the Preliminary Prospectus, the Prospectus, and each
amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, the Preliminary
Prospectus, the Prospectus, the Incorporated Documents, and all amendments or
supplements to any of them, as may be reasonably requested for use in connection
with the offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares and the
Preferred Shares, including any stamp taxes in connection with the original
issuance and sale of the Shares and the Preferred Shares; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda, the Deposit Agreement and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Shares and the Preferred Shares; (v) the fees and expenses of the Depositary,
including the fees and disbursements of counsel for the Depositary, if any; (vi)
the registration of the Shares under the Exchange Act and the listing of the
Shares on the New York Stock Exchange; (vii) the registration or qualification
of the Shares and the Preferred Shares for offer and sale under the securities
or Blue Sky laws of the several states as provided in Section 5(f) hereof
(including the reasonable fees, expenses and disbursements of counsel for the
Underwriters relating to the preparation, printing or reproduction, and delivery
of the preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (viii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (ix) the transportation and
other expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Shares; and (x) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
9. Effective Date of Agreement.
---------------------------
This Agreement shall become effective: (i) upon the execution and
delivery hereof by the parties hereto; or (ii) if, at the time this Agreement is
31
<PAGE>
executed and delivered, it is necessary for a post-effective amendment to the
Registration Statement to be declared effective before the offering of the
Shares may commence, when notification of the effectiveness of such post-
effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Company,
by notifying you, or by you, as Representatives of the several Underwriters, by
notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting Under-
writer or Underwriters are obligated but fail or refuse to purchase is not more
than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Smith Barney Inc., to purchase the Shares
which such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
32
<PAGE>
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Termination.
-----------
This Agreement shall be subject to termination in your absolute
discretion, without liability on the part of any Underwriter to the Company by
notice to the Company, if prior to the Closing Date or any Option Closing Date
(if different from the Closing Date and then only as to the Additional Shares),
as the case may be, (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York or California shall have been declared by either
federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in your
judgment, impracticable or inadvisable to commence or continue the offering of
the Shares at the offering price to the public set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
11. Information Furnished by the Underwriters.
-----------------------------------------
The statements set forth in the last paragraph on the cover page, the
stabilization legend on the inside front cover and the statements in the first
three paragraphs under the caption "Underwriting" in the Prospectus Supplement
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 4(b) and 7 hereof.
12. Miscellaneous.
-------------
Except as otherwise provided in Sections 3, 9 and 10 hereof, notice
given pursuant to any provision of this Agreement shall be in writing and shall
be delivered (i) if to the Company, at the office of the Company, Public
Storage, Inc., 600 North Brand Boulevard, Glendale, California 91203, Attention:
Legal Department, or (ii) if to you, as Representatives of the several
Underwriters, care of Smith Barney Inc., 388 Greenwich Street, New York, New
York 10013, Attention: Manager, Investment Banking Division.
33
<PAGE>
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the
term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the Shares in
his status as such purchaser.
13. Applicable Law; Counterparts.
----------------------------
This agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
34
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
PUBLIC STORAGE, INC.
By .........................................
Name:
Title:
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PRUDENTIAL SECURITIES INCORPORATED
ROBERTSON, STEPHENS & COMPANY, L.P.
THE ROBINSON-HUMPHREY
COMPANY, INC.
As Representatives of the Several Underwriters
By: SMITH BARNEY INC.
By ............................................
Name:
Title:
35
<PAGE>
SCHEDULE I
PUBLIC STORAGE, INC.
4,000,000 Shares
<TABLE>
<CAPTION>
Number of
Underwriters Firm Shares
- ------------ -----------
<S> <C>
Smith Barney Inc. ......................................
PaineWebber Incorporated................................
Donaldson, Lufkin & Jenrette............................
Securities Corporation.................................
Prudential Securities Incorporated......................
Robertson, Stephens & Company, L.P. ....................
The Robinson-Humphrey Company, Inc. ....................
Total................................................. 4,000,000
</TABLE>
<PAGE>
EXHIBIT 3.10
CERTIFICATE OF DETERMINATION OF PREFERENCES
OF
CONVERTIBLE PARTICIPATING
PREFERRED STOCK
OF
STORAGE EQUITIES, INC.
[AS FILED
In the Office of the Secretary of State
of the State of California
Aug 17 1995]
The undersigned, Harvey Lenkin and Sarah Hass, President and
Secretary, respectively, of Storage Equities, Inc., a California corporation, do
hereby certify:
FIRST: The Restated Articles of Incorporation of the corporation
authorize the issuance of 50,000,000 shares of stock designated "preferred
shares," issuable from time to time in one or more series, and authorize the
Board of Directors to fix the number of shares constituting any such series, and
to determine or alter the dividend rights, dividend rate, conversion rights,
voting rights, right and terms of redemption (including sinking fund
provisions), the redemption price or prices and the liquidation preference of
any wholly unissued series of such preferred shares, and the number of shares
constituting any such series.
SECOND: The Board of Directors of the corporation did duly adopt
the resolutions attached hereto as Exhibit A and incorporated herein by
reference authorizing and providing for the creation of a series of preferred
shares to be known as "Convertible Participating Preferred Stock" consisting of
31,200 shares, no share of such series having been issued.
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
IN WITNESS WHEREOF, the undersigned have executed this certificate
this 17th day of August 1995.
----- --------------
/s/ HARVEY LENKIN
-----------------------------------
Harvey Lenkin
President
/s/ SARAH HASS
-----------------------------------
Sarah Hass
Secretary
<PAGE>
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS
OF STORAGE EQUITIES, INC.
ESTABLISHING A SERIES OF
CONVERTIBLE PARTICIPATING PREFERRED STOCK
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors by Article III of the Restated Articles of Incorporation of this
Corporation, there is hereby established a series of the authorized preferred
shares of this Corporation having a par value of $.01 per share, which series
shall be designated "Convertible Participating Preferred Stock," shall consist
of 31,200 Shares (in the aggregate, the "Shares," individually, a "Share"), all
of which shall be issued concurrently, and shall have the following rights,
preferences and privileges:
(a) Dividend Rights.
---------------
(1) Dividends shall be payable in cash on the Shares when, as
and if declared by the Board of Directors, out of funds legally available
therefor, on a cumulative basis, for each of the "Dividend Periods" consisting
of the twenty-eight (28) consecutive calendar quarters beginning with the
calendar quarter ending on September 30, 1995.
(2) The full dividend on each Share for each Dividend Period
shall be (i) $12.50 plus (ii) an additional amount which (A) for each of the
first eight Dividend Periods shall be .003205% of the amount by which (1)
"Adjusted Property Cash Flow" (as hereinafter defined) for the same Dividend
Period exceeds (2) $45,000, and (B) for the ninth Dividend Period, and each
subsequent Dividend Period, shall be .003205% of the amount by which (1) the
Adjusted Property Cash Flow for the same Dividend Period exceeds (2) $525,000.
(The full dividend on each Share for the first Dividend Period shall be computed
on the basis of the Adjusted Cash Flow for the entire first Dividend Period,
notwithstanding that the Shares will have been
1
<PAGE>
outstanding for less than the entire first Dividend Period.) The total dividend
paid on each Share for any Dividend Period shall not exceed the amount of the
full dividend for that Dividend Period, determined as provided above. The
preceding sentence shall not limit in any way the payment on each Share of
accumulated and unpaid dividends for prior Dividend Periods.
(3) The dividend, if any, on the Shares for each Dividend Period
shall be payable on or before the last day of that Dividend Period; provided,
that if any such day shall be a Saturday, Sunday or other day on which banking
institutions are closed (any of the foregoing a "Non-Business Day"), then the
dividend shall be payable on the next succeeding day which is not a Non-Business
Day. Each such dividend shall be paid to the holders of record of the Shares as
they appear on the stock register of the Corporation on the date of payment
thereof.
(4) Because the dividend on the Shares for each Dividend Period
will be paid prior to or concurrently with the end of that Dividend Period, it
is likely to be necessary to estimate the "Property Cash Flow" (as hereinafter
defined) for the Dividend Period for purposes of computing the Dividend. A
dividend computed on the basis of a diligent and good faith attempt to
accurately estimate Property Cash Flow for a Dividend Period shall be deemed a
full dividend for that Dividend Period. However, each subsequent dividend, if
any, shall be increased or decreased, if and as appropriate, to reflect the
amount by which the prior dividend was less than or more than it would have been
if based on actual, rather than estimated, Property Cash Flow. There shall be no
adjustment, following payment, of the dividend paid on a Share for the last
Dividend Period ending contemporaneously with, or prior to, conversion of that
Share, notwithstanding that such dividend may necessarily have been computed on
the basis of estimated, rather than actual, Property Cash Flow for the last
Dividend Period.
2
<PAGE>
(5) Unless dividends on all outstanding "Senior Shares" (as
hereinafter defined) have been or contemporaneously are paid in full for the
latest dividend period ending contemporaneously with or prior to the payment of
a dividend on the Shares, and, to the extent such Senior Shares have cumulative
dividend rights, for all prior dividend periods, no dividend or other
distribution shall be paid on the Shares. The Corporation shall not declare or
pay or set apart for payment any dividends for a dividend period on any "Common
Shares" (as hereinafter defined), or any other class or series of shares ranking
on a parity with, or junior to, the Shares as to dividends, unless a full
dividend on the Shares for the latest Dividend Period ending contemporaneously
with or prior to the last day of such dividend period, and for all prior
Dividend Periods, has been or contemporaneously is declared and paid, or
declared and a sum sufficient for payment thereof is set apart for payment. When
dividends are not paid in full upon the Shares or on any class or series of
shares ranking on a parity therewith as to dividends, all dividends declared
upon the Shares and any other class or series of shares ranking on a parity
therewith as to dividends shall be declared pro rata so that the amount of
dividends declared per share on the Shares and on such other series or class of
shares shall in all cases bear to each other the same ratio that the cumulative
dividends per share on the Shares such other class or series of shares bears to
each other. The foregoing shall not limit distributions on or in respect of any
outstanding shares of stock of the Corporation which are paid in Common Shares.
(6) The preference as to dividends held by holders of any Shares
shall terminate upon, and no further dividends shall be paid on such Shares
after, the earlier of (i) the Corporation's receipt of notice of exercise of the
conversion right as to those Shares as provided for in (g) below and (ii)
automatic conversion in accordance with (f) below.
3
<PAGE>
(b) Liquidation.
-----------
(1) In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation,
(i) The holders of the Shares are not entitled to receive
any liquidation payment in respect of the Shares until the respective
liquidation preferences in respect of all Senior Shares, if any, have been paid
in full;
(ii) If the liquidation amount paid with respect to each
Share is less than the "Share Liquidation Preference" (as hereinafter defined),
plus all accumulated and unpaid dividends, or if the liquidation amounts payable
with respect to any other shares of the Corporation ranking as to any
liquidation distribution on a parity with the Shares are not paid in full, any
participation in the distribution of the assets of the Corporation by the
holders of the Shares and/or of such other shares will be on a basis which
causes the amount paid in respect of each Share to bear the same proportion to
the amount paid in respect of each such other share as the Share Liquidation
Preference, plus all accumulated and unpaid dividends, bears to the full
liquidation amount to which the holder of such other share would be entitled in
the event of full payment; and
(iii) Before any distribution of assets is made to holders
of Common Shares or any other class or series of shares ranking junior to the
Shares upon liquidation, there shall be paid to the holder of the Shares a
liquidating distribution on each Share in the amount of the Share Liquidation
Preference, plus all accumulated and unpaid dividends.
After payment of a total liquidation distribution on each Share of the
Share Liquidation Preference, plus all accumulated and unpaid dividends, the
holders of the Shares shall not be entitled to any further participation in any
distribution of assets by the Corporation, and their preference as to dividends
shall terminate.
4
<PAGE>
(2) For purposes of liquidation rights, a reorganization (as defined
in Section 181 of the California Corporations Code) or consolidation or merger
of the Corporation with or into any other corporation or corporations or a sale
of all or substantially all of the assets or the corporation shall be deemed not
to be a liquidation, dissolution or winding up of the Corporation.
(c) Redemption.
----------
Except as herein specifically provided, the Shares are not redeemable.
If the Board of Directors of the Corporation shall, at any time and in good
faith, be of the opinion that ownership of securities of the Corporation has or
may become concentrated to an extent that may prevent the Corporation from
qualifying as a real estate investment trust under the REIT Provisions of the
Internal Revenue Code, then the Board of Directors shall have the power to
prevent the transfer of and/or to call for redemption of the Shares, if
required, in the opinion of the Board of Directors, to maintain or bring the
direct or indirect ownership thereof into conformity with the requirements of
such a real estate investment trust under the REIT Provisions of the Internal
Revenue Code. The redemption price to be paid for each Share, if so called for
redemption, on the date fixed for redemption, shall be the Share Liquidation
Preference, plus all accumulated and unpaid dividends. From and after the date
fixed for redemption by the Board of Directors, the holders of the Shares shall
cease to be entitled to any distributions, voting rights, and other benefits
with respect to the Shares, other than the right to payment of the redemption
price determined as aforesaid. "REIT Provisions of the Internal Revenue Code"
shall mean Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended. In order to exercise the redemption option set forth above, with
respect to the Shares, the Corporation shall give notice of redemption to the
record holders of the Shares at least 10 days prior to such redemption date, to
the addresses of such holders as the same shall appear on the stock transfer
records of the Corporation. Such notice shall state (i) the
5
<PAGE>
redemption date and (ii) the place or places where the certificates for the
Shares is to be surrendered for payment of the redemption price.
(d) Voting Rights.
-------------
(1) The record owners of the Shares shall be entitled to the
same voting power and rights on a share for share basis as a holder of Common
Shares. Except as required by California law and/or as hereinafter specifically
provided, the holders of the Shares shall have no right or power to vote the
Shares separately as a class.
(2) The affirmative vote or consent of the holders of at least a
majority of the outstanding Shares, voting separately as a class, will be
required for any amendment to the Articles of Incorporation of the Corporation
that will adversely alter or change the powers, preferences, privileges or
rights of the Shares.
(3) If the Corporation shall fail to pay full cumulative
dividends on the Shares or any other class of its preferred shares for six (6)
quarterly dividend payment periods, whether or not consecutive (a "Dividend
Default"), the holders of all outstanding preferred shares and any other holders
of capital stock of the Corporation ranking on a parity with the Shares as to
dividends and rights to distributions upon liquidation, voting as a single class
without regard to series, will be entitled as a group to elect two Directors
until full cumulative dividends for all past dividend payment periods on the
Shares have been paid or declared and funds therefor set apart for payment. Such
right to vote separately as a class to elect Directors shall, when vested, be
subject, always, to the same provisions for the vesting of such rights to elect
Directors separately as a class in the case of future Dividend Defaults. At any
time when such right to elect Directors separately as a class shall have so
vested, the Corporation may, and upon the written request of the holders of
record of not less than 20% of the total number of the Shares then outstanding
shall, call a special meeting of stockholders for the election of Directors. In
the case of such a written request, such special meeting shall be held within 90
days after the delivery of such request and, in either case, at the place and
upon the
6
<PAGE>
notice provided by law and in the Bylaws of the Corporation, provided that the
Corporation shall not be required to call such a special meeting if such request
is received less than 120 days before the date fixed for the next ensuing Annual
Meeting of Shareholders of the Corporation and the holders of all of the Shares
are afforded the opportunity to elect such Directors (or fill any vacancy) at
such Annual Meeting of Shareholders. Directors elected as aforesaid shall serve
until the next Annual Meeting of Shareholders of the Corporation or until their
respective successors shall be elected and qualified. If, prior to the end of
the term of any Director elected as aforesaid, a vacancy in the office of such
Director shall occur during the continuance of a Dividend Default by reason of
death, resignation, or disability, such vacancy shall be filled for the
unexpired term by the appointment of a new Director for the unexpired term of
such former Director, such appointment to be made by the remaining Director
elected as aforesaid.
(e) Conversion.
----------
Each Share shall be convertible, at the option of the holder thereof,
at any time prior to June 30, 2002 in the manner hereinafter set forth, into a
number of Common Shares, computed by dividing (i) .003205% of the "Adjusted
Property Value" (as hereinafter defined) by (ii) the average daily "Closing
Price" (as hereinafter defined) per Common Share for all trading days during the
period of 45 consecutive days ending on the day notice of conversion is given
(which must be a day on which notice of conversion is permitted to be given in
accordance with (g) below), provided, however, that if conversion occurs before
June 30, 2000, and if the average daily Closing Price per Common Share for the
applicable 45 day period is more than $18.00, then $18.00 shall be used in the
computation in place of such average daily Closing Price per Common Share.
7
<PAGE>
(f) Mandatory Conversion on June 30, 2002.
-------------------------------------
Any Shares which have not been converted into Common Shares pursuant
to (e) prior to June 30, 2002, shall be automatically converted, on and as of
June 30, 2002, into a number of Common Shares, computed by dividing (i) .003205%
of the Adjusted Property Value by (ii) the average daily Closing Price per
Common Share for all trading days during the period of 45 consecutive days
ending on June 23, 2002.
(g) Conversion Procedure.
--------------------
To exercise a right of conversion under (e) above, a holder of the
Shares to be converted shall deliver to the principal office of the Corporation,
at least five business days, and not more than 8 business days, prior to the
intended conversion date, written notice of the exercise of its right to convert
such Shares, addressed to the Chief Financial Officer of the Corporation,
specifying the number of Shares to be converted, requesting conversion, and
specifying the date of conversion. On the conversion date established pursuant
to any of (e) or (f) above, the holder of the Shares to be converted shall
surrender the certificates for such Shares, duly endorsed or assigned to the
Corporation or in blank, at the principal office of the Corporation or at a bank
or trust company appointed by the Corporation for that purpose.
(h) Adjustments.
-----------
(1) If, on or before June 30, 2002, there occurs the
consolidation or merger of the Corporation with or into another corporation, or
the sale or conveyance of all or substantially all of the assets of the
Corporation to another corporation, and the Corporation is not the acquiring or
surviving corporation of such consolidation, merger or sale or conveyance of
assets, then, upon conversion, there shall be issued to the holders of the
Shares upon conversion, in lieu of Common Shares, shares of common stock, or
equivalent securities, of the acquiring or surviving corporation, computed in
the same manner that the number of Common Shares to be issued upon
8
<PAGE>
conversion would have been computed in the absence of such consolidation, merger
or sale or conveyance.
(2) If, on or before June 30, 2002, and after the commencement
of an applicable period of 45 consecutive days determined in accordance with (e)
or (f) above, the Corporation shall subdivide or combine its outstanding Common
Shares into a greater or smaller number of Common Shares, or shall set a record
date for the purpose of entitling the holder of its Common Shares to receive a
dividend or other distribution payable in Common Shares, then in each case the
number of shares of Common Stock into which each Share shall be converted (and
the limitation, initially $18.00, provided for in (e), on the amount to be used
as the average daily Closing Price for the applicable period) shall be
appropriately increased or reduced.
(i) No Fractional Shares.
--------------------
No fractions of Common Shares shall be issued upon conversion. The
number of full Common Shares issuable to any one person or entity upon
concurrent conversion of any Shares shall be computed on the basis of the
aggregate number of Shares being converted and shall be rounded to the nearest
whole number.
(j) Future Issuance of Certain Shares.
---------------------------------
The future issuance of shares of preferred stock on a parity with, or
junior to, the Shares as to dividends, and/or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the future issuance of Senior Shares (which shall be senior to
the Shares as to such matters), shall not require the vote or consent of the
holders of the Shares, unless they violate the restrictions contained herein, or
the restrictions contained in Section 5(b) of the Exchange Agreement which limit
or restrict the Corporations's right (i) to issue Senior Shares to certain
investors in partnerships affiliated with this Corporation for consideration
consisting of interests in partnerships or interests in real property, (ii) to
issue preferred shares to certain individuals or affiliates of such
9
<PAGE>
individuals or (iii) to issue Senior Shares while Senior Shares are not rated by
Standard & Poor's, Moody's Investor Services or another rating agency at or
above a rating specified in such Section 5(b).
(k) Certain Definitions.
-------------------
(1) If the Common Shares are listed on one or more exchanges,
the "Closing Price" for a trading day shall be the composite closing price for
that day as reported in the Wall Street Journal (Western Edition). If the Common
Shares are not listed on an exchange, the "Closing Price" for a trading day
shall be the average of the closing bid and asked prices for that day as
reported by NASDAQ (or if not reported by NASDAQ, its equivalent) in the Wall
Street Journal (Western Edition).
(2) "Common Shares" shall mean shares, outstanding as of the
date of issuance of the Share, or issued thereafter, of the Corporation's Common
Stock, par value $.10 per share (together with any other shares of capital stock
into which such shares shall be reclassified or changed).
(3) "Adjusted Property Cash Flow" for any period means 74.25% of
the "Property Cash Flow" for the same period.
(4) "Adjusted Property Value" shall mean the sum of (i) the
amount computed by dividing .0975 into the aggregate Adjusted Property Cash Flow
for the four full consecutive calendar quarters ending most recently prior to
conversion of the Shares hereunder, if such conversion is pursuant to (e) above,
and ending concurrently with conversion of the Shares hereunder, if such
conversion occurs pursuant to (f) above plus (ii) the amount per share of any
accumulated unpaid dividends for prior Dividend Periods multiplied by 31,200 (as
adjusted in accordance with any subdivision or combination as described in
(h)(2) above).
(5) "Property Cash Flow" for any period means the net operating
income for that period, computed in accordance with generally accepted
accounting principles, from the rental and operation of the mini-warehouse
projects identified on
10
<PAGE>
Exhibit A to the Exchange Agreement (the "Projects"), before reduction for
depreciation, taxes (other than real estate taxes and assessments and taxes
computed on gross income or gross rent), fees, interest or principal on any
indebtedness, capital expenditures or distributions to any persons owning the
Projects in partnership or other form of joint ownership with the Corporation,
but after reduction by a sum equal to two percent (2%) of gross revenues
generated during such period from such projects.
Each project will be charged for each period with a property
management fee equal to six percent of gross revenues from the project for the
period. Overhead and other charges by, and reimbursement of, this Corporation
and its Affiliates, shall be allocated among the Projects on the same basis on
which such charges and reimbursement are allocated among all other projects
owned by this Corporation or by Affiliates of this Corporation, and in a manner
generally consistent with prior practice, subject, however, to any provision to
the contrary in the Exchange Agreement.
In the event of casualty or condemnation which terminates or
materially adversely affects, the operation of one of the aforesaid Projects,
then Property Cash Flow for periods subsequent to the casualty or condemnation
affecting such project(s) ("Terminated Projects") shall be computed by adding to
Property Cash Flow for such periods from the remaining Projects (the "Remaining
Property Cash Flow") a percentage of such Remaining Property Cash Flow, which
percentage shall be computed as of the date of the casualty or condemnation by
dividing the Property Cash Flow from the Terminated Projects for the last four
quarters ending prior to the casualty or condemnation by the Remaining Property
Cash Flow (i.e., Property Cash Flow from the Projects, excluding Property Cash
Flow from Projects that became the Terminated Projects) for the same four
quarters. If, as a consequence of a Project being financed by the Corporation,
the Project is lost or disposed of (e.g., by
11
<PAGE>
foreclosure, deed-in-lieu thereof, involuntary sale or liquidation, or
abandonment) (the "Seized Property"), Property Cash Flow for each subsequent
period or portion thereof (an "Accrual Period") shall be computed by adding to
Property Cash Flow for the remaining Projects for the Accrual Period the product
of (A) the greater of (i) the Property Cash Flow from the Seized Property
accrued during the last four quarters ending prior to the disposition of the
Seized Property, and (ii) the Property Cash Flow from the Seized Property
accrued during the four quarters preceding the Seized Property's financing, with
the resulting amount increased at a 6% annual rate from the date of the Seized
Property's disposition, and (B) a fraction in which the numerator is the number
of days in the Accrual Period and the denominator is 365.
(6) "Senior Shares" shall mean any shares of stock of the
Corporation, exclusive of the Shares and the Common Shares, which (i) are
outstanding as of the date of issuance of the Shares or (ii) are issued
subsequent to the date of issuance of the Shares, and not in violation of the
terms of the Exchange Agreement and these Resolutions, on terms which do not
provide that they are on a parity with, or junior to, the Shares as to dividends
and as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation. Senior Shares shall
include, but not be limited to, the following series of preferred stock of the
Corporation:
10% Cumulative Preferred Stock, Series A;
9.20% Cumulative Preferred Stock, Series B;
Adjustable Rate Preferred Stock, Series C;
9.50% Cumulative Preferred Stock, Series D;
10.00% Cumulative Preferred Stock, Series E;
9.75% Cumulative Preferred Stock, Series F.
The shares of 8.25% Convertible Preferred Stock of the Corporation
shall not be "Senior Shares," but shall be on a parity with the Shares as to
dividends and as
12
<PAGE>
to the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
(7) "Affiliate" shall mean (a) any person directly or indirectly
controlling, controlled by or under common control with such person, (b) any
person owning or controlling 10% or more of the outstanding voting securities of
such person; (c) any officer, director, general partner, trustee or any one
acting in a substantially similar capacity as to such person, or (d) any person
who is an officer, director, general partner, trustee or holder of 10% or more
of the voting securities or beneficial interests of any of the foregoing.
(8) "Share Liquidation Preference" means the greater of (i)
$1,000.00 or (ii) .003205% of the amount computed by dividing .0975 into the
aggregate Adjusted Property Cash Flow for the four full consecutive calendar
quarters ending most recently prior to liquidation of the Corporation.
(9) "Exchange Agreement" means that Exchange Agreement and
Assignment between the Corporation and Harris Trust and Savings Bank as trustee
for the Ameritech Pension Trust dated on or about August 11, 1995 by which the
Shares were issued, as amended from time to time.
-----
13
<PAGE>
EXHIBIT 3.11
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
STORAGE EQUITIES, INC.
a California corporation
[AS FILED
In the Office of the Secretary of State
of the State of California
NOV 13 1995]
Ronald L. Havner, Jr. and David P. Singelyn certify that:
1. They are the Vice President and Assistant Secretary, respectively, of
STORAGE EQUITIES, INC., a California corporation (the "Corporation").
2. The Articles of Incorporation of this Corporation are amended as
follows:
(i) Article III of the Corporation's Articles of Incorporation is
amended in its entirety to read as follows:
"III
(a) This corporation is authorized to issue only three classes of shares
to be designated respectively "Preferred Stock," "Common Stock" and "Class B
Common Stock" and referred to herein either as Preferred Stock or Preferred
shares, Common Stock or Common shares or Class B Common Stock or Class B Common
shares. The total number of shares which this corporation is authorized to issue
is Two Hundred Fifty-Seven Million (257,000,000); the number of Preferred shares
shall be Fifty Million (50,000,000) of the par value of One Cent ($.01) each,
the number of Common shares shall be Two Hundred Million (200,000,000) of the
par value of Ten Cents ($.10) each and the number of Class B Common shares shall
be Seven Million (7,000,000) of the par value of Ten Cents ($.10) each.
(b) The Preferred shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of any
series of Preferred shares and to determine the designation of any such series.
The Board of Directors is also authorized to determine or alter the rights
granted to or imposed upon any wholly unissued series of Preferred shares
including the dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price or prices and the liquidation preference, and, within the
limits and restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to
increase or decrease (but not below the number of shares then outstanding) the
number of shares of any such series subsequent to the issue of shares of that
series. In case the number of shares of any series shall be so decreased, the
shares constituting such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.
(c) (1) Subject to any preference with respect to the Preferred shares
and the provisions of this subparagraph (c)(1), the Common shares and the Class
B Common shares
<PAGE>
shall be entitled to distributions out of funds legally available therefor,
when, as and if declared by the Board of Directors. The Class B Common shares
shall not be entitled to participate in distributions until the later to occur
of (i) "funds from operations per Common Share" (as defined below) aggregating
$1.80 during any four consecutive calendar quarters or (ii) January 1, 2000;
thereafter, the Class B Common shares will participate in distributions (other
than liquidating distributions) at the rate of 97% of the per share
distributions on the Common shares, provided that cumulative distributions from
September 30, 1995 at the rate of at least $.22 per share per quarter (subject
to appropriate adjustment for stock splits, reverse stock splits and stock
dividends) have been paid on the Common shares.
(2) In the event of any liquidation, dissolution or winding up of
this corporation, whether voluntary or involuntary, subject to any preference
with respect to the Preferred shares, the entire assets of this corporation
available for distribution to shareholders shall be distributed ratably among
the Common shares. The Class B Common shares shall not be entitled to any
distributions in respect of a liquidation, dissolution or winding up of this
corporation.
(3) The Class B Common shares shall not have any voting powers either
general or special, except as required by law.
(4) (i) The Class B Common shares shall automatically convert into
and become an equal number of Common shares upon the later to occur (A) funds
from operations per Common Share (as defined below) aggregating $3.00 during any
four consecutive calendar quarters or (B) January 1, 2003.
(ii) As used above:
(A) Funds from operations ("FFO") means net income (loss)
(computed in accordance with generally accepted accounting
principles) before (1) gain (loss) on early extinguishment of
debt, (2) minority interest in income and (3) gain (loss) on
disposition of real estate, adjusted as follows: (1) plus
depreciation and amortization (including this corporation's pro
rata share of depreciation and amortization of unconsolidated
equity interests and amortization of assets acquired in the
merger of Public Storage Management, Inc. into this corporation)
and (2) less FFO attributable to minority interest.
(B) FFO per Common Share means FFO less preferred stock
dividends (other than dividends on convertible preferred stock)
divided by the number of outstanding weighted average shares of
Common Stock assuming conversion of all outstanding convertible
securities and the Class B Common shares).
(iii) If this corporation subdivides or combines its outstanding
shares of Common Stock into a greater or smaller number of shares, or sets a
record date for the purpose of entitling the holders of its Common Stock to
receive a dividend or other distribution payable in Common Stock, then in each
case, the then outstanding Class B Common Stock shall be treated equally and
shall, as appropriate, (A) be subdivided or combined in the same proportion as
the Common Stock is subdivided or combined or
-2-
<PAGE>
(B) receive the same proportionate dividend or distribution payable,
respectively, in shares of Class B Common Stock as paid or issued with respect
to the Common Stock.
(iv) This corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all the then
outstanding Class B Common Stock and shall take all such action and obtain all
permits or orders that may be necessary to enable this corporation lawfully to
issue Common Stock upon the conversion of the Class B Common Stock."
(ii) Article IV of the Corporation's Articles of Incorporation is
renumbered as Article V and, as renumbered, Article V reads as follows:
"V
(a) The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
(b) The corporation may indemnify agents of this corporation (as defined
in Section 317 of the Corporations Code) for breach of duty to the corporation
and its shareholders by bylaw, agreement or otherwise to the fullest extent
permitted by California law which may be in excess of that expressly allowed by
California law, provided that such indemnification is not expressly prohibited
by California law."
(iii) a new Article IV is added to the Corporation's Articles of
Incorporation to read as follows:
"IV
(a) OWNERSHIP LIMITATIONS - COMMON STOCK
------------------------------------
(i) Except as provided in subparagraph (c) of this Article IV and the
last sentence of this subparagraph (a), no Person shall Acquire or Beneficially
Own shares of Common Stock in excess of the Ownership Limit set forth in this
subparagraph (a)(i). The Ownership Limit is 2.0% of the outstanding shares of
each class of Common Stock. Solely for purposes of this subparagraph (a)(i), the
Common Stock and the Class B Common Stock shall be treated as a single Class of
Common Stock.
The limitation set forth in this subparagraph (a)(i) of this Article IV(a)
shall apply only to an Acquisition or Transfer of Stock or other event with
respect to Stock occurring subsequent to the effective date of the merger of
Public Storage Management, Inc. with and into this corporation. Notwithstanding
anything to the contrary in this Article IV(a), no Person shall be deemed to
exceed the Ownership Limit set forth in this subparagraph (a)(i) solely by
reason of the Beneficial Ownership of shares of any class of Stock to the extent
such shares of Stock were Beneficially Owned by such Person on the effective
date of the merger of Public Storage Management, Inc. with and into this
corporation (but the Beneficial Ownership of any such shares of Stock shall be
taken into account in determining whether
-3-
<PAGE>
any subsequent Transfer, Acquisition or other event violates this subparagraph
(a)(i)).
(ii) Notwithstanding any other provisions contained in these Articles of
Incorporation, no Person shall Acquire or Beneficially Own shares of any class
of Stock of this corporation to the extent that, if effective, such Acquisition
or Beneficial Ownership would result in this corporation being "closely held"
within the meaning of Section 856(h) of the Code (without regard to whether the
purported Acquisition, Transfer or other event takes place during the second
half of a taxable year) or otherwise would result in this corporation failing to
qualify as a REIT.
(b) REMEDIES
--------
(i) If, notwithstanding the other provisions contained in this Article
IV, at any time after the effective date of the merger of Public Storage
Management, Inc. with and into this corporation, there is a purported Transfer,
Acquisition, change in the capital structure of this corporation or other event
(including, without limitation, a change in the relationship between two or more
Persons that causes the application of Section 544 of the Code, as modified by
Section 856(h)), that, if effective, would result in the violation of one or
more of the restrictions on ownership and transfer described in subparagraph (a)
of the Article IV, then (1) in the case of a Transfer or Acquisition, that
number of shares of Stock purported to be Transferred or Acquired that otherwise
would cause such Person to violate subparagraph (a) (rounded up to the next
whole share) shall be automatically transferred to a Trust for the benefit of a
Charitable Beneficiary, as described in subparagraph (i) of this Article IV,
effective as of the close of business on the day immediately prior to the date
of such purported Transfer or Acquisition, and such Person shall acquire no
rights in such shares of Stock; (2) in the case of any event other than a
Transfer or Acquisition ("Beneficial Ownership Event"), that number of shares of
Stock that would be owned by Persons (the "Affected Persons") as a result of
such Beneficial Ownership Event that otherwise would violate subparagraph (a) of
this Article IV (rounded up to the next whole share) shall be automatically
transferred to a Trust for the benefit of a Charitable Beneficiary, as described
in subparagraph (i) of this Article IV, effective as of the close of business on
the day immediately prior to such Beneficial Ownership Event, and such Affected
Persons shall acquire no rights (or have no continuing rights) in such shares of
Stock; or (3) if the transfer to the Trust described in either clause (1) or
clause (2) hereof would not be effective for any reason to prevent any Person
from Beneficially Owning Stock in violations of subparagraph (a) of this Article
IV, then the Transfer, Acquisition, or other Beneficial Ownership Event that
would otherwise cause such Person to violate subparagraph (a) of this Article IV
shall be void ab initio.
(ii) Notwithstanding the other provisions hereof, any Transfer or
Acquisition of shares of Stock that, if effective, would result in the Stock
being beneficially owned by less than 100 persons (determined without reference
to any rules of attribution) shall be void ab initio, and the intended
transferee shall acquire no rights in such shares of Stock.
(iii) In addition to, and without limitation by, subparagraphs (b)(i) and
(b)(ii) above, if the Board of Directors or its designees shall at any time
determine in good faith that a Transfer, Acquisition or other event has taken
place in violation of subparagraph (a) of this Article IV or that a Person
intends to Acquire, has attempted to Acquire, or may Acquire direct ownership,
beneficial ownership (determined without reference to any rules of
-4-
<PAGE>
attribution) or Beneficial Ownership of any Stock in violation of subparagraph
(a) of this Article IV, the Board of Directors or its designees shall take such
action as it deems advisable to refuse to give effect to or to prevent such
Transfer or other event, including, but not limited to, causing this corporation
to refuse to give effect to such Transfer or other event on the books of this
corporation or instituting proceedings to enjoin such Transfer or other event;
provided, however, that any Transfer or Acquisition (or, in the case of events
- -------- -------
other than a Transfer or Acquisition, ownership or Beneficial Ownership) in
violation of subparagraph (a) of this Article IV shall automatically result in
the transfer to the Trust described in subparagraph (b)(i), irrespective of any
action (or non-action) by the Board of Directors.
(iv) Nothing contained in this subparagraph (b) shall limit the authority
of the Board of Directors to take such other action as it deems necessary or
advisable to protect this corporation and the interests of its stockholders by
preservation of this corporation's status as a REIT.
(c) WAIVERS AND EXCEPTIONS
----------------------
(i) Subject to subparagraph (a)(ii) of this Article IV, the Board of
Directors, in its sole and absolute discretion, may grant to any Person who
makes a request therefor an exception to the Ownership Limit with respect to the
Common Stock set forth in subparagraph (a)(i), subject to the following
conditions and limitations: (A) the Board of Directors shall have determined
that, after giving effect to (x) an acquisition by such Person of Beneficial
Ownership of the maximum amount of Common Stock permitted as a result of the
exception to be granted and (y) assuming that the four other Persons who would
be treated as "individuals" for purposes of Section 542(a)(2) for of the Code
and who would Beneficially Own the largest amounts of the Stock of this
corporation (determined by value) Beneficially Own the maximum amount of Common
Stock permitted under subparagraph (a) of this Article IV (or if greater, any
exception granted under this subparagraph (c)(i) to (or with respect to) such
Persons), this corporation would not be "closely held" within the meaning of
Section 856(h) of the Code (without regard to whether the purported Acquisition,
Transfer or other event takes place during the second half of a taxable year)
and would not otherwise fail to qualify as a REIT; and (B) such Person provides
to the Board of Directors such representations and undertakings as the Board of
Directors may, in its sole and absolute discretion, require (including, without
limitation, an agreement as to a reduced Ownership Limit for such Person with
respect to the Beneficial Ownership of one or more other classes of Stock not
subject to the exception), and such Person agrees that any violation of such
representations and undertakings or attempted violation thereof will result in
the application of the remedies set forth in subparagraph (b)(i) with respect to
shares of Stock held in excess of the Ownership Limit with respect to such
Person (determined without regard to the exception granted such Person under
this subparagraph (c)(i)). If a member of the Board of Directors requests that
the Board of Directors grant an exception to the Ownership Limit with respect to
such member or with respect to any other Person if such Board member would be
considered to be the Beneficial Owner of shares of Stock owned by such Person,
such member of the Board of Directors shall not participate in the decision of
the Board of Directors as to whether to grant any such exception.
(ii) Subject to subparagraph (a)(ii) of this Article IV, in addition to
exceptions
-5-
<PAGE>
permitted under subparagraph (c)(i) above, the Board of Directors, in its sole
and absolute discretion, may exempt a Person from the Ownership Limit if such
Person is not an individual for purposes of Section 542(a)(2) of the Code
(determined taking into account Section 856(h)(3)(A) of the Code) and such
Person provides to the Board of Directors such representations and undertakings
as the Board of Directors may, in its sole and absolute discretion, require, and
such Person agrees that any violation of such representations and undertakings
or attempted violation thereof will result in the application of the remedies
set forth in subparagraph (b)(i) with respect to shares of Stock held in excess
of the Ownership Limit with respect to such Person (determined without regard to
the exemption granted under this subparagraph (c)(ii)).
(iii) Prior to granting any exception or exemption pursuant to
subparagraph (c)(i) or (c)(ii), the Board of Directors may require a ruling from
the IRS or an opinion of counsel, in either case in form and substance
satisfactory to the Board of Directors, in its sole and absolute discretion as
it may deem necessary or advisable in order to determine or ensure this
corporation's status as a REIT, provided, however, that obtaining a favorable
-------- -------
ruling or opinion shall not be required for the Board of Directors to grant an
exception hereunder.
(d) CERTAIN DEFINITIONS
-------------------
Unless the context otherwise requires, the terms defined in this paragraph
(d) shall have, for all purposes of subparagraphs (a) through (k) of this
Article IV, the meaning specified herein (with terms defined in the singular
having comparable meanings when used in the plural).
Acquire. The term "Acquire" shall mean the acquisition of Beneficial
-------
Ownership of shares of Stock by any means, including, without limitation, a
Transfer, the exercise of or right to exercise any rights under any option,
warrant, convertible security, pledge or other security interest or similar
right to acquire shares, but shall not include the acquisition of any such
rights unless, as a result, the acquiror would be considered a Beneficial Owner
(if the acquisition would have been effective), as defined below. The term
"Acquisition" shall have the correlative meaning. Notwithstanding the
foregoing, the term "Acquire" shall not include the conversion of the Class B
Common Stock into Common Stock, which are treated as a single class of Common
Stock for purposes of subparagraph (a)(i) of this Article IV.
Beneficial Ownership. The term "Beneficial Ownership" shall mean ownership
--------------------
of Common Stock by a Person who is or would be treated as an owner of such Stock
either directly, indirectly or constructively through the application of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns," and "Beneficially Owned" shall have
correlative meanings.
Charitable Beneficiary. The term "Charitable Beneficiary" shall mean one
-----------------------
or more beneficiaries of the Trust as determined pursuant to subparagraph (i) of
this Article IV, each of which shall be an organization described in Sections
170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
----
amended from time to time.
IRS. The term "IRS" shall mean the United States Internal Revenue Service.
---
-6-
<PAGE>
Market Price. The term "Market Price" shall mean, with respect to any
------------
class of Stock, the last reported sales price on the NYSE of shares of such
class of Stock on the day immediately preceding the relevant date, or if such
class of Stock is not then traded on the NYSE, the last reported sales price of
shares of such class of Stock on the day immediately preceding the relevant date
as reported on any exchange or quotation system or for which such class of Stock
may be traded, provided, however, that if the Board of Directors determines in
-------- -------
good faith that a lower price is appropriate, then the Market Price shall be
such lower price as determined in good faith by the Board of Directors, or if
such class of Stock is not then traded over any exchange or quotation system,
the Market Price shall be the price determined in good faith by the Board of
Directors of this corporation as the fair market value of shares of such class
of Stock on the relevant date.
NYSE. The term "NYSE" shall mean the New York Stock Exchange.
----
Ownership Limit. The term "Ownership Limit" shall mean the maximum amount
---------------
of Common Stock that may be Beneficially Owned by a Person under subparagraph
(a)(i) of this Article IV, determined without regard to any exception or waiver
that may be granted under subparagraph (c) of this Article IV (but taking into
account the last sentence of subparagraph (a)(i) of this Article IV).
Person. The term "Person" shall mean an individual, corporation,
------
partnership, estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity; but does not include an underwriter
which participates in a public offering of Stock provided that the ownership of
Stock by such underwriter would not result in this corporation being "closely
held" within the meaning of Section 856(h) of the Code and would not otherwise
result in this corporation failing to qualify as a REIT.
Purported Beneficial Transferee. The term "Purported Beneficial
-------------------------------
Transferee" shall mean, with respect to any purported Transfer which would
result in a violation of the limitations in subparagraph (a) of this Article IV,
the Purported Beneficial Transferee or owner for whom the Purported Record
Transferee would have acquired or owned shares of Stock if such Transfer had
been valid under subparagraph (a) of this Article IV.
Purported Record Transferee. The term "Purported Record Transferee" shall
---------------------------
mean with respect to any Purported Transfer which would result in a violation of
the limitations in subparagraph (a) of this Article IV, the record holder of the
Stock if such Transfer had been valid under subparagraph (a) of this Article IV.
REIT. The term "REIT" shall mean a Real Estate Investment Trust under
----
Section 856 of the Code.
Stock. The term "Stock" shall mean shares of stock of this corporation
-----
that are Common Stock.
Transfer. The term "Transfer" shall mean any sale, transfer, gift,
--------
assignment, devise or other disposition of Stock, including (i) the granting of
any option or entering into any agreement or the sale, transfer or other
disposition of Stock or (ii) the sale, transfer, assignment or other disposition
of any securities (or rights convertible into exchangeable
-7-
<PAGE>
Stock), whether voluntarily or involuntarily, whether of record or beneficially
or Beneficially (including, but not limited to, transfers of interests in other
entities which result in changes in Beneficial Ownership of Stock), and whether
by operation of law or otherwise.
Trust. The term "Trust" shall mean the trust created pursuant to
-----
subparagraph (i)(i) of this Article IV.
Trustee. The term "Trustee" shall mean the Person unaffiliated with this
-------
corporation, or the Purported Beneficial Transferee, or the Purported Record
Transferee, that is appointed by this corporation to serve as trustee of the
Trust.
(e) NOTICE OF RESTRICTED TRANSFER
-----------------------------
Any Person who Acquires or attempts to Acquire Stock or other securities in
violation of subparagraph (a) of this Article IV or any Person who is a
transferee in a Transfer or is otherwise affected by an event other than a
Transfer that results in a violation of subparagraph (a) of this Article IV,
shall immediately give written notice to this corporation of such Acquisition,
Transfer or other event and shall provide to this corporation such other
information as this corporation may request in order to determine the effect, if
any, of such Acquisition, Transfer or other event on this corporation's status
as a REIT.
(f) OWNERS REQUIRED TO PROVIDE INFORMATION
--------------------------------------
From and after the Effective Date, each Person who is a beneficial owner or
Beneficial Owner of Stock and each Person (including the stockholder of record)
who is holding Stock for a Beneficial Owner shall provide to this corporation
such information as this corporation may request, in good faith, in order to
determine this corporation's status as a REIT.
(g) AMBIGUITY
---------
In the case of an ambiguity in the application of any of the provisions of
this Article IV, including any definition contained in subparagraph (d) of this
Article IV, the Board of Directors shall have the power to determine the
application of the provisions of this Article IV with respect to any situation
based on the facts known to it.
(h) LEGEND
------
Each certificate for shares of any class of Stock shall bear the following
legend: "The shares of Stock represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of this corporation's
maintenance of its status as a Real Estate Investment Trust under the Internal
Revenue Code of 1986, as amended. Except as set forth in Article IV of this
corporation's Articles of Incorporation, no person may Beneficially Own more
than 2.0% of the outstanding shares of Common Stock of this corporation, with
certain further restrictions and exceptions as are set forth in this
corporation's Articles of Incorporation. Any Person who attempts to own or
Beneficially Own Stock in excess of the above limitations must immediately
notify this corporation. All capitalized terms in this legend have the meanings
defined in this corporation's Articles of Incorporation. If any of the
restrictions on transfer or ownership set forth in Article IV of the Articles of
Incorporation are violated, the Stock represented hereby will be automatically
transferred to the Trustee of a Trust for the benefit of a Charitable
Beneficiary pursuant to the terms of Article IV of the Articles of
Incorporation. In addition, attempted transfers of Stock in
-8-
<PAGE>
violation of the limitations described above (as modified or expanded upon in
Article IV of this corporation's Articles of Incorporation), may be void ab
--
initio. This Corporation will furnish to the holder hereof, upon request and
- ------
without charge, a complete written statement of the terms and conditions of
Article IV of the Articles of Incorporation. Requests for such documents may be
directed to the corporate secretary."
(i) TRANSFER OF STOCK IN TRUST
---------------------------
(i) Ownership in Trust; Status of Shares Held in Trust. Upon any
--------------------------------------------------
purported Transfer (whether or not such Transfer is the result of a
transaction engaged in through the facilities of the NYSE), Acquisition or
other event that results in the transfer of Stock to a Trust pursuant to
subparagraph (b) of this Article IV, such shares of Stock shall be deemed
to have been transferred to the Trustee in its capacity as Trustee for the
exclusive benefit one or more Charitable Beneficiaries. The Trustee shall
be appointed by this corporation and shall be a Person unaffiliated with
this corporation, any Purported Beneficial Transferee or Purported Record
Transferee. Each Charitable Beneficiary shall be designated by this
corporation as provided in subparagraph (k) of this Article IV. Shares of
Stock so held in Trust shall be issued and outstanding stock of this
corporation. The Purported Beneficial Transferee or Purported Record
Transferee shall not benefit economically from ownership of any shares of
Stock held in Trust by the Trustee, shall have no rights to dividends and
shall not possess any rights to vote or other rights attributable to the
shares held in Trust. The Purported Record Transferee and the Purported
Beneficial Transferee of shares of Stock in violation of subparagraph (a)
of this Article IV shall have no claim, cause of action, or any other
recourse whatsoever against the purported transferor of such shares.
(ii) Dividend Rights. The Trustee shall have all rights to dividends
---------------
with respect to shares of Stock held in the Trust, which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary. Any
dividend or distribution paid prior to the discovery by this corporation
that the shares of Stock have been transferred to the Trustee with respect
to such shares shall be paid over to the Trustee by the recipient thereof
upon demand, and any dividend declared but unpaid shall be paid when due to
the Trustee. Any dividends or distributions so paid over to the Trustee
shall be held in trust for the Charitable Beneficiary.
(iii) Rights upon Liquidation. In the event of any voluntary or
-----------------------
involuntary liquidation, dissolution or winding up of or any distribution
of the assets of this corporation, the Trustee shall be entitled to
receive, ratably with each other holder of Stock of the class of Stock that
is held in the Trust, that portion of the assets of this corporation
available for distribution to the holders of such class (determined based
upon the ratio that the number of shares of such class of Stock held by the
Trustee bears to the total number of shares of such class of Stock then
outstanding). The Trustee shall distribute any such assets received in
respect of the Stock held in the Trust in any liquidation, dissolution or
winding up of, or distribution of the assets of the Corporation in
accordance with subparagraph (i)(iv) of this Article IV.
(iv) Sale of Shares by Trustee. Within twenty days of receiving notice
-------------------------
from this corporation that shares of Stock have been transferred to the
Trust, the Trustee of the
-9-
<PAGE>
Trust shall sell the shares held in Trust to a Person, designated by the
Trustee, whose ownership of the shares of Stock held in the Trust would not
violate the ownership limitations set forth in subparagraph (a) of this
Article IV. Upon such sale, the interest of the Charitable Beneficiary in
the shares sold shall terminate and the Trustee shall distribute the net
proceeds of the sale to the Purported Record Transferee and to the
Charitable Beneficiary as provided in this subparagraph (i)(iv). The
Purported Record Transferee shall receive the lesser of (1) (x) the price
per share such Purported Record Transferee paid for the Stock in the
purported Transfer that resulted in the transfer of shares of Stock to the
Trust, or (y) if the Transfer or other event that resulted in the transfer
of shares of Stock to the Trust was not a transaction in which the
Purported Record Transferee gave full value for such shares of Stock, a
price per share equal to the Market Price on the date of the purported
Transfer or other event that resulted in the transfer of such shares of
Stock to the Trust and (2) the price per share received by the Trustee from
the sale or other disposition of the shares held in the Trust. Any net
sales proceeds in excess of the amount payable to the Purported Record
Transferee shall be immediately paid to the Charitable Beneficiary. If,
prior to the discovery by this corporation that shares of Stock have been
transferred to the Trustee, such shares are sold by the Purported Record
Transferee, then (i) such shares shall be deemed to have been sold on
behalf of the Trust and (ii) to the extent that the Purported Record
Transferee received an amount for such shares that exceeds the amount such
Purported Record Transferee was entitled to receive pursuant to this
subparagraph (i)(iv), such excess shall be paid to the Trustee upon demand.
The Trustee should have the right and power (but not the obligation) to
offer any share of Stock held in the Trust for sale to this corporation on
such terms and conditions as the Trustee shall determine appropriate.
(v) Voting and Notice Rights. The Trustee shall have all voting rights
------------------------
and rights to receive any notice of any meetings, which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary. The
Purported Record Transferee shall have no voting rights with respect to
shares held in Trust.
(j) SETTLEMENT
----------
Nothing in this Article IV shall preclude the settlement of any transaction
entered into through the facilities of the NYSE (but the fact that settlement of
a transaction is permitted shall not negate the effect of any other provision of
this Article IV and all of the provisions of this Article IV shall apply to the
purported transferee of the shares of Stock in such transaction).
(k) DESIGNATION OF CHARITABLE BENEFICIARY
-------------------------------------
By written notice to the Trustee, this corporation shall designate one or
more nonprofit organizations to be the Charitable Beneficiary of the interest in
the Trust such that (i) the shares of Stock held in the Trust would not violate
the restrictions set forth in subparagraph (a) of this Article IV in the hands
of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code."
-10-
<PAGE>
3. The foregoing amendment of Articles of Incorporation was approved by
the Board of Directors of the Corporation.
4. The foregoing amendment was approved by the required vote of the
shareholders of the Corporation entitled to vote, in accordance with Section 902
of the General Corporation Law of California. The total number of outstanding
shares entitled to vote with respect to the foregoing amendment was forty-two
million sixty-four thousand two hundred eighty-three (42,064,283) shares of
Common Stock and thirty-one thousand two hundred (31,200) shares of Convertible
Participating Preferred Stock. The number of shares voting in favor of the
foregoing amendment equaled or exceeded the vote required. The required vote
was (i) a majority of the outstanding shares of Common Stock and (ii) a majority
of the outstanding shares of the Common Stock and Convertible Participating
Preferred Stock voting together as a class.
-11-
<PAGE>
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this Certificate are true and
correct of our own knowledge.
DATE: November 13, 1995.
/s/ RONALD L. HAVNER, JR.
---------------------------------------
Ronald L. Havner, Jr., Vice President
/s/ DAVID P. SINGELYN
---------------------------------------
David P. Singelyn, Assistant Secretary
-12-
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF DETERMINATION OF PREFERENCES
OF
____% CUMULATIVE PREFERRED STOCK, SERIES G
OF
PUBLIC STORAGE, INC.
--------------------
The undersigned, Harvey Lenkin and Sarah Hass, President and
Secretary, respectively, of PUBLIC STORAGE, INC., a California corporation, do
hereby certify:
FIRST: The Restated Articles of Incorporation of the Corporation
authorize the issuance of 50,000,000 shares of stock designated "preferred
shares," issuable from time to time in one or more series, and authorize the
Board of Directors to fix the number of shares constituting any such series, and
to determine or alter the dividend rights, dividend rate, conversion rights,
voting rights, right and terms of redemption (including sinking fund
provisions), the redemption price or prices and the liquidation preference of
any wholly unissued series of such preferred shares, and the number of shares
constituting any such series.
SECOND: The Board of Directors of the corporation did duly adopt the
resolutions attached hereto as Exhibit A and incorporated herein by reference
authorizing and providing for the creation of a series of preferred shares to be
known as "___% Cumulative Preferred Stock, Series G" consisting of 4,600 shares,
none of the shares of such series having been issued.
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
IN WITNESS WHEREOF, the undersigned have executed this certificate
this ____ day of December, 1995.
______________________________________________
Harvey Lenkin
President
______________________________________________
Sarah Hass
Secretary
<PAGE>
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS
OF PUBLIC STORAGE, INC.
ESTABLISHING A SERIES OF ____% CUMULATIVE
PREFERRED STOCK, SERIES G
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors by Article III of the Restated Articles of Incorporation of this
Corporation, there is hereby established a series of the authorized preferred
shares of this Corporation having a par value of $.01 per share, which series
shall be designated "____% Cumulative Preferred Stock, Series G," shall consist
of 4,600 shares and shall have the following rights, preferences and privileges:
(a) Dividend Rights.
---------------
(1) Dividends shall be payable in cash on the shares of this Series
when, as and if declared by the Board of Directors, out of funds legally
available therefor: (i) for the period (the "Initial Dividend Period") from the
Deemed Original Issue Date (as defined below) to but excluding April 1, 1996,
and (ii) for each quarterly dividend period thereafter (the Initial Dividend
Period and each quarterly dividend period being hereinafter individually
referred to as a "Dividend Period" and collectively referred to as "Dividend
Periods"), which quarterly Dividend Periods shall be in four equal amounts and
shall commence on January 1, April 1, July 1 and October 1 in each year (each, a
"Dividend Period Commencement Date"), commencing on April 1, 1996, and shall end
on and include the day next preceding the next Dividend Period Commencement
Date, at a rate per annum equal to ____% of the $25,000 per share stated value
thereof (the "Dividend Rate"). Dividends on each share of this Series shall be
cumulative from the Deemed Original Issue Date of such share and shall be
payable, without interest thereon, when, as and if declared by the Board of
Directors, on or before March 31, June 30, September 30 and December 31 of each
year, commencing on March 31, 1996 or, in the case of shares of this Series
with a Deemed Original Issue Date after March 31, 1996, the first such dividend
payment date following such Deemed Original Issue Date; provided, that if any
--------
such day shall be a Saturday, Sunday, or a day on which banking institutions in
the State of New York or the State of California are authorized or obligated by
law to close, or a day which is or is declared a national or a New York or
California state holiday (any of the foregoing a "Non-Business Day"), then the
payment date shall be the next succeeding day which is not a Non-Business Day.
Each such
2
<PAGE>
dividend shall be paid to the holders of record of shares of this Series as they
appear on the stock register of the Corporation on such record date, not more
than 45 days nor less than 15 days preceding the payment date thereof, as shall
be fixed by the Board of Directors. Dividends on account of arrears for any
past Dividend Periods may be declared and paid at any time, without reference to
any regular dividend payment date, to holders of record on such date, not more
than 45 days nor less than 15 days preceding the payment date thereof, as may be
fixed by the Board of Directors. After full cumulative dividends on this Series
have been paid or declared and funds therefor set aside for payment, including
for the then current Dividend Period, the holders of shares of this Series will
not be entitled to any further dividends with respect to that Dividend Period.
"Deemed Original Issue Date" means (a) in the case of any share which
is part of the first issuance of shares of this Series or part of a subsequent
issuance of shares of this Series prior to April 1, 1996, the date of such first
issuance or subsequent issuance, as the case may be, and (b) in the case of any
share which is part of a subsequent issuance of shares of this Series on or
after April 1, 1996, the later of (x) April 1, 1996 and (y) the latest Dividend
Period Commencement Date which precedes the date of issuance of such share and
which succeeds the last Dividend Period for which full cumulative dividends have
been paid; provided that, in the case of any share which is part of a subsequent
issuance, the date of issuance of which falls between (i) the record date for
dividends payable on the first succeeding dividend payment date and (ii) such
dividend payment date, the "Deemed Original Issue Date" means the date of the
Dividend Period Commencement Date that immediately follows the date of issuance.
(2) Dividends payable on shares of this Series for any period
greater or less than a full Dividend Period, including the Initial Dividend
Period, shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
(3) The Corporation shall not declare or pay or set apart for
payment any dividends on any series of preferred shares ranking, as to
dividends, on a parity with or junior to the shares of this Series unless full
cumulative dividends have been or contemporaneously are declared and paid, or
declared and a sum sufficient for payment thereof is set apart for payment, for
all Dividend Periods terminating on or prior to the date of payment of any such
dividends on such other series of preferred shares. When dividends are not paid
in full upon the shares of this Series and any other series of preferred shares
ranking on a parity therewith as to dividends (including, without limitation,
the shares of the Corporation's 10% Cumulative Preferred Stock, Series A (the
"Series A Preferred Stock"), 9.20% Cumulative Preferred Stock, Series B (the
"Series B Preferred Stock"), 9.50% Cumulative Preferred Stock, Series D (the
"Series D Preferred Stock"), 10% Cumulative Preferred Stock, Series E (the
"Series E
3
<PAGE>
Preferred Stock"), 9.75% Cumulative Preferred Stock, Series F (the "Series F
Preferred Stock"), and Adjustable Rate Cumulative Preferred Stock, Series C (the
"Adjustable Rate Preferred Stock")), all dividends declared upon shares of this
Series and any other series of preferred shares ranking on a parity therewith as
to dividends shall be declared pro rata so that the amount of dividends declared
per share on the shares of this Series and such other series of preferred shares
shall in all cases bear to each other that same ratio that the accumulated
dividends per share on the shares of this Series and such other series of
preferred shares bear to each other. Except as provided in the preceding
sentence, unless full cumulative dividends on the shares of this Series have
been paid for all past Dividend Periods, no dividends (other than in shares of
the Corporation's common stock, par value $.10 per share (together with any
other shares of capital stock of the Corporation into which such shares shall be
reclassified or changed ("Common Shares"), or another stock ranking junior to
the shares of this Series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment nor shall any other distribution be
made upon the Common Shares or on any other stock of the Corporation ranking
junior to or on a parity with the shares of this Series as to dividends or upon
liquidation. Unless full cumulative dividends on the shares of this Series have
been paid for all past Dividend Periods, no Common Shares or any other stock of
the Corporation ranking junior to or on a parity with the shares of this Series
as to dividends or upon liquidation shall be redeemed, purchased, or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by the
Corporation or any subsidiary, except by conversion into or exchange for stock
of the Corporation ranking junior to the shares of this Series as to dividends
and upon liquidation.
(b) Liquidation.
-----------
In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the holders of shares of this
Series are entitled to receive out of the assets of the Corporation available
for distribution to shareholders, before any distribution of assets is made to
holders of Common Shares or any other class or series of shares ranking junior
to the shares of this Series upon liquidation, liquidating distributions in the
amount of $25,000 per share plus all accumulated and unpaid dividends (whether
or not earned or declared) for the then current and all past Dividend Periods.
If, upon any voluntary or involuntary liquidation, dissolution, or winding up of
the Corporation the amounts payable with respect to the shares of this Series
and any other shares of the Corporation ranking as to any such distribution on a
parity with the shares of this Series are not paid in full, the holders of
shares of this Series and of such other shares (including the shares of Series
A, Series B, Series D, Series E and Series F Preferred Stock and Adjustable Rate
Preferred Stock) will share ratably in any such distribution of assets of the
Corporation in proportion to the
4
<PAGE>
full respective preferential amounts to which they are entitled. After payment
of the full amount of the liquidating distribution to which they are entitled,
the holders of shares of this Series will not be entitled to any further
participation in any distribution of assets by the Corporation.
(1) Written notice of any such liquidation, dissolution or winding
up of the Corporation, stating the payment date or dates when, and the place or
places where the amounts distributable in such circumstances shall be payable,
shall be given by first class mail, postage pre-paid, not less than 30 nor more
than 60 days prior to the payment date stated therein, to each record holder of
the shares of this Series at the respective addresses of such holders as the
same shall appear on the stock transfer records of the Corporation.
(2) For purposes of liquidation rights, a reorganization (as
defined in Section 181 of the California Corporations Code) or consolidation or
merger of the Corporation with or into any other corporation or corporations or
a sale of all or substantially all of the assets of the Corporation shall be
deemed not to be a liquidation, dissolution or winding up of the Corporation.
(c) Redemption.
----------
(1) Except as provided in clause (9) below, the shares of this
Series are not redeemable prior to December 31, 2000. On and after such date,
the shares of this Series are redeemable at the option of the Corporation, by
resolution of the Board of Directors, in whole or in part, from time to time
upon not less than 30 nor more than 60 days' notice, at a cash redemption price
of $25,000 per share plus all accumulated and unpaid dividends (whether or not
earned or declared) to the date of redemption.
(2) If fewer than all the outstanding shares of this Series are to
be redeemed, the number of shares to be redeemed will be determined by the Board
of Directors, and such shares shall be redeemed pro rata from the holders of
record of such shares in proportion to the number of such shares held by such
holders (with adjustments to avoid redemption of fractional shares) or by lot in
a manner determined by the Board of Directors.
(3) Notwithstanding the foregoing, if any dividends, including any
accumulation, on the shares of this Series are in arrears, no shares of this
Series shall be redeemed unless all outstanding shares of this Series are
simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire, directly or indirectly, any shares of this Series; provided, however,
-------- -------
that the foregoing shall not prevent the purchase or acquisition of shares of
this Series pursuant to a purchase or exchange offer provided such offer is made
on the same terms to all holders of shares of this Series.
5
<PAGE>
(4) Immediately prior to any redemption of shares of this Series,
the Corporation shall pay, in cash, any accumulated and unpaid dividends through
the redemption date, unless a redemption date falls after a dividend payment
record date and prior to the corresponding dividend payment date, in which case
each holder of shares of this Series at the close of business on such dividend
payment record date shall be entitled to the dividend payable on such shares on
the corresponding dividend payment date notwithstanding the redemption of such
shares before such dividend payment date. Except as expressly provided
hereinabove, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on shares of this Series called for
redemption.
(5) Notice of redemption shall be given by publication in a
newspaper of general circulation in the County of Los Angeles and The City of
New York, such publication to be made once a week for two successive weeks,
commencing not less than 30 nor more than 60 days prior to the date fixed for
redemption thereof. A similar notice will be mailed by the Company by first
class mail, postage pre-paid, to each record holder of the shares of this Series
to be redeemed, not less than 30 nor more than 60 days prior to such redemption
date, to the respective addresses of such holders as the same shall appear on
the stock transfer records of the Corporation. Each notice shall state: (i) the
redemption date; (ii) the number of shares of this Series to be redeemed; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accumulate on such
redemption date. If fewer than all the shares of this Series held by any holder
are to be redeemed, the notice mailed to such holder shall also specify the
number of shares of this Series to be redeemed from such holder.
(6) In order to facilitate the redemption of shares of this Series,
the Board of Directors may fix a record date for the determination of the shares
to be redeemed, such record date to be not less than 30 nor more than 60 days
prior to the date fixed for such redemption.
(7) Notice having been given as provided above, from and after the
date fixed for the redemption of shares of this Series by the Corporation
(unless the Corporation shall fail to make available the money necessary to
effect such redemption), the holders of shares selected for redemption shall
cease to be shareholders with respect to such shares and shall have no interest
in or claim against the Corporation by virtue thereof and shall have no voting
or other rights with respect to such shares, except the right to receive the
moneys payable upon such redemption from the Corporation, less any required tax
withholding amount, without interest thereon, upon surrender (and endorsement or
assignment of transfer, if required by the Corporation and so stated in the
notice) of their
6
<PAGE>
certificates, and the shares represented thereby shall no longer be deemed to be
outstanding. If fewer than all the shares represented by a certificate are
redeemed, a new certificate shall be issued, without cost to the holder thereof,
representing the unredeemed shares. The Corporation may, at its option, at any
time after a notice of redemption has been given, deposit the redemption price
for the shares of this Series designated for redemption and not yet redeemed,
plus any accumulated and unpaid dividends thereon to the date fixed for
redemption, with the transfer agent or agents for this Series, as a trust fund
for the benefit of the holders of the shares of this Series designated for
redemption, together with irrevocable instructions and authority to such
transfer agent or agents that such funds be delivered upon redemption of such
shares and to pay, on and after the date fixed for redemption or prior thereto,
the redemption price of the shares to their respective holders upon the
surrender of their share certificates. From and after the making of such
deposit, the holders of the shares designated for redemption shall cease to be
shareholders with respect to such shares and shall have no interest in or claim
against the Corporation by virtue thereof and shall have no voting or other
rights with respect to such shares, except the right to receive from such trust
fund the moneys payable upon such redemption, without interest thereon, upon
surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares represented thereby shall no longer be deemed to be
outstanding. Any balance of such moneys remaining unclaimed at the end of the
five-year period commencing on the date fixed for redemption shall be repaid to
the Corporation upon its request expressed in a resolution of its Board of
Directors.
(8) Any shares of this Series that shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued preferred shares, without designation as to series until such shares
are once more designated as part of a particular series by the Board of
Directors.
(9) If the Board of Directors of the Corporation shall, at any time
and in good faith, be of the opinion that ownership of securities of the
Corporation has or may become concentrated to an extent that may prevent the
Corporation from qualifying as a real estate investment trust under the REIT
Provisions of the Internal Revenue Code, then the Board of Directors shall have
the power, by lot or other means deemed equitable by them to prevent the
transfer of and/or to call for redemption a number of shares of this Series
sufficient, in the opinion of the Board of Directors, to maintain or bring the
direct or indirect ownership thereof into conformity with the requirements of
such a real estate investment trust under the REIT Provisions of the Internal
Revenue Code. The redemption price to be paid for shares of this Series so
called for redemption, on the date fixed for redemption, shall be the average of
the highest bid and the lowest asked quotations on the last business day prior
to the redemption date as reported by the National Quotation Bureau,
Incorporated or a similar
7
<PAGE>
organization selected from time to time by the Corporation or if there be no
such bid and asked quotations, as determined by the Board of Directors in good
faith; provided that if interests in shares of this Series are represented by
depositary shares, then the redemption price shall be determined in accordance
with the foregoing, but with respect to one depositary share, multiplied by the
number of depositary shares that together represent an interest in one share of
this Series. From and after the date fixed for redemption by the Board of
Directors, the holder of any shares of this Series so called for redemption
shall cease to be entitled to any distributions, voting rights and other
benefits with respect to such shares of this Series, other than the right to
payment of the redemption price determined as aforesaid. "REIT Provisions of
the Internal Revenue Code" shall mean Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended. In order to exercise the redemption option
set forth in this clause (9), with respect to the shares of this Series, the
Corporation shall give notice of redemption by publication in a newspaper of
general circulation in the County of Los Angeles and The City of New York, such
publication to be made once a week for two successive weeks, commencing not less
than 30 nor more than 60 days prior to the date fixed for redemption. A similar
notice will be mailed by the Corporation by first class mail, postage pre-paid,
to each record holder of the shares of this Series to be redeemed, not less than
30 nor more than 60 days prior to such redemption date, to the respective
addresses of such holders as the same shall appear on the stock transfer records
of the Corporation. Each notice shall state: (i) the redemption date; (ii) the
number of shares of this Series to be redeemed; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
redeemed will cease to accumulate on such redemption date. If fewer than all
the shares of this Series held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of this Series to
be redeemed from such holder.
(d) Maintenance of Debt Ratio. Without the affirmative vote or the
-------------------------
written consent of the holders of a majority of the shares of this Series, the
Corporation will not take any action that would result in a ratio of Debt to
Assets (the "Debt Ratio") in excess of 50%.
"Debt" means, as of any date of determination, all liabilities that
should, in accordance with GAAP, be reflected as a liability on the consolidated
balance sheet of the Corporation as of such date of determination; provided,
--------
however, that "Debt" shall not include liabilities included in the consolidated
- -------
balance sheet under the headings "accrued and other liabilities" or "minority
interest" to the extent that the inclusion of such liabilities under such
headings is consistent with the Corporation's past practice.
8
<PAGE>
"Assets" means, as of any date of determination, all assets that
should, in accordance with GAAP, be reflected as an asset on the consolidated
balance sheet of the Corporation as of such date of determination.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time, consistently applied.
(e) Voting Rights. The shares of this Series shall not have any
-------------
voting powers either general or special, except as required by law, except as
set forth in Section (d) hereof and except that:
(1) (A) If the Corporation shall fail to pay full cumulative
dividends on the shares of this Series or any other of its preferred shares for
six quarterly dividend payment periods, whether or not consecutive (a "Dividend
Default"), the holders of all outstanding preferred shares, voting as a single
class without regard to series, will be entitled to elect two Directors until
full cumulative dividends for all past dividend payment periods on all
preferred shares have been paid or declared and funds therefor set apart for
payment. Such right to vote separately as a class to elect Directors shall,
when vested, be subject, always, to the same provisions for the vesting of such
right to elect Directors separately as a class in the case of future Dividend
Defaults. At any time when such right to elect Directors separately as a class
shall have so vested, the Corporation may, and upon the written request of the
holders of record of not less than 20% of the total number of preferred shares
of the Corporation then outstanding shall, call a special meeting of
stockholders for the election of Directors. In the case of such a written
request, such special meeting shall be held within 90 days after the delivery of
such request and, in either case, at the place and upon the notice provided by
law and in the Bylaws of the Corporation, provided that the Corporation shall
not be required to call such a special meeting if such request is received less
than 120 days before the date fixed for the next ensuing Annual Meeting of
Shareholders of the Corporation and the holders of all classes of outstanding
preferred shares are afforded the opportunity to elect such Directors (or fill
any vacancy) at such Annual Meeting of Shareholders. Directors elected as
aforesaid shall serve until the next Annual Meeting of Shareholders of the
Corporation or until their respective successors shall be elected and qualified.
If, prior to the end of the term of any Director elected as aforesaid, a vacancy
in the office of such Director shall occur during the continuance of a Dividend
Default by reason of death, resignation, or disability, such vacancy shall be
filled for the unexpired term by the appointment of a new Director for the
unexpired term of such former Director, such appointment to be made by the
remaining Director elected as aforesaid.
(B) In addition to the right to elect Directors set forth in clause
(A) above, if, without the affirmative vote or the written consent of the
9
<PAGE>
holders of a majority of the shares of this Series, on the last day of two
consecutive fiscal quarters of the Corporation, the Debt Ratio exceeds 50% (a
"Debt Ratio Default"), the holders of all outstanding shares of this Series,
voting as a single class, will be entitled to elect two Directors until the Debt
Ratio as of the last day of a fiscal quarter of the Corporation is reduced to
50% or less. Such right to vote separately as a class to elect Directors shall,
when vested, be subject, always, to the same provisions for the vesting of such
right to elect Directors separately as a class in the case of future Debt Ratio
Defaults. At any time when such right to elect Directors separately as a class
shall have so vested, the Corporation may, and upon the written request of the
holders of record of not less than 20% of the total number of shares of this
Series then outstanding shall, call a special meeting of stockholders for the
election of Directors. In the case of such a written request, such special
meeting shall be held within 90 days after the delivery of such request and, in
either case, at the place and upon the notice provided by law and in the Bylaws
of the Corporation, provided that the corporation shall not be required to call
such a special meeting if such request is received less than 120 days before the
date fixed for the next ensuing Annual Meeting of Shareholders of the
Corporation and the holders of shares of this Series are afforded the
opportunity to elect such Directors (or fill any vacancy) at such Annual Meeting
of Shareholders. Directors elected as aforesaid shall serve until the next
Annual Meeting of Shareholders of the Corporation or until their respective
successors shall be elected and qualified. If, prior to the end of the term of
any Director elected as aforesaid, a vacancy in the office of such Director
shall occur during the continuance of a Debt Ratio Default by reason of death,
resignation, or disability, such vacancy shall be filled for the unexpired term
by the appointment of a new Director for the unexpired term of such former
Director, such appointment to be made by the remaining Director elected as
aforesaid.
(2) The affirmative vote or consent of the holders of at least
66 2/3/% of the outstanding shares of this Series, voting separately as a class,
will be required for any amendment to the Articles of Incorporation of the
Corporation that will adversely alter or change the powers, preferences,
privileges or rights of the shares of this Series, except as set forth below.
The affirmative vote or consent of the holders of at least 66 2/3/% of the
outstanding shares of this Series and any other series of preferred shares
ranking on a parity with this Series as to dividends and upon liquidation
(including the shares of Series A, Series B, Series D, Series E and Series F
Preferred Stock and Adjustable Rate Preferred Stock), voting as a single class
without regard to series, will be required to issue, authorize or increase the
authorized amount of any class or series of shares ranking prior to this Series
as to dividends or upon liquidation or to issue or authorize any obligation or
security convertible into or evidencing a right to purchase any such security,
but the Articles of Incorporation may be amended to increase the number of
authorized preferred shares ranking on a parity with or junior to this Series or
to create another class of preferred shares ranking on a
10
<PAGE>
parity with or junior to this Series without the vote of the holders of
outstanding shares of this Series.
(3) The affirmative vote or consent of the holders of a majority of
the outstanding shares of this Series, voting separately as a class, will be
required for any amendment or repeal of the following provisions of the Bylaws
of the Corporation, which would be adverse to the interests of the holders of
shares of this Series, and for any other changes to the Bylaws of the
Corporation that affect these provisions in a manner which would be adverse to
the interests of the holders of shares of this Series: Article IV, Section 2
(relating to the Corporation's permissible Asset Coverage), Article VIII,
Section 2(g) and (h) (relating to the Corporation's investment policy) and each
of the defined terms used in any of the foregoing provisions.
(4) Except to the extent required pursuant to clause (3) above,
nothing herein shall be taken to require a class vote or consent in connection
with the authorization, designation, increase or issuance of any shares of any
class or series (including additional preferred shares of any series) that rank
junior to or on a parity with this Series as to dividends and liquidation rights
or in connection with the authorization, designation, increase or issuance of
any bonds, mortgages, debentures or other debt obligations of the Corporation.
(5) The right to elect Directors set forth in clause (1)(B) above
is not intended to be the exclusive remedy of holders of the shares of this
Series in the event of a Debt Ratio Default.
(f) Conversion. The shares of this Series are not convertible into
----------
shares of any other class or series of the capital stock of the Corporation.
11
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
PUBLIC STORAGE, INC.
THE FIRST NATIONAL BANK OF BOSTON, AS DEPOSITARY
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
RELATING TO SERIES G PREFERRED STOCK
---------------------
DEPOSIT AGREEMENT
---------------------
Dated as of December __, 1995
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I
DEFINITIONS
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1 Form and Transfer of Receipts............................................ 2
SECTION 2.2 Deposit of Stock; Execution and Delivery of Receipts in Respect Thereof.. 4
SECTION 2.3 Registration of Transfer of Receipts..................................... 4
SECTION 2.4 Split-ups and Combinations of Receipts; Surrender of Receipts and
Withdrawal of Stock............................................... 4
SECTION 2.5 Limitations on Execution and Delivery, Transfer, Surrender and
Exchange of Receipts.............................................. 6
SECTION 2.6 Lost Receipts, etc....................................................... 6
SECTION 2.7 Cancellation and Destruction of Surrendered Receipts..................... 6
SECTION 2.8 Redemption of Stock...................................................... 6
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1 Filing Proofs, Certificates and Other Information........................ 8
SECTION 3.2 Payment of Taxes or Other Governmental Charges........................... 8
SECTION 3.3 Warranty as to Stock..................................................... 9
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.1 Cash Distributions....................................................... 9
SECTION 4.2 Distributions Other than Cash, Rights Preferences or Privileges.......... 9
SECTION 4.3 Subscription Rights, Preferences or Privileges........................... 10
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SECTION 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders of Receipts.... 11
SECTION 4.5 Voting Rights............................................................ 11
SECTION 4.6 Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc............................................ 12
SECTION 4.7 Delivery of Reports...................................................... 12
SECTION 4.8 List of Receipt Holders.................................................. 12
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR AND THE COMPANY
SECTION 5.1 Maintenance of Offices, Agencies and Transfer Books by the
Depositary; Registrar............................................. 13
SECTION 5.2 Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company................. 14
SECTION 5.3 Obligation of the Depositary, the Depositary's Agents, the Registrar
and the Company................................................... 14
SECTION 5.4 Resignation and Removal of the Depositary; Appointment of Successor
Depositary........................................................ 16
SECTION 5.5 Corporate Notices and Reports............................................ 17
SECTION 5.6 Indemnification by the Company........................................... 17
SECTION 5.7 Charges and Expenses..................................................... 17
SECTION 5.8 Tax Compliance........................................................... 17
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment................................................................ 18
SECTION 6.2 Termination.............................................................. 18
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts............................................................. 19
SECTION 7.2 Exclusive Benefit of Parties............................................. 19
SECTION 7.3 Invalidity of Provisions................................................. 19
SECTION 7.4 Notices.................................................................. 19
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SECTION 7.5 Appointment of Registrar................................................. 20
SECTION 7.6 Holders of Receipts are Parties.......................................... 20
SECTION 7.7 Governing Law............................................................ 20
SECTION 7.8 Inspection of Deposit Agreement.......................................... 20
SECTION 7.9 Headings................................................................. 20
FORM OF DEPOSITARY SHARES
Form of Face of Receipt.............................................................. A-1
Form of Reverse of Receipt........................................................... A-3
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DEPOSIT AGREEMENT, dated as of December [ ], 1995, among PUBLIC
STORAGE, INC., a California corporation (the "Company"), The First National Bank
of Boston, a national banking association (the "Depositary"), and the holders
from time to time of the Receipts described herein.
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of Series G Preferred Stock of the
Company with the Depositary for the purposes set forth in this Deposit Agreement
and for the issuance hereunder of Receipts evidencing Depositary Shares in
respect of the Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the promises contained herein, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall, for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement:
"Certificate" shall mean the Certificate of Determination filed with
the Secretary of State of the State of California establishing the Stock as a
series of preferred stock of the Company.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean The First National Bank of Boston and any
successor as Depositary hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
1/1,000 of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 5.1 and shall include the Registrar if such Registrar is not
the Depositary.
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"Depositary's Office" shall mean the principal office of the
Depositary at which at any particular time its depositary receipt business shall
be administered.
"Receipt" shall mean one of the Depositary Receipts, substantially in
the form set forth as Exhibit A hereto, issued hereunder, whether in definitive
or temporary form and evidencing the number of Depositary Shares held of record
by the record holder of such Depositary Shares.
"record holder" or "holder" as applied to a Receipt shall mean the
person in whose name a Receipt is registered on the books of the Depositary
maintained for such purpose.
"Registrar" shall mean the Depositary or such other bank or trust
company which shall be appointed to register ownership and transfers of Receipts
as herein provided.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's [ ]% Cumulative Preferred
Stock, Series G, $.01 par value per share.
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1 Form and Transfer of Receipts. Definitive Receipts shall
be engraved or printed or lithographed on steel-engraved borders, with
appropriate insertions, modifications and omissions, as hereinafter provided, if
and to the extent required by any securi ties exchange on which the Receipts are
listed. Pending the preparation of definitive Receipts or if definitive
Receipts are not required by any securities exchange on which the Receipts are
listed, the Depositary, upon the written order of the Company or any holder of
Stock, as the case may be, delivered in compliance with Section 2.2, shall
execute and deliver temporary Receipts which are printed, lithographed,
typewritten, mimeographed or otherwise substantially of the tenor of the
definitive Receipts in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the persons
executing such Receipts may determine, as evidenced by their execution of such
Receipts. If temporary Receipts are issued, the Company and the Depositary will
cause definitive Receipts to be prepared without unreasonable delay. After the
preparation of definitive Receipts, the temporary Receipts shall be exchangeable
for definitive Receipts upon surrender of the temporary Receipts at the
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Depositary's Office or at such other place or places as the Depositary shall
determine, without charge to the holder. Upon surrender for cancellation of any
one or more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of Depositary
Shares as represented by the surrendered temporary Receipt or Receipts. Such
exchange shall be made at the Company's expense and without any charge to the
holder therefor. Until so exchanged, the temporary Receipts shall in all
respects be entitled to the same benefits under this Agreement, and with respect
to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual and/or
facsimile signature of a duly authorized officer of the Depositary. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed in accordance with
the foregoing sentence. The Depositary shall record on its books each Receipt
so signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares. The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt, which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
-------- -------
registered on the books of the Depositary as provided in Section 2.3, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.2 Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or, subject to Section 2.4, any holder of Stock may from time to
time deposit shares of Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates for the Stock
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to be deposited, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with all such certifications as may be
required by the Depositary in accordance with the provisions of this Deposit
Agreement, and together with a written order of the Company or such holder, as
the case may be, directing the Depositary to execute and deliver to, or upon the
written order of, the person or persons stated in such order a Receipt or
Receipts for the number of Depositary Shares representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's
Office or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for
Stock deposited in accordance with the provisions of this Section, together with
the other documents required as above specified, and upon recordation of the
Stock on the books of the Company in the name of the Depositary or its nominee,
the Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver, to or upon the order of the person or persons named
in the written order delivered to the Depositary referred to in the first
paragraph of this Section, a Receipt or Receipts for the whole number of
Depositary Shares representing, in the aggregate, the Stock so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at the
Depositary's Office or such other offices, if any, as the Depositary may
designate. Delivery at other offices shall be at the risk and expense of the
person requesting such delivery.
SECTION 2.3 Registration of Transfer of Receipts. Subject to the
terms and conditions of this Deposit Agreement, the Depositary shall register on
its books from time to time transfers of Receipts upon any surrender thereof by
the holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon, the
Depositary shall execute a new Receipt or Receipts evidencing the same aggregate
number of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the order of the
person entitled thereto.
SECTION 2.4 Split-ups and Combinations of Receipts; Surrender of
Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at
the Depositary's Office or at such other offices as it may designate for the
purpose of effecting a split-up or combination of such Receipt or Receipts, and
subject to the terms and conditions of this Deposit Agreement, the Depositary
shall execute and deliver a new Receipt or Receipts in the authorized
denomination or denominations requested, evidencing the aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered; provided,
--------
however, that the Depositary shall not issue any Receipt evidencing a fractional
- -------
Depositary Share.
4
<PAGE>
Any holder of a Receipt or Receipts representing any number of whole
shares of Stock may (unless the related Depositary Shares have previously been
called for redemption) withdraw the Stock and all money and other property, if
any, represented thereby by surrendering such Receipt or Receipts at the
Depositary's Office or at such other offices as the Depositary may designate for
such withdrawals and paying any unpaid amount due the Depositary. Thereafter,
without unreasonable delay, the Depositary shall deliver to such holder or to
the person or persons designated by such holder as hereinafter provided, the
number of whole shares of Stock and all money and other property, if any,
represented by the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Stock will not thereafter be entitled to deposit
such Stock hereunder or to receive Depositary Shares therefor. If a Receipt
delivered by the holder to the Depositary in connection with such withdrawal
shall evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole shares of Stock to be so
withdrawn, the Depositary shall at the same time, in addition to such number of
whole shares of Stock and such money and other property, if any, to be so
withdrawn, deliver to such holder, or upon his order, a new Receipt evidencing
such excess number of Depositary Shares, provided, however, that the Depositary
-------- -------
shall not issue any Receipt evidencing a fractional Depositary Share. Delivery
of the Stock and money and other property being withdrawn may be made by the
delivery of such certificates, documents of title and other instruments as the
Depositary may deem appropriate which, if required by the Depositary, shall be
properly endorsed or accompanied by proper instruments of transfer.
If the Stock and the money and other property being withdrawn are to
be delivered to a person or persons other than the record holder of the Receipt
or Receipts being surrendered for withdrawal of Stock, such holders shall
execute and deliver to the Depositary a written order so directing the
Depositary and the Depositary may require that the Receipt or Receipts
surrendered by such holder for withdrawal of such shares of Stock be properly
endorsed in blank or accompanied by a properly executed instrument of transfer
in blank.
Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the holder surrendering such Receipt or Receipts and for the account
of the holder thereof, such delivery may be made at such other place as may be
designated by such holder.
SECTION 2.5 Limitations on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment,
5
<PAGE>
the reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Sections 3.2 and 5.7, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed, or (ii) if any such action is deemed necessary or advisable
by the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission or under any provision of this Deposit
Agreement.
SECTION 2.6 Lost Receipts, etc. In case any receipt shall be
mutilated, destroyed, lost or stolen, the Depositary in its reasonable
discretion may execute and deliver a Receipt of like form and tenor in exchange
and substitution for such mutilated Receipt, or in lieu of and in substitution
for such destroyed, lost or stolen Receipt, upon (i) the filing by the holder
thereof with the Depositary of evidence reasonably satisfactory to the
Depositary of such destruction or loss or theft of such Receipt, of the
authenticity thereof and of his or her ownership thereof, (ii) the furnishing of
the Depositary with indemnification reasonably satisfactory to it and the
Company and (iii) the payment of any reasonable expense (including reasonable
fees, charges and expenses of the Depositary) in connection with such execution
and delivery.
SECTION 2.7 Cancellation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Company is authorized to destroy all Receipts so cancelled.
SECTION 2.8 Redemption of Stock. Whenever the Company shall be
permitted and shall elect to redeem shares of Stock in accordance with the
provisions of the Certificate, it shall (unless otherwise agreed to in writing
with the Depositary) give or cause to be given to the Depositary not less than
60 days' notice of the date of such proposed redemption or exchange of Stock and
of the number of such shares held by the Depositary to be so redeemed and the
applicable redemption price, as set forth in the Certificate, which notice shall
be accompanied by a certificate from the Company stating that such redemption of
Stock is in accordance with the provisions of the Certificate. Notice of
redemption of Stock will also be given by the Company by publication in a
newspaper of general circulation in the County of Los Angeles and the City of
New York, such publication to be made once a week for two successive weeks
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<PAGE>
commencing not less than 30 nor more than 60 days prior to the redemption date,
and the Depositary will publish a notice of redemption of the Depositary Shares
containing the same type of information and in the same manner as the Company's
notice of redemption. On the date of such redemption, provided that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus an amount equal to any
accrued and unpaid dividends thereon to the date fixed for redemption, in
accordance with the provisions of the Certificate, the Depositary shall redeem
the number of Depositary Shares representing such Stock. The Depositary shall
mail notice of the Company's redemption of Stock and the proposed simultaneous
redemption of the number of Depositary Shares representing the Stock to be
redeemed by first-class mail, postage prepaid, not less than 30 and not more
than 60 days prior to the date fixed for redemption of such Stock and Depositary
Shares (the "Redemption Date") to the record holders of the Receipts evidencing
the Depositary Shares to be so redeemed, at the address of such holders as they
appear on the records of the Depositary; but neither failure to mail any such
notice of redemption of Depositary Shares to one or more such holders nor any
defect in any notice of redemption of Depositary Shares to one or more such
holders shall affect the sufficiency of the proceedings for redemption as to the
other holders. The Company will provide the Depositary with the information
necessary for the Depositary to prepare such notice and each such notice shall
state: (i) the Redemption Date; (ii) the number of Depositary Shares to be
redeemed and, if less than all the Depositary Shares held by any such holder are
to be redeemed, the number of such Depositary Shares held by such holder to be
so redeemed; (iii) the redemption price per Depositary Share; (iv) the place or
places where Receipts evidencing Depositary Shares are to be surrendered for
payment of the redemption price; and (v) that dividends in respect of the Stock
represented by the Depositary Shares to be redeemed will cease to accrue on such
Redemption Date. In case less than all the outstanding Depositary Shares are to
be redeemed, the Depositary Shares to be so redeemed shall be determined pro
rata or by lot in a manner determined by the Board of Directors.
Notice having been mailed by the Depositary as aforesaid, from and
after the Redemption Date (unless the Company shall have failed to provide the
funds necessary to redeem the Stock evidenced by the Depositary Shares called
for redemption) (i) dividends on the shares of Stock so called for redemption
shall cease to accrue from and after such date, (ii) the Depositary Shares being
redeemed from such proceeds shall be deemed no longer to be outstanding, (iii)
all rights of the holders of Receipts evidencing such Depositary Shares (except
the right to receive the redemption price) shall, to the extent of such
Depositary Shares, cease and terminate, and (iv) upon surrender in accordance
with such redemption notice of the Receipts evidencing any such Depositary
Shares called for redemption (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary Shares shall be
redeemed by the Depositary at a redemption price per Depositary Share equal to
the same fraction of the redemption price per share paid with respect to the
shares of Stock as the fraction each Depositary Share represents of a share of
Stock plus the same fraction of
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<PAGE>
all money and other property, if any, represented by such Depositary Shares,
including all amounts paid by the Company in respect of dividends which on the
Redemption Date have accumulated on the shares of Stock to be so redeemed and
have not theretofore been paid. Any funds deposited by the Company with the
Depositary for any Depositary Shares that the holders thereof fail to redeem
will be returned to the Company after a period of five years from the date such
funds are so deposited.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption, provided, however, that the Depositary shall not
-------- -------
issue any Receipt evidencing a fractional Depositary Share.
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1 Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper or otherwise reasonably request. The
Depositary or the Company may withhold the delivery, or delay the registration
of transfer, redemption or exchange, of any Receipt or the withdrawal or
conversion of the Stock represented by the Depositary Shares evidenced by any
Receipt or the distribution of any dividend or other distribution or the sale of
any rights or of the proceeds thereof until such proof or other information is
filed or such certificates are executed or such representations and warranties
are made.
SECTION 3.2 Payment of Taxes or Other Governmental Charges. Holders
of Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses, as provided in Section 5.7. Registration of transfer of
any Receipt or any withdrawal of Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or any part of or all the Stock or other
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the
8
<PAGE>
proceeds of any such sale may be applied to any payment of such charges or
expenses, the holder of such Receipt remaining liable for any deficiency.
SECTION 3.3 Warranty as to Stock. The Company hereby represents and
warrants that the Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable. Such representation and warranty shall survive
the deposit of the Stock and the issuance of Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.1 Cash Distributions. Whenever the Depositary shall
receive any cash dividend or other cash distribution on Stock, the Depositary
shall, subject to Sections 3.1 and 3.2, distribute to record holders of Receipts
on the record date fixed pursuant to Section 4.4 such amounts of such dividend
or distribution as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders; provided, however, that in case the Company or the Depositary shall be
-------- -------
required to withhold and shall withhold from any cash dividend or other cash
distribution in respect of the Stock an amount on account of taxes or as
otherwise required by law, regulation or court process, the amount made
available for distribution or distributed in respect of Depositary Shares shall
be reduced accordingly. In the event that the calculation of any such cash
dividend or other cash distribution to be paid to any record holder on the
aggregate number of Depositary Receipts held by such holder results in an amount
which is a fraction of a cent, the amount the Depositary shall distribute to
such record holder shall be rounded to the next highest whole cent if such
fraction of a cent is equal to or greater than $.005, otherwise such fractional
interest shall be disregarded; and upon request of the Depositary, the Company
shall pay the additional amount to the Depositary for distribution.
SECTION 4.2 Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable and practicable
for accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes) the Depositary deems such distribution
not
9
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to be feasible, the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including the sale (at public or private sale) of the securities
or property thus received, or any part thereof, at such place or places and upon
such terms as it may deem equitable and appropriate. The net proceeds of any
such sale shall, subject to Sections 3.1 and 3.2, be distributed or made
available for distribution, as the case may be, by the Depositary to record
holders of Receipts as provided by Section 4.1 in the case of a distribution
received in cash.
SECTION 4.3 Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
--------
however, that (i) if at the time of issue or offer of any such rights,
- -------
preferences or privileges the Depositary determines that it is not lawful or
(after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders of Receipts by the issue of
warrants or otherwise, or (ii) if and to the extent so instructed by holders of
Receipts who do not desire to execute such rights, preferences or privileges,
then the Depositary, in its discretion (with approval of the Company, in any
case where the Depositary has determined that it is not feasible to make such
rights, preferences or privileges available), may, if applicable laws or the
terms of such rights, preferences or privileges permit such transfer, sell such
rights, preferences or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net proceeds of any such
sale shall, subject to Sections 3.1 and 3.2, be distributed by the Depositary to
the record holders of Receipts entitled thereto as provided by Section 4.1 in
the case of a distribution received in cash.
If registration under the Securities Act of the securities to which
any rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company will file promptly a registration statement
pursuant to the Securities Act with respect to such rights, preferences or
privileges and securities and use its best efforts and take all steps available
to it to cause such registration statement to become effective sufficiently in
advance of the expiration of such rights, preferences or privileges to enable
such holders to exercise such rights, preferences or privileges. In no event
shall the Depositary make available to the holders of Receipts any right,
preference or privilege to subscribe for or to purchase any securities unless
and until it has received written notice from the Company that such registration
statement shall have become effective, or that the offering and sale of such
securities to such holders are exempt
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from registration under the provisions of the Securities Act and the Company
shall have provided to the Depositary an opinion of counsel reasonably
satisfactory to the Depositary to such effect.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company will use its reasonable best efforts to take such
action or obtain such authorization, consent or permit sufficiently in advance
of the expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges.
SECTION 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders
of Receipts. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with respect to Stock,
or whenever the Depositary shall receive notice of any meeting at which holders
of Stock are entitled to vote or of which holders of Stock are entitled to
notice, or whenever the Depositary and the Company shall decide it is
appropriate, the Depositary shall in each such instance fix a record date (which
shall be the same date as the record date fixed by the Company with respect to
or otherwise in accordance with the terms of the Stock) for the determination of
the holders of Receipts who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting, or who shall be entitled to notice of such meeting or for any other
appropriate reasons.
SECTION 4.5 Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement that the holders may, subject to any applicable restrictions,
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock represented by their respective Depositary Shares (including
an express indication that instructions may be given to the Depositary to give a
discretionary proxy to a person designated by the Company) and a brief statement
as to the manner in which such instructions may be given. Upon the written
request of the holders of Receipts on the relevant record date, the Depositary
shall use its best efforts to vote or cause to be voted, in accordance with the
instructions set forth in such requests, the maximum number of whole shares of
Stock represented by the Depositary Shares evidenced by all Receipts as to which
any particular voting instructions are received. The Company hereby agrees to
take all action which may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Stock or cause such Stock to be voted. In
the absence of specific instructions from the holder of a Receipt, the
Depositary will not vote (but, at its discretion, may appear at any meeting with
respect to such
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<PAGE>
Stock unless directed to the contrary by the holders of all the Receipts) to the
extent of the Stock represented by the Depositary Shares evidenced by such
Receipt.
SECTION 4.6 Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par value or
liquidation preference, split-up, combination or any other reclassification of
the Stock, or upon any recapitalization, reorganization, merger or consolidation
affecting the Company or to which it is a party, the Depositary may in its
discretion with the approval (not to be unreasonably withheld) of, and shall
upon the instructions of, the Company, and (in either case) in such manner as
the Depositary may deem equitable, (i) make such adjustments in the fraction of
an interest in one share of Stock represented by one Depositary Share as may be
necessary (as certified by the Company) fully to reflect the effects of such
change in par value or liquidation preference, split-up, combination or other
reclassification of Stock, or of such recapitalization, reorganization, merger
or consolidation and (ii) treat any securities which shall be received by the
Depositary in exchange for or upon conversion of or in respect of the Stock as
new deposited securities so received in exchange for or upon conversion or in
respect of such Stock. In any such case, the Depositary may in its discretion,
with the approval of the Company, execute and deliver additional Receipts or may
call for the surrender of all outstanding Receipts to be exchanged for new
Receipts specifically describing such new deposited securities. Anything to the
contrary herein notwithstanding, holders of Receipts shall have the right from
and after the effective date of any such change in par value or liquidation
preference, split-up, combination or other reclassification of the Stock or any
such recapitalization, reorganization, merger or consolidation to surrender such
Receipts to the Depositary with instructions to convert, exchange or surrender
the Stock represented thereby only into or for, as the case may be, the kind and
amount of shares of stock and other securities and property and cash into which
the Stock represented by such Receipts would have been converted or for which
such Stock would have been exchanged or surrendered had such Receipt been
surrendered immediately prior to the effective date of such transaction.
SECTION 4.7 Delivery of Reports. The Depositary shall furnish to
holders of Receipts any reports and communications received from the Company
which are received by the Depositary as the holder of Stock.
SECTION 4.8 List of Receipt Holders. Promptly upon request from time
to time by the Company, the Depositary shall furnish to it a list, as of the
most recent practicable date, of the names, addresses and holdings of Depositary
Shares of all record holders of Receipts. The Company shall be entitled to
receive such list four times annually without charge.
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ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR AND THE COMPANY
SECTION 5.1 Maintenance of Offices, Agencies and Transfer Books by
the Depositary; Registrar. Upon execution of this Deposit Agreement, the
Depositary shall maintain at the Depositary's office facilities for the
execution and delivery, registration and registration of transfer, surrender and
exchange of Receipts, and at the offices of the Depositary's Agents, if any,
facilities for the delivery, registration of transfer, surrender and exchange of
Receipts, all in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books during normal
business hours shall be open for inspection by the record holders of Receipts;
provided that any such holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close such books, at any time or from time to time,
when deemed expedient by it in connection with the performance of its duties
hereunder.
The Depositary may, with the approval of the Company, appoint a
Registrar for registration of the Receipts or the Depositary Shares evidenced
thereby. If the Receipts or the Depositary Shares evidenced thereby or the
Stock represented by such Depositary Shares shall be listed on one or more
national securities exchanges, the Depositary will appoint a Registrar
(acceptable to the Company) for registration of such Receipts or Depositary
Shares in accordance with any requirements of such exchange. Such Registrar
(which may be the Depositary if so permitted by the requirements of any such
exchange) may be removed and a substitute registrar appointed by the Depositary
upon the request or with the approval of the Company. If the Receipts, such
Depositary Shares or such Stock are listed on one or more other stock exchanges,
the Depositary will, at the request and at the expense of the Company, arrange
such facilities for the delivery, registration, registration of transfer,
surrender and exchange of such Receipts, such Depositary Shares or such Stock as
may be required by law or applicable securities exchange regulation.
The Depositary may from time to time appoint Depositary's Agents to
act in any respect for the Depositary for the purposes of this Deposit Agreement
and may at any time appoint additional Depositary's Agents and vary or terminate
the appointment of such Depositary's Agents. The Depositary will notify the
Company of any such action.
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SECTION 5.2 Prevention of or Delay in Performance by the Depositary,
the Depositary's Agents, the Registrar or the Company. Neither the Depositary
nor any Depositary's Agent nor the Registrar nor the Company shall incur any
liability to any holder of any Receipt if by reason of any provision of any
present or future law, or regulation thereunder, of the United States of America
or of any other governmental authority or, in the case of the Depositary, the
Depositary's Agent or the Registrar, by reason of any provision, present or
future, of the Company's Articles of Incorporation or by reason of any act of
God or war or other circumstance beyond the control of the relevant party, the
Depositary, the Depositary's Agent, the Registrar or the Company shall be
prevented, delayed or forbidden from, or subjected to any penalty on account of,
doing or performing any act or thing which the terms of this Deposit Agreement
provide shall be done or performed; nor shall the Depositary, any Depositary's
Agent, the Registrar or the Company incur liability to any holder of a Receipt
(i) by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing which the terms of this Deposit Agreement shall
provide shall or may be done or performed, or (ii) by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement
except, in the case of any such exercise or failure to exercise discretion not
caused as aforesaid, if caused by the gross negligence or willful misconduct of
the party charged with such exercise or failure to exercise.
SECTION 5.3 Obligation of the Depositary, the Depositary's Agents,
the Registrar and the Company. Neither the Depositary nor any Depositary's
Agent nor the Registrar nor the Company assumes any obligation or shall be
subject to any liability under this Deposit Agreement or any Receipt to holders
of Receipts other than for its gross negligence, willful misconduct or bad
faith.
Neither the Depositary nor any Depositary's Agent nor the Registrar
nor the Company shall be under any obligation to appear in, prosecute or defend
any action, suit or other proceeding in respect of the Stock, the Depositary
Shares or the Receipts which in its reasonable opinion may involve it in expense
or liability unless indemnity reasonably satisfactory to it against expense and
liability be furnished as often as may be reasonably required.
Neither the Depositary nor any Depositary's Agent nor the Registrar
nor the Company shall be liable for any action or any failure to act by it in
reliance upon the written advice of legal counsel or accountants, or information
from any person presenting Stock for deposit, any holder of a Receipt or any
other person believed by it in good faith to be competent to give such
information. The Depositary, any Depositary's Agent, the Registrar and the
Company may each rely and shall each be protected in acting upon any written
notice, request, direction or other document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties.
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The Depositary shall not be responsible for any failure to carry out
any instruction to vote any of the shares of Stock or for the manner or effect
of any such vote made, as long as any such action or non-action is in good
faith. The Depositary will indemnify the Company and hold it harmless from any
loss, liability or expense (including the reasonable costs and expenses of
defending itself) which may arise out of acts performed or omitted by the
Depositary, including when such Depositary acts as Registrar, or the
Depositary's Agents in connection with this Agreement due to its or their gross
negligence, willful misconduct or bad faith. The indemnification obligations of
the Depositary set forth in this Section 5.3 shall survive any termination of
this Agreement and any succession of any Depositary.
The Depositary, its parent, affiliates or subsidiaries, the
Depositary's Agents, and the Registrar may own, buy, sell and deal in any class
of securities of the Company and its affiliates and in Receipts or Depositary
Shares or become pecuniarily interested in any transaction in which the Company
or its affiliates may be interested or contract with or lend money to or
otherwise act as fully or as freely as if it were not the Depositary, parent,
affiliate or subsidiary or Depositary's Agent or Registrar hereunder. The
Depositary may also act as trustee, transfer agent or registrar of any of the
securities of the Company and its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent
nor the Registrar, acting as the Depositary's Agent or Registrar, as the case
may be, shall be deemed to be an "issuer" of the securities under the federal
securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary, any Depositary's Agent and the
Registrar are acting only in a ministerial capacity as Depositary or Registrar
for the Stock.
Neither the Depositary (or its officers, directors, employees or
agents) nor any Depositary's Agent nor the Registrar makes any representation or
has any responsibility as to the validity of the registration statement pursuant
to which the Depositary Shares are registered under the Securities Act, the
Stock, the Depositary Shares or the Receipts (except for its counter-signatures
thereon) or any instruments referred to therein or herein, or as to the
correctness of any statement made therein or herein.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity or genuineness of any
Stock at any time deposited with the Depositary hereunder or of the Depositary
Shares, as to the validity or sufficiency of this Deposit Agreement, as to the
value of the Depositary Shares or as to any right, title or interest of the
record holders of Receipts in and to the Depositary Shares. The Depositary
shall not be accountable for the use or application by the Company of the
Depositary Shares or the Receipts or the proceeds thereof.
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SECTION 5.4 Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by delivering notice of its election to do so to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$150,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor, and shall deliver to such successor a list of the record holders
of all outstanding Receipts and such records, books and other information in its
possession relating thereto. Any successor Depositary shall promptly mail
notice of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.5 Corporate Notices and Reports. The Company agrees that
it will deliver to the Depositary, and the Depositary will, promptly after
receipt thereof, transmit to the record holders of Receipts, in each case at the
addresses recorded in the Depositary's books, copies of all notices and reports
(including without limitation financial statements) required by
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law or by the rules of any national securities exchange upon which the Stock,
the Depositary Shares or the Receipts are listed, to be furnished to the record
holders of Receipts. Such transmission will be at the Company's expense and the
Company will provide the Depositary with such number of copies of such documents
as the Depositary may reasonably request.
SECTION 5.6 Indemnification by the Company. The Company shall
indemnify the Depositary, any Depositary's Agent and the Registrar against, and
hold each of them harmless from, any loss, liability or expense (including the
reasonable costs and expenses of defending itself) which may arise out of acts
performed or omitted in connection with this Deposit Agreement and the Receipts
by the Depositary, any Registrar or any of their respective agents (including
any Depositary's Agent), except for any liability arising out of gross negli-
gence, willful misconduct or bad faith on the respective parts of any such
person or persons. The obligations of the Company set forth in this Section 5.6
shall survive any succession of any Depositary or Depositary's Agent.
SECTION 5.7 Charges and Expenses. The Company shall pay all transfer
and other taxes and governmental charges arising solely from the existence of
the depositary arrangements. The Company shall pay charges of the Depositary in
connection with the initial deposit of the Stock and the initial issuance of the
Depositary Shares, all withdrawals of shares of the Stock by owners of
Depositary Shares, and any redemption of the Stock at the option of the Company.
All other transfer and other taxes and governmental charges shall be at the
expense of holders of Depositary Shares. If, at the request of a holder of
Receipts, the Depositary incurs charges or expenses for which it is not
otherwise liable hereunder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder (including, in each case, reasonable fees and expenses of
counsel) incident to the performance of their respective obligations hereunder
will be paid upon consultation and agreement between the Depositary and the
Company as to the amount and nature of such charges and expenses. The
Depositary shall present its statement for charges and expenses to the Company
at such intervals as the Company and the Depositary may agree.
SECTION 5.8 Tax Compliance. The Depositary, on its own behalf and on
behalf of the Company, will comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Depositary
Shares or (ii) the issuance, delivery, holding, transfer, redemption or exercise
of rights under the Depositary Receipts or the Depositary Shares. Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
17
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The Depositary shall comply with any direction received from the
Company with respect to the application of such requirements to particular
payments or holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 5.3 hereof.
The Depositary shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available on
request to the Company or to its authorized representatives.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment. The form of the Receipts and any provisions
of this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
-------- -------
than any change in the fees of any Depositary or Registrar, which shall go into
effect not sooner than three months after notice thereof to the holders of the
Receipts) which shall materially adversely alter the rights of the holders of
Receipts shall be effective unless such amendment shall have been approved by
the holders of at least a majority of the Depositary Shares then outstanding.
Every holder of an outstanding Receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such Receipt, to be bound by
the Deposit Agreement as amended thereby. Notwithstanding the foregoing, in no
event may any amendment impair the right of any holder of any Depositary Shares,
upon surrender of the Receipts evidencing such Depositary Shares and subject to
any conditions specified in this Deposit Agreement, to receive shares of Stock
and any money or other property represented thereby, except in order to comply
with mandatory provisions of applicable law.
SECTION 6.2 Termination. This Deposit Agreement may be terminated by
the Company at any time upon not less than 60 days' prior written notice to the
Depositary, in which case, on a date that is not later than 30 days after the
date of such notice, the Depositary shall deliver or make available for delivery
to holders of Depositary Shares, upon surrender of the Receipts evidencing such
Depositary Shares, such number of whole or fractional shares of Stock as are
represented by such Depositary Shares. This Deposit Agreement will
automatically terminate after (i) all outstanding Depositary Shares have been
redeemed pursuant to Section 2.8 or (ii) there shall have been made a final
distribution in respect of the Stock in connection with any liquidation,
dissolution or winding up of the Company and such distribution shall have been
distributed to the holders of Depositary Receipts pursuant to Section 4.1 or
4.2, as applicable.
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Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, the Registrar and any Depositary's Agent under
Sections 5.6 and 5.7.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts. This Deposit Agreement may be executed in
any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.2 Exclusive Benefit of Parties. This Deposit Agreement is
for the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.3 Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4 Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:
Public Storage, Inc.
600 North Brand Boulevard
Glendale, California 91203-1241
Facsimile No.: (818) 241-0627
or at any other address of which the Company shall have notified the Depositary
in writing.
Any and all notices to be given to the Depositary hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the Depositary's Office, at:
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The First National Bank of Boston
150 Royall Street
Mail Stop: 45-02-62
Canton, MA 02021
Attention: Client Administration
Facsimile No.: (617) 575-2549
or at any other address of which the Depositary shall have notified the Company
in writing.
Any and all notices to be given to any record holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to such record holder at
the address of such record holder as it appears on the books of the Depositary,
or if such holder shall have filed with the Depositary a written request that
notices intended for such holder be mailed to some other address, at the address
designated in such request.
Delivery of a notice sent by mail or by telegram or facsimile
transmission shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or facsimile transmission) is deposited for mailing by first class mail, postage
prepaid. The Depositary or the Company may, however, act upon any telegram or
facsimile transmission received by it from the other or from any holder of a
Receipt, notwithstanding that such telegram or facsimile transmission shall not
subsequently be confirmed by letter or as aforesaid.
SECTION 7.5 Appointment of Registrar. The Company hereby also
appoints the Depositary as Registrar in respect of the Receipts and the
Depositary hereby accepts such appointments.
SECTION 7.6 Holders of Receipts Are Parties. The holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by all of the terms and conditions hereof and of the Receipts by acceptance of
delivery thereof.
SECTION 7.7 Governing Law. THIS DEPOSIT AGREEMENT AND THE RECEIPTS
AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS APPLICABLE TO
CONTRACTS MADE IN AND TO BE PERFORMED IN THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
20
<PAGE>
SECTION 7.8 Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agent and
shall be open to inspection during business hours at the Depositary's Office or
respective offices of the Depositary's Agent, if any, by any holder of a
Receipt.
SECTION 7.9 Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any bearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
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IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
PUBLIC STORAGE, INC.
Attested by:
_______________________________ ____________________________________
Name: Name:
Title: Title:
Attested by: THE FIRST NATIONAL BANK OF BOSTON
_______________________________ ____________________________________
Name: Name:
Title: Title:
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ANNEX A
- -------
The Shares represented by this Depositary Receipt are subject to restrictions on
ownership and transfer for the purpose of this corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. Except as set forth in this corporation's Articles of
Incorporation or Bylaws, no person may Beneficially Own (i) more than 2.0% of
the outstanding shares of Common Stock of this corporation, or (ii) more than
9.9% of the outstanding shares of any series of Preferred Stock of this
corporation, with certain further restrictions and exceptions as are set forth
in this corporation's Articles of Incorporation or Bylaws. Any Person who
attempts to own or Beneficially Own Shares in excess of the above limitations
must immediately notify this corporation. All capitalized terms in this legend
have the meanings defined in this corporation's Articles of Incorporation or
Bylaws. If any of the restrictions on transfer or ownership set forth in the
Articles of Incorporation or Bylaws are violated, the Shares represented hereby
will be automatically transferred to the Trustee of a Trust for the benefit of a
Charitable Beneficiary pursuant to the terms of the Articles of Incorporation or
Bylaws. In addition, attempted transfers of Shares in violation of the
limitations described above (as modified or expanded upon in this corporation's
Articles of Incorporation or Bylaws), may be void ab initio. This Corporation
-- ------
will furnish to the holder hereof, upon request and without charge, a complete
written statement of the terms and conditions of these restrictions. Requests
for such documents may be directed to the corporate secretary.
TEMPORARY RECEIPT EXCHANGEABLE FOR DEFINITIVE
ENGRAVED RECEIPT WHEN READY FOR DELIVERY
DEPOSITARY SHARES
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
DEPOSITARY RECEIPT FOR DEPOSITARY
SHARES EACH REPRESENTING 1/1,000th OF A
SHARE OF [ ]% CUMULATIVE PREFERRED STOCK,
SERIES G
OF
PUBLIC STORAGE, INC.
(A CORPORATION INCORPORATED UNDER THE
LAWS OF THE STATE OF CALIFORNIA)
THIS CERTIFICATE IS TRANSFERRABLE IN
THE CITIES OF NEW YORK OR BOSTON
A-1
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON, as Depositary (the "Depositary"),
hereby certifies that
is the registered owner of _____________________________ DEPOSITARY SHARES
("Depositary Shares"), each Depositary Share representing a 1/1,000 interest in
one share of [ ]% Cumulative Preferred Stock, Series G (the "Stock"), of
Public Storage, Inc., a California corporation (the "Corporation"), on deposit
with the Depositary, subject to the terms and entitled to the benefits of the
Deposit Agreement dated as of December [ ], 1995 (the "Deposit Agreement"),
between the Corporation and the Depositary. By accepting this Depositary
Receipt, the holder hereof becomes a party to and agrees to be bound by all the
terms and conditions of the Deposit Agreement. This Depositary Receipt shall
not be valid or obligatory for any purpose or be entitled to any benefits under
the Deposit Agreement unless it shall have been executed by the Depositary by
the manual signature of a duly authorized officer or, if executed in facsimile
by the Depositary, countersigned by a Registrar in respect of the Depositary
Receipts by a duly authorized officer thereof.
The Corporation is authorized to issue Common Stock, one or more series of
Preferred Stock, and Depositary Shares. The Corporation will furnish without
charge to each receiptholder, who so requests in writing, a statement of the
rights, preferences, privileges and restrictions granted to or imposed upon the
respective classes of shares and upon the holders thereof, a copy of the
Corporation's Bylaws and a copy of the Deposit Agreement. Any such request
shall be made to the Corporation at the principal office of the Corporation at
600 North Brand Boulevard, Glendale, California 91203-1241, Attention:
Secretary.
This Depositary Receipt is continued on the reverse hereof and the additional
provisions therein (including, without limitation, those relating to redemption)
set forth for all purposes have the same effect as if set forth at this place.
Dated:
Countersigned
THE FIRST NATIONAL BANK OF BOSTON
Depositary and Registrar
By: ______________________________
Authorized Officer
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<PAGE>
THE SHARES REPRESENTED BY THIS DEPOSITARY RECEIPT ARE SUBJECT TO THE PROVISIONS
OF THE ARTICLES AND BYLAWS, INCLUDING BUT NOT LIMITED TO (1) SECTION (C) OF THE
CERTIFICATE OF DETERMINATION RELATING TO THE STOCK, WHICH CONFERS UPON THE BOARD
THE RIGHT, ON OR AFTER DECEMBER 31, 2000, TO CALL FOR REDEMPTION THE STOCK, (2)
ARTICLE XI, SECTION 7 OF THE BYLAWS, WHICH CONFERS UPON THE BOARD THE RIGHT TO
REFUSE TO REGISTER THE TRANSFER OF AND/OR TO CALL FOR REDEMPTION THE SHARES
REPRESENTED BY THIS CERTIFICATE IF NECESSARY IN ITS OPINION TO MAINTAIN THE
CORPORATION'S QUALIFICATION AS A "REAL ESTATE INVESTMENT TRUST" UNDER THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND (3) THE PROVISIONS OF THE
ARTICLES AND BYLAWS WHICH SET FORTH OWNERSHIP LIMITATION PROVISIONS DESIGNED TO
MAINTAIN SUCH QUALIFICATION.
1. The Deposit Agreement. Depositary Receipts, of which this
Depositary Receipt is one, are made available upon the terms and conditions set
forth in the Deposit Agreement, dated as of December [ ], 1995 (the "Deposit
Agreement"), among the Company, the Depositary and all holders from time to time
of Depositary Receipts. The Deposit Agreement (copies of which are on file at
the principal office maintained by the Depositary which at the time of the
execution of the Deposit Agreement is located at [ ] (the "Depositary's
Office") and at the office of any agent of the Depositary) sets forth the rights
of holders of Depositary Receipts and the rights and duties of the Depositary.
The statements made on the face and the reverse of this Depositary Receipt are
summaries of certain provisions of the Deposit Agreement and are subject to the
detailed provisions thereof, to which reference is hereby made. In the event of
any conflict between the provisions of this Depositary Receipt and the
provisions of the Deposit Agreement, the provisions of the Deposit Agreement
will govern.
2. Definitions. Unless otherwise expressly herein provided, all
defined terms used in this summary of the Deposit Agreement shall have the
meanings ascribed thereto in the Deposit Agreement.
3. Redemption of Stock. Whenever the Company shall elect to redeem
shares of Stock, it shall (unless otherwise agreed in writing with the
Depositary) give the Depositary not less than 60 days' notice of the date of
such proposed redemption and of the number of such shares of Stock held by the
Depositary to be so redeemed and the applicable redemption price. The Depositary
shall mail, first-class postage prepaid, notice of the redemption of Stock and
the proposed simultaneous redemption of Depositary Shares representing the Stock
to be redeemed, not less than 30 and not more than 60 days prior to the date
fixed for redemption of such Stock and Depositary Shares, to the record holders
of the Depositary Receipts evidencing the Depositary Shares to be so redeemed,
at the addresses of such holders as the same appear on the records of the
Depositary. Any such notice shall also be published in the same manner as
notices of redemption of the Stock are required to be published by the Company.
On the date of such redemption, the Depositary shall redeem the number of
Depositary Shares representing such redeemed Stock; provided, that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus any accrued and unpaid divi-
dends payable with respect thereto to the date of any such redemption. In case
fewer than all the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be determined pro rata or by lot in a
manner determined by the Board of Directors. Notice having been mailed as
aforesaid, from and after the Redemption Date (unless the Company shall have
failed to provide the funds necessary to redeem the shares of Stock evidenced by
the Depositary Shares called for redemption), dividends on the shares of Stock
so called for redemption shall cease to accrue, the Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Depositary Receipts evidencing such Depositary Shares (except the
right to receive the redemption price)
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<PAGE>
shall, to the extent of such Depositary Shares, cease and terminate. Upon
surrender in accordance with said notice of the Depositary Receipts evidencing
such Depositary Shares (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary Shares shall be
redeemed at a redemption price per Depositary Share equal to the same fraction
of the redemption price per share paid with respect to the shares of Stock as
the fraction each Depositary Share represents of a share of Stock plus the same
fraction of all money and other property, if any, represented by such Depositary
Shares, including all amounts paid by the Company in respect of dividends which
on the Redemption Date have accumulated on the shares of Stock to be so redeemed
and have not theretofore been paid. The foregoing is subject further to the
terms and conditions of the Certificate of Determination. If fewer than all of
the Depositary Shares evidenced by this Depositary Receipt are called for
redemption, the Depositary will deliver to the holder of this Depositary Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Depositary Receipt evidencing the Depositary Shares evidenced by such prior
Depositary Receipt and not called for redemption.
4. Surrender of Depositary Receipts and Withdrawal of Stock. Upon
surrender of this Depositary Receipt to the Depositary at the Depositary's
Office or at such other offices as the Depositary may designate, and subject to
the provisions of the Deposit Agreement, the holder hereof is entitled to
withdraw, and to obtain delivery, without unreasonable delay, to or upon the
order of such holder, any or all of the Stock (but only in whole shares of
Stock) and all money and other property, if any, at the time represented by the
Depositary Shares evidenced by this Depositary Receipt; provided, however, that,
in the event this Depositary Receipt shall evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the whole
number of shares of Stock to be withdrawn, the Depositary shall, in addition to
such whole number of shares of Stock and such money and other property, if any,
to be withdrawn, deliver, to or upon the order of such holder, a new Depositary
Receipt or Depositary Receipts evidencing such excess number of whole Depositary
Shares.
5. Transfers, Split-ups, Combinations. Subject to the Deposit
Agreement, this Depositary Receipt is transferable on the books of the
Depositary upon surrender of this Depositary Receipt to the Depositary, properly
endorsed or accompanied by a properly executed instrument of transfer, and upon
such transfer the Depositary shall sign and deliver a Depositary Receipt or
Depositary Receipts to or upon the order of the person entitled thereto, all as
provided in and subject to the Deposit Agreement. This Depositary Receipt may
be split into other Depositary Receipts or combined with other Depositary
Receipts into one Depositary Receipt evidencing the same aggregate number of
Depositary Shares evidenced by the Depositary Receipt or Depositary Receipts
surrendered; provided, however, that the Depositary shall not issue any
Depositary Receipt evidencing a fractional Depositary Share.
6. Conditions to Signing and Delivery, Transfer, etc., of Depositary
Receipts. Prior to the execution and delivery, registration of transfer, split-
up, combination, surrender or exchange of this Depositary Receipt, the
Depositary, any of the Depositary's Agents or the Company may require any or all
of the following: (i) payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any tax or other governmental charge with respect
thereto; (ii) production of proof satisfactory to it as to the identity and
genuineness of any signature; and (iii) compliance with such reasonable
regulations, if any, as the Depositary or the Company may establish not
inconsistent with the Deposit Agreement.
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<PAGE>
7. Suspension of Delivery, Transfer, etc. The deposit of Stock may
be refused, the delivery of this Depositary Receipt against Stock may be
suspended, the registration of transfer of Depositary Receipts may be refused
and the registration of transfer, surrender or exchange of this Depositary
Receipt may be suspended (i) during any period when the register of stockholders
of the Company is closed or (ii) if any such action is deemed necessary or
advisable by the Depositary, any of the Depositary's Agents or the Company at
any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of the
Deposit Agreement.
8. Amendment. The form of the Depositary Receipts and any provision
of the Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable; provided, however, that no such amendment (other
than any changes in the fees of any Depositary or Registrar which shall go into
effect not sooner than three months after Notice thereof to the holders of the
Depositary Receipts) which shall materially adversely alter the rights of
holders of Depositary Receipts shall be effective unless such amendment shall
have been approved by at least a majority of the Depositary Shares then
outstanding. The holder of this Depositary Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold this
Depositary Receipt, to be bound by the Deposit Agreement as amended thereby. In
no event shall any amendment impair the right of the owner of the Depositary
Shares evidenced by this Depositary Receipt to surrender this Depositary Receipt
with instructions to the Depositary to deliver to the holder the Stock and all
money and other property, if any, represented thereby, except in order to comply
with mandatory provisions of applicable law.
9. Charges and Expenses. The Company will pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangement, except such charges as are expressly provided in the
Deposit Agreement to be at the expense of holders of Depositary Receipts.
10. Title to Depositary Receipts. Title to this Depositary Receipt,
when properly endorsed or accompanied by a properly executed instrument of
transfer, is transferable by delivery with the same effect as in the case of a
negotiable instrument; provided, however, that the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in the Deposit Agreement and for all other purposes.
11. Dividends and Distributions. Whenever the Depositary shall
receive any cash dividend or other cash distribution on the Stock, the
Depositary shall, subject to the provisions of the Deposit Agreement, distribute
to record holders of Depositary Receipts such amounts of such sums as are, as
nearly as practicable, in proportion to the respective numbers of Depositary
Shares evidenced by the Depositary Receipts held by such holders; provided,
however, that in case the Company or the Depositary shall be required by law to
withhold and does withhold from any cash dividend or other cash distribution in
respect of the Stock an amount on account of taxes or as otherwise required by
law, regulation or court process, the amount made available for distribution or
distributed in respect of Depositary Shares shall be reduced accordingly. In
the event that the calculation of any such cash dividend or other cash
distribution to be paid to any record holder on the aggregate number of
Depositary Receipts held by such holder results in an amount which is a fraction
of a cent, the amount the Depositary shall distribute to such record holder
shall be rounded to the next highest whole cent; and upon request of
A-5
<PAGE>
the Depositary, the Company shall pay the additional amount to the Depositary
for distribution.
12. Subscription Rights, Preferences or Privileges. If the Company
shall at any time offer or cause to be offered to the persons in whose name
Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance, subject to the provisions of the Deposit
Agreement, be made available by the Depositary to the record holders of
Depositary Receipts in such manner as the Depositary shall determine.
13. Notice of Dividends, Fixing of Record Date. Whenever (i) any
cash dividend or other cash distribution shall become payable, or any
distribution other than cash shall be made, or any rights, preferences or
privileges shall at any time be offered, with respect to the Stock, or (ii) the
Depositary shall receive notice of any meeting at which holders of Stock are
entitled to vote or of which holders of Stock are entitled to notice or whenever
the Depositary and the Company shall decide it is appropriate, the Depositary
shall in each such instance fix a record date (which shall be the same date as
the record date fixed by the Company with respect to the Stock) for the
determination of the holders of Depositary Receipts (x) who shall be entitled to
receive such dividend, distribution, rights, preferences or privileges or the
net proceeds of the sale thereof, or (y) who shall be entitled to give
instructions for the exercise of voting rights at any such meeting or to receive
notice of such meeting or for any other appropriate reasons.
14. Voting Rights. Upon receipt of notice of any meeting at which
the holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Depositary Receipts a
notice, which shall contain (i) such information as is contained in such notice
of meeting, (ii) a statement that the holders may, subject to any applicable
restrictions, instruct the Depositary as to the exercise of the voting rights
pertaining to the Stock represented by their respective Depositary Shares, and
(iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a holder of this Depositary Receipt on such
record date the Depositary shall use its best efforts to vote or cause to be
voted the Stock represented by the Depositary Shares evidenced by this
Depositary Receipt in accordance with the instructions set forth in such
request. The Company hereby agrees to take all action that may be deemed
necessary by the Depositary in order to enable the Depositary to vote such Stock
or cause such Stock to be voted. In the absence of specific instructions from
the holder of this Depositary Receipt, the Depositary will abstain from voting
to the extent of the Stock represented by the Depositary Shares evidenced by
this Depositary Receipt.
15. Reports, Inspection of Transfer Books. The Depositary shall
transmit to the record holders of Depositary Receipts copies of all reports and
communications received from the Company that are received by the Depositary as
the holder of Stock. The Depositary shall keep books at the Corporate Office
for the registration and transfer of Depositary Receipts, which books at all
reasonable times will be open for inspection by the record holders of Depositary
Receipts; provided that any such holder requesting to exercise such right shall
certify to the Depositary that such inspection shall be for a proper purpose
reasonably related to such person's interest as an owner of Depositary Shares.
16. Liability of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent nor
the
A-6
<PAGE>
Registrar nor the Company shall incur any liability to any holder of this
Depositary Receipt, if by reason of any provision of any present or future law
or regulation thereunder of any governmental authority or, in the case of the
Depositary, the Registrar or any Depositary's Agent, by reason of any provision
present or future, of the Articles of Incorporation or by reason of any act of
God or war or other circumstances beyond the control of the relevant party, the
Depositary, any Depositary's Agent, the Registrar or the Company shall be
prevented or forbidden from doing or performing any act or thing that the terms
of the Deposit Agreement provide shall be done or performed; nor shall the
Depositary, any Depositary's Agent, the Registrar or the Company incur any
liability to any holder of this Depositary Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing that the terms of the Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in the Deposit Agreement except if such exercise or
failure to exercise discretion is caused by its gross negligence or willful
misconduct.
17. Obligations of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent
nor the Registrar nor the Company assumes any obligation or shall be subject to
any liability under the Deposit Agreement or this Depositary Receipt to the
holder hereof or other persons, other than for its gross negligence, willful
misconduct or bad faith.
Neither the Depositary nor any Depositary's Agent nor the Registrar
nor the Company shall be under any obligation to appear in, prosecute or defend
any action, suit or other proceeding with respect to Stock, Depositary Shares or
Depositary Receipts or Common Stock that in its opinion may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Registrar
nor the Company will be liable for any action or failure to act by it in
reliance upon the advice of or information from legal counsel, accountants, any
person presenting Stock for deposit, any holder of this Depositary Receipt or
any other person believed by it in good faith to be competent to give such
advice or information.
18. Termination of Deposit Agreement. Whenever so directed by the
Company upon not less than 60 days' prior written notice, the Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
after the date of such notice. Upon the termination of the Deposit Agreement,
the Company shall be discharged to all obligations thereunder except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.6 and 5.7 of the Deposit Agreement.
19. Governing Law. The Deposit Agreement and this Depositary Receipt
and all rights thereunder and hereunder and provisions thereof and hereof shall
be governed by, and construed in accordance with, the law of the State of New
York without giving effect to principles of conflict of laws.
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<PAGE>
_________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Depositary Receipt, shall be construed as though they were written out
in full according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -______ Custodian _______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act ____________
tenants in common (State)
UNIF TRAN MIN ACT -______ Custodian (until age __)
(Cust)
_______ under Uniform Transfers
(Minor)
to Minors Act _________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
A-8
<PAGE>
For Value Received, ____________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
______________________________________
______________________________________
______________________________________________________________________________
______________________________________________________________________________
PLEASE PRINT NAME AND ADDRESS OF ASSIGNEE
________________________ Depositary Shares represented by the within
Depositary Receipt, and do hereby irrevocably constitute and appoint
________________________ Attorney to transfer the said Depositary Shares
on the books of the within named Depositary with full power of substitution
in the premises.
Dated _______________________________ Signed:
_________________________________
NOTICE: THE SIGNATURE TO THIS AS-
SIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF
THIS DEPOSITARY RECEIPT IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
By ______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
A-9
<PAGE>
Exhibit 5.1
David Goldberg
Senior Vice President and General Counsel
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
December 5, 1995
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
Gentlemen:
As Senior Vice President and General Counsel of Public Storage, Inc. (the
"Company"), I have examined (A) the Registration Statement on Form S-3 filed by
the Company with the Securities and Exchange Commission (the "Commission") on or
about July 26, 1994 (File No. 33-54755) and (B) the Registration Statement on
Form S-3, filed by the Company with the Commission on or about November 3, 1995,
as amended through the date hereof (File No. 33-63947) (collectively, the
"Registration Statements"), which includes a Prospectus to be used in connection
with securities registered under the Registration Statements (the "Prospectus").
The Prospectus relates to the offer and sale of up to $400,000,000 stated amount
of (i) shares of preferred stock, par value $.01 per share (the "Preferred
Shares"), (ii) depositary shares (the "Depositary Shares") representing a
fractional interest in a Preferred Share, (iii) shares of common stock, par
value $.10 per share (the "Common Shares") and (iv) warrants (the "Warrants").
I am familiar with the proceedings taken or to be taken by the Company
relating to the authorization and issuance of the Preferred Shares, the
Depositary Shares, the Common Shares and the Warrants in the manner set forth in
the Registration Statements. I have also examined the Company's Restated
Articles of Incorporation and Revised Bylaws and have made such other
investigation as I have deemed necessary in order to express the opinions
contained herein.
It is my opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of California.
2. The Preferred Shares, the Depositary Shares, the Common Shares and the
Warrants, when issued and delivered in the manner and on the terms described in
the Registration Statements and payment of the agreed consideration therefor has
been received by the Company, will be legally issued, fully paid and
nonassessable.
I hereby consent to the reference to me under the caption "Legal Opinions"
in the Registration Statements and to the filing of this opinion as an exhibit
to each of the Registration Statements or amendments thereto.
Very truly yours,
/s/ DAVID GOLDBERG
DAVID GOLDBERG
<PAGE>
EXHIBIT 8.1
December 5 , 1995
---
Public Storage, Inc.
600 N. Brand Boulevard
Glendale, California 91203-1241
Ladies and Gentlemen:
In connection with the registration by Public Storage, Inc., a
California corporation (the "Company"), of shares of preferred stock, par value
$.01 per share, depositary shares representing a fractional interest in a share
of such preferred stock, shares of common stock, par value $.10 per share, and
warrants to purchase shares of such preferred or common stock, with an aggregate
public offering price of up to $400,000,000, as more fully described in the
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on November 3, 1995, as amended through the date hereof (the
"Registration Statement"), we have been requested to provide you with our
opinion as to whether:
(1) the Company will continue to qualify as a REIT under sections 856
through 860 of the Internal Revenue Code (the "Code") following the
Merger of Public Storage Management, Inc. ("PSMI") into the Company
(the "Merger") SO LONG AS (A) the Company has met at all times since
the Merger and continues to meet the stock ownership and gross income
requirements applicable to REITs and (B) either PSMI at the time of
(and after giving effect to) the Merger was not considered to have any
current or accumulated earnings and profits for tax purposes or the
Company makes distributions prior to the end of 1995 in an amount
sufficient to eliminate such earnings and profits; and
(2) for purposes of determining the Company's revenues under Section
856(c)(2) and (c)(3) of the Code, it is more likely than not that the
Company will be treated as receiving when paid management fees paid to
the Company under the Amendment to the Amended
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 2
Management Agreement dated August 8, 1995 (the "Management Agreement
Amendment").
All capitalized terms used herein have the same meaning as set forth
in the Registration Statement unless otherwise defined herein.
BASIS FOR OPINIONS AND ASSUMPTIONS MADE IN CONNECTION THEREWITH
Our opinion is based on (i) existing law as contained in the Code,
regulations issued thereunder by the U.S. Treasury Department ("Regulations"),
administrative pronouncements of the Internal Revenue Service ("IRS"), and court
decisions as of the date hereof, (ii) our understanding of the relevant facts
related to the Company, its past, current, and contemplated operation, as
reflected in the Registration Statement and as represented to us in the
certificate of the Company attached hereto, and (iii) our assumption that the
Company will continue to be operated in accordance with the representations
contained in the certificate of the Company attached hereto. Any of the
statutes, regulations, administrative pronouncements, or judicial decisions upon
which this opinion is based could be changed at any time, perhaps with
retroactive effect. Furthermore, some of the issues under existing law that
could significantly affect our opinion have not yet been authoritatively
addressed by the IRS or the courts.
In rendering our opinion, we have examined such statutes, regulations,
records, certificates and other documents as we have considered necessary or
appropriate as a basis for such opinion, including the following: (1) the
Agreement and Plan of Reorganization by and among Public Storage, Inc., PSMI and
the Company dated June 30, 1995; (2) the Registration Statement (including the
exhibits thereto and all amendments thereto made through the date hereof); (3)
the Amendment to the Company's Restated Articles of Incorporation, as adopted in
connection with the Merger; (4) the Shareholders' Agreement dated November 16,
1995 ("Shareholders' Agreement") entered into by B. Wayne Hughes, Tamara L.
Hughes, B. Wayne Hughes, Jr. and Parker Hughes Trust No. 2; (5) the articles of
incorporation, by-laws and stock ownership information for PS Orange Co., Inc.
("Lock/Box Company"), Public Storage Commercial Properties Group, Inc. ("PSCP"),
and PSCC, Inc. ("PSCC"); (6) the ruling request letters, dated March 19, 1995
and June 7, 1995, submitted to the Internal Revenue Service on behalf of the
Company (the "Ruling Request Letters"), and the ruling letter dated October 4,
1995, issued by the Internal Revenue Service in response thereto; (7) the
Management
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 3
Agreement Amendment; and (8) such other instruments and documents related to the
organization and operation of the Company as we have deemed necessary or
appropriate.
In our review, we have assumed, with your consent, that all of the
representations and statements set forth in the documents we reviewed are true
and correct in all material respects, and that all of the obligations imposed by
any such documents on the parties thereto have been and will be performed or
satisfied substantially in accordance with their terms. Moreover, we have
assumed that the Company has been, and each of the Company, the Lock/Box
Company, PSCP and PSCC will be, operated substantially in the manner described
in the Registration Statement, the Ruling Requests, and the relevant articles of
incorporation and other organizational documents. We also have assumed the
genuineness of all signatures, the proper execution of all documents that are
executed, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals from which any copies were made.
For the purposes of our opinion, we have not made an independent
investigation of the facts set forth in documents we reviewed or of
representations made by the Company. We consequently have assumed that the
information presented in such documents or otherwise furnished to us accurately
and completely describes all material facts relevant to our opinion. We also
have assumed for the purposes of this opinion that the Company is a validly
organized and duly incorporated corporation under the laws of the State of
California and that the provisions of the Shareholders' Agreement and Article IV
of the Amendment to the Company's Restated Articles of Incorporation are fully
enforceable in the manner set forth therein under the laws of the State of
California. In the event any of the statements, representations, or assumptions
upon which we have relied in rendering this opinion is incorrect or incomplete,
our opinion could be adversely affected and may not be relied upon.
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 4
OPINIONS
Based upon the foregoing, and subject to the various assumptions,
limitations, and qualifications set forth in this letter, we are of the opinion
that:
(1) the Company will continue to qualify as a REIT under sections 856
through 860 of the Code following the Merger SO LONG AS (A) the
Company has met at all times since the Merger and continues to meet
the stock ownership and gross income requirements applicable to REITs
and (B) either PSMI at the time of (and after giving effect to) the
Merger was not considered to have any current or accumulated earnings
and profits for tax purposes or the Company makes distributions prior
to the end of 1995 in an amount sufficient to eliminate such earnings
and profits; and
(2) for purposes of determining its revenues under Section 856(c)(2)
and (c)(3) of the Code, it is more likely than not that the Company
will be treated as receiving when paid management fees paid to the
Company under the Management Agreement Amendment.
We are expressing our opinion only as to the specific matters set
forth in the preceding numbered paragraphs. With regard to whether the Company
will continue to qualify as a REIT following the Merger, we specifically are not
rendering an opinion as to whether the Company has satisfied or will continue to
satisfy the stock ownership and gross income requirements applicable to REITs
following the Merger or whether PSMI had current or accumulated earnings and
profits at the time of the Merger. For a discussion of certain of the
considerations associated with these issues, we direct your attention
specifically to the discussions of these matters contained in the Registration
Statement under the captions "Federal Income Tax Considerations--Consequences of
the Merger on the Company's Qualification as a REIT." For an analysis with
respect to the payments under the Management Agreement Amendment, we refer you
to the next section below.
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 5
ANALYSIS WITH RESPECT TO MANAGEMENT FEES PAID PURSUANT TO MANAGEMENT AGREEMENT
AMENDMENT
Facts. PSMI, the Company and the owners of the miniwarehouse
facilities managed by the Company ("Owners") entered into the Management
Agreement Amendment. Pursuant to the Management Agreement Amendment, the Owners
have agreed on demand from the Company to pay in advance up to 12 months of
estimated management fees discounted at a rate of 14% per year. The Owners are
not entitled to a return of such prepayment, or any portion thereof, under any
circumstances (including, for example, because the management fees that
otherwise actually would have been payable during the period covered by the
prepayment turn out to be less than the estimate). In addition, the Company is
not entitled to any further or additional payment of management fees for a
period with respect to which a prepayment has been made in the event that the
actual gross revenues for such period would have resulted in a higher management
fee than the estimate had such prepayment not been made.
The management fees that are the subject of the Management Agreement
Amendment would be nonqualifying income to the Company for REIT qualification
purposes. By accelerating the payment of certain of these management fees, the
Company could reduce the amount of nonqualifying income that the Company
otherwise would recognize in future years.
Analysis. The Company will treat the management fees that are paid
pursuant to the Management Agreement Amendment as income for tax purposes in the
year in which the payments are received. Section 446(b) of the Code gives the
IRS the broad authority to adjust a taxpayer's taxable income if the method used
by the taxpayer to compute taxable income "does not clearly reflect income."
For years, taxpayers and the IRS have litigated cases involving whether the
present accrual of prepaid fees for services subsequently to be performed by the
taxpayer clearly reflects income. Understandably, in most cases involving the
timing of accrual of prepaid fees, the IRS argues for the accelerated accrual of
income and the taxpayer argues for the deferred accrual of income. The seminal
trilogy of cases involving this issue is Automobile Club of Michigan v. Comm'r,
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353 U.S. 180 (1957), American Automobile Association v. Comm'r, 367 U.S. 687
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(1961) /1/ and Schlude v.
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/1/ In AAA, the taxpayer received annual dues from its members. In exchange
- ---
for such dues, the members were entitled to receive certain roadside auto
assistance
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 6
Comm'r, 372 U.S. 128 (1963) /2/ (collectively, the "Schlude trilogy"). In all
- ------ - -------
three cases in the Schlude trilogy, the IRS prevailed in arguing that the
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taxpayer must include currently in income amounts paid for future services to be
rendered by the taxpayer. All three of these cases involved the future provision
of services "on demand" and not pursuant to a specific schedule. In light of the
Schlude trilogy, taxpayers generally have been unsuccessful in trying to
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persuade courts that accrual of prepaid fees should be deferred until the
services are actually provided. Notable exceptions are the Artnell and Boise
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Cascade cases described below.
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In Artnell v. Comm'r, 400 F.2d 981 (7th Cir. 1969), the taxpayer, a
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corporation that operated the Chicago White Sox baseball team, was acquired by
another corporation mid-season and was subsequently liquidated. Rather than
report the entire amount of prepaid season tickets as income in its final short-
year tax return, the taxpayer reported only that portion of the payments
relating to games already played. The transferee corporation reported the
remaining amounts as the games were played. Relying on the Schlude trilogy, the
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tax court held that all of the amounts were includible in the taxpayer's final
year return. The Seventh Circuit reversed, distinguishing the Schlude trilogy
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from the instant circumstance because, unlike the Schlude trilogy where services
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were provided "on demand," the timing of the future performance of services was
relatively fixed. The court pointed
- --------------------------------------------------------------------------------
on demand over the course of the following year. The taxpayer included in its
taxable income for the years in question only a ratable portion of the annual
membership dues collected based on the portion of the year that the particular
member's dues covered, with the balance to be included in the next year. The
Court held that the entire dues must be included in income in the year received.
/2/ Schlude involves the deferral of income received by an Arthur Murray dance
- -------
studio from the sale of a package of dance lessons. The lessons were not given
in accordance with any particular schedule, but the student could participate in
regularly scheduled classes until the student had taken as many classes as the
package included. The taxpayer accounted for the cash payments in a manner that
was intended to reflect in income that portion of the contracted-for lessons
taken within each taxable year. The Supreme Court held that the payments were
includible in income in the year received, indicating that it accepted the IRS's
determination that the taxpayer's method of accounting did not clearly reflect
income.
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 7
out that except for rain-outs, the taxpayer was required to present a specified
number of baseball games on a fixed schedule.
The other notable case where the taxpayer prevailed in deferring the
recognition of income is Boise Cascade Corp. v. U.S., 530 F.2d 1367 (Ct. Cl.
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1976), cert. denied, 429 U.S. 867(1976). In Boise Cascade, the taxpayer
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received prepayments for services to be performed under engineering contracts
where the required the services were to "be performed by a specified date
or...with all reasonable dispatch." Citing Artnell, the Court of Claims stated
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that this situation was "entirely unlike" the factual situations before the
Supreme Court in the Schlude trilogy, since the taxpayer's contractual
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obligations were "fixed and definite." Deferral of the prepayments was
therefore permitted.
The services to be provided by the Company are factually similar in
certain respects to the "fixed and definite" performance of services in Artnell
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and Boise Cascade. The Company's management services have to be provided to the
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Owners on a regular and continuous basis throughout the term of the management
agreement. However, under the Management Agreement Amendment, the revenues that
would be produced by such services and the resulting management fee that
otherwise would be payable with respect to such services, are by no means fixed
(either as to time or amount). The Owners are not entitled to a return of any
prepaid fees under any circumstances. In addition, the Company is not entitled
to any further or additional payment of management fees for a period with
respect to which a prepayment has been made, even though the actual gross
revenues for such period would have resulted in a higher management fee had such
prepayment not been made. On balance, the Schlude trilogy should control in
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determining the timing of the accrual of prepaid management fees pursuant to the
Amended Management Agreement.
Conclusion. Based on the Schlude trilogy, it is more likely than not
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that the Company will be treated as receiving when paid management fees paid to
the Company under the Management Agreement Amendment. It seems unlikely that
the IRS would want to jeopardize its successes under the Schlude trilogy by
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arguing for the deferral of the prepaid management fees. However, if the IRS
chose to argue that the management fees should be accrued as performed, the
Artnell and Boise Cascade cases provide support for doing so. Because of the
- ------- -------------
contrary authorities, including Boise Cascade and Artnell, there can be no
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assurance that the IRS might not assert that management fees prepaid pursuant to
the Amended
<PAGE>
Public Storage, Inc.
December 5, 1995
Page 8
Management Agreement should be included in the Company's gross income only as
and when the services are provided, rather than when the fees are received.
* * * * * * * * * *
This opinion only represents and is based upon our best judgment
regarding the application of relevant current provisions of the Code and
interpretations of the foregoing as expressed in existing judicial decisions,
administrative regulations and published rulings and procedures. Our opinion,
however, is not binding upon the IRS or the courts, and there can be no
assurance that the IRS would not seek to assert a contrary position or that a
court would not agree with that contrary position. Furthermore, no assurance
can be given that future legislative, judicial or administrative changes, on
either a prospective or retroactive basis, would not adversely affect the
accuracy of the opinion expressed herein. We undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws. We undertake no obligation to update this opinion, or
to ascertain after the date hereof whether circumstances occurring after such
date may affect the conclusions set forth herein.
We hereby consent to the filing of our opinion, together with the
attachments thereto, as Exhibit 8.1 to the Registration Statement and to the
use of the name of our firm in the Registration Statement. In giving this
consent, however, we do not thereby admit that we are an "expert" within the
meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
Hogan & Hartson L.L.P.
