Exhibit 99.1
PUBLIC STORAGE, INC.
2001 STOCK OPTION AND INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement") is made as of the
____ day of _______, 200__ (the "Grant Date"), by and between Public Storage,
Inc. (the "Corporation") and ______________, an employee of the Corporation, one
of its Subsidiaries or a Service Provider (the "Optionee"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Corporation's 2001 Stock Option and Incentive Plan (the "Plan").
WHEREAS, the Board of Directors of the Corporation (the "Board") has
duly adopted, and the shareholders of the Corporation have duly approved, the
Plan, which provides for the grant to employees of the Corporation and its
Subsidiaries and Service Providers of options for the purchase of shares of the
Corporation's Common Stock, par value $.10 per share (the "Common Stock"), which
may be granted from time to time as the Committee so determines;
WHEREAS, the Corporation has determined that it is desirable and in its
best interests to grant to the Optionee, pursuant to the Plan, options to
purchase a certain number of shares of Common Stock as compensation for services
rendered to the Corporation, and/or in order to provide the Optionee with an
incentive to advance the interests of the Corporation, all according to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF OPTION.
Subject to the terms of the Plan (the terms of which are incorporated
by reference herein), the Corporation hereby grants to the Optionee the right
and option (the "Option") to purchase from the Corporation, on the terms and
subject to the conditions hereinafter set forth, __________ shares of Common
Stock. This Option shall not constitute an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. PRICE.
The purchase price (the "Option Price") of the shares of Common Stock
subject to the Option evidenced by this Option Agreement is $________ per share
(the Fair Market Value on the Grant Date).
3. EXERCISE OF OPTION.
Except as otherwise provided herein, the Option granted pursuant to
this Option Agreement shall be subject to exercise as follows:
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3.1 Time of Exercise of Option.
The Optionee may exercise the Option (subject to the limitations on
exercise set forth in the Plan or in this Option Agreement), in installments as
follows: (i) prior to the first anniversary of the Grant Date, the Option shall
not be exercisable; (ii) on the first anniversary of the Grant Date, the Option
shall become exercisable with respect to one-fifth of the shares of Common Stock
subject to the Option; (iii) on the second anniversary of the Grant Date, the
Option shall become exercisable with respect to an additional one-fifth of the
shares of Common Stock subject to the Option; (iv) on the third anniversary of
the Grant Date, the Option shall become exercisable with respect to an
additional one-fifth of the shares of Common Stock subject to the Option; (v) on
the fourth anniversary of the Grant Date, the Option shall become exercisable
with respect to an additional one-fifth of the shares of Common Stock subject to
the Option; and (vi) on the fifth anniversary of the Grant Date, the Option
shall become exercisable with respect to the remaining shares of Common Stock
subject to the Option. The foregoing installments, to the extent not exercised,
shall accumulate and be exercisable, in whole or in part, at any time and from
time to time, after becoming exercisable and prior to the termination of the
Option; provided, that no single exercise of the Option shall be for less than
100 shares, unless the number of shares purchased is the total number at the
time available for purchase under this Option.
3.2 Exercise by Optionee.
During the lifetime of the Optionee, only the Optionee (or, in the
event of the Optionee's legal incapacity or incompetency, the Optionee's
guardian or legal representative) or a person or entity to whom the Optionee has
transferred the Option in accordance with Section 6 hereof may exercise the
Option.
3.3 Term of Option.
The Option shall have a term of ten years, subject to earlier
termination in accordance with this Option Agreement or the terms of the Plan.
3.4 Limitations on Exercise of Option.
In no event may the Option be exercised, in whole or in part, after
ten years following the Grant Date, or after the occurrence of an event referred
to in Section 8 below which results in termination of the Option. In no event
may the Option be exercised for a fractional Share.
3.5 Termination of Employment or Other Relationship.
Subject to Sections 3.6 and 3.7 hereof, upon the termination of (i) the
employment of the Optionee by the Corporation or any Subsidiary or Service
Provider, or (ii) a Service Provider's relationship with the Corporation, the
Optionee shall have the right at any time within 30 days after such termination
and prior to termination of the Option pursuant to Section 3.4 above, to
exercise, in whole or in part, any Option held by such Optionee at the date of
such termination, to the extent such Option was exercisable immediately prior to
such termination.
3.6 Rights in the Event of Death.
If the Optionee dies while employed by the Corporation, a Subsidiary
or a Service Provider, or while serving as a Service Provider, the executors or
administrators or legatees or distributees of the Optionee's estate shall have
the right, at any time within one year after the date of the Optionee's death
and prior to termination of the Option pursuant to Section 3.4 above, to
exercise the Option with respect to all shares subject to the Option, whether or
not the Option was exercisable immediately prior to the Optionee's death.
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3.7 Rights in the Event of Disability.
If the Optionee terminates employment with the Corporation, a
Subsidiary, or a Service Provider, or if the Optionee ceases to be a Service
Provider, by reason of the permanent and total disability of the Optionee, then
the Optionee shall have the right, for a period of one year after such
termination and prior to termination of the Option pursuant to Section 3.4
above, to exercise the Option to the extent such Option was exercisable
immediately prior to such termination or becomes exercisable within such one
year period pursuant to Section 3.1 above. Whether termination of employment or
service is to be considered by reason of permanent and total disability for
purposes of this Option Agreement shall be determined by the Committee, which
determination shall be final and conclusive.
3.8 Reduction in Number of Shares Subject to Option.
The number of shares which may be purchased upon exercise of the
Option pursuant to this Section 3 shall be reduced by the number of shares
previously purchased upon exercise of the Option pursuant to this Section 3.
4. METHOD OF EXERCISE OF OPTION.
The Option may be exercised to the extent that it has become
exercisable hereunder by delivery to the Corporation on any business day, at its
principal office addressed to the attention of the Committee, of written notice
of exercise, which notice shall specify the number of shares for which the
Option is being exercised, and shall be accompanied by payment in full of the
Option Price of the shares for which the Option is being exercised. Payment of
the Option Price for the shares of Common Stock purchased pursuant to the
exercise of the Option shall be made (a) in cash or by check payable to the
order of the Corporation; (b) through the tender to the Corporation of shares of
Common Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (c) by a combination of the methods described
in (a) and (b). Payment in full of the Option Price need not accompany the
written notice of exercise provided the notice directs that the Common Stock
certificate or certificates for the shares for which the Option is exercised be
delivered to a specified licensed broker acceptable to the Corporation as the
agent for the Optionee and, at the time such Common Stock certificate or
certificates are delivered, the broker tenders to the Corporation cash (or cash
equivalents acceptable to the Corporation) equal to the Option Price plus the
amount, if any, of federal and/or other taxes which the Corporation may, in its
judgment, be required to withhold with respect to the exercise of the Option. An
attempt to exercise the Option granted other than as set forth above shall be
invalid and of no force or effect. Promptly after the exercise of the Option and
the payment in full of the Option Price of the shares of Common Stock covered
thereby, the Optionee shall be entitled to the issuance of a Common Stock
certificate or certificates evidencing the Optionee's ownership of such shares.
5. PARACHUTE LIMITATIONS.
Notwithstanding any other provision of this Option Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by a Optionee with the Corporation or any Subsidiary, except an agreement,
contract or understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an "Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation to the Optionee (including groups or
classes of participants or beneficiaries of which the Optionee is a member),
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whether or not such compensation is deferred, is in cash, or is in the form of a
benefit to or for the Optionee (a "Benefit Arrangement"), if the Optionee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any Option
held by that Optionee and any right to receive any payment or other benefit
under this Option Agreement shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the Optionee under
this Option Agreement, all Other Agreements, and all Benefit Arrangements, would
cause any payment or benefit to the Optionee under this Option Agreement to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code as then in effect (a "Parachute Payment") and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the
Optionee from the Corporation under this Option Agreement, all Other Agreements,
and all Benefit Arrangements would be less than the maximum after-tax amount
that could be received by the Optionee without causing any such payment or
benefit to be considered a Parachute Payment. In the event that the receipt of
any such right to exercise, vesting, payment, or benefit under this Option
Agreement, in conjunction with all other rights, payments, or benefits to or for
the Optionee under any Other Agreement or any Benefit Arrangement would cause
the Optionee to be considered to have received a Parachute Payment under this
Option Agreement that would have the effect of decreasing the after-tax amount
received by the Optionee as described in clause (ii) of the preceding sentence,
then the Optionee shall have the right, in the Optionee's sole discretion, to
designate those rights, payments, or benefits under this Option Agreement, any
Other Agreements, and any Benefit Arrangements that should be reduced or
eliminated so as to avoid having the payment or benefit to the Optionee under
this Option Agreement be deemed to be a Parachute Payment.
6. LIMITATIONS ON TRANSFER.
The Option is not transferable by the Optionee, other than by will or
the laws of descent and distribution in the event of death of the Optionee, and
except that the Optionee may transfer the Option in whole or in part to (i) the
spouse, children (including step-children and adopted children) or grandchildren
of the Optionee ("Family Members"), (ii) a trust for the exclusive benefit of
one or more Family Members, or (iii) a partnership of which the Optionee and/or
one or more Family Members are the only partners, provided that the transferee,
in connection with the transfer, agrees in writing to be bound by all of the
terms of this Option Agreement and the Plan and further agrees not to transfer
the Option other than by will or the laws of descent and distribution in the
event of the death of the transferee. Following any transfer permitted by this
Section 6, the transferee shall have all of the rights of the Optionee
hereunder, and the Option shall be exercisable by the transferee only to the
extent that the Option would have been exercisable by the Optionee had the
Option not been transferred. The Option shall not be pledged or hypothecated (by
operation of law or otherwise) or subject to execution, attachment or similar
processes.
7. RIGHTS AS SHAREHOLDER.
Neither the Optionee, nor any executor, administrator, distributee or
legatee of the Optionee's estate, nor any transferee hereof shall be, or have
any of the rights or privileges of, a shareholder of the Corporation in respect
of any shares issuable hereunder unless and until such shares have been fully
paid and certificates representing such shares have been endorsed, transferred
and delivered, and the name of the Optionee (or of such personal representative,
administrator, distributee or legatee of the Optionee's estate, or of such
transferee) has been entered as the shareholder of record on the books of the
Corporation.
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8. EFFECT OF CHANGES IN CAPITALIZATION.
8.1 Changes in Shares.
If the number of outstanding shares of Common Stock is increased or
decreased or changed into or exchanged for a different number or kind of stock
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Corporation occurring after the date the Option is granted, a proportionate
and appropriate adjustment shall be made by the Corporation in the number and
kind of shares subject to the Option, so that the proportionate interest of the
Optionee immediately following such event shall, to the extent practicable, be
the same as immediately prior to such event. Any such adjustment in the Option
shall not change the total Option Price with respect to shares subject to the
unexercised portion of the Option but shall include a corresponding
proportionate adjustment in the Option Price per share. In the event of a
spin-off by the Corporation of the shares of a subsidiary, a stock dividend for
which the Corporation will claim a dividends paid deduction under Section 561 of
the Code (or any successor provision), or a pro rata distribution to all
shareholders of other assets of the Corporation, the Committee may, but shall
not be required to, make appropriate adjustments to (i) the number and kind of
shares or other assets for which the Option is exercisable and (ii) the
per-share exercise price of the Option.
8.2 Reorganization in Which the Corporation Is the Surviving Entity
and in Which No Change of Control Occurs.
Subject to Section 8.3 hereof, if the Corporation shall be the
surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, the Option shall pertain to and
apply to the securities to which a holder of the number of shares subject to the
Option would have been entitled immediately following such reorganization,
merger or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price immediately prior to such reorganization,
merger or consolidation.
8.3 Reorganization, Sale of Assets or Sale of Stock Which Involves a
Change of Control.
Subject to the exceptions set forth in the last sentence of this
Section 8.3, fifteen days prior to the scheduled consummation of a Change of
Control, the Option shall become immediately exercisable with respect to all
shares subject to the Option and shall remain exercisable for a period of
fifteen days. Any exercise of the Option during such fifteen-day period shall be
conditioned upon the consummation of the Change of Control and shall be
effective only immediately before the consummation of the Change of Control.
Upon consummation of any Change of Control, unless exercised the Option shall
terminate. The Committee shall send written notice of an event that will result
in such a termination to the Optionee not later than the time at which the
Corporation gives notice thereof to its shareholders. For purposes of this
Section 8.3, a "Change of Control" shall be deemed to occur upon (i) the
dissolution or liquidation of the Corporation or upon a merger, consolidation,
or reorganization of the Corporation with one or more other entities in which
the Corporation is not the surviving entity, (ii) a sale of substantially all of
the assets of the Corporation to another entity, or (iii) any transaction
(including without limitation a merger or reorganization in which the
Corporation is the surviving corporation) which results in any person or entity
(other than B. Wayne Hughes and members of his family and their affiliates)
owning 50% or more of the combined voting power of all classes of stock of the
Corporation. This Section 8.3 shall not apply to any Change of Control to the
extent that (A) provision is made in writing in connection with such Change of
Control for the assumption of the Option, or for the substitution for the Option
of a new option covering the stock of a successor corporation, or a parent,
subsidiary or affiliate thereof, with appropriate adjustments as to the number
and kind of shares and exercise prices, in which event the Option shall continue
in the manner and under the terms so provided or (B) a majority of the full
Board determines that such Change of Control shall not trigger application of
the provisions of this Section 8.3.
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8.4 Adjustments.
Adjustments specified in this Section 8 relating to shares of Common
Stock or securities of the Corporation shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. No
fractional shares shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share.
9. GENERAL RESTRICTIONS.
The Corporation shall not be required to sell or issue any shares of
Common Stock under the Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or by the
Corporation of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Corporation shall determine, in its discretion,
that the listing, registration or qualification of any shares of Common Stock
subject to the Option upon any securities exchange or under any state or federal
law, or the consent or approval of any government regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or purchase
of shares hereunder, the Option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Corporation,
and any delay caused thereby shall in no way affect the date of termination of
the Option. Specifically, in connection with the Securities Act of 1933, upon
notice of exercise of the Option, unless a registration statement under such Act
is in effect with respect to the shares covered by the Option, the Corporation
shall not be required to sell or issue such shares unless the Committee has
received evidence satisfactory to the Committee that the holder of the Option
may acquire such shares pursuant to an exemption from registration under such
Act. Any determination in this connection by the Committee shall be final,
binding, and conclusive. The Corporation shall not be obligated to take any
affirmative action in order to cause the exercise of the Option or the issuance
of shares of Common Stock pursuant thereto to comply with any law or regulation
of any governmental authority. As to any jurisdiction that expressly imposes the
requirement that the Option shall not be exercisable unless and until the shares
covered by the Option are registered or are subject to an available exemption
from registration, the exercise of the Option (under circumstances in which the
laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
10. DISCLAIMER OF RIGHTS.
No provision in this Option Agreement shall be construed to confer upon
the Optionee the right to be employed by the Corporation or any Subsidiary or
Service Provider or to provide services to the Corporation, or to interfere in
any way with the right and authority of the Corporation or any Subsidiary or
Service Provider either to increase or decrease the compensation of the Optionee
at any time, or to terminate any employment or other relationship between the
Optionee and the Corporation or any Subsidiary or Service Provider.
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11. WITHHOLDING TAXES
Upon the request of the Corporation, a Subsidiary or a Service
Provider, the Optionee shall promptly pay to the Corporation, Subsidiary or
Service Provider, or make arrangements satisfactory to the Corporation,
Subsidiary or Service Provider regarding payment of, any federal, state or local
taxes of any kind required by law to be withheld as a result of the Optionee's
exercise of the Option. The Corporation, a Subsidiary or a Service Provider
shall have the right to deduct from payments of any kind otherwise due to the
Optionee any such taxes. The Optionee shall make any such payments in cash or
cash equivalents or, subject to the prior approval of the Committee, which may
be withheld in the Committee's sole discretion, the Optionee may elect to
satisfy the withholding obligation, in whole or in part, (i) by causing the
Corporation, the Subsidiary or the Service Provider to withhold shares of Common
Stock otherwise issuable to the Optionee pursuant to the Option or (ii) by
delivering to the Corporation, the Subsidiary or the Service Provider shares of
Common Stock already owned by the Optionee. The shares of Common Stock so
delivered or withheld shall have an aggregate Fair Market Value equal to the
applicable withholding obligations. The Optionee may deliver or have withheld
only shares of Common Stock that are not subject to any repurchase, forfeiture,
unfulfilled vesting, or other similar requirements.
12. INTERPRETATION OF THIS OPTION AGREEMENT.
All decisions and interpretations made by the Committee with regard to
any question arising under the Plan or this Option Agreement shall be binding
and conclusive on the Corporation and the Optionee and any other person entitled
to exercise the Option as provided for herein. In the event that there is any
inconsistency between the provisions of this Option Agreement and of the Plan,
the provisions of the Plan shall govern.
13. GOVERNING LAW.
This Option Agreement is executed pursuant to and shall be governed by
the laws of the State of California (but not including the choice of law rules
thereof).
14. BINDING EFFECT.
Subject to all restrictions provided for in this Option Agreement and
by applicable law relating to assignment and transfer of this Option Agreement
and the option provided for herein, this Option Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, transferees and assigns.
15. NOTICE.
Any notice hereunder by the Optionee to the Corporation shall be in
writing and shall be deemed duly given if mailed or delivered to the Corporation
at its principal office, addressed to the attention of the Corporate Secretary,
or if so mailed or delivered to such other address as the Corporation may
hereafter designate by notice to the Optionee. Any notice hereunder by the
Corporation to the Optionee shall be in writing and shall be deemed duly given
if mailed or delivered to the Optionee at the address specified below by the
Optionee for such purpose, or if so mailed or delivered to such other address as
the Optionee may hereafter designate by written notice given to the Corporation.
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16. ENTIRE AGREEMENT.
This Option Agreement constitutes the entire agreement and supersedes
all prior understandings and agreements, written or oral, of the parties hereto
with respect to the subject matter hereof. Neither this Option Agreement nor any
term hereof may be amended, waived, discharged or terminated except by a written
instrument signed by the Corporation and the Optionee; provided, however, that
the Corporation unilaterally may waive any provision hereof in writing to the
extent that such waiver does not adversely affect the interests of the Optionee
hereunder, but no such waiver shall operate as or be construed to be a
subsequent waiver of the same provision or a waiver of any other provision
hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Option
Agreement, or caused this Option Agreement to be duly executed on their behalf,
as of the day and year first above written.
PUBLIC STORAGE, INC.
By: ________________________________________
Name:
Title:
OPTIONEE:
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ADDRESS FOR NOTICE TO OPTIONEE:
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Number Street
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City State Zip Code
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