FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
Public Storage, Inc.
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(Exact name of registrant as specified in its charter)
California 95-3551121
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(State of incorporation (IRS Employer
or organization) Identification No.)
701 Western Avenue, Glendale, California 91201-2397
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(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. [__]
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [__]
If this Form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), please check the following box. [X]
If this Form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. [__]
Securities Act registration statement file number to which this Form relates:
_______________ (if applicable).
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Depositary Shares Each New York Stock Exchange, Inc.
Representing 1/1,000 of a
Share of Equity Stock,
Series A, par value $.01
per share
Securities to be registered pursuant to Section 12(g) of the Act:
N/A
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(Title of class)
<PAGE>
ITEM 1. Description of Registrant's Securities to be Registered.
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General and Initial Issuance of Equity Stock, Series A
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Under our articles of incorporation, our board of directors is
authorized without further shareholder action to provide for the issuance of up
to 200,000,000 shares of equity stock, in one or more series, with such rights
as are set forth in resolutions providing for the issue of equity stock adopted
by our board of directors. At November 15, 1999, we had outstanding 4,514,544
shares of equity stock.
Prior to issuance, our board of directors will adopt resolutions
creating the Equity Stock, Series A (the "Equity Stock"). When issued, the
Equity Stock will be fully paid and nonassessable, will not be subject to any
sinking fund or other obligation of Public Storage, Inc. (the "Company") to
repurchase or retire the Equity Stock, and will have no preemptive rights.
BankBoston, N.A. will be the transfer agent and dividend disbursing
agent for the Equity Stock.
Each depositary share represents 1/1,000 of a share of Equity Stock. The
shares of the Equity Stock will be deposited with BankBoston, N.A., as
depositary, under a deposit agreement among the Company, the depositary and the
holders from time to time of the depositary receipts issued by the depositary
under the deposit agreement. The depositary receipts will evidence the
depositary shares. Subject to the terms of the deposit agreement, each holder of
a depositary receipt evidencing a depositary share will be entitled,
proportionately, to all the rights and preferences of, and subject to all of the
limitations of, the interest in the Equity Stock represented by the depositary
share (including dividend, voting, redemption and liquidation rights).
The initial issuance of the depositary shares representing the Equity
Stock will be to holders of our Common Stock, $.10 par value (the "Common
Stock") in connection with a special distribution. The holders will have the
option of receiving cash instead of the depositary shares. The fair market value
of the depositary shares on the date of declaration of the special distribution
(November 4, 1999) was determined by our board of directors, based on advice
from a financial advisor, to be $20 per share (equivalent to $20,000 per share
of Equity Stock). The value of the depositary share distributions reflects a
close to 5% premium over the amount of the corresponding cash elections. That
bargain spread is intended to pass on to participating shareholders the
estimated underwriting and other costs that we would otherwise expect to have
incurred if we had issued those shares directly to the public.
On the date of the payment of the special distribution (January 14,
2000), our board of directors, based on advice from the financial advisor, will
update its determination of the value of the depositary shares. In the absence
of significant changes in general market conditions or other circumstances,
neither of which is anticipated, the determined value is expected to continue to
be $20 per depositary share (equivalent to $20,000 per share of Equity Stock).
In that case, the distribution will be .0325 depositary shares per share of
Common Stock (representing $.65 worth of depositary shares). In the unexpected
event that our board of directors determines that the value of the depositary
shares has changed as of the date of payment, the number of depositary shares,
as well as the number of shares of Equity Stock, to be issued will be adjusted
as necessary to maintain a value of $.65 worth of depositary shares to be
distributed per share of Common Stock. It is not expected that any adjustments
to the number of depositary shares to be distributed or the number of shares of
Equity Stock to be issued will be required.
Immediately following our issuance of the Equity Stock, we will deposit
the Equity Stock with the depositary, which will then issue and deliver the
depositary receipts to us. We will, in turn, deliver the depositary receipts to
those shareholders who do not elect cash in connection with the special
distribution. Depositary receipts will be issued evidencing only whole
depositary shares.
We have applied to list the depositary shares on the New York Stock
Exchange. The Equity Stock will not be listed and we do not expect that there
will be any trading market for the Equity Stock except as represented by the
depositary shares.
Equity Stock
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The following is a brief description of the terms of the Equity Stock
which does not purport to be complete and is subject to and qualified in its
entirety by reference to the certificate of determination of the Equity Stock,
the form of which is filed as an exhibit to this registration statement.
Ranking
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With respect to the payment of dividends and amounts upon liquidation,
the Equity Stock will rank junior to our outstanding preferred stock and any
other shares of preferred stock issued by us, and will rank on a parity with our
outstanding common stock and any other equity stock issued by us that ranks on a
parity with our Common Stock.
Dividends
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Each holder of shares of Equity Stock will receive, when and as declared
by our board of directors from our assets legally available for payment, cash
dividends payable when and if paid on our Common Stock at the rate of five
thousand times the per share dividends on our Common Stock (equivalent to five
times in the case of a depositary share), but not more than $2,450 per year per
share of Equity Stock (equivalent to $2.45 per year per depositary share),
subject to adjustment in certain circumstances. Dividends on the shares of
Equity Stock will be non-cumulative and will be payable to holders of record as
they appear on our stock register on the respective record dates, not less than
15 or more than 45 days preceding the respective payment dates, as may be fixed
by our board of directors. We intend to pay dividends quarterly beginning on
March 31, 2000 (with the payment on that date being based pro rata on the number
of days from the original issuance of the Equity Stock). After full dividends on
the Equity Stock have been paid or declared and funds set aside for payment for
the then current year, the holders of shares of Equity Stock will not receive
any further dividends with respect to that year.
Unless dividends on all our outstanding preferred stock and any other
shares of preferred stock issued by us have been or contemporaneously are paid
in full for the latest dividend period ending contemporaneously with or prior to
the end of the period for which a dividend is to be paid on the shares of Equity
Stock and for all prior dividend periods, we will pay no dividend or other
distribution on the shares of Equity Stock for that period.
Unless full dividends on our outstanding preferred stock and any other
shares of preferred stock issued by us have been paid for all past dividend
periods, we and our subsidiaries may not redeem, repurchase or otherwise acquire
for any consideration (nor may we or they pay or make available any moneys for a
sinking fund for the redemption of) any shares of Equity Stock except by
conversion into or exchange for shares of capital stock issued by us ranking
junior to the preferred stock as to dividends and upon liquidation.
Our revolving credit facility with a commercial bank restricts our
ability to pay distributions in excess of "Funds from Operations" for the prior
four fiscal quarters less scheduled principal payments and less capital
expenditures. Funds from operations is defined in the loan agreement generally
as net income before gain on sale of real estate, extraordinary loss on early
retirement of debt and deductions for depreciation, amortization and non-cash
charges. Our management believes that this restriction will not impede our
ability to pay in full the dividends on the Equity Stock.
Conversion Rights
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Except as indicated below, the Equity Stock will not be convertible into
shares of any other class or series of our capital stock.
If we fail to qualify as a REIT for federal income tax purposes, the
Equity Stock is convertible at any time thereafter at the option of the holder
into shares of our Common Stock at a conversion rate of 956 shares of our Common
Stock for each share of Equity Stock (equivalent to .956 shares of our Common
Stock for each depositary share), subject to adjustment in certain
circumstances.
Liquidation Rights
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If we voluntarily or involuntarily liquidate, dissolve or wind up our
affairs, holders of Equity Stock will not be entitled to receive any payment in
respect of their shares until we pay the full respective liquidation preference
in respect of our outstanding preferred stock and any other shares of preferred
stock issued by us.
After we pay the full respective liquidation preferences in respect of
all preferred stock, holders of the Equity Stock will participate with holders
of our Common Stock and holders of our similarly ranked equity stock in our
remaining assets on the basis that a share of Equity Stock receives 1,000 times
the amount allocated in respect of a share of Common Stock (equivalent to one
time in the case of a depositary share), but not to exceed $24,500 per share of
Equity Stock (equivalent to $24.50 per depositary share), subject to adjustment
in certain circumstances.
For purposes of liquidation rights, our consolidation or merger with or
into any other corporation or corporations or a sale of all or substantially all
of our assets is not our liquidation, dissolution or winding up.
Redemption
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Except in certain circumstances relating to our qualification as a REIT,
we may not redeem the shares of Equity Stock prior to March 31, 2005. On and
after March 31, 2005, at any time or from time to time, we may redeem the shares
of Equity Stock in whole or in part at our option at a cash redemption price of
$24,500 per share of Equity Stock (equivalent to $24.50 per depositary share).
The redemption price of the Equity Stock may be paid solely from the sale
proceeds of other common stock or from retained cash and not from any other
source. For purposes of the preceding sentence, "common stock" means our Common
Stock, par value $.10, equity stock or other rights or options to purchase any
of the foregoing (other than debt securities or preferred stock convertible or
exchangeable for common stock).
If we redeem shares of Equity Stock between a dividend record date and a
dividend payment date, the cash redemption price will be $24,500 per share of
Equity Stock (equivalent to $24.50 per depositary share) per share plus the
amount of the declared and unpaid dividend.
If fewer than all the outstanding shares of Equity Stock are to be
redeemed, the number of shares to be redeemed will be determined by our board of
directors, and the shares will be redeemed pro rata from the holders of record
of the shares in proportion to the number of shares held by holders (with
adjustments to avoid redemption of fractional shares) or by lot in a manner
determined by our board of directors.
Notice of redemption of the Equity Stock will be given by publication in
a newspaper of general circulation in the County of Los Angeles and the City of
New York, such publication to be made once a week for two successive weeks
commencing not less than 30 nor more than 60 days prior to the redemption date.
A similar notice will be mailed by us, postage prepaid, not less than 30 or more
than 60 days prior to the redemption date, addressed to the respective holders
of record of shares of Equity Stock to be redeemed at their respective addresses
as they appear on our stock transfer records. Each notice will state: (1) the
redemption date; (2) the number of shares of Equity Stock to be redeemed; (3)
the redemption price per share of Equity Stock; (4) the place or places where
certificates for the Equity Stock are to be surrendered for payment of the
redemption price; and (5) that dividends on the shares of Equity Stock to be
redeemed will cease to accrue on such redemption date. If fewer than all the
shares of Equity Stock held by any holder are to be redeemed, the notice mailed
to the holder will also specify the number of shares of Equity Stock to be
redeemed from the holder. In order to facilitate the redemption of shares of
Equity Stock, our board of directors may fix a record date for the determination
of shares of Equity Stock to be redeemed of not less than 30 nor more than 60
days prior to the date fixed for redemption.
Notice having been given as provided above, from and after the date
specified for redemption, unless we default in providing funds for the payment
of the redemption price on that date, all dividends on the Equity Stock called
for redemption will cease. From and after the redemption date, unless we
default, all rights of the holders of the Equity Stock as our stockholders,
except the right to receive the redemption price (but without interest), will
cease. Upon surrender in accordance with such notice of the certificates
representing these shares (properly endorsed or assigned for transfer, if our
board of directors so requires and the notice so states), the redemption price
set forth above will be paid out of our funds. If fewer than all the shares
represented by any certificate are redeemed, a new certificate will be issued
representing the unredeemed shares without cost to the holder.
Subject to applicable law, we may, at any time and from time to time,
purchase any depositary shares representing shares of Equity Stock in the open
market, by tender or by private agreement.
Adjustments
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If we divide or combine the Common Stock into a greater or smaller
number of shares or pay a dividend in shares of Common Stock, the outstanding
shares of Equity Stock will (1) be divided or combined in the same proportion as
the Common Stock or (2) receive the same proportionate dividend in shares of
Equity Stock. In that case, however, the per share amounts specified for
computing dividends per quarter or per year, the maximum liquidation
distribution and the redemption price will be adjusted so that the respective
total for all outstanding shares of the Equity Stock is the same after as it was
before the event causing the adjustments.
Voting Rights
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Holders of Equity Stock are entitled to vote on all matters presented to
holders of the Common Stock for a vote and vote together as one class with
holders of the Common Stock and other series of equity stock that share voting
rights with the Equity Stock. Each outstanding share of Equity Stock entitles
the holder to 100 votes (equivalent to one-tenth (1/10) of a vote per depositary
share), except that under California law he or she, together with holders of the
Common Stock and other series of equity stock that share voting rights with the
Equity Stock, has cumulative voting rights in electing our board of directors.
Cumulative voting means that each holder of Equity Stock is entitled to cast as
many votes as there are directors to be elected multiplied by 100 times the
number of shares of Equity Stock registered in its name (equivalent to one-tenth
(1/10) the number of depositary shares registered in his or her name). A holder
of Equity Stock may cumulate the votes for directors by casting all of the votes
for one candidate or by distributing the votes among as many candidates as he or
she chooses.
No consent or approval of the holders of shares of the Equity Stock will
be required for the issuance from our authorized but unissued equity stock of
other shares of any series of equity stock ranking on a parity with the Equity
Stock as to payment of dividends and distribution of assets, including other
shares of Equity Stock.
Ownership Limitations
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To qualify as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), no more than 50% in value of our outstanding shares of capital
stock may be owned, directly or constructively under the applicable attribution
rules of the Code, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year. In order to
maintain our qualification as a REIT, our articles of incorporation restrict the
number of shares of capital stock that any shareholder may own.
In a series of transactions among Public Storage Management, Inc. and
its affiliates (collectively, "Public Storage Management"), culminating in the
November 16, 1995 merger of Public Storage Management into Storage Equities,
Inc., Storage Equities became self-administered and self-managed, acquired
substantially all of Public Storage Management's United States real estate
interests and was renamed "Public Storage, Inc."
Our articles of incorporation and bylaws provide that, subject to
certain exceptions, no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than (A) 2.0% of the outstanding shares
of our common stock and (B) 9.9% of the outstanding shares of each class or
series of shares of our preferred stock or equity stock and that all shares of
stock be imprinted with a legend setting forth that restriction. Our articles of
incorporation provide, however, that no person will be deemed to exceed the
ownership limit solely by reason of the beneficial ownership of shares of any
class of stock to the extent that those shares of stock were beneficially owned
by the person (including B. Wayne Hughes, our chief executive officer, and
members of his family) after the merger with Public Storage Management. Thus,
this limitation does not affect the ownership of common stock held by the Hughes
family at the time of the merger. The ownership limitation is intended to
preserve our REIT status in view of the Hughes family's substantial ownership
interest in us. We cannot provide any assurance, however, that this ownership
limit will enable us to satisfy the requirement that a REIT not be "closely
held" within the meaning of Section 856(h) of the Code for any given taxable
year.
Our articles of incorporation and bylaws provide that our board of
directors, in its sole and absolute discretion, may grant exceptions to the
ownership limits, so long as (A) our board has determined that we would not be
"closely held" within the meaning of Section 856(h) of the Code (without regard
to whether the event in question takes place during the second half of a taxable
year) and would not otherwise fail to qualify as a REIT, after giving effect to
an acquisition by an excepted person of beneficial ownership of the maximum
amount of capital stock permitted as a result of the exception to be granted,
and taking into account the existing and permitted ownership by other persons of
stock (taking into account any other exceptions granted) and (B) the excepted
persons provide to our board representations and undertakings as our board may
require. In any case, no holder may own or acquire, either directly, indirectly
or constructively under the applicable attribution rules of the Code, any shares
of any class of capital stock if the ownership or acquisition (1) would cause
more than 50% in value of our outstanding capital stock to be owned, either
directly or constructively, under the applicable attribution rules of the Code,
by five or fewer individuals (as defined in the Code to include certain
tax-exempt entities, other than, in general, qualified domestic pension funds),
(2) would result in our stock being beneficially owned by less than 100 persons
(determined without reference to any rules of attribution), or (3) would
otherwise result in our failing to qualify as a REIT.
Our articles of incorporation and bylaws generally provide that if any
holder of capital stock purports to transfer shares to a person or there is a
change in our capital structure, and either the transfer or the change in
capital structure would result in our failing to qualify as a REIT, or the
transfer or the change in capital structure would cause the transferee to hold
shares in excess of the applicable ownership limit, then the shares causing the
violation will be automatically transferred to a trust for the benefit of a
designated charitable beneficiary. The purported transferee of those shares will
have no right to receive dividends or other distributions with respect to them
and will have no right to vote the shares. Any dividends or other distributions
paid to the purported transferee prior to our discovery that the shares have
been transferred to a trust will be paid to the trustee of the trust for the
benefit of the charitable beneficiary upon demand. The trustee will designate a
transferee of those shares so long as the shares would not violate the
restrictions on ownership or transfer in our articles of incorporation in the
hands of the designated transferee. Upon the sale of the shares, the purported
transferee will receive out of any proceeds remaining after payment of expenses
of the charitable trust and us the lesser of (A)(1) the price per share the
purported transferee paid for the stock in the purported transfer that resulted
in the transfer of the shares to the trust, or (2) if the transfer or other
event that resulted in the transfer of the shares to the trust was not a
transaction in which the purported transferee gave full value for the shares, a
price per share equal to the market price on the date of the purported transfer
or other event that resulted in the transfer of the shares to the trust and (B)
the price per share received by the trustee from the sale or other disposition
of the shares held in the trust. Each purported transferee will be deemed to
have waived any claims the purported transferee may have against the trustee and
us arising from the disposition of the shares, except for claims arising from
the trustee's or our gross negligence, willful misconduct, or failure to make
payments when required by our articles of incorporation.
In addition, our bylaws provide our board of directors with the power to
prevent the transfer of shares of capital stock or to redeem shares of capital
stock if the board of directors determines in good faith that the action is
necessary to preserve our status as a REIT.
Depositary Shares
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The following is a brief description of the terms of the depositary
shares which does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the provisions of the deposit agreement (including
the form of depositary receipt), which is filed as an exhibit to this
registration statement.
Dividends
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The depositary will distribute all cash dividends or other cash
distributions received in respect of the Equity Stock to the record holders of
depositary receipts in proportion to the number of depositary shares owned by
such holders on the relevant record date, which will be the same date as the
record date fixed by us for the Equity Stock. In the event that the calculation
of such amount to be paid results in an amount which is a fraction of one cent,
the amount the depositary shall distribute to such record holder shall be
rounded to the next highest whole cent.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
entitled thereto, in proportion, as nearly as may be practicable, to the number
of depositary shares owned by such holders on the relevant record date, unless
the depositary determines (after consultation with us) that it is not feasible
to make such distribution, in which case the depositary may (with our approval)
adopt any other method for such distribution as it deems equitable and
appropriate, including the sale of such property (at such place or places and
upon such terms as it may deem equitable and appropriate) and distribution of
the net proceeds from such sale to such holders.
Conversion Rights
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If we fail to qualify as a REIT for federal income tax purposes, the
depositary shares are convertible at any time thereafter at the option of the
holder into shares of our Common Stock on the same terms and conditions as the
Equity Stock held by the depositary, except that the conversion rate for the
depositary shares will be equal to the conversion rate for the Equity Stock
divided by 1,000 (equivalent to .956 shares of our Common Stock for each
depositary share), subject to adjustment in certain circumstances. Cash will be
paid in lieu of fractional shares of Common Stock.
Liquidation Preference
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In the event of our liquidation, dissolution or winding up of our
affairs, whether voluntary or involuntary, the holders of each depositary share
will be entitled to 1/1,000th of the liquidation preference accorded each share
of the Equity Stock.
Redemption
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Whenever we redeem any Equity Stock held by the depositary, the
depositary will redeem as of the same redemption date the number of depositary
shares representing the Equity Stock so redeemed. The depositary will publish a
notice of redemption of the depositary shares containing the same type of
information and in the same manner as our notice of redemption and will mail the
notice of redemption promptly upon receipt of such notice from us and not less
than 30 nor more than 60 days prior to the date fixed for redemption of the
Equity Stock and the depositary shares to the record holders of the depositary
receipts. In case less than all the outstanding depositary shares are to be
redeemed, the depositary shares to be so redeemed will be determined pro rata or
by lot in a manner determined by the board of directors.
Voting
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Promptly upon receipt of notice of any meeting at which the holders of
the Equity Stock are entitled to vote, the depositary will mail the information
contained in such notice of meeting to the record holders of the depositary
receipts as of the record date for the meeting. Each record holder of depositary
receipts will be entitled to instruct the depositary as to the exercise of the
voting rights pertaining to the number of shares of Equity Stock represented by
the record holder's depositary shares. The depositary will endeavor, insofar as
practicable, to vote the Equity Stock represented by such depositary shares in
accordance with the instructions, and we will agree to take all action which may
be deemed necessary by the depositary in order to enable the depositary to do
so. The depositary will abstain from voting any of the Equity Stock to the
extent that it does not receive specific instructions from the holders of
depositary receipts.
Withdrawal of Equity Stock
--------------------------
Upon surrender of depositary receipts at the principal office of the
depositary, upon payment of any unpaid amount due the depositary, and subject to
the terms of the deposit agreement, the owner of the depositary shares evidenced
thereby is entitled to delivery of the number of whole shares of Equity Stock
and all money and other property, if any, represented by such depositary shares.
Partial shares of Equity Stock will not be issued. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of the
number of depositary shares representing the number of whole shares of Equity
Stock to be withdrawn, the depositary will deliver to such holder at the same
time a new depositary receipt evidencing the excess number of depositary shares.
Holders of Equity Stock thus withdrawn will not be entitled to deposit those
shares under the deposit agreement or to receive depositary receipts evidencing
depositary shares therefor.
Amendment and Termination of Deposit Agreement
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The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time and from time to time be
amended by agreement between us and the depositary. However, any amendment that
materially and adversely alters the rights of the holders (other than any change
in fees) of depositary shares will not be effective unless such amendment has
been approved by the holders of at least a majority of the depositary shares
then outstanding. No such amendment may impair the right, subject to the terms
of the deposit agreement, of any owner of any depositary shares to surrender the
depositary receipt evidencing the depositary shares with instructions to the
depositary to deliver to the holder the Equity Stock and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. The deposit agreement may be terminated by us or
the depositary only if (1) all outstanding depositary shares have been redeemed
or (2) there has been a final distribution in respect of the Equity Stock in
connection with our dissolution and the final distribution has been made to all
the holders of depositary shares.
Charges of Depositary
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We will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. We will pay
charges of the depositary in connection with the initial deposit of the Equity
Stock and the initial issuance of the depositary shares, and redemption of the
Equity Stock and all withdrawals of Equity Stock by owners of depositary shares.
Holders of depositary receipts will pay transfer, income and other taxes and
governmental charges and certain other charges as are provided in the deposit
agreement to be for their accounts. In certain circumstances, the depositary may
refuse to transfer depositary shares, may withhold dividends and distributions
and sell the depositary shares evidenced by such depositary receipt if such
charges are not paid.
Miscellaneous
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The depositary will forward to the holders of depositary receipts all
reports and communications from us which are delivered to the depositary and
which we are required to furnish to the holders of the Equity Stock. In
addition, the depositary will make available for inspection by holders of
depositary receipts at the principal office of the depositary, and at any other
places as it may from time to time deem advisable, any reports and
communications which are received by the depositary as the holder of Equity
Stock.
Neither the depositary nor any depositary's agent (as defined in the
deposit agreement), nor the registrar (as defined in the deposit agreement) nor
the Company assumes any obligation or will be subject to any liability under the
deposit agreement to holders of depositary receipts other than for its gross
negligence, willful misconduct or bad faith. Neither the depositary, any
depositary's agent, the registrar nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the deposit agreement. The Company and the depositary are
not obligated to prosecute or defend any legal proceeding in respect of any
depositary shares, depositary receipts or Equity Stock unless reasonably
satisfactory indemnity is furnished. The Company and the depositary may rely on
written advice of counsel or accountants, on information provided by holders of
depositary receipts or other persons believed in good faith to be competent to
give such information and on documents believed to be genuine and to have been
signed or presented by the proper party or parties.
Resignation and Removal of Depositary
-------------------------------------
The depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the depositary, any such
resignation or removal to take effect upon the appointment of a successor
depositary and its acceptance of such appointment. The successor depositary must
be appointed within 60 days after delivery of the notice for resignation or
removal and must be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$150,000,000.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax
considerations relating to us and to your acquisition, ownership and disposition
of the depositary shares. The following discussion, which is not exhaustive of
all possible tax considerations, does not give a detailed description of any
state, local, or foreign tax considerations. Nor does it discuss all of the
aspects of federal income taxation that may be relevant to a prospective
shareholder in light of his or her particular circumstances or to certain types
of shareholders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) who are subject to special treatment
under federal income tax laws. The information in this section is based on the
Code, current, temporary and proposed treasury regulations, the legislative
history of the Code, current administrative interpretations and practices of the
IRS (including its practices and policies as endorsed in private letter rulings,
which are not binding on the IRS except with respect to the taxpayer that
receives such a ruling), and court decisions, all as of the date hereof. No
assurance can be given that future legislation, treasury regulations,
administrative interpretations and court decisions will not significantly change
current law or adversely affect existing interpretations of current law. Any
such change could apply retroactively to transactions preceding the date of the
change. We have not requested and do not plan to request any rulings from the
IRS concerning the special distribution and the tax treatment of the Company.
Thus, no assurance can be provided that the statements below (which do not bind
the IRS or the courts) will not be challenged by the IRS or will be sustained by
a court if so challenged.
EACH SHAREHOLDER IS ADVISED TO CONSULT HIS OR HER TAX ADVISOR, REGARDING
THE TAX CONSEQUENCES TO HIM OR HER OF THE ACQUISITION, OWNERSHIP AND SALE OF THE
SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
Taxation of the Special Distributions and Holders of Depositary Shares
- ----------------------------------------------------------------------
The federal income tax rules applicable to REITs impose a 4% excise tax
if a REIT does not meet certain minimum distribution requirements. After taking
into account regular distributions in 1999 on our common and preferred stock, we
estimate we need an additional distribution to avoid liability for that excise
tax in 1999. The special distribution is intended to meet the applicable
distribution requirement.
The special distribution has been structured so that our shareholders
have an election to obtain cash, in order to ensure that the special
distribution will be treated as a taxable distribution that will be deductible
to us. You will be taxable on the distribution if you are subject to income tax.
The distribution, payable to shareholders of record on November 15, 1999, will
be taxable to you in 1999, even though it will not be paid until January 14,
2000, and it will be taxable whether you elect to receive depositary shares or
cash. Shareholders who receive cash will be taxable on the amount of cash
received, and shareholders who receive depositary shares will be taxable on the
value of the shares received. We will report the value of the distributed
depositary shares to the IRS as $.65 of value of depositary shares distributed
per share of our Common Stock, appropriately adjusted to reflect any cash
received with respect to fractional depositary shares.
Owners of the depositary shares will be treated for federal income tax
purposes as if they were owners of the Equity Stock represented by the
depositary shares. Accordingly, those owners will take into account, for federal
income tax purposes, income and deductions to which they would be entitled if
they were holders of such Equity Stock.
Whenever the Company redeems any Equity Stock held by the depositary,
the depositary will redeem as of the same redemption date the number of
depositary shares representing the Equity Stock so redeemed. The treatment to a
holder of depositary shares accorded to any redemption by the Company (as
distinguished from a sale, exchange or other disposition) of Equity Stock held
by the depositary and corresponding redemption of depositary shares can only be
determined on the basis of particular facts as to the holder of depositary
shares at the time of redemption. In general, a holder of depositary shares will
recognize capital gain or loss measured by the difference between the amount
received upon the redemption and the adjusted tax basis of the holder in the
depositary shares redeemed (provided the depositary shares are held as a capital
asset) if such redemption (1) results in a "complete termination" of a holder's
interest in all classes of stock of the Company under Section 302(b)(3) of the
Code, or (2) is "not essentially equivalent to a dividend" with respect to the
holder under Section 302(b)(1) of the Code. In applying these tests, there must
be taken into account not only any depositary shares owned by the holder, but
also such holder's ownership of Common Stock, other series of preferred stock
and any options (including stock purchase rights) to acquire any of the
foregoing. The holder also must take into account any such securities (including
options) that are considered to be owned by such holder by reason of the
constructive ownership rules set forth in Sections 318 and 302(c) of the Code.
If a particular holder of depositary shares owns (actually or
constructively) no shares of Common Stock of the Company or an insubstantial
percentage of the outstanding shares of Common Stock of the Company, based upon
current law, it is probable that the redemption of depositary shares from such a
holder would be considered "not essentially equivalent to a dividend." However,
whether a distribution is "not essentially equivalent to a dividend" depends on
all of the facts and circumstances, and a holder of depositary shares intending
to rely on any of these tests at the time of redemption should consult its own
tax adviser to determine how the tests apply to its particular situation.
If the redemption does not meet any of the tests under Section 302 of
the Code, then the redemption proceeds received from the depositary shares will
be treated as a distribution on the depositary shares as described under
"Taxation of U.S. Shareholders Holding Depositary Shares," below. If the
redemption is taxed as a dividend, the adjusted tax basis of the holder in the
depositary shares will be transferred to any other stockholdings of the holder
in the Company. If the holder of depositary shares owns no other stockholdings
in the Company, under certain circumstances, such basis may be transferred to a
related person, or it may be lost entirely.
Taxation of the Company
- -----------------------
General. We elected to be taxed as a REIT under Sections 856 through 860
of the Code commencing with our taxable year ended December 31, 1981. We believe
that we have been organized and operated in a manner so as to qualify as a REIT,
and we intend to continue to operate in such a manner. So long as we qualify for
taxation as a REIT, we generally will not be subject to federal corporate income
taxes on net income that we distribute currently to shareholders. However, we
will be subject to federal income tax in the following circumstances. First, we
will be taxed at regular corporate rates on any undistributed REIT taxable
income, including undistributed net capital gains. Second, under certain
circumstances, we may be subject to the "alternative minimum tax" on items of
tax preference. Third, if we have (1) net income from the sale or other
disposition of "foreclosure property" (which is, in general, property acquired
by foreclosure or otherwise on default of a lease or a loan secured by the
property) which is held primarily for sale to customers in the ordinary course
of business or (2) other nonqualifying income from foreclosure property, it will
be subject to tax at the highest corporate rate on such income. Fourth, if we
have net income from prohibited transactions (which are, in general, certain
sales or other dispositions of property (other than foreclosure property) held
primarily for sale to customers in the ordinary course of business), such income
will be subject to a 100% tax. Fifth, if we fail to satisfy the 75% gross income
test or the 95% gross income test (as discussed below), and have nonetheless
maintained our qualification as a REIT because certain other requirements have
been met, we will be subject to a 100% tax on the net income attributable to the
greater of the amount by which we fail the 75% or 95% gross income test. Sixth,
if we fail to distribute during each calendar year at least the sum of (1) 85%
of our REIT ordinary income for such year, (2) 95% of our REIT capital gain net
income for such year, and (3) any undistributed taxable income from prior
periods, we would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if we acquire or
have acquired any asset from a taxable C corporation in a transaction in which
the basis of the asset in the acquiror's hands is determined by reference to the
basis of the asset (or any other asset) in the hands of the C corporation (such
as in the case of our 1995 merger with Public Storage Management) and the
acquiror recognizes gain on the disposition of such asset during the 10 year
period beginning on the date on which such asset was acquired by it, then to the
extent of such asset's "Built-In Gain" (i.e., the excess of (a) the fair market
value of such asset at the time of its acquisition by us over (b) the adjusted
basis in such asset, determined at the time of such acquisition), such gain will
be subject to tax at the highest regular corporate rate applicable, pursuant to
treasury regulations that have yet to be promulgated. The results described
above with respect to the recognition of Built-In Gain assume that the Company
made an election pursuant to Notice 88-19 with respect to any such acquisition.
Public Storage Management was taxable as a regular C corporation. After the
merger with Public Storage Management, the Company elected to be subject to the
Built-In Gain rules of Notice 88-19.
Requirements for Qualification. The Code defines a REIT as a
corporation, trust or association (1) that is managed by one or more trustees or
directors, (2) the beneficial ownership of which is evidenced by transferable
shares of stock, or by transferable certificates of beneficial interest, (3)
that would be taxable as a domestic corporation, but for Sections 856 through
859 of the Code, (4) that is neither a financial institution nor an insurance
company subject to certain provisions of the Code, (5) the beneficial ownership
of which is held by 100 or more persons, (6) that during the last half of each
taxable year not more than 50% in value of the outstanding stock of which is
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities), (7) that makes an election to be taxable as a
REIT, or has made such election for a previous taxable year which has not been
revoked or terminated, and satisfies all relevant filing and other
administrative requirements established by the IRS that must be met in order to
elect and maintain REIT status; (8) that uses a calendar year for federal income
tax purposes and complies with recordkeeping requirements of the Code and
regulations promulgated thereunder; and (9) that meets certain other tests,
described below, regarding the nature of its income and assets and the amount of
its distributions. The Code provides that conditions (1) through (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. For purposes of
determining stock ownership under condition (6), a supplemental unemployment
compensation benefits plan, a private foundation or a portion of a trust
permanently set aside or used exclusively for charitable purposes generally is
considered an individual. However, a trust that is a qualified trust under Code
section 401(a) generally is not considered an individual and beneficiaries of
such trust are treated as holding shares of a REIT in proportion to their
actuarial interests in such trust for purposes of condition (6).
In connection with condition (6), a REIT is required to send annual
letters to its shareholders requesting information regarding the actual
ownership of shares. For our taxable years commencing on or after January 1,
1998, if we comply with the annual letters requirement and do not know, or
exercising reasonable diligence would not have known, whether we failed to meet
requirement (6) above, we will be treated as having met the requirement. Our
articles of incorporation contain restrictions regarding the transfer of our
capital stock that are intended to assist us in continuing to satisfy the stock
ownership requirements described in conditions (5) and (6). The ownership
restrictions in our articles of incorporation and bylaws generally prohibit the
actual or constructive ownership of more than 2% of the outstanding shares of
common stock (excluding the interest held by the Hughes family) or more than
9.9% of the outstanding shares of each class or series of shares of preferred
stock or equity stock, unless an exception is established by the board of
directors. The restrictions provide that if, at any time, for any reason, those
ownership limitations are violated or more than 50% in value of our outstanding
stock otherwise would be considered owned by five or fewer individuals, then a
number of shares of stock necessary to cure the violation will automatically and
irrevocably be transferred from the person causing the violation to a designated
charitable beneficiary. See "Description of Common Stock and Class B Common
Stock--Ownership Limitations." At the time of the merger with Public Storage
Management, to further assist us in meeting the ownership restrictions, the
Hughes family entered into an agreement with us for the benefit of the Company
and certain designated charitable beneficiaries providing that if, at any time,
for any reason, more than 50% in value of our outstanding stock otherwise would
be considered owned by five or fewer individuals, then a number of shares of our
common stock owned by Wayne Hughes necessary to cure such violation would
automatically and irrevocably be transferred to a designated charitable
beneficiary.
The REIT protective provisions of our articles and the agreement with
the Hughes family are modeled after certain arrangements that the IRS has ruled
in private letter rulings will preclude a REIT from being considered to violate
the ownership restrictions so long as the arrangements are enforceable as a
matter of state law and the REIT seeks to enforce them as and when necessary.
There can be no assurance, however, that the IRS might not seek to take a
different position with respect to the Company (a private letter ruling is
legally binding only with respect to the taxpayer to whom it was issued and we
will not seek a private ruling on this or any other issue) or contend that we
failed to enforce these various arrangements. Accordingly, there can be no
assurance that these arrangements necessarily will preserve our REIT status. We
believe, however, that we have issued and outstanding sufficient shares with
sufficient diversity of ownership to allow us to satisfy the REIT ownership
requirements.
A REIT is not permitted to have at the end of any taxable year any
undistributed earnings and profits that are attributable to a "C corporation"
taxable year. As a result of the 1995 merger with Public Storage Management and
the 1999 merger with Storage Trust Realty, the Company succeeded to various tax
attributes of those entities and their predecessors, including any undistributed
C corporation earnings and profits. We do not believe that we have acquired any
undistributed "C corporation earnings and profits." However, neither of these
entities nor the Company has sought an opinion of counsel or outside accountants
to the effect that we did not acquire any "C corporation earnings and profits."
There can be no assurance that the IRS would not contend otherwise on a
subsequent audit. It appears that we could keep from being disqualified as a
REIT by using "deficiency dividend" procedures to distribute any such acquired
"C corporation" earnings and profits. In order to use this procedure, an
affected REIT would have to make an additional distribution to its shareholders
(in addition to distributions made for purposes of satisfying the normal REIT
distribution requirements), within 90 days of the IRS determination. In
addition, the REIT would have to pay to the IRS an interest charge on 50% of the
acquired C corporation earnings and profits that were not distributed prior to
the end of the REIT's taxable year in which they were acquired. If we were
deemed to have acquired C corporation earnings and profits, there can be no
assurance, however, that the IRS would not take the position either that the
procedure is not available at all (in which case we would fail to qualify as a
REIT) or, alternatively, that even if the procedure is available, we cannot
qualify as a REIT for our taxable year in which the earnings and profits were
acquired, but we could qualify as a REIT for subsequent taxable years.
Income Tests. In order to maintain qualification as a REIT, we must
satisfy certain gross income requirements, which are applied on an annual basis.
For purposes of applying these income tests, a REIT is considered to earn a
proportionate share of the income of any partnership in which it holds a
partnership interest. First, at least 75% of our gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived
directly or indirectly from investments relating to real property or mortgages
on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
at least 95% of our gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from the same items which
qualify under the 75% income test, and from dividends, interest and gain from
the sale or disposition of stock or securities, or from any combination of the
foregoing.
Rents that we receive will qualify as "rents from real property" in
satisfying the gross income requirements described above only if several
conditions are met. First, the amount of rent must not be based in whole or in
part on the income or profits of any person. However, an amount received or
accrued generally will not be excluded from the term "rents from real property"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales. We anticipate that none of our annual gross income will be
attributable to rents that are based in whole or in part on the income of any
person (excluding rents based on a percentage of receipts or sales, which, as
described above, are permitted). Second, the Code provides that rents received
from a tenant will not qualify as "rents from real property" if the Company, or
an owner of 10% or more of the Company, directly or constructively owns 10% or
more of such tenant. We do not anticipate that we will receive material amounts
of income from such related party tenants. Third, if rent attributable to
personal property, leased in connection with a lease of real property, is
greater than 15% of the total rent received under the lease, then the portion of
rent attributable to such personal property will not qualify as "rents from real
property." We do not anticipate deriving rent attributable to personal property
leased in connection with real property that exceeds 15% of the total rents.
Finally, for rents to qualify as "rents from real property," we generally must
not operate or manage the property or furnish or render services to tenants,
other than through an "independent contractor" that is adequately compensated
and from whom we derive no revenue. The "independent contractor" requirement,
however, does not apply to the extent the services we provide are "usually or
customarily rendered" in connection with the rental of space for occupancy only
and are not otherwise considered "rendered to the occupant." Any services with
respect to certain properties that we believe may not be provided by us directly
without jeopardizing the qualification of rent as "rents from real property"
will be performed by "independent contractors."
For our taxable years commencing on or after January 1, 1998, rents
received generally will qualify as rents from real property even if we were to
provide services that are not permissible services so long as the amount
received for such services meets a de minimis standard. The amount received for
"impermissible services" with respect to a property cannot exceed 1% of all
amounts received, directly or indirectly, by the Company with respect to such
property. In computing any such amounts, the amount that we would be deemed to
have received for performing "impermissible services" will be the greater of the
actual amount so received or 150% of the direct cost to us of providing those
services. If the impermissible service income exceeds 1% of our total income
from a property, then all of the income from that property will fail to qualify
as rents from real property.
In connection with the merger with Public Storage Management, the
Company and the various other owners of mini-warehouses and business parks for
which we performed management activities entered into an agreement with PSCC,
Inc. under which PSCC provides the owners and the Company certain administrative
and cost-sharing services in connection with the operation of the properties and
the performance of certain administrative functions. The services include the
provision of corporate office space and certain equipment, personnel required
for the operation and maintenance of the properties, and corporate or
partnership administration. Each of the owners and the Company pay PSCC directly
for services rendered by PSCC in connection with the administrative and cost
sharing agreement. That payment is separate from and in addition to the
compensation paid to us under the management agreement for the management of the
properties owned by the owners. At the time of the merger with Public Storage
Management, we received a private letter ruling from the IRS to the effect that
the reimbursements and other payments made to PSCC by the owners will not be
treated as our revenues for purposes of the 95% test.
We own substantially all of the economic interest in Pickup & Delivery
(the portable self-storage business). The income from that business would be
nonqualifying income to us and the business is conducted by a limited
partnership between the Company and a subsidiary of PS Orangeco, Inc. (the
"Lock/Box Company"). The share of gross income of that business attributable to
our partnership interest, when combined with our other nonqualifying income,
must be less than 5% of our total gross revenues. We anticipate that we will be
able to continue to satisfy both the 95% and 75% gross income tests.
If we fail to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, we may nevertheless qualify as a REIT for such year if we
are entitled to relief under certain provisions of the Code. It is not possible,
however, to state whether in all circumstances we would be entitled to the
benefit of these relief provisions. Even if these relief provisions were to
apply, however, a 100% tax would be imposed with respect to the "excess net
income" attributable to the failure to satisfy the 75% and 95% gross income
tests.
Asset Tests. At the close of each quarter of our taxable year, we must
satisfy three tests relating to the nature of our assets. For purposes of
applying these asset tests, a REIT is considered to own a proportionate share of
the assets of any partnership in which it holds a partnership interest. First,
at least 75% of the value of our total assets must be represented by real estate
assets. Our real estate assets include, for this purpose, stock or debt
instruments held for less than one year purchased with the proceeds of a stock
offering, or long-term (at least five years) debt offering of the Company, cash,
cash items and government securities. Second, not more than 25% of our total
assets may be represented by securities other than those in the 75% asset class.
Third, of the investments included in the 25% asset class, the value of any one
issuer's securities owned by us may not exceed 5% of the value of our total
assets, and, except for REITs or "qualified REIT subsidiaries," we may not own
more than 10% of any one issuer's outstanding voting securities.
We believe that we satisfy the asset tests. In this regard, however, the
value of our interest in the Lock/Box Company (including the Lock/Box Company's
interest in Pickup & Delivery) may not exceed 5% of the value of our total
assets and the 10% voting stock prohibition precludes us from controlling the
operations of the Lock/Box Company (in which we own 95% of the equity in the
form of non-voting stock and the Hughes family owns 5% of the equity but 100% of
the voting stock), Pickup & Delivery (a subsidiary of the Lock/Box Company) or
PSCC (in which we own a less than 10% voting interest) and may preclude us from
exercising our rights of first refusal with respect to the corporations owning
the Canadian operations and the reinsurance business. See "--Proposed Changes to
REIT Qualification Requirements" below for a discussion of proposals that, if
enacted, might affect Public Storage's ability to derive economic benefits from
the activities of the Lock/Box Company and Pickup & Delivery.
After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a REIT for failure to satisfy the 25% or 5% asset
tests at the end of a later quarter solely by reason of changes in the relative
values of our assets. If the failure to satisfy the 25% or 5% asset tests
results from an acquisition of securities or other property during a quarter,
the failure can be cured by disposition of sufficient nonqualifying assets
within 30 days after the close of that quarter. We intend to maintain adequate
records of the value of our assets to ensure compliance with the asset tests and
to take any available actions within 30 days after the close of any quarter as
may be required to cure any noncompliance with the 25% or 5% asset tests. If we
fail to cure noncompliance with the asset tests within such time period, we
would cease to qualify as a REIT.
Certain Partnership Interests. In the merger with Public Storage
Management and in other transactions, we have acquired interests in various
partnerships that own and operate properties. For purposes of satisfying the
REIT asset and gross income tests, we will be treated as if we directly own a
proportionate share of each of the assets of these partnerships. For these
purposes, under current treasury regulations our interest in each of the
partnerships must be determined in accordance with our "capital interest" in the
partnership.
The ownership of these partnership interests creates several issues
regarding our satisfaction of the 95% gross income test. First, we earn property
management fees from these partnerships. Existing treasury regulations do not
address the treatment of management fees derived by a REIT from a partnership in
which the REIT holds a partnership interest, but the IRS has issued a number of
private letter rulings holding that the portion of the management fee that
corresponds to the REIT's interest in the partnership in effect is disregarded
in applying the 95% gross income test where the REIT holds a "substantial"
interest in the partnership. We disregard the portion of management fees derived
from partnerships in which we are a partner that corresponds to our interest in
these partnerships in determining the amount of our nonqualifying income. There
can be no assurance, however, that the IRS would not take a contrary position
with respect to the Company, either rejecting the approach set forth in the
private letter rulings mentioned above or contending that our situation is
distinguishable from those addressed in the private letter rulings (for example,
arguing that we do not have a "substantial" interest in the partnerships).
Second, we acquired interests in certain of these partnerships that
entitle us to a percentage of profits (either from operations, or upon a sale,
or both) in excess of the percentage of total capital originally contributed to
the partnership with respect to such interest. Existing treasury regulations do
not specifically address how our "capital interest" in partnerships of this type
should be determined. This determination is relevant because it affects both the
percentage of the gross rental income of the partnership that is considered
gross rental income (or qualifying income) to us and the percentage of the
management fees paid to us that is disregarded in determining our nonqualifying
income. For example, if we take the position that we have a 25% "capital
interest" in a partnership (because we would receive 25% of the partnership's
assets upon a sale and liquidation) but the IRS determines we only have a 1%
"capital interest" (because the original holder of our interest only contributed
1% of the total capital contributed to the partnership), our share of the
qualifying income from the partnership would be reduced and the portion of the
management fee from the partnership that would be treated as nonqualifying
income would be increased, thereby adversely affecting our ability to satisfy
the 95% gross income test. In determining our "capital interest" in the various
partnerships, we determine the percentage of the partnership's assets that would
be distributed to us if those assets were sold and distributed among the
partners in accordance with the applicable provisions of the partnership
agreements. There can be no assurance, however, that the IRS will agree with
this methodology and not contend that another, perhaps less favorable, method
must be used for purposes of determining our "capital interests," which could
adversely affect our ability to satisfy the 95% gross income test.
Annual Distribution Requirements. In order to qualify as a REIT, we are
required to distribute dividends (other than capital gain dividends) to our
shareholders in an amount at least equal to (1) the sum of (a) 95% of our "REIT
taxable income" (computed without regard to the dividends paid deduction and our
net capital gain) and (b) 95% of the net income (after tax), if any, from
foreclosure property, minus (2) the sum of certain items of non-cash income. In
addition, if we dispose of any Built-In Gain Asset during the 10 year period
beginning on the date we acquired that asset, we will be required, pursuant to
Treasury Regulations that have not yet been promulgated, to distribute at least
95% of the Built-In Gain (after tax), if any, recognized on the disposition of
such asset. See "--General" above for a discussion of "Built-In Gain Assets."
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before we timely file our tax return for
such year and if paid on or before the first regular dividend payment date after
such declaration.
To the extent that we do not distribute all of our net capital gain or
distribute at least 95%, but less than 100%, of our "REIT taxable income," as
adjusted, we will be subject to tax at regular ordinary and capital gain
corporate tax rates. We may elect to require the shareholders to include our
undistributed net capital gains in their income by designating, in a written
notice to shareholders, those amounts as undistributed capital gains in respect
of our shareholders' shares. If we make such an election, the shareholders will
(1) include in their income as capital gains their proportionate share of such
undistributed capital gains and (2) be deemed to have paid their proportionate
share of the tax paid by us on such undistributed capital gains and thereby
receive a credit or refund for such amount. A shareholder will increase the
basis in its common shares by the difference between the amount of capital gain
included in its income and the amount of the tax that we are deemed to have paid
on the shareholder's behalf. Our earnings and profits will be adjusted
appropriately. For a more detailed description of the tax consequences to a
shareholder of such a designation, see "--Taxation of U.S. Shareholders Holding
Depositary Shares."
In addition, if we should fail to distribute during each calendar year
at least the sum of (1) 85% of our REIT ordinary income for such year, (2) 95%
of our REIT capital gain income for such year, and (3) any undistributed taxable
income from prior periods, we would be subject to a 4% excise tax on the excess
of such required distribution over the sum of amounts actually distributed
during the calendar year by us and the amount, if any, on which we paid income
tax for such year.
In years prior to 1990, we made distributions in excess of our REIT
taxable income. During 1990, we reduced our distribution to our shareholders. As
a result, distributions paid by the Company in 1990 were less than 95% of our
REIT taxable income for 1990. We have satisfied the REIT distribution
requirements for 1990 through 1998 by attributing distributions in 1991 through
1999 to the prior year's taxable income, and we expect to satisfy the
distribution requirement for 1999 by attributing distributions in 2000 to the
1999 taxable income. We may be required, over each of the next several years, to
make distributions after the close of a taxable year and to attribute those
distributions to the prior year, but shareholders will be treated for federal
income tax purposes as having received such distributions in the taxable years
in which they were actually made. The extent to which we will be required to
attribute distributions to the prior year will depend on our operating results
and the level of distributions as determined by the board of directors. As noted
above, reliance on subsequent year distributions could cause us to be subject to
an excise tax. We intend to comply with the 85% distribution requirement in an
effort to minimize any excise tax.
We intend to make timely distributions sufficient to satisfy our annual
distribution requirements. It is expected that our REIT taxable income will be
less than our cash flow due to the allowance of depreciation and other non-cash
charges in computing REIT taxable income. Accordingly, we anticipate that we
will generally have sufficient cash or liquid assets to enable us to satisfy the
distribution requirements described above. It is possible, however, that the
Company, from time to time, may not have sufficient cash or other liquid assets
to meet these distribution requirements due to timing differences between (1)
the actual receipt of income and actual payment of deductible expenses and (2)
the inclusion of such income and deduction of such expenses in arriving at our
taxable income, or due to the need to make nondeductible payments, such as
principal payments on any indebtedness we may have. If such circumstances occur,
in order to meet the distribution requirements, we may find it necessary to
arrange for short-term, or possibly long-term, borrowings or to pay dividends in
the form of taxable stock dividends.
Under certain circumstances, we may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
shareholders in a later year, which may be included in our deduction for
dividends paid for the earlier year. Thus, we may be able to avoid being taxed
on amounts distributed as deficiency dividends; however, we will be required to
pay interest based upon the amount of any deduction taken for deficiency
dividends.
Recordkeeping Requirements. Pursuant to applicable Treasury Regulations,
we must comply with certain recordkeeping requirements to qualify for taxation
as a REIT.
Failure of the Company to Qualify as a REIT. For any taxable year that
we fail to qualify as a REIT, we would be taxed at the usual corporate rates on
all of our taxable income. Those taxes would reduce the amount of cash available
to us for distribution to our shareholders or for reinvestment. Distributions to
shareholders in any year in which we fail to qualify as a REIT will not be
deductible and will not be required to be made. In addition, if we fail to
qualify as a REIT, all distributions to shareholders will be taxed as ordinary
income, to the extent of our current and accumulated earnings and profits, and,
subject to certain limitations of the Code, corporate distributees may be
eligible for the dividends received deduction.
Unless certain relief provisions apply, our election to be treated as a
REIT will terminate automatically if we fail to meet the qualification
requirements described above and we will not be eligible to elect REIT status
again until the fifth taxable year that begins after the first year for which
our election was terminated (or revoked). If we lose our REIT status, but later
qualify and elect to be taxed as a REIT again, we may face significant adverse
tax consequences.
Taxation of U.S. Shareholders Holding Depositary Shares
- -------------------------------------------------------
As used below, the term "U.S. Shareholder" means a holder of depositary
shares who (for United States federal income tax purposes) (1) is a citizen or
resident of the United States, (2) is a corporation, partnership, or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, (3) is an estate the income of which is subject
to United States federal income taxation regardless of its source or (4) is a
trust the administration of which is subject to the primary supervision of a
United States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in regulations, certain trusts in
existence on August 20, 1996, and treated as United States persons prior to such
date that elect to continue to be treated as United States persons, shall also
be considered U.S. Shareholders.
Distributions by the Company. As long as we qualify as a REIT,
distributions made to our taxable U.S. Shareholders (and not designated as
capital gain dividends) will generally be taxable to such shareholders as
ordinary income to the extent of our current or accumulated earnings and
profits. For purposes of determining whether distributions on shares of common
stock are out of current or accumulated earnings and profits, our earnings and
profits will be allocated first to shares of preferred stock and second to
shares of common stock. There can be no assurance that we will have sufficient
earnings and profits to cover distributions on any shares of preferred stock.
Such distributions will not be eligible for the dividends received deductions in
the case of shareholders that are corporations. Dividends declared during the
last quarter of a calendar year and actually paid during January of the
immediately following calendar year generally are treated as if received by the
shareholders on December 31 of the calendar year during which they were
declared.
Distributions designated by us as capital gain dividends generally will
be taxed as gain from the sale or exchange of a capital asset held for more than
one year (to the extent that the distributions do not exceed our actual net
capital gain for the taxable year) without regard to the period for which the
shareholder has held its stock. Corporate shareholders however, may be required
to treat up to 20% of certain capital gain dividends as ordinary income.
Shareholders may not include in their individual income tax returns any
net operating losses or capital losses of the Company. Instead, such losses
would be carried over by us for potential offset against future income (subject
to certain limitations). Distributions made by us and gain arising from the sale
or exchange by a holder of depositary shares will not be treated as passive
activity income, and, as a result, holders of depositary shares generally will
not be able to apply any "passive losses" against such income or gain.
Shareholders also may be required to take into account, for purposes of
computing their individual alternative minimum tax liability, certain tax
preference items of the Company. In addition, taxable distributions from the
Company generally will be treated as investment income for purposes of the
investment interest limitations. Capital gain dividends and capital gain from
the disposition of shares, including distributions treated as such, however,
will be treated as investment income for purposes of the investment interest
limitation only if the U.S. Shareholder so elects, in which case such capital
gains will be taxed at ordinary income rates. We will notify shareholders after
the close of our taxable year as to the portions of distributions attributable
to that year that constitute ordinary income, return of capital and capital
gain.
Distributions in excess of current or accumulated earnings and profits
will not be taxable to a U.S. Shareholder to the extent that they do not exceed
the adjusted basis of the shareholder's shares, but rather will reduce the
adjusted basis of such shares. To the extent that such distributions exceed the
adjusted basis of a U.S. Shareholder's shares, they will be included in income
as capital gains, assuming the shares are a capital asset in the hands of the
U.S. Shareholder.
For our taxable years commencing on or after January 1, 1998, we may
elect to require the holders of stock to include our undistributed net long-term
capital gains in their income. If we make such an election, the holders of stock
will (1) include in their income as long-term capital gains their proportionate
share of such undistributed capital gains and (2) be deemed to have paid their
proportionate share of the tax paid by us on such undistributed capital gains
and thereby receive a credit or refund for such amount. A holder of stock will
increase the basis in its stock by the difference between the amount of capital
gain included in its income and the amount of the tax it is deemed to have paid.
Our earnings and profits will be adjusted appropriately. With respect to such
long-term capital gain of a taxable domestic shareholder that is an individual
or an estate or trust, the IRS has authority to issue regulations that could
apply the special tax rate applicable to sales of depreciable real property by
an individual or an estate or trust to the portion of the long-term capital
gains of an individual or an estate or trust attributable to deductions for
depreciation taken with respect to depreciable real property.
Sales of Shares. In general, a U.S. Shareholder will realize gain or
loss on the disposition of depositary shares equal to the difference between (1)
the amount of cash and the fair market value of any property received on such
disposition and (2) the shareholder's adjusted basis of such shares. Such gain
or loss will be capital gain or loss if the shares have been held as a capital
asset. In the case of a taxable U.S. Shareholder who is an individual or an
estate or trust, such gain or loss will be long-term capital gain or loss, and
such long-term capital gain shall be subject to the maximum capital gain rate of
20%. In the case of a taxable U.S. Shareholder that is a corporation, such gain
or loss will be long-term capital gain or loss if such shares have been held for
more than one year and any such capital gain shall be subject to the maximum
capital gain rate of 35%. Loss upon a sale or exchange of shares by a
shareholder who has held such shares for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss to the
extent of distributions from the Company required to be treated by such
shareholder as long-term capital gain.
Taxpayer Relief Act and IRS Restructuring Act Changes to Capital Gain
Taxation. The Taxpayer Relief Act of 1997 (the "Taxpayer Relief Act") altered
the taxation of capital gain income. Under the Taxpayer Relief Act, individuals,
trusts and estates that hold certain investments for more than 18 months may be
taxed at a maximum long-term capital gain rate of 20% on the sale or exchange of
those investments. Individuals, trusts and estates that hold certain assets for
more than one year but not more than 18 months may be taxed at a maximum
long-term capital gain rate of 28% on the sale or exchange of those investments.
The Taxpayer Relief Act also provides a maximum rate of 25% for "unrecaptured
Section 1250 gain" for individuals, trusts and estates, special rules for
"qualified 5-year gain" and other changes to prior law. The IRS Restructuring
Act of 1998, however, reduced the holding period requirement established by the
Taxpayer Relief Act for the application of the 20% and 25% capital gain tax
rates to 12 months from 18 months for sales of capital gain assets after
December 31, 1997 and thus eliminated the 28% rate. The Taxpayer Relief Act
allows the IRS to prescribe regulations on how the Taxpayer Relief Act's capital
gain rates will apply to sales of capital assets by "pass-through entities,"
including REITs, such as the Company, and to sales of interests in "pass-through
entities." Shareholders are urged to consult with their own tax advisors with
respect to the rules contained in the Taxpayer Relief Act and the IRS
Restructuring Act.
On November 10, 1997, the IRS issued IRS Notice 97-64, which provides
generally that REITs such as the Company may classify portions of their
designated capital-gain dividends as (1) a 20% rate gain distribution (which
would be taxed as long-term capital gain in the 20% group), (2) an unrecaptured
Section 1250 gain distribution (which would be taxed as long-term capital gain
in the 25% group), or (3) a 28% rate gain distribution (which would be taxed as
long-term capital gain in the 28% group). (If no designation is made, the entire
designated capital gain dividend will be treated as a 28% rate gain
distribution.) IRS Notice 97-64 provides that a REIT must determine the maximum
amounts that it may designate as 20% and 25% rate capital gain dividends by
performing the computation required by the Code as if the REIT were an
individual whose ordinary income were subject to a marginal tax rate of at least
28%. The Notice further provides that designations made by the REIT will only be
effective to the extent that they comply with Revenue Ruling 89-81, which
requires that distributions made to different classes of shares be composed
proportionately of dividends of a particular type. Although Notice 97-64 will
apply to sales of capital gain assets after July 28, 1997 and before January 1,
1998, it is expected that the IRS will issue clarifying guidance, most likely
applying the same principles set forth in Notice 97-64, regarding a REIT's
designation of capital gain dividends in light of the changed holding period
requirements.
Backup Withholding. We will report to our domestic shareholders and the
IRS the amount of dividends paid during each calendar year, and the amount of
tax withheld, if any. Under the backup withholding rules, a shareholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
unless such holder (a) is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or (b) provides a
taxpayer identification number and certifies as to no loss of exemption from
backup withholding. Amounts withheld as backup withholding will be creditable
against the stockholder's income tax liability. In addition, we may be required
to withhold a portion of capital gain distributions made to any shareholders who
fail to certify their non-foreign status to the Company. See "--Taxation of
Non-U.S. Shareholders" below.
Taxation of Tax-Exempt Shareholders. As a general rule, amounts
distributed to a tax-exempt entity by a corporation do not constitute "unrelated
business taxable income" ("UBTI"), and thus our distributions to a stockholder
that is a tax-exempt entity generally should not constitute UBTI, provided that
the tax-exempt entity has not financed the acquisition of its shares with
"acquisition indebtedness" within the meaning of the Code and the shares are not
otherwise used in an unrelated trade or business of the tax-exempt entity.
However, distributions by a REIT to a tax-exempt employee's pension trust that
owns more than 10% of the REIT will be treated as UBTI in an amount equal to the
percentage of gross income of the REIT that is derived from an "unrelated trade
or business" (determined as if the REIT were a pension trust) divided by the
gross income of the REIT for the year in which the dividends are paid. This rule
only applies, however, if (1) the percentage of gross income of the REIT that is
derived from an unrelated trade or business for the year in which the dividends
are paid is at least 5%, (2) the REIT qualifies as a REIT only because the
pension trust is not treated as a single individual for purposes of the
"five-or-fewer rule" (see "--Taxation of the Company--Requirements for
Qualification" above), and (3) (A) one pension trust owns more than 25 percent
of the value of the REIT or, (B) a group of pension trusts individually holding
more than 10 percent of the value of the REIT collectively own more than 50
percent of the value of the REIT. We currently do not expect that this rule will
apply.
Taxation of Non-U.S. Shareholders
- ---------------------------------
The rules governing U.S. federal income taxation of non-U.S.
Shareholders are complex, and the following discussion is intended only as a
summary of such rules. Prospective non-U.S. Shareholders should consult with
their tax advisors to determine the impact of federal, state, local and foreign
income tax laws on an investment in the Company, including any reporting
requirements.
Distributions by the Company. Distributions to a non-U.S. Shareholder
that are not attributable to gain from sales or exchanges by the Company of U.S.
real property interests and not designated by us as capital gain dividends will
generally be subject to tax as ordinary income to the extent of our current or
accumulated earnings and profits as determined for U.S. federal income tax
purposes. Such distributions will generally be subject to a withholding tax
equal to 30% of the gross amount of the distribution, unless reduced by an
applicable tax treaty or unless such dividends are treated as effectively
connected with a United States trade or business. If the amount distributed
exceeds a non-U.S. Shareholder's allocable share of such earnings and profits,
the excess will be treated as a tax-free return of capital to the extent of such
non-U.S. Shareholder's adjusted basis in the stock. To the extent that such
distributions exceed the adjusted basis of a non-U.S. Shareholder's stock, such
distributions will generally be subject to tax if such non-U.S. Shareholder
would otherwise be subject to tax on any gain from the sale or disposition of
its stock, as described below.
For withholding tax purposes, we currently are required to treat all
distributions as if made out of our current or accumulated earnings and profits
and thus intend to withhold at the rate of 30% (or a reduced treaty rate if
applicable) on the amount of any distribution (other than distributions
designated as capital gain dividends) made to a non-U.S. Shareholder. Under
regulations generally effective for distributions on or after January 1, 1999,
we would not be required to withhold at the 30% rate on distributions we
reasonably estimate to be in excess of our current and accumulated earnings and
profits. If it cannot be determined at the time a distribution is made whether
such distribution will be in excess of current and accumulated earnings and
profits, the distribution will be subject to withholding at the rate applicable
to ordinary dividends. As a result of a legislative change made by the Small
Business Job Protection Act of 1996, under current law, it appears that we will
be required to withhold 10% of any distribution to a non-U.S. Shareholder in
excess of our current and accumulated earnings and profits. Consequently,
although we intend to withhold at a rate of 30% on the entire amount of any
distribution to a non-U.S. Shareholder (or lower applicable treaty rate), to the
extent we do not do so, any portion of such a distribution not subject to
withholding at a rate of 30% (or lower applicable treaty rate) will be subject
to withholding at a rate of 10%. However, the non-U.S. Shareholder may seek a
refund of such amounts from the IRS if it subsequently determined that such
distribution was, in fact, in excess of our current or accumulated earnings and
profits, and the amount withheld exceeded the non-U.S. Shareholder's United
States tax liability, if any, with respect to the distribution.
Distributions to a non-U.S. Shareholder that are designated by us at the
time of distribution as capital gain dividends (other than those arising from
the disposition of a United States real property interest) generally will not be
subject to United States federal income taxation, unless (1) the investment in
the stock is effectively connected with the non-U.S. Shareholder's United States
trade or business, in which case the non-U.S. Shareholder will be subject to the
same treatment as U.S. Shareholders with respect to such gain (except that a
shareholder that is a foreign corporation may also be subject to the 30% branch
profits tax) or (2) the non-U.S. Shareholder is a nonresident alien individual
who is present in the United States for 183 days or more during the taxable year
and certain other requirements are met, in which case the nonresident alien
individual will be subject to a 30% tax on the individual's capital gains.
Under the Foreign Investment in Real Property Tax Act ("FIRPTA"),
distributions to a non-U.S. Shareholder that are attributable to gain from sales
or exchanges by the Company of United States real property interests (whether or
not designated as a capital gain dividend) will be taxed to a non-U.S.
Shareholder at the normal capital gains rates applicable to domestic
shareholders (subject to a special alternative minimum tax in the case of
nonresident alien individuals). Also, distributions subject to FIRPTA may be
subject to a 30% branch profits tax in the hands of a non-U.S. Shareholder that
is a corporation and that is not entitled to treaty relief or exemption. We are
required by applicable FIRPTA Treasury Regulations to withhold 35% of any such
distribution that is or could be designated by us as a capital gain dividend.
That amount is creditable against the non-U.S. Shareholder's United States
FIRPTA tax liability.
Even if we do not qualify or cease to be a domestically controlled REIT,
gain arising from the sale or exchange by a non-U.S. Shareholder of stock would
still not be subject to U.S. taxation under FIRPTA as a sale of a United States
real property interest if (1) the class or series of shares being sold is
"regularly traded," as defined by applicable Treasury Regulations, on an
established securities market such as the New York Stock Exchange, and (2) the
selling non-U.S. Shareholder owned 5% or less of the value of the outstanding
class or series of shares being sold throughout the five-year period ending on
the date of the sale or exchange.
If gain on the sale or exchange of stock were subject to taxation under
FIRPTA, the non-U.S. Shareholder would be subject to regular United States
income tax with respect to such gain in the same manner as a taxable U.S.
Shareholder, subject to any applicable alternative minimum tax, a special
alternative minimum tax in the case of nonresident alien individuals and the
possible application of the 30% branch profits tax in the case of foreign
corporations. The purchaser of the stock would be required to withhold and remit
to the IRS 10% of the purchase price.
Although the law is not entirely clear on the matter, it appears that
amounts designated by us pursuant to the Taxpayer Relief Act as undistributed
capital gains in respect of shares of stock (see "Taxation of U.S. Shareholders
Holding Depositary Shares" above) would be treated with respect to non-U.S.
Shareholders in the manner outlined in the preceding paragraph for actual
distributions by us of capital gain dividends. Under that approach, the non-U.S.
Shareholders would be able to offset as a credit against their United States
federal income tax liability resulting therefrom their proportionate share of
the tax paid by us on such undistributed capital gains (and to receive from the
IRS a refund to the extent their proportionate share of such tax paid by us were
to exceed their actual United States federal income tax liability).
Sale of Depositary Shares. Gain recognized by a non-U.S. Shareholder
upon a sale of its stock will generally not be subject to tax under FIRPTA if we
are a "domestically controlled REIT," which is defined generally as a REIT in
which at all times during a specified testing period less than 50% in value of
its shares were held directly or indirectly by non-U.S. persons. Because only a
minority of the shareholders are non-U.S. Shareholders, we expect to qualify as
a "domestically controlled REIT." Accordingly, a non-U.S. Shareholder should not
be subject to U.S. tax on gains recognized upon disposition of stock, provided
that such gain is not effectively connected with the conduct of a United States
trade or business and, in the case of an individual shareholder, such holder is
not present in the United States for 183 days or more during the year of sale
and certain other requirements are met.
Backup Withholding Tax and Information Reporting. Backup withholding tax
(which generally is a withholding tax imposed at a rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions paid to non-U.S. Shareholders outside the
United States that are treated as (1) dividends subject to the 30% (or lower
treaty rate) withholding tax discussed above, (2) capital gain dividends, or (3)
distributions attributable to gain from the sale or exchange by the Company of
United States real property interests. As a general matter, backup withholding
and information reporting will not apply to a payment of the proceeds of a sale
of stock by or through a foreign office of a foreign broker. Information
reporting (but not backup withholding) will apply, however, to a payment of the
proceeds of a sale of stock by a foreign office of a broker that (a) is a United
States person, (b) derives 50% or more of its gross income for certain periods
from the conduct of a trade or business in the United States or (c) is a
"controlled foreign corporation" (generally a foreign corporation controlled by
United States shareholders) for United States tax purposes, unless the broker
has documentary evidence in its records that the holder is a non-U.S.
Shareholder and certain other conditions are met, or the shareholder otherwise
establishes an exemption. Payment to or through a United States office of a
broker of the proceeds of a sale of stock is subject to both backup withholding
and information reporting unless the shareholder certifies under penalty of
perjury that the shareholder is a non-U.S. Shareholder, or otherwise establishes
an exemption. A non-U.S. Shareholder may obtain a refund of any amounts withheld
under the backup withholding rules by filing the appropriate claim for refund
with the IRS.
The United States Treasury Department has finalized regulations
regarding the withholding and information reporting rules discussed above. In
general, these regulations do not alter the substantive withholding and
information reporting requirements but unify certification procedures and forms
and clarify and modify reliance standards. These regulations generally are
anticipated to be effective for payments made after December 31, 2000, subject
to certain transition rules. Valid withholding certificates that are held on
December 31, 1999, will remain valid until the earlier of December 31, 2000, or
the date of the expiration of the certificate under rules currently in effect,
unless otherwise invalidated due to changes in the circumstances of the person
whose name is on such certificate. A non-U.S. Shareholder should consult its
advisor regarding the effect of the new treasury regulations.
Proposed Changes to REIT Qualification Requirements
- ---------------------------------------------------
A number of legislative proposals have been made in 1999 that, if
adopted, would affect REITs. For example, the tax relief bill that was passed by
Congress but vetoed by the President in September of 1999 included proposals
intended to ease the current restrictions on a REIT's ability to own the stock
of taxable companies, and those proposals have been reintroduced in subsequent
proposed legislation. The proposals would allow REITs to own up to 100% of the
stock of certain "taxable REIT subsidiaries" ("TRSs"). Under current law, a REIT
generally may not own more than 10% of the voting securities of other issuers
(such as the Lock/Box Company, see "Taxation of the Company - Asset Tests"
above). An important effect of this proposed change is that TRSs would be
permitted to offer noncustomary services to the tenants of the REIT (such
services can be provided under current law only by "independent contractors"
from which the REIT cannot earn any income). TRSs also would be able to engage
in other income producing activities that are now typically undertaken by REITs
only through entities in which a REIT may have a substantial economic interest,
but is limited to a 10% or less voting interest (such as the Lock/Box Company).
Certain limitations are also proposed to prevent income shifting between a REIT
and its TRSs, in an effort to ensure that TRSs would in fact be taxable on the
income that they earn. Under current law, a REIT cannot own securities of any
single issuer with a value in excess of 5% of the value of all assets of the
REIT. The proposals also would relax this limitation, so that a REIT could own a
TRS (or TRSs), so long as the aggregate value of the TRSs, when combined with
all other nonREIT assets, did not exceed 25% (or 20% in the more recent
proposals) of the value of all assets of the REIT.
Other provisions in that have generally been included in these bills and
are targeted at REITs include: (1) a reduction in the size of a REIT's required
annual dividends-paid deduction to 90% of REIT taxable income (from the current
95%) (a change that seems likely to have limited effect, given that REITs
typically seek to have a dividends-paid deduction equal to 100% of their income,
so as to avoid paying taxes on any undistributed portion), (2) limitations on
"closely held" REITs, (3) provisions directed at other segments of the REIT
industry, principally the lodging and health-care sectors, and (4) various other
technical changes. The REIT provisions of these proposals generally would affect
taxable years beginning after December 31, 2000.
It is presently uncertain whether any proposal regarding REIT
subsidiaries will be enacted or, if enacted, what the terms, including the
effective date, of such proposal will be.
State and Local Taxes
- ---------------------
The tax treatment of the Company and our shareholders in states having
taxing jurisdiction over them may differ from the federal income tax treatment.
Accordingly, no discussion of state taxation of the Company and our shareholders
is provided nor is any representation made as to our tax status in such states.
All investors should consult their tax advisors as to the treatment of the
Company under the respective state tax laws applicable to them.
ITEM 2. Exhibits.
---------
I. The following exhibits are being filed with the copies of this Form
8-A filed with the New York Stock Exchange, Inc. and the Securities and Exchange
Commission:
1. Form of Deposit Agreement.
2. Certificate of Determination.
3. Form of Cash Election Certificate.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
(Registrant) PUBLIC STORAGE, INC.
By: /S/ SARAH HASS
-------------------
Sarah Hass
Vice President
Date: November 22, 1999
Exhibit 1
- --------------------------------------------------------------------------------
PUBLIC STORAGE, INC.
BANKBOSTON, N.A., AS DEPOSITARY
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
RELATING TO EQUITY STOCK, SERIES A
DEPOSIT AGREEMENT
Dated as of January 14, 2000
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions.......................................................1
ARTICLE II Form of Receipts, Deposit of Stock, Execution and Delivery,
Transfer, Surrender and Redemption of Receipts....................2
SECTION 2.1 Form and Transfer of Receipts.....................................2
SECTION 2.2 Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof...................................................3
SECTION 2.3 Registration of Transfer of Receipts..............................4
SECTION 2.4 Split-ups and Combinations of Receipts; Surrender of Receipts and
Withdrawal of Stock...............................................4
SECTION 2.5 Limitations on Execution and Delivery, Transfer, Surrender and
Exchange of Receipts..............................................5
SECTION 2.6 Lost Receipts, etc................................................6
SECTION 2.7 Cancellation and Destruction of Surrendered Receipts..............6
SECTION 2.8 Redemption of Stock...............................................6
SECTION 2.9 Optional Conversion of Stock into Common Stock....................7
ARTICLE III Certain Obligations of Holders of Receipts and the Company.......10
SECTION 3.1 Filing Proofs, Certificates and Other Information................10
SECTION 3.2 Payment of Taxes or Other Governmental Charges...................10
SECTION 3.3 Warranty as to Stock.............................................11
ARTICLE IV The Deposited Securities; Notices................................11
SECTION 4.1 Cash Distributions...............................................11
SECTION 4.2 Distributions Other than Cash, Rights Preferences
or Privileges....................................................11
SECTION 4.3 Subscription Rights, Preferences or Privileges...................12
SECTION 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders
of Receipts......................................................13
SECTION 4.5 Voting Rights....................................................13
SECTION 4.6 Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc...........................................13
SECTION 4.7 Delivery of Reports..............................................14
SECTION 4.8 List of Receipt Holders..........................................14
ARTICLE V The Depositary, the Depositary's Agents, the Registrar
and the Company..................................................14
SECTION 5.1 Maintenance of Offices, Agencies and Transfer Books by the
Depositary; Registrar............................................14
SECTION 5.2 Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company................15
SECTION 5.3 Obligation of the Depositary, the Depositary's Agents, the
Registrar and the Company........................................15
SECTION 5.4 Resignation and Removal of the Depositary; Appointment of
Successor Depositary.............................................16
SECTION 5.5 Corporate Notices and Reports....................................17
SECTION 5.6 Indemnification by the Company...................................17
SECTION 5.7 Charges and Expenses.............................................17
SECTION 5.8 Tax Compliance...................................................18
ARTICLE VI Amendment and Terminati..........................................19
SECTION 6.1 Amendment........................................................19
SECTION 6.2 Termination......................................................20
ARTICLE VII Miscellaneous....................................................20
SECTION 7.1 Counterparts.....................................................20
SECTION 7.2 Exclusive Benefit of Parties.....................................20
SECTION 7.3 Invalidity of Provisions.........................................20
SECTION 7.4 Notices..........................................................20
SECTION 7.5 Appointment of Registrar.........................................21
SECTION 7.6 Holders of Receipts are Parties..................................21
SECTION 7.7 Governing Law....................................................21
SECTION 7.8 Inspection of Deposit Agreement..................................22
SECTION 7.9 Headings.........................................................22
Form of Depositary Shares
Form of Face of Receipt......................................................A-1
Form of Reverse of Receipt...................................................A-3
ii
<PAGE>
DEPOSIT AGREEMENT, dated as of January 14, 2000, among PUBLIC STORAGE,
INC., a California corporation (the "Company"), BankBoston, N.A., a national
banking association (the "Depositary"), and the holders from time to time of the
Receipts described herein.
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of Equity Stock, Series A of the
Company with the Depositary for the purposes set forth in this Deposit Agreement
and for the issuance hereunder of Receipts evidencing Depositary Shares in
respect of the Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Annex A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the promises contained herein, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
The definitions set forth below shall, for all purposes, unless
otherwise indicated, apply to the respective terms used in this Deposit
Agreement. Capitalized terms used in this Deposit Agreement that are not defined
shall have the meanings assigned to those terms in the Certificate.
"Certificate" shall mean the Certificate of Determination filed with the
Secretary of State of the State of California establishing the Stock as a series
of equity stock of the Company.
"Common Stock" shall mean shares of the Company's Common Stock, $.10 par
value per share, or any other shares of capital stock into which such shares are
reclassified, changed or exchanged.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean BankBoston, N.A. and any successor as Depositary
hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
1/1,000 of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 5.1 and shall include the Registrar if such Registrar is not
the Depositary.
"Depositary's Office" shall mean the principal office of the Depositary
at which at any particular time its depositary receipt business shall be
administered.
"Receipt" shall mean one of the Depositary Receipts, substantially in
the form set forth as Exhibit A hereto, issued hereunder, whether in definitive
or temporary form and evidencing the number of Depositary Shares held of record
by the record holder of such Depositary Shares.
"record holder" or "holder" as applied to a Receipt shall mean the
person in whose name a Receipt is registered on the books of the Depositary
maintained for such purpose.
"Registrar" shall mean the Depositary or such other bank or trust
company which shall be appointed to register ownership and transfers of Receipts
as herein provided.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's Equity Stock, Series A, $.01
par value per share.
ARTICLE II
Form of Receipts, Deposit of Stock,
Execution and Delivery, Transfer,
Surrender and Redemption of Receipts
SECTION 2.1 Form and Transfer of Receipts. Definitive Receipts shall be
engraved or printed or lithographed on steel-engraved borders, with appropriate
insertions, modifications and omissions, as hereinafter provided, if and to the
extent required by any securities exchange on which the Receipts are listed.
Pending the preparation of definitive Receipts or if definitive Receipts are not
required by any securities exchange on which the Receipts are listed, the
Depositary, upon the written order of the Company or any holder of Stock, as the
case may be, delivered in compliance with Section 2.2, shall execute and deliver
temporary Receipts which are printed, lithographed, typewritten, mimeographed or
otherwise substantially of the tenor of the definitive Receipts in lieu of which
they are issued and with such appropriate insertions, omissions, substitutions
and other variations as the persons executing such Receipts may determine, as
evidenced by their execution of such Receipts. If temporary Receipts are issued,
the Company and the Depositary will cause definitive Receipts to be prepared
without unreasonable delay. After the preparation of definitive Receipts, the
temporary Receipts shall be exchangeable for definitive Receipts upon surrender
of the temporary Receipts at the Depositary's Office or at such other place or
places as the Depositary shall determine, without charge to the holder. Upon
surrender for cancellation of any one or more temporary Receipts, the Depositary
shall execute and deliver in exchange therefor definitive Receipts representing
the same number of Depositary Shares as represented by the surrendered temporary
Receipt or Receipts. Such exchange shall be made at the Company's expense and
without any charge to the holder therefor. Until so exchanged, the temporary
Receipts shall in all respects be entitled to the same benefits under this
Agreement, and with respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual and/or
facsimile signature of a duly authorized officer of the Depositary. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed in accordance with
the foregoing sentence. The Depositary shall record on its books each Receipt so
signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares. The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt, which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.3, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.2 Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or, subject to Section 2.4, any holder of Stock may from time to
time deposit shares of Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates for the Stock to be deposited,
properly endorsed or accompanied, if required by the Depositary, by a duly
executed instrument of transfer or endorsement, in form satisfactory to the
Depositary, together with all such certifications as may be required by the
Depositary in accordance with the provisions of this Deposit Agreement, and
together with a written order of the Company or such holder, as the case may be,
directing the Depositary to execute and deliver to, or upon the written order
of, the person or persons stated in such order a Receipt or Receipts for the
number of Depositary Shares representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's
Office or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for
Stock deposited in accordance with the provisions of this Section, together with
the other documents required as above specified, and upon recordation of the
Stock on the books of the Company in the name of the Depositary or its nominee,
the Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver, to or upon the order of the person or persons named
in the written order delivered to the Depositary referred to in the first
paragraph of this Section, a Receipt or Receipts for the whole number of
Depositary Shares representing, in the aggregate, the Stock so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at the
Depositary's Office or such other offices, if any, as the Depositary may
designate. Delivery at other offices shall be at the risk and expense of the
person requesting such delivery.
SECTION 2.3 Registration of Transfer of Receipts. Subject to the terms
and conditions of this Deposit Agreement, the Depositary shall register on its
books from time to time transfers of Receipts upon any surrender thereof by the
holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon, the
Depositary shall execute a new Receipt or Receipts evidencing the same aggregate
number of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the order of the
person entitled thereto.
SECTION 2.4 Split-ups and Combinations of Receipts; Surrender of
Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at the
Depositary's Office or at such other offices as it may designate for the purpose
of effecting a split-up or combination of such Receipt or Receipts, and subject
to the terms and conditions of this Deposit Agreement, the Depositary shall
execute and deliver a new Receipt or Receipts in the authorized denomination or
denominations requested, evidencing the aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered; provided, however, that the
Depositary shall not issue any Receipt evidencing a fractional Depositary Share.
Any holder of a Receipt or Receipts representing any number of whole
shares of Stock may (unless the related Depositary Shares have previously been
called for redemption) withdraw the Stock and all money and other property, if
any, represented thereby by surrendering such Receipt or Receipts at the
Depositary's Office or at such other offices as the Depositary may designate for
such withdrawals and paying any unpaid amount due the Depositary. Thereafter,
without unreasonable delay, the Depositary shall deliver to such holder or to
the person or persons designated by such holder as hereinafter provided, the
number of whole shares of Stock and all money and other property, if any,
represented by the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Stock will not thereafter be entitled to deposit
such Stock hereunder or to receive Depositary Shares therefor. If a Receipt
delivered by the holder to the Depositary in connection with such withdrawal
shall evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of whole shares of Stock to be so
withdrawn, the Depositary shall at the same time, in addition to such number of
whole shares of Stock and such money and other property, if any, to be so
withdrawn, deliver to such holder, or upon his order, a new Receipt evidencing
such excess number of Depositary Shares, provided, however, that the Depositary
shall not issue any Receipt evidencing a fractional Depositary Share. Delivery
of the Stock and money and other property being withdrawn may be made by the
delivery of such certificates, documents of title and other instruments as the
Depositary may deem appropriate which, if required by the Depositary, shall be
properly endorsed or accompanied by proper instruments of transfer.
If the Stock and the money and other property being withdrawn are to be
delivered to a person or persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Stock, such holders shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
holder for withdrawal of such shares of Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer in blank.
Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the holder surrendering such Receipt or Receipts and for the account
of the holder thereof, such delivery may be made at such other place as may be
designated by such holder.
SECTION 2.5 Limitations on Execution and Delivery, Transfer, Surrender
and Exchange of Receipts. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination, surrender or exchange
of any Receipt, the Depositary, any of the Depositary's Agents or the Company
may require payment to it of a sum sufficient for the payment (or, in the event
that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Sections 3.2 and 5.7, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature, and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed, or (ii) if any such action is deemed necessary or advisable
by the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission or under any provision of this Deposit
Agreement.
SECTION 2.6 Lost Receipts, etc. In case any receipt shall be mutilated,
destroyed, lost or stolen, the Depositary in its reasonable discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt, or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, upon (i) the filing by the holder
thereof with the Depositary of evidence reasonably satisfactory to the
Depositary of such destruction or loss or theft of such Receipt, of the
authenticity thereof and of his or her ownership thereof, (ii) the furnishing of
the Depositary with indemnification reasonably satisfactory to it and the
Company and (iii) the payment of any reasonable expense (including reasonable
fees, charges and expenses of the Depositary) in connection with such execution
and delivery.
SECTION 2.7 Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Company is authorized to destroy all Receipts so cancelled.
SECTION 2.8 Redemption of Stock. Whenever the Company shall be permitted
and shall elect to redeem shares of Stock in accordance with the provisions of
the Certificate, it shall (unless otherwise agreed to in writing with the
Depositary) give or cause to be given to the Depositary not less than 60 days'
notice of the date of such proposed redemption or exchange of Stock and of the
number of such shares held by the Depositary to be so redeemed and the
applicable redemption price, as set forth in the Certificate, which notice shall
be accompanied by a certificate from the Company stating that such redemption of
Stock is in accordance with the provisions of the Certificate. Notice of
redemption of Stock will also be given by the Company by publication in a
newspaper of general circulation in the County of Los Angeles and the City of
New York, such publication to be made once a week for two successive weeks
commencing not less than 30 nor more than 60 days prior to the redemption date,
and the Depositary will publish a notice of redemption of the Depositary Shares
containing the same type of information and in the same manner as the Company's
notice of redemption. On the date of such redemption, provided that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus an amount equal to any
accrued and unpaid dividends thereon to the date fixed for redemption, in
accordance with the provisions of the Certificate, the Depositary shall redeem
the number of Depositary Shares representing such Stock. The Depositary shall
mail notice of the Company's redemption of Stock and the proposed simultaneous
redemption of the number of Depositary Shares representing the Stock to be
redeemed by first-class mail, postage prepaid, not less than 30 and not more
than 60 days prior to the date fixed for redemption of such Stock and Depositary
Shares (the "Redemption Date") to the record holders of the Receipts evidencing
the Depositary Shares to be so redeemed, at the address of such holders as they
appear on the records of the Depositary; but neither failure to mail any such
notice of redemption of Depositary Shares to one or more such holders nor any
defect in any notice of redemption of Depositary Shares to one or more such
holders shall affect the sufficiency of the proceedings for redemption as to the
other holders. The Company will provide the Depositary with the information
necessary for the Depositary to prepare such notice and each such notice shall
state: (i) the Redemption Date; (ii) the number of Depositary Shares to be
redeemed and, if less than all the Depositary Shares held by any such holder are
to be redeemed, the number of such Depositary Shares held by such holder to be
so redeemed; (iii) the redemption price per Depositary Share; (iv) the place or
places where Receipts evidencing Depositary Shares are to be surrendered for
payment of the redemption price; and (v) that dividends in respect of the Stock
represented by the Depositary Shares to be redeemed will cease to accrue on such
Redemption Date. In case less than all the outstanding Depositary Shares are to
be redeemed, the Depositary Shares to be so redeemed shall be determined pro
rata or by lot in a manner determined by the Board of Directors.
Notice having been mailed by the Depositary as aforesaid, from and after
the Redemption Date (unless the Company shall have failed to provide the funds
necessary to redeem the Stock evidenced by the Depositary Shares called for
redemption) (i) dividends on the shares of Stock so called for redemption shall
cease to accrue from and after such date, (ii) the Depositary Shares being
redeemed from such proceeds shall be deemed no longer to be outstanding, (iii)
all rights of the holders of Receipts evidencing such Depositary Shares (except
the right to receive the redemption price) shall, to the extent of such
Depositary Shares, cease and terminate, and (iv) upon surrender in accordance
with such redemption notice of the Receipts evidencing any such Depositary
Shares called for redemption (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary Shares shall be
redeemed by the Depositary at a redemption price per Depositary Share equal to
the same fraction of the redemption price per share paid with respect to the
shares of Stock as the fraction each Depositary Share represents of a share of
Stock plus the same fraction of all money and other property, if any,
represented by such Depositary Shares, including all amounts paid by the Company
in respect of dividends which on the Redemption Date have accumulated on the
shares of Stock to be so redeemed and have not theretofore been paid. Any funds
deposited by the Company with the Depositary for any Depositary Shares that the
holders thereof fail to redeem will be returned to the Company after a period of
five years from the date such funds are so deposited.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption, provided, however, that the Depositary shall not
issue any Receipt evidencing a fractional Depositary Share.
SECTION 2.9 Optional Conversion of Stock into Common Stock. At any time
after the Company (or any successor entity which succeeds to the obligations of
the Company under the Certificate) determines that (i) it will no longer
constitute a qualifying REIT under the REIT Provisions of the Internal Revenue
Code for United States federal income tax purposes or (ii) it will no longer
file a United States federal income tax return as a REIT (each of the foregoing,
a "REIT Termination Event"), then each share of Stock may be converted into
whole shares of Common Stock and cash for any fractional share amount at the
conversion price then in effect for the Stock pursuant to the Certificate, as
such conversion price may be adjusted as provided in the Certificate. The
Company shall promptly give or cause to be given to the Depositary notice of a
REIT Termination Event and of the right of holders of shares of Stock to convert
as provided in the Certificate. Notice of a REIT Termination Event and of the
right of holders of shares of Stock to convert as provided in the Certificate
will also be given by the Company by publication in a newspaper of general
circulation in the County of Los Angeles and The City of New York, such
publication to be made once a week for two successive weeks, commencing within
fifteen days after the occurrence of such event. The Depositary will publish a
notice of the REIT Termination Event and of the right of holders of the Receipts
to convert as provided in this Section containing the same type of information
and in the same manner as the Company's notice, and the Depositary will
concurrently mail a similar notice by first-class mail, postage prepaid, to the
record holders of the Receipts evidencing the Depositary Shares, at the address
of such holders as they appear on the records of the Depositary. The Company
will provide the Depositary with the information necessary for the Depositary to
prepare each such notice.
At any time after the occurrence of a REIT Termination Event, Receipts
may be surrendered with written instructions to the Depositary to instruct the
Company to cause the conversion of any specified number of whole or fractional
shares of Stock represented by whole Depositary Shares evidenced by such
Receipts into whole shares of Common Stock, and cash for any fractional share
amount at the conversion price then in effect for the Stock pursuant to the
Certificate, as such conversion price may be adjusted as provided in the
Certificate. Subject to the terms and conditions of this Deposit Agreement and
the Certificate, a holder of a Receipt or Receipts evidencing Depositary Shares
representing whole or fractional shares of Stock may surrender such Receipt or
Receipts at the Depositary's Office or at such office or to such Depositary's
Agents as the Depositary may designate for such purpose, together with a notice
of conversion duly completed and executed, thereby directing the Depositary to
instruct the Company to cause the conversion of the number of whole or
fractional shares of underlying Stock specified in such notice of conversion
into shares of Common Stock, and an assignment of such Receipt or Receipts to
the Company or in blank, duly completed and executed. To the extent that a
holder delivers to the Depositary for conversion a Receipt or Receipts which in
the aggregate are convertible into less than one whole share of Common Stock,
the holder shall receive payment in cash in lieu of such fractional share of
Common Stock otherwise issuable. If more than one Receipt shall be delivered for
conversion at one time by the same holder, the number of whole shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate number of Depositary Shares represented by the Receipts so delivered.
Upon receipt by the Depositary of a Receipt or Receipts, together with
notice of conversion, duly completed and executed, directing the Depositary to
instruct the Company to cause the conversion of a specified number of shares of
Stock, and an assignment of such Receipt or Receipts to the Company or in blank,
duly completed and executed, the Depositary shall instruct the Company (i) to
cause the conversion of the number of whole or fractional shares of Stock
represented by the Depositary Shares evidenced by the Receipts so surrendered
for conversion as specified in the written notice to the Depositary and (ii) to
cause the delivery to the holders of such Receipts of a certificate or
certificates evidencing the number of whole shares of Common Stock and the
amount of money, if any, to be delivered to the holders of Receipts surrendered
for conversion in lieu of fractional shares of Common Stock otherwise issuable.
The Company shall as promptly as practicable after receipt thereof cause the
delivery of (i) a certificate or certificates evidencing the number of whole
shares of Common Stock into which the Stock represented by the Depositary Shares
evidenced by such Receipt or Receipts has been converted, and (ii) any money or
other property to which the holder is entitled by reason of such conversion.
Upon such conversion, the Depositary (i) shall deliver to the holder a Receipt
evidencing the number of Depositary Shares evidenced by the surrendered Receipt
in excess of the number of Depositary Shares evidenced by such Receipt that has
been so converted, (ii) shall cancel the Depositary Shares evidenced by Receipts
surrendered for conversion and (iii) shall deliver to the Company or its
transfer agent for the Stock for cancellation the shares of Stock represented by
the Depositary Shares evidenced by the Receipts so surrendered and so converted.
Upon the delivery of the shares of Stock to be cancelled due to such conversion
by the Depositary to the Company, the Company shall deliver to the Depositary a
certificate or certificates evidencing the number of shares of Stock, if any,
that equals the excess of the number of shares of Stock evidenced by the
surrendered certificate over the number of shares of Stock evidenced by that
certificate that have been so converted.
If Stock shall be called by the Company for redemption, the Depositary
Shares representing such Stock may be converted into Common Stock as provided in
this Deposit Agreement; provided, however, that such right to convert shall
terminate at the close of business on the Redemption Date, unless the Company
shall fail to deposit with the Depositary the amount of cash required to redeem
the Stock held by the Depositary, in which case the Depositary Shares
representing such Stock may continue to be converted into Common Stock until,
but not after, the close of business on the date on which the Company deposits
with the Depositary such amount of cash as is required by the Certificate to
make full payment of the amounts payable upon such redemption.
The record holder of Depositary Shares on any dividend payment record
date established by the Depositary shall be entitled to receive the dividend
payable with respect to such Depositary Shares on the corresponding dividend
payment date notwithstanding the conversion subsequent to such record date of
the shares of Stock to which such Depositary Shares relate. However, any
Receipts surrendered with instructions to the Depositary for conversion of the
underlying Stock during the period from the close of business on a dividend
payment record date for any dividend payment date, to the opening of business on
such dividend payment date shall (unless such underlying Stock shall have been
called for redemption on a Redemption Date in such period) be accompanied by
payment of an amount equal to the dividend payable on the Depositary Shares
evidenced by the Receipts surrendered for conversion, on such dividend payment
date.
Upon the conversion of any share of Stock for which a request for
conversion has been made by the holder of Depositary Shares representing such
share, all dividends in respect of such Depositary Shares shall cease to accrue,
such Depositary Shares shall be deemed no longer outstanding, all rights of the
holder of the Receipt with respect to such Depositary Shares (except the right
to receive the Common Stock, any cash payable with respect to any fractional
shares of Common Stock as provided herein and any cash payable on account of
accrued dividends as provided herein and any Receipts evidencing Depositary
Shares not so converted) shall terminate, and the Receipt evidencing such
Depositary Shares shall be cancelled in accordance with Section 2.7 hereof.
No fractional shares of Common Stock shall be issuable upon conversion
of Stock underlying the Depositary Shares. If any holder of Receipts surrendered
with instructions to the Depositary for conversion of the underlying Stock would
be entitled to a fractional share of Common Stock upon such conversion, the
Company shall cause to be delivered to such holder an amount in cash for such
fractional share as provided in the Certificate.
ARTICLE III
Certain Obligations of
Holders of Receipts and the Company
SECTION 3.1 Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper or otherwise reasonably request. The
Depositary or the Company may withhold the delivery, or delay the registration
of transfer, redemption or exchange, of any Receipt or the withdrawal or
conversion of the Stock represented by the Depositary Shares evidenced by any
Receipt or the distribution of any dividend or other distribution or the sale of
any rights or of the proceeds thereof until such proof or other information is
filed or such certificates are executed or such representations and warranties
are made.
SECTION 3.2 Payment of Taxes or Other Governmental Charges. Holders of
Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses, as provided in Section 5.7. Registration of transfer of
any Receipt or any withdrawal of Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or any part of or all the Stock or other
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the proceeds of any
such sale may be applied to any payment of such charges or expenses, the holder
of such Receipt remaining liable for any deficiency.
SECTION 3.3 Warranty as to Stock. The Company hereby represents and
warrants that the Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable. Such representation and warranty shall survive the
deposit of the Stock and the issuance of Receipts.
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.1 Cash Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of such dividend or
distribution as are, as nearly as practicable, in proportion to the respective
numbers of Depositary Shares evidenced by the Receipts held by such holders;
provided, however, that in case the Company or the Depositary shall be required
to withhold and shall withhold from any cash dividend or other cash distribution
in respect of the Stock an amount on account of taxes or as otherwise required
by law, regulation or court process, the amount made available for distribution
or distributed in respect of Depositary Shares shall be reduced accordingly. In
the event that the calculation of any such cash dividend or other cash
distribution to be paid to any record holder on the aggregate number of
Depositary Receipts held by such holder results in an amount which is a fraction
of a cent, the amount the Depositary shall distribute to such record holder
shall be rounded to the next highest whole cent if such fraction of a cent is
equal to or greater than $.005, otherwise such fractional interest shall be
disregarded; and upon request of the Depositary, the Company shall pay the
additional amount to the Depositary for distribution.
SECTION 4.2 Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable and practicable
for accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes) the Depositary deems such distribution
not to be feasible, the Depositary may, with the approval of the Company, adopt
such method as it deems equitable and practicable for the purpose of effecting
such distribution, including the sale (at public or private sale) of the
securities or property thus received, or any part thereof, at such place or
places and upon such terms as it may deem equitable and appropriate. The net
proceeds of any such sale shall, subject to Sections 3.1 and 3.2, be distributed
or made available for distribution, as the case may be, by the Depositary to
record holders of Receipts as provided by Section 4.1 in the case of a
distribution received in cash.
SECTION 4.3 Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
however, that (i) if at the time of issue or offer of any such rights,
preferences or privileges the Depositary determines that it is not lawful or
(after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders of Receipts by the issue of
warrants or otherwise, or (ii) if and to the extent so instructed by holders of
Receipts who do not desire to execute such rights, preferences or privileges,
then the Depositary, in its discretion (with approval of the Company, in any
case where the Depositary has determined that it is not feasible to make such
rights, preferences or privileges available), may, if applicable laws or the
terms of such rights, preferences or privileges permit such transfer, sell such
rights, preferences or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net proceeds of any such
sale shall, subject to Sections 3.1 and 3.2, be distributed by the Depositary to
the record holders of Receipts entitled thereto as provided by Section 4.1 in
the case of a distribution received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company will file promptly a registration statement
pursuant to the Securities Act with respect to such rights, preferences or
privileges and securities and use its best efforts and take all steps available
to it to cause such registration statement to become effective sufficiently in
advance of the expiration of such rights, preferences or privileges to enable
such holders to exercise such rights, preferences or privileges. In no event
shall the Depositary make available to the holders of Receipts any right,
preference or privilege to subscribe for or to purchase any securities unless
and until it has received written notice from the Company that such registration
statement shall have become effective, or that the offering and sale of such
securities to such holders are exempt from registration under the provisions of
the Securities Act and the Company shall have provided to the Depositary an
opinion of counsel reasonably satisfactory to the Depositary to such effect.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company will use its reasonable best efforts to take such
action or obtain such authorization, consent or permit sufficiently in advance
of the expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges.
SECTION 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders of
Receipts. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with respect to Stock,
or whenever the Depositary shall receive notice of any meeting at which holders
of Stock are entitled to vote or of which holders of Stock are entitled to
notice, or whenever the Depositary and the Company shall decide it is
appropriate, the Depositary shall in each such instance fix a record date (which
shall be the same date as the record date fixed by the Company with respect to
or otherwise in accordance with the terms of the Stock) for the determination of
the holders of Receipts who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting, or who shall be entitled to notice of such meeting or for any other
appropriate reasons.
SECTION 4.5 Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement that the holders may, subject to any applicable restrictions,
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock represented by their respective Depositary Shares (including
an express indication that instructions may be given to the Depositary to give a
discretionary proxy to a person designated by the Company) and a brief statement
as to the manner in which such instructions may be given. Upon the written
request of the holders of Receipts on the relevant record date, the Depositary
shall use its best efforts to vote or cause to be voted, in accordance with the
instructions set forth in such requests, the maximum number of whole shares of
Stock represented by the Depositary Shares evidenced by all Receipts as to which
any particular voting instructions are received. The Company hereby agrees to
take all action which may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Stock or cause such Stock to be voted. In the
absence of specific instructions from the holder of a Receipt, the Depositary
will not vote (but, at its discretion, may appear at any meeting with respect to
such Stock unless directed to the contrary by the holders of all the Receipts)
to the extent of the Stock represented by the Depositary Shares evidenced by
such Receipt.
SECTION 4.6 Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par value or
liquidation preference, split-up, combination or any other reclassification of
the Stock, or upon any recapitalization, reorganization, merger or consolidation
affecting the Company or to which it is a party, the Depositary may in its
discretion with the approval (not to be unreasonably withheld) of, and shall
upon the instructions of, the Company, and (in either case) in such manner as
the Depositary may deem equitable, (i) make such adjustments in the fraction of
an interest in one share of Stock represented by one Depositary Share as may be
necessary (as certified by the Company) fully to reflect the effects of such
change in par value or liquidation preference, split-up, combination or other
reclassification of Stock, or of such recapitalization, reorganization, merger
or consolidation and (ii) treat any securities which shall be received by the
Depositary in exchange for or upon conversion of or in respect of the Stock as
new deposited securities so received in exchange for or upon conversion or in
respect of such Stock. In any such case, the Depositary may in its discretion,
with the approval of the Company, execute and deliver additional Receipts or may
call for the surrender of all outstanding Receipts to be exchanged for new
Receipts specifically describing such new deposited securities. Anything to the
contrary herein notwithstanding, holders of Receipts shall have the right from
and after the effective date of any such change in par value or liquidation
preference, split-up, combination or other reclassification of the Stock or any
such recapitalization, reorganization, merger or consolidation to surrender such
Receipts to the Depositary with instructions to convert, exchange or surrender
the Stock represented thereby only into or for, as the case may be, the kind and
amount of shares of stock and other securities and property and cash into which
the Stock represented by such Receipts would have been converted or for which
such Stock would have been exchanged or surrendered had such Receipt been
surrendered immediately prior to the effective date of such transaction.
SECTION 4.7 Delivery of Reports. The Depositary shall furnish to holders
of Receipts any reports and communications received from the Company which are
received by the Depositary as the holder of Stock.
SECTION 4.8 List of Receipt Holders. Promptly upon request from time to
time by the Company, the Depositary shall furnish to it a list, as of the most
recent practicable date, of the names, addresses and holdings of Depositary
Shares of all record holders of Receipts. The Company shall be entitled to
receive such list four times annually without charge.
ARTICLE V
The Depositary, the Depositary's
Agents, the Registrar and the Company
SECTION 5.1 Maintenance of Offices, Agencies and Transfer Books by the
Depositary; Registrar. Upon execution of this Deposit Agreement, the Depositary
shall maintain at the Depositary's office facilities for the execution and
delivery, registration and registration of transfer, surrender and exchange of
Receipts, and at the offices of the Depositary's Agents, if any, facilities for
the delivery, registration of transfer, surrender and exchange of Receipts, all
in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books during normal
business hours shall be open for inspection by the record holders of Receipts;
provided that any such holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close such books, at any time or from time to time,
when deemed expedient by it in connection with the performance of its duties
hereunder.
The Depositary may, with the approval of the Company, appoint a
Registrar for registration of the Receipts or the Depositary Shares evidenced
thereby. If the Receipts or the Depositary Shares evidenced thereby or the Stock
represented by such Depositary Shares shall be listed on one or more national
securities exchanges, the Depositary will appoint a Registrar (acceptable to the
Company) for registration of such Receipts or Depositary Shares in accordance
with any requirements of such exchange. Such Registrar (which may be the
Depositary if so permitted by the requirements of any such exchange) may be
removed and a substitute registrar appointed by the Depositary upon the request
or with the approval of the Company. If the Receipts, such Depositary Shares or
such Stock are listed on one or more other stock exchanges, the Depositary will,
at the request and at the expense of the Company, arrange such facilities for
the delivery, registration, registration of transfer, surrender and exchange of
such Receipts, such Depositary Shares or such Stock as may be required by law or
applicable securities exchange regulation.
The Depositary may from time to time appoint Depositary's Agents to act
in any respect for the Depositary for the purposes of this Deposit Agreement and
may at any time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
SECTION 5.2 Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company. Neither the Depositary nor
any Depositary's Agent nor the Registrar nor the Company shall incur any
liability to any holder of any Receipt if by reason of any provision of any
present or future law, or regulation thereunder, of the United States of America
or of any other governmental authority or, in the case of the Depositary, the
Depositary's Agent or the Registrar, by reason of any provision, present or
future, of the Company's Articles of Incorporation or by reason of any act of
God or war or other circumstance beyond the control of the relevant party, the
Depositary, the Depositary's Agent, the Registrar or the Company shall be
prevented, delayed or forbidden from, or subjected to any penalty on account of,
doing or performing any act or thing which the terms of this Deposit Agreement
provide shall be done or performed; nor shall the Depositary, any Depositary's
Agent, the Registrar or the Company incur liability to any holder of a Receipt
(i) by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing which the terms of this Deposit Agreement shall
provide shall or may be done or performed, or (ii) by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement
except, in the case of any such exercise or failure to exercise discretion not
caused as aforesaid, if caused by the gross negligence or willful misconduct of
the party charged with such exercise or failure to exercise.
SECTION 5.3 Obligation of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent nor
the Registrar nor the Company assumes any obligation or shall be subject to any
liability under this Deposit Agreement or any Receipt to holders of Receipts
other than for its gross negligence, willful misconduct or bad faith.
Neither the Depositary nor any Depositary's Agent nor the Registrar nor
the Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding in respect of the Stock, the Depositary Shares
or the Receipts which in its reasonable opinion may involve it in expense or
liability unless indemnity reasonably satisfactory to it against expense and
liability be furnished as often as may be reasonably required.
Neither the Depositary nor any Depositary's Agent nor the Registrar nor
the Company shall be liable for any action or any failure to act by it in
reliance upon the written advice of legal counsel or accountants, or information
from any person presenting Stock for deposit, any holder of a Receipt or any
other person believed by it in good faith to be competent to give such
information. The Depositary, any Depositary's Agent, the Registrar and the
Company may each rely and shall each be protected in acting upon any written
notice, request, direction or other document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties.
The Depositary shall not be responsible for any failure to carry out any
instruction to vote any of the shares of Stock or for the manner or effect of
any such vote made, as long as any such action or non-action is in good faith.
The Depositary will indemnify the Company and hold it harmless from any loss,
liability or expense (including the reasonable costs and expenses of defending
itself) which may arise out of acts performed or omitted by the Depositary,
including when such Depositary acts as Registrar, or the Depositary's Agents in
connection with this Agreement due to its or their gross negligence, willful
misconduct or bad faith. The indemnification obligations of the Depositary set
forth in this Section 5.3 shall survive any termination of this Agreement and
any succession of any Depositary.
The Depositary, its parent, affiliates or subsidiaries, the Depositary's
Agents, and the Registrar may own, buy, sell and deal in any class of securities
of the Company and its affiliates and in Receipts or Depositary Shares or become
pecuniarily interested in any transaction in which the Company or its affiliates
may be interested or contract with or lend money to or otherwise act as fully or
as freely as if it were not the Depositary, parent, affiliate or subsidiary or
Depositary's Agent or Registrar hereunder. The Depositary may also act as
trustee, transfer agent or registrar of any of the securities of the Company and
its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent
nor the Registrar, acting as the Depositary's Agent or Registrar, as the case
may be, shall be deemed to be an "issuer" of the securities under the federal
securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary, any Depositary's Agent and the
Registrar are acting only in a ministerial capacity as Depositary or Registrar
for the Stock.
Neither the Depositary (or its officers, directors, employees or agents)
nor any Depositary's Agent nor the Registrar makes any representation or has any
responsibility as to the validity of the registration statement pursuant to
which the Depositary Shares are registered under the Securities Act, the Stock,
the Depositary Shares or the Receipts (except for its counter-signatures
thereon) or any instruments referred to therein or herein, or as to the
correctness of any statement made therein or herein.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity or genuineness of any
Stock at any time deposited with the Depositary hereunder or of the Depositary
Shares, as to the validity or sufficiency of this Deposit Agreement, as to the
value of the Depositary Shares or as to any right, title or interest of the
record holders of Receipts in and to the Depositary Shares. The Depositary shall
not be accountable for the use or application by the Company of the Depositary
Shares or the Receipts or the proceeds thereof.
SECTION 5.4 Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by delivering notice of its election to do so to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$150,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor, and shall deliver to such successor a list of the record holders
of all outstanding Receipts and such records, books and other information in its
possession relating thereto. Any successor Depositary shall promptly mail notice
of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.5 Corporate Notices and Reports. The Company agrees that it
will deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, transmit to the record holders of Receipts, in each case at the
addresses recorded in the Depositary's books, copies of all notices and reports
(including without limitation financial statements) required by law or by the
rules of any national securities exchange upon which the Stock, the Depositary
Shares or the Receipts are listed, to be furnished to the record holders of
Receipts. Such transmission will be at the Company's expense and the Company
will provide the Depositary with such number of copies of such documents as the
Depositary may reasonably request.
SECTION 5.6 Indemnification by the Company. The Company shall indemnify
the Depositary, any Depositary's Agent and the Registrar against, and hold each
of them harmless from, any loss, liability or expense (including the reasonable
costs and expenses of defending itself) which may arise out of acts performed or
omitted in connection with this Deposit Agreement and the Receipts by the
Depositary, any Registrar or any of their respective agents (including any
Depositary's Agent), except for any liability arising out of gross negligence,
willful misconduct or bad faith on the respective parts of any such person or
persons. The obligations of the Company set forth in this Section 5.6 shall
survive any succession of any Depositary or Depositary's Agent.
SECTION 5.7 Charges and Expenses. The Company shall pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company shall pay charges of the Depositary in
connection with the initial deposit of the Stock and the initial issuance of the
Depositary Shares, all withdrawals of shares of the Stock by owners of
Depositary Shares, and any redemption of the Stock at the option of the Company.
All other transfer and other taxes and governmental charges shall be at the
expense of holders of Depositary Shares. If, at the request of a holder of
Receipts, the Depositary incurs charges or expenses for which it is not
otherwise liable hereunder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder (including, in each case, reasonable fees and expenses of
counsel) incident to the performance of their respective obligations hereunder
will be paid upon consultation and agreement between the Depositary and the
Company as to the amount and nature of such charges and expenses. The Depositary
shall present its statement for charges and expenses to the Company at such
intervals as the Company and the Depositary may agree.
SECTION 5.8 Tax Compliance. The Depositary, on its own behalf and on
behalf of the Company, will comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Depositary
Shares or (ii) the issuance, delivery, holding, transfer, redemption or exercise
of rights under the Depositary Receipts or the Depositary Shares. Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
The Depositary shall comply with any direction received from the Company
with respect to the application of such requirements to particular payments or
holders or in other particular circumstances, and may for purposes of this
Agreement rely on any such direction in accordance with the provisions of
Section 5.3 hereof.
The Depositary shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available on
request to the Company or to its authorized representatives.
ARTICLE VI
Amendment and Termination
SECTION 6.1 Amendment. The form of the Receipts and any provisions of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary or Registrar, which shall go into
effect not sooner than three months after notice thereof to the holders of the
Receipts) which shall materially adversely alter the rights of the holders of
Receipts shall be effective unless such amendment shall have been approved by
the holders of at least a majority of the Depositary Shares then outstanding.
Every holder of an outstanding Receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such Receipt, to be bound by
the Deposit Agreement as amended thereby. Notwithstanding the foregoing, in no
event may any amendment impair the right of any holder of any Depositary Shares,
upon surrender of the Receipts evidencing such Depositary Shares and subject to
any conditions specified in this Deposit Agreement, to receive shares of Stock
and any money or other property represented thereby, except in order to comply
with mandatory provisions of applicable law.
SECTION 6.2 Termination. This Deposit Agreement may be terminated by the
Company at any time upon not less than 60 days' prior written notice to the
Depositary, in which case, on a date that is not later than 30 days after the
date of such notice, the Depositary shall deliver or make available for delivery
to holders of Depositary Shares, upon surrender of the Receipts evidencing such
Depositary Shares, such number of whole or fractional shares of Stock as are
represented by such Depositary Shares. This Deposit Agreement will automatically
terminate after (i) all outstanding Depositary Shares have been redeemed
pursuant to Section 2.8 or (ii) there shall have been made a final distribution
in respect of the Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of Depositary Receipts pursuant to Section 4.1 or 4.2, as
applicable.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, the Registrar and any Depositary's Agent under
Sections 5.6 and 5.7.
ARTICLE VII
Miscellaneous
SECTION 7.1 Counterparts. This Deposit Agreement may be executed in any
number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.2 Exclusive Benefit of Parties. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.3 Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4 Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:
Public Storage, Inc.
701 Western Avenue, 2nd Floor
Glendale, California 91201-2397
Facsimile No.: (818) 244-9267
or at any other address of which the Company shall have notified the Depositary
in writing.
Any and all notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the Depositary's Office, at:
BankBoston, N.A.
150 Royall Street
Mail Stop: 45-02-62
Canton, MA 02021
Attention: Client Administration
Facsimile No.: (617) 575-2549
or at any other address of which the Depositary shall have notified the Company
in writing.
Any and all notices to be given to any record holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to such record holder at
the address of such record holder as it appears on the books of the Depositary,
or if such holder shall have filed with the Depositary a written request that
notices intended for such holder be mailed to some other address, at the address
designated in such request.
Delivery of a notice sent by mail or by telegram or facsimile
transmission shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or facsimile transmission) is deposited for mailing by first class mail, postage
prepaid. The Depositary or the Company may, however, act upon any telegram or
facsimile transmission received by it from the other or from any holder of a
Receipt, notwithstanding that such telegram or facsimile transmission shall not
subsequently be confirmed by letter or as aforesaid.
SECTION 7.5 Appointment of Registrar. The Company hereby also appoints
the Depositary as Registrar in respect of the Receipts and the Depositary hereby
accepts such appointments.
SECTION 7.6 Holders of Receipts Are Parties. The holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by all of the terms and conditions hereof and of the Receipts by acceptance of
delivery thereof.
SECTION 7.7 Governing Law. THIS DEPOSIT AGREEMENT AND THE RECEIPTS AND
ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS APPLICABLE TO CONTRACTS
MADE IN AND TO BE PERFORMED IN THE STATE OF NEW YORK, INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
SECTION 7.8 Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agent and
shall be open to inspection during business hours at the Depositary's Office or
respective offices of the Depositary's Agent, if any, by any holder of a
Receipt.
SECTION 7.9 Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any bearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
<PAGE>
IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
PUBLIC STORAGE, INC.
Attested by:
- ------------------------------- ------------------------------------
Sarah Hass David Goldberg
Secretary Senior Vice President and General Counsel
Attested by: BANKBOSTON, N.A.
- ------------------------------- ------------------------------------
Name: Name:
Title: Title:
<PAGE>
ANNEX A
The Shares represented by this Depositary Receipt are subject to restrictions on
ownership and transfer for the purpose of this Corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. Except as set forth in this Corporation's Articles of
Incorporation or Bylaws, no person may Beneficially Own (i) more than 2.0% of
the outstanding shares of Common Stock of this Corporation, or (ii) more than
9.9% of the outstanding shares of any series of Preferred Stock or Equity Stock
of this Corporation, with certain further restrictions and exceptions as are set
forth in this Corporation's Articles of Incorporation or Bylaws. Any Person who
attempts to own or Beneficially Own Shares in excess of the above limitations
must immediately notify this Corporation. All capitalized terms in this legend
have the meanings defined in this Corporation's Articles of Incorporation or
Bylaws. If any of the restrictions on transfer or ownership set forth in the
Articles of Incorporation or Bylaws are violated, the Shares represented hereby
will be automatically transferred to the Trustee of a Trust for the benefit of a
Charitable Beneficiary pursuant to the terms of the Articles of Incorporation or
Bylaws. In addition, attempted transfers of Shares in violation of the
limitations described above (as modified or expanded upon in this Corporation's
Articles of Incorporation or Bylaws), may be void ab initio. This Corporation
will furnish to the holder hereof, upon request and without charge, a complete
written statement of the terms and conditions of these restrictions. Requests
for such documents may be directed to the corporate secretary.
DEPOSITARY SHARES
THIS DEPOSITARY RECEIPT
IS TRANSFERABLE IN BOSTON,
MA OR NEW YORK, NY
CUSIP 74460D ______
SEE REVERSE FOR
CERTAIN DEFINITIONS
DEPOSITARY RECEIPT FOR DEPOSITARY
SHARES EACH REPRESENTING 1/1,000th OF
A SHARE OF EQUITY STOCK, SERIES A
OF
PUBLIC STORAGE, INC.
INCORPORATED UNDER THE
LAWS OF THE STATE OF CALIFORNIA
<PAGE>
BANKBOSTON, N.A., as Depositary (the "Depositary"), hereby certifies
that
is the registered owner of _____________________________ DEPOSITARY SHARES
("Depositary Shares"), each Depositary Share representing a 1/1,000 interest in
one share of Equity Stock, Series A (the "Stock"), of Public Storage, Inc., a
California corporation (the "Corporation"), on deposit with the Depositary,
subject to the terms and entitled to the benefits of the Deposit Agreement dated
as of January 14, 2000 (the "Deposit Agreement"), between the Corporation and
the Depositary. By accepting this Depositary Receipt, the holder hereof becomes
a party to and agrees to be bound by all the terms and conditions of the Deposit
Agreement. This Depositary Receipt shall not be valid or obligatory for any
purpose or be entitled to any benefits under the Deposit Agreement unless it
shall have been executed by the Depositary by the manual and/or facsimile
signature of a duly authorized officer or, if executed in facsimile by the
Depositary, countersigned by a Registrar in respect of the Depositary Receipts
by a duly authorized officer.
The Corporation is authorized to issue Common Stock, one or more series of
Preferred Stock, one or more series of Equity Stock and Depositary Shares. The
Corporation will furnish without charge to each receiptholder, who so requests
in writing, a statement of the rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of shares and upon the holders
thereof, a copy of the Corporation's Bylaws and a copy of the Deposit Agreement.
Any such request shall be made to the Corporation at the principal office of the
Corporation at 701 Western Avenue, Glendale, California 91201-2397, Attention:
Secretary.
This Depositary Receipt is continued on the reverse hereof and the additional
provisions set forth therein (including, without limitation, those relating to
redemption) for all purposes have the same effect as if set forth at this place.
Dated:
Countersigned
BANKBOSTON, N.A.
Depositary, Transfer Agent and Registrar
By: _____________________________
Authorized Officer
<PAGE>
THE SHARES REPRESENTED BY THIS DEPOSITARY RECEIPT ARE SUBJECT TO THE
PROVISIONS OF THE ARTICLES AND BYLAWS, INCLUDING BUT NOT LIMITED TO (1) SECTION
(C) OF THE CERTIFICATE OF DETERMINATION RELATING TO THE STOCK, WHICH CONFERS
UPON THE BOARD THE RIGHT, ON OR AFTER MARCH 31, 2005, TO CALL FOR REDEMPTION THE
STOCK, (2) SECTION (D) OF THE CERTIFICATE OF DETERMINATION RELATING TO THE STOCK
WHICH CONFERS UPON THE HOLDERS OF THE STOCK THE RIGHT TO CONVERT THE STOCK INTO
SHARES OF COMMON STOCK, AT ANY TIME AFTER THE CORPORATION FAILS TO QUALIFY AS A
REAL ESTATE INVESTMENT TRUST ("REIT") UNDER THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, (3) ARTICLE XI, SECTION 7 OF THE BYLAWS, WHICH CONFERS UPON THE
BOARD THE RIGHT TO REFUSE TO REGISTER THE TRANSFER OF AND/OR TO CALL FOR
REDEMPTION THE SHARES REPRESENTED BY THIS DEPOSITARY RECEIPT IF NECESSARY IN ITS
OPINION TO MAINTAIN THE CORPORATION'S QUALIFICATION AS A REIT AND (4) THE
PROVISIONS OF THE ARTICLES AND BYLAWS, WHICH SET FORTH OWNERSHIP LIMITATION
PROVISIONS DESIGNED TO MAINTAIN SUCH QUALIFICATION.
1. The Deposit Agreement. Depositary Receipts, of which this Depositary
Receipt is one, are made available upon the terms and conditions set forth in
the Deposit Agreement, dated as of January 14, 2000 (the "Deposit Agreement"),
among the Company, the Depositary and all holders from time to time of
Depositary Receipts. The Deposit Agreement (copies of which are on file at the
principal office maintained by the Depositary which at the time of the execution
of the Deposit Agreement is located at 150 Royall Street, Mail Stop: 45-02-62,
Canton, MA 02021 (the "Depositary's Office") and at the office of any agent of
the Depositary) sets forth the rights of holders of Depositary Receipts and the
rights and duties of the Depositary. The statements made on the face and the
reverse of this Depositary Receipt are summaries of certain provisions of the
Deposit Agreement and are subject to the detailed provisions thereof, to which
reference is hereby made. In the event of any conflict between the provisions of
this Depositary Receipt and the provisions of the Deposit Agreement, the
provisions of the Deposit Agreement will govern.
2. Definitions. Unless otherwise expressly herein provided, all defined
terms used in this summary of the Deposit Agreement shall have the meanings
ascribed thereto in the Deposit Agreement.
3. Redemption of Stock. Whenever the Company shall elect to redeem
shares of Stock, it shall (unless otherwise agreed in writing with the
Depositary) give the Depositary not less than 60 days' notice of the date of
such proposed redemption and of the number of such shares of Stock held by the
Depositary to be so redeemed and the applicable redemption price. The Depositary
shall mail, first-class postage prepaid, notice of the redemption of Stock and
the proposed simultaneous redemption of Depositary Shares representing the Stock
to be redeemed, not less than 30 and not more than 60 days prior to the date
fixed for redemption of such Stock and Depositary Shares, to the record holders
of the Depositary Receipts evidencing the Depositary Shares to be so redeemed,
at the addresses of such holders as the same appear on the records of the
Depositary. Any such notice shall also be published in the same manner as
notices of redemption of the Stock are required to be published by the Company.
On the date of such redemption, the Depositary shall redeem the number of
Depositary Shares representing such redeemed Stock; provided, that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus any accrued and unpaid
dividends payable with respect thereto to the date of any such redemption. In
case fewer than all the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be determined pro rata or by lot in a
manner determined by the Board of Directors. Notice having been mailed as
aforesaid, from and after the Redemption Date (unless the Company shall have
failed to provide the funds necessary to redeem the shares of Stock evidenced by
the Depositary Shares called for redemption), dividends on the shares of Stock
so called for redemption shall cease to accrue, the Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Depositary Receipts evidencing such Depositary Shares (except the
right to receive the redemption price) shall, to the extent of such Depositary
Shares, cease and terminate. Upon surrender in accordance with said notice of
the Depositary Receipts evidencing such Depositary Shares (properly endorsed or
assigned for transfer, if the Depositary or applicable law shall so require),
such Depositary Shares shall be redeemed at a redemption price per Depositary
Share equal to the same fraction of the redemption price per share paid with
respect to the shares of Stock as the fraction each Depositary Share represents
of a share of Stock plus the same fraction of all money and other property, if
any, represented by such Depositary Shares, including all amounts paid by the
Company in respect of dividends which on the Redemption Date have accumulated on
the shares of Stock to be so redeemed and have not theretofore been paid. The
foregoing is subject further to the terms and conditions of the Certificate of
Determination. If fewer than all of the Depositary Shares evidenced by this
Depositary Receipt are called for redemption, the Depositary will deliver to the
holder of this Depositary Receipt upon its surrender to the Depositary, together
with the redemption payment, a new Depositary Receipt evidencing the Depositary
Shares evidenced by such prior Depositary Receipt and not called for redemption.
4. Optional Conversion of Stock into Common Stock. At any time after the
Company determines that (i) it will no longer constitute a qualifying REIT under
the REIT Provisions of the Internal Revenue Code for United States federal
income tax purposes or (ii) it will no longer file a United States federal
income tax return as a REIT (each of the foregoing, a "REIT Termination Event"),
then each share of Stock may be converted into whole shares of Common Stock, par
value $.10 per share, of the Company ("Common Stock"), and cash for any
fractional share amount at the conversion price then in effect for the Stock
pursuant to the Certificate of Determination, as such conversion price may be
adjusted as provided in the Certificate of Determination. The Company shall
promptly give or cause to be given to the Depositary notice of a REIT
Termination Event and of the right of holders of shares of Stock to convert as
provided in the Certificate of Determination. The Depositary will publish a
notice of a REIT Termination Event and of the right of holders of the Receipts
to convert as provided in this Section containing the same type of information
and in the same manner as the notice of the REIT Termination Event and of the
right of holders of shares of Stock to convert that is required to be published
by the Company, and the Depositary will concurrently mail a similar notice by
first-class mail, postage prepaid, to the record holders of the Receipts
evidencing the Depositary Shares, at the address of such holders as they appear
on the records of the Depositary. At any time after the occurrence of a REIT
Termination Event, this Receipt may be surrendered with written instructions to
the Depositary to instruct the Company to cause the conversion of any specified
number of whole or fractional shares of Stock represented by whole Depositary
Shares evidenced hereby into whole shares of Common Stock, and cash for any
fractional share amount at the conversion price then in effect for the Stock
pursuant to the Certificate of Determination, as such conversion price may be
adjusted as provided in the Certificate of Determination. Subject to the terms
and conditions of the Deposit Agreement and the Certificate of Determination, a
holder of a Receipt or Receipts evidencing Depositary Shares representing whole
or fractional shares of Stock may surrender such Receipt or Receipts at the
Depositary's Office or at such office or to such Depositary's Agents as the
Depositary may designate for such purpose, together with a notice of conversion
duly completed and executed, thereby directing the Depositary to instruct the
Company to cause the conversion of the number of whole or fractional shares of
underlying Stock specified in such notice of conversion into shares of Common
Stock, and an assignment of such Receipt or Receipts to the Company or in blank,
duly completed and executed. To the extent that a holder delivers to the
Depositary for conversion a Receipt or Receipts which in the aggregate are
convertible into less than one whole share of Common Stock, the holder shall
receive payment in cash in lieu of such fractional share of Common Stock
otherwise issuable. If more than one Receipt shall be delivered for conversion
at one time by the same holder, the number of whole shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of Depositary Shares represented by the Receipts so delivered.
If Stock shall be called by the Company for redemption, the Depositary
Shares representing such Stock may be converted into Common Stock as provided in
the Deposit Agreement; provided, however, that such right to convert shall
terminate at the close of business on the Redemption Date, unless the Company
shall fail to deposit with the Depositary the amount of cash required to redeem
the Stock, in which case the Depositary Shares representing such Stock may
continue to be converted into Common Stock until, but not after, the close of
business on the date on which the Company deposits with the Depositary such
amount of cash as is required by the Certificate of Determination to make full
payment of the amounts payable upon such redemption. Upon receipt by the
Depositary of a Receipt or Receipts, together with a properly completed and
executed notice of conversion, representing any Stock called for redemption, the
shares of Stock held by the Depositary represented by such Depositary Shares for
which conversion is requested shall be deemed to have been received by the
Company for conversion immediately prior to the close of business on the date of
such receipt by the Depositary.
The record holder of Depositary Shares on any dividend payment record
date established by the Depositary shall be entitled to receive the dividend
payable with respect to such Depositary Shares on the corresponding dividend
payment date notwithstanding the conversion subsequent to such record date of
the shares of Stock to which such Depositary Shares relate. However, any
Receipts surrendered with instructions to the Depositary for conversion of the
underlying Stock during the period from the close of business on a dividend
payment record date for any dividend payment date, to the opening of business on
such dividend payment date shall (unless such underlying Stock shall have been
called for redemption on a Redemption Date in such period) be accompanied by
payment of an amount equal to the dividend payable on the Depositary Shares
evidenced by the Receipts surrendered for conversion, on such dividend payment
date.
5. Surrender of Depositary Receipts and Withdrawal of Stock. Upon
surrender of this Depositary Receipt to the Depositary at the Depositary's
Office or at such other offices as the Depositary may designate, and subject to
the provisions of the Deposit Agreement, the holder hereof is entitled to
withdraw, and to obtain delivery, without unreasonable delay, to or upon the
order of such holder, any or all of the Stock (but only in whole shares of
Stock) and all money and other property, if any, at the time represented by the
Depositary Shares evidenced by this Depositary Receipt; provided, however, that,
in the event this Depositary Receipt shall evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the whole
number of shares of Stock to be withdrawn, the Depositary shall, in addition to
such whole number of shares of Stock and such money and other property, if any,
to be withdrawn, deliver, to or upon the order of such holder, a new Depositary
Receipt or Depositary Receipts evidencing such excess number of whole Depositary
Shares.
6. Transfers, Split-ups, Combinations. Subject to the Deposit Agreement,
this Depositary Receipt is transferable on the books of the Depositary upon
surrender of this Depositary Receipt to the Depositary, properly endorsed or
accompanied by a properly executed instrument of transfer, and upon such
transfer the Depositary shall sign and deliver a Depositary Receipt or
Depositary Receipts to or upon the order of the person entitled thereto, all as
provided in and subject to the Deposit Agreement. This Depositary Receipt may be
split into other Depositary Receipts or combined with other Depositary Receipts
into one Depositary Receipt evidencing the same aggregate number of Depositary
Shares evidenced by the Depositary Receipt or Depositary Receipts surrendered;
provided, however, that the Depositary shall not issue any Depositary Receipt
evidencing a fractional Depositary Share.
7. Conditions to Signing and Delivery, Transfer, etc., of Depositary
Receipts. Prior to the execution and delivery, registration of transfer,
split-up, combination, surrender or exchange of this Depositary Receipt, the
Depositary, any of the Depositary's Agents or the Company may require any or all
of the following: (i) payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any tax or other governmental charge with respect
thereto; (ii) production of proof satisfactory to it as to the identity and
genuineness of any signature; and (iii) compliance with such reasonable
regulations, if any, as the Depositary or the Company may establish not
inconsistent with the Deposit Agreement.
8. Suspension of Delivery, Transfer, etc. The deposit of Stock may be
refused, the delivery of this Depositary Receipt against Stock may be suspended,
the registration of transfer of Depositary Receipts may be refused and the
registration of transfer, surrender or exchange of this Depositary Receipt may
be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission, or under any provision of the Deposit
Agreement.
9. Amendment. The form of the Depositary Receipts and any provision of
the Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable; provided, however, that no such amendment (other
than any changes in the fees of any Depositary or Registrar which shall go into
effect not sooner than three months after Notice thereof to the holders of the
Depositary Receipts) which shall materially adversely alter the rights of
holders of Depositary Receipts shall be effective unless such amendment shall
have been approved by at least a majority of the Depositary Shares then
outstanding. The holder of this Depositary Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold this
Depositary Receipt, to be bound by the Deposit Agreement as amended thereby. In
no event shall any amendment impair the right of the owner of the Depositary
Shares evidenced by this Depositary Receipt to surrender this Depositary Receipt
with instructions to the Depositary to deliver to the holder the Stock and all
money and other property, if any, represented thereby, except in order to comply
with mandatory provisions of applicable law.
10. Charges and Expenses. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangement, except such charges as are expressly provided in the
Deposit Agreement to be at the expense of holders of Depositary Receipts.
11. Title to Depositary Receipts. Title to this Depositary Receipt, when
properly endorsed or accompanied by a properly executed instrument of transfer,
is transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that the Depositary may, notwithstanding any
notice to the contrary, treat the record holder hereof at such time as the
absolute owner hereof for the purpose of determining the person entitled to
distribution of dividends or other distributions or to any notice provided for
in the Deposit Agreement and for all other purposes.
12. Dividends and Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on the Stock, the Depositary shall,
subject to the provisions of the Deposit Agreement, distribute to record holders
of Depositary Receipts such amounts of such sums as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Depositary Receipts held by such holders; provided, however,
that in case the Company or the Depositary shall be required by law to withhold
and does withhold from any cash dividend or other cash distribution in respect
of the Stock an amount on account of taxes or as otherwise required by law,
regulation or court process, the amount made available for distribution or
distributed in respect of Depositary Shares shall be reduced accordingly. In the
event that the calculation of any such cash dividend or other cash distribution
to be paid to any record holder on the aggregate number of Depositary Receipts
held by such holder results in an amount which is a fraction of a cent, the
amount the Depositary shall distribute to such record holder shall be rounded to
the next highest whole cent; and upon request of the Depositary, the Company
shall pay the additional amount to the Depositary for distribution.
13. Subscription Rights, Preferences or Privileges. If the Company shall
at any time offer or cause to be offered to the persons in whose name Stock is
registered on the books of the Company any rights, preferences or privileges to
subscribe for or to purchase any securities or any rights, preferences or
privileges of any other nature, such rights, preferences or privileges shall in
each such instance, subject to the provisions of the Deposit Agreement, be made
available by the Depositary to the record holders of Depositary Receipts in such
manner as the Depositary shall determine.
14. Notice of Dividends, Fixing of Record Date. Whenever (i) any cash
dividend or other cash distribution shall become payable, or any distribution
other than cash shall be made, or any rights, preferences or privileges shall at
any time be offered, with respect to the Stock, or (ii) the Depositary shall
receive notice of any meeting at which holders of Stock are entitled to vote or
of which holders of Stock are entitled to notice or whenever the Depositary and
the Company shall decide it is appropriate, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the Company with respect to the Stock) for the determination of the
holders of Depositary Receipts (x) who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds of
the sale thereof, or (y) who shall be entitled to give instructions for the
exercise of voting rights at any such meeting or to receive notice of such
meeting or for any other appropriate reasons.
15. Voting Rights. Upon receipt of notice of any meeting at which the
holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Depositary Receipts a
notice, which shall contain (i) such information as is contained in such notice
of meeting, (ii) a statement that the holders may, subject to any applicable
restrictions, instruct the Depositary as to the exercise of the voting rights
pertaining to the Stock represented by their respective Depositary Shares, and
(iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a holder of this Depositary Receipt on such
record date the Depositary shall use its best efforts to vote or cause to be
voted the Stock represented by the Depositary Shares evidenced by this
Depositary Receipt in accordance with the instructions set forth in such
request. The Company hereby agrees to take all action that may be deemed
necessary by the Depositary in order to enable the Depositary to vote such Stock
or cause such Stock to be voted. In the absence of specific instructions from
the holder of this Depositary Receipt, the Depositary will abstain from voting
to the extent of the Stock represented by the Depositary Shares evidenced by
this Depositary Receipt.
16. Reports, Inspection of Transfer Books. The Depositary shall transmit
to the record holders of Depositary Receipts copies of all reports and
communications received from the Company that are received by the Depositary as
the holder of Stock. The Depositary shall keep books at the Corporate Office for
the registration and transfer of Depositary Receipts, which books at all
reasonable times will be open for inspection by the record holders of Depositary
Receipts; provided that any such holder requesting to exercise such right shall
certify to the Depositary that such inspection shall be for a proper purpose
reasonably related to such person's interest as an owner of Depositary Shares.
17. Liability of the Depositary, the Depositary's Agents, the Registrar
and the Company. Neither the Depositary nor any Depositary's Agent nor the
Registrar nor the Company shall incur any liability to any holder of this
Depositary Receipt, if by reason of any provision of any present or future law
or regulation thereunder of any governmental authority or, in the case of the
Depositary, the Registrar or any Depositary's Agent, by reason of any provision
present or future, of the Articles of Incorporation or by reason of any act of
God or war or other circumstances beyond the control of the relevant party, the
Depositary, any Depositary's Agent, the Registrar or the Company shall be
prevented or forbidden from doing or performing any act or thing that the terms
of the Deposit Agreement provide shall be done or performed; nor shall the
Depositary, any Depositary's Agent, the Registrar or the Company incur any
liability to any holder of this Depositary Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing that the terms of the Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in the Deposit Agreement except if such exercise or
failure to exercise discretion is caused by its gross negligence or willful
misconduct.
18. Obligations of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent nor
the Registrar nor the Company assumes any obligation or shall be subject to any
liability under the Deposit Agreement or this Depositary Receipt to the holder
hereof or other persons, other than for its gross negligence, willful misconduct
or bad faith.
Neither the Depositary nor any Depositary's Agent nor the Registrar nor
the Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to Stock, Depositary Shares or
Depositary Receipts or Common Stock that in its opinion may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Registrar nor
the Company will be liable for any action or failure to act by it in reliance
upon the advice of or information from legal counsel, accountants, any person
presenting Stock for deposit, any holder of this Depositary Receipt or any other
person believed by it in good faith to be competent to give such advice or
information.
19. Termination of Deposit Agreement. Whenever so directed by the
Company upon not less than 60 days' prior written notice, the Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
after the date of such notice. Upon the termination of the Deposit Agreement,
the Company shall be discharged to all obligations thereunder except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.6 and 5.7 of the Deposit Agreement.
20. Governing Law. The Deposit Agreement and this Depositary Receipt and
all rights thereunder and hereunder and provisions thereof and hereof shall be
governed by, and construed in accordance with, the law of the State of New York,
including without limitation Section 5-1401 of the New York General Obligations
Law.
<PAGE>
The following abbreviations, when used in the inscription on the face of
this Depositary Receipt, shall be construed as though they were written out in
full according to applicable laws or regulations:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -______ Custodian _______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act ____________
tenants in common (State)
UNIF TRF MIN ACT -______ Custodian (until age __)
(Cust)
_______ under Uniform Transfers
(Minor)
to Minors Act _________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
<PAGE>
NOTICE OF CONVERSION
The undersigned holder of this Receipt for Depositary Shares hereby
irrevocably exercises the option to convert that number of whole or fractional
shares of Stock of the Company represented by _______________ Depositary Shares
into shares of Common Stock of the Company and cash for any fractional share
amount in accordance with the terms of and subject to the conditions of the
Stock, including the Certificate of Determination in respect thereof, and the
Deposit Agreement, and directs the Depositary to instruct the Company that the
shares of Common Stock deliverable upon such conversion be registered in the
name of, and delivered together with a check in payment for any fractional
shares of Common Stock to, the undersigned unless a different name has been
indicated below. If the shares of Common Stock are to be registered in the name
of a person other than the undersigned, the undersigned will pay all transfer
and similar taxes payable with respect thereto. If the number of shares of Stock
represented by the number of Depositary Shares set forth above is less than the
number of shares of Stock on deposit in respect of this Receipt, the undersigned
directs that the Depositary execute and deliver to the undersigned, unless a
different name is indicated below, a new Receipt evidencing Depositary Shares
for the balance of such Stock not to be converted.
Dated ___________________________ Signed ___________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS DEPOSITARY RECEIPT
IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
By ______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
Name:_____________________________________________________________
Address:__________________________________________________________
(Please print names and address of Registered Holder)
Name:_____________________________________________________________
Address:__________________________________________________________
(Please indicate other delivery instructions, if applicable)
<PAGE>
ASSIGNMENT
For Value Received, ____________________ hereby sell, assign and
transfer unto
__________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________ Depositary Shares represented by the within Depositary
Receipt, and do hereby irrevocably constitute and appoint
________________________ Attorney to transfer the said Depositary Shares on the
books of the within named Depositary with full power of substitution in the
premises.
Dated ____________________________ Signed ____________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS DEPOSITARY RECEIPT
IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
By ______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
Exhibit 2
CERTIFICATE OF DETERMINATION
OF
EQUITY STOCK, SERIES A
OF
PUBLIC STORAGE, INC.
[As Filed in the Office of the Secretary of State of the
State of California November 9, 1999]
The undersigned, David Goldberg and Sarah Hass, Senior Vice President
and Secretary, respectively, of PUBLIC STORAGE, INC., a California corporation,
do hereby certify:
FIRST: The Restated Articles of Incorporation of the Corporation, as
amended, authorize the issuance of 200,000,000 shares of stock designated
"equity shares," issuable from time to time in one or more series, and authorize
the Board of Directors to fix the designation and number of shares constituting
any such series, and to determine or alter the dividend rights, dividend rate,
conversion rights, voting rights, right and terms of redemption (including
sinking fund provisions), the redemption price or prices and the liquidation
rights of any wholly unissued series of such equity shares.
SECOND: The Board of Directors of the Corporation did duly adopt the
resolutions attached hereto as Exhibit A and incorporated herein by reference
authorizing and providing for the creation of a series of equity shares to be
known as "Equity Stock, Series A" consisting of 500,000 shares, none of the
shares of such series having been issued.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
IN WITNESS WHEREOF, the undersigned have executed this certificate this
8th day of November, 1999.
/S/ DAVID GOLDBERG
----------------------------------
David Goldberg
Senior Vice President
/S/ SARAH HASS
----------------------------------
Sarah Hass
Secretary
<PAGE>
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS
OF PUBLIC STORAGE, INC.
ESTABLISHING A SERIES OF
EQUITY STOCK, SERIES A
RESOLVED that pursuant to the authority conferred upon the Board of
Directors by Article III of the Restated Articles of Incorporation, as amended,
of this Corporation, there is hereby established a series of the authorized
equity shares of this Corporation having a par value of $.01 per share, which
series shall be designated "Equity Stock, Series A," shall consist of 500,000
shares and shall have the following rights and privileges:
(a) Dividend Rights.
(1) Dividends on each share of this Series shall be non-cumulative and
shall be payable out of funds legally available therefor, without interest
thereon, when, as and if declared by the Board of Directors. If, at any time,
the Corporation shall declare or pay a dividend or other distribution on the
Common Shares (i) in cash or (ii) in any shares of the Corporation's capital
stock (but in the latter case, only to the extent that the Corporation will
claim with respect to the distributed shares a deduction for dividends paid in
computing its taxable income pursuant to the REIT Provisions of the Internal
Revenue Code (as defined in clause (9) of Section (c)), a dividend or other
distribution in cash shall also concurrently be declared or paid, as the case
may be, on each share of this Series. The amount of the dividend or distribution
on each share of this Series shall be at the rate of five thousand (5,000) times
the per share dividend or distribution on the Common Shares (based on the amount
of cash, and in the case of shares distributed with respect to the Common
Shares, the amount of the dividends paid deduction attributable to the
distributed shares), but shall not be more than $612.50 in any calendar quarter
(prorated for the quarter ending March 31, 2000 to reflect only the number of
days in that quarter beginning with the date of the original issuance of the
shares of this Series); provided, however, during any calendar year (prorated
for the year 2000) not at a rate less than the lesser of (i) $2,450 per share or
(ii) five thousand (5,000) times the per share dividends or distributions on the
Common Shares. Notwithstanding the foregoing, any dividend or distribution on
the shares of this Series shall be subject to adjustment as provided in Section
(e).
Each such dividend shall be paid to the holders of record of shares of
this Series as they appear on the stock register of the Corporation on such
record date, not more than 45 days nor less than 15 days preceding the payment
date thereof, as shall be fixed by the Board of Directors. After dividends on
this Series equal to the maximum amount set forth above have been paid or
declared (as provided hereby) during any particular year and funds therefor set
aside for payment, the holders of shares of this Series will not be entitled to
any further dividends in that year.
For purposes hereof, "Common Shares" shall mean shares of common stock,
$0.10 par value per share, of the Corporation or any other shares of capital
stock into which such shares are reclassified, changed or exchanged.
(2) Unless dividends on all outstanding "Senior Shares" have been or
contemporaneously are paid in full for the latest dividend period ending
contemporaneously with or prior to the end of the period for which a dividend is
to be paid on shares of this Series, and, to the extent such Senior Shares have
cumulative dividend rights, for all prior dividend periods, no dividend or other
distribution shall be paid on the shares of this Series for such period. "Senior
Shares" shall mean any shares of stock of the Corporation, exclusive of the
shares of this Series and any other series of equity stock, the Common Shares
and shares of the Corporation's Class B Common Stock, which (i) are outstanding
as of the date of issuance of the shares of this Series or (ii) are issued
subsequent to the date of issuance of the shares of this Series, on terms which
do not provide that they are on a parity with, or junior to, the shares of this
Series, as to dividends and as to the distribution of assets upon any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation.
(b) Liquidation.
In the event of any voluntary or involuntary liquidation, dissolution,
or winding up of the Corporation, after the respective liquidation preferences
in respect of all Senior Shares, if any, have been paid in full, a holder of
each share of this Series will receive out of the assets of the Corporation
available for distribution to shareholders one thousand (1,000) times the amount
per share distributed to the holder of each Common Share; provided, that the
amount so received by the holder of each share of this Series shall not exceed
$24,500 per share, subject to adjustment as provided in Section (e). After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of shares of this Series will not be entitled to any
further participation in any distribution of assets by the Corporation.
(1) Written notice of any such liquidation, dissolution or winding up of
the Corporation, stating the payment date or dates when, and the place or places
where the amounts distributable in such circumstances shall be payable, shall be
given by first class mail, postage pre-paid, not less than 30 nor more than 60
days prior to the payment date stated therein, to each record holder of the
shares of this Series at the respective addresses of such holders as the same
shall appear on the stock transfer records of the Corporation.
(2) For purposes of liquidation rights, a reorganization (as defined in
Section 181 of the California Corporations Code) or consolidation or merger of
the Corporation with or into any other corporation or corporations or a sale of
all or substantially all of the assets of the Corporation shall be deemed not to
be a liquidation, dissolution or winding up of the Corporation.
(c) Redemption.
(1) Except as provided in clause (9) of this Section (c), the shares of
this Series are not redeemable prior to March 31, 2005. On and after such date,
the shares of this Series are redeemable at the option of the Corporation, by
resolution of the Board of Directors, in whole or in part, from time to time
upon not less than 30 nor more than 60 days' notice, at a cash redemption price
of $24,500 per share, subject to adjustment as provided in clause (1) of Section
(e).
(2) Except in the case of a redemption pursuant to clause (9) of this
Section (c), the redemption price to be paid for shares of this Series may only
be paid from the sale proceeds of Common Shares, other equity stock, other
rights or options to purchase any of the foregoing (other than debt securities
or preferred stock convertible into or exchangeable or exercisable for Common
Shares or equity stock) or from the Corporation's undistributed cumulative net
cash provided by operating activities.
For this purpose undistributed cumulative net cash provided by operating
activities means the Corporation's aggregate "net cash provided by operating
activities" determined on a cumulative basis from the date of organization of
the Corporation through the end of the calendar quarter immediately preceding
the date of redemption as reduced by aggregate "distributions paid to
shareholders" and "distributions from operations to minority interests in
consolidated real estate entities" that occur during such period. The terms "net
cash provided by operating activities," "distributions paid to shareholders" and
"distributions from operations to minority interests in consolidated real estate
entities" shall mean all amounts that should, in accordance with generally
accepted accounting principles as in effect in the United States of America from
time to time, consistently applied, and past practice of the Corporation, be
reflected on the consolidated financial statements of the Corporation under such
heading or similar heading.
(3) If fewer than all the outstanding shares of this Series are to be
redeemed, the number of shares to be redeemed will be determined by the Board of
Directors, and such shares shall be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or by lot in a
manner determined by the Board of Directors.
(4) If a redemption date falls after a dividend payment record date and
prior to the corresponding dividend payment date, each holder of shares of this
Series at the close of business on such dividend payment record date shall be
entitled to the dividend payable on such shares on the corresponding dividend
payment date notwithstanding the redemption of such shares before such dividend
payment date. Except as expressly provided herein above, the Corporation shall
make no payment or allowance for unpaid dividends on shares of this Series
called for redemption.
(5) Notice of redemption shall be given by publication in a newspaper of
general circulation in the County of Los Angeles and The City of New York, such
publication to be made once a week for two successive weeks, commencing not less
than 30 nor more than 60 days prior to the date fixed for redemption thereof. A
similar notice will be mailed by the Corporation by first class mail, postage
pre-paid, to each record holder of the shares of this Series to be redeemed, not
less than 30 nor more than 60 days prior to such redemption date, to the
respective addresses of such holders as the same shall appear on the stock
transfer records of the Corporation. Each notice shall state: (i) the redemption
date; (ii) the number of shares of this Series to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that, except
as provided in clause (4) of this Section (c), dividends on the shares to be
redeemed will cease on such redemption date. If fewer than all the shares of
this Series held by any holder are to be redeemed, the notice mailed to such
holder shall also specify the number of shares of this Series to be redeemed
from such holder.
(6) In order to facilitate the redemption of shares of this Series, the
Board of Directors may fix a record date for the determination of the shares to
be redeemed, such record date to be not less than 30 nor more than 60 days prior
to the date fixed for such redemption.
(7) Notice having been given as provided above, from and after the date
fixed for the redemption of shares of this Series by the Corporation (unless the
Corporation shall fail to make available the money necessary to effect such
redemption), the holders of shares selected for redemption shall cease to be
shareholders with respect to such shares and shall have no interest in or claim
against the Corporation by virtue thereof and shall have no voting or other
rights with respect to such shares, except the right to receive the moneys
payable upon such redemption from the Corporation, less any required tax
withholding amount, without interest thereon, upon surrender (and endorsement or
assignment of transfer, if required by the Corporation and so stated in the
notice) of their certificates, and the shares represented thereby shall no
longer be deemed to be outstanding. If fewer than all the shares represented by
a certificate are redeemed, a new certificate shall be issued, without cost to
the holder thereof, representing the unredeemed shares. The Corporation may, at
its option, at any time after a notice of redemption has been given, deposit the
redemption price for the shares of this Series designated for redemption and not
yet redeemed, plus the amount of the dividends, if any, to which the holders of
this Series are entitled under clause (4) above, with the transfer agent or
agents for this Series, as a trust fund for the benefit of the holders of the
shares of this Series designated for redemption, together with irrevocable
instructions and authority to such transfer agent or agents that such funds be
delivered upon redemption of such shares and to pay, on and after the date fixed
for redemption or prior thereto, the redemption price of the shares to their
respective holders upon the surrender of their share certificates. From and
after the making of such deposit, the holders of the shares designated for
redemption shall cease to be shareholders with respect to such shares and shall
have no interest in or claim against the Corporation by virtue thereof and shall
have no voting or other rights with respect to such shares, except the right to
receive from such trust fund the moneys payable upon such redemption, without
interest thereon, upon surrender (and endorsement, if required by the
Corporation) of their certificates, and the shares represented thereby shall no
longer be deemed to be outstanding. Any balance of such moneys remaining
unclaimed at the end of the five-year period commencing on the date fixed for
redemption shall be repaid to the Corporation upon its request expressed in a
resolution of its Board of Directors.
(8) Any shares of this Series that shall at any time have been redeemed
shall, after such redemption, have the status of authorized but unissued equity
shares, without designation as to series until such shares are once more
designated as part of a particular series by the Board of Directors.
(9) If the Board of Directors of the Corporation shall, at any time and
in good faith, be of the opinion that ownership of securities of the Corporation
has or may become concentrated to an extent that may prevent the Corporation
from qualifying as a real estate investment trust ("REIT") under the REIT
Provisions of the Internal Revenue Code (as defined below), then the Board of
Directors shall have the power, by lot or other means deemed equitable by them,
to prevent the transfer of and/or to call for redemption a number of shares of
this Series sufficient, in the opinion of the Board of Directors, to maintain or
bring the direct or indirect ownership thereof into conformity with the
requirements of the REIT Provisions of the Internal Revenue Code. The redemption
price to be paid for shares of this Series so called for redemption, on the date
fixed for redemption, shall be, as applicable, the average of the daily closing
prices on the principal exchange on which such shares are traded or the average
of the highest bid and the lowest asked quotations as reported by the National
Quotation Bureau, Incorporated or a similar organization selected from time to
time by the Corporation in each case for the 15 consecutive trading days
commencing 20 trading days prior to the redemption or if there are no such bid
and asked quotations, as determined by the Board of Directors in good faith;
provided that if interests in shares of this Series are represented by
depositary shares, then the redemption price shall be determined in accordance
with the foregoing, but with respect to one depositary share, multiplied by the
number of depositary shares that together represent an interest in one share of
this Series. From and after the date fixed for redemption by the Board of
Directors, the holder of any shares of this Series so called for redemption
shall cease to be entitled to any distributions, voting rights and other
benefits with respect to such shares of this Series, other than the right to
payment of the redemption price determined as aforesaid. "REIT Provisions of the
Internal Revenue Code" shall mean Sections 856 through 860 and related or
successor provisions of the Internal Revenue Code of 1986, as amended. In order
to exercise the redemption option set forth in this clause (9), with respect to
the shares of this Series, the Corporation shall give notice of redemption in
the manner provided in clause (5) of this Section (c). Except as provided in
clause (4) of this Section (c), dividends on the shares to be redeemed will
cease on such redemption date. If fewer than all the shares of this Series held
by any holder are to be redeemed, the notice mailed to such holder shall also
specify the number of shares of this Series to be redeemed from such holder.
(d) Conversion. (1) Except as set forth in this clause (1) of Section
(d), the shares of this Series are not convertible into shares of any other
class or series of the capital stock of the Corporation. If the Corporation (or
any successor entity which succeeds to the obligations of the Corporation
hereunder) determines that (i) it will no longer constitute a qualifying REIT
under the REIT Provisions of the Internal Revenue Code for United States federal
income tax purposes or (ii) it will no longer file a United States federal
income tax return as a REIT (each of the foregoing, a "REIT Termination Event"),
then each share of this Series shall be convertible at any time thereafter at
the option of the holder thereof into a number of Common Shares equal to $20,000
divided by the Conversion Price.
For purposes hereof, "Conversion Price" shall mean initially, $20.92
(resulting in a conversion rate of 956 Common Shares for each share of this
Series), as such Conversion Price may be adjusted pursuant to Section (e).
Notice of a REIT Termination Event and of the right of holders of shares
of this Series to convert as provided in this Section, shall be given by
publication in a newspaper of general circulation in the County of Los Angeles
and The City of New York, such publication to be made once a week for two
successive weeks, commencing within fifteen days after the occurrence of such
event. A similar notice will be mailed by the Corporation concurrently by first
class mail, postage pre-paid, to each record holder of the shares of this
Series, to the respective addresses of such holders as the same shall appear on
the stock transfer records of the Corporation.
Any holder of shares of this Series desiring to convert the same into
Common Shares shall surrender the certificate or certificates for the shares of
this Series being converted, duly endorsed or assigned to the Corporation or in
blank, at the principal office of the Corporation or at a bank or trust company
appointed by the Corporation for that purpose, accompanied by a written notice
of conversion specifying the number (in whole shares) of shares of this Series
to be converted and the name or names in which such holder wishes the
certificate or certificates for Common Shares to be issued; in case such notice
shall specify a name or names other than that of such holder, such notice shall
be accompanied by instruments of transfer, in form reasonably satisfactory to
the Corporation, duly executed by the holder or such holder's duly authorized
attorney and payment of all transfer taxes payable upon the issue of Common
Shares in such name or names or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid. In the event that less
than all of the shares of this Series represented by a certificate are to be
converted by a holder, upon such conversion the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder a certificate or
certificates for the shares of this Series not so converted. The right to
convert shares of this Series called for redemption shall terminate at the close
of business on the redemption date pursuant to Section (c) above. The holders of
shares of this Series at the close of business on a dividend payment record date
shall be entitled to receive the dividend payable on such shares on the
corresponding dividend payment date notwithstanding the conversion thereof or
the Corporation's failure to pay the dividend due on such dividend payment date.
However, shares of this Series surrendered for conversion during the period from
the close of business on any record date for the payment of dividends on such
shares of this Series to the opening of business on the corresponding dividend
payment date (except shares called for redemption on a redemption date during
such period, which shall be entitled to such dividend on the dividend payment
date) must be accompanied by payment of an amount equal to the dividend payable
on such shares on such dividend payment date. A holder of shares of this Series
on such dividend payment record date who (or whose transferee) tenders shares of
this Series on such dividend payment date will receive the dividend payable on
such shares by the Corporation on such date, and the converting holder need not
include payment in the amount of such dividend upon surrender of shares of this
Series for conversion. Except as expressly provided herein, no payment or
adjustment will be made on account of accrued or unpaid dividends upon the
conversion of shares of this Series.
As promptly as practicable after the surrender of certificates for
shares of this Series as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Shares issuable upon
the conversion of such shares in accordance with the provisions of this Section
(d).
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
this Series shall have been surrendered and such notice (and if applicable,
payment of an amount equal to the dividend payable on such shares) received by
the Corporation as aforesaid, and the person or persons in whose name or names
any certificate or certificates for Common Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such conversion shall
be at the Conversion Price, unless the stock transfer books of the Corporation
shall be closed on that date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of business
on the next succeeding day on which such stock transfer books are open.
(2) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Shares, for
the purpose of issuance upon conversion of shares of this Series, the full
number of Common Shares then deliverable upon the conversion of all shares of
this Series then outstanding and shall take all action necessary so that Common
Shares so issued will be validly issued, fully paid and nonassessable. For
purposes of this clause (2) of Section (d), the number of Common Shares that
shall be required to be reserved for delivery upon the conversion of all
outstanding shares of this Series shall be computed as if at the time of
computation all such outstanding shares were held by a single holder. The
Corporation shall use its best efforts to list the Common Shares required to be
delivered upon conversion of shares of this Series, prior to such conversion,
upon each national securities exchange or quotation system, if any, upon which
the outstanding Common Shares are listed or quoted at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be obligated
to deliver upon conversion of any shares of this Series, the Corporation shall
endeavor to comply with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any approval of or
consent to the delivery thereof by, any governmental authority.
(3) The Corporation will pay any and all stamp or similar taxes that may
be payable in respect of the issuance or delivery of Common Shares on conversion
of shares of this Series. The Corporation shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issuance
and delivery of Common Shares in a name other than that in which the shares of
this Series so converted were registered, and no such issuance or delivery shall
be made unless and until the person requesting such issuance has paid to the
Corporation the amount of any such tax or has established to the satisfaction of
the Corporation that such tax has been paid.
(4) No fractional shares or scrip representing fractions of Common
Shares shall be issued upon conversion of shares of this Series. Instead of any
fractional interest in a Common Share that would otherwise be deliverable upon
the conversion of a share of this Series, the Corporation shall pay to the
holder of such share an amount in cash (computed to the nearest cent) based upon
the value of Common Shares on the last business day immediately preceding the
conversion date. If more than one share shall be surrendered for conversion at
one time by the same holder, the number of full Common Shares issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of this Series so surrendered. For purposes hereof, the value of Common
Shares shall be determined as provided in clause (9) of Section (c).
(e) Adjustments. (1) Other than a dividend or distribution as to which
the Corporation will claim a deduction for dividends paid in computing its
taxable income pursuant to the REIT Provisions of the Internal Revenue Code, in
the event that the Corporation shall subdivide or combine its outstanding Common
Shares into a greater or smaller number of Common Shares, or shall make a
dividend or other distribution of Common Shares to the holders of any of its
Common Shares, then in each case (i) the outstanding shares of this Series
shall, as appropriate, (A) be subdivided or combined in the same proportion as
the Common Shares are subdivided or combined or (B) receive the same
proportionate dividend or distribution payable in shares of this Series as paid
or issued with respect to the Common Shares and (ii) the per share dollar
amounts specified herein for computing dividends per quarter or year, the
maximum liquidation distribution and the redemption price shall be adjusted so
that the total of each such amount for all outstanding shares of this Series is
the same immediately after, as it was immediately prior to, the subdivision,
combination, dividend or distribution.
(2) In the event that the Corporation shall issue rights, warrants or
options to all holders of its Common Shares entitling them to subscribe for or
purchase Common Shares at a price per share less than the current market price
(as defined below) per share of a Common Share on the date fixed for the
determination of stockholders entitled to receive such rights, warrants or
options, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator shall be the number
of Common Shares outstanding at the close of business on the date fixed for such
determination plus the number of Common Shares which the aggregate of the
offering price of the total number of Common Shares offered for subscription or
purchase would purchase at such current market price and the denominator shall
be the number of Common Shares outstanding at the close of business on the date
fixed for such determination plus the number of Common Shares so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For purposes of clause (2) of this Section (e), the number of
Common Shares at any time outstanding shall include shares issuable in respect
of scrip certificates issued in lieu of fractions of Common Shares.
(3) In the event that the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Shares evidence of its indebtedness or
assets (including debt securities, but excluding (i) rights, warrants or options
referred to in clause (2) of this Section (e), (ii) any dividend or distribution
paid in cash out of or in respect of Available Cash (as defined below), (iii)
any dividend or distribution as to which the Corporation will claim a deduction
for dividends paid in computing its taxable income pursuant to the REIT
Provisions of the Internal Revenue Code and (iv) any dividend or distribution
referred to in clause (1) of this Section (e)), the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share of the Common Shares on the dated fixed for such determination
less the then fair market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be conclusive) of such
portion of the assets or evidences of indebtedness so distributed applicable to
one Common Share (the "Distribution FMV") and the denominator shall be such
current market price per Common Share, such adjustment to become effective
immediately prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such distribution;
provided, however, that if the Distribution FMV exceeds the current market price
per share, or if the current market price exceeds the Distribution FMV by less
than 10%, in lieu of the foregoing adjustment, from and after the record date
for determining holders of Common Shares entitled to receive the distribution, a
holder of a share of this Series that converts such share in accordance with the
provisions hereof shall upon such conversion be entitled to receive, in addition
to the Common Shares into which the share of this Series is convertible, the
kind and amount of securities, cash or other assets comprising the distribution
that such holder would have received if such holder had converted the share
immediately prior to the record date for determining the holders of Common
Shares entitled to receive the distribution.
For purposes hereof, Available Cash shall mean net income before loss on
early extinguishment of debt and gain on disposition of investments, adjusted as
follows: (i) plus depreciation and amortization, (ii) plus gain on disposition
of investments, (iii) less distributions to minority interest in excess of
minority interest in income and (iv) less dividends on preferred shares, equity
shares and Common Shares. The terms "net income," "loss on early extinguishment
of debt," "gain on disposition of investments," "depreciation and amortization,"
"distributions to minority interest" and "minority interest in income" shall
mean, as of any date of determination, all amounts that should, in accordance
with generally accepted accounting principles as in effect in the United States
of America from time to time, consistently applied, and past practice of the
Corporation, be reflected on the consolidated financial statements of the
Corporation under such heading (or similar heading) and shall be determined in
respect of the year in which the dividend or distribution occurs.
(4) Other than a dividend or distribution as to which the Corporation
will claim a deduction for dividends paid in computing its taxable income
pursuant to the REIT Provisions of the Internal Revenue Code, in the event that
the Corporation shall pay a dividend or make a distribution on its Common Shares
in any shares of its capital stock (other than Common Shares) or issue by
reclassification of its Common Shares any shares of its capital stock (other
than Common Shares), a holder of a share of this Series who subsequently
converts the share, at the time of conversion shall be entitled to receive the
number of shares of capital stock of the Corporation which such holder would
have owned immediately following such dividend, distribution or reclassification
if such holder had converted the share immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a reclassification.
If after an adjustment a holder of a share of this Series upon
conversion of such share may receive shares of two or more classes of capital
stock of the Corporation, the Conversion Price shall thereafter be subject to
adjustment upon the occurrence of an action taken with respect to any such class
of capital stock as is contemplated by this Section (e) with respect to the
Common Shares on terms comparable to those applicable to the Common Shares in
this Section (e).
(5) In the event that the Corporation shall effect any capital
reorganization or reclassification of its shares (other than a subdivision,
combination or stock dividend referred to in clause (1) of this Section (e)
above or a dividend or distribution as to which the Corporation will claim a
deduction for dividends paid in computing its taxable income pursuant to the
REIT Provisions of the Internal Revenue Code) or shall consolidate or merge with
or into any other corporation (other than a consolidation or merger in which the
Corporation is the surviving corporation and each Common Share outstanding
immediately prior to such consolidation or merger is to remain outstanding
immediately after such consolidation or merger) or shall sell, lease or transfer
all or substantially all of its assets to any other person or entity for a
consideration consisting in whole or in part of equity securities of such other
entity, lawful provision shall be made as a part of the terms of such
transaction whereby the holders of shares of this Series shall, if entitled to
convert such shares at any time after the consummation of such transaction,
receive upon conversion thereof in lieu of each Common Share that would have
been issuable upon conversion of such shares prior to such consummation the same
kind and amount of stock (and other securities, cash or property, if any) as may
be issuable or distributable in connection with such transaction with respect to
each outstanding Common Share subject to adjustments for subsequent stock
dividends and distributions, subdivisions or combinations of shares, capital
reorganizations, reclassifications, consolidations or mergers as nearly
equivalent as possible to the adjustments provided for in this Section (e).
(6) For the purpose of any computation under this Section (e), the
"current market price" per Common Share on any date shall be determined as of
the date in question in the manner provided in clause (9) of Section (c) above.
(7) Notwithstanding the above provisions, no adjustment in the
Conversion Price shall be required unless such adjustment (plus any adjustments
not previously made by reason of this subsection) would require an increase or
decrease of at least 1% in such price; provided, however, that any adjustments
which by reason of this subsection are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; provided, further,
that adjustment shall be required and shall be made in accordance with the
provisions of this Section (e) (other than this subsection) not later than the
same time as may be required in order to preserve the tax-free nature of a
distribution to the holder of any share of this Series. All calculations under
this Section (e) shall be made to the nearest four digits.
(8) The Corporation shall take all action necessary so that shares of
this Series issued on adjustments pursuant to this Section (e) will be validly
issued, fully paid and nonassessable. The Corporation shall use its best efforts
to list the shares of this Series required to be issued upon such adjustment,
prior to such issuance, upon each national securities exchange or quotation
system, if any, upon which the outstanding shares of this Series are listed or
quoted at the time of such issuance. Prior to the delivery of any securities
that the Corporation shall be obligated to issue pursuant to clause (1) of this
Section (e), the Corporation shall endeavor to comply with all federal and state
laws and regulations thereunder requiring the registration of such securities
with, or any approval of or consent to the delivery thereof by, any governmental
authority.
(9) Whenever the Conversion Price is adjusted as herein provided:
(A) the Corporation shall compute the adjusted Conversion Price and
shall cause to be prepared a certificate signed by the chief financial officer
of the Corporation setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based and the
computation thereof which certificate, absent manifest error, shall be prima
facie evidence of the correctness of such adjustment; such certificate shall
forthwith be filed with each transfer agent for the shares of this Series; and
(B) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall, as soon as practicable, be
mailed to the holders of record of outstanding shares of this Series.
(10) For purposes of this Section (e), the number of Common Shares at
any time outstanding shall not include any Common Shares then owned or held by
or for the account of any subsidiary of the Corporation, except to the extent of
the ownership of common shares of such subsidiary by any person other than the
Corporation.
(11) In case any event shall occur as to which the provisions of this
Section (e) are not strictly applicable but the failure to make any adjustment
would not fairly protect the conversion rights represented by the shares of this
Series in accordance with the essential intent and principles of this Section,
then, in each such case, the Corporation shall appoint an independent firm of
public accountants of recognized national standing (which may be the regular
auditors of the Corporation), which shall gave their opinion upon the
adjustments, if any, on a basis consistent with the essential intent and
principles established in this Section, necessary to preserve, without dilution,
the conversion rights represented by the shares of this Series. Upon receipt of
such opinion, the Corporation will promptly mail a copy thereof to each holder
of shares of this Series and shall make the adjustments described therein. The
certificate of any independent firm of public accountants of nationally
recognized standing selected by the Board of Directors shall be presumptive
evidence of the correctness of any computation made under this subsection.
(f) Voting Rights. The shares of this Series shall not have any voting
powers either general or special, except as required by law, except as set forth
in clause (1) of this Section (f).
(1) Holders of shares of this Series shall have the right to vote on all
matters presented to holders of the Common Shares for a vote and vote together
as one class with holders of Common Shares and other series of equity shares
that share voting rights with holders of shares of this Series. Each outstanding
share of this Series entitles the holder to one hundred (100) votes, except that
such holder, together with holders of Common Shares and other series of equity
shares that share voting rights with holders of shares of this Series, has
cumulative voting rights in electing Directors. For purposes of this clause (1)
of Section (f), each holder of shares of this Series shall have the right (i) to
cast as many votes as there are Directors to be elected multiplied by one
hundred (100) times the number of shares of this Series registered in the name
of such holder and (ii) either to cast all of such votes for one candidate for
Director or to distribute such votes among as many candidates as such holder
chooses.
(2) Except as required by law, nothing herein shall be taken to require
a class vote or consent in connection with any matter, including the
authorization, designation, increase or issuance of any shares of any class or
series (including additional shares of this Series) that rank senior to, junior
to or on a parity with this Series as to dividends and liquidation rights or in
connection with the authorization, designation, increase or issuance of any
bonds, mortgages, debentures or other debt obligations of the Corporation.
Exhibit 3
CASH ELECTION CERTIFICATE
On November 4, 1999, Public Storage, Inc. declared a special
distribution payable to common shareholders of record on November 15, 1999 of:
(1) $.65 per common share payable in depositary shares (expected to be .0325
depositary shares), with each depositary share representing 1/1,000 of a share
of Public Storage's Equity Stock, Series A, or (2) $.62 per common share payable
in cash. The special distribution is payable in depositary shares or cash, at
the option of each shareholder, exercisable by December 23, 1999, and will be
paid on January 14, 2000. The special distribution and the terms of the
depositary shares are described in the documents accompanying this cash election
certificate.
Please sign below if you elect to receive your special distribution in
cash on all shares of common stock that you owned on November 15, 1999. Your
election to receive your special distribution in cash may not be made as to less
than all of your common shares. If you want to receive depositary shares, you
should not complete this cash election certificate. If you receive depositary
shares, you will receive cash in lieu of any fractional depositary share, so
that you will receive a whole number of depositary shares. If you want to
receive cash, you must sign and date this cash election certificate and return
it to BankBoston, N.A. by December 23, 1999. To be effective, your properly
completed cash election certificate must be received by BankBoston, N.A. on or
before 5:00 p.m., Eastern Time, on December 23, 1999. If you do not return a
properly completed cash election certificate by 5:00 p.m., Eastern Time, on
December 23, 1999, you will receive your special distribution in depositary
shares.
By signing below, I elect to receive cash in payment of the special
distribution on all of my common stock owned on November 15, 1999.
Signature:______________________ Date:___________
Signature:______________________ Date:___________
Please sign exactly as your name appears on this
cash election certificate. Joint owners should
each sign. Trustees and others acting in a
representative capacity should indicate the
capacity in which they sign.
Please sign, date and deliver this cash election certificate to BankBoston, N.A.
in the enclosed envelope or at one of the following addresses:
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By Mail By Hand By Overnight Courier For Assistance For Information
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BankBoston, N.A. Securities Transfer & BankBoston, N.A. BankBoston, N.A. Georgeson Shareholder
c/o EquiServe Reporting Services c/o EquiServe Shareholder Services Communications Inc.
Corporate Actions c/o EquiServe Corporate Actions (781) 575-3120 (800) 248-2681
P.O. Box 9573 100 William Street 40 Campanelli Drive
Boston, MA 02205-9573 Galleria Braintree, MA 02184
New York, NY 10038
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