EXHIBIT 3
CERTIFICATE OF DETERMINATION
OF
EQUITY STOCK, SERIES AAA
OF
PUBLIC STORAGE, INC.
[As filed in the Office of the Secretary of State of
the State of California on November 15, 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 AAA" consisting of 4,500,000 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
15th day of November, 1999.
/S/ DAVID GOLDBERG
--------------------------------
David Goldberg
Senior Vice President
/S/ SARAH HASS
--------------------------------
Sarah Hass
Secretary
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS
OF PUBLIC STORAGE, INC.
ESTABLISHING A SERIES OF
EQUITY STOCK, SERIES AAA
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 AAA," shall consist of
4,500,000 shares and shall have the following rights and privileges:
(a) Dividend Rights.
(1) If, at any time, the Corporation shall declare or pay, or set aside
funds, shares or other property to pay, a dividend or other distribution on the
Common Shares (i) in cash or (ii) in any shares of the Corporation's capital
stock or (iii) other property (but in the case of (ii), 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 (3) of Section
(c)), a dividend or other distribution in cash shall also concurrently be
declared or paid, or so set aside, 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 (5) times the per share dividend or distribution,
or amount so set aside, on the Common Shares (based on the amount of cash, and
in the case of shares or other property distributed with respect to the Common
Shares, the fair market value attributable to the distributed shares or other
property), but shall not be more than $0.539101563 in any calendar quarter
(prorated for the quarter ending December 31, 1999 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 1999) not at a rate less than the lesser of (i) $2.15640625 per
share or (ii) five (5) 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, or funds set aside therefor, 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 or the Common Shares, 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 120% of the amount distributed to the
holder of each Common Share. 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 clauses (2) and (3) of this Section (c), the
shares of this Series are not redeemable.
(2) 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 at a
cash redemption price as determined in clause (4) of this Section (c), (i) for a
period of ten (10) days after the date the Limited Partner (as defined in the
Limited Partnership Agreement (the "Partnership Agreement") of PSAC Development
Partners, L.P. (the "Partnership")) exercises its option to liquidate the
Partnership and (ii) for a period of ten (10) days following the 15th
anniversary of the Partnership.
(3) 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, then the Board of Directors shall have
the power to prevent the transfer of and/or to call for redemption all or such
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, provided that any such action shall be taken pro rata with respect to the
shares of this Series and the Common Shares to the extent such action
accomplishes the Corporation's objective.
For purposes hereof, "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.
(4) The per share redemption price to be paid for shares of this Series
called for redemption under clauses (2) or (3) of this Section (c), on the date
fixed for redemption, shall be, as applicable, 120% of (i) the average of the
daily per share closing prices on the principal exchange on which the Common
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 (ii) if there are no such bid and asked quotations, the value of a
Common Share as determined by the Board of Directors in good faith.
(5) In the case of a redemption under clause (2) 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 or 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.
(6) If a redemption date falls after a dividend payment record date and
prior to the corresponding dividend payment date, the 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 hereinabove, the Corporation shall
make no payment or allowance for unpaid dividends on shares of this Series
called for redemption.
(7) 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 holder of shares selected
for redemption shall cease to be a shareholder with respect to such shares and,
subject to clause (6) of this Section (c), 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 the 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, in a segregated account, as a trust fund for the benefit of the
holder of the shares of this Series designated for redemption and shall pay, on
and after the date fixed for redemption or prior thereto, the redemption price
of the shares to the holder thereof upon the surrender of the share
certificates. From and after the making of such deposit, the holder of the
shares shall cease to be a shareholder with respect to such shares and, subject
to clause (6) of this Section (c), 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, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of the certificate, and the shares represented
thereby shall no longer be deemed to be outstanding.
(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.
(d) Conversion.
(1) Subject to the provisions for adjustment hereinafter set forth, and
unless previously redeemed under clauses (2) or (3) of clause (c), each share of
this Series shall be automatically converted into a number of Common Shares
equal to $23.3125 divided by the Conversion Price on the earlier of (i) eleven
(11) days after the date the Limited Partner (as defined in the Partnership
Agreement) exercises its option to liquidate the Partnership or (ii) 11 days
following the 15th anniversary of the Partnership.
For purposes hereof, "Conversion Price" shall mean the conversion price
per Common Share for which this Series is convertible, as such Conversion Price
may be adjusted pursuant to Section (e). The initial Conversion Price will be
$19.4270833 (equivalent to a conversion rate of 1.2 Common Shares for each share
of this Series).
The holder 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. 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.
(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.
(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.
(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 Closing Price 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 (4) 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 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 or other property of the Corporation 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 real estate, adjusted as
follows: (i) plus depreciation and amortization, (ii) plus gain on disposition
of real estate 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 real estate 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 of this Series 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) 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 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 (4) of Section (c).
(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.
(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.
(1) The shares of this Series shall not have any voting powers either
general or special, except as required by law.
(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.