Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into
as of this 13th day of February, 1998, by and among PUBLIC STORAGE, INC., a
California corporation ("PSI") and PUBLIC STORAGE PROPERTIES XX, INC., a
California corporation ("PSP20").
A. The parties intend that this Agreement shall constitute a Plan of
Reorganization for purposes of Section 368(a) of the Internal Revenue Code of
1986, as amended. The Plan of Reorganization provides for the merger of PSP20
with and into PSI in accordance with the applicable provisions of the General
Corporation Law of California (the "GCLC") and the Agreement of Merger
substantially in the form attached hereto as Exhibit A ("Merger Agreement").
B. The Boards of Directors of PSI and PSP20 believe that it is in the
best interests of such corporations and their respective shareholders to enter
into and complete this Agreement and they have approved this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, the parties agree as follows:
1. Adoption of Plan. The parties hereby adopt the Plan of
Reorganization hereinafter set forth.
2. The Merger.
2.1 Completion of the Merger. At the Effective Time (as defined
below), PSP20 will be merged with and into PSI (the "Merger") in accordance with
the terms, conditions and provisions of this Agreement and the Merger Agreement.
The Merger shall become effective at the time at which the Merger Agreement,
together with the requisite Officers' Certificates of PSI and PSP20 are filed
with the California Secretary of State in accordance with the GCLC (the
"Effective Time"). PSI and PSP20 are sometimes collectively referred to herein
as the "Constituent Corporations" and PSI, as the surviving corporation of the
Merger, is sometimes referred to herein as the "Surviving Corporation."
2.2 Effect of the Merger. At the Effective Time:
2.2.1 Constituent Corporations. The separate corporate
existence of PSP20 shall cease and the Surviving Corporation shall thereupon
succeed, without other transfer, to all the rights and property of PSP20 and
shall be subject to all the debts and liabilities of PSP20 in the same manner as
if the Surviving Corporation had itself incurred them; all rights of creditors
and all liens upon the property of each of the Constituent Corporations shall be
preserved unimpaired, provided that such liens upon property of PSP20 shall be
limited to the property affected thereby immediately prior to the Effective
Time; and any action or proceeding pending by or against PSP20 may be prosecuted
to judgment, which shall bind the Surviving Corporation, or the Surviving
Corporation may be proceeded against or substituted in its place.
2.2.2 Articles and Bylaws. The Articles of Incorporation
and the Bylaws of PSI, as then amended, shall continue to be the Articles of
Incorporation and the Bylaws of the Surviving Corporation until changed as
provided by law and their respective provisions.
2.2.3 Officers and Directors. The officers and directors
of PSI shall continue as officers and directors of the Surviving Corporation
until their successors are elected and qualified as provided by law and in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
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2.3 Conversion of Common Stock Series A. The manner of
converting the outstanding shares of Common Stock Series A ($.01 par value) of
PSP20 (the "PSP20 Shares") into cash and/or shares of Common Stock ($.10 par
value) of PSI (the "PSI Shares") shall be as follows:
2.3.1 Cash Election. At the Effective Time, subject to
Sections 2.6 and 6.8 hereof, each PSP20 Share as to which a cash election has
been made in accordance with the provisions of Section 2.5 hereof and has not
been revoked, relinquished or lost pursuant to Section 2.5 hereof (the "Cash
Election Shares") shall be converted into and shall represent the right to
receive $22.57 in cash (the "Cash Election Price"). As soon as practicable after
the Effective Time, the registered holders of Cash Election Shares shall be paid
the cash to which they are entitled hereunder in respect of such Cash Election
Shares.
2.3.2 Share Exchange. At the Effective Time, subject to
Sections 2.4, 2.5, 2.7 and 6.8 hereof, each PSP20 Share (other than Cash
Election Shares and PSP20 Shares owned by PSI) shall be converted into that
number of PSI Shares equal to, rounded to the nearest thousandth, the quotient
(the "Conversion Number") derived by dividing $22.57 by the average of the per
share closing prices on the New York Stock Exchange, Inc. (the "NYSE") of PSI
Shares during the 20 consecutive trading days ending on the fifth trading day
prior to the meeting of shareholders of PSP20 provided for in Section 6.2
hereof. If, prior to the Effective Time, PSI should split or combine the PSI
Shares, or pay a stock dividend, the Conversion Number will be appropriately
adjusted to reflect such action.
2.4 No Fractional Shares. Notwithstanding any other term or
provision of this Agreement, no fractional PSI Shares and no certificates or
script therefor, or other evidence of ownership thereof, will be issued in the
Merger. In lieu of any such fractional share interests, each holder of PSP20
Shares who would otherwise be entitled to such fractional share will, upon
surrender of the certificate representing such PSP20 Shares, receive a whole PSI
Share if such fractional share to which such holder would otherwise have been
entitled is .5 of an PSI Share or more, and such fractional share shall be
disregarded if it represents less than .5 of an PSI Share; provided, however,
that, such fractional share shall not be disregarded if such fractional share to
which such holder would otherwise have been entitled represents .5 of 1% or more
of the total number of PSI Shares such holder is entitled to receive in the
Merger. In such event, such holder shall be paid an amount in cash (without
interest), rounded to the nearest $.01, determined by multiplying (i) the per
share closing price on the NYSE of the PSI Shares at the Effective Time by (ii)
the fractional interest.
2.5 Procedure for Cash Election. At the time of the mailing of
the Proxy Statement and Prospectus provided for in Section 6.5 hereof, PSI will
send to each holder of record of PSP20 Shares at the record date for PSP20
meetings of shareholders referred to in Section 6.2 hereof a cash election form
(the "Form of Election") providing such holder with the option to elect to
receive the Cash Election Price with respect to all or any portion of such
holder's PSP20 Shares. Any such election to receive the cash payment
contemplated by Section 2.3.1 hereof shall have been properly made only if
American Stock Transfer & Trust Company (the "Depositary") shall have received
at its designated office, by 5:00 p.m., New York time, on the last business day
preceding the day of such meeting of shareholders, a Form of Election properly
completed and accompanied by certificates for the shares to which such Form of
Election relates (or an appropriate guarantee of delivery in a form and on terms
satisfactory to PSI), as set forth in such Form of Election. Any Form of
Election may be revoked by the person submitting the same to the Depositary only
by written notice received by the Depositary prior to 5:00 p.m., New York time,
on the last business day before the day of the meeting of shareholders referred
to in Section 6.2 hereof. In addition, all Forms of Election shall automatically
be revoked if the Depositary is notified in writing by the parties hereto that
the Merger have been abandoned. If a Form of Election is revoked pursuant to
this Section 2.5, the certificate or certificates or any guarantee of delivery
in respect of the PSP20 Shares to which such Form of Election relates shall be
promptly returned to the person submitting the same to the Depositary. The
Depositary may determine whether or not elections to receive cash have been
properly made or revoked pursuant to this Section 2.5, and any such
determination shall be conclusive and binding. If the Depositary determines that
any election to receive cash was not properly or timely made, the PSP20 Shares
covered thereby shall not be treated as Cash Election Shares, and shall be
converted in the Merger as provided in Section 2.3.2 hereof. The Depositary may,
with the agreement of PSI and PSP20, establish such procedures, not inconsistent
with this Section 2.5, as may be necessary or desirable to implement this
Section 2.5.
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2.6 Procedure for Proration.
2.6.1 No Proration of PSP20 Shares. If the aggregate
number of Cash Election Shares and Dissenting Shares (as defined below) of PSP20
is 20% or less than the number of PSP20 Shares outstanding as of the record date
for the meeting of shareholders of PSP20 referred to in Section 6.2, then each
Cash Election Share of PSP20 shall be converted in the Merger into the right to
receive the Cash Election Price for PSP20 Shares.
2.6.2 Proration of PSP20 Shares. If the aggregate number
of Cash Election Shares and Dissenting Shares of PSP20 exceeds 20%, then each
Cash Election Share of PSP20 shall be converted in the Merger into the right to
receive cash or into PSI Shares as follows: the number of Cash Election Shares
of PSP20 owned by a holder of PSP20 Shares that shall be converted into the
right to receive the Cash Election Price for PSP20 Shares shall equal the number
obtained by multiplying (i) (A) 20% of outstanding PSP20 Shares less (B) the
number of Dissenting Shares (as hereinafter defined) of PSP20, if any, by (ii) a
fraction of which the numerator shall be the number of Cash Election Shares
owned by such holder and the denominator shall be the aggregate number of Cash
Election Shares of PSP20. The balance of such Cash Election Shares shall be
converted into PSI Shares in accordance with the provisions of Section 2.3.2
hereof. Notwithstanding the foregoing, PSI, in its sole discretion, may allow
Cash Election Shares of PSP20 to receive the Cash Election Price for PSP20
Shares even if the aggregate number of Cash Election Shares and Dissenting
Shares of PSP20 exceeds 20% of the number of PSP20 Shares outstanding as of the
record date for the meeting of shareholders of PSP20 referred to in Section 6.2,
provided that in no event shall the number of Cash Election Shares exceed 50% of
the outstanding PSP20 Shares.
2.7 Dissenting Shares. PSP20 Shares held by a holder who has
demanded and perfected his right to an appraisal of such shares in accordance
with Section 1300 et seq. of the GCLC and who has not effectively withdrawn or
lost his right to appraisal ("Dissenting Shares") shall not be converted into or
represent the right to receive cash and/or PSI Shares, but the holder thereof
shall be entitled only to such rights as are granted by Section 1300 et seq. of
the GCLC. Each holder of Dissenting Shares who becomes entitled to payment for
PSP20 Shares pursuant to these provisions of the GCLC shall receive payment
therefor from the Surviving Corporation in accordance therewith. If any holder
of PSP20 Shares who demands appraisal in accordance with Section 1300 et seq. of
the GCLC shall effectively withdraw with the consent of the Surviving
Corporation or lose (through failure to perfect or otherwise) his right to
appraisal with respect to PSP20 Shares, such PSP20 Shares shall automatically be
converted into the right to receive PSI Shares pursuant to Section 2.3.2 hereof.
2.8 PSI Shares Unaffected. The Merger shall effect no change in
any of the outstanding PSI Shares and no outstanding PSI Shares shall be
converted or exchanged as a result of the Merger, and no cash shall be
exchangeable, and no securities shall be issuable, with respect thereto.
2.9 Cancellation of Shares Held or Owned by Parties. At the
Effective Time, any PSP20 Shares owned by PSI shall be cancelled and retired and
no shares shall be issuable, and no cash shall be exchangeable, with respect
thereto.
2.10 Exchange of Certificates. After the Effective Time, each
holder of a certificate theretofore evidencing outstanding PSP20 Shares which
were converted into PSI Shares pursuant hereto, upon surrender of such
certificate to The First National Bank of Boston (the "Exchange Agent") or such
other agent or agents as shall be appointed by the Surviving Corporation, shall
be entitled to receive a certificate representing the number of whole PSI Shares
into which the PSP20 Shares theretofore represented by the certificate so
surrendered shall have been converted as provided in Section 2.3.2 hereof and
cash payment in lieu of fractional share interests, if any, as provided in
Section 2.4 hereof. As soon as practicable after the Effective Time, the
Exchange Agent will send a notice and a transmittal form to each holder of PSP20
Shares of record at the Effective Time whose stock shall have been converted
into PSI Shares, advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Exchange Agent certificates evidencing PSP20
Shares in exchange for certificates evidencing PSI Shares.
2.11 Status Until Surrendered. Until surrendered as provided in
Section 2.10 hereof, each outstanding certificate which, prior to the Effective
Time, represented PSP20 Shares (other than Cash Election Shares and Dissenting
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Shares, if any) will be deemed for all corporate purposes to evidence ownership
of the number of whole PSI Shares into which the PSP20 Shares evidenced thereby
were converted. However, until such outstanding certificates formerly evidencing
PSP20 Shares are so surrendered, no dividend payable to holders of record of PSI
Shares shall be paid to the holders of such outstanding certificates in respect
of PSP20 Shares, but upon surrender of such certificates by such holders there
shall be paid to such holders the amount of any dividends (without interest)
theretofore paid with respect to such whole PSI Shares as of any record date on
or subsequent to the Effective Time and the amount of any cash (without
interest) payable to such holder in lieu of fractional share interests pursuant
to Section 2.4 hereof.
2.12 Transfer of Shares. After the Effective Time, there shall
be no further registration of transfers of PSP20 Shares on the records of PSP20
and, if certificates formerly evidencing such shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for certificates
evidencing PSI Shares and cash in lieu of fractional share interests as herein
provided.
2.13 Conversion of Common Stock Series B and C. At the Effective
Time, subject to Section 6.8 hereof, each share of Common Stock Series B and C
($.01 par value) of PSP20 (other than shares owned by PSI) shall be converted
(or deemed to be converted) into that number of PSI Shares equal to, rounded to
the nearest thousandth, the quotient derived by dividing $10.90 by the average
per share closing prices on the NYSE of PSI Shares during the 20 consecutive
trading days ending on the fifth trading day prior to the meeting of
shareholders of PSP20 provided for in Section 6.2 hereof. If, prior to the
Effective Time, PSI should split or combine the PSI Shares, or pay a stock
dividend, such conversion number will be appropriately adjusted to reflect such
action. At the Effective Time, any Common Stock Series B and C of PSP20 owned by
PSI shall be cancelled and retired and no shares shall be issuable with respect
thereto.
3. Closing.
3.1 Time and Place of Closing. If this Agreement is approved by
the shareholders of PSP20, a meeting (the "Closing") shall take place as
promptly as practicable thereafter at which the applicable parties will exchange
certificates and other documents as required by this Agreement. Such Closing
shall take place at such time and place as PSI may designate. The date of the
Closing shall be referred to as the "Closing Date."
3.2 Execution and Filing of Merger Agreement. At or before the
Closing and after shareholder approval of PSP20, the applicable parties shall
execute and deliver the Merger Agreement, together with the requisite Officers'
Certificates, for filing with the California Secretary of State. The Merger
Agreement, together with the requisite Officers' Certificates, shall be duly
filed with the California Secretary of State in accordance with the GCLC as soon
as practicable following the Closing.
4. Representations, Warranties and Agreements of PSP20. PSP20
represents, warrants and agrees with PSI that:
4.1 Authorization. Subject to approval of this Agreement by the
shareholders of PSP20, (i) the execution, delivery and performance of this
Agreement by PSP20 has been duly authorized and approved by all necessary
corporate action of PSP20, and (ii) PSP20 has necessary corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to complete the transactions contemplated hereby.
4.2 Organization and Related Matters. PSP20 is a corporation
duly organized, existing and in good standing under the laws of the State of
California with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as and where now owned,
leased, operated or carried on, as the case may be; and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business, properties,
results of operations or financial condition of PSP20. PSP20 has no direct or
indirect equitable or beneficial interest in any other corporation other than
PSCC, Inc.
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4.3 Capital Stock. The authorized capital stock of PSP20
consists solely of (i) 1,393,709 shares of Common Stock Series A ($.01 par
value), 860,734 of which were issued and outstanding as of December 31, 1997,
(ii) 90,859 shares of Common Stock Series B ($.01 par value), all of which were
issued and outstanding as of December 31, 1997 and (iii) 257,432 shares of
Common Stock Series C ($.01 par value), all of which were issued and outstanding
as of December 31, 1997. All of the issued and outstanding shares of Common
Stock Series A, B and C of PSP20 have been duly and validly authorized and
issued, and are fully paid and nonassessable. There are no options or agreements
to which PSP20 is a party or by which it is bound calling for or requiring the
issuance of any of PSP20's capital stock, except that the shares of Common Stock
Series B and C are convertible into shares of Common Stock Series A in
accordance with PSP20's Articles of Incorporation.
4.4 Consents and Approvals; No Violation. Assuming approval of
the Merger and of this Agreement by the shareholders of PSP20, neither the
execution and delivery of this Agreement nor the consummation by PSP20 of the
transactions contemplated hereby will: (i) conflict with or result in any breach
of any provision of its Articles of Incorporation or Bylaws; (ii) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except (A) in
connection with the applicable requirements, if any, of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to
the applicable requirements of the federal securities laws and the rules and
regulations promulgated thereunder, (C) the filing of the Merger Agreement and
Officers' Certificates pursuant to the GCLC and appropriate documents with the
relevant authorities of other states in which PSP20 is authorized to do
business, (D) in connection with any state or local tax which is attributable to
the beneficial ownership of PSP20's real property, (E) as may be required by any
applicable state securities or takeover laws, or (F) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on PSP20
or adversely affect the ability of PSP20 to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, mortgage,
agreement or other instrument or obligation to which PSP20 is a party or any of
its properties or assets may be bound, except for such violations, breaches and
defaults which, in the aggregate, would not have a material adverse effect on
PSP20 or adversely affect the ability of PSP20 to consummate the transactions
contemplated hereby; or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.4 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to PSP20 or its properties or assets,
except for violations which would not in the aggregate have a material adverse
effect on PSP20 or adversely affect the ability of PSP20 to consummate the
transactions contemplated hereby.
4.5 Litigation. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is or may be
material and adverse, pending or, to the knowledge of PSP20, threatened against
PSP20 or involving any of its properties or assets.
4.6 SEC Reports. Since January 1, 1994, PSP20 has filed all
forms, reports and documents with the Securities and Exchange Commission ("SEC")
required to be filed by it pursuant to the federal securities laws and the rules
and regulations promulgated by the SEC thereunder, all of which complied in all
material respects with all applicable requirements of the federal securities
laws and such rules and regulations (collectively, the "PSP20 SEC Reports").
None of the PSP20 SEC Reports, including without limitation any financial
statements or schedules included therein, at the time filed contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.7 Financial Statements. The financial statements included in
the PSP20 SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly the financial position
of PSP20 as of their respective dates, and the results of operations of PSP20
for the periods presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
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4.8 Absence of Certain Changes or Events. Since January 1, 1997,
the business of PSP20 has been carried on only in the ordinary and usual course
and there has not been any material adverse change in its business, results of
operations or financial condition, or any damage or destruction in the nature of
a casualty loss, whether covered by insurance or not, that would materially and
adversely affect its properties, business or results of operations.
4.9 S-4 Registration Statement and Proxy Statement and
Prospectus. None of the information supplied or to be supplied by PSP20 for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Proxy Statement and Prospectus (as such terms are defined in Section 6.5 hereof)
will (i) in the case of the S-4 Registration Statement, at the time it becomes
effective and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or (ii) in the
case of the Proxy Statement and Prospectus, at the time of the mailing of the
Proxy Statement and Prospectus and at the time of the meetings of the
shareholders of PSP20, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
4.10 Insurance. All material insurance of PSP20 is currently in
full force and effect and PSP20 has reported all claims and occurrences to the
extent required by such insurance.
4.11 Disclosure. The representations and warranties by PSP20 in
this Agreement and any certificate or document delivered by it pursuant hereto
do not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
5. Representations, Warranties and Agreements of PSI. PSI hereby
represents, warrants and agrees with PSP20 that:
5.1 Authorization. The execution, delivery and performance of
this Agreement by PSI have been duly authorized and approved by all necessary
corporate action of PSI, and PSI has all necessary corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
complete the transactions contemplated hereby.
5.2 Organization and Related Matters. PSI is a corporation duly
organized, existing and in good standing under the laws of the State of
California, with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as and where now owned,
leased, operated or carried on, as the case may be; and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business carried on by it requires such qualification and where the failure to
so qualify would have a material adverse effect on the business, properties,
results of operations or financial condition of PSI.
5.3 Capital Stock. The authorized capital stock of PSI consists
solely of (i) 200,000,000 shares of Common Stock ($.10 par value), 105,102,145
of which were issued and outstanding as of December 31, 1997, (ii) 7,000,000
shares of Class B Common Stock ($.10 par value), all of which were issued and
outstanding as of December 31, 1997, (iii) 50,000,000 shares of Preferred Stock
($.10 par value), 13,261,884 of which were issued and outstanding as of December
31, 1997 and (iv) 200,000,000 shares of Equity Stock ($.01 par value), 225,000
of which were issued and outstanding at December 31, 1997. All of the issued and
outstanding shares of Common Stock, Class B Common Stock, Preferred Stock and
Equity Stock of PSI have been duly and validly authorized and issued, and are
fully paid and nonassessable. The issuance of the PSI Shares in the Merger has
been duly and validly authorized and, when issued and delivered as provided in
this Agreement, the PSI Shares will have been duly and validly issued, fully
paid and nonassessable; and the shareholders of PSI have no preemptive rights
with respect to any shares of capital stock of PSI.
5.4 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement nor the consummation by PSI of the transactions
contemplated hereby will: (i) conflict with or result in any breach of any
provision of its Articles of Incorporation or Bylaws; (ii) require any consent,
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waiver, approval, authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, except (A) in connection with the
applicable requirements, if any, of the HSR Act, (B) pursuant to the applicable
requirements of the federal securities laws and the rules and regulations
promulgated thereunder, (C) the filing of the Merger Agreement and Officers'
Certificates pursuant to the GCLC and appropriate documents with the relevant
authorities of other states in which PSI is authorized to do business, (D) in
connection with any state or local tax which is attributable to the beneficial
ownership of the real property of PSP20, (E) as may be required by any
applicable state securities or takeover laws, or (F) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a material adverse effect on PSI
or adversely affect the ability of PSI to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, license, mortgage,
agreement or other instrument or obligation to which PSI is a party or any of
its properties or assets may be bound, except for such violations, breaches and
defaults which, in the aggregate, would not have a material adverse effect on
PSI or adversely affect the ability of PSI to consummate the transactions
contemplated hereby; or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 5.4 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to PSI or its properties or assets,
except for violations which would not in the aggregate have a material adverse
effect on PSI or adversely affect the ability of PSI to consummate the
transactions contemplated hereby.
5.5 Litigation. There is no litigation, proceeding or
governmental investigation which, individually or in the aggregate, is or may be
material and adverse, pending or, to the knowledge of PSI, threatened against
PSI or involving any of its properties or assets.
5.6 SEC Reports. Since January 1, 1994, PSI has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
federal securities laws and the rules and regulations promulgated by the SEC
thereunder, all of which complied in all material respects with all applicable
requirements of the federal securities laws and such rules and regulations
(collectively, the "PSI SEC Reports"). None of the PSI SEC Reports, including
without limitation any financial statements or schedules included therein, at
the time filed contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
5.7 Financial Statements. The financial statements included in
PSI's SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods (except
as otherwise noted therein), and present fairly the financial position of PSI as
of their respective dates, and the results of operations of PSI for the periods
presented therein (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
5.8 Absence of Certain Changes or Events. Since January 1, 1997,
the business of PSI has been carried on only in the ordinary and usual course
and there has not been any material adverse change in its business, results of
operations or financial condition, or any damage or destruction in the nature of
a casualty loss, whether covered by insurance or not, that would materially and
adversely affect its properties, business or results of operations.
5.9 S-4 Registration Statement and Proxy Statement and
Prospectus. None of the information supplied or to be supplied by PSI for
inclusion or incorporation by reference in the S-4 Registration Statement or the
Proxy Statement and Prospectus (as those terms are defined in Section 6.5
hereof) will (i) in the case of the S-4 Registration Statement, at the time it
becomes effective and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or (ii) in
the case of the Proxy Statement and Prospectus, at the time of the mailing of
the Proxy Statement and Prospectus and at the time of the meetings of the
shareholders of PSP20, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
5.10 Insurance. All material insurance of PSI is currently in
full force and effect and PSI has reported all claims and occurrences to the
extent required by such insurance.
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5.11 Disclosure. The representations and warranties by PSI in
this Agreement and any certificate or document delivered by it pursuant hereto
do not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
6. Covenants and Agreements.
6.1 Ordinary Course. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time, each of
PSI and PSP20 will carry on its business in the ordinary course in substantially
the same manner as heretofore conducted and use all reasonable efforts to: (a)
preserve intact its present business, organization and goodwill, (b) maintain
all permits, licenses and authorizations required by applicable laws, and (c)
keep available the services of its present employees and preserve its
relationships with customers, suppliers, lenders, lessors, governmental entities
and others having business or regulatory dealings with it. PSP20 will not issue
any capital stock or debt securities convertible into capital stock. PSI and
PSP20 will promptly notify the others of any event or occurrence not in the
ordinary and usual course of business or which may have a material adverse
effect on the properties or financial condition of such party.
6.2 Meetings of Shareholders. PSP20 will take all action
necessary in accordance with applicable law to convene a meeting of its
shareholders as promptly as practicable to consider and vote upon approval of
this Agreement, it being understood that the principal terms of the Agreement
must be approved by the affirmative vote of a majority of the outstanding shares
of Common Stock Series A, B and C of PSP20, counted together as a single class
with the shares of Common Stock Series B and C voted with the holders of a
majority of the unaffiliated shares of Common Stock Series A.
6.3 Tax Reporting. Each of PSI and PSP20 agrees to report the
Merger for federal and state income tax purposes, as a reorganization of the
type described in Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended.
6.4 Acquisition Proposals. PSP20 will not initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
with respect to a merger, consolidation, share exchange or similar transaction
involving PSP20, or any purchase of all or any significant portion of either of
their assets, or any equity interest in either of them, other than the
transactions contemplated hereby (an "Acquisition Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal;
provided, however, that the Board of Directors of PSP20 may furnish or cause to
be furnished information and may participate in such discussions and
negotiations through its representatives with persons who have sought the same
if the failure to provide such information or participate in such negotiations
and discussions might cause the members of the Board of Directors of PSP20 to
breach their fiduciary duty to the shareholders of PSP20 under applicable law as
advised by counsel. PSP20 will notify PSI immediately if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with PSP20,
and will keep PSI informed of the status and terms of any such proposals and any
such negotiations or discussions.
6.5 Registration and Proxy Statements. PSP20 will promptly
prepare and file with the SEC a preliminary proxy statement in connection with
the vote of shareholders of PSP20 with respect to the Merger. PSI will, as
promptly as practicable, prepare and file with the SEC a registration statement
on Form S-4 (the "S-4 Registration Statement"), containing a combined proxy
statement/prospectus, in connection with the registration under the Securities
Act of 1933, as amended (the "Securities Act") of the PSI Shares to be issued to
holders of PSP20 Shares in the Merger (such combined proxy statement/prospectus,
together with any amendments thereof or supplements thereto, in each case in the
form or forms to be mailed to the shareholders of PSP20, being herein called the
"Proxy Statement and Prospectus"). PSI and PSP20 will use their best efforts to
have or cause the S-4 Registration Statement to be declared effective as
promptly as practicable, and also will take any other action required to be
taken under federal or state securities laws, and PSP20 will use its best
efforts to cause the Proxy Statement and Prospectus to be mailed to its
shareholders at the earliest practicable date. PSP20 agrees that if at any time
prior to the Effective Time any event with respect to PSP20 should occur which
is required to be described in an amendment of, or a supplement to, the Proxy
Statement and Prospectus or the S-4 Registration Statement, such event shall be
8
so described, and such amendment or supplement shall be promptly filed with the
SEC and, as required by law, disseminated to the shareholders of PSP20 and (ii)
the Proxy Statement and Prospectus will (with respect to PSP20) comply as to
form in all material respects with the requirements of the federal securities
laws. PSI agrees that (i) if at any time prior to the Effective Time any event
with respect to PSI should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement and Prospectus or the S-4
Registration Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of PSP20 and (ii) the Proxy Statement and
Prospectus will (with respect to PSI) comply as to form in all material respects
with the requirements of the federal securities laws.
6.6 Best Efforts. Each of PSI and PSP20 shall: (i) promptly make
its respective filings and thereafter make any other required submissions under
all applicable laws with respect to the Merger and the other transactions
contemplated hereby; and (ii) use its best efforts to promptly take, or cause to
be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
6.7 Registration and Listing of PSI Shares. PSI will use its
best efforts to register the PSI Shares under the applicable provisions of the
Securities Act and to cause the PSI Shares to be listed for trading on the NYSE
upon official notice of issuance.
6.8 Distributions. PSP20 will not, at any time prior to the
Effective Time, declare or pay any cash distribution on its capital stock or
make any other distribution of assets to its shareholders, except (i) regular
quarterly dividends on its Common Stock at a quarterly rate not in excess of
$.28 per share, (ii) distributions to shareholders of record immediately prior
to the Effective Time in an aggregate amount equal to the amount by which the
estimated Net Asset Value of PSP20 (as defined below) allocable to the
shareholders as of the Effective Time exceeds $22.57 per share in the case of
the PSP20 Shares and $10.90 per share in the case of the PSP20 Common Stock
Series B and C and (iii) pre-Merger cash distributions required to satisfy
PSP20's REIT distribution requirements (the number of PSI Shares issued in the
Merger and the amount receivable upon Cash Elections would be reduced on a pro
rata basis in an aggregate amount equal to such additional distributions). For
this purpose, the Net Asset Value of PSP20 is the sum of (a) the fair market
value of PSP20's real estate assets as determined by appraisal by The Nicholson
Group, Ltd. as of October 31, 1997, and (b) the book value of PSP20's non-real
estate assets as of the date of determination, and less (c) PSP20's liabilities
as of the date of determination. The determination of book value and liabilities
shall be from PSP20's financial statements prepared in accordance with generally
accepted accounting principles on a basis consistent with prior periods.
7. Conditions.
7.1 Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Closing of each of
the following conditions, any or all of which may be waived in whole or in part,
to the extent permitted by applicable law:
7.1.1 PSP20 Shareholder Approval. This Agreement and the
transactions contemplated hereby shall have been duly approved by the
shareholders of PSP20 as contemplated by Section 6.2.
7.1.2 Governmental and Regulatory Consents. All filings
required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, governmental and regulatory authorities in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (including the expiration of the waiting period
requirements of the HSR Act) shall have been made or obtained (as the case may
be) without material restrictions, except where the failure to obtain such
consents, approvals, permits and authorizations could not reasonably be expected
to have a material adverse effect on PSI, PSP20.
7.1.3 Litigation. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
9
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) or taken any action
which prohibits the consummation of the transactions contemplated by this
Agreement; provided, however, that the party invoking this condition shall use
its best efforts to have any such judgment, decree, injunction or other order
vacated.
7.1.4 Registration Statement. The S-4 Registration
Statement shall have been declared effective and no stop order suspending
effectiveness shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under federal and state
securities laws relating to the issuance or trading of the PSI Shares shall have
been received.
7.1.5 Listing of PSI Shares on NYSE. The PSI Shares
shall have been approved for listing on the NYSE upon official notice of
issuance.
7.1.6 Fairness Opinion. The Boards of Directors of PSP20
shall have received the opinion of Robert A. Stanger & Co., Inc. in form and
substance satisfactory to them to the effect that the consideration to be
received by the shareholders of PSP20 in the Merger is fair to such shareholders
from a financial point of view, and such opinion shall not have been withdrawn
or revoked.
7.1.7 Tax Opinion. The Boards of Directors of PSI and
PSP20 shall have received a legal opinion of Hogan & Hartson L.L.P. that the
Merger will qualify as a tax-free reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended.
7.1.8 PSI Board Approval. This Agreement and the
transactions contemplated hereby shall have been duly approved by the Board of
Directors of PSI.
7.2 Conditions to Obligations of PSI. The obligations of PSI to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Closing of the following conditions, which may be
waived in whole or in part by PSI to the extent permitted by applicable law:
7.2.1 Accuracy of Representations; Performance of
Agreements. Each of the representations and warranties of PSP20 contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of the Closing Date (except to the extent
they relate to a particular date) and PSP20 shall have performed or complied
with all agreements and covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing.
7.2.2 Certificate of Officers. PSI shall have received
such certificates of officers of PSP20 as PSI may reasonably request in
connection with the Closing, including upon request a certificate satisfactory
to it of the Chief Executive Officer and the Chief Financial Officer of PSP20,
to the effect that, to the best of their knowledge, all representations and
warranties of PSP20 contained in this Agreement are true and correct in all
material respects at and as of the Closing Date as if made at and as of the
Closing Date, and PSP20 have performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with by them at
or prior to the Closing.
7.2.3 Title to Properties; Environmental Audits. PSI in
its sole discretion shall be satisfied as to the status of title to (including
the existence and effect of liens and encumbrances), and the results of an
environmental audit of, each of the real properties owned by PSP20.
7.2.4 Trading Price of PSI Shares. The average of the
per share closing prices of the PSI Shares on the NYSE during the 20 consecutive
trading days ending on the fifth trading day prior to the meeting of
shareholders of PSP20 provided for in Section 6.2 hereof (the "Average PSI Share
Price") shall be not less than $28.
7.2.5 Dissenting Shares. The number of Dissenting Shares
shall be less than 5% of the outstanding PSP20 Shares.
10
7.3 Conditions to Obligations of PSP20. The obligations of PSP20
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Closing of the following conditions, which may be
waived in whole or in part by PSP20 to the extent permitted by applicable law.
7.3.1 Accuracy of Representations; Performance of
Agreements. Each of the representations and warranties of PSI contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of the Closing Date (except to the extent they
relate to a particular date) and PSI shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it at or prior to the Closing.
7.3.2 Certificate of Officers. PSP20 shall have received
such certificates of officers of PSI as PSP20 may reasonably request in
connection with the Closing, including upon request a certificate satisfactory
to them of the Chief Executive Officer and the Chief Financial Officer of PSI,
to the effect that, to the best of their knowledge, all representations and
warranties of PSI contained in this Agreement are true and correct in all
material respects at and as of the Closing Date as if made at and as of the
Closing Date, and PSI has performed or complied with all agreements and
covenants required by this Agreement to be performed or complied with by it at
or prior to the Closing.
8. Termination.
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after shareholder approval, by the mutual written consent of
PSI, PSP20.
8.2 Termination by PSI, PSP20. This Agreement may be terminated
and the Merger may be abandoned by action of the Board of Directors of PSI,
PSP20 if (i) the Merger shall not have been consummated by December 31, 1998
(provided that the right to terminate this Agreement under this Section 8.2(i)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date); (ii) any court of competent
jurisdiction in the United States or some other governmental body or regulatory
authority shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
or (iii) the shareholders of PSP20 shall have failed to approve this Agreement
and the transactions contemplated hereby at its meeting of shareholders.
8.3 Termination by PSI. This Agreement may be terminated by PSI,
and the Merger may be abandoned at any time prior to the Effective Time, as to
the defaulting party if (i) PSP20 shall have failed to comply in any material
respect with any of the covenants, conditions or agreements contained in this
Agreement to be complied with or performed by such party at or prior to such
date of termination, which failure to comply has not been cured within five
business days following notice to such party of such failure to comply, or (ii)
any representation or warranty of PSP20 contained in this Agreement shall not be
true in all material respects when made, which inaccuracy or breach (if capable
of cure) has not been cured within five business days following notice to such
party of the inaccuracy or breach, or on and as of the Closing as if made on and
as of the Closing Date.
8.4 Termination by PSP20. This Agreement may be terminated by
PSP20 and the Merger may be abandoned at any time prior to the Effective Time,
before or after shareholder approval, if (i) PSI shall have failed to comply in
any material respect with any of the covenants, conditions or agreements
contained in this Agreement to be complied with or performed by PSI at or prior
to such date of termination, which failure to comply has not been cured within
five business days following notice to PSI of such failure to comply, or (ii)
any representation or warranty of PSI contained in this Agreement shall not be
true in all material respects when made, which inaccuracy or beach (if capable
of cure) has not been cured within five business days following notice to PSI of
the inaccuracy or breach, or on and as of the Closing as if made on and as of
the Closing Date.
8.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
11
Section 8, no party (or any directors, officers, employees, agents or
representatives of any party) shall have any liability or further obligation to
any other party or any person who controls a party within the meaning of the
Securities Act, except as provided in Section 9.1 and except that nothing herein
will relieve any party from liability for any breach of this Agreement.
9. Miscellaneous.
9.1 Payment of Expenses. If the Merger are consummated, the
Surviving Corporation shall pay all the expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby. If the Merger are not consummated, each of PSI
and PSP20 shall pay its own expenses, except that any expenses incurred in
connection with the printing of the S-4 Registration Statement and the Proxy
Statement and Prospectus, the real estate appraisals and environmental audits of
the properties of PSP20 and preparation for real estate closings, and any filing
fees under the HSR Act, the Securities Act and the Securities Exchange Act of
1934, as amended shall be paid 50% by PSI and 50% by PSP20.
9.2 Survival of Representations, Warranties and Covenants. The
respective representations and warranties of PSI and PSP20 contained herein or
in any certificate or document delivered pursuant hereto shall expire with and
be terminated and extinguished by the effectiveness of the Merger and shall not
survive the Effective Time. The sole right and remedy arising from a
misrepresentation or breach of warranty, or from the failure of any of the
conditions to be met, shall be the termination of this Agreement by the other
party. This Section 9.2 shall not limit any covenant or agreement of the
parties, which by its terms contemplates performance after the Effective Time.
9.3 Modification or Amendment. The parties may modify or amend
this Agreement by written agreement authorized by the Boards of Directors and
executed and delivered by officers of the respective parties; provided, however,
that after approval of this Agreement by the shareholders of a party, no
amendment shall be made which changes any of the principal terms of the Merger
or this Agreement, without the approval of such shareholders.
9.4 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to the principles of conflict of laws thereof.
9.6 Interpretation. This Agreement has been negotiated by the
parties and is to be interpreted according to its fair meaning as if the parties
had prepared it together and not strictly for or against any party. Each of the
capitalized terms defined in this Agreement shall, for all purposes of this
Agreement (and whether defined in the plural and used in the singular, or vice
versa), have the respective meaning assigned to such term in the Section in
which such meaning is set forth. References in this Agreement to "parties" or a
"party" refer to parties to this Agreement unless expressly indicated otherwise.
At each place in this Agreement where the context so requires, the masculine,
feminine or neuter gender includes the others and the singular or plural number
includes the other. "Including" means "including without limitation."
9.7 Headings. The descriptive headings contained in the Sections
and subsections of this Agreement are for convenience of reference only and
shall not affect in any way the meaning or interpretation of this Agreement.
9.8 Parties in Interest. This Agreement, and the rights,
interests and obligations created by this Agreement, shall bind and inure to the
benefit of the parties and their respective successors and permitted assigns,
and shall confer no right, benefit or interest upon any other person, including
shareholders of the respective parties.
9.9 Notices. All notices or other communications required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by U.S. mail, postage prepaid, addressed as follows or such
other address as the party to be notified has furnished in writing by a notice
given in accordance with this Section 9.9:
12
If to PSI:
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attention: Harvey Lenkin
President
If to PSP20:
Public Storage Properties XX, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Attention: B. Wayne Hughes
Chief Executive Officer
Any such notice or communication shall be deemed given as of the date of
delivery, if delivered personally, or on the second day after deposit with the
U.S. Postal Service, if sent by U.S. mail.
9.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same agreement.
9.11 Assignment. No rights, interests or obligations of either
party under this Agreement may be assigned or delegated without the prior
written consent of the other party.
9.12 Entire Agreement. This Agreement, including the Merger
Agreement, embodies the entire agreement and understanding between the parties
pertaining to the subject matter hereof, and supersedes all prior agreements,
understandings, negotiations, representations and discussions, whether written
or oral.
9.13 Severable Provisions. If any of the provisions of this
Agreement may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially enforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.
9.14 Further Action. If at any time after the Effective Time,
the Surviving Corporation shall determine that any assignments, transfers, deeds
or other assurances are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, title to any property or
rights of PSP20, the officers of any Constituent Corporation are fully
authorized in the name of PSP20 or otherwise to execute and deliver such
documents and do all things necessary and proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written.
PUBLIC STORAGE, INC.
By: /s/ HARVEY LENKIN
-----------------------------
Harvey Lenkin
President
PUBLIC STORAGE PROPERTIES XX, INC.
By: /s/ B. WAYNE HUGHES
-----------------------------
B. Wayne Hughes
Chief Executive Officer
13
Exhibit A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is entered into as of this _____
day of _______________, 1998, by and between PUBLIC STORAGE, INC., a California
corporation ("PSI"), and PUBLIC STORAGE PROPERTIES XX, INC., a California
corporation ("PSP20"), with reference to the following:
A. PSI was incorporated in 1980 under the laws of California, and on
the date hereof its authorized capital stock consists of 200,000,000 shares of
Common Stock, $.10 par value (the "PSI Shares"), ___________ of which are issued
and outstanding, 7,000,000 shares of Class B Common Stock, $.10 par value, all
of which are issued and outstanding, 50,000,000 shares of Preferred Stock, $.01
par value, ___________ of which are issued and outstanding and 200,000,000
shares of Equity Stock, $.01 par value, _______________ of which are issued and
outstanding.
B. PSP20 was incorporated in 1990 under the laws of California, and on
the date hereof has outstanding __________ shares of Common Stock Series A, $.01
par value (the "PSP20 Shares"), _________ shares of Common Stock Series B and
_________ shares of Common Stock Series C.
C. PSI and PSP20 have entered into an Agreement and Plan of
Reorganization dated as of February 13, 1998 (the "Plan"), setting forth certain
representations, warranties, conditions and agreements pertaining to the Merger
(as defined below).
D. The Boards of Directors of PSI and PSP20 have approved the Plan and
this Agreement of Merger, and the requisite shareholder approval has been
obtained.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
1.1 The Merger. At the Effective Time (as defined below), PSP20
will be merged with and into PSI (the "Merger") and PSI shall be the surviving
corporation. PSI and PSP20 are sometimes collectively referred to herein as the
"Constituent Corporations" and PSI, as the surviving corporation of the Merger,
is sometimes referred to herein as the "Surviving Corporation."
1.2 Effective Time. The Merger shall become effective at the
time at which this Agreement, together with the requisite Officers' Certificates
of PSI and PSP20, are filed with the California Secretary of State (the
"Effective Time").
1.3 Effect of the Merger. At the Effective Time:
(a) The separate corporate existence of PSP20 shall
cease and the Surviving Corporation shall thereupon succeed, without other
transfer, to all the rights and property of PSP20 and shall be subject to all
the debts and liabilities of PSP20 in the same manner as if the Surviving
Corporation had itself incurred them; all rights of creditors and all liens upon
the property of each of the Constituent Corporations shall be preserved
unimpaired, provided that such liens upon property of PSP20 shall be limited to
the property affected thereby immediately prior to the Effective Time; and any
action or proceeding pending by or against PSP20 may be prosecuted to judgment,
which shall bind the Surviving Corporation, or the Surviving Corporation may be
proceeded against or substituted in its place.
A-1
(b) The Articles of Incorporation and the Bylaws of PSI,
as then amended, shall continue to be the Articles of Incorporation and the
Bylaws of the Surviving Corporation until changed as provided by law and their
respective provisions.
(c) The directors of PSI shall continue as directors of
the Surviving Corporation until their successors are elected and qualified as
provided by law and in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation.
ARTICLE II
2.1 Conversion of PSP20 Shares. The manner of converting the
outstanding PSP20 Shares into cash and/or PSI Shares shall be as follows:
(a) At the Effective Time, subject to Section 2.6 of the
Plan, each PSP20 Share as to which a cash election has been made in accordance
with the provisions of Section 2.5 of the Plan and has not been revoked,
relinquished or lost pursuant to Section 2.5 of the Plan (the "Cash Election
Shares") shall be converted into and shall represent the right to receive
$_______ in cash (the "Cash Election Price"). As soon as practicable after the
Effective Time, the registered holders of Cash Election Shares shall be paid the
cash to which they are entitled hereunder in respect of such Cash Election
Shares.
(b) At the Effective Time, subject to Sections 2.4, 2.5
and 2.7 of the Plan, each PSP20 Share (other than Cash Election Shares and PSP20
Shares owned by PSI) shall be converted into ______ PSI Shares.
2.2 No Fractional Shares. Notwithstanding any other term or
provision of this Agreement or the Plan, no fractional PSI Shares and no
certificates or script therefor, or other evidence of ownership thereof, will be
issued in the Merger. In lieu of any such fractional share interests, each
holder of PSP20 Shares who would otherwise be entitled to such fractional share
will, upon surrender of the certificate representing such PSP20 Shares, receive
a whole PSI Share if such fractional share to which such holder would otherwise
have been entitled is .5 of an PSI Share or more, and such fractional share
shall be disregarded if it represents less than .5 of an PSI Share; provided,
however, that, such fractional share shall not be disregarded if such fractional
share to which such holder would otherwise have been entitled represents .5 of
1% or more of the total number of PSI Shares such holder is entitled to receive
in the Merger. In such event, such holder shall be paid an amount in cash
(without interest), rounded to the nearest $.01, determined by multiplying (i)
the per share closing price on the New York Stock Exchange, Inc. of the PSI
Shares at the Effective Time by (ii) the fractional interest.
2.3 Dissenting Shares. PSP20 Shares held by a holder who has
demanded and perfected his right to an appraisal of such shares in accordance
with Section 1300 et seq. of the General Corporation Law of California (the
"GCLC") and who has not effectively withdrawn or lost his right to appraisal
("Dissenting Shares") shall not be converted into or represent the right to
receive cash and/or PSI Shares, but the holder thereof shall be entitled only to
such rights as are granted by Section 1300 et seq. of the GCLC. Each holder of
Dissenting Shares who becomes entitled to payment for PSP20 Shares pursuant to
these provisions of the GCLC shall receive payment therefor from the Surviving
Corporation in accordance therewith. If any holder of PSP20 Shares who demands
appraisal in accordance with Section 1300 et seq. of the GCLC shall effectively
withdraw with the consent of the Surviving Corporation or lose (through failure
to perfect or otherwise) his right to appraisal with respect to PSP20 Shares,
such PSP20 Shares shall automatically be converted into the right to receive PSI
Shares pursuant to Section 2.1(b) hereof.
2.4 PSI Shares Unaffected. The Merger shall effect no change in
any of the outstanding PSI Shares and no outstanding PSI Shares shall be
converted or exchanged as a result of the Merger, and no cash shall be
exchangeable and no securities shall be issuable, with respect thereto.
2.5 Cancellation of Shares Held or Owned by Parties. At the
Effective Time, any PSP20 Shares owned by PSI shall be cancelled and retired and
no shares shall be issuable, and no cash shall be exchangeable, with respect
thereto.
A-2
2.6 Exchange of Certificates. After the Effective Time, each
holder of a certificate theretofore evidencing outstanding PSP20 Shares which
were converted into PSI Shares pursuant hereto, upon surrender of such
certificate to First National Bank of Boston (the "Exchange Agent") or such
other agent or agents as shall be appointed by the Surviving Corporation, shall
be entitled to receive a certificate representing the number of whole PSI Shares
into which the PSP20 Shares theretofore represented by the certificate so
surrendered shall have been converted and cash payment in lieu of fractional
share interests, if any. As soon as practicable after the Effective Time, the
Exchange Agent will send a notice and a transmittal form to each holder of PSP20
Shares of record at the Effective Time whose stock shall have been converted
into PSI Shares, advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Exchange Agent certificates evidencing PSP20
Shares in exchange for certificates evidencing PSI Shares.
2.7 Status Until Surrendered. Until surrendered as provided in
Section 2.6 hereof, each outstanding certificate which, prior to the Effective
Time, represented PSP20 Shares (other than Cash Election Shares and Dissenting
Shares, if any) will be deemed for all corporate purposes to evidence ownership
of the number of whole PSI Shares into which the PSP20 Shares evidenced thereby
were converted. However, until such outstanding certificates formerly evidencing
PSP20 Shares are so surrendered, no dividend payable to holders of record of PSI
Shares shall be paid to the holders of such outstanding certificates in respect
of PSP20 Shares, but upon surrender of such certificates by such holders there
shall be paid to such holders the amount of any dividends (without interest)
theretofore paid with respect to such whole PSI Shares as of any record date on
or subsequent to the Effective Time and the amount of any cash (without
interest) payable to such holder in lieu of fractional share interests.
2.8 Transfer of Shares. After the Effective Time, there shall be
no further registration of transfers of PSP20 Shares on the records of PSP20
and, if certificates formerly evidencing such shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged for certificates
evidencing PSI Shares and cash in lieu of fractional share interests as herein
provided.
2.9 Conversion of Common Stock Series B and C. At the Effective
Time, each share of Common Stock Series B (other than shares owned by PSI) shall
be converted into ______ PSI Shares and each share of Common Stock Series C
(other than shares owned by PSI) shall be converted into ______ PSI Shares.
ARTICLE III
3.1 Headings. The descriptive headings contained in the Sections
of this Agreement are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
3.2 Parties in Interest. This Agreement, and the rights,
interests and obligations created by this Agreement, shall bind and inure to the
benefit of the parties and their respective successors and permitted assigns.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same agreement.
3.4 Further Action. If at any time after the Effective Time, the
Surviving Corporation shall determine that any assignments, transfers, deeds or
other assurances are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, title to any property or
rights of PSP20, the officers of either Constituent Corporation are fully
authorized in the name of PSP20 or otherwise to execute and deliver such
documents and do all things necessary and proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation.
3.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to the principles of conflict of laws thereof.
3.6 Abandonment of Merger. The Constituent Corporations have the
power to abandon the Merger by mutual written consent prior to the filing of
this Agreement with the California Secretary of State.
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written.
PUBLIC STORAGE, INC.
By: ________________________________
Harvey Lenkin
President
By: ________________________________
Obren B. Gerich
Assistant Secretary
PUBLIC STORAGE PROPERTIES XX, INC.
By: ________________________________
Harvey Lenkin
President
By: ________________________________
Obren B. Gerich
Secretary
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