6,500,000 SHARES
▇▇▇▇▇▇▇ PACIFIC PROPERTIES, INC.
COMMON STOCK, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
MARCH 24, 1998
March 24, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
EVEREN Securities, Inc.
Sutro & Co. Incorporated
As Representatives of the several Underwriters
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
▇▇▇▇▇▇▇ Pacific Properties, Inc., a Maryland corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in SCHEDULE I
hereto (the "UNDERWRITERS"), an aggregate of 6,500,000 shares of the Common
Stock, $0.01 par value per share (the "COMMON STOCK"), of the Company (the "FIRM
SHARES"). The Company also proposes to issue and sell to the Underwriters not
more than an additional 975,000 shares of Common Stock (the "ADDITIONAL SHARES")
if and to the extent the Representatives shall have determined to exercise, on
behalf of the Underwriters, the right to purchase such Additional Shares granted
to the Underwriters in Section 3 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "SHARES." ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, EVEREN Securities, Inc. and Sutro & Co. Incorporated are acting as
representatives of the several Underwriters and in such capacity are referred to
herein as the "REPRESENTATIVES."
Substantially concurrently herewith, the Company may enter into another
underwriting agreement with EVEREN Securities, Inc. (the "EVEREN Agreement")
relating to the Company's issuance and sale of not more than $15,000,000 of its
Common Stock for resale by EVEREN to a unit investment trust.
1. (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the several Underwriters, as of the date
hereof, as of the Closing Date (as defined in Section 5), and as of the Option
Closing Date (as defined in Section 5), if any, and agrees with the several
Underwriters, as follows:
(i) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") registration statements on Form S-3 (File No.
33-68712 filed with the Commission in September 1993 (the "1993
REGISTRATION STATEMENT"), and File No. 333-31591 filed with the Commission
on July 18, 1997 (the "1997 REGISTRATION STATEMENT")) for the registration
under the Securities Act of 1933, as
amended (the "1933 ACT"), of the Shares and certain other securities, and
has filed such amendments thereto, if any, as may have been required to the
date hereof. Such registration statements (including all exhibits thereto
and all documents incorporated or deemed to be incorporated by reference
therein and the information, if any, deemed to be a part thereof pursuant
to Rule 430A of the rules and regulations of the Commission under the 1933
Act (the "RULES AND REGULATIONS")), as amended (if applicable) at the time
each such registration statement first became effective and as from time to
time amended (including, without limitation, by post-effective amendments)
or supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 ACT"), or otherwise, are hereinafter
collectively referred to as the "REGISTRATION STATEMENT." The Company
proposes to file with the Commission, pursuant to Rule 424(b) of the Rules
and Regulations, the Prospectus Supplement (as defined in
Section 7(i) hereof) and the related prospectus dated July 18, 1997 (the
"BASE PROSPECTUS"), and has previously advised you of all information
(financial and other) set forth therein. The Base Prospectus and the
Prospectus Supplement, each in the form first provided to the Underwriters
by the Company for use in connection with the offering of the Shares (being
the forms in which they are to be filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations), including all documents
incorporated or deemed to be incorporated by reference therein, are
hereinafter referred to, collectively, as the "PROSPECTUS," except that if
any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Company for use in connection with the offering and
sale of the Shares which differs from the Prospectus first provided to the
Underwriters for such purpose (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations), the term
"PROSPECTUS" shall refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Unless the context otherwise
requires, all references in this Agreement to documents, financial
statements and schedules and other information which is "contained,"
"included," "stated," "described in" or "referred to" in the Registration
Statement or the Prospectus (and all other references of like import) shall
be deemed to mean and include all such documents, financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to
the Registration Statement or the Prospectus shall be deemed to mean and
include the filing of any document under the 1934 Act after the date of
this Agreement which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Base Prospectus, the Prospectus
Supplement, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy, if any, filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
2
(ii) (A) The 1993 Registration Statement was originally
declared effective under the 1933 Act on October 4, 1993, and the 1993
Registration Statement, as amended by post-effective amendment No. 3
thereto, was declared effective under the 1933 Act on March 25, 1997, and
no stop order suspending the effectiveness of the 1993 Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
(B) The 1997 Registration Statement was originally
declared effective under the 1933 Act on July 18, 1997, and no stop order
suspending the effectiveness of the 1997 Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
(C) At the respective times the Registration Statement
and any post-effective amendments thereto became or become effective, as
the case may be, and at the Closing Date (and, if any Additional Shares are
purchased, at the Option Closing Date), the Registration Statement complied
and will comply in all material respects with the requirements of the 1933
Act and the Rules and Regulations and the Trust Indenture Act of 1939, as
amended (the "1939 ACT"), and the rules and regulations under the 1939 Act,
and did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus does not and
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the foregoing representations, warranties and
agreements shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information relating to any Underwriter furnished
to the Company by or on behalf of any Underwriter through you specifically
for use in the preparation thereof.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, when they
were filed with the Commission, complied in all material respects to the
requirements of the 1934 Act and the published rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
any further documents so filed and incorporated or deemed to be
incorporated by reference, when they are filed with the Commission, will
comply in all material respects with the requirements of the 1934 Act and
the published rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material
3
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(iv) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries (as defined below), taken as
a whole, from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement). Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement), except as otherwise
stated therein or contemplated thereby, (A) there has been no change in the
consolidated capital stock or consolidated long-term debt (other than as a
result of the scheduled amortization of long-term debt) of the Company,
(B) there have been no transactions entered into by the Company or any of
its Subsidiaries or Affiliates (as defined below) which are material to the
Company and its Subsidiaries considered as one enterprise, other than those
entered into in the ordinary course of its business, and (C) except for
regular quarterly dividends, there has been no dividend or distribution of
any kind declared, paid or made by the Company on its shares of capital
stock. As used in this Agreement, the term "SUBSIDIARIES" means those
entities listed on SCHEDULE II hereto under the caption "Subsidiaries," and
the term "AFFILIATES" means those entities listed on SCHEDULE II hereto
under the caption "Affiliates."
(v) The financial statements, together with the related notes
and supporting schedules (if any) included in the Prospectus and elsewhere
in the Registration Statement, present fairly the financial position,
results of operations, cash flows and stockholders' equity of the Company
and its consolidated Subsidiaries as at the respective dates and for the
respective periods therein indicated, and all of the foregoing financial
statements and related notes and supporting schedules have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved, except as may be set
forth therein or in the Prospectus. The historical financial statements of
the Company's acquisitions completed in 1997 and 1998 (through the date
hereof) and the Pending Acquisitions (as defined in the Prospectus) which
were used in preparing the pro forma condensed consolidated financial
statements included in the Prospectus present fairly the results of
operations for such properties for the fiscal year ended December 31, 1997,
and such financial statements have been prepared in conformity with GAAP
applied on a basis consistent with that of the Company's audited financial
statements included in the Registration Statement. The selected financial
data and the historical summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the Company's audited financial statements
included in the Registration Statement. The Company's ratios of earnings
to fixed charges included in the Prospectus and as an
4
exhibit to the Registration Statement have been calculated in compliance
with Item 503(d) of Regulation S-K of the Commission.
(vi) The accountants who have delivered their reports with
respect to the audited financial statements and supporting schedules
included in the Registration Statement and the Prospectus are independent
public accountants as required by the 1933 Act and the Rules and
Regulations.
(vii) The pro forma condensed consolidated financial
statements, together with the related notes and any supporting schedules,
included in the Prospectus present fairly the information shown therein,
have been prepared on a basis substantially consistent with the audited
financial statements of the Company set forth therein, the assumptions on
which such pro forma financial statements have been prepared are reasonable
and are set forth in the notes thereto, and such pro forma condensed
consolidated financial statements have been prepared, and the pro forma
adjustments set forth therein have been applied, in accordance with the
applicable accounting requirements of the 1933 Act and the Rules and
Regulations (including, without limitation, Regulation S-X promulgated by
the Commission), and such pro forma adjustments have been properly applied
to the historical amounts in the compilation of such statements.
(viii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Maryland; the Company has power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus; the Company's operations and business
activities are not such as to require the Company to be qualified as a
foreign corporation to transact business in any other jurisdiction where
the failure to be so qualified would have a material adverse effect on the
condition (financial or otherwise) or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise. Attached hereto as SCHEDULE II is a true, complete and correct
listing of the names and jurisdictions of organization of all of the
Company's Subsidiaries and Affiliates, including ▇▇▇▇▇▇▇ Pacific Operating
Partnership, L.P., the Delaware limited partnership formed in November 1997
through which the Company holds substantially all of its properties and
conducts substantially all of its business (the "OPERATING PARTNERSHIP").
The Company, the Operating Partnership or a wholly owned subsidiary of the
Company owns the general partner interest in each of the limited
partnerships listed in SCHEDULE II. The Company has no other subsidiaries
other than those listed in SCHEDULE II, and the Company holds no interests
in any corporation, partnership, limited liability company or other entity
other than those listed in SCHEDULE II.
(ix) Each Subsidiary and Affiliate has been duly organized and
is validly existing and in good standing under the laws of the jurisdiction
of its organization, has power and authority to own, lease and operate its
property and conduct its business as
5
described in the Registration Statement and the Prospectus, and is duly
qualified to transact business and is in good standing in each jurisdiction
in which such qualification is required, except where the failure to be so
qualified or in good standing would not have a material adverse effect on
the condition (financial or otherwise) or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise; and except as otherwise disclosed in the Prospectus, (A) all of
the issued and outstanding capital stock of each Subsidiary that is a
corporation and all of the issued and outstanding limited liability company
interests of each Subsidiary or Affiliate that is a limited liability
company have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company, directly or through
Subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, and (B) all of the issued and
outstanding partnership interests of each Subsidiary that is a partnership
have been duly authorized (if applicable) and validly issued and are owned
by the Company, directly or through Subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity,
and the partners thereof are entitled to the respective rights specified in
the relevant limited partnership agreements. The Company is the sole
general partner of the Operating Partnership and holds an approximately 84%
economic interest in the Operating Partnership.
(x) The Company is not, and upon the issuance and sale of the
Shares as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment
company" or an entity "controlled" by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended (the "1940
ACT").
(xi) (A) The authorized, issued and outstanding shares of
capital stock of the Company are as set forth in the Prospectus under the
caption "Capitalization" (except for subsequent issuances, if any, of
Common Stock pursuant to this Agreement, the EVEREN Agreement or pursuant
to employee benefit plans referred to in the Prospectus); the shares of
issued and outstanding Common Stock and Series 1997-A Convertible Preferred
Stock have been duly authorized and validly issued and are fully paid and
non-assessable; the Shares have been duly authorized for issuance and sale
to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable; the Common Stock and the Company's charter and bylaws
conform in all material respects to all statements relating thereto
contained in the Prospectus; the form of certificate used to evidence the
Common Stock is in due and proper form and complies with all applicable
statutory requirements; and the issuance of the Shares is not subject to
preemptive or other similar rights that have not been waived or complied
with.
(B) The Series 1997-A Preferred Limited Partner Units
(the "PREFERRED UNITS"), the Common Limited Partner Units and the General
Partner Units
6
(such Common Limited Partner Units and the General Partner Units
collectively, the "COMMON UNITS," and, further, such Common Units and the
Preferred Units collectively, the "UNITS") of the Operating Partnership
have been duly authorized for issuance by the Operating Partnership to the
holders thereof and are validly issued and fully paid and, with respect to
the Units owned by the Company, are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims. As of the date
hereof, there are (i) 4,800,000 Preferred Units issued and outstanding,
2,800,000 of which are held by the Company, and (ii) 24,157,935 Common
Units issued and outstanding, 23,463,852 of which are held by the Company.
The Company owns all of the issued and outstanding General Partner Units.
(xii) Neither the Company nor any of its Subsidiaries or
Affiliates is in violation of its charter or by-laws, certificate of
limited partnership, limited partnership agreement, certificate of
formation of a limited liability company, limited liability company
agreement or other similar certificates, instruments or agreements
(collectively, "ORGANIZATIONAL DOCUMENTS"), as the case may be; neither the
Company nor any of its Subsidiaries or Affiliates is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it or any of its property or assets may be
bound, except for such defaults which would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise) or the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise; and the
execution, delivery and performance of this Agreement, the consummation of
the transactions contemplated herein and in the Prospectus (including the
issuance and sale of the Shares and the use of the proceeds from the sale
of the Shares as described in the Prospectus under the caption "Use of
Proceeds"), and compliance by the Company with its obligations hereunder,
have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its Subsidiaries or Affiliates pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which the Company or any of its
Subsidiaries or Affiliates is a party or by which the Company or any of its
Subsidiaries or Affiliates may be bound or to which any of the property or
assets of the Company or any of its Subsidiaries or Affiliates is subject,
nor will such action result in any violation of the provisions of the
Organizational Documents of the Company or any of its Subsidiaries or
Affiliates or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality,
governmental agency or body or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or Affiliate or any of
their respective assets, properties or operations; and no filing with, or
authorization, approval, consent, license, order,
7
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the
Company of its obligations hereunder in connection with the offering,
issuance or sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except such as may be required
under state securities or Blue Sky laws of any jurisdiction or real estate
syndication laws in connection with the purchase and distribution of the
Shares by the Underwriters. As used herein, a "REPAYMENT EVENT" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any Subsidiary or Affiliate.
(xiii) At all times commencing with its taxable year ended
December 31, 1987, (A) the Company has been organized in conformity with
the requirements for qualification and taxation as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended (the
"CODE"); (B) the Company has met and continues to meet all the requirements
of the Code for qualification and taxation as a "real estate investment
trust"; (C) the Company is qualified and has been qualified as a "real
estate investment trust" under the Code and will be so qualified after
consummation of the transactions contemplated by the Prospectus and the
Prospectus Supplement; and (D) the Company's present and contemplated
operations, assets and income will enable the Company to meet the
requirements for qualification as a "real estate investment trust" under
the Code. For purposes of this representation, the term "Company" shall
include ▇▇▇▇▇▇▇ Pacific Properties, Inc., a California corporation (the
"PREDECESSOR"), for all taxable periods of the Predecessor beginning with
its taxable year ended December 31, 1987 through and including the merger
of the Predecessor with and into the Company.
(xiv) Neither the Company nor any entity treated as a
partnership for federal income tax purposes in which the Company has at any
time owned an interest, either directly or indirectly through one or more
other such entities, has at any time owned more than 10% of the voting
securities (within the meaning of the ▇▇▇▇ ▇▇▇) of any other entity, except
for (A) any "qualified REIT subsidiary" (within the meaning of Section
856(i) of the Code as in effect prior to the enactment of the Taxpayer
Relief Act of 1997) of the Company, or (B) any entity treated as a
partnership for federal income tax purposes. For purposes of this
representation, the term "Company" shall include the Predecessor, for all
taxable periods of the Predecessor beginning with its taxable year ended
December 31, 1987 through and including the merger of the Predecessor with
and into the Company.
(xv) There is no action, suit or proceeding before or by any
court, government, government instrumentality, governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or
Affiliates, which is required to be
8
disclosed in the Registration Statement or the Prospectus (other than as
disclosed therein) or which might reasonably be expected to result in any
material adverse change in the condition (financial or otherwise) or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise, or which might reasonably be
expected to materially and adversely affect the properties or assets of the
Company or any of its Subsidiaries or Affiliates; and there are no
contracts or documents of the Company or any of its Subsidiaries or
Affiliates which are required to be filed as exhibits to the Registration
Statement or any document incorporated or deemed to be incorporated therein
by the 1933 Act, the Rules and Regulations, the 1934 Act or the rules and
regulations of the Commission thereunder which have not been so filed; and
there are no persons or entities with registration or other similar rights
to have any securities registered pursuant to the Registration Statement or
otherwise included as part of the offering contemplated by the Prospectus.
(xvi) The Company and its Subsidiaries and Affiliates possess
such permits, licenses, approvals, consents and other authorizations
(collectively, "GOVERNMENTAL LICENSES") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; the Company and its Subsidiaries and
Affiliates are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to so comply would not,
singly or in the aggregate, result in any material adverse change in the
condition (financial or otherwise) or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, or which might materially and adversely affect a material
amount of the properties or assets of the Company and its Subsidiaries; all
of the Governmental Licenses are valid and in full force and effect, except
where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
material or adverse effect on the properties or assets of the Company or
any of its Subsidiaries or Affiliates; and neither the Company nor any of
its Subsidiaries or Affiliates has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
effect on a material amount of the properties or assets of the Company and
its Subsidiaries and Affiliates.
(xvii) The Company is eligible to use a Form S-3 registration
statement under the 1933 Act. The Company is also eligible to use Form S-3
pursuant to the standards for that form in effect prior to October 21,
1992.
(xviii) Neither the Company nor any of its Subsidiaries nor any
of their respective officers or directors or any members or limited or
general partners over whom the Company has control has taken nor any of
them take, directly or indirectly, any action resulting in a violation of
Regulation M under the 1934 Act, or designed to
9
cause or result in, or which has constituted or which reasonably might be
expected to constitute, the stabilization or manipulation of the price of
the shares of Common Stock or facilitation of the sale or resale of the
Shares.
(xix) Neither the Company nor any of its Subsidiaries or
Affiliates is required to own or possess any trademarks, service marks,
trade names or copyrights in order to conduct the business now operated by
it.
(xx) The Company has full right, power and authority to enter
into this Agreement; this Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of
the Company, enforceable against it in accordance with its terms.
(xxi) The outstanding shares of Common Stock are listed on the
New York Stock Exchange and the Shares have been approved for listing,
subject to official notice of issuance, on the New York Stock Exchange.
(xxii) Except as otherwise disclosed in the Prospectus: (A) the
Company and its Subsidiaries and Affiliates have good and marketable title
in fee simple to all real property and improvements owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its Subsidiaries or Affiliates; (B) all of the leases and subleases
material to the business of the Company and its Subsidiaries, considered as
one enterprise, and under which the Company or any of its Subsidiaries or
Affiliates leases (as lessee) or holds properties described in the
Prospectus, are in full force and effect, and neither the Company nor any
Subsidiary or Affiliate has any notice of any material claim of any sort
that has been asserted by anyone adverse to the right of the Company or any
Subsidiary or Affiliate under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or such
Subsidiary or Affiliate to the continued possession of the leased or
subleased premises under any such lease or sublease; (C) all liens,
charges, encumbrances, claims or restrictions on or affecting the real
property and improvements of the Company or any of its Subsidiaries or
Affiliates which are required to be disclosed in the Prospectus are
disclosed therein; (D) neither the Company nor any of its Subsidiaries or
Affiliates nor any lessee of any portion of the real property or
improvements of the Company or any of its Subsidiaries or Affiliates is in
default under any of the leases pursuant to which the Company or any of its
Subsidiaries or Affiliates leases (as lessor) its real property or
improvements and the Company knows of no event which, but for the passage
of time or the giving of notice, or both, would constitute a default under
any of such leases, except such defaults that would not, individually or in
the aggregate, have a material adverse effect on the condition (financial
or otherwise) or the earnings, business affairs or business
10
prospects of the Company and its Subsidiaries considered as one enterprise;
(E) other than those options and rights of first refusal to purchase the
premises demised under certain leases described on SCHEDULE III hereto, no
tenant under any of the leases pursuant to which the Company or any of its
Subsidiaries or Affiliates leases (as lessor) any of its real property or
improvements has an option or right of first refusal to purchase the
premises demised under such lease; (F) all of the real property and
improvements of the Company and its Subsidiaries and Affiliates comply with
all applicable codes and zoning laws and regulations, except for such
failures to comply which would not, individually or in the aggregate, have
a material adverse effect on the condition (financial or otherwise) or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise; and (G) the Company has no
knowledge of any pending or threatened condemnation, zoning change or other
proceeding or action that would in any manner affect the size of, use of,
improvements on, construction on, or access to any of the real property of
the Company or any of its Subsidiaries or Affiliates, except such
proceedings or actions that would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise) or
the earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.
(xxiii) The Company and its Subsidiaries and Affiliates maintain
a system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; and
(C) access to assets is permitted only in accordance with management's
general or specific authorizations. Neither the Company nor any of its
Subsidiaries or Affiliates nor any of their respective employees or agents
has made any payment of funds of the Company or any of its Subsidiaries or
Affiliates or received or retained any funds in violation of any law, rule
or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(xxiv) Except as otherwise set forth in the Registration
Statement or the Prospectus, (A) neither the Company nor any of its
Subsidiaries or Affiliates has at any time, and, to the best knowledge and
information of the Company, no other party has at any time, handled,
buried, stored, retained, refined, transported, processed, manufactured,
generated, produced, spilled, allowed to seep, leak, escape or ▇▇▇▇▇, or
pumped, poured, emitted, emptied, discharged, injected, dumped, transferred
or otherwise disposed of or dealt with Hazardous Materials (hereinafter
defined) on, to or from real property owned, leased or otherwise utilized
by the Company or any of its Subsidiaries or Affiliates or in which the
Company or any of its Subsidiaries or Affiliates has any ownership
interest, including without limitation any subsurface soils and ground
water (the "PREMISES"), except for such cases as (u) are not required to be
disclosed in the Registration Statement and (v) would not, individually or
in the aggregate, have a material adverse effect on the condition
(financial or otherwise) or
11
the earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise, (B) no seepage, leak, escape,
▇▇▇▇▇, discharge, injection, release, emission, spill, pumping, pouring,
emptying or dumping of Hazardous Materials from or to the Premises has
occurred, except for such cases as (w) are not required to be disclosed in
the Registration Statement and (x) would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise) or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, (C) there are no events or circumstances that might reasonably
be expected to form the basis of, and neither the Company nor any of its
Subsidiaries or Affiliates has received notice of any claim or has
knowledge of any occurrence or circumstance which with notice or passage of
time or both might reasonably be expected to give rise to, an order for
clean-up or remediation, claim, action, suit or proceeding under or
pursuant to any Environmental Statute (as hereinafter defined) by any
private party or governmental body or agency except for such orders as
would not, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise) or the earnings, business affairs
or business prospects of the Company and its Subsidiaries considered as one
enterprise, (D) to the best of Company's knowledge and information, there
are not pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Statute against the Company or any of its Subsidiaries or
Affiliates, (E) to the best of the Company's knowledge and information,
neither the Company nor any of its Subsidiaries or Affiliates is in
violation of any Environmental Statute with respect to any Hazardous
Materials, (F) to the best of Company's knowledge and information, no part
of the Premises is included or proposed for inclusion on the National
Priorities List issued pursuant to CERCLA (hereinafter defined) by the
United States Environmental Protection Agency (the "EPA") or on the
inventory of other potential "problem" sites issued by the EPA and has not
otherwise been identified by the EPA as a potential CERCLA site or included
or proposed for inclusion on any list or inventory issued pursuant to any
other Environmental Statute or issued by any other Governmental Authority
(hereinafter defined), and (G) the Company and its Subsidiaries and
Affiliates have, to the best of the Company's knowledge and information,
all permits, authorizations and approvals required under any applicable
Environmental Statutes and are each in compliance with the requirements of
such permits, authorizations and approvals, except where such
non-compliance would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise) or the earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise. As used herein "HAZARDOUS MATERIAL" shall
include without limitation, any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related materials, asbestos or any material containing
asbestos, or any other hazardous, toxic or similar substance or material as
defined by any federal, state or local environmental law, ordinance, rule,
or regulation including, without limitation, the Comprehensive
12
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Sections 9601, et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et sea.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901
et seq.), and in the regulations adopted and publications promulgated
pursuant to each of the foregoing (individually, an "ENVIRONMENTAL
STATUTE") or by any federal, state or local governmental authority having
or claiming jurisdiction over the Premises (a "GOVERNMENTAL AUTHORITY").
(xxv) The reincorporation of the Company from California to
Maryland in May 1997 was treated as a reorganization for federal income tax
purposes under Section 368(a) of the Code.
(xxvi) The Company and its Subsidiaries have filed all federal,
state and local income tax returns which have been required to be filed and
have paid all taxes required to be paid and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due
and payable, except, in all cases, for any such tax, assessment, fine or
penalty that is being contested in good faith (and except in any case in
which the failure to so file or pay would not have a material adverse
effect on the Company and its Subsidiaries considered as one enterprise).
(b) Any certificate signed by an officer of the Company and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
3. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company at U.S.$13.385 a share (the "PURCHASE PRICE") the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) set forth in SCHEDULE I hereto opposite the name of such Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 975,000 Additional
Shares at the Purchase Price. If the Representatives, on behalf of the several
Underwriters, elect to exercise such option, the Representatives shall so notify
the Company in writing not later than 30 days after the date of this Agreement,
which notice shall specify the number of Additional Shares to be purchased by
the Underwriters and the date on which such shares are to be purchased. Such
date may be the same as the Closing Date (as defined below) but not earlier than
the Closing Date nor later than ten business days after the date of such notice.
The Additional Shares may be purchased as provided in Section 5 hereof solely
for the purpose of covering over-allotments made in connection with the offering
of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such
13
adjustments to eliminate fractional shares as the Representatives may determine)
that bears the same proportion to the total number of Additional Shares to be
purchased as the number of Firm Shares set forth in SCHEDULE I hereto opposite
the name of such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 60 days from the date of this Agreement, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to
(A) the shares of Common Stock offered hereby, (B) the issuance of shares of
Common Stock upon the exercise of an option or a warrant or the conversion of a
security outstanding on the date of this Prospectus Supplement of which the
Underwriters have been advised in writing, (C) limited partnership units issued
in connection with property acquisitions which are not convertible into or
exercisable for Common Stock until after the end of such 60-day period or (D)
the sale of shares of Common Stock pursuant to the EVEREN Agreement.
4. TERMS OF PUBLIC OFFERING. The Company is advised by you that the
Underwriters propose to make a public offering of the Shares as soon after the
Registration Statement and this Agreement have become effective as in your
judgment is advisable. The Company is further advised by you that the Shares
are to be offered to the public initially at U.S.$14.125 a share (the "PUBLIC
OFFERING PRICE") and to certain dealers selected by you at a price that
represents a concession not in excess of U.S.$.44 a share under the Public
Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of U.S.$.10 a share, to any Underwriter or
to certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by
the Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on March 30, 1998, or at such other time on the same or such other date,
not later than April 6, 1998, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the notice described in
Section 3 or at such other time on the same or on such other date, in any event
not later than May 7, 1998, as shall be designated in writing by the
14
Representatives. The time and date of such payment are hereinafter referred to
as the "OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:30 P.M. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the 1933 Act; and
(ii) there shall not have occurred any change or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its Subsidiaries, considered as one enterprise,
from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement)
that, in your judgment, is material and adverse and that makes it,
in your judgment, impracticable to market the Shares on the terms
and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date
a certificate, dated the Closing Date, of the President and Chief Financial
Officer of the Company to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has
15
complied with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the Closing
Date.
(c) The Representatives shall have received from ▇▇▇▇▇▇▇,
Procter & ▇▇▇▇ LLP, counsel for the Company, a favorable opinion dated the
Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Maryland.
(ii) The Company has the corporate power and authority
to own, lease and operate its properties and conduct its business
as described in the Registration Statement and the Prospectus and
to enter into and perform its obligations under this Agreement.
(iii) The Company's operations and business activities
are not such as to require the Company to be qualified as a foreign
corporation to transact business in any other jurisdiction where
the failure to be so qualified or in good standing would have a
material adverse effect on the condition (financial or otherwise)
or the earnings or business affairs of the Company and its
Subsidiaries considered as one enterprise.
(iv) Each Subsidiary and Affiliate has been duly
organized and is validly existing and in good standing under the
laws of the jurisdiction of its organization, has power and
authority to own, lease and operate its property and to conduct its
business as described in the Registration Statement and the
Prospectus, and is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is
required, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the condition
(financial or otherwise) or the earnings or business affairs of the
Company and its Subsidiaries considered as one enterprise; and
except as otherwise disclosed in the Prospectus with respect to the
properties owned by the respective Subsidiaries or Affiliates,
(A) all of the issued and outstanding capital stock of each
Subsidiary that is a corporation and all of the issued and
outstanding limited liability company interests of each Subsidiary
or Affiliate that is a limited liability company have been duly
authorized and validly issued, are fully paid and non-assessable
and, to the best of their knowledge, are owned by the Company,
directly or through Subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity, and
(B) all of the issued and outstanding partnership interests of each
Subsidiary that is a partnership have been duly authorized (if
applicable) and validly issued and, to the best of their knowledge,
are owned by the Company, directly or through Subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity, and the partners thereof
16
are entitled to the respective rights specified in the relevant
limited partnership agreements. The Company is the sole general
partner of the Operating Partnership.
(v) (A) The authorized, issued and outstanding shares
of capital stock of the Company are as set forth in the Prospectus
under the caption "Capitalization" (except for subsequent
issuances, if any, of Common Stock pursuant to employee benefit
plans referred to in the Prospectus or pursuant to this Agreement
or the EVEREN Agreement); the shares of issued and outstanding
capital stock outstanding prior to the issuance of the Shares have
been duly authorized and validly issued and are fully paid and
non-assessable and such shares of capital stock were not issued in
violation of the preemptive or other similar rights of any security
holder of the Company;
(B) The Units of the Operating Partnership have
been duly authorized for issuance by the Operating Partnership to
the holders thereof and are validly issued and fully paid and, with
respect to the Units owned by the Company, are owned directly by
the Company, free and clear of all liens, encumbrances, equities or
claims. As of the date hereof, there are (i) 4,800,000 Preferred
Units issued and outstanding, 2,800,000 of which are held by the
Company, and (ii) 24,157,935 Common Units issued and outstanding,
23,463,852 of which are held by the Company. The Company owns all
of the issued and outstanding General Partner Units.
(vi) The Shares have been duly authorized by the
Company for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to
this Agreement against payment of the consideration set forth
herein, will be validly issued and fully paid and non-assessable;
and the issuance of the Shares is not subject to preemptive or
other similar rights arising by operation of law, under the charter
or by-laws of the Company or otherwise.
(vii) The capital stock of the Company and Units of the
Operating Partnership conform to the description thereof contained
in the Prospectus in all material respects.
(viii) (A) This Agreement has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the other parties thereto,
is a valid and binding agreement of the Company; and (B) the
execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated herein and in the
Prospectus (including the issuance and sale of the Shares and the
use of the proceeds from the sale of the Shares as described in the
Prospectus under the caption "Use of Proceeds"), and compliance by
the Company with its
17
obligations hereunder, do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
in Section 1(a)(xii) of this Agreement) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary or Affiliate
pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or
instrument, known to such counsel, to which the Company or any
Subsidiary or Affiliate is a party or by which it or any of them
may be bound, or to which any of the property or assets of the
Company or any Subsidiary or Affiliate is subject, nor will such
action result in any violation of the provisions of the
Organizational Documents of the Company or any Subsidiary or
Affiliate, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to such counsel, of any
government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or
Affiliate or any of their respective properties, assets or
operations.
(ix) Each of the 1993 and 1997 Registration Statements
is effective under the 1933 Act and, to the best of such counsel's
knowledge and information, no stop order suspending the
effectiveness of either such Registration Statement has been issued
under the 1933 Act and no proceedings therefor have been initiated
or are pending or threatened by the Commission.
(x) At the time the 1993 Registration Statement first
became effective, at the time that post-effective amendment No. 3
thereto became effective, at the time the 1997 Registration
Statement became effective and at the date of this Agreement, the
Registration Statement (other than the financial statements and
supporting schedules and other financial and statistical data
included or incorporated by reference therein and other than any
trustee's statement of eligibility on Form T-1 (a "FORM T-1"), as
to which no opinion need be rendered) complied as to form in all
material respects with the requirements of the 1933 Act and the
Rules and Regulations; and nothing has come to such counsel's
attention that would lead them to believe that the 1993
Registration Statement, at the time the 1993 Registration Statement
first became effective, at the time that post-effective amendment
No. 3 thereto became effective, at the time the 1997 Registration
Statement became effective or at the date of this Agreement,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus,
as of the date of the Prospectus Supplement or at the date of such
opinion, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except
that no statement need be made as to financial statements or
supporting schedules or
18
other financial or statistical data or any Form T-1 included or
incorporated by reference in the Registration Statement or the
Prospectus).
(xi) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the
financial statements and supporting schedules and other financial
and statistical data included therein, as to which no opinion need
be rendered), as of the dates they were filed with the Commission
(and, if such incorporated documents were amended, when such
amendment was filed or became effective), complied as to form in
all material respects with the requirements of the 1934 Act and the
published rules and regulations thereunder.
(xii) No filing with, or consent, approval,
authorization, license, registration, qualification, decree or
order of, any court or governmental authority or agency, domestic
or foreign, is necessary or required in connection with the due
authorization, execution and delivery of this Agreement or for the
offering, issuance, sale or delivery of the Shares to the
Underwriters, except such as have been obtained under the 1933 Act
or the Rules and Regulations or such as may be required under state
securities laws or real estate syndication laws.
(xiii) The Company is not, and upon the issuance and sale
of the Shares as contemplated by this Agreement and the application
of the net proceeds therefrom as described in the Prospectus will
not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the 1940 Act.
(xiv) The Company is eligible to use a Form S-3
registration statement under the 1933 Act. The Company is also
eligible to use Form S-3 pursuant to the standards for that form in
effect prior to October 21, 1992.
(xv) The Company has all legal right, power and
authority necessary to qualify as a "real estate investment trust"
under the Code; commencing with the taxable year of the Company
ended December 31, 1987, (A) the Company has at all times been
organized in conformity with the requirements for qualification as
a "real estate investment trust" under the Code; (B) the Company
has qualified as a "real estate investment trust" for each year
through its taxable year ended December 31, 1997; and (C) the
Company's organization and proposed method of operation will enable
it to qualify to be taxed as a "real estate investment trust" under
the Code for its taxable year ending December 31, 1998 and
thereafter. For purposes of this opinion, the term "Company" shall
include ▇▇▇▇▇▇▇ Pacific Properties, Inc., a California corporation
(the "Predecessor"), for all taxable periods of the Predecessor
19
beginning with its taxable year ended December 31, 1987 through and
including the merger of the Predecessor with and into the Company.
(xvi) The information in the Prospectus under the
captions "Risk Factors--Distributions to Shareholders," "Risk
Factors--Consequences of Failure to Qualify as a REIT," "Federal
Income Tax Considerations" and "Description of Common Stock," in
the Company's 1997 Annual Report on Form 10-K under the captions
"Business--Risk Factors--Distributions to Shareholders" and
"Business--Risk Factors--Consequences of Failure to Qualify as a
REIT" and in the Company's Preliminary Proxy Statement filed with
the Commission on March 6, 1998 under the captions "Proposal
2--Approval of the Issuance of Common Stock" and "Certain
Transactions with Management," in each case to the extent that it
constitutes matters of law or legal matters, summaries of the
Company's charter or by-laws, summaries of the partnership
agreements relating to the ▇▇▇▇▇▇ Projects (as defined in the
Prospectus), summaries of other instruments, agreements or
documents or of legal proceedings, or legal conclusions, is correct
in all material respects; and the opinion of counsel in the
Prospectus and Prospectus Supplement under the caption "Federal
Income Tax Considerations" is confirmed.
(xvii) To the best of such counsel's knowledge, there is
not pending or threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any Subsidiary or Affiliate
is a party or to which the property or assets of the Company or any
Subsidiary or Affiliate is subject, before or brought by any court
or any governmental agency or body, domestic or foreign, which
might reasonably be expected to result in a material adverse effect
on the condition (financial or otherwise) or the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, or which might reasonably be expected
to materially and adversely affect a material amount of the
properties or assets of the Company and its Subsidiaries or the
consummation of the transactions contemplated in this Agreement or
the performance by the Company of its obligations hereunder.
(xviii) There are no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments which, to the
best of such counsel's knowledge, are required to be described or
referred to in the Registration Statement or in the documents
incorporated by reference therein or to be filed as exhibits
thereto other than those described or referred to therein or filed
or incorporated by reference as exhibits thereto; the descriptions
thereof or references thereto are correct in all material respects,
and no default exists, to the best of such counsel's knowledge, in
the due performance or observance of any obligation, agreement,
covenant or condition contained in any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument so described, referred to or
filed or
20
incorporated by reference, and all descriptions in the Registration
Statement and the Prospectus of contracts and other documents to
which the Company or any of its Subsidiaries or Affiliates is a
party are accurate in all material respects.
(xix) For each taxable year of the Company commencing
with its taxable year ended December 31, 1987, every partnership,
limited liability company, or joint venture in which the Company
has at any time owned an interest either directly or thorough one
or more other partnerships, limited liability companies, or joint
ventures has at all times during its existence been treated as a
partnership or ignored as a separate entity for federal income tax
purposes and not as an association taxable as a corporation or a
"publicly traded partnership" within the meaning of Section 7704 of
the Code. For purposes of this opinion, the term "Company" shall
include the Predecessor for all taxable periods of the Predecessor
beginning with its taxable year ended December 31, 1987 through and
including the merger of the Predecessor with and into the Company.
(xx) To the best of such counsel's knowledge, there are
no statutes or regulations that are required to be described in the
Prospectus that are not described as required therein.
(xxi) To the best of such counsel's knowledge, neither
the Company nor any Subsidiary or Affiliate is in violation of its
Organizational Documents.
(xxii) The reincorporation of the Company from California
to Delaware in May 1997 was treated as a reorganization for federal
income tax purposes under Section 368(a) of the Code.
Such opinion shall be rendered to the Underwriters at the request
of the Company and shall so state therein. In giving their opinion,
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP may rely (i) as to the good standing and/or
qualification of the Company and its Subsidiaries and Affiliates to do
business in any state or jurisdiction, upon certificates of appropriate
government officials and (ii) as to certain matters of fact, to the extent
not independently verified by such counsel, upon certificates and written
statements of officers of and accountants for the Company.
(d) The Underwriters shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters,
with respect to the organization of the Company, the validity of this
Shares, this Agreement, the Registration Statement, the Prospectus and such
other related matters as the Representatives may require, and the Company
shall have furnished to such counsel such documents as they may request for
the purpose of enabling them to pass upon such matters.
21
(e) (i) The Underwriters shall have received, on each of
the date hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to the
Underwriters, from Deloitte & Touche LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus; PROVIDED that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(ii) The Underwriters shall have received, on each of
the date hereof and the Closing Date, a supplemental letter dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Ernst & Young LLP, independent
public accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to certain financial and property-related information contained in
the Registration Statement and the Prospectus regarding the Golden State
Properties (as defined therein).
(f) The "lock-up" agreements, each substantially in the form
of EXHIBIT A hereto, between you and certain officers and directors of the
Company listed on SCHEDULE IV hereto relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and
effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the Representatives on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, the due authorization and
issuance of the Additional Shares and other matters related to the issuance
of the Additional Shares.
7. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) The Company will advise the Representatives promptly of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the
lifting thereto, if issued. The Company will advise the Representatives
promptly of the receipt of any comments from the Commission and any request
by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information, and will not at
any time file any amendment to the Registration Statement or supplement to
the Prospectus which shall not previously have been submitted to the
Representatives a reasonable time prior to the proposed filing or use
thereof or to which the Representatives shall reasonably object
22
in writing or which is not in compliance with the 1933 Act and the Rules
and Regulations. The Company will advise the Representatives promptly when
the Prospectus has been filed pursuant to Rule 424(b) of the Rules and
Regulations. The Company will advise the Representatives promptly when any
post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus
shall have been filed.
(b) The Company will prepare and file with the Commission,
promptly upon the request of the Representatives, any amendments or
supplements to the Registration Statement or the Prospectus which in the
opinion of the Representatives may be necessary to enable the several
Underwriters to continue the distribution of the Shares and, in the case of
any such amendments to the Registration Statement, will use its best
efforts to cause the same to become effective as promptly as possible. The
Company will promptly file all reports and any definitive proxy or
information statements required to be filed with the Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Shares.
(c) If at any time when a prospectus relating to the Shares
is required to be delivered under the 1933 Act any event occurs as a result
of which the Prospectus would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to
comply with the 1933 Act or the Rules and Regulations, the Company will
promptly notify the Representatives thereof and will prepare an amended or
supplemented Prospectus (in form and substance reasonably satisfactory to
counsel to the Underwriters) or, with the consent of counsel to the
Underwriters, make an appropriate filing pursuant to Section 13 or 14 of
the 1934 Act which will correct such statement or omission; and, in case
any Underwriter is required to deliver a prospectus relating to the Shares
nine months or more after the date of this Agreement, the Company upon the
request of the Representatives and at the expense of such Underwriters will
prepare promptly such prospectus or prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the 1933
Act.
(d) The Company will deliver to the Representatives, at or
before the Closing Date, signed copies of the Registration Statement and
all amendments thereto (including all financial statements and exhibits
thereto and all documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will deliver to the Representatives such number of copies of
the Registration Statement, including such financial statements and all
documents incorporated or deemed to be incorporated by reference therein,
and of all amendments thereto, as the Representatives may reasonably
request. The copies of the Registration Statement and each amendment or
supplement thereto furnished to the
23
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T. The Company will furnish to you in New York
City, without charge, prior to 10:00 a.m. New York City time on the
business day next succeeding the date of this Agreement and thereafter from
time to time during the period when delivery of a prospectus relating to
the Shares is required under the 1933 Act, as many copies of the
Prospectus, in final form or as thereafter amended or supplemented, as the
Representatives may reasonably request; PROVIDED, HOWEVER, that the expense
of the preparation and delivery of any prospectus required for use nine
months or more after the date of this Agreement shall be borne by the
Underwriters required to deliver such prospectus. Each preliminary
prospectus and preliminary prospectus supplement and the Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(e) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than 60 days
after the close of the period covered thereby, an earnings statement (in
form complying with the provisions of Rule 158 under the ▇▇▇▇ ▇▇▇) which
will be in reasonable detail (but which need not be audited) and which will
comply with Section 11(a) of the 1933 Act, covering a period of at least
twelve months beginning not later than the first day of the Company's
fiscal quarter next following the "effective date" (as defined in said Rule
158) of the Registration Statement.
(f) The Company will cooperate with the Representatives to
enable the Shares to be qualified for sale under the securities laws and
real estate syndication laws of such states and other jurisdictions as the
Representatives may reasonably designate and at the request of the
Representatives will make such applications and furnish such information as
may reasonably be required of it as the issuer of the Shares for that
purpose; PROVIDED, HOWEVER, that the Company shall not be required to
qualify to do business or to file a general consent to service of process
in any such jurisdiction. The Company will, from time to time, prepare and
file such statements and reports as are or may be required of it as the
issuer of the Shares to continue such qualifications in effect for so long
a period as the Representatives may reasonably request for the distribution
of the Shares.
(g) The Company will furnish to its stockholders annual
reports containing financial statements certified by independent public
accountants. During the period of five years from the date hereof, the
Company will deliver to the Representatives and, upon request, to each of
the other Underwriters, copies of each annual report of the Company and
each other report furnished by the Company to its stockholders; and will
deliver to the Representatives, as soon as they are available, copies of
any other reports (financial or other) which the Company shall publish or
otherwise make
24
available to any of its securityholders as such and, as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange.
(h) The Company will effect, and use its best efforts to
maintain, the listing of the Shares on the New York Stock Exchange.
(i) Immediately following the execution of this Agreement,
the Company will prepare a prospectus supplement, dated the date hereof
(the "PROSPECTUS SUPPLEMENT"), containing the public offering price of the
Shares, the underwriting discounts and commissions, the plan of
distribution of the Shares and such other information as may be required by
the 1933 Act or the Rules and Regulations or as the Representatives and the
Company deem appropriate, and will file or transmit for filing with the
Commission in accordance with Rule 424(b) of the Rules and Regulations
copies of the Prospectus (including such Prospectus Supplement).
(j) The Company will use the net proceeds received by it from
the sale of the Shares in the manner specified in the Prospectus Supplement
under "Use of Proceeds."
(k) The Company will use its best efforts to continue to meet
the requirements to qualify as a "real estate investment trust" under the
Code.
(l) In accordance with the provisions of that certain Florida
Act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "CUBA ACT"), if applicable, and without limitation to
the provisions of Section 9 hereof, the Company will indemnify each
Underwriter against any and all losses, claims, damages, liabilities and
expenses (including attorneys' fees) arising out of or based upon any
violation by the Company of the Cuba Act.
8. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and its accountants in connection with the
registration and delivery of the Shares under the 1933 Act and all other fees or
expenses in connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing costs associated
therewith, and the mailing and delivering of copies thereof to the Underwriters
and dealers, in the quantities hereinabove specified, (ii) all costs and
expenses related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky memorandum in connection with the offer and
sale of the Shares under state securities laws and all expenses in connection
with the qualification of the Shares for offer and sale under state securities
laws as provided in Section 7(f) hereof, including filing fees
25
and the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky
memorandum, (iv) the cost of printing certificates representing the Shares, (v)
the costs and charges of any transfer agent, registrar or depositary, (vi) the
fees and expenses incurred in connection with the listing of the Shares on the
New York Stock Exchange and (vii) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section. It is understood, however, that except as
provided in this Section, Section 9 entitled "Indemnity and Contribution," and
the last paragraph of Section 11 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
26
9. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the 1933 Act or Section 20 of the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein. Notwithstanding anything to the contrary contained above, the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 7(d) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the 1933 Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
27
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a) or 9(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the 1933 Act
or Section 20 of the Exchange Act and (ii) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either such Section, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the Underwriters and such control persons
of any Underwriters, such firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
28
(d) To the extent the indemnification provided for in Section 9(a) or
9(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(d)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 9 are not exclusive and shall not
29
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter, or
the Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Shares.
10. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in SCHEDULES I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; PROVIDED that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements
30
satisfactory to you and the Company for the purchase of such Firm Shares are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. If, on the Option Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased, the non-defaulting Underwriters shall have
the option to (i) terminate their obligation hereunder to purchase Additional
Shares or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
[the remainder of this page is intentionally left blank]
31
14. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
▇▇▇▇▇▇▇ PACIFIC PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President, Chief Financial
Officer and Chief Administrative Officer
Accepted as of the date hereof:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
EVEREN SECURITIES, INC.
SUTRO & CO. INCORPORATED
Acting severally on behalf of themselves and the
several Underwriters named on Schedule I hereto
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Principal
32
SCHEDULE I
UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated . . . . . . . . . . . 1,276,250
▇▇▇▇▇▇ Brothers Inc.. . . . . . . . . . . . . . . . . . 1,276,250
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated. . . 1,276,250
EVEREN Securities, Inc. . . . . . . . . . . . . . . . . 635,625
Sutro & Co. Incorporated. . . . . . . . . . . . . . . . 635,625
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. . . . . . . . . . . . . . . . 350,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.. . . . . . . . . . . . . . 350,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P. . . . . . . . . . . . . . . 350,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated. . . . . . . . . . 350,000
---------
Total Firm Shares . . . . . . . . . . . . . . . . . . . 6,500,000
---------
---------
SCHEDULE II
SUBSIDIARIES AND AFFILIATES
I. SUBSIDIARIES
A. CORPORATE SUBSIDIARIES:
BPP/▇▇▇▇▇▇▇▇-Imperial, Inc. (Delaware)(Consolidated)
BPP/Golden State Acquisitions, Inc. (Delaware)(Consolidated)
BPP/Mountaingate, Inc. (Delaware)(Consolidated)
BPP/Northwest Acquisitions, Inc. (Delaware)(Consolidated)
BPP/▇▇▇▇▇▇ Hills, Inc. (Delaware)(Consolidated)
BPP/▇▇▇▇▇, Inc. (California)(Consolidated)
BPP/Simi Valley, Inc. (Delaware)(Consolidated)
BPP/Valley Central, Inc. (Delaware)(Consolidated)
▇▇▇▇▇▇▇ Pacific L.P., Inc. (Delaware)(Consolidated)
B. PARTNERSHIP SUBSIDIARIES:
BPP/Cameron Park L.P. (California)(Consolidated)
BPP/▇▇▇▇▇▇▇▇-Imperial, Inc. (Delaware)(Consolidated)
BPP/East Palo Alto L.P. (California)(Consolidated)
BPP/Hilltop L.P. (California)(Consolidated)
BPP/▇▇▇▇▇ ▇.▇. (California)(Consolidated)
BPP/Mission Viejo, L.P. (California)(Consolidated)
BPP/Mountaingate, L.P. (Delaware)(Consolidated)
BPP/Pleasant ▇▇▇▇ ▇.▇. (California)(Consolidated)
BPP/Richmond L.P. (California)(Consolidated)
BPP/▇▇▇▇▇ ▇.▇. (California)(Consolidated)
BPP/Simi Valley, L.P. (Delaware)(Consolidated)
BPP/Valley Central, L.P. (California)(Consolidated)
BPP/Van Ness L.P. (California)(Consolidated)
▇▇▇▇▇▇▇ Pacific Operating Partnership, L.P. (Delaware)(Consolidated)
▇▇ ▇▇▇▇▇▇ Partners L.P. (California)(Consolidated)
C. LLC SUBSIDIARIES:
BPP/Golden State Acquisitions, LLC (Delaware)(Consolidated)
BPP/Northwest Acquisitions, LLC (Delaware)(Consolidated)
BPP/▇▇▇▇▇▇ Hills, LLC (Delaware)(Consolidated)
II. AFFILIATES
Ladera Center Associates, LLC (Delaware)(Unconsolidated; 25% interest)
▇▇▇▇▇▇▇▇▇ Plaza Associates, LLC (Delaware)(Unconsolidated; 25% interest)
2
SCHEDULE III
OPTIONS AND RIGHTS OF FIRST REFUSAL TO PURCHASE COMPANY-OWNED PROPERTIES
1. THE BERGEN ▇▇▇▇▇▇▇▇ BUILDING: Bergen ▇▇▇▇▇▇▇▇ Corp. has an option to
purchase the Bergen ▇▇▇▇▇▇▇▇ Building and underlying land at fair market value
at the expiration of the lease on March 31, 2000, upon providing the Company
with at least 15 months but not more than 24 months notice prior to the
expiration of such lease.
2. THE SAN DIEGO FACTORY OUTLET CENTER: K-Mart has (a) an option to
purchase the building and the underlying land that it leases at fair market
value at the expiration of the lease on August 31, 2006 upon providing the
Company with notice one year prior to the expiration of such lease and (b) a
right of first refusal to purchase such building and underlying land upon thirty
days notice.
3. GATEWAY CENTER: Long's Drugs has a right of first refusal to purchase
the land under its store at fair market value, under certain circumstances.
4. MESA SHOPPING CENTER: Lucky's has a right of first refusal to
purchase its building and two parcels of land thereunder in the event of a sale
of such parcels other than in the context of a sale of the entire shopping
center.
5. PLAZA AT ▇▇▇▇▇▇ HILLS: Frisco's has a right of first refusal to
purchase its buildings and the land thereunder in the event of a sale of such
parcel other than in the context of a sale of the entire shopping center.
6. 580 MARKETPLACE: P.W. Foods had a right of first refusal to purchase
either their leased premises or the entire shopping center, depending on what
was proposed for sale. P.W. Foods waived this right in September 1996 upon the
sale of the shopping center to the Golden State entities, and again in December
1997 upon the Company's purchase of the center. Although the lease language is
ambiguous on this point, the Company believes that P.W. Foods retains such right
with respect to future sales of its leased premises or the entire shopping
center.
7. CENTERWOOD PLAZA: McDonald's has a right of refusal to purchase its
demised premises in the event of a sale of either its premises or the entire
shopping center.
8. SOUTHAMPTON SHOPPING CENTER: Burger King has a right of refusal to
purchase its leased premises, but this right does not apply in the event the
entire shopping center is being sold.
9. SUMMER HILLS SHOPPING CENTER: (a) Long ▇▇▇▇ ▇▇▇▇▇▇ has a right of
refusal to purchase its leased premises, but this right does not apply in the
event the entire shopping center is being sold; and (b) Summer Hills Veterinary
Hospital has a right of refusal to purchase its leased premises, but this right
does not apply in the event the entire shopping center is being sold.
SCHEDULE IV
EXECUTIVE OFFICERS AND DIRECTORS SUBJECT TO LOCK-UP
J. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Donne ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. Page
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
EXHIBIT A
[FORM OF LOCK-UP LETTER FOR OFFICERS AND DIRECTORS]
March 24, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
EVEREN Securities, Inc.
Sutro & Co. Incorporated
As Representatives of the several Underwriters
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with ▇▇▇▇▇▇▇ Pacific Properties, Inc., a Maryland
corporation (the "COMPANY"), providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"UNDERWRITERS"), of 6,500,000 shares (the "SHARES") of the Common Stock, $0.01
par value, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ on behalf of the Underwriters, the undersigned will not, during the
period commencing on the date hereof and ending 60 days after the date of the
Underwriting Agreement, (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or (2) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to transactions relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the Public Offering or transfers of shares of Common Stock by will
or the laws of descent and distribution. In addition, the undersigned agrees
that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the
Underwriters, the undersigned will not, during the
period commencing on the date hereof until after the end of such 60-day period,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
_________________________
(Name)
_________________________
_________________________
(Address)
2