EXHIBIT 2
CERTIFICATE OF DETERMINATION
OF
EQUITY STOCK, SERIES A
OF
PUBLIC STORAGE, INC.
--------------------
[As filed in the Office of the Secretary of State of the
State of California November 9, 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 A" consisting of 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 8th 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 A
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 A," shall consist of 500,000
shares and shall have the following rights and privileges:
(a) Dividend Rights.
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(1) Dividends on each share of this Series shall be non-cumulative and
shall be payable out of funds legally available therefor, without interest
thereon, when, as and if declared by the Board of Directors. If, at any time,
the Corporation shall declare or pay a dividend or other distribution on the
Common Shares (i) in cash or (ii) in any shares of the Corporation's capital
stock (but in the latter case, 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 (9) of Section (c)), a dividend or other
distribution in cash shall also concurrently be declared or paid, 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 thousand
(5,000) times the per share dividend or distribution on the Common Shares (based
on the amount of cash, and in the case of shares distributed with respect to the
Common Shares, the amount of the dividends paid deduction attributable to the
distributed shares), but shall not be more than $612.50 in any calendar quarter
(prorated for the quarter ending March 31, 2000 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
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for the year 2000) not at a rate less than the lesser of (i) $2,450 per share or
(ii) five thousand (5,000) 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
1
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 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, 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.
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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 one thousand (1,000) times the amount
per share distributed to the holder of each Common Share; provided, that the
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amount so received by the holder of each share of this Series shall not exceed
$24,500 per share, subject to adjustment as provided in Section (e). 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
2
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.
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(1) Except as provided in clause (9) of this Section (c), the shares
of this Series are not redeemable prior to March 31, 2005. On and after such
date, 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, from time to time
upon not less than 30 nor more than 60 days' notice, at a cash redemption price
of $24,500 per share, subject to adjustment as provided in clause (1) of Section
(e).
(2) Except in the case of a redemption pursuant to clause (9) 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, 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.
(3) If fewer than all the outstanding shares of this Series are to be
redeemed, the number of shares to be redeemed will be determined by the Board of
Directors, and such shares shall be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or by lot in a
manner determined by the Board of Directors.
(4) If a redemption date falls after a dividend payment record date
and prior to the corresponding dividend payment date, each 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
3
provided herein above, the Corporation shall make no payment or allowance for
unpaid dividends on shares of this Series called for redemption.
(5) Notice of redemption shall be given by publication in a newspaper
of general circulation in the County of Los Angeles and The City of New York,
such publication to be made once a week for two successive weeks, commencing not
less than 30 nor more than 60 days prior to the date fixed for redemption
thereof. A similar notice will be mailed by the Corporation by first class
mail, postage pre-paid, to each record holder of the shares of this Series to be
redeemed, not less than 30 nor more than 60 days prior to such redemption date,
to the respective addresses of such holders as the same shall appear on the
stock transfer records of the Corporation. Each notice shall state: (i) the
redemption date; (ii) the number of shares of this Series to be redeemed; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v) that,
except as provided in clause (4) of this Section (c), dividends on the shares to
be redeemed will cease on such redemption date. If fewer than all the shares of
this Series held by any holder are to be redeemed, the notice mailed to such
holder shall also specify the number of shares of this Series to be redeemed
from such holder.
(6) In order to facilitate the redemption of shares of this Series,
the Board of Directors may fix a record date for the determination of the shares
to be redeemed, such record date to be not less than 30 nor more than 60 days
prior to the date fixed for such redemption.
(7) Notice having been given as provided above, 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 holders of shares selected for redemption shall
cease to be shareholders with respect to such shares and 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 their 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, plus the amount of the dividends, if any, to which the holders of
this Series are entitled under clause (4) above, with the transfer agent or
agents for this Series, as a trust fund for the benefit of the holders of the
shares of this Series designated for redemption, together with irrevocable
instructions and authority to such transfer agent or agents that such funds be
delivered upon redemption of such shares and to pay, on and after the date fixed
for redemption or prior thereto, the redemption price of the
4
shares to their respective holders upon the surrender of their share
certificates. From and after the making of such deposit, the holders of the
shares designated for redemption shall cease to be shareholders with respect to
such shares and 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 from such trust fund the moneys payable upon
such redemption, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of their certificates, and the shares represented
thereby shall no longer be deemed to be outstanding. Any balance of such moneys
remaining unclaimed at the end of the five-year period commencing on the date
fixed for redemption shall be repaid to the Corporation upon its request
expressed in a resolution of its Board of Directors.
(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.
(9) 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 (as defined below), then the Board
of Directors shall have the power, by lot or other means deemed equitable by
them, to prevent the transfer of and/or to call for redemption a 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. The
redemption price to be paid for shares of this Series so called for redemption,
on the date fixed for redemption, shall be, as applicable, the average of the
daily closing prices on the principal exchange on which such 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 if there are no such
bid and asked quotations, as determined by the Board of Directors in good faith;
provided that if interests in shares of this Series are represented by
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depositary shares, then the redemption price shall be determined in accordance
with the foregoing, but with respect to one depositary share, multiplied by the
number of depositary shares that together represent an interest in one share of
this Series. From and after the date fixed for redemption by the Board of
Directors, the holder of any shares of this Series so called for redemption
shall cease to be entitled to any distributions, voting rights and other
benefits with respect to such shares of this Series, other than the right to
payment of the redemption price determined as aforesaid. "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. In order
to exercise the redemption option set forth in this clause (9), with respect to
the shares of this Series, the Corporation shall give notice of redemption in
5
the manner provided in clause (5) of this Section (c). Except as provided in
clause (4) of this Section (c), dividends on the shares to be redeemed will
cease on such redemption date. If fewer than all the shares of this Series held
by any holder are to be redeemed, the notice mailed to such holder shall also
specify the number of shares of this Series to be redeemed from such holder.
(d) Conversion. (1) Except as set forth in this clause (1) of Section
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(d), the shares of this Series are not convertible into shares of any other
class or series of the capital stock of the Corporation. If the Corporation (or
any successor entity which succeeds to the obligations of the Corporation
hereunder) determines that (i) it will no longer constitute a qualifying REIT
under the REIT Provisions of the Internal Revenue Code for United States federal
income tax purposes or (ii) it will no longer file a United States federal
income tax return as a REIT (each of the foregoing, a "REIT Termination Event"),
then each share of this Series shall be convertible at any time thereafter at
the option of the holder thereof into a number of Common Shares equal to $20,000
divided by the Conversion Price.
For purposes hereof, "Conversion Price" shall mean initially, $20.92
(resulting in a conversion rate of 956 Common Shares for each share of this
Series), as such Conversion Price may be adjusted pursuant to Section (e).
Notice of a REIT Termination Event and of the right of holders of
shares of this Series to convert as provided in this Section, shall be given by
publication in a newspaper of general circulation in the County of Los Angeles
and The City of New York, such publication to be made once a week for two
successive weeks, commencing within fifteen days after the occurrence of such
event. A similar notice will be mailed by the Corporation concurrently by first
class mail, postage pre-paid, to each record holder of the shares of this
Series, to the respective addresses of such holders as the same shall appear on
the stock transfer records of the Corporation.
Any holder of shares of this Series desiring to convert the same into
Common Shares shall surrender the certificate or certificates for the shares of
this Series being converted, duly endorsed or assigned to the Corporation or in
blank, at the principal office of the Corporation or at a bank or trust company
appointed by the Corporation for that purpose, accompanied by a written notice
of conversion specifying the number (in whole shares) of shares of this Series
to be converted and the name or names in which such holder wishes the
certificate or certificates for Common Shares to be issued; in case such notice
shall specify a name or names other than that of such holder, such notice shall
be accompanied by instruments of transfer, in form reasonably satisfactory to
the Corporation, duly executed by the holder or such holder's duly authorized
attorney and payment of all transfer taxes payable upon the issue of Common
Shares in such name or names or evidence reasonably satisfactory to the
Corporation demonstrating that such taxes have been paid. In the event that
less than all of the shares of this Series represented by a certificate are to
be converted by a holder, upon such conversion the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder a certificate or
6
certificates for the shares of this Series not so converted. The right to
convert shares of this Series called for redemption shall terminate at the close
of business on the redemption date pursuant to Section (c) above. The holders
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.
However, shares of this Series surrendered for conversion during the period from
the close of business on any record date for the payment of dividends on such
shares of this Series to the opening of business on the corresponding dividend
payment date (except shares called for redemption on a redemption date during
such period, which shall be entitled to such dividend on the dividend payment
date) must be accompanied by payment of an amount equal to the dividend payable
on such shares on such dividend payment date. A holder of shares of this Series
on such dividend payment record date who (or whose transferee) tenders shares of
this Series on such dividend payment date will receive the dividend payable on
such shares by the Corporation on such date, and the converting holder need not
include payment in the amount of such dividend upon surrender of shares of this
Series for conversion. 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.
As promptly as practicable after the surrender of certificates for
shares of this Series as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Shares issuable upon
the conversion of such shares in accordance with the provisions of this Section
(d).
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for shares
of this Series shall have been surrendered and such notice (and if applicable,
payment of an amount equal to the dividend payable on such shares) received by
the Corporation as aforesaid, and the person or persons in whose name or names
any certificate or certificates for Common Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such conversion shall
be at the Conversion Price, unless the stock transfer books of the Corporation
shall be closed on that date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of business
on the next succeeding day on which such stock transfer books are open.
(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
7
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. The
Corporation shall use its best efforts to list the Common Shares required to be
delivered upon conversion of shares of this Series, prior to such conversion,
upon each national securities exchange or quotation system, if any, upon which
the outstanding Common Shares are listed or quoted at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be obligated
to deliver upon conversion of any shares of this Series, the Corporation shall
endeavor to comply with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any approval of or
consent to the delivery thereof by, any governmental authority.
(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. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of Common Shares in a name other than that in which
the shares of this Series so converted were registered, and no such issuance or
delivery shall be made unless and until the person requesting such issuance has
paid to the Corporation the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has been paid.
(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 value 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 (9) of Section (c).
(e) Adjustments. (1) Other than a dividend or distribution as to
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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, the
maximum liquidation distribution and the redemption price shall be adjusted so
that the total of each such amount for all
8
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 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
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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
9
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 investments, adjusted
as follows: (i) plus depreciation and amortization, (ii) plus gain on
disposition of 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 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 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)
above or a dividend or
10
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 that would have been 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 (9) of Section (c) above.
(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
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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,
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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. The Corporation shall use its best
efforts to list the shares of this Series required to be issued upon such
adjustment, prior to such issuance, upon each national securities exchange or
quotation system, if any, upon which the outstanding shares of this Series are
listed or quoted at the time of such issuance. Prior to the delivery of any
securities that the Corporation shall be obligated to issue pursuant to clause
(1) of this Section (e), the Corporation shall endeavor to comply with all
federal and state laws and regulations thereunder requiring the registration of
such securities with, or any approval of or consent to the delivery thereof by,
any governmental authority.
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(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. The shares of this Series shall not have any
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voting powers either general or special, except as required by law, except as
set forth in clause (1) of this Section (f).
(1) Holders of shares of this Series shall have the right to vote on
all matters presented to holders of the Common Shares for a vote and vote
together as one class with holders of Common Shares and other series of equity
shares that share voting rights with holders of shares of this Series. Each
outstanding share of this Series entitles the holder to one hundred (100) votes,
except that such holder, together with holders of Common Shares and other series
of equity shares that share voting rights with holders of
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shares of this Series, has cumulative voting rights in electing Directors. For
purposes of this clause (1) of Section (f), each holder of shares of this Series
shall have the right (i) to cast as many votes as there are Directors to be
elected multiplied by one hundred (100) times the number of shares of this
Series registered in the name of such holder and (ii) either to cast all of such
votes for one candidate for Director or to distribute such votes among as many
candidates as such holder chooses.
(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.
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