EXHIBIT 1.1
PS Business Parks, Inc.
2,000,000 Depositary Shares
Each Representing 1/1,000 of a Share of
8 3/4% Cumulative Preferred Stock, Series F
Liquidation Preference Equivalent to
$25.00 Per Depositary Share
Underwriting Agreement
New York, New York
January 18, 2002
Salomon Smith Barney Inc.
Credit Suisse First Boston Corporation
A.G. Edwards & Sons, Inc.
Morgan Stanley & Co. Incorporated
CIBC World Markets Corp.
Deutsche Banc Alex. Brown Inc.
First Union Securities, Inc.
Tucker Anthony Incorporated
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
PS Business Parks, Inc., a real estate investment trust ("REIT") and a
California corporation (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, an aggregate of 2,000,000
shares (the "Shares") of its Depositary Shares (the "Depositary Shares") each
representing 1/1,000th of a share of 8 3/4% Cumulative Preferred Stock, Series
F, stated value $25.00 per share (the "Preferred Stock").
The shares of Preferred Stock represented by the Shares (the
"Preferred Shares") will, when issued, be deposited by the Company against
delivery of Depositary Receipts (the "Depositary Receipts") to be issued by
American Stock Transfer & Trust Company, as Depositary (the "Depositary"), under
a Deposit Agreement (the "Deposit Agreement") among the Company, the Depositary
and the holders from time to time of the Depositary Receipts issued thereunder.
Each Depositary Receipt will represent one or more Depositary Shares.
The Company wishes to confirm as follows its agreement with you and the
other several Underwriters on whose behalf you are acting, in connection with
the several purchases of the Shares by the Underwriters.
The terms which follow, when used in this Agreement, shall have the
meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"amend," "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of any
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Effective Date" shall mean each date that the Registration Statement
and any post-effective amendment or amendments thereto became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus or
preliminary prospectus supplement relating to the Shares and the Preferred
Shares, in each case filed pursuant to Rule 424(b).
"Prospectus" shall mean the prospectus and any prospectus supplement
relating to the Shares that is first filed pursuant to Rule 424(b) after the
Execution Time.
"Registration Statement" shall mean the Registration Statement referred to
in Section 4(a), including exhibits and financial statements, as amended at the
Execution Time and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date, shall also mean such registration statement
as so amended.
"Rule 424" refers to such rule under the Act.
1. Agreements to Sell and Purchase.
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On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriters and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $24.2125 per share (the "purchase price per share"), the number of
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Shares increased as set forth in Section 9 hereof).
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2. Terms of Public Offering.
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The Company has been advised by you that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after this
Agreement has been entered into and the Registration Statement (as defined
herein), and, if necessary, any post-effective amendment to the Registration
Statement, has become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
3. Delivery of the Shares and Payment Therefor.
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Delivery to the Underwriters of and payment for the Shares shall be made at
the office of Salomon Smith Barney Inc., 388 Greenwich Street, New York, NY
10013, at 10:00 A.M., New York City time, on January 28, 2002 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between you and the Company.
Certificates for the Shares shall be registered in such names and in such
denominations as you shall request prior to 1:00 P.M., New York City time, on
the second business day preceding the Closing Date. Such certificates shall be
made available to you in New York City for inspection and packaging not later
than 9:30 A.M., New York City time, on the business day immediately preceding
the Closing Date. The certificates evidencing the Shares to be purchased
hereunder shall be delivered to you on the Closing Date against payment of the
purchase price therefor by wire transfer of immediately available funds to the
order of the Company.
4. Representations, Warranties and Agreements of the Primary Entities.
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The Company and PS Business Parks, L.P., a limited partnership under
the laws of the state of California (the "Operating Partnership," and together
with the Company, the "Primary Entities"), jointly and severally, represent and
warrant to and agree with the Underwriters that:
(a) The Company has filed with the Commission a registration
statement, file number 333-78627, on Form S-3, including the related
prospectus included in the Registration Statement, for the registration
under the Act, of the offering and sale of, inter alia, the Shares. The
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Company may have filed one or more amendments thereto, including each
related prospectus, and one or more prospectus supplements thereto, each of
which has previously been furnished to the Representatives. The Company
has filed with, or transmitted for filing to, or shall promptly hereafter
file with or transmit for filing to, the Commission a prospectus supplement
(the "Prospectus Supplement") specifically relating to the Shares pursuant
to Rule 424 under the Act. The Company has included or will include in
such Registration Statement, as amended at the Execution Time, and in the
Prospectus Supplement all information required by the Act and the rules
thereunder to be included therein with respect to the Shares and the
offering thereof. As filed, such Registration Statement, as so amended,
and form of final prospectus contained in the Registration Statement and
Prospectus Supplement, or such final prospectus and Prospectus Supplement,
contains or will contain all required information with respect to the
Shares and the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to the Underwriters prior to the
date hereof or, to the extent not completed at
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the Execution Time, shall contain only such specific additional information
and other changes as the Company has advised the Representatives, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and, when the Prospectus Supplement is first filed in accordance with Rule
424(b) and on the Closing Date, the Prospectus will, comply in all material
respects with the requirements of the Act and the rules thereunder; on the
Effective Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the date of any filing pursuant to Rule
424(b) and on the Closing Date, the Prospectus will not include any 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
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Prospectus
in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Prospectus.
The Registration Statement has become effective under the Act, and no stop
order suspending the effectiveness of the Registration Statement is in
effect and no proceedings for such purpose are pending before or, to the
knowledge of the Primary Entities, threatened by, the Commission.
(c) The documents incorporated or deemed to be incorporated by
reference into the Registration Statement and the Prospectus pursuant to
Item 12 of Form S-3 under the Act (the "Incorporated Documents"), at the
time they were or hereafter are filed with the Commission, complied or will
comply in all material respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder, and, when read
together with the other information in the Prospectus, at the date of the
Prospectus, as of the Closing Date, did not and will not include an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(d) Ernst & Young LLP, an accounting firm that audited certain
financial statements and supporting schedules included in, or incorporated
by reference into, the Registration Statement and the Prospectus, are, and
during the periods covered by such reports were, independent public
accountants as required by the Act. PricewaterhouseCoopers LLP, an
accounting firm that also audited certain financial statements and
supporting schedules included in, or incorporated by reference into, the
Registration Statement and the Prospectus, are, and during the periods
covered by such reports were, independent public accountants as required by
the Act.
(e) The financial statements (including the notes and schedules
thereto) included in, or incorporated by reference into, the Registration
Statement and the Prospectus present fairly the financial position of the
respective entity or entities or group presented therein at the respective
dates indicated and the results of their operations for the respective
periods specified; except as otherwise stated in the Registration Statement
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and Prospectus, said financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis; the supporting schedules included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the
information included or incorporated therein and have been prepared on a
basis consistent, except as may be noted therein, with that of the
financial statements included in, or incorporated by reference into, the
Registration Statement and the Prospectus and the books and records of the
respective entities presented therein. The summary and selected financial
data included in, or incorporated by reference into, the Prospectus present
fairly the information shown therein as at the respective dates and for the
respective periods specified, and the summary and selected financial data
have been presented on a basis consistent with the financial statements so
set forth in the Prospectus and other financial information. Pro forma
financial information included in or incorporated by reference into the
Registration Statement and the Prospectus has been prepared in accordance
with the applicable requirements of the Act and guidelines of the American
Institute of Certified Public Accountants (the "AICPA") with respect to pro
forma financial information and includes all adjustments necessary to
present fairly the pro forma financial position of the Company at the
respective dates indicated and the results of operations for the respective
periods specified. All financial statements that are required under the
Act or the Exchange Act to be included in, or incorporated by reference
into, the Registration Statement and the Prospectus are included in, or
incorporated by reference into, the Registration Statement and the
Prospectus.
(f) No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Primary Entities,
threatened by the Commission or by the state securities authority of any
jurisdiction. No order preventing or suspending the use of the Prospectus
has been issued and no proceeding for that purpose has been instituted or,
to the knowledge of the Primary Entities, threatened by the Commission or
by the state securities authority of any jurisdiction.
(g) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no adverse change in the condition (financial
or otherwise), or in the earnings, assets, business affairs or business
prospects of the Primary Entities or any subsidiary of the Company (the
Primary Entities, such subsidiaries or any entity through which the Primary
Entities own a joint venture interest in any property being sometimes
hereinafter collectively referred to as the "Transaction Entities" and
individually as a "Transaction Entity"), or any property in which any
Transaction Entity directly or indirectly owns an interest (a "Facility"),
whether or not arising in the ordinary course of business, which would be
material to the Transaction Entities, considered as one enterprise (any
such adverse change being hereinafter referred to as a "Material Adverse
Change"); (B) no material casualty loss or condemnation or other adverse
event with respect to any of the Facilities has occurred; (C) there have
been no material transactions or acquisitions entered into by the
Transaction Entities, other than those in the ordinary course of business;
(D) none of the Transaction Entities has incurred any material obligation
or liability, direct, contingent or otherwise; (E) there has been no
material change in the short-term debt or long-term debt of the Transaction
Entities; (F) except for regular
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quarterly distributions in amounts per share described in the Prospectus,
there has been no dividend or distribution of any kind declared, paid or
made by the Company, on any class of its capital shares; and (G) with the
exception of (I) the Company's issuance of 30,000 restricted shares of
common stock of the Company, par value $.01 per share ("Common Stock"), and
(II) the Company's grant of options to purchase, in the aggregate, 322,500
shares of Common Stock, in each case since December 31, 2000, there has
been no change in the capital shares of the Company or partnership
interests in the Operating Partnership (the "Units").
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under and by virtue of the laws of the State
of California, with power and authority to own, lease and operate its
properties and to conduct the business in which it is engaged or proposes
to engage, as described in the Registration Statement and the Prospectus,
and to enter into and perform its obligations under this Agreement and the
other Company Documents (as hereinafter defined) to which it is a party;
and the Company is duly qualified or registered to transact business and is
in good standing in each jurisdiction in which such qualification or
registration is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
or register would not result in a Material Adverse Change. Other than the
Operating Partnership, none of the subsidiaries of the Company is a
"significant subsidiary" as such term is defined in Rule 405 under the Act.
The Company owns no direct or indirect equity interest in any entity other
than the Transaction Entities and in PSCC, Inc.
(i) The Operating Partnership has been duly organized and is validly
existing as a limited partnership in good standing under and by virtue of
the laws of the State of California, with partnership power and authority
to own, lease and operate its properties, to conduct the business in which
it is engaged and proposes to engage, in each case as described in the
Registration Statement and the Prospectus, and to enter into and perform
its obligations under this Agreement and the other Company Documents to
which it is a party. The Operating Partnership is duly qualified or
registered as a foreign partnership and is in good standing in each
jurisdiction in which such qualification or registration is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or register would not
result in a Material Adverse Change. The Company is the sole general
partner of the Operating Partnership. The Agreement of Limited Partnership
of the Operating Partnership (the "Operating Partnership Agreement") is in
full force and effect in the form in which it was incorporated by reference
as an exhibit in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, and the aggregate percentage interests of the
general partner and the limited partners in the Operating Partnership are
as set forth therein, and as amended by the amendments incorporated by
reference as Exhibits to the Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2001 and the Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2001.
(j) Each of the Transaction Entities has been duly organized and is
validly existing as a corporation, limited partnership or other legal
entity, as the case may be, in good standing under and by virtue of the
laws of its state of organization with the
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requisite power and authority to own, lease and operate its properties, to
conduct the business in which it is engaged or proposes to engage, and to
enter into and perform its obligations under the Company Documents to which
it is a party, if any. Each of the Transaction Entities is duly qualified
or registered as a foreign corporation, limited partnership or other legal
entity, as the case may be, to transact business and is in good standing in
each jurisdiction in which such qualification or registration is required,
whether by reason of the ownership or leasing of a property or the conduct
of business, except where the failure to so qualify or register would not
result in a Material Adverse Change. All of the issued and outstanding
capital stock, units of limited partnership or other equity interest, as
the case may be, of each of the Transaction Entities is duly authorized,
validly issued, fully paid and, in the case of capital stock,
nonassessable, and has been offered and sold in compliance with all
applicable laws (including, without limitation, federal and state
securities laws) and, except as disclosed in the Prospectus, the capital
stock, units of limited partnership or other equity interest, as the case
may be, are owned by the Company, directly or indirectly, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim,
restriction or equities. No shares of capital stock, units of limited
partnership or other equity interest, as the case may be, of any of the
Transaction Entities are reserved for any purpose, and there are no
outstanding securities convertible into or exchangeable for any capital
stock, units of limited partnership or other equity interest, as the case
may be, of any of the Transaction Entities and no outstanding options,
rights (preemptive or otherwise) or warrants to purchase or to subscribe
for shares of such capital stock, units of limited partnership or other
equity interest, as the case may be, or any other securities of such
Transaction Entities, except as disclosed in the Prospectus.
(k) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued capital stock of the Company has been
duly authorized and is validly issued, fully paid and nonassessable and has
been offered and sold in compliance with all applicable laws (including,
without limitation, federal and state securities laws) and conforms to the
description thereof contained in the Prospectus. Except for Common Stock
issuable upon the exercise of options granted under the Company's 1997
Stock Option and Incentive Plan (the "Option Plan"), upon exchange of
interests in the Operating Partnership or as described in the Prospectus,
no capital stock of the Company is reserved for any purpose, and there are
(A) no outstanding securities convertible into or exchangeable for any
capital stock of the Company, (B) no options, rights or warrants to
purchase or to subscribe for such capital stock or any other securities of
the Company or (C) no outstanding preemptive rights, rights of first
refusal or co-sale, registration or similar rights with respect to capital
stock of the Company, which by their terms are applicable to the offering
or sale of the Shares hereunder, which have not been waived pursuant to
binding agreements in connection with the offering and sale of the Shares
hereunder.
(l) The Shares and the Preferred Shares have been duly authorized and,
when issued and delivered by the Company pursuant to this Agreement and, in
the case of the Shares, the Deposit Agreement, against payment of the
consideration therefor, will be validly issued, fully paid and
nonassessable. Upon payment of the purchase price and delivery of the
Shares in accordance herewith, the Underwriter will receive the Shares,
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free and clear of all security interests and liens. The terms of such
Shares conform in substance to all statements and descriptions related
thereto contained in the Prospectus. The form of share certificates to be
used to evidence such applicable Shares will be in due and proper form and
will comply with all applicable legal and American Stock Exchange
requirements. The issuance of such Shares is not subject to any preemptive
or other similar rights.
(m) All the issued and outstanding Units have been duly authorized and
are validly issued and fully paid and have been offered and sold or
exchanged in compliance with all applicable laws (including, without
limitation, federal and state securities laws). Except as described in the
Prospectus, there are no outstanding securities convertible or exchangeable
for any Units and no outstanding options, rights (preemptive or otherwise)
or warrants to purchase or to subscribe for Units.
(n) The shares of Common Stock and preferred stock issuable upon
exchange of any of the outstanding Units are duly and validly authorized by
all necessary action and such shares, when issued upon such exchange, will
be duly and validly issued, fully paid and nonassessable, and the issuance
of such shares upon such exchange will not be subject to preemptive or
other similar rights; the shares of Common Stock and preferred stock so
issuable conform in all material respects to all statements relating
thereto contained in the Prospectus.
(o) None of the Transaction Entities is, and at the Closing Date none
of the Transaction Entities will be, in violation of its articles of
incorporation, by-laws, certificate of limited partnership, agreement of
limited partnership or other governing documents, as the case may be, and
none of the Transaction Entities is, and at the Closing Date none of the
Transaction Entities will be, in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument or of any applicable law, rule, order, administrative regulation
or administrative or court decree, to which such entity is a party or by
which such entity may be bound, or to which any of its property or assets
or any Facility may be bound or subject, except for such violations and
defaults that would not, individually or in the aggregate, result in a
Material Adverse Change.
(p) (i) Each of this Agreement and the Deposit Agreement has been
duly and validly authorized, executed and delivered by the Primary Entities
which are parties thereto and is a valid and binding agreement of each of
the Primary Entities which are parties thereto, enforceable against such
Primary Entities in accordance with its terms, except as such
enforceability may be subject to (A) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or similar
laws affecting creditors' rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); (ii) at the Closing Date, each of this
Agreement and the Deposit Agreement will have been duly and validly
authorized, executed and delivered by the Primary Entities which are
parties thereto, and will be a valid and binding agreement of the Primary
Entities which are parties thereto, enforceable against such Primary
Entities in accordance with its terms, except as rights to indemnification
under this Agreement may be limited by applicable law and except as
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such enforceability may be subject to (A) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or similar
laws affecting creditors' rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); (iii) each agreement filed pursuant to
Item 601(b)(10) of Regulation S-K as an exhibit to the Registration
Statement and the 10-K, or any report filed subsequently by the Company
which is incorporated by reference into the Registration Statement (each a
"Material Agreement") has been duly and validly authorized, executed and
delivered by the Transaction Entities which are parties thereto and is a
valid and binding agreement, enforceable against the Transaction Entities
which are parties thereto in accordance with its terms, except as such
enforceability may be subject to (A) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or similar
laws affecting creditors' rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). This Agreement, the Deposit Agreement, the
Operating Partnership Agreement and the Material Agreements are sometimes
herein collectively called the "Company Documents."
(q) The execution and delivery of this Agreement and the Deposit
Agreement, the issuance of the Preferred Shares, the issuance and sale of
the Shares, the performance of the obligations set forth herein or therein
and the consummation of the transactions contemplated hereby and thereby or
in the Prospectus by the Transaction Entities will not conflict with or
constitute a material breach or violation by such parties of, or default
under or result in the creation or imposition of any lien, charge or
encumbrance upon any Facility, or any other property or asset of a
Transaction Entity under or pursuant to, (i) any of the other Company
Documents or (ii) any contract, indenture, mortgage, loan agreement, note,
lease, joint venture or partnership agreement or other instrument or
agreement to which any Transaction Entity is a party or by which they, any
of them, any of their respective properties or other assets or any Facility
may be bound or subject, nor will such action conflict with or constitute a
breach or violation by the Transaction Entities of, or default under, (X)
the articles of incorporation, by-laws, certificate of limited partnership,
partnership agreement or other governing documents, as the case may be, of
any Transaction Entity or (Y) any applicable law, rule, order,
administrative regulation or administrative or court decree.
(r) (i) No labor dispute with employees of either of the Primary
Entities exists or is imminent, and (ii) no Primary Entity is aware of any
existing or imminent labor disturbance by the employees of any of the
Transaction Entities' principal suppliers, manufacturers or contractors,
which, in the case of either (i) or (ii), might be expected to result in
any Material Adverse Change. No collective bargaining agreement exists
with the employees of any of the Primary Entities, and to the best
knowledge of either of the Primary Entities, no such agreement is imminent.
(s) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Primary Entities, after due inquiry, threatened against
or affecting any Transaction Entity, Facility or, to the knowledge of the
Company, any officer or director of the Company, which is required to be
disclosed in the Registration Statement or the
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Prospectus (other than as disclosed therein), or that, if determined
adversely to any Transaction Entity, Facility or such officer or director,
will or could reasonably be expected to result in a Material Adverse Change
or to prevent consummation of the transaction contemplated hereby. There
are no pending legal or governmental proceedings to which any Transaction
Entity is a party or of which they or any of their respective properties or
assets or any Facility is the subject, including ordinary routine
litigation incidental to the business, that, considered in the aggregate,
could reasonably be expected to result in a Material Adverse Change. There
are no contracts or documents of any Transaction Entity which are required
to be filed as exhibits to the Registration Statement by the Act or which
were required to be filed as exhibits to any of the Incorporated Documents
by the Exchange Act, which have not been so filed, or which are required to
be incorporated by reference into the Prospectus by the Act or the Exchange
Act which have not been so incorporated.
(t) At all times since its taxable year ended December 31, 1990, the
Company has been, and upon the sale of the Shares the Company will continue
to be, organized and operated in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue
Code of 1986, as amended (the "Code"), and its proposed method of operation
will enable it to continue to meet the requirements for taxation as a real
estate investment trust under the Code.
(u) Each of the Transaction Entities has filed all federal, state,
local and foreign income tax returns which have been required to be filed
and has 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 pay would not result in a Material Adverse Change.
(v) At all times since its formation, the Operating Partnership has
been, and upon the sale of the Shares will continue to be, classified as a
partnership for Federal income tax purposes.
(w) None of the Transaction Entities is, and at the Closing Date none
of the Transaction Entities will be, required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act").
(x) None of the Transaction Entities is, and at the Closing Date none
of the Transaction Entities will be, required to own or possess or to
obtain the consent of any holder of any trademarks, service marks, trade
names or copyrights not now lawfully owned or possessed in order to conduct
the business proposed to be operated by the Transaction Entities.
(y) No authorization, approval, consent or order of any court or
governmental authority or agency or other entity or person is necessary in
connection with the offering, the execution and delivery of this Agreement
or the Deposit Agreement, the issuance of the Preferred Shares or the
issuance or sale of the Shares hereunder, except such as may
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be required under the Act or state securities, real estate syndication or
blue sky laws, or the listing requirements of the American Stock Exchange
or such as have been received.
(z) Each of the Transaction Entities possesses, and at the Closing
Date will possess, such certificates, authorizations or permits issued by
the appropriate local, state, federal or foreign regulatory agencies or
bodies necessary to conduct the business now operated by it, or proposed to
be conducted by it, except for such certificates, authorizations and
permits, the failure to obtain, maintain or possess which by any of the
Transaction Entities would not result, singly or in the aggregate, in a
Material Adverse Change, and none of the Transaction Entities has received
any notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Change.
(aa) Except as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement that have not been waived in
connection with the offering and sale of the Shares pursuant to this
Agreement.
(bb) The outstanding shares of Common Stock, the Company's Depositary
Shares Each Representing 1/1000/th/ of a share of 9 1/4% Cumulative
Preferred Stock, Series A (the "Series A Stock") and the Company's
Depositary Shares Each Representing 1/1000/th/ of a share of 9 1/2%
Cumulative Preferred Stock, Series D (the "Series D Stock") are listed on
the American Stock Exchange and the Shares will be listed on the American
Stock Exchange, subject to official notice of issuance.
(cc) The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock or the
Series A Stock or the Series D Stock under the Exchange Act or delisting
the Common Stock or the Series A Stock or the Series D Stock from the
American Stock Exchange, nor has the Company received any notification that
the Commission or the American Stock Exchange is contemplating terminating
any such registration or listing.
(dd) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date or (ii) completion of the distribution of
the Shares, any offering material in connection with the offering and sale
of the Shares other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the Act.
(ee) Neither the Company nor any of its subsidiaries has at any time
during the last five (5) years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
-11-
(ff) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock or the Series A Stock or the Series D Stock to facilitate the sale or
resale of the Shares in violation of the Act.
(gg) (i) At the Closing Date, the Company, the Operating Partnership
or one of the other Transaction Entities will have good and marketable
title (or, with respect to any Facilities located in Texas, good and
indefeasible fee simple title, or such substantially equivalent quality of
title as provided by the applicable title insurance policy) to each of the
Facilities and all other items of real property (and improvements therein),
in each case free and clear of all liens, encumbrances, claims, security
interests and defects, other than those (A) referred to in the Registration
Statement or described in any document incorporated into the Registration
Statement by reference or (B) which are not material in amount; (ii) all
liens, charges, encumbrances, claims or restrictions on or affecting any of
the Facilities and the assets of any Transaction Entity which are required
to be disclosed in the Prospectus are disclosed therein; (iii) except as
otherwise described in the Prospectus, neither Primary Entity is, and, to
the best knowledge of the Primary Entities, no Transaction Entity is, in
default under (A) any space or ground leases (as lessor or lessee, as the
case may be) relating to the Facilities, or (B) any of the mortgage or
other security documents or other agreements encumbering or otherwise
recorded against the Facilities, and no Primary Entity knows, after due
inquiry, of any event which, but for the passage of time or the giving of
notice, or both, would constitute a default under any of such documents or
agreements; (iv) each of the Facilities complies with all applicable codes,
laws and regulations (including, without limitation, building and zoning
codes, laws and regulations and laws relating to access to the Facilities);
and (v) no Primary Entity has knowledge of, after due inquiry, any pending
or threatened condemnation proceeding, zoning change or other proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on or access to the Facilities, except in each case for such
matters as could not, individually or in the aggregate, result in a
Material Adverse Change.
(hh) Each of the Facilities has property, title, casualty and
liability insurance in favor of either the Company, the Operating
Partnership, or one of the Transaction Entities with respect to the
Facilities by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged, provided, that with respect to
certain Facilities, title insurance is held by Public Storage, Inc., a
California corporation ("PSI"), or an affiliate of PSI under policies the
benefits of which have been assigned to the Company or the Operating
Partnership pursuant to a binding agreement, or PSI has indemnified the
Company, the Operating Partnership or the respective Transaction Entity
against material defects in title to the Facilities pursuant to a binding
agreement; and none of the Company, the Operating Partnership, or the other
Transaction Entities has any reason to believe that they will not be able
to renew their existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue their businesses at a cost that would not result in a
Material Adverse Change, except as described in or contemplated by the
Registration Statement and the Prospectus.
-12-
(ii) Except as disclosed in the Prospectus, and, except for
activities, conditions, circumstances or matters that (1) do not have a
Material Adverse Change, or (2) as to which the Transaction Entities have
been indemnified by PSI or another creditworthy entity: (i) the Company and
the Operating Partnership are in compliance with all Environmental Laws (as
defined below) and all requirements of applicable permits, licenses,
approvals and other authorizations issued pursuant to Environmental Laws;
(ii) none of the Transaction Entities has caused or suffered to occur any
Release (as defined below) of any Hazardous Substance (as defined below)
into the Environment (as defined below) on, in, under or from any Facility
or any developed or undeveloped land held by a Transaction Entity ("Land"),
and no condition exists on, in or under any Facility or Land that could
result in the incurrence of liabilities under, or any violations of, any
Environmental Law or give rise to the imposition of any Lien (as defined
below) under any Environmental Law; (iii) none of the Transaction Entities
has received any written notice of a claim under or pursuant to any
Environmental Law or under common law pertaining to Hazardous Substances
on, in, under or originating from any Facility or Land; (iv) none of the
Transaction Entities has knowledge of, after due inquiry, or has received
any written notice from any Governmental Authority (as defined below) or
other person claiming any violation of any Environmental Law or a
determination to undertake and/or request the investigation, remediation,
clean-up or removal of any Hazardous Substance released into the
Environment or in, under or from any Facility or Land; and (v) no Facility
or Land is included or, to the knowledge of the Primary Entities, after due
inquiry, proposed for inclusion on the National Priorities List issued
pursuant to CERCLA (as defined below) by the United States Environmental
Protection Agency (the "EPA") or on the Comprehensive Environmental
Response, Compensation and Liability Information System database maintained
by the EPA and neither of the Primary Entities has knowledge, after due
inquiry, that any Facility or Land has otherwise been identified in a
published writing by the EPA as a potential CERCLA removal, remedial or
response site or, to the knowledge of the Primary Entities, after due
inquiry, proposed for inclusion on any similar list of potentially
contaminated sites pursuant to any other Environmental Law.
As used herein, "Hazardous Substance" shall include any hazardous
substance, hazardous waste, toxic substance, pollutant, hazardous material, or
similarly designated materials including, without limitation, oil, petroleum-
derived substance or waste, asbestos or asbestos-containing materials, PCBs,
pesticides, explosives, radioactive materials, dioxins, urea formaldehyde
insulation or any constituent of any such substance, pollutant or waste which is
identified, regulated, prohibited or limited under any Environmental Law
(including, without limitation, materials listed in the United States Department
of Transportation Optional Hazardous Material Table, 49 C.F.R. (S) 172.101, or
in the EPA's List of Hazardous Substances and Reportable Quantities, 40 C.F.R.
Part 302) as the same may now or hereafter be amended; "Environment" shall mean
any surface water, drinking water, ground water, land surface, subsurface
strata, river sediment, buildings, structures, and ambient workplace and indoor
and outdoor air; "Environmental Law" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. (S)
9601, et seq.) ("CERCLA"), the Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. (S) 6901, et seq.), the Clean Air Act, as amended (42
U.S.C. (S) 7401, et seq.), the Clean Water Act, as amended (33 U.S.C. (S) 1251,
et seq.), the Toxic Substances Control Act, as amended (29 U.S.C. (S)2601 et
seq.), the
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Occupational Safety and Health Act of 1970, as amended (29 U.S.C. (S) 651, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. (S)
1801, et seq.), and all other federal, state and local laws, ordinances,
regulations, rules and orders relating to the protection of the environment or
of human health from environmental effects; "Governmental Authority" shall mean
any federal, state or local governmental office, agency or authority having the
duty or authority to promulgate, implement or enforce any Environmental Law;
"Lien" shall mean, with respect to any Facility, any mortgage, deed of trust,
pledge, security interest, lien, encumbrance, penalty, charge, assessment,
judgment or other liability in, on or affecting such Facility; and "Release"
shall mean any spilling, leaking, dumping, emanating or disposing of any
Hazardous Substance in the Environment, including without limitation the
abandonment or discard of barrels, containers or tanks (including without
limitation underground storage tanks or other receptacles containing or
previously containing any Hazardous Substance), or any release, emission,
discharge or similar terms, as those terms are defined or used in any
Environmental Law.
(jj) To the best knowledge of the Primary Entities, none of the
environmental consultants which prepared environmental and asbestos
inspection reports with respect to any of the Facilities was employed for
such purpose on a contingent basis or has any substantial interest in any
Transaction Entity, and none of them nor any of their directors, officers
or employees is connected with any Transaction Entity as a promoter,
selling agent, director, officer or employee.
(kk) (i) The Company (A) has been subject to the requirements of
Section 12 of the Exchange Act and has filed all materials required of it
to be filed pursuant to Section 13 and 14 of the Exchange Act since prior
to January 1, 1999; and (B) has filed in a timely manner all reports
required of it to be filed with the Commission since January 1, 2001; (ii)
none of the Transaction Entities has, since January 1, 2001 (A) failed to
pay any dividend or sinking fund installment on preferred stock; or (B)
defaulted (1) on any installment or installments on indebtedness or
borrowed money, or (2) on any rental on one or more long-term leases, which
defaults in the aggregate were material to the financial position of such
entities taken as a whole; (iii) the aggregate market value of the voting
Common Stock held by non-affiliates (as defined in Rule 405 under the Act)
is in excess of $150,000,000.
(ll) Assuming due authorization, execution and delivery of the Deposit
Agreement by the Depositary, each of the Shares will represent an interest
in 1/1,000 of a share of a validly issued, outstanding, fully paid and
nonassessable share of Preferred Stock; assuming due execution and delivery
of the Depositary Receipts by the Depositary pursuant to the Deposit
Agreement, the Depositary Receipts will entitle the holders thereof to the
benefits provided therein and in the Deposit Agreement.
(mm) Any certificate signed by any officer or authorized
representative of any Primary Entity or any Company Document signed by any
officer or authorized representative of any Primary Entity, and delivered
to the Underwriter or to counsel of the Underwriter shall be deemed a
representation and warranty by such entity or person, as the case may be,
to the Underwriter as to the matter covered thereby.
-14-
5. Agreements of the Company. The Company agrees with the Underwriters as
-------------------------
follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by any Underwriter or any
dealer, file any amendment or supplement to the Registration Statement
(including any filing under Rule 462(b) under the Act) or the Prospectus,
unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing
thereof and the Representatives shall not have objected thereto in good
faith.
(b) The Company will notify the Representatives promptly, and will
confirm such advice in writing, (1) of the receipt of any comments from or
any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (2)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (3) of the happening of
any event during the period mentioned in the second sentence of Section
5(e) that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making
of any changes in the Registration Statement or the Prospectus in order to
make the statements therein, in light of the circumstances in which they
are made, not misleading, and (4) of receipt by the Company or any
representative or attorney of the Company of any other communication from
the Commission relating to the Company, the Registration Statement or the
Prospectus. If at any time the Commission shall issue any order suspending
the effectiveness of the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment.
(c) The Company will furnish to the Representatives, without charge,
four copies of the signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and
schedules, and all exhibits thereto (including any document filed under the
Exchange Act and deemed to be incorporated by reference into the
Prospectus) and will furnish to the Representatives, without charge, for
transmittal to each of the other Underwriters, copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) The Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus, including any amendment or
supplement thereto, as the Representatives may reasonably request. The
Company consents to the use of the Prospectus, including any amendment or
supplement thereto, by the several Underwriters and by all dealers to whom
the Shares may be sold, both in connection with the offering or sale of the
Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such
period of time any event shall occur which in the judgment of the Company
or counsel to the
-15-
Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was
made, not misleading, or if it is necessary to supplement or amend the
Prospectus to comply with law, subject to the provisions of Section 5(a)
hereof, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver
to the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request. The Company shall not file any
document under the Exchange Act before the termination of the offering of
the Shares by the Underwriters if such document would be deemed to be
incorporated by reference into the Prospectus which is not approved by the
Representatives after reasonable notice thereof.
(f) The Company will cooperate with the Representatives and counsel to
the Underwriters in connection with the registration or qualification of
the Shares and the Preferred Shares for offer and sale under the securities
or Blue Sky laws of such jurisdictions as the Representatives may
reasonably request; provided, that in no event shall the Company be
--------
obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the date hereof, the
Company will furnish to each of the Representatives and each other
Underwriter who may so request copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and
will furnish to each of the Representatives and each other Underwriter who
may so request a copy of each annual or other report it shall be required
to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the
last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, a consolidated earnings
statement (which need not be audited but shall be in reasonable detail),
with respect to the Primary Entities, for a period of 12 months commencing
after the Effective Date, and satisfying the provisions of Section 11(a) of
the Act (including Rule 158 thereunder) and will file such earnings
statement as an exhibit to the next periodic report required by Section 13
or 15(d) of the Exchange Act covering the period when the earnings
statement is released.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 9 hereof or by notice given by you terminating
this Agreement pursuant to Section 9 or Section 10 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company to comply with the terms or fulfill any
of the conditions of this Agreement, the Company agrees to reimburse the
Representatives for all out-of-pocket expenses (including fees and expenses
of counsel for the Underwriters) reasonably incurred by you in connection
herewith.
-16-
(j) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the Shares to
facilitate the sale or resale of any of the Shares in violation of the Act.
(k) The Company will apply the net proceeds from the offering and sale
of the Shares in the manner set forth in the Prospectus under "Use of
Proceeds."
(l) The Company will use its best efforts to have the Shares listed,
subject to notice of issuance, on the American Stock Exchange.
6. Conditions of Underwriters' Obligations. The several obligations of the
---------------------------------------
Underwriters to purchase the Shares hereunder are subject to the following
conditions:
(a) All of the representations and warranties of the Company contained
in this Agreement shall be true and correct on the Closing Date with the
same force and effect as if made on and as of the Closing Date.
(b) The Registration Statement (including any post-effective amendment
thereto) shall have become effective not later than 5:00 P.M. (and, in the
case of a Registration Statement filed under Rule 462(b) of the Act, not
later than 10:00 p.m.), New York City time, on the date of this Agreement,
or at such later date and time as shall be consented to in writing by the
Representatives, and all filings, if any, required by Rules 424 and 430A
under the Act shall have been timely made; and at the Closing Date no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted
or, to the knowledge of the Company or any Underwriter, contemplated by the
Commission, and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.
(c) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the
Transaction Entities not contemplated by the Prospectus, which in your
opinion, as Representatives of the several Underwriters, would materially,
adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Company or any officer or director
of the Company which makes any statement made in the Prospectus untrue in
any material respect or which, in the opinion of the Company and its
counsel or the Underwriters and their counsel, requires the making of any
addition to or change in the Prospectus in order to state a material fact
required by the Act or any other law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in
your opinion, as Representatives of the several Underwriters, adversely
affect the market for the Shares. On the Closing Date, the Underwriters
shall have received a certificate dated the Closing Date, signed by each of
the President and the
-17-
Chief Financial Officer of the Company confirming the matters set forth in
Sections 6(a), (b) and (c).
(d) The Underwriters shall have received an opinion, dated the Closing
Date and satisfactory in form and substance to counsel for the
Underwriters, from David Goldberg, counsel for the Company, to the effect
that:
(i) Each of the Company and the Operating Partnership has been
duly organized and is validly existing (in the case of the Company, as
a corporation) in good standing under the laws of the jurisdiction in
which it is organized, with full power and authority to own or lease
and occupy its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business, and is in good
standing, in each jurisdiction which requires such qualification,
except where the failure to so qualify would not, individually or in
the aggregate, have a Material Adverse Change;
(ii) All of the Company's ownership interest in the Operating
Partnership is owned free and clear of any perfected security interest
and, to my knowledge, after due inquiry, any other security interests,
claims, liens or encumbrances;
(iii) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to
the description thereof contained in the Prospectus in all material
respects; the statements in the Prospectus Supplement under the
caption "Description of Preferred Stock and Depositary Shares" and in
the Prospectus under the captions "Description of Preferred Stock" and
"Description of the Depositary Shares," insofar as such statements
constitute summaries of the documents referred to therein, have been
reviewed by me and fairly summarize the matters referred to therein in
all material respects; the outstanding shares of Common Stock and
Series A Stock and Series D Stock have been duly and validly
authorized and issued and are fully paid and nonassessable and the
deposit of the Preferred Shares in accordance with the Deposit
Agreement has been duly authorized; the Shares and the Preferred
Shares have been duly and validly authorized, and, when issued and
delivered pursuant to the Agreement and the Deposit Agreement and, in
the case of the Shares, paid for by the Underwriters pursuant to the
Agreement, will be fully paid and nonassessable; the Shares have been
duly authorized for listing, subject to official notice of issuance,
on the American Stock Exchange; the forms of certificates for the
Shares are in valid and sufficient form in compliance with the
American Stock Exchange requirements; and the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive
or other rights to subscribe for the Shares or the Preferred Shares;
(iv) To the best of my knowledge, after due inquiry, there is
no pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or arbitrator involving the
Company or the Operating Partnership of a character required to be
disclosed in the Registration Statement
-18-
which is not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed
as an exhibit, which is not described or filed as required; and, to
the best of my knowledge, after due inquiry, the statements in the
Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2001, under Part I, Item 2 - "Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Distributions" and the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2000, under Part III, Item 13 - "Certain Relationships and Related
Transactions" (other than the financial statements and other financial
and statistical information contained therein, as to which I need not
express any opinion) fairly summarize the matters therein described in
all material respects;
(v) The Registration Statement and the Prospectus and any
amendment or supplement thereto comply as to form in all material
respects with the requirements for the use of Form S-3 and the rules
and regulations thereunder, and the Registration Statement and the
Prospectus and any amendment or supplement thereto (other than the
financial statements and other financial information contained
therein, as to which I need express no opinion) comply as to form in
all material respects with the requirements of the Act and the rules
thereunder and each of the documents incorporated therein by reference
(or, if any amendment with respect to any such document was filed,
when such document was filed), complied as to form in all material
respects with the requirements of the Exchange Act and the rules
thereunder (other than the financial statements and other financial
information contained therein, as to which I need express no opinion);
(vi) The Company has full corporate power and authority to
enter into and perform its obligations under the Agreement and the
Deposit Agreement and to issue, sell and deliver the Shares and to
issue and deliver the Preferred Shares; the Agreement has been, and
the Deposit Agreement will have been as of the Closing Date, duly
authorized, executed and delivered by the Company; the Operating
Partnership has full partnership, power and authority to enter into
and to perform its obligations under the Agreement; and the Agreement
has been duly authorized, executed and delivered by the Operating
Partnership;
(vii) No consent, approval, authorization or order of any court
or governmental agency, authority or body is required for the
execution of the Agreement or the Deposit Agreement by the Primary
Entities which are parties thereto, the performance by such Primary
Entities of their obligations thereunder or the consummation of the
transactions contemplated herein or therein, except such as have been
obtained under the Act and the Exchange Act and such as may be
required under the Blue Sky laws of any jurisdiction in connection
with the purchase and distribution by the Underwriters of the Shares;
-19-
(viii) The Company and the Operating Partnership have all
requisite power and authority, and, to the best of my knowledge, after
due inquiry, all necessary material authorizations, approvals, orders,
licenses, certificates and permits of and from all regulatory or
governmental officials, bodies and tribunals, to own or lease their
respective properties and to conduct their respective businesses as
now being conducted and as described in the Prospectus; and, to the
best of my knowledge, after due inquiry, all such authorizations,
approvals, licenses, certificates and permits are in full force and
effect, except where the failure to be in full force and effect would
not have a Material Adverse Change, and the Company and the Operating
Partnership are complying with all applicable laws, the violation of
which could have a Material Adverse Change;
(ix) The Company is not in violation of its articles of
incorporation or by-laws, and the Operating Partnership is not in
violation of its partnership agreement, and to the best of my
knowledge, after due inquiry, neither the Company nor the Operating
Partnership is in default in the performance of any obligation,
agreement or condition contained in any loan, note or other evidence
of indebtedness or in any indenture, mortgage, deed of trust or any
other material agreement by which it or its properties are bound,
except for such defaults as could not, individually or the aggregate,
have a Material Adverse Change;
(x) Neither the issue and sale of the Shares nor the
consummation of any of the other transactions contemplated by the
Agreement (including without limitation the execution, delivery and
performance of the Deposit Agreement, the issuance and deposit of the
Preferred Shares in accordance with the Deposit Agreement and the
consummation of the transactions contemplated therein) nor the
fulfillment of the terms hereof or thereof will conflict with, result
in a breach or violation of, or constitute a default under any law or
the articles of incorporation or by-laws of the Company or the
partnership agreement of the Operating Partnership or the terms of any
indenture or other agreement or instrument known to me and to which
the Company or the Operating Partnership is a party or is bound or any
judgment, order or decree known to me to be applicable to the Company
or the Operating Partnership of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or the Operating Partnership;
(xi) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement,
except as provided therein;
(xii) Any required filing of the Prospectus, including any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the
best of my knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened;
-20-
(xiii) To the best of my knowledge, after due inquiry, neither
the Company nor the Operating Partnership is in violation of any law,
ordinance, administrative or governmental rule or regulation
applicable to the Company or the Operating Partnership or of any
decree of any court or governmental agency or body having jurisdiction
over the Company or the Operating Partnership, the violation of which
could have a Material Adverse Change;
(xiv) The statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements
or other legal documents, or refer to statements of law or legal
conclusions, are accurate and present fairly the information required
to be shown in all material respects;
(xv) The Company and the Operating Partnership own or have the
right to use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Prospectus as
being owned by them or any of them or necessary for the conduct of
their respective businesses, and, other than routine proceedings which
if adversely determined would not materially affect the business of
the Company and the Operating Partnership taken as a whole as
described in the Prospectus, to the best of my knowledge, there is no
claim to the contrary or any challenge by any other person to the
rights of the Company and the Operating Partnership with respect to
the foregoing;
(xvi) Except as described in the Prospectus, to the best of my
knowledge, after due inquiry, there are no outstanding options,
warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any security convertible into or exchangeable
or exercisable for capital stock of the Company;
(xvii) Except as described in the Prospectus, to the best of my
knowledge, after due inquiry, there is no holder of any security of
the Company or any other person who has the right, contractual or
otherwise, to cause the Company to sell or otherwise issue to them, or
to permit them to underwrite the sale of, the Shares or the Preferred
Shares or the right to have any Common Stock or other securities of
the Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or other
securities of the Company;
(xviii) Assuming due authorization, execution and delivery by
the Depositary, the Deposit Agreement constitutes the valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity
and (regardless of whether a proceeding is considered at law or in
equity);
-21-
(xix) When the Shares evidenced by the Depositary Receipts are
issued and delivered in accordance with the terms of the Deposit
Agreement against the deposit of duly authorized and issued, fully
paid and nonassessable shares of Preferred Stock, the Depositary
Receipts will entitle the holders thereof to the benefits provided
therein and in the Deposit Agreement.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Underwriters, and with officers and
other representatives of the Company and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, on the basis of the
foregoing (relying as to certain factual matters on the information provided to
such counsel by the Company and not on an independent investigation, but in the
absence of information to the contrary), no facts have come to such counsel's
attention which leads such counsel to believe that the Registration Statement,
as of its effective date, 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 its
date and as of the date hereof, contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that such counsel need not express any comment with respect to the
- --------
financial statements and other financial data included in the Registration
Statement or Prospectus.
(e) The Underwriters shall have received an opinion, dated the Closing
Date and satisfactory in form and substance to counsel for the
Underwriters, from Hogan & Hartson L.L.P., counsel for the Company, to the
effect that:
(i) The Company was organized and has operated in conformity
with the requirements for qualification and taxation as a real estate
investment trust ("REIT") under the Code for the taxable year ended
December 31, 2001, and the Company's current organization and method
of operation (as described in the Prospectus, the Prospectus
Supplement and the management representation letter) will enable it to
continue to meet the requirements for qualification and taxation as a
REIT; and
(ii) The statements in the Prospectus under the heading "Certain
Federal Income Tax Considerations" and in the Company's Form 10-Q for
the quarterly period ended September 30, 2001 under the heading "Item
2A - Risk Factors - We would incur adverse tax consequences if we fail
to qualify as a REIT" read in conjunction with the statements in the
Prospectus Supplement under the heading "Federal Income Tax
Consequences," to the extent they describe matters of federal income
tax law or federal income tax legal conclusions, are correct in all
material respects.
(f) The Underwriters shall have received an opinion, dated the Closing
Date from Hale and Dorr LLP, counsel to the Underwriters, with respect to
the Registration
-22-
Statement, the Prospectus and this Agreement, which opinion shall be
satisfactory in all respects to the Representatives, and such counsel shall
have been provided by the Company with such documents and information as
they may reasonably request to enable them to pass on such matters.
(g) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and
the Closing Date from Ernst & Young LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(h) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been taken or, to the knowledge of the Company, shall be contemplated
by the Commission at or prior to the Closing Date; (ii) there shall not
have been any material change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); (iii) there shall not have been, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Primary Entities
taken as a whole; (iv) the Primary Entities shall not have any liabilities
or obligations, direct or contingent (whether or not in the ordinary course
of business), that are material to the Primary Entities, taken as a whole,
other than those reflected in the Registration Statement or the Prospectus
(or any amendment or supplement thereto); and (v) all the representations
and warranties of the Primary Entities contained in this Agreement shall be
true and correct in all material respects on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date, and
you shall have received a certificate, dated the Closing Date and signed by
the chief executive officer and the chief financial officer of the Company
(or such other officers as are acceptable to you), to the effect set forth
in this Section 6(h) and in Section 6(i) hereof.
(i) The Company shall not in any material respect have failed at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained or contained in the Deposit Agreement and
required to be performed or complied with by it hereunder or thereunder at
or prior to the Closing Date.
(j) Prior to the Closing Date the Shares shall have been listed,
subject to notice of issuance, on the American Stock Exchange.
(k) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably
requested.
(l) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized
-23-
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act) or any notice given of any intended or potential decrease in
any such rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company to
each Underwriter as to the statements made therein.
7. Indemnification and Contribution.
--------------------------------
(a) The Primary Entities, jointly and severally, agree to indemnify
and hold harmless you and each other Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus
or in the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or arising out of or based upon 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, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such Underwriter
furnished in writing to the Company by or on behalf of any Underwriter
through you expressly for use in connection therewith; provided, however,
that with respect to any untrue statement or omission of material fact made
in any Preliminary Prospectus, the indemnity agreement contained in this
Section 7(a) shall not inure to the benefit of any Underwriter from whom
the person asserting any such loss, claim, damage or liability purchased
the securities concerned, to the extent that any such loss, claim, damage
or liability of such Underwriter occurs under the circumstance where it
shall have been determined by a court of competent jurisdiction by final
and nonappealable judgment that (w) the Company had previously furnished
copies of the Prospectus to the Representatives, (x) delivery of the
Prospectus was required by the Act to be made to such person, (y) the
untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus and (z) there was
not sent or given to such person, at or prior to the written confirmation
of the sale of such securities to such person, a copy of the Prospectus.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Primary Entities, such Underwriter or
such controlling person shall promptly notify the Company (but failure to
so notify the Company shall not relieve the Company
-24-
from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement) and the Company shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses; provided,
however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be one or more legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnifying party shall not have the right to direct the defense of
such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or
parties. Such Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the Primary Entities jointly and severally have agreed in
writing to pay such fees and expenses, (ii) the Company has failed promptly
to assume the defense and employ counsel, or (iii) the named parties to any
such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and a Primary Entity and
such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and a Primary Entity
by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same
counsel has been proposed) due to actual or potential differing interests
between them (in which case the Company shall not have the right to assume
the defense of such action, suit or proceeding on behalf of such
Underwriter or such controlling person). It is understood, however, that
the Company shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among
themselves, which firm shall be designated in writing by Salomon Smith
Barney Inc., and that all such fees and expenses shall be reimbursed as
they are incurred. The Primary Entities shall not be liable for any
settlement of any such action, suit or proceeding effected without the
Company's written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Primary Entities jointly and severally agree to indemnify
and hold harmless any Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each
Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter
through you
-25-
expressly for use in the Registration Statement, the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Company, any of its
directors, any such officer, or any such controlling person based on the
Registration Statement, the Prospectus or any Preliminary Prospectus, or
any amendment or supplement thereto, and in respect of which indemnity may
be sought against any Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's
expense), and the Company, its directors, any such officer, and any such
controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which the Underwriters may otherwise
have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraph (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Primary Entities on the one hand and the
Underwriters on the other hand from the offering of the Shares, or (ii) if
the allocation provided by clause (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 (i) above but also the relative fault of the
Primary Entities on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Primary
Entities on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
The relative fault of the Primary Entities 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 Primary Entities on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
(e) The Primary Entities, on the one hand and the Underwriters, on the
other hand, agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by a 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 paragraph (d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed
to include, subject to the
-26-
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of
the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which 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 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute pursuant to this Section 7 are
several in proportion to the respective numbers of Shares set forth
opposite their names in Schedule I hereto and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or 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 action, suit or proceeding and does not include a
statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any indemnified party.
(g) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7(b) effected without its
written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding 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, an indemnifying
party shall not be liable for any settlement of the nature contemplated by
Section 7(b) effected without its consent if such indemnifying party (i)
reimburses such indemnified party in accordance with such request to the
extent such indemnifying party considers such request to be reasonable and
(ii) provides written notice to the indemnified party substantiating the
unpaid balance as unreasonable, in each case prior to the date of such
settlement.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person
controlling
-27-
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company,
its directors or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. Expenses.
--------
The Company agrees to pay the following costs and expenses and all other
costs and expenses incident to the performance by it of its obligations
hereunder: (i) the preparation, printing or reproduction, and filing with the
Commission of the Registration Statement (including financial statements and
exhibits thereto) and the Prospectus, including each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, the Prospectus and the documents
incorporated therein by reference, including all amendments or supplements to
any of them, as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares and the
Preferred Shares, including any stamp taxes in connection with the original
issuance and sale of the Shares and the Preferred Shares; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda, the Deposit Agreement and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Shares and the Preferred Shares; (v) the fees and expenses of the Depositary,
including the fees and disbursements of counsel for the Depositary, if any; (vi)
the registration of the Shares under the Exchange Act and the listing of the
Shares on the American Stock Exchange; (vii) the registration or qualification
of the Shares and the Preferred Shares for offer and sale under the securities
or Blue Sky laws of the several states as provided in Section 5(f) hereof
(including the reasonable fees, expenses and disbursements of counsel for the
Underwriters relating to the preparation, printing or reproduction, and delivery
of the preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (viii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (ix) the transportation and
other expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Shares; and (x) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
9. Effective Date of Agreement.
---------------------------
This Agreement shall become effective: (i) upon the execution and delivery
hereof by the parties hereto; or (ii) if, at the time this Agreement is executed
and delivered, it is necessary for a post-effective amendment to the
Registration Statement to be declared or become effective before the offering of
the Shares may commence, when notification of the effectiveness of such post-
effective amendment has been released by the Commission. Until such time as this
Agreement shall have become effective, it may be terminated by the Company, by
notifying you, or by you, as Representatives of the several Underwriters, by
notifying the Company.
-28-
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than one-
tenth of the aggregate number of Shares which the Underwriters are obligated to
purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Shares
set forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify in accordance with Section 11 of the Master
Agreement Among Underwriters of Salomon Smith Barney Inc., to purchase the
Shares which such defaulting Underwriter or Underwriters are obligated, but fail
or refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, 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 the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Termination.
-----------
This Agreement shall be subject to termination in your absolute discretion,
without liability on the part of any Underwriter to the Company by notice to the
Company, if prior to the Closing Date, (i) there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the business, properties, net worth or results of
operations of the Company or the Operating Partnership, whether or not arising
in the ordinary course of business, (ii) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, (iii) a general
moratorium on commercial banking activities in New York or California shall have
been declared by either federal or state authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or
-29-
continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the resale
of the Shares by the Underwriters. Notice of such termination may be given to
the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
11. Information Furnished by the Underwriters.
-----------------------------------------
The statements set forth in the last paragraph on the cover page and in the
first, second, third, seventh, eighth, ninth and twelfth paragraphs under the
caption "Underwriting" in the Prospectus Supplement constitute the only
information furnished by or on behalf of the Underwriters through you as such
information is referred to in Sections 3(b) and 7 hereof.
12. Miscellaneous.
-------------
Except as otherwise provided in Sections 3, 9 and 10 hereof, notice given
pursuant to any provision of this Agreement shall be in writing and shall be
delivered (i) if to any of the Primary Entities, at the office of the Company,
PS Business Parks, Inc., 701 Western Avenue, 2nd Floor, Glendale, California
91201-2397, Attention: Legal Department, or (ii) if to you, as Representatives
of the several Underwriters, care of Salomon Smith Barney Inc., 388 Greenwich
Street, New York, New York 10013, Attention: General Counsel.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Primary Entities, their respective directors and officers, and
the other controlling persons referred to in Section 7 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Shares in his status as such purchaser.
13. Applicable Law; Counterparts.
----------------------------
This agreement shall be governed by and construed in accordance with the
laws of the State of New York, including without limitation Section 5-1401 of
the New York General Obligations Law.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
-30-
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Primary
Entities and the several Underwriters.
Very truly yours,
PS Business Parks, Inc.
By: /s/ David Goldberg
------------------------------
Name: David Goldberg
Title: Vice President
PS Business Parks L.P.
By: PS Business Parks, Inc.,
General Partner
By: /s/ David Goldberg
------------------------------
Name: David Goldberg
Title: Vice President
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
Salomon Smith Barney Inc.
By: /s/ Dan Guglielmone
-------------------------------
Name: Dan Guglielmone
Title: Director
For itself and the other several Underwriters
named in Schedule I to the foregoing Agreement.
[Signature page to the Underwriting Agreement]
SCHEDULE I
----------
PS BUSINESS PARKS, INC.
2,000,000 Depositary Shares
Number of
Underwriters Shares
- ------------ ------
Salomon Smith Barney Inc. ................................. 390,000
Credit Suisse First Boston Corporation..................... 380,000
A.G. Edwards & Sons, Inc. ................................. 380,000
Morgan Stanley & Co. Incorporated.......................... 380,000
CIBC World Markets Corp. .................................. 65,000
Deutsche Banc Alex. Brown Inc. ............................ 65,000
First Union Securities, Inc. .............................. 65,000
Tucker Anthony Incorporated................................ 65,000
RBC Dain Rauscher Inc. .................................... 35,000
Janney Montgomery Scott LLC................................ 35,000
McDonald Investments Inc. ................................. 35,000
Prudential Securities Incorporated......................... 35,000
U.S. Bancorp Piper Jaffray Inc. ........................... 35,000
Wells Fargo Securities, Inc. .............................. 35,000
_________
Total................................................. 2,000,000
=========