UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Storage Properties, Inc.
(Name of Issuer)
Common Stock, $.05 par value
(Title of Class of Securities)
861903 10 2
(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)
April 3, 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 [ x ]. (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. 861903 10 2
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Public Storage, Inc.
2 Check the Appropriate Box if a Member of a Group*
a. [ ]
b. [ ]
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
California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 Sole Voting Power
247,100
8 Shared Voting Power
N/A
9 Sole Dispositive Power
247,100
10 Shared Dispositive Power
N/A
11 Aggregate Amount Beneficially Owned by Each Reporting
Person
247,100
12 Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares* [ ]
13 Percent of Class Represented by Amount in Row (11)
7.38%
14 Type of Reporting Person*
CO
Item 1. Security and Issuer
This Statement on Schedule 13D relates to the Common Stock,
par value $.05 per share (the "Shares"), of Storage Properties, Inc., a
California corporation (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 Statement on Schedule 13D is filed on behalf of Public
Storage, Inc. (the "Reporting Person"), a California corporation
formerly known as Storage Equities, Inc.
The Reporting Person is a fully integrated, self-advised and
self-managed real estate investment trust which is engaged primarily
in the development, construction, acquisition, ownership, operation,
management and leasing of mini-warehouses. In a series of mergers
among Public Storage Management, Inc. (which was the Issuer's and the
Reporting Person's mini-warehouse operator), PSI Holdings, Inc. (which
was the Issuer's investment advisor), Public Storage, Inc. and its
affiliates (collectively, "PSMI"), culminating in the November 16, 1995
merger of PSMI into the Reporting Person (the "PSMI Merger"), the
Reporting Person became self-administered and self-managed and acquired
substantially all of the United States real estate operations of PSMI
and became the Issuer's investment advisor and the operator of the
Issuer's mini-warehouse properties. In addition, the Reporting
Person's name was changed from Storage Equities, Inc. to Public
Storage, Inc. The address of the Reporting Person's principal
executive office is 600 North Brand Boulevard, Suite 300, Glendale,
California 91203-1241.
Information regarding the identity and background of the
Reporting Person's directors and executive officers is set forth in
Appendix A attached to this Statement on Schedule 13D. To the
knowledge of the Reporting Person, all of its directors and executive
officers are citizens of the United States except Uri P. Harkham, who
is a citizen of Australia.
During the last five years, neither the Reporting Person nor,
to its knowledge, any director, executive officer, or controlling
person of the 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 Consideration
The 247,100 Shares acquired by the Reporting Person (as of
April 3, 1996 and subsequent to that date through April 8, 1996) were
acquired as follows: (i) 20,000 Shares were acquired by the Reporting
Person as a result of the PSMI Merger and (ii) 227,100 Shares were
purchased by the Reporting Person for an aggregate cost (including
commissions) of approximately $1,490,920, with funds obtained from the
Reporting Person's working capital.
Item 4. Purpose of Transaction
The Reporting Person first purchased Shares in May 1995.
The Reporting Person has recently purchased Shares (resulting in the
Reporting Person's ownership of more than 5% of the Shares and the
filing of this Statement on Schedule 13D) in connection with the
proposed merger of the Issuer with and into the Reporting Person
(described below) at a price less than the publicly announced merger
price. At this time, the Reporting Person intends to continue to
purchase Shares in the open market or in privately negotiated
transactions.
The Reporting Person and the Issuer have entered into an
Agreement and Plan of Reorganization dated as of March 4, 1996 (the
"Merger Agreement") providing for the merger of the Issuer with and
into the Reporting Person (the "Merger"), which is subject to certain
conditions (as described below). Upon the Merger, each Share (other
than Shares held by the Reporting Person or by shareholders of the
Issuer who have properly exercised dissenters' rights under California
law ("Dissenting Shares")) would be converted into the right to receive
cash, the Reporting Person's common stock or a combination of the two,
as follows: (i) with respect to a certain number of Shares (not to
exceed 20% of the Shares, less any Dissenting Shares), upon a
shareholder's election, $7.31 in cash, subject to reduction as
described below or (ii) that number (subject to rounding) of shares
of the Reporting Person's common stock determined by dividing $7.31,
subject to reduction as described below, by the average of the per
share closing prices on the New York Stock Exchange of the Reporting
Person's common stock during the 20 consecutive trading days ending on
the fifth trading day prior to the special meeting of the shareholders
of the Issuer. The consideration paid by the Reporting Person in the
Merger will be reduced on a pro rata basis by the amount of cash
distributions required to be paid by the Issuer to its shareholders
prior to completion of the Merger in order to satisfy the Issuer's
REIT distribution requirements ("Required REIT Distributions"). The
consideration received by the Issuer's shareholders in the Merger,
however, along with any Required REIT Distributions, will not be less
than $7.31 per Share, which amount represents the market value of
the Issuer's real estate assets at February 29, 1996 (based on an
independent appraisal) and the estimated net asset value of its other
assets at June 30, 1996. Additional pre-merger cash distributions
would be made to the shareholders of the Issuer to cause the Issuer's
estimated net asset value as of the date of the Merger to be
substantially equivalent to its estimated net asset value as of June
30, 1996. The Shares held by the Reporting Person will be cancelled in
the Merger. The Merger is subject to (among other things) approval by
the Reporting Person's Board of Directors and the Issuer's shareholders
and receipt of a satisfactory fairness opinion by the Issuer. The
Reporting Person believes that the conditions to the Merger will be
satisfied, although there can be no assurance.
For further information regarding the Merger, see the Merger
Agreement which is filed as Exhibit 1 hereto and is incorporated herein
by this reference.
Item 5. Interest in Securities of the Issuer
As of April 3, 1996, the Reporting Person beneficially owned
210,900 Shares, representing approximately 6.30% of the 3,348,167
Shares outstanding. As of April 8, 1996, the Reporting Person
beneficially owned 247,100 Shares, representing approximately 7.38% of
the Shares outstanding. The Reporting Person has the sole power to
vote and the sole power to dispose of all of these Shares.
During the 60-day period ended April 3, 1996 and subsequent
to that date through April 8, 1996, the Reporting Person engaged in the
following acquisitions of Shares at the following prices (not including
commissions):
No. of Type Price
Transaction Shares of per
Date Bought Transaction Share
3/25/96 2,200 open market $6.9375
3/26/96 7,200 open market $6.9375
3/27/96 7,200 open market $6.9375
3/28/96 9,900 open market $6.9375
3/29/96 7,200 open market $6.9375
4/01/96 6,000 open market $6.9375
4/02/96 2,800 open market $6.9375
4/03/96 48,300 open market $7.00
4/08/96 36,200 open market $6.9375
The number of Shares beneficially owned by each of the
directors and executive officers of the Reporting Person is set forth
on Appendix A attached to this Statement on Schedule 13D. Unless
otherwise indicated, each director and executive officer has the sole
power to vote and the sole power to dispose of his or her Shares.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer
Except as disclosed herein, to the knowledge of the Reporting
Person, there are no contracts, arrangements, understandings or
relationships between the Reporting Person 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 or investment power over securities of the
Issuer.
Item 7. Material to be Filed as Exhibits
Exhibit 1 - Agreement and Plan of Reorganization dated as of
March 4, 1996 by and between the Reporting Person
and the Issuer
SIGNATURE
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated: April 11, 1996 PUBLIC STORAGE, INC.
By: /s/ DAVID GOLDBERG
-------------------------
David Goldberg
Senior Vice President and
General Counsel
Appendix A
No. of Shares
Beneficially
Name Title Owned
B. Wayne Hughes Chairman of the Board and
Chief Executive Officer 3,000*
Harvey Lenkin President 700
Ronald L. Havner, Jr. Senior Vice President and
Chief Financial Officer 33,200
Hugh W. Horne Senior Vice President -0-
Marvin M. Lotz Senior Vice President -0-
Mary Jayne Howard Senior Vice President -0-
David Goldberg Senior Vice President and
General Counsel 7,000
Obren B. Gerich Senior Vice President -0-
John Reyes Vice President and Controller -0-
Sarah Hass Vice President and Secretary -0-
Robert J. Abernethy Director -0-
Dann V. Angeloff Director 100
William C. Baker Director -0-
Uri P. Harkham Director 13,700
_______________
* Shares held of record by PS Insurance Company, Ltd. as to which Mr.
Hughes and Tamara L. Hughes (an adult daughter of Mr. Hughes) share
voting and dispositive power.
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered
into as of this 4th day of March, 1996, by and between PUBLIC STORAGE,
INC., a California corporation ("PSI"), and STORAGE PROPERTIES, INC., a
California corporation ("SPI").
A. The parties intend that this Agreement shall constitute a
Plan of Reorganization for purposes of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended. The Plan of Reorganization
provides for the merger of SPI with and into PSI in accordance with the
applicable provisions of the General Corporation Law of California (the
"GCLC") and an Agreement of Merger substantially in the form attached
hereto as Exhibit A ("Merger Agreement").
B. PSI and SPI believe that it is in the best interests of such
corporations and their respective shareholders to enter into and
complete this Agreement and they have approved this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, the parties agree as follows:
1. Adoption of Plan. The parties hereby adopt the Plan of
Reorganization hereinafter set forth.
2. The Merger.
2.1 Completion of the Merger. At the Effective Time
(as defined below), SPI will be merged with and into PSI (the "Merger")
in accordance with the terms, conditions and provisions of this
Agreement and the Merger Agreement. The Merger shall become effective
at the time at which the Merger Agreement, together with the requisite
Officers' Certificates of PSI and SPI, are filed with the California
Secretary of State in accordance with the GCLC (the "Effective Time").
PSI and SPI are sometimes collectively referred to herein as the
"Constituent Corporations" and PSI, as the surviving corporation of the
Merger, is sometimes referred to herein as the "Surviving Corporation."
2.2 Effect of the Merger. At the Effective Time:
2.2.1 Constituent Corporations. The separate
corporate existence of SPI shall cease and the Surviving Corporation
shall thereupon succeed, without other transfer, to all the rights and
property of SPI and shall be subject to all the debts and liabilities
of SPI in the same manner as if the Surviving Corporation had itself
incurred them; all rights of creditors and all liens upon the property
of each of the Constituent Corporations shall be preserved unimpaired,
provided that such liens upon property of SPI shall be limited to the
property affected thereby immediately prior to the Effective Time; and
any action or proceeding pending by or against SPI may be prosecuted to
judgment, which shall bind the Surviving Corporation, or the Surviving
Corporation may be proceeded against or substituted in its place.
2.2.2 Articles and Bylaws. The Articles of
Incorporation and the Bylaws of PSI, as then amended, shall continue
to be the Articles of Incorporation and the Bylaws of the Surviving
Corporation until changed as provided by law and their respective
provisions.
2.2.3 Officers and Directors. The officers and
directors of PSI shall continue as officers and directors of the
Surviving Corporation until their successors are elected and qualified
as provided by law and in accordance with the Articles of Incorporation
and Bylaws of the Surviving Corporation.
2.3 Conversion of SPI Shares. The manner of
converting the outstanding shares of Common Stock ($.05 par value)
of SPI (the "SPI Shares") into cash and/or shares of Common Stock
($.10 par value) of PSI (the "PSI Shares") shall be as follows:
2.3.1 Cash Election. At the Effective Time,
subject to Sections 2.6 and 6.8 hereof, each SPI Share as to which a
cash election has been made in accordance with the provisions of
Section 2.5 hereof and has not been revoked, relinquished or lost
pursuant to Section 2.5 hereof (the "Cash Election Shares") shall be
converted into and shall represent the right to receive $7.31 in cash
(the "Cash Election Price"). As soon as practicable after the
Effective Time, the registered holders of Cash Election Shares shall
be paid the cash to which they are entitled hereunder in respect of
such Cash Election Shares.
2.3.2 Share Exchange. At the Effective Time,
subject to Sections 2.4, 2.5, 2.7 and 6.8 hereof, each SPI Share (other
than Cash Election Shares) shall be converted into that number of PSI
Shares equal to, rounded to the nearest thousandth, the quotient (the
"Conversion Number") derived by dividing $7.31 by the average of the
per share closing prices on the New York Stock Exchange, Inc. (the
"NYSE") of PSI Shares during the 20 consecutive trading days ending
on the fifth trading day prior to the meeting of shareholders of SPI
provided for in Section 6.2 hereof. If, prior to the Effective Time,
PSI should split or combine the PSI Shares, or pay a stock dividend,
the Conversion Number will be appropriately adjusted to reflect such
action.
2.4 No Fractional Shares. Notwithstanding any other
term or provision of this Agreement, no fractional PSI Shares and no
certificates or script therefor, or other evidence of ownership
thereof, will be issued in the Merger. In lieu of any such fractional
share interests, each holder of SPI Shares who would otherwise be
entitled to such fractional share will, upon surrender of the
certificate representing such SPI Shares, receive a whole PSI Share if
such fractional share to which such holder would otherwise have been
entitled is .5 of a PSI Share or more, and such fractional share shall
be disregarded if it represents less than .5 of a PSI Share; provided,
however, that, such fractional share shall not be disregarded if such
fractional share to which such holder would otherwise have been
entitled represents .5 of 1% or more of the total number of PSI Shares
such holder is entitled to receive in the Merger. In such event, such
holder shall be paid an amount in cash (without interest), rounded to
the nearest $.01, determined by multiplying (i) the per share closing
price on the NYSE of the PSI Shares at the Effective Time by (ii) the
factional interest.
2.5 Procedure for Cash Election. At the time of
the mailing of the Proxy Statement and Prospectus provided for in
Section 6.5 hereof, PSI will send to each holder of record of SPI
Shares at the record date for SPI meeting of shareholders referred to
in Section 6.2 hereof a cash election form (the "Form of Election")
providing such holder with the option to elect to receive the Cash
Election Price with respect to all or any portion of such holder's SPI
Shares. Any such election to receive the cash payment contemplated by
Section 2.3.1 hereof shall have been properly made only if The First
National Bank of Boston (the "Exchange Agent") shall have received
at its designated office, by 5:00 p.m., New York time, on the last
business day preceding the day of such meeting of shareholders, a Form
of Election properly completed and accompanied by certificates for
the shares to which such Form of Election relates (or an appropriate
guarantee of delivery in a form and on terms satisfactory to PSI),
as set forth in such Form of Election. Any Form of Election may be
revoked by the person submitting the same to the Exchange Agent only by
written notice received by the Exchange Agent prior to 5:00 p.m., New
York time, on the last business day before the day of the meeting of
shareholders referred to in Section 6.2 hereof. In addition, all Forms
of Election shall automatically be revoked if the Exchange Agent is
notified in writing by the parties hereto that the Merger has been
abandoned. If a Form of Election is revoked pursuant to this
Section 2.5, the certificate or certificates or any guarantee of
delivery in respect of the SPI Shares to which such Form of Election
relates shall be promptly returned to the person submitting the same to
the Exchange Agent. The Exchange Agent may determine whether or not
elections to receive cash have been properly made or revoked pursuant
to this Section 2.5, and any such determination shall be conclusive and
binding. If the Exchange Agent determines that any election to receive
cash was not properly or timely made, the SPI Shares covered thereby
shall not be treated as Cash Election Shares, and shall be converted
in the Merger as provided in Section 2.3.2 hereof. The Exchange Agent
may, with the mutual agreement of PSI and SPI, establish such
procedures, not inconsistent with this Section 2.5, as may be necessary
or desirable to implement this Section 2.5.
2.6 Procedure for Proration.
2.6.1 No Proration. If the aggregate number of
Cash Election Shares and Dissenting Shares (as defined below) is 20% or
less than the number of SPI Shares outstanding as of the record date
for the meeting of shareholders of SPI referred to in Section 6.2, then
each Cash Election Share shall be converted in the Merger into the
right to receive the Cash Election Price.
2.6.2 Proration. If the aggregate number of Cash
Election Shares and Dissenting Shares exceeds 20%, then each Cash
Election Share shall be converted in the Merger into the right to
receive cash or into PSI Shares as follows: the number of Cash
Election Shares owned by a holder of SPI Shares that shall be converted
into the right to receive the Cash Election Price shall equal the
number obtained by multiplying (i) (A) 20% of outstanding SPI Shares
less (B) the number of Dissenting Shares (as hereinafter defined), if
any, by (ii) a fraction of which the numerator shall be the number of
Cash Election Shares owned by such holder and the denominator shall be
the aggregate number of Cash Election Shares. The balance of such Cash
Election Shares shall be converted into PSI Shares in accordance with
the provisions of Section 2.3.2 hereof. Notwithstanding the foregoing,
PSI, in its sole discretion, may allow Cash Election Shares to receive
the Cash Election Price even if the aggregate number of Cash Election
Shares and Dissenting Shares exceeds 20% (but not 50%) of the number of
SPI Shares outstanding as of the record date for the meeting of
shareholders of SPI referred to in Section 6.2.
2.7 Dissenting Shares. SPI Shares held by a holder
who has demanded and perfected his right to an appraisal of such shares
in accordance with Section 1300 et seq. of the GCLC and who has not
effectively withdrawn or lost his right to appraisal ("Dissenting
Shares") shall not be converted into or represent the right to receive
cash and/or PSI Shares, but the holder thereof shall be entitled only
to such rights as are granted by Section 1300 et seq. of the GCLC.
Each holder of Dissenting Shares who becomes entitled to payment for
SPI Shares pursuant to these provisions of the GCLC shall receive
payment therefor from the Surviving Corporation in accordance
therewith. If any holder of SPI Shares who demands appraisal in
accordance with Section 1300 et seq. of the GCLC shall effectively
withdraw with the consent of the Surviving Corporation or lose (through
failure to perfect or otherwise) his right to appraisal with respect to
SPI Shares, such SPI Shares shall automatically be converted into the
right to receive PSI Shares pursuant to Section 2.3.2 hereof.
2.8 PSI Shares Unaffected. The Merger shall effect
no change in any of the outstanding PSI Shares and no outstanding PSI
shares shall be converted or exchanged as a result of the Merger, and
no cash shall be exchangeable, and no securities shall be issuable,
with respect thereto.
2.9 Cancellation of Shares Held or Owned by Parties.
At the Effective Time, any SPI Shares owned by PSI shall be cancelled
and retired and no shares shall be issuable, and no cash shall be
exchangeable, with respect thereto.
2.10 Exchange of Certificates. After the Effective
Time, each holder of a certificate theretofore evidencing outstanding
SPI Shares which were converted into PSI Shares pursuant hereto, upon
surrender of such certificate to the Exchange Agent or such other agent
or agents as shall be appointed by the Surviving Corporation, shall be
entitled to receive a certificate representing the number of whole
PSI Shares into which the SPI Shares theretofore represented by the
certificate so surrendered shall have been converted as provided in
Section 2.3.2 hereof and cash payment in lieu of fractional share
interests, if any, as provided in Section 2.4 hereof. As soon as
practicable after the Effective Time, the Exchange Agent will send a
notice and a transmittal form to each holder of SPI Shares of record at
the Effective Time whose stock shall have been converted into PSI
Shares, advising such holder of the effectiveness of the Merger and
the procedure for surrendering to the Exchange Agent certificates
evidencing SPI Shares in exchange for certificates evidencing PSI
Shares.
2.11 Status Until Surrendered. Until surrendered as
provided in Section 2.10 hereof, each outstanding certificate which,
prior to the Effective Time, represented SPI Shares (other than Cash
Election Shares and Dissenting Shares, if any) will be deemed for all
corporate purposes to evidence ownership of the number of whole PSI
Shares into which the SPI Shares evidenced thereby were converted.
However, until such outstanding certificates formerly evidencing SPI
Shares are so surrendered, no dividend payable to holders of record
of PSI Shares shall be paid to the holders of such outstanding
certificates in respect of SPI Shares, but upon surrender of such
certificates by such holders there shall be paid to such holders the
amount of any dividends (without interest) theretofore paid with
respect to such whole PSI Shares as of any record date on or subsequent
to the Effective Time and the amount of any cash (without interest)
payable to such holder in lieu of fractional share interests pursuant
to Section 2.4 hereof.
2.12 Transfer of Shares. After the Effective Time,
there shall be no further registration of transfers of SPI Shares on
the records of SPI and, if certificates formerly evidencing such shares
are presented to the Surviving Corporation, they shall be cancelled and
exchanged for certificates evidencing PSI Shares and cash in lieu of
fractional share interests as herein provided.
3. Closing.
3.1 Time and Place of Closing. If this Agreement is
approved by the shareholders of SPI, a meeting (the "Closing") shall
take place as promptly as practicable thereafter at which the parties
will exchange certificates and other documents as required by this
Agreement. Such Closing shall take place at such time and place as PSI
may designate. The date of the Closing shall be referred to as the
"Closing Date."
3.2 Execution and Filing of Merger Agreement. At or
before the Closing and after shareholder approval by SPI, PSI and SPI
shall execute and deliver the Merger Agreement, together with the
requisite Officers' Certificates, for filing with the California
Secretary of State. The Merger Agreement, together with the requisite
Officers' Certificates, shall be duly filed with the California
Secretary of State in accordance with the GCLC as soon as practicable
following the Closing.
4. Representations, Warranties and Agreements of SPI. SPI
represents, warrants and agrees with PSI that:
4.1 Authorization. Subject to approval of this
Agreement by the shareholders of SPI, (i) the execution, delivery and
performance of this Agreement by SPI has been duly authorized and
approved by all necessary corporate action of SPI, and (ii) SPI has
necessary corporate power and authority to enter into this Agreement,
to perform its obligations hereunder and to complete the transactions
contemplated hereby.
4.2 Organization and Related Matters. SPI is a
corporation duly organized, existing and in good standing under the
laws of the State of California with all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as and where now owned, leased, operated or carried on, as the
case may be; and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business,
properties, results of operations or financial condition of SPI. SPI
has no direct or indirect equitable or beneficial interest in any other
corporation.
4.3 Capital Stock. The authorized capital stock of
SPI consists solely of (i) 100 million shares of Common Stock ($.05 par
value), 3,348,167 of which were issued and outstanding as of
January 31, 1996 and (ii) 10 million shares of Preferred Stock ($.05
par value), none of which were issued and outstanding as of January 31,
1996. All of the issued and outstanding shares of Common Stock of SPI
have been duly and validly authorized and issued, and are fully paid
and nonassessable. There are no options or agreements to which SPI is
a party or by which it is bound calling for or requiring the issuance
of any of SPI's capital stock.
4.4 Consents and Approvals; No Violation. Assuming
approval of the Merger and of this Agreement by the shareholders of
SPI, neither the execution and delivery of this Agreement nor the
consummation by SPI of the transactions contemplated hereby will: (i)
conflict with or result in any breach of any provision of its Articles
of Incorporation or Bylaws; (ii) require any consent, waiver, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (A) in connection with the
applicable requirements, if any, of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to
the applicable requirements of the federal securities laws and the
rules and regulations promulgated thereunder, (C) the filing of the
Merger Agreement and Officers' Certificates pursuant to the GCLC and
appropriate documents with the relevant authorities of other states in
which SPI is authorized to do business, (D) in connection with any
state or local tax which is attributable to the beneficial ownership of
SPI's real property, (E) as may be required by any applicable state
securities or takeover laws, or (F) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect
on SPI or adversely affect the ability of SPI to consummate the
transactions contemplated hereby; (iii) result in a violation or breach
of, or constitute a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, mortgage, agreement or other
instrument or obligation to which SPI is a party or any of its
properties or assets may be bound, except for such violations, breaches
and defaults which, in the aggregate, would not have a material adverse
effect on SPI or adversely affect the ability of SPI to consummate the
transactions contemplated hereby; or (iv) assuming the consents,
approvals, authorizations or permits and filings or notifications
referred to in this Section 4.4 are duly and timely obtained or
made, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to SPI or its properties or assets, except for
violations which would not in the aggregate have a material adverse
effect on SPI or adversely affect the ability of SPI to consummate the
transactions contemplated hereby.
4.5 Litigation. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is
or may be material and adverse, pending or, to the knowledge of SPI,
threatened against SPI or involving any of its properties or assets.
4.6 SEC Reports. Since January 1, 1993, SPI has filed
all forms, reports and documents with the Securities and Exchange
Commission ("SEC") required to be filed by it pursuant to the federal
securities laws and the rules and regulations promulgated by the SEC
thereunder, all of which complied in all material respects with all
applicable requirements of the federal securities laws and such rules
and regulations (collectively, the "SPI SEC Reports"). None of the SPI
SEC Reports, including without limitation any financial statements or
schedules included therein, at the time filed contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
4.7 Financial Statements. The financial statements
included in the SPI SEC Reports complied as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods (except as otherwise
noted therein), and present fairly the financial position of SPI as of
their respective dates, and the results of operations of SPI for the
periods presented therein (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
4.8 Absence of Certain Changes or Events. Since
January 1, 1996, the business of SPI has been carried on only in the
ordinary and usual course and there has not been any material adverse
change in its business, results of operations or financial condition,
or any damage or destruction in the nature of a casualty loss, whether
covered by insurance or not, that would materially and adversely affect
its properties, business or results of operations.
4.9 S-4 Registration Statement and Proxy Statement and
Prospectus. None of the information supplied or to be supplied by SPI
for inclusion or incorporation by reference in the S-4 Registration
Statement or the Proxy Statement and Prospectus (as such terms are
defined in Section 6.5 hereof) will (i) in the case of the S-4
Registration Statement, at the time it becomes effective and at the
Effective Time, 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, or (ii) in the
case of the Proxy Statement and Prospectus, at the time of the mailing
of the Proxy Statement and Prospectus and at the time of the meetings
of the shareholders of SPI, 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, in light of the
circumstances under which they are made, not misleading.
4.10 Insurance. All material insurance of SPI is
currently in full force and effect and SPI has reported all claims and
occurrences to the extent required by such insurance.
4.11 Disclosure. The representations and warranties by
SPI in this Agreement and any certificate or document delivered by it
pursuant hereto do not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
5. Representations, Warranties and Agreements of PSI. PSI
hereby represents, warrants and agrees with SPI that:
5.1 Authorization. Subject to approval of this
Agreement by the Board of Directors of PSI, (i) the execution, delivery
and performance of this Agreement by PSI has been duly authorized and
approved by all necessary corporate action of PSI, and (ii) PSI has all
necessary corporate power and authority to enter into this Agreement,
to perform its obligations hereunder and to complete the transactions
contemplated hereby.
5.2 Organization and Related Matters. PSI is a
corporation duly organized, existing and in good standing under the
laws of the State of California, with all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as and where now owned, leased, operated or carried on, as
the case may be; and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business,
properties, results of operations or financial condition of PSI.
5.3 Capital Stock. The authorized capital stock of
PSI consists solely of (i) 200,000,000 shares of Common Stock ($.10
par value), 71,518,796 of which were issued and outstanding as of
January 31, 1996, (ii) 7,000,000 shares of Class B Common Stock
($.10 par value), all of which are issued and outstanding and (iii)
50,000,000 shares of Preferred Stock ($.01 par value), 13,450,850 of
which were issued and outstanding as of January 31, 1996. All of the
issued and outstanding shares of Common Stock, Class B Common Stock and
Preferred Stock of PSI have been duly and validly authorized and
issued, and are fully paid and nonassessable. Other than options under
PSI's employee stock option plan and PSI's convertible capital stock
and as provided in this Agreement, there are no options or agreements
to which PSI is a party or by which it is bound calling for or
requiring the issuance of any of PSI's capital stock. Upon approval of
this Agreement by the Board of Directors of PSI, the issuance of the
PSI Shares in the Merger will have been duly and validly authorized
and, when issued and delivered as provided in this Agreement, the PSI
Shares will be duly and validly issued, fully paid and nonassessable;
and the shareholders of PSI have no preemptive rights with respect to
any shares of capital stock of PSI.
5.4 Consents and Approvals; No Violation. Assuming
the approval of the Merger and this Agreement by the Board of Directors
of PSI, neither the execution and delivery of this Agreement nor the
consummation by PSI of the transactions contemplated hereby will: (i)
conflict with or result in any breach of any provision of its Articles
of Incorporation or Bylaws; (ii) require any consent, waiver, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (A) in connection with the
applicable requirements, if any, of the HSR Act, (B) pursuant to the
applicable requirements of the federal securities laws and the rules
and regulations promulgated thereunder, (C) the filing of the Merger
Agreement and Officers' Certificates pursuant to the GCLC and
appropriate documents with the relevant authorities of other states in
which PSI is authorized to do business, (D) in connection with any
state or local tax which is attributable to the beneficial ownership of
SPI's real property, (E) as may be required by any applicable state
securities or takeover laws, or (F) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect
on PSI or adversely affect the ability of PSI to consummate the
transactions contemplated hereby; (iii) result in a violation or breach
of, or constitute a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, mortgage, agreement or other
instrument or obligation to which PSI is a party or any of its
properties or assets may be bound, except for such violations, breaches
and defaults which, in the aggregate, would not have a material adverse
effect on PSI or adversely affect the ability of PSI to consummate the
transactions contemplated hereby; or (iv) assuming the consents,
approvals, authorizations or permits and filings or notifications
referred to in this Section 5.4 are duly and timely obtained or made,
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to PSI or its properties or assets, except for
violations which would not in the aggregate have a material adverse
effect on PSI or adversely affect the ability of PSI to consummate the
transactions contemplated hereby.
5.5 Litigation. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is
or may be material and adverse, pending or, to the knowledge of PSI,
threatened against PSI or involving any of its properties or assets.
5.6 SEC Reports. Since January 1, 1993, PSI has filed
all forms, reports and documents with the SEC required to be filed
by it pursuant to the federal securities laws and the rules and
regulations promulgated by the SEC thereunder, all of which complied in
all material respects with all applicable requirements of the federal
securities laws and such rules and regulations (collectively, the
"PSI SEC Reports"). None of the PSI SEC Reports, including without
limitation any financial statements or schedules included therein, at
the time filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
5.7 Financial Statements. The financial statements
included in PSI's SEC Reports complied as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods (except as otherwise
noted therein), and present fairly the financial position of PSI as of
their respective dates, and the results of operations of PSI for the
periods presented therein (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
5.8 Absence of Certain Changes or Events. Since
January 1, 1996, the business of PSI has been carried on only in the
ordinary and usual course and there has not been any material adverse
change in its business, results of operations or financial condition,
or any damage or destruction in the nature of a casualty loss, whether
covered by insurance or not, that would materially and adversely affect
its properties, business or results of operations.
5.9 S-4 Registration Statement and Proxy Statement and
Prospectus. None of the information supplied or to be supplied by PSI
for inclusion or incorporation by reference in the S-4 Registration
Statement or the Proxy Statement and Prospectus (as those terms are
defined in Section 6.5 hereof) will (i) in the case of the S-4
Registration Statement, at the time it becomes effective and at the
Effective Time, 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, or (ii) in the
case of the Proxy Statement and Prospectus, at the time of the mailing
of the Proxy Statement and Prospectus and at the time of the meetings
of the shareholders of SPI, 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, in light of the
circumstances under which they are made, not misleading.
5.10 Insurance. All material insurance of PSI is
currently in full force and effect and PSI has reported all claims and
occurrences to the extent required by such insurance.
5.11 Disclosure. The representations and warranties by
PSI in this Agreement and any certificate or document delivered by it
pursuant hereto do not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
6. Covenants and Agreements.
6.1 Ordinary Course. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the
Effective Time, each of PSI and SPI will carry on its business in the
ordinary course in substantially the same manner as heretofore
conducted and use all reasonable efforts to: (a) preserve intact its
present business, organization and goodwill, (b) maintain all permits,
licenses and authorizations required by applicable laws, and (c) keep
available the services of its present employees and preserve its
relationships with customers, suppliers, lenders, lessors, governmental
entities and others having business or regulatory dealings with it.
SPI will not issue any capital stock or debt securities convertible
into capital stock. Each of PSI and SPI will promptly notify the other
of any event or occurrence not in the ordinary and usual course of
business or which may have a material adverse effect on the properties
or financial condition of such party.
6.2 Meeting of Shareholders. SPI will take all action
necessary in accordance with applicable law to convene a meeting of its
shareholders as promptly as practicable to consider and vote upon
approval of this Agreement, it being understood that the principal
terms of the Agreement must be approved by the affirmative vote of (i)
a majority of the outstanding SPI Shares entitled to vote at the SPI
shareholders meeting and (ii) a majority of the SPI Shares voting at
the meeting of SPI shareholders not held by PSI.
6.3 Tax Reporting. Each of PSI and SPI agrees to
report the Merger for federal and state income tax purposes, as a
reorganization of the type described in Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended.
6.4 Acquisition Proposals. SPI will not initiate,
solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal with respect to a merger, consolidation, share
exchange or similar transaction involving SPI, or any purchase of all
or any significant portion of the assets of SPI, or any equity
interest in SPI, other than the transactions contemplated hereby (an
"Acquisition Proposal"), or engage in any negotiations concerning, or
provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal;
provided, however, that the Board of Directors on behalf of SPI may
furnish or cause to be furnished information and may participate in
such discussions and negotiations through its representatives with
persons who have sought the same if the failure to provide such
information or participate in such negotiations and discussions might
cause the members of the Board of Directors to breach their fiduciary
duty to SPI's shareholders under applicable law as advised by counsel.
SPI will notify PSI immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued
with SPI, and will keep PSI informed of the status and terms of any
such proposals and any such negotiations or discussions.
6.5 Registration and Proxy Statements. PSI and SPI
will promptly prepare and file with the SEC a preliminary proxy
statement in connection with the vote of shareholders of SPI with
respect to the Merger. PSI will, as promptly as practicable, prepare
and file with the SEC a registration statement on Form S-4 (the "S-4
Registration Statement"), containing a proxy statement/prospectus, in
connection with the registration under the Securities Act of 1933, as
amended (the "Securities Act") of the PSI Shares to be issued to
holders of SPI Shares in the Merger (such proxy statement/prospectus,
together with any amendments thereof or supplements thereto, in the
form or forms to be mailed to the shareholders of SPI, being herein
called the "Proxy Statement and Prospectus"). PSI and SPI will each
use its best efforts to have or cause the S-4 Registration Statement to
be declared effective as promptly as practicable, and also will take
any other action required to be taken under federal or state securities
laws, and SPI will use its best efforts to cause the Proxy Statement
and Prospectus to be mailed to its shareholders at the earliest
practicable date. SPI agrees that if at any time prior to the
Effective Time any event with respect to SPI should occur which is
required to be described in an amendment of, or a supplement to, the
Proxy Statement and Prospectus or the S-4 Registration Statement, such
event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC and, as required by law, disseminated to
the shareholders of SPI and (ii) the Proxy Statement and Prospectus
will (with respect to SPI) comply as to form in all material respects
with the requirements of the federal securities laws. PSI agrees that
(i) if at any time prior to the Effective Time any event with respect
to PSI should occur which is required to be described in an amendment
of, or a supplement to, the Proxy Statement and Prospectus or the S-4
Registration Statement, such event shall be so described, and such
amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the shareholders of SPI and (ii) the
Proxy Statement and Prospectus will (with respect to PSI) comply as to
form in all material respects with the requirements of the federal
securities laws.
6.6 Best Efforts. Each of PSI and SPI shall: (i)
promptly make its respective filings and thereafter make any other
required submissions under all applicable laws with respect to the
Merger and the other transactions contemplated hereby; and (ii) use its
best efforts to promptly take, or cause to be taken, all other actions
and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions
contemplated by this Agreement as soon as practicable.
6.7 Registration and Listing of PSI Shares. PSI will
use its best efforts to register the PSI Shares under the applicable
provisions of the Securities Act and to cause the PSI Shares to be
listed for trading on the NYSE upon official notice of issuance.
6.8 Distributions. SPI will not, at any time prior to
the Effective Time, declare or pay any cash distribution on its capital
stock or make any other distribution of assets to its shareholders,
except (i) regular quarterly dividends on its Common Stock at a
quarterly rate not in excess of $.08 per share, (ii) pre-Merger cash
distributions to shareholders of record immediately prior to the
Effective Time in an aggregate amount equal to the amount by which the
estimated Net Asset Value of SPI (as defined below) as of the Effective
Time exceeds the estimated Net Asset Value of SPI as of June 30, 1996
and (iii) additional pre-Merger cash distributions required to satisfy
SPI's REIT distribution requirements (the number of PSI Shares issued
in the Merger and the amount receivable upon Cash Elections would be
reduced on a pro rata basis in an aggregate amount equal to such
additional distributions). For this purpose, the Net Asset Value of
SPI is the sum of (a) the fair market value of SPI's real estate assets
as determined by appraisal by Charles R. Wilson & Associates, Inc. as
of January 31, 1996, and (b) the book value of SPI's non-real estate
assets as of the date of determination and less (c) SPI's liabilities
as of the date of determination and less (d) the amount payable to PSI
under the Advisory Agreement dated June 23, 1989 as applicable to a
disposition of SPI's properties. The determination of book value and
liabilities shall be from SPI's financial statements prepared in
accordance with generally accepted accounting principles on a basis
consistent with prior periods. PSI shall not, at any time prior to
the Effective Time, declare, set aside or make payment of any cash
distributions or distribution of assets to its shareholders except for
regular quarterly dividends.
7. Conditions.
7.1 Conditions to Each Party's Obligations. The
respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or
prior to the Closing of each of the following conditions, any or all of
which may be waived in whole or in part, to the extent permitted by
applicable law:
7.1.1 Shareholder Approval. This Agreement and
the transactions contemplated hereby shall have been duly approved by
the shareholders of SPI as contemplated by Section 6.2.
7.1.2 Board Approval. This Agreement and the
transactions contemplated hereby shall have been duly approved by the
Board of Directors of PSI.
7.1.3 Governmental and Regulatory Consents. All
filings required to be made prior to the Effective Time with, and all
consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from, governmental and regulatory
authorities in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(including the expiration of the waiting period requirements of the HSR
Act) shall have been made or obtained (as the case may be) without
material restrictions, except where the failure to obtain such
consents, approvals, permits and authorizations could not reasonably be
expected to have a material adverse effect on either PSI or SPI.
7.1.4 Litigation. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) or taken any action which prohibits the
consummation of the transactions contemplated by this Agreement;
provided, however, that the party invoking this condition shall use its
best efforts to have any such judgment, decree, injunction or other
order vacated.
7.1.5 Registration Statement. The S-4
Registration Statement shall have been declared effective and no stop
order suspending effectiveness shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under federal and state securities laws relating to the
issuance or trading of the PSI Shares shall have been received.
7.1.6 Listing of PSI Shares on NYSE. The PSI
Shares shall have been approved for listing on the NYSE upon official
notice of issuance.
7.1.7 SPI Fairness Opinion. The Board of
Directors of SPI shall have received the opinion of Robert A. Stanger &
Co., Inc. in form and substance satisfactory to it to the effect that
the consideration to be received by the shareholders of SPI in the
Merger is fair to such shareholders from a financial point of view, and
such opinion shall not have been withdrawn or revoked.
7.1.8 Tax Opinion. The Board of Directors of PSI
and SPI shall have received a legal opinion of Hogan & Hartson L.L.P.
that the Merger will qualify as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended.
7.2 Conditions to Obligations of PSI. The obligations
of PSI to consummate the transactions contemplated by this Agreement
are subject to the fulfillment at or prior to the Closing of the
following conditions, which may be waived in whole or in part by PSI to
the extent permitted by applicable law:
7.2.1 Accuracy of Representations; Performance of
Agreements. Each of the representations and warranties of SPI
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of the
Closing Date (except to the extent they relate to a particular date)
and SPI shall have performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with
by it at or prior to the Closing.
7.2.2 Certificate of Officers. PSI shall have
received such certificates of officers of SPI as PSI may reasonably
request in connection with the Closing, including a certificate
satisfactory to it of the Chief Executive Officer and the Chief
Financial Officer of SPI, to the effect that, to the best of their
knowledge, all representations and warranties of SPI contained in this
Agreement are true and correct in all material respects at and as of
the Closing Date as if made at and as of the Closing Date, and SPI has
performed or complied with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to
the Closing.
7.2.3 Title to Properties; Environmental Audits.
PSI in its sole discretion shall be satisfied as to the status of title
to (including the existence and effect of liens and encumbrances), and
the results of an environmental audit of, each of the real properties
owned by SPI.
7.2.4 Trading Price of PSI Shares. The average
of the per share closing prices of the PSI Shares on the NYSE during
the 20 consecutive trading days ending on the fifth trading day prior
to the meeting of shareholders of SPI provided for in Section 6.2
hereof (the "Average PSI Share Price") shall be not less than $18.
7.2.5 Dissenting Shares. The number of
Dissenting Shares shall be less than 5% of the outstanding SPI Shares.
7.3 Conditions to Obligations of SPI. The obligations
of SPI to consummate the transactions contemplated by this Agreement
are subject to the fulfillment at or prior to the Closing of the
following conditions, which may be waived in whole or in part by SPI
to the extent permitted by applicable law.
7.3.1 Accuracy of Representations; Performance
of Agreements. Each of the representations and warranties of PSI
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of the
Closing Date (except to the extent they relate to a particular date)
and PSI shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed
or complied with by it at or prior to the Closing.
7.3.2 Certificate of Officers. SPI shall have
received such certificates of officers of PSI as SPI may reasonably
request in connection with the Closing, including a certificate
satisfactory to it of the Chief Executive Officer and the Chief
Financial Officer of PSI, to the effect that, to the best of their
knowledge, all representations and warranties of PSI contained in this
Agreement are true and correct in all material respects at and as of
the Closing Date as if made at and as of the Closing Date, and PSI has
performed or complied with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to
the Closing.
8. Termination.
8.1 Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after shareholder approval, by the mutual
written consent of PSI and SPI.
8.2 Termination by Either PSI or SPI. This Agreement
may be terminated and the Merger may be abandoned by action of the
Board of Directors of either PSI or SPI if (i) the Merger shall not
have been consummated by March 31, 1997 (provided that the right to
terminate this Agreement under this Section 8.2(i) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date); (ii) any court of competent
jurisdiction in the United States or some other governmental body or
regulatory authority shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or (iii) the shareholders of
SPI shall have failed to approve this Agreement and the transactions
contemplated hereby at its meeting of shareholders.
8.3 Termination by PSI. This Agreement may be
terminated by PSI and the Merger may be abandoned at any time prior to
the Effective Time, if (i) SPI shall have failed to comply in any
material respect with any of the covenants, conditions or agreements
contained in this Agreement to be complied with or performed by SPI at
or prior to such date of termination, which failure to comply has not
been cured within five business days following notice to SPI of such
failure to comply, or (ii) any representation or warranty of SPI
contained in this Agreement shall not be true in all material respects
when made, which inaccuracy or breach (if capable of cure) has not been
cured within five business days following notice to SPI of the
inaccuracy or breach, or on and as of the Closing as if made on and as
of the Closing Date.
8.4 Termination by SPI. This Agreement may be
terminated by SPI and the Merger may be abandoned at any time prior to
the Effective Time, before or after shareholder approval, if (i) PSI
shall have failed to comply in any material respect with any of the
covenants, conditions or agreements contained in this Agreement to be
complied with or performed by PSI at or prior to such date of
termination, which failure to comply has not been cured within five
business days following notice to PSI of such failure to comply, or
(ii) any representation or warranty of PSI contained in this Agreement
shall not be true in all material respects when made, which inaccuracy
or beach (if capable of cure) has not been cured within five business
days following notice to PSI of the inaccuracy or breach, or on and as
of the Closing as if made on and as of the Closing Date.
8.5 Effect of Termination and Abandonment. In the
event of termination of this Agreement and abandonment of the Merger
pursuant to this Section 8, no party (or any directors, officers,
employees, agents or representatives of any party) shall have any
liability or further obligation to any other party or any person who
controls a party within the meaning of the Securities Act, except as
provided in Section 9.1 and except that nothing herein will relieve any
party from liability for any breach of this Agreement.
9. Miscellaneous.
9.1 Payment of Expenses. If the Merger is
consummated, the Surviving Corporation shall pay all the expenses
incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
If the Merger is not consummated, each of PSI and SPI shall pay its own
expenses, except that they shall each pay 50% of any expenses incurred
in connection with the printing of the S-4 Registration Statement and
the Proxy Statement and Prospectus, the real estate appraisals and
environmental audits of SPI's properties and preparation for real
estate closings, and any filing fees under the HSR Act, the Securities
Act and the Securities Exchange Act of 1934, as amended.
9.2 Survival of Representations, Warranties and
Covenants. The respective representations and warranties of PSI and
SPI contained herein or in any certificate or document delivered
pursuant hereto shall expire with and be terminated and extinguished
by the effectiveness of the Merger and shall not survive the Effective
Time. The sole right and remedy arising from a misrepresentation or
breach of warranty, or from the failure of any of the conditions to be
met, shall be the termination of this Agreement by the other party.
This Section 9.2 shall not limit any covenant or agreement of the
parties, which by its terms contemplates performance after the
Effective Time.
9.3 Modification or Amendment. The parties may modify
or amend this Agreement by written agreement authorized by the Boards
of Directors and executed and delivered by officers of the respective
parties; provided, however, that after approval of this Agreement by
the shareholders of SPI, no amendment shall be made which changes any
of the principal terms of the Merger or this Agreement, without the
approval of such shareholders.
9.4 Waiver of Conditions. The conditions to each of
the parties' obligations to consummate the Merger are for the sole
benefit of such party and may be waived by such party in whole or in
part to the extent permitted by applicable law.
9.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California, without giving effect to the principles of conflict of laws
thereof.
9.6 Interpretation. This Agreement has been
negotiated by the parties and is to be interpreted according to its
fair meaning as if the parties had prepared it together and not
strictly for or against any party. Each of the capitalized terms
defined in this Agreement shall, for all purposes of this Agreement
(and whether defined in the plural and used in the singular, or vice
versa), have the respective meaning assigned to such term in the
Section in which such meaning is set forth. References in this
Agreement to "parties" or a "party" refer to parties to this Agreement
unless expressly indicated otherwise. At each place in this Agreement
where the context so requires, the masculine, feminine or neuter gender
includes the others and the singular or plural number includes the
other. "Including" means "including without limitation."
9.7 Headings. The descriptive headings contained in
the Sections and subsections of this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.8 Parties in Interest. This Agreement, and the
rights, interests and obligations created by this Agreement, shall bind
and inure to the benefit of the parties and their respective successors
and permitted assigns, and shall confer no right, benefit or interest
upon any other person, including shareholders of the respective
parties.
9.9 Notices. All notices or other communications
required or permitted under this Agreement shall be in writing and
shall be delivered personally or sent by U.S. mail, postage prepaid,
addressed as follows or such other address as the party to be notified
has furnished in writing by a notice given in accordance with this
Section 9.9:
If to PSI:
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
Attention: Harvey Lenkin
President
If to SPI:
Storage Properties, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
Attention: B. Wayne Hughes
Chief Executive Officer
Any such notice or communication shall be deemed given as of the date
of delivery, if delivered personally, or on the second day after
deposit with the U.S. Postal Service, if sent by U.S. mail.
9.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an
original, but all of which shall be considered one and the same
agreement.
9.11 Assignment. No rights, interests or obligations
of either party under this Agreement may be assigned or delegated
without the prior written consent of the other party.
9.12 Entire Agreement. This Agreement, including the
Merger Agreement, embodies the entire agreement and understanding
between the parties pertaining to the subject matter hereof, and
supersedes all prior agreements, understandings, negotiations,
representations and discussions, whether written or oral.
9.13 Severable Provisions. If any of the provisions of
this Agreement may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any
partially enforceable provisions to the extent enforceable, shall
nevertheless be binding and enforceable.
9.14 Further Action. If at any time after the
Effective Time, the Surviving Corporation shall determine that any
assignments, transfers, deeds or other assurances are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to any property or rights of SPI, the
officers of either Constituent Corporation are fully authorized in the
name of SPI or otherwise to execute and deliver such documents and do
all things necessary and proper to vest, perfect or confirm title to
such property or rights in the Surviving Corporation.
IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the date first above written.
PUBLIC STORAGE, INC.
By: /s/ HARVEY LENKIN
--------------------
Harvey Lenkin
President
STORAGE PROPERTIES, INC.
By: /s/ B. WAYNE HUGHES
--------------------
B. Wayne Hughes
Chief Executive Officer
EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is entered into as of
this _____ day of _____________, 1996, by and between PUBLIC STORAGE,
INC., a California corporation ("PSI"), and STORAGE PROPERTIES, INC.,
a California corporation ("SPI"), with reference to the following:
A. PSI was incorporated in 1980 under the laws of
California, and on the date hereof its authorized capital stock
consists of 200,000,000 shares of Common Stock, $.10 par value (the
"PSI Shares"), ___________ of which are issued and outstanding,
7,000,000 shares of Class B Common Stock, all of which are issued and
outstanding and 50,000,000 shares of Preferred Stock ($.01 par value),
__________ of which are issued and outstanding.
B. SPI was incorporated in 1989 under the laws of
California, and on the date hereof its authorized capital stock
consists of 100,000,000 shares of Common Stock, $.05 per value (the
"SPI Shares"), 3,348,167 of which are issued and outstanding and
10,000,000 shares of Preferred Stock, $.05 par value, none of which
are issued and outstanding.
C. PSI and SPI have entered into an Agreement and Plan of
Reorganization dated as of March 4, 1996 (the "Plan"), setting forth
certain representations, warranties, conditions and agreements
pertaining to the Merger (as defined below).
D. The Boards of Directors of PSI and SPI have approved
the Plan and this Agreement of Merger, and the requisite shareholder
approval has been obtained.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
1.1 The Merger. At the Effective Time (as defined
below), SPI will be merged with and into PSI (the "Merger") and PSI
shall be the surviving corporation. PSI and SPI are sometimes
collectively referred to herein as the "Constituent Corporations" and
PSI, as the surviving corporation of the Merger, is sometimes referred
to herein as the "Surviving Corporation."
1.2 Effective Time. The Merger shall become effective
at the time at which this Agreement, together with the requisite
Officers' Certificates of PSI and SPI, are filed with the California
Secretary of State (the "Effective Time").
1.3 Effect of the Merger. At the Effective Time:
(a) The separate corporate existence of SPI
shall cease and the Surviving Corporation shall thereupon succeed,
without other transfer, to all the rights and property of SPI and shall
be subject to all the debts and liabilities of SPI in the same manner
as if the Surviving Corporation had itself incurred them; all rights of
creditors and all liens upon the property of each of the Constituent
Corporations shall be preserved unimpaired, provided that such liens
upon property of SPI shall be limited to the property affected thereby
immediately prior to the Effective Time; and any action or proceeding
pending by or against SPI may be prosecuted to judgment, which shall
bind the Surviving Corporation, or the Surviving Corporation may be
proceeded against or substituted in its place.
(b) The Articles of Incorporation and the
Bylaws of PSI, as then amended, shall continue to be the Articles of
Incorporation and the Bylaws of the Surviving Corporation until changed
as provided by law and their respective provisions.
(c) The officers and directors of PSI shall
continue as officers and directors of the Surviving Corporation until
their successors are elected and qualified as provided by law and in
accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.
ARTICLE II
2.1 Conversion of SPI Shares. The manner of
converting the outstanding SPI Shares into cash and/or PSI Shares
shall be as follows:
(a) At the Effective Time, subject to Section
2.6 of the Plan, each SPI Share as to which a cash election has been
made in accordance with the provisions of Section 2.5 of the Plan and
has not been revoked, relinquished or lost pursuant to Section 2.5 of
the Plan (the "Cash Election Shares") shall be converted into and shall
represent the right to receive $_______ in cash (the "Cash Election
Price"). As soon as practicable after the Effective Time, the
registered holders of Cash Election Shares shall be paid the cash to
which they are entitled hereunder in respect of such Cash Election
Shares.
(b) At the Effective Time, subject to
Sections 2.4, 2.5 and 2.7 of the Plan, each SPI Share (other than
Cash Election Shares) shall be converted into __________ PSI Shares.
2.2 No Fractional Shares. Notwithstanding any other
term or provision of this Agreement or the Plan, no fractional PSI
Shares and no certificates or script therefor, or other evidence of
ownership thereof, will be issued in the Merger. In lieu of any such
fractional share interests, each holder of SPI Shares who would
otherwise be entitled to such fractional share will, upon surrender of
the certificate representing such SPI shares, receive a whole PSI Share
if such fractional share to which such holder would otherwise have been
entitled is .5 of an PSI Share or more, and such fractional share shall
be disregarded if it represents less than .5 of an PSI Share; provided,
however, that, such fractional share shall not be disregarded if such
fractional share to which such holder would otherwise have been
entitled represents .5 of 1% or more of the total number of PSI Shares
such holder is entitled to receive in the Merger. In such event, such
holder shall be paid an amount in cash (without interest), rounded to
the nearest $.01, determined by multiplying (i) the per share closing
price on the New York Stock Exchange, Inc. of the PSI Shares at the
Effective Time by (ii) the fractional interest.
2.3 Dissenting Shares. SPI Shares held by a holder
who has demanded and perfected his right to an appraisal of such shares
in accordance with Section 1300 et seq. of the General Corporation Law
of California (the "GCLC") and who has not effectively withdrawn or
lost his right to appraisal ("Dissenting Shares") shall not be
converted into or represent the right to receive cash and/or PSI
Shares, but the holder thereof shall be entitled only to such rights
as are granted by Section 1300 et seq. of the GCLC. Each holder of
Dissenting Shares who becomes entitled to payment for SPI Shares
pursuant to these provisions of the GCLC shall receive payment therefor
from the Surviving Corporation in accordance therewith. If any holder
of SPI Shares who demands appraisal in accordance with Section 1300 et
seq. of the GCLC shall effectively withdraw with the consent of the
Surviving Corporation or lose (through failure to perfect or otherwise)
his right to appraisal with respect to SPI Shares, such SPI Shares
shall automatically be converted into the right to receive PSI Shares
pursuant to Section 2.1(b) hereof.
2.4 PSI Shares Unaffected. The Merger shall effect no
change in any of the PSI Shares and no outstanding PSI shares shall be
converted or exchanged as a result of the Merger, and no cash shall be
exchangeable and no securities shall be issuable, with respect thereto.
2.5 Cancellation of Shares Held or Owned by Parties.
At the Effective Time, any SPI Shares owned by PSI shall be cancelled
and retired and no shares shall be issuable, and no cash shall be
exchangeable, with respect thereto.
2.6 Exchange of Certificates. After the Effective
Time, each holder of a certificate theretofore evidencing outstanding
SPI Shares which were converted into PSI Shares pursuant hereto, upon
surrender of such certificate to First National Bank of Boston (the
"Exchange Agent") or such other agent or agents as shall be appointed
by the Surviving Corporation, shall be entitled to receive a
certificate representing the number of whole PSI Shares into which the
SPI Shares theretofore represented by the certificate so surrendered
shall have been converted and cash payment in lieu of fractional share
interests, if any. As soon as practicable after the Effective Time,
the Exchange Agent will send a notice and a transmittal form to each
holder of SPI Shares of record at the Effective Time whose stock shall
have been converted into PSI Shares, advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the
Exchange Agent certificates evidencing SPI Shares in exchange for
certificates evidencing PSI Shares.
2.7 Status Until Surrendered. Until surrendered as
provided in Section 2.6 hereof, each outstanding certificate which,
prior to the Effective Time, represented SPI Shares (other than Cash
Election Shares and Dissenting Shares, if any) will be deemed for all
corporate purposes to evidence ownership of the number of whole PSI
Shares into which the SPI Shares evidenced thereby were converted.
However, until such outstanding certificates formerly evidencing SPI
Shares are so surrendered, no dividend payable to holders of record
of PSI Shares shall be paid to the holders of such outstanding
certificates in respect of SPI Shares, but upon surrender of such
certificates by such holders there shall be paid to such holders the
amount of any dividends (without interest) theretofore paid with
respect to such whole PSI Shares as of any record date on or subsequent
to the Effective Time and the amount of any cash (without interest)
payable to such holder in lieu of fractional share interests.
2.8 Transfer of Shares. After the Effective Time,
there shall be no further registration of transfers of SPI Shares on
the records of SPI and, if certificates formerly evidencing such shares
are presented to the Surviving Corporation, they shall be cancelled and
exchanged for certificates evidencing PSI Shares and cash in lieu of
fractional share interests as herein provided.
ARTICLE III
3.1 Headings. The descriptive headings contained in
the Sections of this Agreement are for convenience of reference only
and shall not affect in any way the meaning or interpretation of this
Agreement.
3.2 Parties in Interest. This Agreement, and the
rights, interests and obligations created by this Agreement, shall bind
and inure to the benefit of the parties and their respective successors
and permitted assigns, and shall confer no right, benefit or interest
upon any other person, including shareholders of the respective
parties.
3.3 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an
original, but all of which shall be considered one and the same
agreement.
3.4 Further Action. If at any time after the
Effective Time, the Surviving Corporation shall determine that any
assignments, transfers, deeds or other assurances are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to any property or rights of SPI, the
officers of either Constituent Corporation are fully authorized in the
name of SPI or otherwise to execute and deliver such documents and do
all things necessary and proper to vest, perfect or confirm title to
such property or rights in the Surviving Corporation.
3.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California, without giving effect to the principles of conflict of
laws thereof.
3.6 Abandonment of Merger. The Constituent
Corporations have the power to abandon the Merger by mutual written
consent prior to the filing of this Agreement with the California
Secretary of State.
IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the date first above written.
PUBLIC STORAGE, INC.
By:
--------------------
Harvey Lenkin
President
By:
--------------------
Obren B. Gerich
Assistant Secretary
STORAGE PROPERTIES, INC.
By:
--------------------
B. Wayne Hughes
Chairman of the Board
of Directors and Chief
Executive Officer
By:
--------------------
Obren B. Gerich
Secretary
