EXHIBIT 1.1
904,710 Shares
PUBLIC STORAGE, INC.
Common Stock
UNDERWRITING AGREEMENT
February 12, 1998
SALOMON SMITH BARNEY
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Public Storage, Inc., a real estate investment trust ("REIT") and a
California corporation (the "Company"), proposes to issue and sell an aggregate
of 904,710 shares (the "Shares") of its common stock, par value $.10 per share,
to Smith Barney Inc. (the "Underwriter"). The shares of common stock, par value
$.10 per share, of the Company to be outstanding after giving effect to the sale
contemplated hereby are herein referred to as the "Common Stock."
The Company wishes to confirm as follows its agreement with the
Underwriter, in connection with the purchase of the Shares by the Underwriter.
1. Agreements to Sell and Purchase. On the basis of the
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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 Underwriter and the Underwriter agrees to purchase from the Company,
at a purchase price of $30.875 per share (the "purchase price per share"), the
Shares.
2. Terms of Public Offering.
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The Company has been advised by the Underwriter that the Underwriter
proposes to make a public offering 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 the judgment of the Underwriter is advisable and
initially to offer the Shares upon the terms set forth in the Prospectus (as
defined herein).
The Company understands that the Underwriter intends to deposit the
Shares with the trustee of The Equity Focus Trusts-REIT Portfolio Series, 1998-A
(the "Trust"), a registered unit investment trust under the Investment Company
Act of 1940, as amended, in exchange for units in the Trust. The Underwriter is
acting as sponsor and depositor of the Trust and is therefore considered an
affiliate of the Trust.
3. Delivery of the Shares and Payment Therefor.
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Delivery to the Underwriter of and payment for the Shares shall be
made at the office of Smith Barney Inc., 388 Greenwich Street, New York, NY
10013, at 10:00 A.M., New York City time, on February 18, 1998 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between the Underwriter and the Company.
Certificates for the Shares to be purchased hereunder shall be
registered in such names and in such denominations as the Underwriter 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 the
Underwriter in New York City for inspection and packaging not later than 9:30
A.M., New York City time, on the business day next preceding the Closing Date.
The certificates evidencing the Shares to be purchased hereunder shall be
delivered to the Underwriter on the Closing Date against payment of the purchase
price therefor by wire transfer of immediately available funds to the order of
the Company.
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4. Representations and Warranties of the Company. The Company
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represents, warrants and covenants to the Underwriter as set forth below.
Certain terms used in this Section 4 are defined in paragraph (ad) hereof.
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, registration number 333-41123 (the
"Registration Statement"), on Form S-3, including the related prospectus
included in the Registration Statement, for the registration under the
Securities Act of 1933, as amended (the "Act"), of the offering and sale of,
inter alia, the Shares. The Company may have filed one or more amendments
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thereto, including the related prospectus, and one or more prospectus
supplements thereto, each of which has previously been furnished to the
Underwriter. Any registration statement filed pursuant to Rule 462(b) under the
Act is herein referred to as the "Rule 462(b) Registration Statement," and,
after such filing, the term "Registration Statement" shall include the Rule
462(b) Registration Statement. 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 Underwriter shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to the Underwriter prior to the Effective Date or, to the extent not
completed at the Execution Time, shall contain only such specific additional
information and other changes as the Company has advised the Underwriter, 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 and the Prospectus Supplement is first filed in
accordance with Rule 424(b) and on the Closing Date, the Prospectus (and any
supplements thereto) 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
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Date, the Prospectus (together with any supplement thereto) 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
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no representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Company by the Underwriter specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(c) 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, to the knowledge of the
Company, pending before or threatened by the Commission.
(d) Each of the Incorporated Documents complied, as of the date such
Incorporated Document was filed (or, if any amendment with respect to any such
document was filed, when such amendment was filed), in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder.
(e) The only subsidiaries of the Company are the Subsidiaries (as
defined below). Each of the Company, SEI Arlington Acquisition Corporation
("SEI Arlington"), SEI Hypoluxo Acquisition Corporation ("Hypoluxo"), PSTI/SEI -
North Bergen Acquisition Corporation ("PSTI"), SEI-Sandy Acquisition Corporation
("Sandy"), PS Orangeco, Inc. ("Orangeco"), Public Storage Pick-Up & Delivery,
Inc. ("PSPUD"), PSI Institutional Advisors, Inc. ("PSIIA"), American Office Park
Properties, Inc. ("AOPP Inc."), PSAF Development, Inc. ("PSAF Inc.") and SEI -
Firestone Acquisition Corporation ("SEI Firestone" and, together with SEI
Arlington, Hypoluxo, PSTI, Sandy, Orangeco, PSPUD, PSIIA, AOPP Inc. and PSAF
Inc., the "Subsidiaries") and PS Partners, Ltd. ("PSPI"), PS Partners II, Ltd.
("PSPII"), PS Partners III, Ltd. ("PSPIII"), PS Partners IV, Ltd. ("PSPIV"), PS
Partners V, Ltd. ("PSPV"), PS Partners VI, Ltd. ("PSPVI"), PS Partners VII, Ltd.
("PSPVII"), PS Partners VIII, Ltd. ("PSPVIII"), American Office Park Properties,
L.P. ("AOPP LP") and PSAF Development Partners, L.P. ("PSAF LP" and, together
with PSPI, PSPII, PSPIII, PSPIV, PSPV, PSPVI, PSPVII, PSPVIII and AOPP LP, the
"Partnerships") has been duly organized and is validly existing (in the case of
the Company and each of the Subsidiaries, 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
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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
effect on the business, operations, earnings, assets or financial condition of
the Company (a "Material Adverse Effect"). All of the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the Company (in the
case of Orangeco and PSPUD, approximately 95% owned and in the case of AOPP
Inc., approximately 43% owned), directly, or indirectly through another
Subsidiary, free and clear of any lien, adverse claim, security interest,
equity, or other encumbrance. The Company owns as of the date hereof
approximately 69%, 74%, 60%, 55%, 61%, 61%, 58% and 54% of the limited
partnership units of PSPI, PSPII, PSPIII, PSPIV, PSPV, PSPVI, PSPVII and
PSPVIII, respectively. The Company owns as of the date hereof an approximately
64% and a 30% economic interest in AOPP LP and PSAF LP, respectively.
(f) The Company, each of the Subsidiaries and each Partnership have
all requisite power and authority, and 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; 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 Effect on the Company, such Subsidiary or such Partnership; and
the Company, each of the Subsidiaries and each Partnership are complying with
all applicable laws, the violation of which could have a Material Adverse Effect
on the Company, such Subsidiary or such Partnership, as the case may be.
(g) The Company, each Subsidiary and each Partnership have good and
marketable title to their properties, free and clear of all material liens,
charges and encumbrances and equities of record, except as set forth or
reflected in the Prospectus.
(h) The Company, each Subsidiary and each Partnership maintains
adequate insurance for the conduct of their respective business as described in
the Prospectus.
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(i) The Company, either directly or through the Subsidiaries or
Partnerships, owns or licenses or otherwise has the right to use all patents,
trademarks, trade names and trade secrets material to the Company's business as
described in the Prospectus; other than routine proceedings which if adversely
determined would not materially affect the business (as described in the
Prospectus) of the Company, the Subsidiaries and the Partnerships taken as a
whole, no claims have been asserted by any person with respect to the use of any
such patents, trademarks, trade names or trade secrets or challenging or
questioning the validity or effectiveness of any such patents, trademarks, trade
names or trade secrets; to the best knowledge of the Company, the use, in
connection with the business and operations of the Company, the Subsidiaries and
the Partnerships, of such patents, trademarks and trade names does not infringe
on the rights of any person.
(j) The Company's authorized capitalization is as set forth in the
Prospectus (including the Incorporated Documents); the capital stock of the
Company conforms in all material respects to the description thereof contained
in the Prospectus; the outstanding shares of Common Stock, Class B common stock,
par value $.10 per share, of the Company (the "Class B Common Stock"), Series A
Preferred Stock, par value $.01 per share, of the Company (the "Series A
Preferred Stock"), Series B Preferred Stock, par value $.01 per share, of the
Company (the "Series B Preferred Stock"), Adjustable Rate Cumulative Preferred
Stock, Series C, stated value $25.00 per share, of the Company (the "Series C
Preferred Stock"), 9.50% Cumulative Preferred Stock, Series D, stated value
$25.00 per share, of the Company (the "Series D Preferred Stock"), 10%
Cumulative Preferred Stock, Series E, stated value $25.00 per share, of the
Company (the "Series E Preferred Stock"), 8.25% Convertible Preferred Stock,
stated value $25.00 per share, of the Company (the "Convertible Preferred
Stock"), 9.75% Cumulative Preferred Stock, Series F, stated value of $25.00 per
share, of the Company (the "Series F Preferred Stock"), 8-7/8% Cumulative
Preferred Stock, Series G, stated value of $25,000 per share, of the Company
(the "Series G Preferred Stock"), 8.45% Cumulative Preferred Stock, Series H,
stated value of $25,000 per share, of the Company (the "Series H Preferred
Stock"), 8-5/8% Cumulative Preferred Stock, Series I, stated value of $25,000
per share, of the Company (the "Series I Preferred Stock"), 8% Cumulative
Preferred Stock, Series J, stated value $25,000 per share, of the Company (the
"Series J Preferred Stock") and Equity Stock, Series A, of the Company ("Series
A Equity Stock") have each been duly and validly authorized and issued in
compliance with all Federal and state securities laws, and are fully paid and
nonassessable; the Shares been duly and validly authorized and, when issued and
delivered pursuant to this Agreement, will be fully paid and nonassessable;
application has been made to list the
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Shares on the New York Stock Exchange and the Pacific Exchange; the form of
certificate for the Shares will be in valid and sufficient form in compliance
with New York Stock Exchange and Pacific 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.
(k) There is no pending or, to the best knowledge of the Company,
after due inquiry, threatened, action, suit, proceeding or investigation before
any court, governmental agency, authority or body or arbitrator involving the
Company, any of the Subsidiaries or any of the Partnerships or any of their
respective officers or any of their respective properties, assets or rights of a
character required to be disclosed in the Registration Statement or Prospectus
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.
(l) The Company has full corporate power and authority to enter into
and perform its obligations under this Agreement and to issue, sell and deliver
the Shares; this Agreement has been duly authorized, executed and delivered by
the Company and, when so executed, will constitute a valid and binding
obligation 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
hereinafter in effect relating to creditors' rights generally, and (ii) general
principles of equity (regardless of whether a proceeding is considered at law or
in equity).
(m) No consent, approval, authorization or order of any court or
governmental agency, authority or body is required (and has not been received)
for the execution by the Company of this Agreement, the performance by the
Company of its obligations hereunder or the consummation by the Company of the
transactions contemplated herein, except such as are required under the state
securities or the Blue Sky laws of any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriter. Neither the Company
nor any of its affiliates is presently doing any business with the government of
Cuba or with any person or affiliate located in Cuba.
(n) Neither the Company nor any of the Subsidiaries is in violation
of, in conflict with, in breach of or in default under (and none of them know of
an event which with the giving of notice or the lapse of time or both would be
reasonably
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likely to constitute a default under) its charter or by-laws, and none of the
Partnerships is in violation of its respective partnership agreement (and none
of them know of an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a violation), and neither the
Company, any Subsidiary nor any 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 in the aggregate, have a Material
Adverse Effect on the Company, such Subsidiary or such Partnership, as the case
may be.
(o) Neither the Company, any of the Subsidiaries nor any of the
Partnerships has violated any environmental, safety or similar law or regulation
applicable to its business relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants, nor has the Company, any of the Subsidiaries nor any of the
Partnerships violated any Federal, state or local law relating to discrimination
in the hiring, promotion, pay or terms or conditions of employment of employees
nor any applicable wage or hour laws, nor has the Company or any of the
Partnerships engaged in any unfair labor practice, which in each case could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company, such Subsidiary or such Partnership, as the case
may be.
(p) Neither the issue and sale of the Shares nor the consummation of
any of the other transactions herein contemplated nor the fulfillment of the
terms hereof will conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws of the Company or
any of the Subsidiaries or the partnership agreement of any of the Partnerships
or the terms of any indenture or other agreement or instrument to which the
Company, any of the Subsidiaries or any of the Partnerships is a party or is
bound or any judgment, order or decree applicable to the Company, any of the
Subsidiaries or any of the Partnerships of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
the Company, any of the Subsidiaries or any of the Partnerships.
(q) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the regulations and published
interpretations thereunder with respect to each "pension plan" (as defined in
ERISA and such regulations and published interpretations) in which employees of
the
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Company are eligible to participate and each such plan is in compliance in all
material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations (except for such failure to so comply
that would not have, singularly or in the aggregate with all other such failures
to comply, a Material Adverse Effect), and has not incurred any unpaid liability
to the Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV of ERISA.
(r) Other than as described in the Prospectus (including the
Incorporated Documents), and other than grants of options to purchase 201,000
shares of Common Stock since January 1, 1997, there are no outstanding warrants
or options to purchase any shares of capital stock of the Company and there are
no restrictions upon the voting or transfer of, or the declaration or payment of
any dividend or distribution on, any shares of capital stock of the Company
pursuant to the articles of incorporation or by-laws of the Company, any
agreement or other instrument to which the Company is a party or by which the
Company is bound, or any order, law, rule, regulation or determination of any
court, governmental agency or body (including, without limitation, any banking
or insurance regulatory agency or body), or arbitrator having jurisdiction over
the Company. No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(s) The Company is qualified, has been qualified since January 1,
1981, has been operating, since the beginning of the current fiscal year, in a
manner that would continue to permit it to be qualified, and intends to operate
so as to continue to be qualified, (i) as a REIT under Section 856 et seq. of
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the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) to be taxed
on its "real estate investment trust income" pursuant to Section 857 of the
Code.
(t) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriter is, or will be, when made,
inaccurate, untrue or incorrect in any material respect.
(u) Neither the Company nor any of its officers, directors, or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares in violation of the Act.
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(v) To the best of the Company's knowledge, the firm of accountants
that have certified or shall certify the applicable financial statements and
supporting schedules filed or to be filed with the Commission as part of (or
incorporated by reference in) the Registration Statement and the Prospectus are
independent public accountants with respect to the Company and any other
applicable entity, as required by the Act. The financial statements, together
with related schedules and notes, incorporated by reference in the Prospectus
and the Registration Statement comply as to form in all material respects with
the requirements of the Act. Such financial statements fairly present the
consolidated financial position of the Company, the Subsidiaries and the
Partnerships at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated, and have
been prepared in accordance with generally accepted accounting principles,
except as otherwise expressly stated therein, as consistently applied throughout
such periods. The pro forma financial statements and the related notes thereto,
and the other pro forma financial information, included or incorporated by
reference in the Prospectus and the Registration Statement present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, in all material
respects, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. The other financial and statistical
information and data included in the Prospectus and in the Registration
Statement are, in all material respects, accurately presented and prepared on a
basis consistent with applicable financial statements and the books and records
of the Company, the Subsidiaries and the Partnerships or, with respect to
information and data relating to persons other than the Company, the
Subsidiaries and the Partner ships, other information available to the Company.
(w) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company, any of the Subsidiaries nor any of the Partnerships has incurred
any liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material to the
Company, the Subsidiaries and the Partnerships taken as a whole, and there has
not been any material change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company, any Subsidiary or any of the
Partnerships, or any material adverse change, or any development (that relates
to the Company, the Subsidiaries and the Partnerships or to
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any of its respective properties or assets) which may reasonably be expected to
involve a prospective material adverse change, in the condition (financial or
other), business, net worth or results of operations of the Company, the
Subsidiaries and the Partnerships taken as a whole.
(x) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prospectus or
other materials, if any, permitted by the Act.
(y) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that in all material respects (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) To the Company's knowledge, neither the Company, any of its
Subsidiaries nor any of the Partnerships nor any employee or agent of the
Company, any Subsidiary or any Partnership has made any payment of funds of the
Company, any Partnership or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or retention of
funds is of a character required to be disclosed in the Prospectus.
(aa) The Company, each of the Subsidiaries and each of the
Partnerships have filed all tax returns required to be filed (except to the
extent extensions have been timely filed related thereto), which returns are
complete and correct in all material respects, and neither the Company, any
Partnership nor any Subsidiary is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect thereto.
(ab) To the best of the Company's knowledge, no labor disturbance by
the employees of the Company, the Subsidiaries or the Partnerships exists or is
imminent that would, individually or in the aggregate, have a Material Adverse
Effect. No collective bargaining agreement exists with any of the Company's
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employees and, to the best of the Company's knowledge, no such agreement is
imminent.
(ac) The Company has been advised concerning the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it will not become an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the 1940 Act and such rules and regulations.
(ad) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "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, 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 paragraph (a) above, 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. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein either pursuant to the terms of
the Registration Statement or pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of such Preliminary Prospectus or the Prospectus, as
the case may be (collectively, the "Incorporated Documents"); and any reference
herein to the terms "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.
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5. Agreements of the Company. The Company agrees with the
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Underwriter 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 the 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 Underwriter within a
reasonable period of time prior to the filing thereof and the Underwriter shall
not have objected thereto in good faith.
(b) The Company will use its best efforts to cause any Rule 462(b)
Registration Statement and any post-effective amendment to the Registration
Statement to become effective, and will notify the Underwriter promptly, and
will confirm such advice in writing, (1) when any Rule 462(b) Registration
Statement and any post-effective amendment to the Registration Statement become
effective, (2) 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, (3) 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, (4) 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 (5) 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, any Preliminary Prospectus 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 Underwriter, 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
incorporated, or deemed to be incorporated by reference into the Prospectus).
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(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) The Company will deliver to the Underwriter, without charge, as
many copies of the Prospectus or any amendment or supplement thereto as the
Underwriter may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Underwriter 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 Underwriter 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
Underwriter, without charge, such number of copies thereof as the Underwriter
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
Underwriter if such document would be deemed to be incorporated by reference
into the Prospectus which is not approved by the Underwriter after reasonable
notice thereof.
(f) The Company will cooperate with the Underwriter and counsel to
the Underwriter in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Underwriter 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. The Company will inform the Florida Department of Banking and
Finance if, at any time prior to the completion of the distribution of the
Shares by the Underwriter, it commences engaging in business with the government
of Cuba or with any person or affiliate located in Cuba. Such information will
be provided within 90 days after the commencement thereof or after a change
occurs with respect to previously reported information.
(g) During the period of five years commencing on the date hereof,
the Company will furnish to the Underwriter copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute
14
generally to the holders of any class of its capital stock, and will furnish to
the Underwriter 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, an earnings statement (which need not be audited but shall
be in reasonable detail), with respect to the Company, the Subsidiaries and the
Partnerships, for a period of 12 months commencing after the Effective Date of
the Registration Statement, 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 by notice given by
the Underwriter terminating this Agreement pursuant to Section 9 or Section 10
hereof) or if this Agreement shall be terminated by the Underwriter 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 Underwriter for all out-of-pocket expenses (including fees and expenses of
counsel for the Underwriter) reasonably incurred by the Underwriter in
connection herewith.
(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 New York Stock Exchange and the Pacific
Exchange.
15
6. Conditions of Underwriter's Obligations. The obligation of the
---------------------------------------
Underwriter 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 the Underwriter may approve in writing, 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 commenced or shall be pending before or, to the knowledge of the Company or
the Underwriter, contemplated by the Commission.
(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 Company, the Subsidiaries
or the Partnerships not contemplated by the Prospectus, which in the
Underwriter's opinion, 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 Underwriter and its 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 the Underwriter's
opinion, adversely affect the market for the Shares. On the Closing Date the
Underwriter shall have received a certificate dated the Closing Date, signed by
Harvey Lenkin and John Reyes in their capacities as the President, and Senior
Vice President and Chief Financial Officer, respectively, of the Company,
confirming the matters set forth in Sections 6(a), (b) and (c).
16
(d) The Underwriter shall have received an opinion, dated the Closing
Date, and satisfactory in form and substance to counsel for the Underwriter,
from David Goldberg, counsel for the Company, to the effect that:
(i) Each of the Company, the Subsidiaries and the Partnerships
has been duly organized and is validly existing (in the case of the Company
and each of the Subsidiaries, 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 Effect;
(ii) All of the Company's ownership interests in the
Partnerships are 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 under the captions "Description of Common
Stock and Class B Common Stock," "Description of Preferred Stock" and
"Description of Equity Stock," insofar as such statements constitute
summaries of the documents referred to therein, have been reviewed by such
counsel and fairly summarize the matters referred to therein in all
material respects; the outstanding shares of Common Stock, Class B Common
Stock, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series
F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock,
Series I Preferred Stock, Series J Preferred Stock, Series A Equity Stock
and Convertible Preferred Stock have been duly and validly authorized and
issued and are fully paid and nonassessable; the Shares have been duly and
validly authorized and, when issued and delivered by the Company pursuant
to the Agreement and paid for by the Underwriter pursuant to the Agreement,
will be fully paid and nonassessable; the Shares
17
have been duly authorized for listing, subject to official notice of
issuance, on the New York Stock Exchange and the Pacific Exchange; the
forms of certificates for the Shares are in valid and sufficient form in
compliance with New York Stock Exchange and Pacific 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;
(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,
any of the Subsidiaries or any of the Partnerships of a character required
to be disclosed in the Registration Statement 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 Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, under Part II, Item 7 -"Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Distribution Requirements" and in the
Company's Annual Report on Form 10-K (Amendment No. 1) for the fiscal year
ended December 31, 1996, under Part III, Item 13 -"Certain Relationships
and Related Party Transactions" (other than the financial statements and
other financial and statistical information contained therein, as to which
such counsel 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 such counsel
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
Incorporated Documents (or, if
18
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 such counsel need express no opinion);
(vi) The Company has full corporate power and authority to
enter into and perform its obligations under the Agreement and to issue,
sell and deliver the Shares; and the Agreement has been duly authorized,
executed and delivered by the Company;
(vii) No consent, approval, authorization or order of any court
or governmental agency, authority or body is required for the execution by
the Company of the Agreement, the performance by the Company of its
obligations thereunder or the consummation of the transactions contemplated
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 Underwriter of the
Shares;
(viii) The Company, each Subsidiary and each Partnership have all
requisite power and authority, and, to the best knowledge of such counsel,
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
Effect on the Company, such Subsidiary or such Partnership, and the
Company, each Subsidiary and each Partnership are complying with all
applicable laws, the violation of which could have a Material Adverse
Effect on the Company, such Subsidiary or such Partnership, as the case may
be;
(ix) The Company and each of the Subsidiaries are not in
violation of its articles of incorporation or by-laws, and each of the
Partnerships is not in violation of its respective partnership agreement,
19
and to the best of my knowledge, after due inquiry, neither the Company,
the Subsidiaries nor any 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 Effect on the Company, such Subsidiary or such
Partnership, as the case may be;
(x) Neither the issue and sale of the Shares nor the
consummation of any of the other transactions contemplated by the Agreement
nor the fulfillment of the terms 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 Subsidiaries or
the partnership agreement of any of the Partnerships or the terms of any
indenture or other agreement or instrument known to me and to which the
Company, any of the Subsidiaries or any of the Partnerships is a party or
is bound or any judgment, order or decree known to me to be applicable to
the Company, any of the Subsidiaries or any of the Partnerships of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company, any of the Subsidiaries or
any of the Partnerships;
(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, and 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;
(xiii) To the best of such counsel's knowledge, after reasonable
inquiry, neither the Company, any of the Subsidiaries nor any of the
Partnerships is in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company, any of the
Subsidiaries or any of the Partnerships or of any decree of
20
any court or governmental agency or body having jurisdiction over the
Company, any of the Subsidiaries or any of the Partnerships, the violation
of which could have a Material Adverse Effect on the Company, such
Subsidiary or such Partnership, as the case may be;
(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, the Subsidiaries and the Partnerships 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, the Subsidiaries and the Partnerships taken as a whole as
described in the Prospectus, such counsel is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company,
the Subsidiaries and the Partnerships with respect to the foregoing;
(xvi) Except as described in the Prospectus and in Section 4(r)
of the Agreement, to the best of such counsel's knowledge, after reasonable
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 and in Section 4(r)
of the Agreement, to the best of such counsel's knowledge, after reasonable
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 right to have any Common Stock or other securities of
the Company included in the
21
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;
In addition, such counsel shall state that he has participated in
conferences with representatives of the Underwriter, 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 Underwriter shall have received an opinion, dated the Closing
Date, and satisfactory in form and substance to counsel for the Underwriter,
from Hogan & Hartson L.L.P., counsel for the Company, to the effect that:
(i) The statements in the Prospectus under the heading "Certain
Federal Income Tax Considerations" and "Risk Factors - Tax Risks," read in
conjunction with the statements in the Prospectus Supplement under the
heading "Certain Federal Income Tax Considerations, to the extent they
describe matters of law or legal conclusions, are correct in all material
respects.
(ii) Based upon current law, including relevant statutes,
regulations and judicial and administrative precedent (which law is subject
to change on a retroactive basis), and subject to the limitations and
qualifications set forth in such counsel's tax opinion filed as
22
Exhibit 8.1 to the Registration Statement, the Company will continue to
qualify as a REIT under sections 856 through 860 of the Code following the
Merger of Public Storage Management, Inc. ("PSMI") into the Company (the
"Merger") so long as (A) the Company has met at all times since the Merger
-- ---- --
and continues to meet the stock ownership and gross income requirements
applicable to REITs and (B) either PSMI at the time of (and after giving
effect to) the Merger was not considered to have any current or accumulated
earnings and profits for tax purposes or the Company made distributions
prior to the end of 1995 in an amount sufficient to eliminate such earnings
and profits. The Underwriter may rely upon such counsel's tax opinion
filed as Exhibit 8.1 to the Registration Statement to the same extent as if
it were set forth in full herein.
(f) The Underwriter shall have received an opinion, dated the Closing
Date and from Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the
Underwriter, with respect to the Registration Statement, the Prospectus and this
Agreement, which opinion shall be satisfactory in all respects to the
Underwriter, 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) The Underwriter shall have received letters addressed to the
Underwriter and dated the date hereof and the Closing Date from Ernst & Young
LLP and Peat Marwick LLP, independent certified public accountants,
substantially in the forms heretofore approved by the Underwriter.
(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 Company, the
23
Subsidiaries and the Partnerships taken as a whole; (iv) the Company, the
Subsidiaries and the Partnerships shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company, the Subsidiaries, and the Partnerships, 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 Company 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 the
Underwriter 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 the Underwriter), to the effect set
forth in this Section 6(h) and in Section 6(i) hereof.
(i) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder 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 New York Stock Exchange and the Pacific
Exchange.
(k) The Company shall have furnished or caused to be furnished to the
Underwriter such further certificates and documents as the Underwriter shall
have requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriter and its counsel.
Any certificate or document signed by any officer of the Company and
delivered to the Underwriter or to its counsel, shall be deemed a representation
and warranty by the Company to the Underwriter as to the statements made
therein.
24
7. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the 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 the Underwriter furnished in writing
to the Company by the Underwriter expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a) with
respect to any Preliminary Prospectus shall not inure to the benefit of the
Underwriter (or to the benefit of any person controlling the Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Shares by the Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time required by
the Act and the regulations thereunder, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the Underwriter in requisite quantity on
a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought against the
Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Company, the Underwriter or such controlling
person shall promptly notify the Company and the Company shall assume the
defense thereof, including the employment of counsel and payment of all fees and
expenses. The 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 the Underwriter or such controlling person unless (i)
the Company has agreed in writing to pay such fees and expenses, (ii) the
Company has failed to assume the defense and
25
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both the Underwriter or
such controlling person and the Company and the Underwriter or such controlling
person shall have been advised by its counsel that representation of such
indemnified party and the Company 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 the
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
the Underwriter and controlling persons not having actual or potential differing
interests with the Underwriter or among themselves, which firm shall be
designated in writing by Smith Barney Inc., and that all such fees and expenses
shall be reimbursed as they are incurred. The Company shall not be liable for
any settlement of any such action, suit or proceeding effected without its
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
Company agrees to indemnify and hold harmless the 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) The Underwriter agrees 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 the Underwriter, but only with respect to information
relating to the Underwriter furnished in writing by or on behalf of the
Underwriter 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 the Underwriter pursuant to this paragraph (c), the 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 the
26
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 the 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 Underwriter by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Underwriter
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
Company on the one hand and the Underwriter 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 Company on the one hand and the Underwriter 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 Company on the
one hand and the Underwriter 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 Underwriter, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriter on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Underwriter 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 Company and the Underwriter 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 Underwriter 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
27
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, the Underwriter shall not 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 the
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.
(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.
(g) 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 the Underwriter or any person controlling
the 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 the
Underwriter or any person controlling the 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), the
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Preliminary Prospectus, the Prospectus, and 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 Preliminary Prospectus, the Prospectus, the
Incorporated Documents, and 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, including any stamp taxes in connection with the
original issuance and sale of the Shares; (iv) the printing (or reproduction)
and delivery of this Agreement, the preliminary and supplemental Blue Sky
Memoranda and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Shares; (v) the registration of
the Shares under the Exchange Act and the listing of the Shares on the New York
Stock Exchange and on the Pacific Exchange; (vi) the registration or
qualification of the 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 Underwriter
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees and the fees and expenses of counsel for
the Underwriter in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Shares; and (ix) 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 or a Rule 462 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 or, in the case of a Rule 462(b) Registration
Statement, upon filing thereof. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying the
Underwriter, or by the Underwriter notifying the Company.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
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10. Termination.
-----------
This Agreement shall be subject to termination in the Underwriter's
absolute discretion, without liability on the part of the Underwriter to the
Company by notice to the Company, if prior to the Closing Date, (i) 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,
(ii) a general moratorium on commercial banking activities in New York or
California shall have been declared by either federal or state authorities, or
(iii) 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 the Underwriter's judgment,
impracticable or inadvisable (x) to commence or continue the offering of the
units of the Trust to the public or (y) to enforce contracts for the sale of
units in the Trust. 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 Underwriter.
----------------------------------------
The statements set forth in the last paragraph on the cover page and
the statements in the first three paragraphs under the caption "Underwriting" in
the Prospectus Supplement constitute the only information furnished by the
Underwriter as such information is referred to in Sections 4(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 the Company, at the office of the Company, Public
Storage, Inc., 701 Western Avenue, 2/nd/ Floor, Glendale, California 91201-2397,
Attention: Legal Department, or (ii) if to the Underwriter, at 388 Greenwich
Street, New York, New York 10013, Attention: Manager, Investment Banking
Division.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Company, its 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
30
"successors and assigns" as used in this Agreement shall include a purchaser
from the 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 applicable to contracts made and to be
performed within the State of New York.
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.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriter.
Very truly yours,
PUBLIC STORAGE, INC.
By /s/ HARVEY LENKIN
-----------------------------------
Harvey Lenkin
President
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
By /s/ MARK PATTERSON
--------------------------
Mark Patterson
Managing Director
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