-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RTTZkroeTYfpWaGJzNRs6+efZbu5eV+SzteGwmFIJVkA52RUefD9NG2NShjtrf5r TzTTHlta3Q5TyqDjdRO3DQ== 0000935808-96-000001.txt : 19960408 0000935808-96-000001.hdr.sgml : 19960408 ACCESSION NUMBER: 0000935808-96-000001 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960405 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE INC /CA CENTRAL INDEX KEY: 0000318380 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953551121 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-36024 FILM NUMBER: 96544803 BUSINESS ADDRESS: STREET 1: 600 N BRAND BLVD STREET 2: SUITE 300 CITY: GLENDALE STATE: CA ZIP: 91203 BUSINESS PHONE: 8182448080 FORMER COMPANY: FORMER CONFORMED NAME: STORAGE EQUITIES INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HUGHES B WAYNE ET AL CENTRAL INDEX KEY: 0000935808 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 952782164 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 600 NORTH BRAND BOULEVARD SUITE 300 CITY: GLENDALE STATE: CA ZIP: 91203-1124 BUSINESS PHONE: 8182448080 MAIL ADDRESS: STREET 2: 600 NORTH BRAND BOULEVARD SUITE 300 CITY: GLENDALE STATE: CA ZIP: 91203-1241 SC 13D/A 1 SCHEDULE 13D AMENDMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 18)* Public Storage, Inc. (Name of Issuer) Common Stock, $.10 par value (Title of Class of Securities) 74460D 10 9 (CUSIP Number) David Goldberg, 600 No. Brand Blvd., Glendale, California 91203-1241, 818/244-8080, ext. 529 --------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 26, 1996 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 74460D 10 9 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person PS Insurance Company, Ltd. 2 Check the Appropriate Box if a Member of a Group* a. [ ] b. [x] 3 SEC Use Only 4 Source of Funds* WC 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Bermuda NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 Sole Voting Power 300,000 8 Shared Voting Power N/A 9 Sole Dispositive Power 300,000 10 Shared Dispositive Power N/A 11 Aggregate Amount Beneficially Owned by Each Reporting Person 300,000 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented by Amount in Row (11) 0.41% 14 Type of Reporting Person* CO SCHEDULE 13D CUSIP No. 74460D 10 9 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person PS Orangeco, Inc. 2 Check the Appropriate Box if a Member of a Group* a. [ ] b. [x] 3 SEC Use Only 4 Source of Funds* N/A 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Bermuda NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 Sole Voting Power 30,777 8 Shared Voting Power N/A 9 Sole Dispositive Power 30,777 10 Shared Dispositive Power N/A 11 Aggregate Amount Beneficially Owned by Each Reporting Person 30,777 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented by Amount in Row (11) 0.04% 14 Type of Reporting Person* CO SCHEDULE 13D CUSIP No. 74460D 10 9 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person B. Wayne Hughes 2 Check the Appropriate Box if a Member of a Group* a. [ ] b. [x] 3 SEC Use Only 4 Source of Funds* PF 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 Sole Voting Power 19,367,916 8 Shared Voting Power 360,246 (see footnote 2 below) 9 Sole Dispositive Power 19,367,916 10 Shared Dispositive Power 360,246 (see footnote 2 below) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 19,728,162 (see footnote 2 below) 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented by Amount in Row (11) 27.02% 14 Type of Reporting Person* IN (2) Includes 300,000 shares held of record by PS Insurance Company, Ltd., 30,777 shares held of record by PS Orangeco, Inc. and 29,469 shares held of record by Parker Hughes Trust dtd 3/7/91. SCHEDULE 13D CUSIP No. 74460D 10 9 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person B. Wayne Hughes, Jr. 2 Check the Appropriate Box if a Member of a Group* a. [ ] b. [x] 3 SEC Use Only 4 Source of Funds* PF, BK 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 Sole Voting Power 925,314 (see footnote 3 below) 8 Shared Voting Power 31,727 (see footnote 4 below) 9 Sole Dispositive Power 925,314 (see footnote 3 below) 10 Shared Dispositive Power 31,727 (see footnote 4 below) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 957,041 (see footnotes 3 and 4 below) 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented by Amount in Row (11) 1.31% 14 Type of Reporting Person* IN (3) Includes 1,472 shares of common stock which can be acquired upon conversion of 875 shares of the issuer's 8.25% Convertible Preferred Stock which are beneficially owned by B. Wayne Hughes, Jr. (4) Includes 30,777 shares held of record by PS Orangeco, Inc. and 950 shares held of record jointly by B. Wayne Hughes, Jr. and Tamara L. Hughes. SCHEDULE 13D CUSIP No. 74460D 10 9 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Parker Hughes Trust No. 2 2 Check the Appropriate Box if a Member of a Group* a. [ ] b. [x] 3 SEC Use Only 4 Source of Funds* PF 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization California NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 Sole Voting Power 15,930 8 Shared Voting Power N/A 9 Sole Dispositive Power 15,930 10 Shared Dispositive Power N/A 11 Aggregate Amount Beneficially Owned by Each Reporting Person 15,930 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented by Amount in Row (11) 0.02% 14 Type of Reporting Person* OO (Trust) SCHEDULE 13D CUSIP No. 74460D 10 9 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Tamara L. Hughes 2 Check the Appropriate Box if a Member of a Group* a. [ ] b. [x] 3 SEC Use Only 4 Source of Funds* PF 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 Sole Voting Power 16,609,837 (see footnote 5 below) 8 Shared Voting Power 347,657 (see footnote 6 below) 9 Sole Dispositive Power 16,609,837 (see footnote 5 below) 10 Shared Dispositive Power 347,657 (see footnote 6 below) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 16,957,494 (see footnotes 5 and 6 below) 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented by Amount in Row (11) 23.22% 14 Type of Reporting Person* IN (5) Includes 5,050 shares of common stock which can be acquired upon conversion of 3,000 shares of the issuer's 8.25% Convertible Preferred Stock which are held of record by Tamara L. Hughes. (6) Includes 300,000 shares held of record by PS Insurance Company, Ltd., 30,777 shares held of record by PS Orangeco, Inc., 950 shares held of record jointly by Tamara L. Hughes and B. Wayne Hughes, Jr. and 15,930 shares held of record by Parker Hughes Trust No. 2 dtd 12/24/92. This Amendment No. 18 to Statement on Schedule 13D (the "Amended and Restated Statement") amends and restates the Statement on Schedule 13D dated March 3, 1989, as amended by Amendment No. 1 dated September 7, 1989, Amendment No. 2 dated March 27, 1990, Amendment No. 3 dated November 1, 1990, Amendment No. 4 dated January 2, 1991, Amendment No. 5 dated November 4, 1991, Amendment No. 6 dated January 14, 1992, Amendment No. 7 dated December 28, 1992, Amendment No. 8 dated August 6, 1993, Amendment No. 9 dated September 27, 1993, Amendment No. 10 dated December 28, 1993, Amendment No. 11 dated April 4, 1994, Amendment No. 12 dated September 30, 1994, Amendment No. 13 dated November 11, 1994, Amendment No. 14 dated January 23, 1995, Amendment No. 15 dated February 28, 1995, Amendment No. 16 dated June 30, 1995 and Amendment No. 17 dated November 16, 1995. Item 1. Security and Issuer The class of securities to which this Statement on Schedule 13D relates is the common stock, par value $.10 per share (the "Shares"), of Public Storage, Inc., a California corporation formerly known as Storage Equities, Inc. (the "Issuer"). The address of the principal executive office of the Issuer is 600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241. Item 2. Identity and Background This Amendment No. 18 to Statement on Schedule 13D is being filed by PS Insurance Company, Ltd. ("PSIC"), PS Orangeco, Inc. ("PSOI"), B. Wayne Hughes, B. Wayne Hughes, Jr. and Tamara L. Hughes (collectively, the "Reporting Persons") pursuant to an Amended Joint Filing Agreement attached hereto as Exhibit 1. On November 16, 1995, Public Storage Management, Inc. ("PSMI") was merged with and into the Issuer (the "PSMI Merger") pursuant to an Agreement and Plan of Reorganization dated as of June 30, 1995 and an Amendment to Agreement and Plan of Reorganization dated as of November 13, 1995, each among the Issuer, Public Storage, Inc. ("Old PSI") and PSMI (collectively, the "Agreement and Plan of Reorganization"). Prior to the Restructuring (described below) and the PSMI Merger, (i) PSI Holdings, Inc. ("PSH") was the sole shareholder of Old PSI and Old PSI was the sole shareholder of PSIC and PSMI and (ii) substantially all of the stock of PSH was held by B. Wayne Hughes, as trustee of the B.W. Hughes Living Trust, Tamara L. Hughes, an adult daughter of B. Wayne Hughes and B. Wayne Hughes, Jr., an adult son of B. Wayne Hughes (collectively, the "Hughes Family"). Prior to the PSMI Merger, (i) PSIC was distributed, in a spin-off intended to qualify as tax-free under Section 355 of the Internal Revenue Code, to the Hughes Family and (ii) Old PSI was merged with and into PSH, which was followed by the merger of PSH with and into PSMI (collectively, the "Restructuring"). Immediately preceding the PSMI Merger, PSMI transferred its merchandise business to PSOI in exchange for non-voting preferred stock of PSOI (representing approximately 95% of the equity) and the voting common stock of PSOI (representing approximately 5% of the equity) was acquired by the Hughes Family. At the time of the PSMI Merger, substantially all of the stock of PSMI was held by the Hughes Family as follows: 46.6% by B. Wayne Hughes, as trustee of the B.W. Hughes Living Trust, 46.5% by Tamara L. Hughes and 6.7% by B. Wayne Hughes, Jr. As a result of the Restructuring and the PSMI Merger, Old PSI, PSH and PSMI ceased to exist. In connection with the PSMI Merger, the Issuer changed its name from Storage Equities, Inc. to Public Storage, Inc. PSIC is a corporation organized under the laws of Bermuda. It is owned by the Hughes Family as follows: 45.4% by B. Wayne Hughes, 46.8% by Tamara L. Hughes and 7.8% by B. Wayne Hughes, Jr. Its principal business activity is to reinsure casualty policies sold to tenants of mini-warehouse facilities. The principal office of PSIC is located at 41 Cedar Avenue, Hamilton, Bermuda. PSOI is a corporation organized under the laws of California. The voting common stock of PSOI (representing approximately 5% of the equity) is owned one-third each by B. Wayne Hughes, Tamara L. Hughes and B. Wayne Hughes, Jr., and the non-voting preferred stock of PSOI (representing approximately 95% of the equity) is owned by the Issuer. PSOI's principal business activity is to sell locks and boxes to tenants of mini-warehouse facilities. The principal office of PSOI is located at 600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241. Mr. B. Wayne Hughes, a United States citizen, is the Chairman of the Board and Chief Executive Officer of the Issuer. His business address is 600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241. Mr. Hughes is the father of B. Wayne Hughes, Jr., Tamara L. Hughes and Parker Hughes (a minor), the beneficiary of Parker Hughes Trust No. 2. Mr. B. Wayne Hughes, Jr., a United States citizen, is a Vice President-Acquisitions of the Issuer. His business address is 600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241. Parker Hughes Trust No. 2 is an irrevocable trust formed under a trust agreement dated 12/24/92 and governed by the laws of the State of California. Tamara L. Hughes is the trustee of Parker Hughes Trust No. 2. Parker William Lawrence Hughes, a minor son of B. Wayne Hughes, is the beneficiary of Parker Hughes Trust No. 2. B. Wayne Hughes is the settlor of Parker Hughes Trust No. 2. The address of Parker Hughes Trust No. 2 is 600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241. Ms. Tamara L. Hughes, a United States citizen, is a Vice President-Administration of the Issuer. Her business address is 600 North Brand Boulevard, Suite 300, Glendale, California 91203-1241. Because of the relationship among the Reporting Persons, such Reporting Persons may be deemed a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934. However, each of the Reporting Persons disclaims that he or it constitutes such a group. In addition, except as otherwise disclosed herein, each Reporting Person claims beneficial ownership only of those Shares set out following his or its name under Item 5 hereof and disclaims beneficial ownership of any Shares covered by this Amended and Restated Statement owned by any other Reporting Person. The filing of this Amended and Restated Statement shall not be deemed an admission that the Reporting Persons constitute such a group or that a Reporting Person is a beneficial owner of Shares owned by any other Reporting Person. During the last five years, neither the Reporting Persons nor, to the best knowledge of the Reporting Persons, any executive officer, director or person controlling any Reporting Person, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Compensation In the PSMI Merger, the Issuer acquired a significant amount of real estate related assets and as a result of the PSMI Merger, the Issuer became self-advised and self-managed. The aggregate consideration paid by the Issuer in the PSMI Merger to the shareholders of PSMI consisted of (i) the issuance on November 16, 1995 (the effective date of the PSMI Merger) of 30,000,000 Shares of the Issuer (subject to post-closing adjustment) having a market value of $16.088 per share based on the average closing price of the Issuer's common stock on the New York Stock Exchange for the 30 consecutive trading days ending on June 29, 1995, the day prior to the date the Agreement and Plan of Reorganization was executed, and $17.75 per share based on the closing price of the Issuer's common stock on the New York Stock Exchange on November 16, 1995, the effective date of the PSMI Merger, (ii) the issuance on January 22, 1996 of an additional 5,861,723 Shares of the Issuer issued as post- closing adjustments (in respect of 6,412,210 Shares of the Issuer that were owned by PSMI at the effective time of the PSMI Merger which were cancelled in the PSMI Merger and reissued to the Hughes Family as a post-closing adjustment, offset by a reduction in the total number of Shares issuable in the PSMI Merger resulting from a further post- closing adjustment, (iii) the issuance on January 2, 1996 of 7,000,000 shares of Class B Common Stock of the Issuer and (iv) assumption of $68 million of PSMI debt and consolidated property debt of $4.7 million. Substantially all of the consideration paid in the PSMI Merger was paid to the Hughes Family. For a detailed description of the PSMI Merger, see the Issuer's definitive proxy statement dated October 11, 1995. As of March 26, 1996, PSIC owned a total of 300,000 Shares. These Shares were acquired as follows: (i) for 148,300 of these Shares, PSIC paid an approximate aggregate purchase price (including commissions) of $1,725,883, which funds were obtained from PSIC's working capital, (ii) 71,900 of these Shares were originally acquired by Old PSI for an approximate aggregate purchase price of $689,920 (with funds obtained from Old PSI's working capital) and these Shares were subsequently transferred to PSIC by Old PSI and (iii) the remaining 79,800 of these Shares represent transaction fees earned in connection with the Issuer's acquisition of limited partnership interests in affiliated real estate limited partnerships (these Shares were transferred to PSIC by Old PSI). As of March 26, 1996, PSOI owned a total of 30,777 Shares, which Shares were contributed to PSOI on November 14, 1995 one-third each by B. Wayne Hughes (as trustee of the B.W. Hughes Living Trust), Tamara L. Hughes and B. Wayne Hughes, Jr. in exchange for the acquisition of one-third of PSOI's voting common stock by each of B. Wayne Hughes (as trustee of the B.W. Hughes Living Trust), Tamara L. Hughes and B. Wayne Hughes, Jr. As of March 26, 1996, Mr. B. Wayne Hughes owned a total of 19,397,385 Shares (exclusive of Shares owned by PSIC and PSOI). These Shares were acquired (or deemed to be acquired) as follows: (i) 17,620 Shares were acquired as follows: (a) 550,237 Shares were acquired for an approximate aggregate purchase price (including commissions) of $7,651,853, which funds were obtained from Mr. Hughes' personal funds, and (b) on November 14, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust sold 532,617 of these Shares to PSMI for an aggregate price of $9,453,952, (ii) pursuant to a merger of Public Storage Properties VIII, Inc. ("PSP8") into the Issuer (the "PSP8 Merger") which was effective September 30, 1994, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust acquired 206,892 Shares of the Issuer in exchange for the surrender of 144,781 shares of PSP8 common stock series A (the terms of the PSP8 Merger are set forth in the Agreement and Plan of Reorganization between PSP8 and the Issuer dated as of April 14, 1994 and the related Agreement of Merger, which were filed with the Issuer's Registration Statement on Form S-4 (File No. 33-54557)), (iii) 156,100 Shares were acquired by B. Wayne Hughes, Trustee for B.W. Hughes Living Trust from Harkham Industries, Inc. (DBA Jonathan Martin, Inc.), a corporation wholly owned by Uri P. Harkham, a director of the Issuer, on November 30, 1994 in a privately negotiated transaction for an aggregate price of $2,107,350, with funds obtained from Mr. Hughes' personal funds, and on November 14, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust sold these 156,100 Shares to PSMI for an aggregate price of $2,770,775, (iv) 27,400 of these Shares were originally acquired by Mr. Hughes' wife, Kathleen Becker Hughes, as custodian (under the Uniform Transfer to Minors Act) for their son Parker Hughes (the "Custodial Account") for an approximate aggregate purchase price (including commissions) of $248,612 using funds contributed by Mr. Hughes, and these Shares were subsequently transferred from the Custodial Account to Kathleen Becker Hughes, Trustee FBO Parker Hughes Trust dtd 3/7/91 ("Parker Hughes Trust No. 1") (Parker Hughes Trust No. 1 is an irrevocable trust governed by the laws of the State of California, B. Wayne Hughes is the settlor of Parker Hughes Trust No. 1 and Parker Hughes is the beneficiary of Parker Hughes Trust No. 1), (v) (a) pursuant to a merger of Public Storage Properties VI, Inc. ("PSP6") into the Issuer (the "PSP6 Merger") which was effective February 28, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust acquired a total of 250,351 Shares of the Issuer in exchange for the surrender of 145,215 shares of PSP6 common stock series A (the terms of the PSP6 Merger are set forth in the Agreement and Plan of Reorganization between PSP6 and the Issuer dated as of September 26, 1994 and the related Agreement of Merger, which were filed with the Issuer's Registration Statement on Form S-4 (File No. 33-56925)), (b) on May 11, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust transferred 93,023 of these Shares to a third party as a gift and (c) on November 27, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust transferred 157,328 of these Shares to a third party as a gift, (vi) pursuant to the PSP6 Merger, Parker Hughes Trust No. 1 acquired 2,069 Shares of the Issuer in exchange for the surrender of 1,200 shares of PSP6 common stock series A, (vii) 142,917 Shares were acquired by B. Wayne Hughes, Trustee for B.W. Hughes Living Trust from B. Wayne Hughes, Jr. on February 28, 1995 in a privately negotiated transaction for an aggregate price of $2,038,000 consisting of the cancellation of $2,038,000 of debt of B. Wayne Hughes, Jr. to B. Wayne Hughes, (viii) 76,876 Shares were acquired as follows: (a) pursuant to a merger of Public Storage Properties VII, Inc. ("PSP7") into the Issuer (the "PSP7 Merger") which was effective June 30, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust acquired 248,889 Shares of the Issuer in exchange for the surrender of 215,488 shares of PSP7 common stock series A (the terms of the PSP7 Merger are set forth in the Agreement and Plan of Reorganization between PSP7 and the Issuer dated as of February 2, 1995 and the related Agreement of Merger, which were filed with the Issuer's Registration Statement on Form S-4 (File No. 33-58893)), (b) on September 6, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust transferred 96,000 of these Shares to a third party as a gift, (c) on November 1, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust transferred 65,754 of these Shares to a third party as a gift, and (d) on November 14, 1995, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust contributed 10,259 of these Shares to PSOI in exchange for one-third of PSOI's voting common stock, (ix) pursuant to the PSMI Merger, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust was issued 16,089,553 Shares on November 16, 1995, which Shares were subject to certain post-closing adjustments, (x) as post-closing adjustments to the Shares issued pursuant to the PSMI Merger, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust was issued 2,744,889 Shares on January 22, 1996 in respect of Shares that were owned by PSMI at the effective time of the PSMI Merger and cancelled in the PSMI Merger and reissued as a post-closing adjustment, offset by a reduction in the total number of Shares issuable in the PSMI Merger resulting from a further post- closing adjustment, and (xi) pursuant to a merger of Public Storage Properties IX, Inc. ("PSP9") into the Issuer (the "PSP9 Merger") which was effective March 26, 1996, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust acquired 89,169 Shares of the Issuer in exchange for the surrender of 104,781 shares of PSP9 common stock series A (the terms of the PSP9 Merger are set forth in the Agreement and Plan of Reorganization among the Issuer, PSP9 and PS Business Parks, Inc. dated as of December 13, 1995 and the related Agreement of Merger between the Issuer and PSP9, which were filed with the Issuer's Registration Statement on Form S-4 (File No. 333-00591)). As of March 26, 1996, Mr. B. Wayne Hughes, Jr. and Tamara L. Hughes owned jointly a total of 950 Shares, for which they paid an approximate aggregate purchase price (including commissions) of $9,921. All funds used to purchase such Shares were obtained from their personal funds. As of March 26, 1996, Mr. B. Wayne Hughes, Jr. owned (or was deemed to own) a total of 925,314 Shares (exclusive of Shares owned by PSOI and Shares owned jointly by B. Wayne Hughes, Jr. and Tamara L. Hughes). These Shares were acquired (or deemed to be acquired) as follows: (i) 219,985 Shares were acquired as follows: (a) 230,244 Shares were acquired for an approximate aggregate purchase price (including commissions) of $2,796,974, which funds were obtained from Mr. Hughes, Jr.'s personal funds and (b) on November 14, 1995, B. Wayne Hughes, Jr. contributed 10,259 of these Shares to PSOI in exchange for one-third of PSOI's voting common stock, (ii) pursuant to the PSP8 Merger, (a) B. Wayne Hughes, Jr. acquired 179 Shares of the Issuer in exchange for the surrender of 125 shares of PSP8 common stock series A and (b) B. Wayne Hughes, Jr. as custodian for his daughter acquired 286 Shares of the Issuer in exchange for the surrender of 200 shares of PSP8 common stock series A, (iii) 1,472 Shares can be acquired upon conversion of 875 shares of the Issuer's 8.25% Convertible Preferred Stock which are beneficially owned by B. Wayne Hughes, Jr. (the Issuer's 8.25% Convertible Preferred Stock (the "Convertible Preferred Stock") is convertible into common stock, at the option of the holder, based on a conversion rate of 1.6835-for-1; cash would be paid for fractional shares based on the market price of the common stock on the conversion date), and the 875 shares of Convertible Preferred Stock were acquired for an approximate aggregate purchase price (including commissions) of $24,588, which funds were obtained from Mr. Hughes, Jr.'s personal funds, (iv) 103,392 Shares were acquired as follows: (a) in April 1994, B. Wayne Hughes, Jr. acquired a total of 526,300 Shares for an approximate aggregate purchase price (including commissions) of $7,383,989, of which funds $4,750,000 was borrowed under Mr. Hughes, Jr.'s credit agreement with Wells Fargo Bank which is referenced under Item 7, Exhibit 2 (the "Wells Fargo Note") and $2,633,989 was advanced by Old PSI (the "Old PSI Note"), and the Old PSI Note bore interest at Wells Fargo Bank's prime rate plus 0.50%, (b) the Wells Fargo Note was subsequently paid off in full, of which $2,038,000 was paid with funds advanced to B. Wayne Hughes, Jr. by B. Wayne Hughes (the "B. Wayne Hughes Note"), $1,484,000 was paid with funds advanced to B. Wayne Hughes, Jr. by Tamara L. Hughes (the "Tamara Hughes Note") and the balance was paid with Mr. Hughes, Jr.'s funds, (c) on February 1, 1995, Mr. Hughes, Jr. sold 279,991 of these Shares to Tamara L. Hughes in a privately negotiated transaction for an aggregate price of $3,992,671 consisting of the cancellation of the Tamara Hughes Note and the assumption by Tamara L. Hughes of $2,508,671 of the Old PSI Note and (d) on February 28, 1995, Mr. Hughes, Jr. sold 142,917 of these Shares to B. Wayne Hughes in a privately negotiated transaction for an aggregate price of $2,038,000 consisting of the cancellation of the B. Wayne Hughes Note, (v) pursuant to the PSMI Merger, B. Wayne Hughes, Jr. was issued 144,254 Shares on November 16, 1995, which Shares were subject to certain post-closing adjustments and (vi) as post-closing adjustments to the Shares issued pursuant to the PSMI Merger, B. Wayne Hughes, Jr. was issued 455,746 Shares on January 22, 1996 in respect of Shares that were owned by PSMI at the effective time of the PSMI Merger and cancelled in the PSMI Merger and reissued as a post-closing adjustment, offset by a reduction in the total number of Shares issuable in the PSMI Merger resulting from a further post-closing adjustment. As of March 26, 1996, Parker Hughes Trust No. 2 owned a total of 15,930 Shares. These Shares were acquired as follows: (i) 12,500 Shares were acquired for an approximate aggregate purchase price (including commissions) of $165,392, with funds obtained from the assets of Parker Hughes Trust No. 2, which were contributed by Mr. B. Wayne Hughes, the settlor of Parker Hughes Trust No. 2 and (ii) pursuant to the PSP8 Merger, Parker Hughes Trust No. 2 acquired 3,430 Shares of the Issuer in exchange for the surrender of 2,400 shares of PSP8 common stock series A. As of March 26, 1996, Ms. Tamara L. Hughes owned (or was deemed to own) a total of 16,609,837 Shares (exclusive of Shares owned by PSIC and PSOI, Shares owned jointly by Tamara L. Hughes and B. Wayne Hughes, Jr. and Shares owned by Parker Hughes Trust No. 2). These Shares were acquired (or deemed to be acquired) as follows: (i) 276,673 Shares were acquired as follows: (a) 286,932 Shares were acquired for an approximate aggregate purchase price (including commissions) of $2,588,554, which funds were obtained from Ms. Hughes' personal funds and (b) on November 14, 1995, Tamara L. Hughes contributed 10,259 of these Shares to PSOI in exchange for one-third of PSOI's voting common stock, (ii) 5,050 Shares can be acquired upon conversion of 3,000 shares of Convertible Preferred Stock which are held of record by Tamara L. Hughes, and the 3,000 shares of Convertible Preferred Stock were acquired for an approximate aggregate purchase price (including commissions) of $82,740, which funds were obtained from Ms. Hughes' personal funds, (iii) 279,991 Shares were acquired by Tamara L. Hughes from B. Wayne Hughes, Jr. on February 1, 1995 in a privately negotiated transaction for an aggregate price of $3,992,671 consisting of the cancellation of the Tamara Hughes Note and the assumption by Tamara L. Hughes of $2,508,671 of the Old PSI Note, and on November 14, 1995, Tamara L. Hughes sold these 279,991 Shares to PSMI for an aggregate price of $4,969,840, a portion of which was used to pay off Tamara Hughes' portion of the Old PSI Note, (iv) pursuant to the PSMI Merger, Tamara L. Hughes was issued 13,667,026 Shares on November 16, 1995, which Shares were subject to certain post-closing adjustments and (v) as post-closing adjustments to the Shares issued pursuant to the PSMI Merger, Tamara L. Hughes was issued 2,661,088 Shares on January 22, 1996 in respect of Shares that were owned by PSMI at the effective time of the PSMI Merger and cancelled in the PSMI Merger and reissued as a post-closing adjustment, offset by a reduction in the total number of Shares issuable in the PSMI Merger resulting from a further post-closing adjustment. Item 4. Purpose of Transaction The purpose of the acquisition of Shares by the Reporting Persons is for investment as part of the general investment portfolio of the Reporting Persons acquiring such Shares. The Reporting Persons believe that Issuer's shares of common stock represent a good investment. The Reporting Persons intend to review their investments in the Issuer on a continuing basis and may, at any time, consistent with the Reporting Persons' obligations under the federal securities laws, determine to increase or decrease their ownership of Shares through purchases or sales of Shares in the open market or in privately negotiated transactions. Such determination will depend on various factors, including the Issuer's business prospects, other developments concerning the Issuer, general economic conditions, money and stock market conditions, and any other facts and circumstances which may become known to the Reporting Persons regarding their investments in the Issuer. At this time, one or more of the Reporting Persons and their affiliates intend to continue to purchase Shares in the open market or in privately negotiated transactions. By virtue of the purchase of the Shares, the Reporting Persons have no plans or proposals which relate to or would result in (i) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer; (ii) a sale or transfer of a material amount of assets of the Issuer; (iii) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or fill any position, vacancies on the boards; (iv) any material change in the present capitalization or dividend policy of the Issuer; (v) any other material change in the Issuer's business or corporate structure; (vi) changes in the Issuer's articles of incorporation or bylaws or other actions which may impede the acquisition or control of the Issuer by any person; (vii) any class of securities of the Issuer to be delisted from the national securities exchange or cease to be quoted in an inter-dealer quotation system of a registered national securities association; (viii) a class of equity securities of the Issuer to become eligible for termination of registration pursuant to Section 12(d)(4) of the Securities Exchange Act of 1934; or (ix) any action similar to any of those described above. B. Wayne Hughes is Chairman of the Board and Chief Executive Officer of the Issuer and, in his capacity as such, may, from time to time, propose to Issuer's board of directors a wide variety of types of transactions, including transactions similar to those described above. Item 5. Interest in Securities of the Issuer As of March 26, 1996, each Reporting Person owned (or was deemed to own) the aggregate number of Shares set forth below opposite his, her or its name. Such Shares constitute approximately 51.05%, in the aggregate, of the approximate total number of Shares outstanding (or deemed to be outstanding) on March 26, 1996 of 73,019,828. Approximate % of Reporting Person No. of Shares Shares Outstanding ---------------- --------------- ------------------ PSIC 300,000 0.41% PSOI 30,777 0.04% B. Wayne Hughes 19,397,385 26.57% B. Wayne Hughes, Jr. and Tamara L. Hughes 950 -- B. Wayne Hughes, Jr. 925,314 1.27% Parker Hughes Trust No. 2 15,930 0.02% Tamara L. Hughes 16,609,837 22.75% ---------- ----- Total 37,280,193 51.05% Includes 19,360,295 Shares held of record by the B.W. Hughes Living Trust as to which Mr. Hughes has voting and dispositive power, 1,400 and 1,395 Shares, respectively, held by custodians of individual retirement accounts for Mr. Hughes and Mr. Hughes' wife as to which each has investment and dispositive power, 4,826 Shares held by Mr. Hughes' wife as to which she has investment and dispositive power and 29,469 Shares held of record by Parker Hughes Trust No. 1 as to which Mr. Hughes' wife, Kathleen Becker Hughes, as trustee of Parker Hughes Trust No. 1, has voting and dispositive power. Excludes 300,000 Shares held of record by PSIC as to which Mr. Hughes and Tamara Hughes share voting and dispositive power and 30,777 Shares held of record by PSOI as to which Mr. Hughes, Tamara Hughes and Mr. Hughes, Jr. share voting and dispositive power. Shares held of record jointly by Mr. Hughes, Jr. and Tamara Hughes as to which they have joint voting and dispositive power. Includes 1,231 and 214 Shares, respectively, held by custodians of individual retirement accounts for Mr. Hughes, Jr. and Mrs. Hughes, Jr. as to which each has investment and dispositive power, 3,496 Shares and 2,960 Shares, respectively, held by Mr. Hughes, Jr. as custodian (under the Uniform Transfer to Minors Act) for their daughter and their son, respectively, as to which Mr. Hughes, Jr. has voting and dispositive power, and 2,265 Shares held by Mrs. Hughes, Jr. as custodian (under the Uniform Transfer to Minors Act) for their daughter, as to which Mrs. Hughes, Jr. has voting and dispositive power. Also includes (i) 589 Shares which can be acquired upon conversion of 350 Shares of Convertible Preferred Stock, which Shares of Convertible Preferred Stock are held by Mr. Hughes, Jr. as custodian (under the Uniform Transfer to Minors Act) for their daughter and (ii) 883 Shares which can be acquired upon conversion of 525 Shares of Convertible Preferred Stock, which Shares of Convertible Preferred Stock are held by Mrs. Hughes, Jr. as custodian (under the Uniform Transfer to Minors Act) for their daughter. Excludes 30,777 Shares held of record by PSOI as to which Mr. Hughes, Jr., Mr. Hughes and Tamara Hughes share voting and dispositive power, 950 Shares held of record jointly by Mr. Hughes, Jr. and Tamara Hughes. Includes 1,397 Shares held by a custodian of an individual retirement account for Tamara Hughes as to which she has investment and dispositive power and 1,300 Shares held by Tamara Hughes' husband as to which he has investment and dispositive power. Also includes 5,050 Shares which can be acquired upon conversion of 3,000 Shares of Convertible Preferred Stock, which Shares of Convertible Preferred Stock are held of record by Tamara Hughes. Excludes 300,000 Shares held of record by PSIC as to which Mr. Hughes and Tamara Hughes share voting and dispositive power, 30,777 Shares held of record by PSOI as to which Tamara Hughes, Mr. Hughes and Mr. Hughes, Jr. share voting and dispositive power, 950 Shares held of record jointly by Tamara Hughes and Mr. Hughes, Jr. and 15,930 Shares held of record by Parker Hughes Trust No. 2 as to which Tamara Hughes, as trustee of Parker Hughes Trust No. 2, has voting and dispositive power. B. Wayne Hughes and Tamara L. Hughes share the power to vote and dispose of the Shares of the Issuer held by PSIC. B. Wayne Hughes, Tamara L. Hughes and B. Wayne Hughes, Jr. share the power to vote and dispose of the Shares of the Issuer held by PSOI. B. Wayne Hughes has the sole power to vote and dispose of the Shares of the Issuer held directly by him or by the B.W. Hughes Living Trust. B. Wayne Hughes' wife, Kathleen Becker Hughes, as trustee of Parker Hughes Trust No. 1, has the sole power to vote and dispose of the Shares of the Issuer held by Parker Hughes Trust No. 1. B. Wayne Hughes, Jr. has the sole power to vote and dispose of the Shares of the Issuer held directly by him or by him as custodian for his son and his daughter, and Mrs. Hughes, Jr. has the sole power to vote and dispose of the Shares of the Issuer held by her as custodian for their daughter. Tamara L. Hughes has the sole power to vote and dispose of the Shares of the Issuer held directly by her. Tamara L. Hughes, as trustee of Parker Hughes Trust No. 2, has the sole power to vote and dispose of the Shares of the Issuer held by Parker Hughes Trust No. 2. During the 60-day period ending March 26, 1996, the Reporting Persons purchased or sold the number of Shares in the transaction, on the transaction date and at the price per Share (not including commissions) set forth below opposite his, her or its name.
Price Transaction No. of Type of per Reporting Person Date Shares Bought Transaction Share ---------------- ----------- --------------- ----------- ----- B. Wayne Hughes 3/26/96 89,169 Pursuant to the PSP9 Merger, B. Wayne Hughes, Trustee for B.W. Hughes Living Trust acquired 89,169 Shares of the Issuer in exchange for the surrender of 104,781 shares of PSP9 common stock series A.
To the best of the Reporting Persons' knowledge, except as disclosed herein, none of the Reporting Persons named in Item 2 has any beneficial ownership of any Shares as of March 26, 1996, or has engaged in any transaction in any Shares during the 60-day period ending March 26, 1996. Except as disclosed herein, no other person is known to the Reporting Persons to have the right to receive or the power to direct receipt of dividends from, or the proceeds from the sale of, the Shares beneficially owned by the Reporting Persons. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer In connection with the PSMI Merger, in order to assist the Issuer in preserving its status as a "real estate investment trust" under the Internal Revenue Code of 1986, B. Wayne Hughes, Tamara L. Hughes, B. Wayne Hughes, Jr. and Parker Hughes Trust No. 2 (collectively, the "Shareholders") entered into a Shareholders' Agreement with the Issuer dated as of November 16, 1995 (the "Shareholders Agreement") restricting the Shareholders' acquisition of additional shares of capital stock of the Issuer and providing that, if at any time, for any reason, more than 50% in value of the Issuer's outstanding capital stock otherwise would be considered owned by five or fewer individuals, a number of Shares owned by B. Wayne Hughes necessary to prevent such violation will automatically and irrevocably be transferred to a designated charitable beneficiary. The Shareholders Agreement is filed as Exhibit 5 hereto and is incorporated herein by this reference. Except as disclosed herein, to the best knowledge of the Reporting Persons, there are at present no contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons named in Item 2 and between such persons and any person with respect to any securities of the Issuer, including but not limited to, transfer or voting of any of the securities of the Issuer, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss or the giving or withholding of proxies, or a pledge or contingency the occurrence of which would give another person voting power over securities of the Issuer. Item 7. Material to be Filed as Exhibits Exhibit 1 - Amended Joint Filing Agreement. Exhibit 2 - Credit Agreement between B. Wayne Hughes, Jr. and Wells Fargo Bank dated as of April 11, 1994 was previously filed. Exhibit 3 - Agreement and Plan of Reorganization dated as of June 30, 1995 by and among the Issuer, Old PSI and PSMI. Filed as Appendix A to the Issuer's definitive Proxy Statement dated October 11, 1995 (filed October 13, 1995) and incorporated herein by reference. Exhibit 4 - Amendment to Agreement and Plan of Reorganization dated as of November 13, 1995 by and among the Issuer, Old PSI and PSMI was previously filed. Exhibit 5 - Shareholders' Agreement dated as of November 16, 1995 by and among the Issuer, B. Wayne Hughes, Tamara L. Hughes, B. Wayne Hughes, Jr. and Parker Hughes Trust No. 2. SIGNATURES Each person whose signature appears below hereby authorizes B. Wayne Hughes and Harvey Lenkin, and each of them, as attorney- in-fact, to sign on its or his behalf any amendment to this Amendment No. 18 to Statement on Schedule 13D, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission. After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this Amendment No. 18 to Statement on Schedule 13D is true, complete and correct. Dated: April 5, 1996 PS INSURANCE COMPANY, LTD. By: /s/OBREN B. GERICH ------------------- Obren B. Gerich, Vice President PS ORANGECO, INC. By: /s/OBREN B. GERICH ------------------- Obren B. Gerich, Vice President /s/B. WAYNE HUGHES ---------------------- B. Wayne Hughes /s/B. WAYNE HUGHES, JR. ---------------------- B. Wayne Hughes, Jr. /s/TAMARA LYNN HUGHES, TRUSTEE ---------------------- Tamara Lynn Hughes, Trustee FBO Parker Hughes Trust No. 2 DTD 12/24/92 /s/TAMARA L. HUGHES ---------------------- Tamara L. Hughes EX-99.1 2 EXHIBIT 1 TO SCHEDULE 13D AMENDMENT SUBMISSION EXHIBIT 1 AMENDED JOINT FILING AGREEMENT In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing on behalf of each of them of Amendment No. 18 to Statement on Schedule 13D (including amendments thereto) with respect to the common stock of Public Storage, Inc. and further agree that this agreement be included as an exhibit to such filing. Each party to this agreement expressly authorizes each other party to file on its behalf any and all amendments to such Statement. In evidence whereof, the undersigned have caused this Agreement to be executed on their behalf this 5th day of April, 1996. PS INSURANCE COMPANY, LTD. By: /s/OBREN B. GERICH ------------------- Obren B. Gerich, Vice President PS ORANGECO, INC. By: /s/OBREN B. GERICH ------------------- Obren B. Gerich, Vice President /s/B. WAYNE HUGHES ---------------------- B. Wayne Hughes /s/B. WAYNE HUGHES, JR. ---------------------- B. Wayne Hughes, Jr. /s/TAMARA LYNN HUGHES, TRUSTEE ---------------------- Tamara Lynn Hughes, Trustee FBO Parker Hughes Trust No. 2 DTD 12/24/92 /s/TAMARA L. HUGHES ---------------------- Tamara L. Hughes EX-99.5 3 EXHIBIT 5 TO SCHEDULE 13D AMENDMENT SUBMISSION EXHIBIT 5 SHAREHOLDERS' AGREEMENT THIS SHAREHOLDERS' AGREEMENT ("Agreement") is made and entered into as of November 16, 1995, by and between STORAGE EQUITIES, INC., a California corporation (the "Corporation"), and B. WAYNE HUGHES ("Hughes"), TAMARA L. HUGHES, B. WAYNE HUGHES, JR. and PARKER HUGHES TRUST NO. 2 (collectively, the "Shareholders"). BACKGROUND The Shareholders currently own shares of the Corporation's issued and outstanding common stock par value $.01 per share (the "Common Stock"). Upon consummation of the merger of Public Storage Management, Inc. with and into the Corporation on the date hereof (the "Merger"), the Shareholders will collectively be the beneficial owners of up to 44,892,280 shares of Common Stock (approximately 57% of the outstanding shares of Common Stock) and 3,400 shares of Preferred Stock (less than 1% of the outstanding Preferred Stock (determined by issue price)). (As used herein, the term Common Stock refers to both the Class A Common Stock and the Class B Common Stock of the Corporation.) As a condition to its agreement to consummate the Merger, the Corporation is requiring that the Shareholders (who also own (or will own immediately prior to the Merger) substantially all of the stock in Public Storage Management, Inc.) enter into an agreement which imposes certain restrictions and obligations on themselves and on the Common Stock of the Corporation in order to assist the Corporation in preserving its status as a "real estate investment trust" under the Internal Revenue Code of 1986 (the "Code") and to promote their mutual interests. NOW THEREFORE, in consideration of the background stated above and the mutual promises, agreements, covenants, representations and warranties hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows: 1. AUTOMATIC TRANSFER OF SHARES TO TRUST FOR BENEFIT OF CHARITABLE BENEFICIARIES Automatic Transfer of Shares. If, at any time, more than 50% of the value of the capital stock of the Corporation would be considered held (for purposes of Section 542(a)(2) of the Code, taking into account the ownership attribution rules of Section 544 of the Code, as modified by Section 856(h) of the Code) by five or fewer individuals (the "5/50 Rule") under any circumstances whatsoever, including without limitation, (1) a change in the value of the Common Stock relative to the preferred stock of the Corporation or (2) the actual ownership or acquisition of capital stock by a person as and to the extent permitted under the Corporation's Restated Articles of Incorporation, as amended (the "Articles of Incorporation") (either (x) in accordance with the ownership limitations set forth in section (a) of Article IV of the Articles of Incorporation or (y) pursuant to the authority of the Board of Directors of the Corporation under subsection (c) of Article IV of the Articles of Incorporation to grant a waiver of the ownership limits contained in the Corporation's Articles of Incorporation), then, that number, and no more than that number, of shares of Common Stock owned by the Shareholders necessary to prevent the Corporation from violating the 5/50 Rule shall be automatically (without requirement for any action on the part of any person) and irrevocably transferred to the charitable beneficiary specified in Section 3; provided, however, that no transfer pursuant to this Section 1 shall occur if the violation of the 5/50 Rule results solely from the ownership or acquisition of capital stock by a person other than the Shareholders (and other than a person whose ownership of stock would be attributed to one or more of the Shareholders for purposes of the 5/50 Rule) in violation of Article IV of the Articles of Incorporation. Any transfer of shares of Common Stock pursuant to this Section 1 shall be effective as of the close of business on the business day prior to the date on which the ownership of the Corporation's capital stock otherwise would have violated the 5/50 Rule. Any transfer required to be made hereunder first shall be made out of the Designated Transfer Shares (as provided for in Section 2 hereof), and, second, to the extent that the Designated Transfer Shares are not sufficient therefor, shall be made out of shares of Common Stock owned by Hughes, and, third, to the extent that the Designated Transfer Shares and shares of Common Stock owned by Hughes are not sufficient therefor, shall be made out of shares of Common Stock owned by the other Shareholders, with any such shares to be transferred from each of the other Shareholders in proportion to their respective ownership of the outstanding Common Stock of the Corporation. 2. DESIGNATED TRANSFER SHARES The shares of stock that are initially subject to transfer pursuant to Section 1 upon the occurrence of an event specified in Section 1 are identified on Schedule 1 by certificate number (the "Designated Transfer Shares"). Subsequent to the date hereof, the Shareholders, jointly and severally, agree to designate, and the Designated Transfer Shares shall include, such number of additional shares of stock as necessary to maintain a number of Designated Transfer Shares with a fair market value, determined as set forth below, equal to the excess of the value (determined as set forth below) of shares of stock that Hughes is considered to own for purposes of the 5/50 Rule over 35% of the aggregate value (determined as set forth below) of the outstanding shares of stock of the Corporation (including all Common Stock and all classes and series of Preferred Stock); and the Shareholders shall deposit such additional Designated Transfer shares with the escrow agent identified in the Escrow Agreement dated the date hereof and attached as Exhibit A. The Designated Transfer Shares and the certificates representing such shares together with stock powers executed in blank shall be deposited by the Shareholders and held in escrow in accordance with the terms of the Escrow Agreement. For purposes of this Section 2, the following assumptions shall be made: (1) the value of the outstanding stock of the Corporation and of any stock held by the Shareholders shall be determined without regard to any discount of any type; (2) it shall be assumed for purposes hereof that all shares of Class B Common Stock to be issued in connection with the Merger are issued and outstanding on the date the Merger is consummated (without regard to any contingency with respect to the issuance of such shares provided for in the merger agreement), and that the fair market value of a share of Class B Common Stock is at all times equal to the fair market value of a share of Class A Common Stock; and (3) the fair market value of a share of any class or series of Preferred Stock (other than Preferred Stock convertible into Common Stock) is equal to the lesser of (i) the actual value of such share as determined by the trading price for shares of stock of such class or series), or (ii) the issue price of such Preferred Stock. 3. DESIGNATION OF CHARITABLE BENEFICIARY Provided that the William Lawrence and Blanche Hughes Foundation (the "Hughes Foundation") has received a determination from the Internal Revenue Service that the Hughes Foundation qualifies as a "public charity" under the Code, the Hughes Foundation shall be the primary charitable beneficiary to which the Designated Transfer Shares shall be transferred upon the occurrence of an event specified in Section 1. If the Hughes Foundation has not received a determination letter from the Internal Revenue Service that the Hughes Foundation qualifies as a "public charity" under the Code, then the William Lawrence and Blanche Hughes Fund at the California Community Foundation (the "CCF") shall be the primary charitable beneficiary to which the Designated Transfer Shares shall be transferred unless and until such time as the Hughes Foundation shall have received such a determination letter. If at any time the Hughes Foundation ceases to qualify as a "public charity" within the meaning of the Code, no Designated Transfer Shares may thereafter be transferred to it and any Designated Transfer Shares then held by the Hughes Foundation shall automatically (without requirement for any action on the part of any person) and irrevocably be deemed to be transferred to the CCF. 4. RIGHTS AND POWERS OF DESIGNATED TRANSFER SHARES Until such time as any Designated Transfer Shares shall be transferred to a charitable beneficiary pursuant to the terms hereof (the "Transferred Shares"), the Shareholders owning such Shares shall continue to exercise all rights and powers with respect to such shares, including the right to receive dividends on such shares, the right to vote such shares and the right to transfer such shares; provided, however, that Designated Transfer Shares may not be transferred to any person whose ownership thereof would be attributed to Hughes under the Code (for the purposes of Section 542(a)(2) of the Code, taking into account the ownership attribution rules of Section 544 of the Code, as modified by Section 856(h) of the Code), unless such person shall agree to be bound by the terms of this Agreement and shall agree that such shares shall continue to be Designated Transfer Shares for purpose of this Agreement (or the Shareholders shall designate an equal number of additional shares of Common Stock held by him as Designated Transfer Shares for purposes of this Agreement). If and when any Designated Transfer Shares are transferred to a charitable beneficiary pursuant to the terms hereof, the Shareholders owning such Shares shall have no further rights or powers (including voting rights) with respect thereto and shall receive no dividends or other economic benefits therefrom. Furthermore, any dividend or distribution paid on Transferred Shares prior to the Corporation's discovery that such Transferred Shares have been transferred to a charitable beneficiary shall be paid by the Shareholders owning such Shares to the charitable beneficiary upon demand, with interest calculated at the prime rate in effect at the time of discovery, and any dividend or distribution declared but unpaid with respect to the Transferred Shares shall be paid when due to the charitable beneficiary. Any vote of Transferred Shares cast by the Shareholders owning such Shares prior to the Corporation's discovery that such shares have been transferred to a charitable beneficiary shall be rescinded as void and shall be recast in accordance with the desires of the applicable charitable beneficiary. 5. RESTRICTIONS ON ACQUISITION OF STOCK Each of the Shareholders agrees that during the term of this Agreement such Shareholder shall not (without the consent of the Corporation) acquire by purchase, exercise of options or otherwise any shares of Common Stock or Preferred Stock in addition to the shares of Common Stock or Preferred Stock owned by such Shareholder on the date hereof as set forth on Schedule 1; provided, however, that a Shareholder may acquire additional shares of Common Stock or Preferred Stock pursuant to a stock split, recapitalization, merger or other business combination (including, without limitation, pursuant to the exercise by the Corporation of its option under that certain Option Agreement dated the date hereof between Hughes and the Corporation). 6. TERMINATION The Agreement shall terminate upon occurrence of any of the following events: (1) Cessation of the Corporation's business; or (2) The entry of any order for relief under the federal Bankruptcy Code with respect to the Corporation, or a receivership or dissolution of the Corporation; or (3) On such date as the Shareholders collectively own (for purposes of Section 542 of the Code, taking into account the ownership attribution rules of Section 544 of the Code, as modified by Section 856(h) of the Code) less than 35% of the outstanding shares of Common Stock of the Corporation; or (4) On such date as the Corporation (in its reasonable discretion) shall determine that (i) the aggregate value (determined as described in Section 2 without regard to discounts of any type) of the capital stock owned by the Shareholders (as determined for purposes of Section 542 of the Code, taking into account the ownership attribution rules of Section 544 of the Code, as modified by Section 856(h) of the Code) is less that 20% of the aggregate value of the outstanding capital stock of the Corporation and (ii) it is not likely that such percentage ownership will increase above 30% in the future as the result of changes in the Corporation's capital structure and/or fluctuations in the value of the various classes of the Corporation's outstanding capital stock. 7. NOTICES All notices, demands, requests, or other communications which may be or are required to be given, served, or sent by any party to any other party pursuant to this Agreement shall be in writing and shall be hand-delivered or mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by telegram, telecopy, facsimile transmission or telex, addressed as follows: (i) If to the Corporation: 600 North Brand Boulevard Suite 300 Glendale, California 91203-1241 Attn: David Goldberg With copies to: William Lawrence and Blanche Hughes Foundation c/o California Community Foundation 606 South Olive Street, Suite 2400 Los Angeles, California 90014-1526 Attn: Jack Shakely William Lawrence and Blanche Hughes Fund at the California Community Foundation 606 South Olive Street, Suite 2400 Los Angeles, California 90014-1526 Attn: Jack Shakely (ii) If to any Shareholder: 600 North Brand Boulevard Suite 300 Glendale, California 91203-1241 Attn: B. Wayne Hughes With copies to: William Lawrence and Blanche Hughes Foundation c/o California Community Foundation 606 South Olive Street, Suite 2400 Los Angeles, California 90014-1526 Attn: Jack Shakely William Lawrence and Blanche Hughes Fund at the California Community Foundation 606 South Olive Street, Suite 2400 Los Angeles, California 90014-1526 Attn: Jack Shakely Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication which shall be hand-delivered, mailed transmitted, telecopied or telexed in the manner described above, or which shall be delivered to a telegraph company, shall be deemed sufficiently given, served, sent, received or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, or the answer back being deemed conclusive, but not exclusive, evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. 8. ADDITIONAL DOCUMENTS Each of the parties hereto shall take or cause to be taken all action, or do or cause to be done all things, or execute and deliver any and all documents, instruments, and writings, necessary, convenient, proper or advisable to consummate, make effective, and carry out the terms and provisions of this Agreement. 9. MISCELLANEOUS (1) This Agreement, and all Schedules and Exhibits hereto, constitute the entire agreement of the parties and supersedes all prior or contemporaneous agreements and understandings of the parties hereto with respect to the subject matter hereof, and there are no other terms and conditions other than those set forth herein. No change, termination or attempted waiver of any of the provisions of this Agreement shall be binding on the parties unless approved by the holders of a majority of the Common Stock, excluding the Shareholders and their affiliates. The rights, obligations, duties and agreements of the parties hereto shall inure to and be binding upon their respective heirs, administrators, executors, personal representatives, successors and assigns (including, with respect to the Corporation, its successor in any merger), except as otherwise herein provided. (2) Each of the Hughes Foundation and the CCF shall be a third party beneficiary or the intended beneficiary to this Agreement and shall have the right to enforce this Agreement directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder. Each of the Hughes Foundation and the CCF shall be sent a copy of this Agreement at the respective address set forth in Section 7. It is the explicit intention of the parties hereto that no person or entity other than the parties hereto and the Hughes Foundation and the CCF is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants, undertakings and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto and the Hughes Foundation and the CCF or their respective successors, heirs, executors, administrators, legal representatives and permitted assigns. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written, intending to be legally bound. CORPORATION: STORAGE EQUITIES, INC. By: /s/HARVEY LENKIN -------------------- Name: Harvey Lenkin Title: President SHAREHOLDERS: /s/B. WAYNE HUGHES ------------------------ B. Wayne Hughes /s/TAMARA L. HUGHES ------------------------ Tamara L. Hughes /s/B. WAYNE HUGHES, JR. ------------------------ B. Wayne Hughes, Jr. Parker Hughes Trust No. 2 By: /s/TAMARA L. HUGHES, TRUSTEE -------------------- Name: Tamara L. Hughes, Trustee Parker Hughes Trust No. 1 By: /s/KATHLEEN B. HUGHES, TRUSTEE -------------------- Name: Kathleen B. Hughes, Trustee -----END PRIVACY-ENHANCED MESSAGE-----