UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 18)*
Public Storage, Inc.
(Name of Issuer)
Common Stock, $.10 par value
(Title of Class of Securities)
74460D 10 9
(CUSIP Number)
David Goldberg, 600 No. Brand Blvd., Glendale, California
91203-1241, 818/244-8080, ext. 529
---------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 26, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the
statement [ ]. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
CUSIP No. 74460D 10 9
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
PS Insurance Company, Ltd.
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
WC
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Bermuda
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
300,000
8 Shared Voting Power
N/A
9 Sole Dispositive Power
300,000
10 Shared Dispositive Power
N/A
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
300,000
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
0.41%
14 Type of Reporting Person*
CO
SCHEDULE 13D
CUSIP No. 74460D 10 9
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
PS Orangeco, Inc.
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
N/A
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Bermuda
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
30,777
8 Shared Voting Power
N/A
9 Sole Dispositive Power
30,777
10 Shared Dispositive Power
N/A
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
30,777
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
0.04%
14 Type of Reporting Person*
CO
SCHEDULE 13D
CUSIP No. 74460D 10 9
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
B. Wayne Hughes
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
PF
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
19,367,916
8 Shared Voting Power
360,246 (see footnote 2 below)
9 Sole Dispositive Power
19,367,916
10 Shared Dispositive Power
360,246 (see footnote 2 below)
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
19,728,162 (see footnote 2 below)
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
27.02%
14 Type of Reporting Person*
IN
(2) Includes 300,000 shares held of record by PS Insurance Company,
Ltd., 30,777 shares held of record by PS Orangeco, Inc. and
29,469 shares held of record by Parker Hughes Trust dtd 3/7/91.
SCHEDULE 13D
CUSIP No. 74460D 10 9
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
B. Wayne Hughes, Jr.
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
PF, BK
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
925,314 (see footnote 3 below)
8 Shared Voting Power
31,727 (see footnote 4 below)
9 Sole Dispositive Power
925,314 (see footnote 3 below)
10 Shared Dispositive Power
31,727 (see footnote 4 below)
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
957,041 (see footnotes 3 and 4 below)
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
1.31%
14 Type of Reporting Person*
IN
(3) Includes 1,472 shares of common stock which can be acquired
upon conversion of 875 shares of the issuer's 8.25%
Convertible Preferred Stock which are beneficially owned by
B. Wayne Hughes, Jr.
(4) Includes 30,777 shares held of record by PS Orangeco, Inc. and
950 shares held of record jointly by B. Wayne Hughes, Jr. and
Tamara L. Hughes.
SCHEDULE 13D
CUSIP No. 74460D 10 9
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Parker Hughes Trust No. 2
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
PF
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
15,930
8 Shared Voting Power
N/A
9 Sole Dispositive Power
15,930
10 Shared Dispositive Power
N/A
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
15,930
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
0.02%
14 Type of Reporting Person*
OO (Trust)
SCHEDULE 13D
CUSIP No. 74460D 10 9
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Tamara L. Hughes
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
PF
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
16,609,837 (see footnote 5 below)
8 Shared Voting Power
347,657 (see footnote 6 below)
9 Sole Dispositive Power
16,609,837 (see footnote 5 below)
10 Shared Dispositive Power
347,657 (see footnote 6 below)
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
16,957,494 (see footnotes 5 and 6 below)
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
23.22%
14 Type of Reporting Person*
IN
(5) Includes 5,050 shares of common stock which can be acquired
upon conversion of 3,000 shares of the issuer's 8.25%
Convertible Preferred Stock which are held of record by
Tamara L. Hughes.
(6) Includes 300,000 shares held of record by PS Insurance Company,
Ltd., 30,777 shares held of record by PS Orangeco, Inc., 950
shares held of record jointly by Tamara L. Hughes and B. Wayne
Hughes, Jr. and 15,930 shares held of record by Parker Hughes
Trust No. 2 dtd 12/24/92.
This Amendment No. 18 to Statement on Schedule 13D (the
"Amended and Restated Statement") amends and restates the Statement
on Schedule 13D dated March 3, 1989, as amended by Amendment No. 1
dated September 7, 1989, Amendment No. 2 dated March 27, 1990,
Amendment No. 3 dated November 1, 1990, Amendment No. 4 dated
January 2, 1991, Amendment No. 5 dated November 4, 1991, Amendment
No. 6 dated January 14, 1992, Amendment No. 7 dated December 28,
1992, Amendment No. 8 dated August 6, 1993, Amendment No. 9 dated
September 27, 1993, Amendment No. 10 dated December 28, 1993,
Amendment No. 11 dated April 4, 1994, Amendment No. 12 dated
September 30, 1994, Amendment No. 13 dated November 11, 1994,
Amendment No. 14 dated January 23, 1995, Amendment No. 15 dated
February 28, 1995, Amendment No. 16 dated June 30, 1995 and
Amendment No. 17 dated November 16, 1995.
Item 1. Security and Issuer
The class of securities to which this Statement on Schedule 13D
relates is the common stock, par value $.10 per share (the "Shares"),
of Public Storage, Inc., a California corporation formerly known
as Storage Equities, Inc. (the "Issuer"). The address of the
principal executive office of the Issuer is 600 North Brand Boulevard,
Suite 300, Glendale, California 91203-1241.
Item 2. Identity and Background
This Amendment No. 18 to Statement on Schedule 13D is being filed
by PS Insurance Company, Ltd. ("PSIC"), PS Orangeco, Inc. ("PSOI"),
B. Wayne Hughes, B. Wayne Hughes, Jr. and Tamara L. Hughes
(collectively, the "Reporting Persons") pursuant to an Amended Joint
Filing Agreement attached hereto as Exhibit 1.
On November 16, 1995, Public Storage Management, Inc. ("PSMI")
was merged with and into the Issuer (the "PSMI Merger") pursuant to
an Agreement and Plan of Reorganization dated as of June 30, 1995
and an Amendment to Agreement and Plan of Reorganization dated as
of November 13, 1995, each among the Issuer, Public Storage, Inc.
("Old PSI") and PSMI (collectively, the "Agreement and Plan of
Reorganization"). Prior to the Restructuring (described below)
and the PSMI Merger, (i) PSI Holdings, Inc. ("PSH") was the sole
shareholder of Old PSI and Old PSI was the sole shareholder of PSIC
and PSMI and (ii) substantially all of the stock of PSH was held by
B. Wayne Hughes, as trustee of the B.W. Hughes Living Trust, Tamara L.
Hughes, an adult daughter of B. Wayne Hughes and B. Wayne Hughes, Jr.,
an adult son of B. Wayne Hughes (collectively, the "Hughes Family").
Prior to the PSMI Merger, (i) PSIC was distributed, in a spin-off
intended to qualify as tax-free under Section 355 of the Internal
Revenue Code, to the Hughes Family and (ii) Old PSI was merged with
and into PSH, which was followed by the merger of PSH with and into
PSMI (collectively, the "Restructuring"). Immediately preceding the
PSMI Merger, PSMI transferred its merchandise business to PSOI in
exchange for non-voting preferred stock of PSOI (representing
approximately 95% of the equity) and the voting common stock of PSOI
(representing approximately 5% of the equity) was acquired by the
Hughes Family. At the time of the PSMI Merger, substantially all of
the stock of PSMI was held by the Hughes Family as follows: 46.6% by
B. Wayne Hughes, as trustee of the B.W. Hughes Living Trust, 46.5% by
Tamara L. Hughes and 6.7% by B. Wayne Hughes, Jr. As a result of the
Restructuring and the PSMI Merger, Old PSI, PSH and PSMI ceased to
exist. In connection with the PSMI Merger, the Issuer changed its name
from Storage Equities, Inc. to Public Storage, Inc.
PSIC is a corporation organized under the laws of Bermuda. It is
owned by the Hughes Family as follows: 45.4% by B. Wayne Hughes, 46.8%
by Tamara L. Hughes and 7.8% by B. Wayne Hughes, Jr. Its principal
business activity is to reinsure casualty policies sold to tenants of
mini-warehouse facilities. The principal office of PSIC is located at
41 Cedar Avenue, Hamilton, Bermuda.
PSOI is a corporation organized under the laws of California.
The voting common stock of PSOI (representing approximately 5% of the
equity) is owned one-third each by B. Wayne Hughes, Tamara L. Hughes
and B. Wayne Hughes, Jr., and the non-voting preferred stock of PSOI
(representing approximately 95% of the equity) is owned by the Issuer.
PSOI's principal business activity is to sell locks and boxes to
tenants of mini-warehouse facilities. The principal office of PSOI
is located at 600 North Brand Boulevard, Suite 300, Glendale,
California 91203-1241.
Mr. B. Wayne Hughes, a United States citizen, is the Chairman of
the Board and Chief Executive Officer of the Issuer. His business
address is 600 North Brand Boulevard, Suite 300, Glendale, California
91203-1241. Mr. Hughes is the father of B. Wayne Hughes, Jr., Tamara
L. Hughes and Parker Hughes (a minor), the beneficiary of Parker Hughes
Trust No. 2.
Mr. B. Wayne Hughes, Jr., a United States citizen, is a Vice
President-Acquisitions of the Issuer. His business address is
600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241.
Parker Hughes Trust No. 2 is an irrevocable trust formed under a
trust agreement dated 12/24/92 and governed by the laws of the State
of California. Tamara L. Hughes is the trustee of Parker Hughes Trust
No. 2. Parker William Lawrence Hughes, a minor son of B. Wayne Hughes,
is the beneficiary of Parker Hughes Trust No. 2. B. Wayne Hughes is
the settlor of Parker Hughes Trust No. 2. The address of Parker Hughes
Trust No. 2 is 600 North Brand Boulevard, Suite 300, Glendale,
California 91203-1241.
Ms. Tamara L. Hughes, a United States citizen, is a Vice
President-Administration of the Issuer. Her business address is
600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241.
Because of the relationship among the Reporting Persons, such
Reporting Persons may be deemed a "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934. However, each of the
Reporting Persons disclaims that he or it constitutes such a group. In
addition, except as otherwise disclosed herein, each Reporting Person
claims beneficial ownership only of those Shares set out following his
or its name under Item 5 hereof and disclaims beneficial ownership of
any Shares covered by this Amended and Restated Statement owned by
any other Reporting Person. The filing of this Amended and Restated
Statement shall not be deemed an admission that the Reporting Persons
constitute such a group or that a Reporting Person is a beneficial
owner of Shares owned by any other Reporting Person.
During the last five years, neither the Reporting Persons nor, to
the best knowledge of the Reporting Persons, any executive officer,
director or person controlling any Reporting Person, has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation
with respect to such laws.
Item 3. Source and Amount of Funds or Other Compensation
In the PSMI Merger, the Issuer acquired a significant amount
of real estate related assets and as a result of the PSMI Merger,
the Issuer became self-advised and self-managed. The aggregate
consideration paid by the Issuer in the PSMI Merger to the
shareholders of PSMI consisted of (i) the issuance on November 16,
1995 (the effective date of the PSMI Merger) of 30,000,000 Shares of
the Issuer (subject to post-closing adjustment) having a market value
of $16.088 per share based on the average closing price of the
Issuer's common stock on the New York Stock Exchange for the 30
consecutive trading days ending on June 29, 1995, the day prior to
the date the Agreement and Plan of Reorganization was executed, and
$17.75 per share based on the closing price of the Issuer's common
stock on the New York Stock Exchange on November 16, 1995, the
effective date of the PSMI Merger, (ii) the issuance on January 22,
1996 of an additional 5,861,723 Shares of the Issuer issued as post-
closing adjustments (in respect of 6,412,210 Shares of the Issuer that
were owned by PSMI at the effective time of the PSMI Merger which were
cancelled in the PSMI Merger and reissued to the Hughes Family as a
post-closing adjustment, offset by a reduction in the total number of
Shares issuable in the PSMI Merger resulting from a further post-
closing adjustment, (iii) the issuance on January 2, 1996 of 7,000,000
shares of Class B Common Stock of the Issuer and (iv) assumption of
$68 million of PSMI debt and consolidated property debt of $4.7
million. Substantially all of the consideration paid in the PSMI
Merger was paid to the Hughes Family. For a detailed description of
the PSMI Merger, see the Issuer's definitive proxy statement dated
October 11, 1995.
As of March 26, 1996, PSIC owned a total of 300,000 Shares.
These Shares were acquired as follows: (i) for 148,300 of these
Shares, PSIC paid an approximate aggregate purchase price (including
commissions) of $1,725,883, which funds were obtained from PSIC's
working capital, (ii) 71,900 of these Shares were originally acquired
by Old PSI for an approximate aggregate purchase price of $689,920
(with funds obtained from Old PSI's working capital) and these Shares
were subsequently transferred to PSIC by Old PSI and (iii) the
remaining 79,800 of these Shares represent transaction fees earned
in connection with the Issuer's acquisition of limited partnership
interests in affiliated real estate limited partnerships (these Shares
were transferred to PSIC by Old PSI).
As of March 26, 1996, PSOI owned a total of 30,777 Shares, which
Shares were contributed to PSOI on November 14, 1995 one-third each
by B. Wayne Hughes (as trustee of the B.W. Hughes Living Trust),
Tamara L. Hughes and B. Wayne Hughes, Jr. in exchange for the
acquisition of one-third of PSOI's voting common stock by each of
B. Wayne Hughes (as trustee of the B.W. Hughes Living Trust), Tamara
L. Hughes and B. Wayne Hughes, Jr.
As of March 26, 1996, Mr. B. Wayne Hughes owned a total of
19,397,385 Shares (exclusive of Shares owned by PSIC and PSOI). These
Shares were acquired (or deemed to be acquired) as follows: (i)
17,620 Shares were acquired as follows: (a) 550,237 Shares were
acquired for an approximate aggregate purchase price (including
commissions) of $7,651,853, which funds were obtained from Mr. Hughes'
personal funds, and (b) on November 14, 1995, B. Wayne Hughes, Trustee
for B.W. Hughes Living Trust sold 532,617 of these Shares to PSMI
for an aggregate price of $9,453,952, (ii) pursuant to a merger of
Public Storage Properties VIII, Inc. ("PSP8") into the Issuer (the
"PSP8 Merger") which was effective September 30, 1994, B. Wayne
Hughes, Trustee for B.W. Hughes Living Trust acquired 206,892 Shares
of the Issuer in exchange for the surrender of 144,781 shares of PSP8
common stock series A (the terms of the PSP8 Merger are set forth in
the Agreement and Plan of Reorganization between PSP8 and the Issuer
dated as of April 14, 1994 and the related Agreement of Merger, which
were filed with the Issuer's Registration Statement on Form S-4 (File
No. 33-54557)), (iii) 156,100 Shares were acquired by B. Wayne Hughes,
Trustee for B.W. Hughes Living Trust from Harkham Industries, Inc. (DBA
Jonathan Martin, Inc.), a corporation wholly owned by Uri P. Harkham, a
director of the Issuer, on November 30, 1994 in a privately negotiated
transaction for an aggregate price of $2,107,350, with funds obtained
from Mr. Hughes' personal funds, and on November 14, 1995, B. Wayne
Hughes, Trustee for B.W. Hughes Living Trust sold these 156,100
Shares to PSMI for an aggregate price of $2,770,775, (iv) 27,400 of
these Shares were originally acquired by Mr. Hughes' wife, Kathleen
Becker Hughes, as custodian (under the Uniform Transfer to Minors Act)
for their son Parker Hughes (the "Custodial Account") for an
approximate aggregate purchase price (including commissions) of
$248,612 using funds contributed by Mr. Hughes, and these Shares were
subsequently transferred from the Custodial Account to Kathleen Becker
Hughes, Trustee FBO Parker Hughes Trust dtd 3/7/91 ("Parker Hughes
Trust No. 1") (Parker Hughes Trust No. 1 is an irrevocable trust
governed by the laws of the State of California, B. Wayne Hughes is
the settlor of Parker Hughes Trust No. 1 and Parker Hughes is the
beneficiary of Parker Hughes Trust No. 1), (v) (a) pursuant to a merger
of Public Storage Properties VI, Inc. ("PSP6") into the Issuer (the
"PSP6 Merger") which was effective February 28, 1995, B. Wayne Hughes,
Trustee for B.W. Hughes Living Trust acquired a total of 250,351 Shares
of the Issuer in exchange for the surrender of 145,215 shares of PSP6
common stock series A (the terms of the PSP6 Merger are set forth in
the Agreement and Plan of Reorganization between PSP6 and the Issuer
dated as of September 26, 1994 and the related Agreement of Merger,
which were filed with the Issuer's Registration Statement on Form S-4
(File No. 33-56925)), (b) on May 11, 1995, B. Wayne Hughes, Trustee for
B.W. Hughes Living Trust transferred 93,023 of these Shares to a third
party as a gift and (c) on November 27, 1995, B. Wayne Hughes, Trustee
for B.W. Hughes Living Trust transferred 157,328 of these Shares to a
third party as a gift, (vi) pursuant to the PSP6 Merger, Parker Hughes
Trust No. 1 acquired 2,069 Shares of the Issuer in exchange for the
surrender of 1,200 shares of PSP6 common stock series A, (vii) 142,917
Shares were acquired by B. Wayne Hughes, Trustee for B.W. Hughes Living
Trust from B. Wayne Hughes, Jr. on February 28, 1995 in a privately
negotiated transaction for an aggregate price of $2,038,000 consisting
of the cancellation of $2,038,000 of debt of B. Wayne Hughes, Jr. to
B. Wayne Hughes, (viii) 76,876 Shares were acquired as follows: (a)
pursuant to a merger of Public Storage Properties VII, Inc. ("PSP7")
into the Issuer (the "PSP7 Merger") which was effective June 30, 1995,
B. Wayne Hughes, Trustee for B.W. Hughes Living Trust acquired 248,889
Shares of the Issuer in exchange for the surrender of 215,488 shares of
PSP7 common stock series A (the terms of the PSP7 Merger are set forth
in the Agreement and Plan of Reorganization between PSP7 and the Issuer
dated as of February 2, 1995 and the related Agreement of Merger, which
were filed with the Issuer's Registration Statement on Form S-4 (File
No. 33-58893)), (b) on September 6, 1995, B. Wayne Hughes, Trustee
for B.W. Hughes Living Trust transferred 96,000 of these Shares to a
third party as a gift, (c) on November 1, 1995, B. Wayne Hughes,
Trustee for B.W. Hughes Living Trust transferred 65,754 of these
Shares to a third party as a gift, and (d) on November 14, 1995,
B. Wayne Hughes, Trustee for B.W. Hughes Living Trust contributed
10,259 of these Shares to PSOI in exchange for one-third of PSOI's
voting common stock, (ix) pursuant to the PSMI Merger, B. Wayne Hughes,
Trustee for B.W. Hughes Living Trust was issued 16,089,553 Shares
on November 16, 1995, which Shares were subject to certain post-closing
adjustments, (x) as post-closing adjustments to the Shares issued
pursuant to the PSMI Merger, B. Wayne Hughes, Trustee for B.W.
Hughes Living Trust was issued 2,744,889 Shares on January 22, 1996
in respect of Shares that were owned by PSMI at the effective time of
the PSMI Merger and cancelled in the PSMI Merger and reissued as a
post-closing adjustment, offset by a reduction in the total number of
Shares issuable in the PSMI Merger resulting from a further post-
closing adjustment, and (xi) pursuant to a merger of Public Storage
Properties IX, Inc. ("PSP9") into the Issuer (the "PSP9 Merger") which
was effective March 26, 1996, B. Wayne Hughes, Trustee for B.W. Hughes
Living Trust acquired 89,169 Shares of the Issuer in exchange for the
surrender of 104,781 shares of PSP9 common stock series A (the terms
of the PSP9 Merger are set forth in the Agreement and Plan of
Reorganization among the Issuer, PSP9 and PS Business Parks, Inc.
dated as of December 13, 1995 and the related Agreement of Merger
between the Issuer and PSP9, which were filed with the Issuer's
Registration Statement on Form S-4 (File No. 333-00591)).
As of March 26, 1996, Mr. B. Wayne Hughes, Jr. and Tamara L.
Hughes owned jointly a total of 950 Shares, for which they paid an
approximate aggregate purchase price (including commissions) of
$9,921. All funds used to purchase such Shares were obtained from
their personal funds.
As of March 26, 1996, Mr. B. Wayne Hughes, Jr. owned (or was
deemed to own) a total of 925,314 Shares (exclusive of Shares owned
by PSOI and Shares owned jointly by B. Wayne Hughes, Jr. and Tamara L.
Hughes). These Shares were acquired (or deemed to be acquired) as
follows: (i) 219,985 Shares were acquired as follows: (a) 230,244
Shares were acquired for an approximate aggregate purchase price
(including commissions) of $2,796,974, which funds were obtained from
Mr. Hughes, Jr.'s personal funds and (b) on November 14, 1995, B. Wayne
Hughes, Jr. contributed 10,259 of these Shares to PSOI in exchange for
one-third of PSOI's voting common stock, (ii) pursuant to the PSP8
Merger, (a) B. Wayne Hughes, Jr. acquired 179 Shares of the Issuer in
exchange for the surrender of 125 shares of PSP8 common stock series A
and (b) B. Wayne Hughes, Jr. as custodian for his daughter acquired 286
Shares of the Issuer in exchange for the surrender of 200 shares of
PSP8 common stock series A, (iii) 1,472 Shares can be acquired upon
conversion of 875 shares of the Issuer's 8.25% Convertible Preferred
Stock which are beneficially owned by B. Wayne Hughes, Jr. (the
Issuer's 8.25% Convertible Preferred Stock (the "Convertible Preferred
Stock") is convertible into common stock, at the option of the holder,
based on a conversion rate of 1.6835-for-1; cash would be paid for
fractional shares based on the market price of the common stock on the
conversion date), and the 875 shares of Convertible Preferred Stock
were acquired for an approximate aggregate purchase price (including
commissions) of $24,588, which funds were obtained from Mr. Hughes,
Jr.'s personal funds, (iv) 103,392 Shares were acquired as follows:
(a) in April 1994, B. Wayne Hughes, Jr. acquired a total of 526,300
Shares for an approximate aggregate purchase price (including
commissions) of $7,383,989, of which funds $4,750,000 was borrowed
under Mr. Hughes, Jr.'s credit agreement with Wells Fargo Bank which
is referenced under Item 7, Exhibit 2 (the "Wells Fargo Note") and
$2,633,989 was advanced by Old PSI (the "Old PSI Note"), and the Old
PSI Note bore interest at Wells Fargo Bank's prime rate plus 0.50%,
(b) the Wells Fargo Note was subsequently paid off in full, of which
$2,038,000 was paid with funds advanced to B. Wayne Hughes, Jr. by B.
Wayne Hughes (the "B. Wayne Hughes Note"), $1,484,000 was paid with
funds advanced to B. Wayne Hughes, Jr. by Tamara L. Hughes (the "Tamara
Hughes Note") and the balance was paid with Mr. Hughes, Jr.'s funds,
(c) on February 1, 1995, Mr. Hughes, Jr. sold 279,991 of these Shares
to Tamara L. Hughes in a privately negotiated transaction for an
aggregate price of $3,992,671 consisting of the cancellation of the
Tamara Hughes Note and the assumption by Tamara L. Hughes of $2,508,671
of the Old PSI Note and (d) on February 28, 1995, Mr. Hughes, Jr. sold
142,917 of these Shares to B. Wayne Hughes in a privately negotiated
transaction for an aggregate price of $2,038,000 consisting of the
cancellation of the B. Wayne Hughes Note, (v) pursuant to the PSMI
Merger, B. Wayne Hughes, Jr. was issued 144,254 Shares on November 16,
1995, which Shares were subject to certain post-closing adjustments
and (vi) as post-closing adjustments to the Shares issued pursuant to
the PSMI Merger, B. Wayne Hughes, Jr. was issued 455,746 Shares on
January 22, 1996 in respect of Shares that were owned by PSMI at the
effective time of the PSMI Merger and cancelled in the PSMI Merger and
reissued as a post-closing adjustment, offset by a reduction in the
total number of Shares issuable in the PSMI Merger resulting from a
further post-closing adjustment.
As of March 26, 1996, Parker Hughes Trust No. 2 owned a total
of 15,930 Shares. These Shares were acquired as follows: (i) 12,500
Shares were acquired for an approximate aggregate purchase price
(including commissions) of $165,392, with funds obtained from the
assets of Parker Hughes Trust No. 2, which were contributed by Mr.
B. Wayne Hughes, the settlor of Parker Hughes Trust No. 2 and (ii)
pursuant to the PSP8 Merger, Parker Hughes Trust No. 2 acquired 3,430
Shares of the Issuer in exchange for the surrender of 2,400 shares of
PSP8 common stock series A.
As of March 26, 1996, Ms. Tamara L. Hughes owned (or was deemed
to own) a total of 16,609,837 Shares (exclusive of Shares owned by
PSIC and PSOI, Shares owned jointly by Tamara L. Hughes and B. Wayne
Hughes, Jr. and Shares owned by Parker Hughes Trust No. 2). These
Shares were acquired (or deemed to be acquired) as follows: (i)
276,673 Shares were acquired as follows: (a) 286,932 Shares were
acquired for an approximate aggregate purchase price (including
commissions) of $2,588,554, which funds were obtained from Ms. Hughes'
personal funds and (b) on November 14, 1995, Tamara L. Hughes
contributed 10,259 of these Shares to PSOI in exchange for one-third
of PSOI's voting common stock, (ii) 5,050 Shares can be acquired upon
conversion of 3,000 shares of Convertible Preferred Stock which are
held of record by Tamara L. Hughes, and the 3,000 shares of Convertible
Preferred Stock were acquired for an approximate aggregate purchase
price (including commissions) of $82,740, which funds were obtained
from Ms. Hughes' personal funds, (iii) 279,991 Shares were acquired by
Tamara L. Hughes from B. Wayne Hughes, Jr. on February 1, 1995 in a
privately negotiated transaction for an aggregate price of $3,992,671
consisting of the cancellation of the Tamara Hughes Note and the
assumption by Tamara L. Hughes of $2,508,671 of the Old PSI Note, and
on November 14, 1995, Tamara L. Hughes sold these 279,991 Shares to
PSMI for an aggregate price of $4,969,840, a portion of which was used
to pay off Tamara Hughes' portion of the Old PSI Note, (iv) pursuant
to the PSMI Merger, Tamara L. Hughes was issued 13,667,026 Shares on
November 16, 1995, which Shares were subject to certain post-closing
adjustments and (v) as post-closing adjustments to the Shares issued
pursuant to the PSMI Merger, Tamara L. Hughes was issued 2,661,088
Shares on January 22, 1996 in respect of Shares that were owned by PSMI
at the effective time of the PSMI Merger and cancelled in the PSMI
Merger and reissued as a post-closing adjustment, offset by a reduction
in the total number of Shares issuable in the PSMI Merger resulting
from a further post-closing adjustment.
Item 4. Purpose of Transaction
The purpose of the acquisition of Shares by the Reporting
Persons is for investment as part of the general investment
portfolio of the Reporting Persons acquiring such Shares. The
Reporting Persons believe that Issuer's shares of common stock
represent a good investment.
The Reporting Persons intend to review their investments in
the Issuer on a continuing basis and may, at any time, consistent
with the Reporting Persons' obligations under the federal
securities laws, determine to increase or decrease their ownership
of Shares through purchases or sales of Shares in the open market
or in privately negotiated transactions. Such determination will
depend on various factors, including the Issuer's business
prospects, other developments concerning the Issuer, general
economic conditions, money and stock market conditions, and any
other facts and circumstances which may become known to the
Reporting Persons regarding their investments in the Issuer. At
this time, one or more of the Reporting Persons and their
affiliates intend to continue to purchase Shares in the open
market or in privately negotiated transactions.
By virtue of the purchase of the Shares, the Reporting
Persons have no plans or proposals which relate to or would
result in (i) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Issuer; (ii)
a sale or transfer of a material amount of assets of the Issuer;
(iii) any change in the present board of directors or management
of the Issuer, including any plans or proposals to change the
number or term of directors or fill any position, vacancies on
the boards; (iv) any material change in the present
capitalization or dividend policy of the Issuer; (v) any other
material change in the Issuer's business or corporate structure;
(vi) changes in the Issuer's articles of incorporation or bylaws
or other actions which may impede the acquisition or control of
the Issuer by any person; (vii) any class of securities of the
Issuer to be delisted from the national securities exchange or
cease to be quoted in an inter-dealer quotation system of a
registered national securities association; (viii) a class of
equity securities of the Issuer to become eligible for
termination of registration pursuant to Section 12(d)(4) of the
Securities Exchange Act of 1934; or (ix) any action similar to
any of those described above.
B. Wayne Hughes is Chairman of the Board and Chief Executive
Officer of the Issuer and, in his capacity as such, may, from
time to time, propose to Issuer's board of directors a wide
variety of types of transactions, including transactions similar
to those described above.
Item 5. Interest in Securities of the Issuer
As of March 26, 1996, each Reporting Person owned (or was
deemed to own) the aggregate number of Shares set forth below
opposite his, her or its name. Such Shares constitute approximately
51.05%, in the aggregate, of the approximate total number of Shares
outstanding (or deemed to be outstanding) on March 26, 1996 of
73,019,828.
Approximate % of
Reporting Person No. of Shares Shares Outstanding
---------------- --------------- ------------------
PSIC 300,000 0.41%
PSOI 30,777 0.04%
B. Wayne Hughes 19,397,385 <F1> 26.57%
B. Wayne Hughes, Jr. and
Tamara L. Hughes 950 <F2> --
B. Wayne Hughes, Jr. 925,314 <F3> 1.27%
Parker Hughes Trust No. 2 15,930 0.02%
Tamara L. Hughes 16,609,837 <F4> 22.75%
---------- -----
Total 37,280,193 51.05%
<F1> Includes 19,360,295 Shares held of record by the B.W. Hughes
Living Trust as to which Mr. Hughes has voting and dispositive
power, 1,400 and 1,395 Shares, respectively, held by custodians
of individual retirement accounts for Mr. Hughes and Mr. Hughes'
wife as to which each has investment and dispositive power,
4,826 Shares held by Mr. Hughes' wife as to which she has
investment and dispositive power and 29,469 Shares held of
record by Parker Hughes Trust No. 1 as to which Mr. Hughes'
wife, Kathleen Becker Hughes, as trustee of Parker Hughes Trust
No. 1, has voting and dispositive power. Excludes 300,000 Shares
held of record by PSIC as to which Mr. Hughes and Tamara Hughes
share voting and dispositive power and 30,777 Shares held of
record by PSOI as to which Mr. Hughes, Tamara Hughes and Mr.
Hughes, Jr. share voting and dispositive power.
<F2> Shares held of record jointly by Mr. Hughes, Jr. and Tamara
Hughes as to which they have joint voting and dispositive
power.
<F3> Includes 1,231 and 214 Shares, respectively, held by
custodians of individual retirement accounts for Mr. Hughes,
Jr. and Mrs. Hughes, Jr. as to which each has investment and
dispositive power, 3,496 Shares and 2,960 Shares,
respectively, held by Mr. Hughes, Jr. as custodian (under
the Uniform Transfer to Minors Act) for their daughter and
their son, respectively, as to which Mr. Hughes, Jr. has
voting and dispositive power, and 2,265 Shares held by Mrs.
Hughes, Jr. as custodian (under the Uniform Transfer to
Minors Act) for their daughter, as to which Mrs. Hughes, Jr.
has voting and dispositive power. Also includes (i) 589
Shares which can be acquired upon conversion of 350 Shares
of Convertible Preferred Stock, which Shares of Convertible
Preferred Stock are held by Mr. Hughes, Jr. as custodian
(under the Uniform Transfer to Minors Act) for their
daughter and (ii) 883 Shares which can be acquired upon
conversion of 525 Shares of Convertible Preferred Stock,
which Shares of Convertible Preferred Stock are held by Mrs.
Hughes, Jr. as custodian (under the Uniform Transfer to
Minors Act) for their daughter. Excludes 30,777 Shares held
of record by PSOI as to which Mr. Hughes, Jr., Mr. Hughes and
Tamara Hughes share voting and dispositive power, 950 Shares
held of record jointly by Mr. Hughes, Jr. and Tamara Hughes.
<F4> Includes 1,397 Shares held by a custodian of an individual
retirement account for Tamara Hughes as to which she has
investment and dispositive power and 1,300 Shares held by
Tamara Hughes' husband as to which he has investment and
dispositive power. Also includes 5,050 Shares which can be
acquired upon conversion of 3,000 Shares of Convertible
Preferred Stock, which Shares of Convertible Preferred Stock
are held of record by Tamara Hughes. Excludes 300,000 Shares
held of record by PSIC as to which Mr. Hughes and Tamara Hughes
share voting and dispositive power, 30,777 Shares held of record
by PSOI as to which Tamara Hughes, Mr. Hughes and Mr. Hughes, Jr.
share voting and dispositive power, 950 Shares held of record
jointly by Tamara Hughes and Mr. Hughes, Jr. and 15,930 Shares
held of record by Parker Hughes Trust No. 2 as to which Tamara
Hughes, as trustee of Parker Hughes Trust No. 2, has voting and
dispositive power.
B. Wayne Hughes and Tamara L. Hughes share the power to vote and
dispose of the Shares of the Issuer held by PSIC. B. Wayne Hughes,
Tamara L. Hughes and B. Wayne Hughes, Jr. share the power to vote and
dispose of the Shares of the Issuer held by PSOI. B. Wayne Hughes has
the sole power to vote and dispose of the Shares of the Issuer held
directly by him or by the B.W. Hughes Living Trust. B. Wayne Hughes'
wife, Kathleen Becker Hughes, as trustee of Parker Hughes Trust No. 1,
has the sole power to vote and dispose of the Shares of the Issuer held
by Parker Hughes Trust No. 1. B. Wayne Hughes, Jr. has the sole power
to vote and dispose of the Shares of the Issuer held directly by him or
by him as custodian for his son and his daughter, and Mrs. Hughes, Jr.
has the sole power to vote and dispose of the Shares of the Issuer held
by her as custodian for their daughter. Tamara L. Hughes has the sole
power to vote and dispose of the Shares of the Issuer held directly by
her. Tamara L. Hughes, as trustee of Parker Hughes Trust No. 2, has
the sole power to vote and dispose of the Shares of the Issuer held by
Parker Hughes Trust No. 2.
During the 60-day period ending March 26, 1996, the Reporting
Persons purchased or sold the number of Shares in the transaction,
on the transaction date and at the price per Share (not including
commissions) set forth below opposite his, her or its name.
<TABLE>
<CAPTION>
Price
Transaction No. of Type of per
Reporting Person Date Shares Bought Transaction Share
---------------- ----------- --------------- ----------- -----
<S> <C> <C> <C> <C>
B. Wayne Hughes 3/26/96 89,169 <F1> <F1>
<FN>
<F1> Pursuant to the PSP9 Merger, B. Wayne Hughes, Trustee for B.W.
Hughes Living Trust acquired 89,169 Shares of the Issuer in
exchange for the surrender of 104,781 shares of PSP9 common
stock series A.
</TABLE>
To the best of the Reporting Persons' knowledge, except as
disclosed herein, none of the Reporting Persons named in Item 2 has
any beneficial ownership of any Shares as of March 26, 1996, or has
engaged in any transaction in any Shares during the 60-day period
ending March 26, 1996.
Except as disclosed herein, no other person is known to the
Reporting Persons to have the right to receive or the power to direct
receipt of dividends from, or the proceeds from the sale of, the Shares
beneficially owned by the Reporting Persons.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer
In connection with the PSMI Merger, in order to assist the Issuer
in preserving its status as a "real estate investment trust" under the
Internal Revenue Code of 1986, B. Wayne Hughes, Tamara L. Hughes,
B. Wayne Hughes, Jr. and Parker Hughes Trust No. 2 (collectively, the
"Shareholders") entered into a Shareholders' Agreement with the Issuer
dated as of November 16, 1995 (the "Shareholders Agreement")
restricting the Shareholders' acquisition of additional shares of
capital stock of the Issuer and providing that, if at any time, for
any reason, more than 50% in value of the Issuer's outstanding capital
stock otherwise would be considered owned by five or fewer individuals,
a number of Shares owned by B. Wayne Hughes necessary to prevent such
violation will automatically and irrevocably be transferred to a
designated charitable beneficiary. The Shareholders Agreement is
filed as Exhibit 5 hereto and is incorporated herein by this reference.
Except as disclosed herein, to the best knowledge of the
Reporting Persons, there are at present no contracts, arrangements,
understandings or relationships (legal or otherwise) among the
Reporting Persons named in Item 2 and between such persons and any
person with respect to any securities of the Issuer, including but not
limited to, transfer or voting of any of the securities of the Issuer,
finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or loss or the giving
or withholding of proxies, or a pledge or contingency the occurrence of
which would give another person voting power over securities of the
Issuer.
Item 7. Material to be Filed as Exhibits
Exhibit 1 - Amended Joint Filing Agreement.
Exhibit 2 - Credit Agreement between B. Wayne Hughes, Jr. and
Wells Fargo Bank dated as of April 11, 1994 was previously filed.
Exhibit 3 - Agreement and Plan of Reorganization dated as of
June 30, 1995 by and among the Issuer, Old PSI and PSMI. Filed as
Appendix A to the Issuer's definitive Proxy Statement dated October 11,
1995 (filed October 13, 1995) and incorporated herein by reference.
Exhibit 4 - Amendment to Agreement and Plan of Reorganization
dated as of November 13, 1995 by and among the Issuer, Old PSI and
PSMI was previously filed.
Exhibit 5 - Shareholders' Agreement dated as of November 16, 1995
by and among the Issuer, B. Wayne Hughes, Tamara L. Hughes, B. Wayne
Hughes, Jr. and Parker Hughes Trust No. 2.
SIGNATURES
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 its or his behalf any amendment to this Amendment
No. 18 to Statement on Schedule 13D, and to file the same, with all
exhibits thereto and all documents in connection therewith, with the
Securities and Exchange Commission.
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this Amendment
No. 18 to Statement on Schedule 13D is true, complete and correct.
Dated: April 5, 1996
PS INSURANCE COMPANY, LTD.
By: /s/OBREN B. GERICH
-------------------
Obren B. Gerich,
Vice President
PS ORANGECO, INC.
By: /s/OBREN B. GERICH
-------------------
Obren B. Gerich,
Vice President
/s/B. WAYNE HUGHES
----------------------
B. Wayne Hughes
/s/B. WAYNE HUGHES, JR.
----------------------
B. Wayne Hughes, Jr.
/s/TAMARA LYNN HUGHES, TRUSTEE
----------------------
Tamara Lynn Hughes, Trustee FBO
Parker Hughes Trust No. 2 DTD
12/24/92
/s/TAMARA L. HUGHES
----------------------
Tamara L. Hughes
EXHIBIT 1
AMENDED JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act
of 1934, as amended, the undersigned agree to the joint filing on
behalf of each of them of Amendment No. 18 to Statement on Schedule 13D
(including amendments thereto) with respect to the common stock of
Public Storage, Inc. and further agree that this agreement be included
as an exhibit to such filing. Each party to this agreement expressly
authorizes each other party to file on its behalf any and all
amendments to such Statement.
In evidence whereof, the undersigned have caused this Agreement to
be executed on their behalf this 5th day of April, 1996.
PS INSURANCE COMPANY, LTD.
By: /s/OBREN B. GERICH
-------------------
Obren B. Gerich,
Vice President
PS ORANGECO, INC.
By: /s/OBREN B. GERICH
-------------------
Obren B. Gerich,
Vice President
/s/B. WAYNE HUGHES
----------------------
B. Wayne Hughes
/s/B. WAYNE HUGHES, JR.
----------------------
B. Wayne Hughes, Jr.
/s/TAMARA LYNN HUGHES, TRUSTEE
----------------------
Tamara Lynn Hughes, Trustee FBO
Parker Hughes Trust No. 2 DTD
12/24/92
/s/TAMARA L. HUGHES
----------------------
Tamara L. Hughes
EXHIBIT 5
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT ("Agreement") is made and entered
into as of November 16, 1995, by and between STORAGE EQUITIES, INC., a
California corporation (the "Corporation"), and B. WAYNE HUGHES
("Hughes"), TAMARA L. HUGHES, B. WAYNE HUGHES, JR. and PARKER HUGHES
TRUST NO. 2 (collectively, the "Shareholders").
BACKGROUND
The Shareholders currently own shares of the Corporation's issued
and outstanding common stock par value $.01 per share (the "Common
Stock"). Upon consummation of the merger of Public Storage Management,
Inc. with and into the Corporation on the date hereof (the "Merger"),
the Shareholders will collectively be the beneficial owners of up to
44,892,280 shares of Common Stock (approximately 57% of the outstanding
shares of Common Stock) and 3,400 shares of Preferred Stock (less than
1% of the outstanding Preferred Stock (determined by issue price)).
(As used herein, the term Common Stock refers to both the Class A
Common Stock and the Class B Common Stock of the Corporation.) As a
condition to its agreement to consummate the Merger, the Corporation is
requiring that the Shareholders (who also own (or will own immediately
prior to the Merger) substantially all of the stock in Public Storage
Management, Inc.) enter into an agreement which imposes certain
restrictions and obligations on themselves and on the Common Stock of
the Corporation in order to assist the Corporation in preserving its
status as a "real estate investment trust" under the Internal Revenue
Code of 1986 (the "Code") and to promote their mutual interests.
NOW THEREFORE, in consideration of the background stated above
and the mutual promises, agreements, covenants, representations and
warranties hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. AUTOMATIC TRANSFER OF SHARES TO TRUST FOR BENEFIT OF
CHARITABLE BENEFICIARIES
Automatic Transfer of Shares. If, at any time, more than
50% of the value of the capital stock of the Corporation would be
considered held (for purposes of Section 542(a)(2) of the Code, taking
into account the ownership attribution rules of Section 544 of the
Code, as modified by Section 856(h) of the Code) by five or fewer
individuals (the "5/50 Rule") under any circumstances whatsoever,
including without limitation, (1) a change in the value of the Common
Stock relative to the preferred stock of the Corporation or (2) the
actual ownership or acquisition of capital stock by a person as and to
the extent permitted under the Corporation's Restated Articles of
Incorporation, as amended (the "Articles of Incorporation") (either (x)
in accordance with the ownership limitations set forth in section (a)
of Article IV of the Articles of Incorporation or (y) pursuant to the
authority of the Board of Directors of the Corporation under subsection
(c) of Article IV of the Articles of Incorporation to grant a waiver of
the ownership limits contained in the Corporation's Articles of
Incorporation), then, that number, and no more than that number, of
shares of Common Stock owned by the Shareholders necessary to prevent
the Corporation from violating the 5/50 Rule shall be automatically
(without requirement for any action on the part of any person) and
irrevocably transferred to the charitable beneficiary specified in
Section 3; provided, however, that no transfer pursuant to this Section
1 shall occur if the violation of the 5/50 Rule results solely from the
ownership or acquisition of capital stock by a person other than the
Shareholders (and other than a person whose ownership of stock would be
attributed to one or more of the Shareholders for purposes of the 5/50
Rule) in violation of Article IV of the Articles of Incorporation. Any
transfer of shares of Common Stock pursuant to this Section 1 shall be
effective as of the close of business on the business day prior to the
date on which the ownership of the Corporation's capital stock
otherwise would have violated the 5/50 Rule. Any transfer required to
be made hereunder first shall be made out of the Designated Transfer
Shares (as provided for in Section 2 hereof), and, second, to the
extent that the Designated Transfer Shares are not sufficient therefor,
shall be made out of shares of Common Stock owned by Hughes, and,
third, to the extent that the Designated Transfer Shares and shares of
Common Stock owned by Hughes are not sufficient therefor, shall be made
out of shares of Common Stock owned by the other Shareholders, with any
such shares to be transferred from each of the other Shareholders in
proportion to their respective ownership of the outstanding Common
Stock of the Corporation.
2. DESIGNATED TRANSFER SHARES
The shares of stock that are initially subject to transfer
pursuant to Section 1 upon the occurrence of an event specified in
Section 1 are identified on Schedule 1 by certificate number (the
"Designated Transfer Shares"). Subsequent to the date hereof, the
Shareholders, jointly and severally, agree to designate, and the
Designated Transfer Shares shall include, such number of additional
shares of stock as necessary to maintain a number of Designated
Transfer Shares with a fair market value, determined as set forth
below, equal to the excess of the value (determined as set forth below)
of shares of stock that Hughes is considered to own for purposes of the
5/50 Rule over 35% of the aggregate value (determined as set forth
below) of the outstanding shares of stock of the Corporation (including
all Common Stock and all classes and series of Preferred Stock); and
the Shareholders shall deposit such additional Designated Transfer
shares with the escrow agent identified in the Escrow Agreement dated
the date hereof and attached as Exhibit A. The Designated Transfer
Shares and the certificates representing such shares together with
stock powers executed in blank shall be deposited by the Shareholders
and held in escrow in accordance with the terms of the Escrow
Agreement. For purposes of this Section 2, the following assumptions
shall be made: (1) the value of the outstanding stock of the
Corporation and of any stock held by the Shareholders shall be
determined without regard to any discount of any type; (2) it shall be
assumed for purposes hereof that all shares of Class B Common Stock to
be issued in connection with the Merger are issued and outstanding on
the date the Merger is consummated (without regard to any contingency
with respect to the issuance of such shares provided for in the merger
agreement), and that the fair market value of a share of Class B Common
Stock is at all times equal to the fair market value of a share of
Class A Common Stock; and (3) the fair market value of a share of any
class or series of Preferred Stock (other than Preferred Stock
convertible into Common Stock) is equal to the lesser of (i) the actual
value of such share as determined by the trading price for shares of
stock of such class or series), or (ii) the issue price of such
Preferred Stock.
3. DESIGNATION OF CHARITABLE BENEFICIARY
Provided that the William Lawrence and Blanche Hughes
Foundation (the "Hughes Foundation") has received a determination from
the Internal Revenue Service that the Hughes Foundation qualifies as a
"public charity" under the Code, the Hughes Foundation shall be the
primary charitable beneficiary to which the Designated Transfer Shares
shall be transferred upon the occurrence of an event specified in
Section 1. If the Hughes Foundation has not received a determination
letter from the Internal Revenue Service that the Hughes Foundation
qualifies as a "public charity" under the Code, then the William
Lawrence and Blanche Hughes Fund at the California Community Foundation
(the "CCF") shall be the primary charitable beneficiary to which the
Designated Transfer Shares shall be transferred unless and until such
time as the Hughes Foundation shall have received such a determination
letter. If at any time the Hughes Foundation ceases to qualify as a
"public charity" within the meaning of the Code, no Designated Transfer
Shares may thereafter be transferred to it and any Designated Transfer
Shares then held by the Hughes Foundation shall automatically (without
requirement for any action on the part of any person) and irrevocably
be deemed to be transferred to the CCF.
4. RIGHTS AND POWERS OF DESIGNATED TRANSFER SHARES
Until such time as any Designated Transfer Shares shall be
transferred to a charitable beneficiary pursuant to the terms hereof
(the "Transferred Shares"), the Shareholders owning such Shares shall
continue to exercise all rights and powers with respect to such shares,
including the right to receive dividends on such shares, the right to
vote such shares and the right to transfer such shares; provided,
however, that Designated Transfer Shares may not be transferred to any
person whose ownership thereof would be attributed to Hughes under the
Code (for the purposes of Section 542(a)(2) of the Code, taking into
account the ownership attribution rules of Section 544 of the Code, as
modified by Section 856(h) of the Code), unless such person shall agree
to be bound by the terms of this Agreement and shall agree that such
shares shall continue to be Designated Transfer Shares for purpose of
this Agreement (or the Shareholders shall designate an equal number of
additional shares of Common Stock held by him as Designated Transfer
Shares for purposes of this Agreement). If and when any Designated
Transfer Shares are transferred to a charitable beneficiary pursuant to
the terms hereof, the Shareholders owning such Shares shall have no
further rights or powers (including voting rights) with respect thereto
and shall receive no dividends or other economic benefits therefrom.
Furthermore, any dividend or distribution paid on Transferred Shares
prior to the Corporation's discovery that such Transferred Shares have
been transferred to a charitable beneficiary shall be paid by the
Shareholders owning such Shares to the charitable beneficiary upon
demand, with interest calculated at the prime rate in effect at the
time of discovery, and any dividend or distribution declared but unpaid
with respect to the Transferred Shares shall be paid when due to the
charitable beneficiary. Any vote of Transferred Shares cast by the
Shareholders owning such Shares prior to the Corporation's discovery
that such shares have been transferred to a charitable beneficiary
shall be rescinded as void and shall be recast in accordance with the
desires of the applicable charitable beneficiary.
5. RESTRICTIONS ON ACQUISITION OF STOCK
Each of the Shareholders agrees that during the term of
this Agreement such Shareholder shall not (without the consent of the
Corporation) acquire by purchase, exercise of options or otherwise any
shares of Common Stock or Preferred Stock in addition to the shares of
Common Stock or Preferred Stock owned by such Shareholder on the date
hereof as set forth on Schedule 1; provided, however, that a
Shareholder may acquire additional shares of Common Stock or Preferred
Stock pursuant to a stock split, recapitalization, merger or other
business combination (including, without limitation, pursuant to the
exercise by the Corporation of its option under that certain Option
Agreement dated the date hereof between Hughes and the Corporation).
6. TERMINATION
The Agreement shall terminate upon occurrence of any of the
following events:
(1) Cessation of the Corporation's business; or
(2) The entry of any order for relief under the federal
Bankruptcy Code with respect to the Corporation, or a
receivership or dissolution of the Corporation; or
(3) On such date as the Shareholders collectively own
(for purposes of Section 542 of the Code, taking into
account the ownership attribution rules of
Section 544 of the Code, as modified by
Section 856(h) of the Code) less than 35% of the
outstanding shares of Common Stock of the
Corporation; or
(4) On such date as the Corporation (in its reasonable
discretion) shall determine that (i) the aggregate
value (determined as described in Section 2 without
regard to discounts of any type) of the capital stock
owned by the Shareholders (as determined for purposes
of Section 542 of the Code, taking into account the
ownership attribution rules of Section 544 of the
Code, as modified by Section 856(h) of the Code) is
less that 20% of the aggregate value of the
outstanding capital stock of the Corporation and
(ii) it is not likely that such percentage ownership
will increase above 30% in the future as the result
of changes in the Corporation's capital structure
and/or fluctuations in the value of the various
classes of the Corporation's outstanding capital
stock.
7. NOTICES
All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party
to any other party pursuant to this Agreement shall be in writing and
shall be hand-delivered or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or
transmitted by telegram, telecopy, facsimile transmission or telex,
addressed as follows:
(i) If to the Corporation:
600 North Brand Boulevard
Suite 300
Glendale, California 91203-1241
Attn: David Goldberg
With copies to:
William Lawrence and Blanche Hughes Foundation
c/o California Community Foundation
606 South Olive Street, Suite 2400
Los Angeles, California 90014-1526
Attn: Jack Shakely
William Lawrence and Blanche Hughes Fund at
the California Community Foundation
606 South Olive Street, Suite 2400
Los Angeles, California 90014-1526
Attn: Jack Shakely
(ii) If to any Shareholder:
600 North Brand Boulevard
Suite 300
Glendale, California 91203-1241
Attn: B. Wayne Hughes
With copies to:
William Lawrence and Blanche Hughes Foundation
c/o California Community Foundation
606 South Olive Street, Suite 2400
Los Angeles, California 90014-1526
Attn: Jack Shakely
William Lawrence and Blanche Hughes Fund at
the California Community Foundation
606 South Olive Street, Suite 2400
Los Angeles, California 90014-1526
Attn: Jack Shakely
Each party may designate by notice in writing a new address
to which any notice, demand, request or communication may thereafter be
so given, served or sent. Each notice, demand, request, or
communication which shall be hand-delivered, mailed transmitted,
telecopied or telexed in the manner described above, or which shall be
delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it
is delivered to the addressee (with the return receipt, the delivery
receipt, or the answer back being deemed conclusive, but not exclusive,
evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
8. ADDITIONAL DOCUMENTS
Each of the parties hereto shall take or cause to be taken
all action, or do or cause to be done all things, or execute and
deliver any and all documents, instruments, and writings, necessary,
convenient, proper or advisable to consummate, make effective, and
carry out the terms and provisions of this Agreement.
9. MISCELLANEOUS
(1) This Agreement, and all Schedules and Exhibits
hereto, constitute the entire agreement of the parties and supersedes
all prior or contemporaneous agreements and understandings of the
parties hereto with respect to the subject matter hereof, and there are
no other terms and conditions other than those set forth herein. No
change, termination or attempted waiver of any of the provisions of
this Agreement shall be binding on the parties unless approved by the
holders of a majority of the Common Stock, excluding the Shareholders
and their affiliates. The rights, obligations, duties and agreements
of the parties hereto shall inure to and be binding upon their
respective heirs, administrators, executors, personal representatives,
successors and assigns (including, with respect to the Corporation, its
successor in any merger), except as otherwise herein provided.
(2) Each of the Hughes Foundation and the CCF shall be a
third party beneficiary or the intended beneficiary to this Agreement
and shall have the right to enforce this Agreement directly to the
extent it deems such enforcement necessary or advisable to protect its
rights hereunder. Each of the Hughes Foundation and the CCF shall be
sent a copy of this Agreement at the respective address set forth in
Section 7. It is the explicit intention of the parties hereto that no
person or entity other than the parties hereto and the Hughes
Foundation and the CCF is or shall be entitled to bring any action to
enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto and the Hughes Foundation and
the CCF or their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written, intending to be
legally bound.
CORPORATION:
STORAGE EQUITIES, INC.
By: /s/HARVEY LENKIN
--------------------
Name: Harvey Lenkin
Title: President
SHAREHOLDERS:
/s/B. WAYNE HUGHES
------------------------
B. Wayne Hughes
/s/TAMARA L. HUGHES
------------------------
Tamara L. Hughes
/s/B. WAYNE HUGHES, JR.
------------------------
B. Wayne Hughes, Jr.
Parker Hughes Trust No. 2
By: /s/TAMARA L. HUGHES, TRUSTEE
--------------------
Name: Tamara L. Hughes, Trustee
Parker Hughes Trust No. 1
By: /s/KATHLEEN B. HUGHES, TRUSTEE
--------------------
Name: Kathleen B. Hughes, Trustee
