CERTIFICATE OF DETERMINATION OF PREFERENCES
OF
8 7/8% SERIES Y CUMULATIVE REDEEMABLE
PREFERRED STOCK
OF
PS BUSINESS PARKS, INC.
[As Filed in the Office of the Secretary of State
of the State of California on July 12, 2000]
The undersigned, David Goldberg and Jack E. Corrigan, Vice President and
Secretary, respectively, of PS BUSINESS PARKS, INC., a California corporation,
do hereby certify:
FIRST: The Restated Articles of Incorporation of the Corporation authorize
the issuance of 50,000,000 shares of stock designated "preferred shares,"
issuable from time to time in one or more series, and authorize the Board of
Directors to fix the number of shares constituting any such series, and to
determine or alter the dividend rights, dividend rate, conversion rights, voting
rights, right and terms of redemption (including sinking fund provisions), the
redemption price or prices and the liquidation preference of any wholly unissued
series of such preferred shares, and the number of shares constituting any such
series.
SECOND: The Board of Directors of the Corporation did duly adopt the
resolutions attached hereto as Exhibit A and incorporated herein by reference
authorizing and providing for the creation of a series of preferred shares to be
known as "8 7/8% Series Y Cumulative Redeemable Preferred Stock" consisting of
480,000 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
12th day of July, 2000.
/s/ DAVID GOLDBERG
------------------------------
David Goldberg, Vice President
/s/ JACK E. CORRIGAN
------------------------------
Jack E. Corrigan, Secretary
<PAGE>
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS
OF PS BUSINESS PARKS, INC.
ESTABLISHING A SERIES OF 8 7/8% SERIES Y
CUMULATIVE REDEEMABLE PREFERRED STOCK
RESOLVED that pursuant to the authority conferred upon the Board of
Directors by Article III of the Restated Articles of Incorporation of this
Corporation, there is hereby established a series of the authorized preferred
shares of this Corporation having a par value of $.01 per share, which series
shall be designated "8 7/8% Series Y Cumulative Redeemable Preferred Stock,"
shall consist of 480,000 shares and shall have the following rights, preferences
and privileges:
1. Rank. The 8 7/8% Series Y Cumulative Redeemable Preferred Stock (the
"Series Y Preferred Stock") will, with respect to distributions and rights upon
voluntary or involuntary liquidation, winding-up or dissolution of the
Corporation, or both, rank senior to all classes or series of Common Shares and
to all classes or series of equity securities of the Corporation now or
hereafter authorized, issued or outstanding, other than any class or series of
equity securities of the Corporation expressly designated as ranking on a parity
with or senior to the Series Y Preferred Stock as to distributions and rights
upon voluntary or involuntary liquidation, winding-up or dissolution of the
Corporation. For purposes of this Certificate of Determination, the term "Parity
Preferred Stock" shall be used to refer to any class or series of capital stock
of the Corporation now or hereafter authorized, issued or outstanding expressly
designated by the Corporation to rank on a parity with Series Y Preferred Stock
with respect to distributions and rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation (including the
Corporation's 9 1/4% Cumulative Preferred Stock, Series A, 8 7/8% Series B
Cumulative Redeemable Preferred Stock, 8 3/4% Series C Cumulative Redeemable
Preferred Stock and 8 7/8% Series X Cumulative Redeemable Preferred Stock). For
purposes of the preceding sentence, "capital stock" means any equity securities
(including Common Shares and Preferred Stock), shares, participation or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.
2. Distributions Rights. (a) Payment of Distributions. Subject to the
rights of holders of Parity Preferred Stock as to the payment of distributions,
holders of Series Y Preferred Stock shall be entitled to receive the Series Y
Priority Return, when, as and if declared by the Board of Directors of the
Corporation, out of funds legally available for the payment of distributions.
Such distributions shall be cumulative, shall accrue from the original date of
issuance of the Series Y Preferred Stock and will be payable (A) quarterly in
arrears, on March 31, June 30, September 30 and December 31 of each year
commencing on the last day of the calendar quarter following the date of
issuance of such stock and, (B) in the event of a redemption, on the redemption
date (each a "Series Y Preferred Stock Distribution Payment Date"). If any
Preferred Stock Distribution Payment Date is not a Business Day (as defined
herein), then payment of the distribution to be made on such date shall be made
on the Business Day immediately preceding such Preferred Stock Distribution
Payment Date in each case with the same force and effect as if made on such
date. Distributions on the Series Y Preferred Stock will be made to the holders
of record of the Series Y Preferred Stock on the relevant record dates to be
fixed by the Board of Directors of the Corporation, which record dates shall in
no event be more than 45 days or less than 15 days prior to the relevant
Series Y Preferred Stock Distribution Payment Date (each a "Distribution Record
Date").
For purposes of this Certificate of Determination, the following terms
shall have the meanings set forth herein: (i) "Liquidation Preference"
shall mean, with respect to the Series Y Preferred Stock, $25.00 per share
of Series Y Preferred Stock, plus the amount of any accumulated and unpaid
Series Y Priority Return (as hereinafter defined) with respect to such share,
whether or not declared, minus any distributions in excess of the Series Y
Priority Return that has occurred with respect to such Series Y Perferred Units,
<PAGE>
to the date of payment; (ii) "Series Y Priority Return" shall mean an amount
equal to 8 7/8% per annum of the Liquidation Preference per share of Series Y
Preferred Stock, commencing on the date of issuance of such share of Series Y
Preferred Stock, determined on the basis of a 365-day year (and actual days for
any period), cumulative to the extent not distributed on any Series Y Preferred
Stock Distribution Payment Date; and (iii) "Business Day" shall mean each day,
other than a Saturday or a Sunday, which is not a day on which banking
institutions in New York, New York are authorized or required by law, regulation
or executive order to close.
(b) Prohibition on Distributions. No distributions on Series Y Preferred
Stock shall be authorized by the Board of Directors of the Corporation or paid
or set apart for payment by the Corporation at any such time as the terms and
provisions of any agreement of the Corporation including any agreement relating
to indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent that such authorization or payment shall be restricted or prohibited by
law.
(c) Distributions Cumulative. Distributions on the Series Y Preferred Stock
will accrue whether or not the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness at any time
prohibits the current payment of distributions, whether or not the Corporation
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized or
declared. Accrued but unpaid distributions on the Series Y Preferred Stock will
accumulate as of the Series Y Preferred Stock Distribution Payment Date on which
they first become payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time, without reference to
a regular Series Y Preferred Stock Distribution Payment Date to holders of
record of the Series Y Preferred Stock on the record date fixed by the Board of
Directors which date shall not be more than 45 days or less than 15 days prior
to the payment date. Accumulated and unpaid distributions will not bear
interest.
(d) Priority as to Distributions. (i) So long as any Series Y Preferred
Stock is outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Common Shares or any class or series of other stock of the
Corporation ranking junior as to the payment of distributions or rights upon
voluntary or involuntary dissolution, liquidation or winding-up of the
Corporation to the Series Y Preferred Stock (such Common Shares or other junior
stock, collectively, "Junior Stock"), nor shall any cash or other property be
set aside for or applied to the purchase, redemption or other acquisition for
consideration of any Series Y Preferred Stock, any Parity Preferred Stock or any
Junior Stock, unless, in each case, all distributions accumulated on all
Series Y Preferred Stock and all classes and series of outstanding Parity
Preferred Stock have been paid in full. The foregoing sentence shall not
prohibit (i) distributions payable solely in Junior Stock, and (ii) the
conversion of Series Y Preferred Stock, Junior Stock or Parity Preferred Stock
into stock of the Corporation ranking junior to the Series Y Preferred Stock as
to distributions.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series Y Preferred Stock, all distributions authorized and
declared on the Series Y Preferred Stock and all classes or series of
outstanding Parity Preferred Stock with respect to distributions shall be
authorized and declared so that the amount of distributions authorized and
declared per share of Series Y Preferred Stock and such other classes or series
of Parity Preferred Stock shall in all cases bear to each other the same ratio
that accrued distributions per share on the Series Y Preferred Stock and such
other classes or series of Parity Preferred Stock (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Preferred Stock do not have cumulative
distribution rights) bear to each other.
(e) No Further Rights. Holders of Series Y Preferred Stock shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
3. Liquidation. (a) Payment of Liquidating Distributions. Subject to the
rights of holders of Parity Preferred Stock with respect to rights upon any
voluntary or involuntary liquidation, dissolution or winding-up of
<PAGE>
the Corporation and subject to any series of capital stock ranking senior to the
Series Y Preferred Stock with respect to rights upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
holders of Series Y Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution or the proceeds
thereof, after payment or provision for debts and other liabilities of the
Corporation, but before any payment or distributions of the assets shall be made
to holders of Common Shares or any other class or series of shares of the
Corporation that ranks junior to the Series Y Preferred Stock as to rights upon
liquidation, dissolution or winding-up of the Corporation, an amount equal to
the Liquidation Preference per share of Series Y Preferred Stock. If upon such
voluntary or involuntary liquidation, dissolution or winding-up, there are
insufficient assets to permit full payment of liquidating distributions to the
holders of Series Y Preferred Stock and any Parity Preferred Stock as to rights
upon liquidation, dissolution or winding-up of the Corporation, all payments of
liquidating distributions on the Series Y Preferred Stock and such Parity
Preferred Stock shall be made so that the payments on the Series Y Preferred
Stock and such Parity Preferred Stock shall in all cases bear to each other the
same ratio that the respective rights of the Series Y Preferred Stock and such
other Parity Preferred Stock (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock does not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or involuntary
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 (i) fax and (ii) by first
class mail, postage pre-paid, not less than 10 and not more than 60 days prior
to the payment date stated therein, to each record holder of the Series Y
Preferred Stock at the respective addresses of such holders as the same shall
appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series Y Preferred
Stock will have no right or claim to any of the remaining assets of the
Corporation.
(d) Consolidation, Merger or Certain Other Transactions. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation to, or the consolidation or merger or other
business combination of the Corporation with or into, any corporation, trust or
other entity (or of any corporation, trust or other entity with or into the
Corporation) or a statutory share exchange shall not be deemed to constitute a
liquidation, dissolution or winding-up of the Corporation.
4. Redemption. (a) Right of Optional Redemption. The Series Y Preferred
Stock may not be redeemed prior to July 12, 2005. On or after such date, the
Corporation shall have the right to redeem the Series Y Preferred Stock, in
whole (but not in part), at any time, upon not less than 30 nor more than 60
days' written notice, at a redemption price, payable in cash, equal to the
Liquidation Preference (the "Series Y Redemption Price").
(b) Limitation on Redemption. The redemption price of the Series Y
Preferred Stock will be payable solely to the extent such payment would be
permitted as a distribution under the California Corporations Code.
(c) Procedures for Redemption. (i) Notice of redemption will be (i) faxed,
and (ii) mailed by the Corporation, postage prepaid, not less than 30 nor more
than 60 days prior to the redemption date, addressed to the respective holders
of record of the Series Y Preferred Stock to be redeemed at their respective
addresses as they appear on the transfer records of the Corporation. No failure
to give or defect in such notice shall affect the validity of the proceedings
for the redemption of any Series Y Preferred Stock except as to the holder to
whom such notice was defective or not given. In addition to any information
required by law or by the applicable rules of any exchange upon which the
Series Y Preferred Stock may be listed or admitted to trading, each such notice
shall state: (i) the redemption date, (ii) the redemption price, (iii) the
number of shares of Series Y Preferred Stock to be redeemed, (iv) the place or
places where such shares of Series Y Preferred Stock are to be surrendered for
<PAGE>
payment of the redemption price, (v) that distributions on the Series Y
Preferred Stock to be redeemed will cease to accumulate on such redemption date
and (vi) that payment of the redemption price and any accumulated and unpaid
distributions will be made upon presentation and surrender of such Series Y
Preferred Stock.
(ii) If the Corporation gives a notice of redemption in respect of Series Y
Preferred Stock (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Corporation will deposit irrevocably in
trust for the benefit of the Series Y Preferred Stock being redeemed funds
sufficient to pay the applicable Series Y Redemption Price, and will give
irrevocable instructions and authority to pay such Series Y Redemption Price to
the holders of the Series Y Preferred Stock upon surrender of the certificate
evidencing the Series Y Preferred Stock by such holders at the place designated
in the notice of redemption. On and after the date of redemption, distributions
will cease to accumulate on the Series Y Preferred Stock called for redemption,
unless the Corporation defaults in the payment thereof. If any date fixed for
redemption of Series Y Preferred Stock is not a Business Day, then payment of
the redemption price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Series Y Redemption Price or any accumulated or
unpaid distributions in respect of the Series Y Preferred Stock is improperly
withheld or refused and not paid by the Corporation, distributions on such
Series Y Preferred Stock will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series Y Redemption Price.
(d) Status of Redeemed Stock. Any Series Y Preferred Stock that shall at
any time have been redeemed shall after such redemption, have the status of
authorized but unissued Preferred Stock, without designation as to class or
series until such shares are once more designated as part of a particular class
or series by the Board of Directors.
5. Voting Rights. (a) General. Holders of the Series Y Preferred Stock will
not have any voting rights, except as set forth below.
(b) Right to Elect Directors. If the Corporation shall fail to pay full
cumulative dividends on the shares of Series Y Preferred Stock or any of its
preferred shares for six quarterly dividend payment periods, whether or not
consecutive (a "Dividend Default"), the holders of all outstanding preferred
shares, voting as a single class without regard to series, will be entitled to
elect two Directors until full cumulative dividends for all past dividend
payment periods on all preferred shares have been paid or declared and funds
therefor set apart for payment. Such right to vote separately as a class to
elect Directors shall, when vested, be subject, always, to the same provisions
for the vesting of such right to elect Directors separately as a class in the
case of future Dividend Defaults. At any time when such right to elect Directors
separately as a class shall have so vested, the Corporation may call, and, upon
the written request of the holders of record of not less than 20% of the total
number of preferred shares of the Corporation then outstanding, shall call, a
special meeting of stockholders for the election of Directors. In the case of
such a written request, such special meeting shall be held within 90 days after
the delivery of such request and, in either case, at the place and upon the
notice provided by law and in the Bylaws of the Corporation; provided that the
Corporation shall not be required to call such a special meeting if such request
is received less than 120 days before the date fixed for the next ensuing Annual
Meeting of Shareholders of the Corporation and the holders of all classes of
outstanding preferred shares are afforded the opportunity to elect such
Directors (or fill any vacancy) at such Annual Meeting of Shareholders.
Directors elected as aforesaid shall serve until the next Annual Meeting of
Shareholders of the Corporation or until their respective successors shall be
elected and qualified. If, prior to the end of the term of any Director elected
as aforesaid, a vacancy in the office of such Director shall occur during the
continuance of a Dividend Default by reason of death, resignation, or
disability, such vacancy shall be filled for the unexpired term by the
appointment of a new Director for the unexpired term of such former Director,
such appointment to be made by the remaining Director elected as aforesaid.
<PAGE>
(c) Certain Voting Rights. So long as any Series Y Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote of the
holders of a majority of the Series Y Preferred Stock outstanding at the time,
(i) designate or create, or increase the authorized or issued amount of, any
class or series of shares ranking prior to the Series Y Preferred Stock with
respect to payment of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any authorized shares of the Corporation into any such
shares, or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such shares, (ii) designate or
create, or increase the authorized or issued amount of, any Parity Preferred
Stock or reclassify any authorized shares of the Corporation into any such
shares, or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such shares, but only to the extent
such Parity Preferred Stock is issued to an Affiliate of the Corporation on
terms that differ from the terms of any Parity Preferred Stock issued to the
public or non-Affiliates of the Corporation, or (iii) either (A) consolidate,
merge into or with, or convey, transfer or lease its assets substantially as an
entirety, to any corporation or other entity, or (B) amend, alter or repeal the
provisions of the Corporation's Charter (including this Certificate of
Determination) or By-laws, whether by merger, consolidation or otherwise, in
each case that would materially and adversely affect the powers, special rights,
preferences, privileges or voting power of the Series Y Preferred Stock or the
holders thereof; provided, however, that with respect to the occurrence of a
merger, consolidation or a sale or lease of all of the Corporation's assets as
an entirety, so long as (a) the Corporation is the surviving entity and the
Series Y Preferred Stock remains outstanding with the terms thereof unchanged,
or (b) the resulting, surviving or transferee entity is a corporation organized
under the laws of any state and substitutes the Series Y Preferred Stock for
other preferred stock having substantially the same terms and same rights as the
Series Y Preferred Stock, including with respect to distributions, voting rights
and rights upon liquidation, dissolution or winding-up, then the occurrence of
any such event shall not be deemed to materially and adversely affect such
rights, privileges or voting powers of the holders of the Series Y Preferred
Stock; and provided, further, that any increase in the amount of authorized
Preferred Stock or the creation or issuance of any other class or series of
Preferred Stock, or any increase in an amount of authorized shares of each class
or series, in each case ranking either (a) junior to the Series Y Preferred
Stock with respect to payment of distributions and the distribution of assets
upon liquidation, dissolution or winding-up, or (b) on a parity with the
Series Y Preferred Stock with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up to the extent
such Preferred Stock is not issued to an Affiliate of the Corporation on terms
that differ from the terms of any Parity Preferred Stock issued to the public or
non-Affiliates of the Corporation, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of this Series and any other series of preferred shares
ranking on a parity with this Series as to dividends and upon liquidation,
voting as a single class without regard to series, will be required to issue,
authorize or increase the authorized amount of any class or series of shares
ranking prior to this Series as to dividends or upon liquidation or to issue or
authorize any obligation or security convertible into or evidencing a right to
purchase any such security, but subject to Section 5(c)(ii) hereof, the Articles
of Incorporation may be amended to increase the number of authorized preferred
shares ranking on a parity with or junior to this Series or to create another
class of preferred shares ranking on a parity with or junior to this Series
without the vote of the holders of outstanding shares of this Series.
6. Conversion. The holders of the Series Y Preferred Stock shall not have
any rights to convert such shares into shares of any other class or series of
stock or into any other securities of, or interest in, the Corporation.
7. No Sinking Fund. No sinking fund shall be established for the retirement
or redemption of Series Y Preferred Stock.
8. No Preemptive Rights. No holder of the Series Y Preferred Stock of the
Corporation shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of stock of the Corporation or any other
security of the Corporation which it may issue or sell.
