Exibit 99.3
EXHIBIT A
OUTSIDE DIRECTOR
PUBLIC STORAGE, INC.
2001 STOCK OPTION AND INCENTIVE PLAN
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 Outside Director of the
Corporation (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 Plan provides for the grant to Outside Directors of
options for the purchase of a specified number of shares of the Corporation's
Common Stock, par value $.10 per share (the "Common Stock"), upon initial
election to the Board and following each subsequent Annual Meeting of
Shareholders of the Corporation (if the Outside Director attended at least 75%
of the meetings held by the Board or, if a member of a committee of the Board,
held by both the Board and all committees of the Board on which the Outside
Director served, during the portion of the preceding fiscal year during which
the Outside Director served on the Board and any such committees);
WHEREAS, the Optionee was [re-]elected to the Board at the 200__ Annual
Meeting of Shareholders held on ________________ ___, 200__ [and the Optionee
attended at least 75% of the meetings held by the Board or, if a member of a
committee of the Board, held by both the Board and all committees of the Board
on which the Optionee served, during the portion of the preceding fiscal year
during which the Optionee served on the Board and any such committees];
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-third 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-third of the shares of Common Stock subject to the Option; and
(iv) on the third 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 5 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 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 7 below which results in termination of the
Option. In no event may the Option be exercised for a fractional Share.
3.5 Termination of Service.
Upon the termination of service (a "Service
Termination") of the Optionee as a director of the Corporation, other than by
reason of the death or permanent and total disability of the Optionee, the
Optionee shall have the right at any time within 30 days after such Service
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 Service Termination, to the extent such Option was exercisable
immediately prior to such Service Termination.
3.6 Rights in the Event of Death.
If the Optionee dies while in service as a director
of the Corporation, 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 there is a Service Termination 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 Service 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 Service
Termination or becomes exercisable within such one year period pursuant to
Section 3.1 above. Whether a Service Termination 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. 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, for no
consideration, 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
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any transfer permitted by this Section 5, 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.
6. RIGHTS AS SHAREHOLDER.
Neither the Optionee nor any executor, administrator,
distributee or legatee of the Optionee's estate 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) has been entered
as the shareholder of record on the books of the Corporation.
7. EFFECT OF CHANGES IN CAPITALIZATION.
7.1 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.
7.2 Reorganization in Which the Corporation Is the
Surviving Entity and in Which No Change of Control
Occurs.
Subject to Section 7.3 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.
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7.3 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 7.3, 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 7.3, 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 7.3 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 7.3.
7.4 Adjustments.
Adjustments specified in this Section 7 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.
8. 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,
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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.
9. DISCLAIMER OF RIGHTS.
No provision in this Option Agreement shall be construed to
confer upon the Optionee the right to continue as a director of the Corporation.
10. WITHHOLDING TAXES
Upon the request of the Corporation, the Optionee shall
promptly pay to the Corporation, or make arrangements satisfactory to the
Corporation 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 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 to withhold shares of Common Stock otherwise
issuable to the Optionee pursuant to the Option or (ii) by delivering to the
Corporation 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.
11. 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.
12. 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).
13. 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, and assigns.
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14. 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.
15. 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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