<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 11
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CATELLUS DEVELOPMENT CORPORATION
(Name of Subject Company)
Common Shares, $0.01 par value
(Title of Class of Securities)
149-111-106
--------------
(CUSIP Number)
Sheryl Pressler
Chief Investment Officer
California Public Employees'
Retirement System
Lincoln Plaza, 400 "P" Street
Sacramento, California 95814
Tel. No. (916) 326-3828
--------------------------------------
(Name, Address and Telephone Number of
Persons Authorized to Receive
Notices and Communications)
November 25, 1997
-----------------------------
(Date of Event Which Requires
Filing of this Statement)
Page 1 of 6 Pages
The Index to Exhibits is on Page 6
<PAGE> 2
This Amendment No. 11 amends and supplements the Statement on Schedule
13D (the "Schedule 13D") filed by California Public Employees' Retirement System
("CalPERS"), a governmental employee pension fund, which is a unit of the State
and Consumer Services Agency of the State of California, with respect to the
common stock, par value $0.01 per share (the "Common Stock"), of Catellus
Development Corporation, a Delaware corporation (the "Issuer"). Capitalized
terms used but not defined in this Amendment No. 11 have the meanings given to
such terms in the Schedule 13D.
Item 4. Purpose of the Transaction.
Item 4 is amended by adding to the end thereof the following
information:
On November 25, 1997, CalPERS executed and delivered an Underwriting
Agreement (the "Underwriting Agreement") among CalPERS, the Issuer, and Morgan
Stanley & Co., Inc. on behalf of itself and the several underwriters named in
Schedule I to the Underwriting Agreement and Morgan Stanley & Co. International
Limited on behalf of itself and the several Underwriters named in Schedule II to
the Underwriting Agreement. The Underwriting Agreement provides for the sale by
CalPERS to the several Underwriters named therein of 16,500,000 shares (plus an
additional 2,475,000 shares to cover an over-allotment option granted to the
Underwriters) of the Issuer's Common Stock held by CalPERS (the "Shares"). The
Underwriting Agreement provides for the purchase of the Shares by the
Underwriters from CalPERS at a purchase price of $17.145 per share, which would
provide for proceeds to CalPERS upon the closing of the transactions
contemplated by the Underwriting Agreement of $282,892,500 (plus an additional
$42,433,875 if the over-allotment option is exercised in full), and further
provides that the Underwriters propose to make a public offering of the Shares
and to offer the Shares to the public initially at a public offering price of
$18.00 per share. On October 31, 1997, the Issuer filed a Registration Statement
with the Securities and Exchange Commission on Form S-3 (file no. 333-39131)
relating to the Shares; the Registration Statement contains the Prospectus to be
used in connection with the offering and sale of the Shares. The Underwriting
Agreement also provides that, without the prior written consent of Morgan
Stanley & Co. Inc. on behalf of the several Underwriters, CalPERS will not
during the period 180 days after the date of the Prospectus offer, sell,
contract to sell or otherwise dispose of any Common Stock or securities
exercisable for, convertible into or exchangeable for Common Stock, except that,
if the Issuer files a registration statement in connection with a public
offering for cash, CalPERS may request that Common Stock held by CalPERS be
included in such registration statement, subject to certain volume and other
limitations contained in the Registration Rights Agreement between CalPERS and
the Issuer. In connection with the sale of the Shares, CalPERS also on November
25, 1997, executed and delivered a Custody Agreement between CalPERS and First
Chicago Trust Company of New York, as Custodian, pursuant to which CalPERS
deposited certificates representing the Shares. The descriptions of the terms
and provisions of the Underwriting Agreement and Custody Agreement are qualified
in their entirety by reference to the text of such agreements, which are filed
as Exhibits 17 and 18 respectively, hereto and incorporated herein by this
reference.
Page 2 of 6 Pages
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Item 5. Interest in Securities of Issuer.
Item 5 is amended by adding to the end thereof the following
information:
On November 25, 1997, CalPERS executed and delivered the Underwriting
Agreement and the Custody Agreement. The Underwriting Agreement provides for the
sale by CalPERS to the several Underwriters named therein of 16,500,000 shares
(plus an additional 2,475,000 shares to cover an over-allotment option granted
to the Underwriters) of the Issuer's Common Stock held by CalPERS (the
"Shares"). The Underwriting Agreement provides for the purchase of the Shares by
the Underwriters from CalPERS at a purchase price of $17.145 per share, which
would provide for proceeds to CalPERS upon the closing of the transactions
contemplated by the Underwriting Agreement of $282,892,500 (plus an additional
$42,433,875 if the over-allotment option is exercised in full), and further
provides that the Underwriters propose to make a public offering of the Shares
and to offer the Shares to the public initially at a public offering price of
$18.00 per share. On October 31, 1997, the Issuer filed a Registration Statement
with the Securities and Exchange Commission on Form S-3 (file no. 333-39131)
relating to the Shares; the Registration Statement contains the Prospectus to be
used in connection with the offering and sale of the Shares. The Underwriting
Agreement also provides that, without the prior written consent of Morgan
Stanley & Co. Inc. on behalf of the several Underwriters, CalPERS will not
during the period 180 days after the date of the Prospectus offer, sell,
contract to sell or otherwise dispose of any Common Stock or securities
exercisable for, convertible into or exchangeable for Common Stock, except that,
if the Issuer files a registration statement in connection with a public
offering for cash, CalPERS may request that Common Stock held by CalPERS be
included in such registration statement, subject to certain volume and other
limitations contained in the Registration Rights Agreement between CalPERS and
the Issuer. The descriptions of the terms and provisions of the
Underwriting Agreement and Custody Agreement are qualified in their
entirety by reference to the text of such agreements, which are filed as
Exhibits 17 and 18 respectively, hereto and incorporated herein by this
reference.
Item 6. Contracts, Arrangements, Understandings Where Relationship With Respect
to Securities of the Issuer.
Item 6 is amended by adding to the end thereof the following
information:
On November 25, 1997, CalPERS executed and delivered the Underwriting
Agreement and the Custody Agreement. The Underwriting Agreement provides for the
sale by CalPERS to the several Underwriters named therein of 16,500,000 shares
(plus an additional 2,475,000 shares to cover an over-allotment option granted
to the Underwriters) of the Issuer's Common Stock held by CalPERS (the
"Shares"). The Underwriting Agreement provides for the purchase of the Shares by
the Underwriters from CalPERS at a purchase price of $17.145 per share, which
would provide for proceeds to CalPERS upon the closing of the transactions
contemplated by the Underwriting Agreement of $282,892,500 (plus an additional
$42,433,875 if the over-allotment option is exercised in full), and further
provides that the Underwriters propose to make a public offering of the Shares
and to offer the Shares to the public initially at a public offering price of
$18.00 per share. On October 31, 1997, the Issuer filed a Registration Statement
with the Securities and Exchange Commission on Form S-3 (file no. 333-39131)
relating to the
Page 3 of 6 Pages
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Shares; the Registration Statement contains the Prospectus to be used in
connection with the offering and sale of the Shares. The Underwriting Agreement
also provides that, without the prior written consent of Morgan Stanley & Co.
Inc. on behalf of the several Underwriters, CalPERS will not during the period
180 days after the date of the Prospectus offer, sell, contract to sell or
otherwise dispose of any Common Stock or securities exercisable for, convertible
into or exchangeable for Common Stock, except that, if the Issuer files a
registration statement in connection with a public offering for cash, CalPERS
may request that Common Stock held by CalPERS be included in such registration
statement, subject to certain volume and other limitations contained in the
Registration Rights Agreement between CalPERS and the Issuer. The descriptions
of the terms and provisions of the form Underwriting Agreement and form Custody
Agreement are qualified in their entirety by reference to the text of such
agreements, which are filed as Exhibits 17 and 18 respectively, hereto and
incorporated herein by this reference. The descriptions of the terms and
provisions of the Underwriting Agreement and Custody Agreement are qualified in
their entirety by reference to the text of such agreements, which are filed as
Exhibits 17 and 18 respectively, hereto and incorporated herein by this
reference.
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended by adding the following exhibits:
17. Underwriting Agreement among CalPERS, the Issuer and the
Underwriters named on Schedules I and II thereto.
18. Custody Agreement between CalPERS and First Chicago Trust
Company of New York.
Page 4 of 6 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: November 26, 1997 CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT
SYSTEM
By: /s/ SHERYL PRESSLER
-------------------------------------
Sheryl Pressler
Title: Chief Investment Officer
Page 5 of 6 Pages
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Number
- ------
<S> <C>
17. Underwriting Agreement among CalPERS, the Issuer and the
Underwriters named on Schedules I and II thereto.
18. Custody Agreement between CalPERS and First Chicago Trust
Company of New York.
</TABLE>
Page 6 of 6 Pages
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EXHIBIT 17
CONFORMED COPY
16,500,000 SHARES
CATELLUS DEVELOPMENT CORPORATION
COMMON STOCK, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
NOVEMBER 25, 1997
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November 25, 1997
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BancAmerica Robertson Stephens
EVEREN Securities, Inc.
NationsBanc Montgomery Securities, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. International Limited
Merrill Lynch International
BancAmerica Robertson Stephens
EVEREN Securities, Inc.
NationsBanc Montgomery Securities, Inc.
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs and Mesdames:
California Public Employees' Retirement System, a governmental employee
pension fund which is a unit of the State and Consumer Services Agency of the
State of California (the "SELLING SHAREHOLDER"), a shareholder of Catellus
Development Corporation, a Delaware corporation (the "COMPANY"), proposes to
sell to the several Underwriters (as defined below), an aggregate of 16,500,000
shares of the Common Stock $0.01 par value, of the Company (the "FIRM SHARES").
It is understood that, subject to the conditions hereinafter stated,
13,200,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the several
U.S. Underwriters named in Schedule I hereto (the "U.S. UNDERWRITERS") in
connection with the offering and sale of such U.S. Firm Shares in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 3,300,000 Firm Shares (the "INTERNATIONAL SHARES") will be
sold to the several International Underwriters named in Schedule II hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Morgan Stanley & Co. Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens,
EVEREN Securities, Inc. and NationsBanc Montgomery Securities, Inc. shall act
as representatives (the "U.S. REPRESENTATIVES") of the several U.S.
Underwriters, and Morgan Stanley & Co. International Limited, Merrill Lynch
International, BancAmerica Robertson Stephens, EVEREN Securities, Inc. and
NationsBanc Montgomery Securities, Inc. shall act as representatives (the
"INTERNATIONAL REPRESENTATIVES") of the several International Underwriters. The
U.S. Underwriters and the International Underwriters are hereinafter
collectively referred to as the "UNDERWRITERS."
<PAGE> 3
The Selling Shareholder also proposes to issue and sell to the several
U.S. Underwriters not more than an additional 2,475,000 shares of the Common
Stock, $0.01 par value, of the Company (the "ADDITIONAL SHARES") if and to the
extent that the U.S. Representatives shall have determined to exercise, on
behalf of the U.S. Underwriters, the right to purchase such Additional Shares
granted to the U.S. Underwriters in Section 3 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "SHARES." The
shares of Common Stock, $0.01 par value, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (File No. 333-39131)
relating to the Shares. The registration statement contains two prospectuses to
be used in connection with the offering and sale of the Shares: (i) the U.S.
prospectus, to be used in connection with the offering and sale of Shares in
the United States and Canada to United States and Canadian Persons, and (ii) the
international prospectus, to be used in connection with the offering and sale
of Shares outside the United States and Canada to persons other than United
States and Canadian Persons. The international prospectus is identical to the
U.S. prospectus except for the outside front cover page. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION
STATEMENT;" the U.S. prospectus and the international prospectus in the
respective forms first used to confirm sales of Shares are hereinafter
collectively referred to as the "PROSPECTUS." If the Company has filed an
abbreviated registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT"
shall be deemed to include such Rule 462 Registration Statement.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; 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 Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iii) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any 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 are made,
3
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not misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon (A) information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein or (B) information relating to the Selling
Shareholder furnished to the Company by the Selling Shareholder expressly
for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company or indirectly
through one of its subsidiaries, free and clear of all adverse claims.
(e) Each of the joint venture partnerships or limited liability
companies in which the Company has a controlling interest, as disclosed in
the Prospectus (the "Joint Ventures"), has been duly formed and is validly
existing and in good standing under the laws of its state of organization,
with power and authority to own, lease and operate its properties and to
conduct the business in which it is engaged. Each Joint Venture is duly
qualified or registered as a foreign limited partnership or limited
liability company to transact business 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 so to qualify or be registered would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(f) This Agreement has been duly authorized, executed and delivered
by the Company.
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(g) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(h) The shares of Common Stock (including the Shares to be sold by
the Selling Shareholder) outstanding on the date hereof have been duly
authorized and are validly issued, fully-paid and non-assessable.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
contravene (A) any provisions of law applicable to the Company, (B) the
certificate of incorporation or by-laws of the Company, (C) any agreement or
other instrument binding upon the Company or any of its subsidiaries, except
for the contravention of any agreement which would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole or (D) any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary. No
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company of
its obligations under this Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Shares and except those which have been obtained or waived
prior to the date hereof.
(j) There has not occurred any material adverse change or, to the
knowledge of the Company, any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a whole,
from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) The preliminary prospectus issued November 7, 1997 and filed as
part of the registration statement complied when so filed in all material
respects with the Securities Act and the applicable rules and regulations of
the Commission thereunder.
(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be
5
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an "investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
(n) With respect to each of the properties owned by the Company or
one of its subsidiaries, whether such property is an income-producing property
or held for development, sale, lease or for any other purpose (the
"Properties"), (i) the Company or one of its subsidiaries has good and valid
fee simple title to the land underlying the Properties and good and valid title
to the improvements thereon and all other assets that are required for the
operation of the Properties in the manner in which they are currently operated,
subject, however, to existing mortgages on such Properties, to utility
easements serving such Properties, to liens of ad valorem taxes not delinquent
as of the Closing Date or which are being contested in good faith, to zoning
and similar governmental land use matters affecting such Properties that are
consistent with the current uses of such Properties, to statutory liens not due
and payable as of the Closing Date or which are being contested in good faith,
to title matters that may be material in character, amount or extent but which
do not materially interfere with the use or proposed use of the Properties or
otherwise materially impair the business operations being conducted or proposed
to be conducted thereon, to service marks and trade names used in connection
with such Properties, to the ownership by others of certain items of equipment
and other items of personal property that are used in conduct of business
operations at such Properties and to other defects or irregularities in title
which do not interfere in any material respect with the ordinary conduct of the
business of the Company and its subsidiaries, taken as a whole, and which
neither singly or in the aggregate would have a material adverse effect on the
Company and its subsidiaries, taken as a whole, (ii) all liens, charges,
encumbrances, claims, or restrictions on or affecting any of the Properties and
the assets of the Company which are required to be disclosed in the Prospectus
are disclosed therein; (iii) any real property and buildings held under lease
by the Company or one of its subsidiaries are held by them under valid,
subsisting and enforceable leases except to the extent the failure of such
leases to be valid, subsisting or enforceable would not, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole; (iv) no person has an option or right of first refusal to
purchase all or part of any Property or any interest therein, except for
options and rights of first refusal which, if exercised, would not singly or in
the aggregate have a material adverse effect on the Company and its
subsidiaries, taken as a whole; (v) each of the Properties 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
Properties), except if and to the extent disclosed in the Prospectus and except
for such failures to comply that would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole; and (vi) the Company has no
knowledge of any pending or threatened condemnation proceedings, zoning change,
or other similar proceeding or action that will affect the size of, use of,
improvements on, construction on or access to any of the Properties, except
such proceedings or actions as are disclosed in the Prospectus or that would
not have a material adverse effect on the Company and its subsidiaries, taken
as a whole;
(o) The Company and its subsidiaries (i) are in compliance with all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health
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and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all
permits, licenses or other approvals required of them under applicable federal
and state health and safety laws and regulations and Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance, failure to receive required permits, licenses or other approvals
or failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(p) Except as disclosed in the Prospectus, there are no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(q) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered pursuant to
the Registration Statement.
(r) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, intellectual property
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them, and neither the
Company nor any of its subsidiaries have received any notice of infringement of
or conflict with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, would have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(s) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, or, to the knowledge of the Company, is
imminent.
(t) Price Waterhouse LLP, who have certified certain financial
statements in the Registration Statement, whose report appears in the
Prospectus, are independent public accountants as required by the Securities
Act and the rules and regulations of the Commission thereunder during the
periods covered by the financial statements on which they reported contained in
the Prospectus.
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<PAGE> 8
(u) The Company and its subsidiaries are insured 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; and neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole, except as described in or contemplated by
the Prospectus.
(v) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except
for those certificates, authorizations and permits the non-possession of which
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole, and neither the Company nor any
subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; and (iii) access to assets is permitted only in
accordance with management's general or specific authorization.
(x) The Company and its subsidiaries have filed all federal, state,
and local income tax returns which have been required to be filed and have paid
all taxes required to be paid and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except,
in all cases, for any such tax, assessment, fine or penalty that is being
contested in good faith (and except in any case in which the failure to so file
or pay would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole).
(y) The financial statements (including the notes thereto) included
in the Registration Statement and the Prospectus present fairly the financial
position of the Company at the respective dates indicated and the results of
operations for the respective periods specified, and except as otherwise stated
in the Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis. The supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. The
financial information and data included in the Registration Statement and the
Prospectus
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present fairly the information included therein and have been prepared on a
basis consistent with that of the books and records of the respective entities
presented therein.
(z) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
customers, suppliers or contractors of the Company, on the other hand, which is
required to be described in the Prospectus which is not so described.
(aa) Neither the Company nor any director, officer, agent, employee
or other person associated with or acting on behalf of the Company has used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(bb) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba.
2. Representations and Warranties of the Selling Shareholder. The Selling
Shareholder represents and warrants to and agrees with each of the Underwriters
that:
(a) This Agreement has been duly authorized, executed and delivered
by the Selling Shareholder.
(b) The execution and delivery by the Selling Shareholder of, and
the performance by the Selling Shareholder of its obligations under, this
Agreement and the Custody Agreement signed by the Selling Shareholder and
First Chicago Trust Company of New York, the Company's transfer agent, as
Custodian, relating to the deposit of the Shares to be sold by the Selling
Shareholder (the "CUSTODY AGREEMENT") will not contravene (i) any provision of
law applicable to the Selling Shareholder, assuming the accuracy of the
Company's representations contained in Sections 1(a) and (b) above, (ii) any
statutes governing the organization and operation of the Selling Shareholder,
(iii) any agreement or other instrument binding upon the Selling Shareholder,
except for the contravention of any agreement which would not, singly or in the
aggregate, have a material adverse effect on the Selling Shareholder or (iv) any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Selling Shareholder. Assuming the accuracy of the
Company's representations contained in Section 1(a) above, no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Selling Shareholder of
its obligations under this Agreement or the
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<PAGE> 10
Custody Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Shares and except those which have been obtained or waived prior to
the date hereof.
(c) The Selling Shareholder has, and on the Closing Date will have,
valid title to the Shares and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement
and Custody Agreement and to sell, transfer and deliver the Shares.
(d) The Custody Agreement has been duly authorized, executed and
delivered by the Selling Shareholder and is a valid and binding agreement
of the Selling Shareholder.
(e) Delivery of the Shares by the Selling Shareholder pursuant to
this Agreement will pass title to such Shares free and clear of any
security interests, claims, liens, equities and other encumbrances.
3. Agreements to Sell and Purchase. The Selling Shareholder hereby
agrees to sell to the several Underwriters, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Selling Shareholder at U.S. $17.145 a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as you may determine) set forth in Schedules I and II hereto
opposite the name of such Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholder
agrees to sell to the U.S. Underwriters the Additional Shares, and the U.S.
Underwriters shall have a one-time right to purchase, severally and not
jointly, up to 2,475,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Selling Shareholder and
the Company in writing not later than 30 days after the date of this Agreement,
which notice shall specify the number of Additional Shares to be purchase by
the U.S. Underwriters and the date on which such shares are to be purchased.
Such date may be the same as the Closing Date (as defined below) but not
earlier than the Closing Date nor later than ten business days after the date
of such notice. The Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each U.S. Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as the U.S. Representatives may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of U.S. Firm Shares set forth in Schedule I hereto opposite the name of
such U.S. Underwriter bears to the total number of U.S. Firm Shares.
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<PAGE> 11
The Company and the Selling Shareholder hereby agree that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, they will not, during the period ending 90 days after the date
of the Prospectus, with respect to the Company, and 180 days after the date of
the Prospectus, with respect to the Selling Shareholder, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Shares to be sold hereunder, (B) the issuance by the
Company of options or shares of Common Stock upon the exercise of options
granted under the Company's employee and non-employee director stock option
plans or the exercise of a warrant or the conversion of a security, in each
case as outstanding on the date hereof of which the Underwriters have been
advised in writing, (C) the issuance by the Company of stock units to directors
(which units, subject to certain vesting requirements, convert into shares of
Common Stock upon termination of service) granted under the Company's employee
and non-employee director stock option plans or (D) with respect to the Selling
Shareholder, if the Company files a registration statement in connection with a
public offering for cash, the Selling Shareholder may request that its
securities be included in such registration statement, subject to certain volume
and other limitations contained in that certain Registration Rights Agreement,
dated as of December 29, 1989, among the company, the Selling Shareholder and
certain other parties thereto. In addition, the Selling Shareholder agrees
that, without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the Underwriters and except as set forth in the immediately preceding
sentence, it will not, during the period ending 180 days after the date of the
Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
4. Terms of Public Offering. The Company and the Selling Shareholder
are advised by you that the Underwriters propose to make a public offering of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company and the Selling
Shareholder are further advised by you that the Shares are to be offered to the
public initially at U.S. $18.00 a share (the "PUBLIC OFFERING PRICE") and to
certain dealers selected by you at a price that represents a concession not in
excess of U.S. $.535 a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in
excess of U.S. $.10 a share, to any Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by the
Selling Shareholder shall be made to the Selling Shareholder in Federal or
other funds immediately available in New York City against delivery of such
Firm Shares for the respective accounts of the several Underwriters at 10:00
a.m., New York City time, on December 2, 1997, or at such other time on the
same or such other date, not later than December 9, 1997 as shall be designated
in writing by you. The time and date of such payment are hereinafter referred
to as the "CLOSING DATE."
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<PAGE> 12
Payment for any Additional Shares shall be made to the Selling Shareholder
in Federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 3 or at such other time on the same or on such
other date, in any event not later than January 9, 1998, as shall be designated
in writing by the U.S. Representatives. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes
payable in connection with the transfer of the Shares to the Underwriters duly
paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Selling Shareholder to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 5:30 P.M. (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or, to the
knowledge of the Company, any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment,
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<PAGE> 13
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
Certificate, dated the Closing Date and signed by an executive officer of the
Company on behalf of the Company, to the effect set forth in Section 6(a)(i)
above and to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date and
that the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
(c) The Underwriters shall have received on the Closing Date an
opinion of O'Melveny & Myers LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing in good standing under the laws of the State of Delaware, with
corporate power to own its property, to conduct its business as described in
the Prospectus and to enter into the Underwriting Agreement, and to perform its
obligations under the Underwriting Agreement;
(ii) each corporation listed on Schedule III hereto as a
significant subsidiary of the Company (each a "Significant Subsidiary") has
been duly incorporated and is validly existing in good standing under the laws
of the jurisdiction of its incorporation, with corporate power to own its
property and to conduct its business as described in the Prospectus;
(iii) the Company is qualified as a foreign corporation to do
business in the States listed on Schedule IV hereto and is in good standing in
each of those States;
(iv) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the Prospectus;
(v) the Shares have been duly authorized by all necessary
corporate action on the part of the Company and are validly issued, fully paid
and nonassessable;
(vi) the outstanding shares of the capital stock of each
Significant Subsidiary have been duly authorized by all necessary corporate
action on the part of such Significant Subsidiary, are validly issued, fully
paid and nonassessable, and are owned of record by the Company;
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<PAGE> 14
(vii) holders of the Common Stock of the Company are not entitled to
any preemptive right to subscribe for any additional shares of Common Stock
under the Company's Certificate of Incorporation or Bylaws;
(viii) the execution, delivery and performance of the Underwriting
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and the Underwriting Agreement has been duly executed and
delivered by the Company;
(ix) the statements in the Prospectus under the captions "Principal
and Selling Shareholders--Registration Rights Agreement" and "Description of
Capital Stock," in each case insofar as such statements constitute summaries of
the legal matters or documents referred to therein, fairly present the
information called for by Form S-3 and fairly summarize the matters referred to
therein;
(x) the Company's execution and delivery of, and the performance of
its obligations on or prior to the date of this opinion under, the Underwriting
Agreement will not (a) violate any provision of the Certificate of
Incorporation or Bylaws of the Company; (b) violate, breach or result in a
default under, any existing obligation of or restriction on the Company under
any agreement listed as an exhibit to the Company's most recent annual report
on Form 10-K (each a "Material Agreement") or (c) breach or otherwise violate
any existing obligation of or restriction on the Company under any judgment,
order or decree of any California or federal court or governmental authority
binding on the Company and identified to such counsel in an officer's
certificate from the Company;
(xi) no order, consent, permit or approval of any California or
federal governmental authority that such counsel has, in the exercise of
customary professional diligence, recognized as applicable to the Company or to
transactions of the type contemplated by the Underwriting Agreement is required
on the part of the Company for the execution and delivery of, and performance
of its obligations on or prior to the date hereof under, the Underwriting
Agreement, except for such as have been obtained under the Securities Act and
such as may be required under applicable blue sky or state securities laws;
(xii) the execution and delivery by the Company of, and the
performance by the Company of its obligations on or prior to the date hereof
under, the Underwriting Agreement do not violate any California or federal
statute or regulation that such counsel has, in the exercise of customary
professional diligence, recognized as applicable to the Company or to the
transactions of the type contemplated by the
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<PAGE> 15
Underwriting Agreement, except that such counsel need express no opinion
regarding any federal securities laws, blue sky or state securities laws or the
provisions of Section 9 of the Underwriting Agreement, except as otherwise
expressly stated in such counsel's opinion;
(xiii) the Company is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended; and
(xiv) such counsel is of the opinion that the Registration Statement
and Prospectus, on the date of effectiveness of the Registration Statement
(except for financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not express any
opinion) appeared on their face to comply as to form in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder.
In connection with such counsel's participation in the preparation of the
Registration Statement and the Prospectus, such counsel may state that it has
not independently verified the accuracy, completeness or fairness of the
statements contained or incorporated therein, and may state that the
limitations inherent in the examination made by such counsel and the knowledge
available to such counsel are such that such counsel is unable to assume, and
does not assume, any responsibility for such accuracy, completeness or fairness
(except as otherwise specifically stated in clause (xi) above). However, on the
basis of such counsel's review of the Registration Statement and the Prospectus
and such counsel's participation in conferences in connection with the
preparation of the Registration Statement and Prospectus, and relying as to
matters of fact and materiality to a large extent upon opinions of officers and
other representatives of the Company, such counsel shall state that it does not
believe that the Registration Statement, considered as a whole as of the
effective date of the Registration Statement, contained any 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, and that
such counsel does not believe that the Prospectus, considered as a whole as of
the date of such opinion, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. However, such counsel need express no opinion or belief as to the
financial statements and other financial information contained in the
Registration Statement or the Prospectus.
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<PAGE> 16
(d) The Underwriters shall have received on the Closing Date an opinion of (1)
Kayla J. Gillan, Esq., General Counsel of the Selling Shareholder, with respect
to paragraphs (i), (ii), (iii) and (iv) below and (2) Jones, Day, Reavis &
Pogue, special counsel for the Selling Shareholder, with respect to paragraph
(v) below, each dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and delivered
by the Selling Shareholder;
(ii) the execution and delivery by the Selling Shareholder of, and the
performance by the Selling Shareholder of its obligations under, this
Agreement and the Custody Agreement will not contravene (i) any provision
of law applicable to the Selling Shareholder, assuming the accuracy of the
Company's representations contained in Sections 1(a) and (b) of the
Agreement, (ii) any statutes governing the organization and operation of
the Selling Shareholder, (iii) to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Selling Shareholder, except
for the contravention of any agreement which would not, singly or in the
aggregate, have a material adverse effect on the Selling Shareholder or
(iv) any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Selling Shareholder. Assuming the
accuracy of the Company's representations contained in Section 1(a) of the
Agreement, no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Selling Shareholder of its obligations under this
Agreement or the Custody Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares and except those which have been obtained or
waived prior to the date hereof
(iii) the Selling Shareholder has valid title to the Shares and the
legal right and power, and all authorization and approval required by law,
to enter into this Agreement and the Custody Agreement and to sell,
transfer and deliver the Shares;
(iv) the Custody Agreement has been duly authorized, executed and
delivered by the Selling Shareholder and is a valid and binding agreement
of the Selling Shareholder; and
(v) assuming the Underwriters are "protected purchasers" (as defined
under Section 8-303 of the New York Commercial Code), upon delivery of the
certificates for any Shares to be sold against payment therefor, the
Underwriters will acquire title to such Shares, free and clear of any
security interest or "adverse claims" within the meaning of Section 8-102
of the New York Commercial Code.
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<PAGE> 17
(e) The Underwriters shall have received on the Closing Date an opinion
of Gibson, Dunn & Crutcher LLP, counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in Sections 6(c)(v), 6(c)(viii), 6(c)(ix)
(but only as to the statements in the Prospectus under "Description of Capital
Stock" and as to the statements in the Prospectus under "Underwriters") and
6(c)(xiv) above.
With respect to Section 6(c)(xiii) above, O'Melveny & Myers LLP and
Gibson, Dunn & Crutcher LLP may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification,
except as specified.
The opinions of O'Melveny & Myers LLP and Kayla J. Gillan, Esq. and Jones,
Day, Reavis & Pogue described in Sections 6(c) and 6(d) above shall be rendered
to the Underwriters at the request of the Company or the Selling Shareholder,
as the case may be, and shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Price Waterhouse LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and certain officers and directors of the Company relating
to sales and certain other dispositions of shares of Common Stock or certain
other securities, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the U.S. Representatives on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of the Additional Shares and other matters related to the issuance of the
Additional Shares.
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<PAGE> 18
7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to you
and each other Underwriter such number of conformed copies of the
Registration Statement (without exhibits thereto) as you may reasonably
request, and to furnish to you in New York City, without charge, prior to
10:00 a.m. New York City time on the business day next succeeding the date
of this Agreement and during the period mentioned in Section 7(c) below, as
many copies of the Prospectus and any supplements and amendment thereto or
to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, provided, however, that in connection therewith the Company will
not be required to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 1998 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
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<PAGE> 19
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees
to pay or cause to be paid all expenses incident to the performance of its and
the Selling Shareholder's obligations under this Agreement, including: (i) the
fees, disbursements and expenses of the Company's counsel, the Company's
accountants and counsel for the Selling Shareholder in connection with the
registration and delivery of the Shares under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws
and all expenses in connection with the qualification of the Shares for offer
and sale under state securities laws as provided in Section 7(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection with
the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the National Association of Securities Dealers, Inc., (v) the cost of printing
certificates representing the Shares, (vi) the costs and charges of any
transfer agent, registrar or depositary and (vii) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 9 entitled "Indemnity
and Contribution," and the last paragraph of Section 11 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel, stock transfer taxes payable on resale of any of the Shares by
them and any advertising expenses connected with any offers they may make.
The provisions of this Section shall not supersede or otherwise
affect any agreement that the Company and the Selling Shareholder may otherwise
have for the allocation of such expenses among themselves.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be
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<PAGE> 20
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
Notwithstanding anything to the contrary contained above, the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 7(a) hereof.
(b) The Selling Shareholder agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to the Selling Shareholder furnished in
writing by or on behalf of the Selling Shareholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Shareholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or the Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or cased by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
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<PAGE> 21
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 9(a), 9(b) or 9(c), such person
(the "INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Section and (iii) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Selling Shareholder and all persons, if any, who control the Selling
Shareholder within the meaning of either such Section, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Morgan Stanley & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholder and such control persons of the Selling Shareholder,
such firm shall be designated in writing by the Selling Shareholder. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
21
<PAGE> 22
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause 9(e)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 9(e)(i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
Notwithstanding the foregoing, as between the Company and the Selling
Shareholder, contribution shall be in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other in connection with the actions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholder on the one hand and the
Underwriters on the other hand in connection with the offering of the Shares
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Shares (before deducting expenses) received in the
aggregate by the Company and the Selling Shareholder and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the parties hereto 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, the
Selling Shareholder or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective number
of Shares they have purchased hereunder, and not joint.
(f) The Company, the Selling Shareholder and the Underwriters agree
that it would not be just or equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 9(e).
The amount paid or payable by an indemnified party as a result
22
<PAGE> 23
of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) the Selling Shareholder shall not be
required to contribute any amount in excess of the proceeds received by the
Selling Shareholder from the sale of the Shares pursuant to this Agreement
exceeds the amount of any damages that the Selling Shareholder 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 Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholder contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, the Selling
Shareholder or any person controlling the Selling Shareholder, or the
Company, its officers or directors or any person controlling the Company
and (iii) acceptance of and payment for any of the Shares.
(h) The provisions of this Section 9 shall not supersede or otherwise
affect any agreement that the Company and the Selling Shareholder may
otherwise have for the allocation of indemnification and contribution
obligations among themselves.
10. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
23
<PAGE> 24
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more the one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedules I and II bears to the aggregate
number of Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Shareholder for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Shareholder. In any such case either you, the Company or the Selling Shareholder
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase not less
than the number of Additional Shares that such non-defaulting Underwriters would
have been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or the Selling
Shareholder to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company or the Selling Shareholder
shall be unable to perform its obligations under this Agreement, the Company
will reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel) reasonably
incurred by such Underwriters in connection with this Agreement or the offering
contemplated hereunder.
24
<PAGE> 25
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
[the remainder of this page is intentionally left blank]
25
<PAGE> 26
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
Catellus DEVELOPMENT Corporation
By: /s/ NELSON C. RISING
-------------------------------------
Nelson C. Rising
President and Chief Executive Officer
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ DAVID J. GILBERT
-------------------------------------
David J. Gilbert
Senior Investment Officer
26
<PAGE> 27
Accepted as of the date hereof:
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
EVEREN SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES, INC.
Acting severally and on behalf of themselves and the
several Underwriters named on Schedule I hereto
By: Morgan Stanley & Co. Incorporated
By: /s/ BRYAN W. ANDRZEJEWSKI
-------------------------------------
Bryan W. Andrzejewski
Vice President
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
MERRILL LYNCH INTERNATIONAL
BANCAMERICA ROBERTSON STEPHENS
EVEREN SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES, INC.
Acting severally and on behalf of themselves and the
several Underwriters named on Schedule II hereto
By: Morgan Stanley & Co. International Limited
By: /s/ BRYAN W. ANDRZEJEWSKI
-------------------------------------
Bryan W. Andrzejewski
Attorney-in-Fact
27
<PAGE> 28
SCHEDULE I
U.S. UNDERWRITERS
<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
U.S. UNDERWRITER TO BE PURCHASED
- ---------------- ---------------------
<S> <C>
Morgan Stanley & Co. Incorporated ....................... 1,776,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ...... 1,776,000
BancAmerica Robertson Stephens .......................... 1,776,000
EVEREN Securities, Inc. ................................. 1,776,000
NationsBanc Montgomery Securities, Inc. ................. 1,776,000
BT Alex Brown Incorporated .............................. 320,000
A.G. Edwards & Sons, Inc. ............................... 320,000
Gabelli ................................................. 160,000
Genesis Merchant Group Securities L.P. .................. 160,000
Goldman, Sachs & Co. .................................... 320,000
Interstate/Johnson Lane Corporation ..................... 160,000
Jefferies & Company, Inc. ............................... 160,000
Edward D. Jones & Co., L.P. ............................. 160,000
Legg Mason Wood Walker, Incorporated .................... 160,000
McDonald & Company Securities, Inc. ..................... 160,000
Ormes Capital Markets, Inc. ............................. 160,000
PaineWebber Incorporated ................................ 320,000
Prudential Securities Incorporated ...................... 320,000
Ragen MacKenzie Incorporated ............................ 320,000
The Robinson-Humphrey Company, LLC ...................... 160,000
Muriel Siebert & Co., Inc. .............................. 160,000
Sutro & Co. Incorporated ................................ 320,000
Value Investing Partners, Inc. .......................... 160,000
Wasserstein Perella Securities, Inc. .................... 320,000
----------
Total U.S. Firm Shares .............................. 13,200,000
----------
</TABLE>
<PAGE> 29
SCHEDULE II
INTERNATIONAL UNDERWRITERS
<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
INTERNATIONAL UNDERWRITER TO BE PURCHASED
- ------------------------- ---------------------
<S> <C>
Morgan Stanley & Co. Incorporated Limited ............... 660,000
Merrill Lynch International ............................. 660,000
BancAmerica Robertson Stephens .......................... 660,000
EVEREN Securities, Inc. ................................. 660,000
NationsBanc Montgomery Securities, Inc. ................. 660,000
---------
Total International Firm Shares ..................... 3,300,000
---------
</TABLE>
<PAGE> 30
SCHEDULE III
SIGNIFICANT SUBSIDIARIES
Catellus Management Corporation
Catellus Residential Group, Inc.
RVL, Inc.
SF Pacific Properties, Inc.
<PAGE> 31
SCHEDULE IV
STATES WHERE QUALIFIED TO DO BUSINESS
Arizona
Arkansas
California
Colorado
Illinois
Iowa
Kansas
Louisiana
Nevada
New Mexico
Oklahoma
Oregon
Texas
Utah
<PAGE> 32
EXHIBIT A
[FORM OF LOCK-UP LETTER FOR OFFICERS AND DIRECTORS]
November 25, 1997
Morgan Stanley & Co. Incorporated
Merrill Lynch & Co.
BancAmerica Robertson Stephens
EVEREN Securities, Inc.
NationsBanc Montgomery Securities, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. International Limited
Merrill Lynch International
BancAmerica Robertson Stephens
EVEREN Securities, Inc.
NationsBanc Montgomery Securities, Inc.
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated (MORGAN
STANLEY") and Morgan Stanley & Co. International Limited ("MSIL") propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with
Catellus Development Corporation, a Delaware corporation (the "COMPANY") and
California Public Employee Retirement System, a governmental employee pension
fund, providing for the public offering (the "PUBLIC OFFERING") by the several
Underwriters, including Morgan Stanley and MSIL (the "UNDERWRITERS"), of
16,500,000 shares (the "SHARES") of the Common Stock, $0.01 par value, of the
Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the unadvertised
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any
<PAGE> 33
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or (2) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering or (b) transfers of
shares of Common Stock, either during the undersigned's lifetime or on death,
(i) by will or the laws of descent and distribution or (ii) to the
undersigned's ancestors, descendants or spouse, or to any custodian or trustee
for the benefit of the undersigned or the undersigned's ancestors, descendants
or spouse, whether by gift or for value; provided that any such transferee of
such shares of Common Stock in this subsection (b) agrees to be bound by the
terms of this lock-up agreement.
Whether or not the Public Offering actually occurs depends on a
number of factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
--------------------------------------------
(Name)
--------------------------------------------
--------------------------------------------
(Address)
2
<PAGE> 1
EXHIBIT 18
CATELLUS DEVELOPMENT CORPORATION
COMMON STOCK
($.01 PAR VALUE)
CUSTODY AGREEMENT
First Chicago Trust Company of
New York
525 Washington Boulevard
Jersey City, New Jersey 07303
Attn: Thomas McDonough
Catellus Development Corporation, a Delaware corporation (the "Company")
has filed a Registration Statement on Form S-3 with the Securities and Exchange
Commission (File No. 333- 39131) to register for sale to the public under the
Securities Act of 1933, as amended (the "Offering"), up to 18,975,000 shares of
the Company's common stock, $0.01 par value (the "Common Stock"). The shares
covered by the Registration Statement consist of (a) 16,500,000 shares (the
"Firm Shares") to be sold by the California Public Employees' Retirement System
(the "Selling Stockholder") and (b) up to 2,475,000 additional shares of Common
Stock which the underwriters of the Offering have an option to purchase from the
Selling Stockholder to cover over-allotments, if any (the "Additional Shares,"
and collectively with the Firm Shares, the "Shares").
There are delivered to you as Custodian herewith a certificate or
certificates representing 18,975,000 issued and outstanding Shares. Each
certificate so delivered is in negotiable and proper deliverable form with the
signature of a duly authorized representative of the Selling Stockholder
endorsed thereon; provided, that each certificate may instead be accompanied by
a duly executed stock power or powers bearing the signature of a duly authorized
representative of the Selling Stockholder. These certificates are to be held by
you as Custodian for the account of the Selling Stockholder and are to be
disposed of by you in accordance with this Custody Agreement. All capitalized
terms not otherwise defined herein shall have the meanings assigned to such
terms in the Underwriting Agreement to be entered into by and among the Company,
the Selling Stockholder and the underwriters named therein (the "Underwriting
Agreement").
You are authorized and directed to hold the certificates representing
the Firm Shares deposited with you hereunder in your custody, and on the Closing
Date as specified in Section 5 of the Underwriting Agreement, you shall:
(i) take all necessary action to cause the Firm Shares to be
sold and transferred on the books of the Company into such names as the
Representatives, on behalf of the several Underwriters, shall have
instructed you and to cause to be issued, against surrender of the
certificates representing such Firm Shares, new certificates for the
Firm Shares registered in such names and in such denominations as the
Representatives shall have instructed you;
(ii) deliver such new certificates to the Representatives, for
the accounts of the several Underwriters, against payment for such Firm
Shares in such amounts as determined
1
<PAGE> 2
in accordance with Section 3 of the Underwriting Agreement, and give
receipt for such payment; and
(iii) on the Closing Date promptly upon receipt, remit to the
Selling Stockholder by wire transfer of immediately available funds the
amount received by you as payment for the Firm Shares, after deducting
any reasonable expenses incurred by you in the performance of your
duties as Custodian hereunder, which expenses shall not exceed $500.
You are authorized and directed to hold the certificates representing
the Additional Shares deposited with you hereunder in your custody, and, if the
U.S. Underwriters elect to exercise the over-allotment option granted to them
under the Underwriting Agreement, on the Option Closing Date as specified in
Section 5 of the Underwriting Agreement, you shall:
(i) take all necessary action to cause the Additional Shares to
be sold and transferred on the books of the Company into such names as
the Representatives, on behalf of the several Underwriters, shall have
instructed you and to cause to be issued, against surrender of the
certificates representing such Additional Shares, new certificates for
the Additional Shares registered in such names and in such denominations
as the Representatives shall have instructed you;
(ii) deliver such new certificates to the Representatives, for
the accounts of the several Underwriters, against payment for such
Additional Shares in such amounts as determined in accordance with
Section 3 of the Underwriting Agreement, and give receipt for such
payment; and
(iii) on the Option Closing Date promptly upon receipt, remit to
the Selling Stockholder by wire transfer of immediately available funds
the amount received by you as payment for the Additional Shares.
If the Underwriting Agreement shall not be entered into, or if the sale
of Shares by the Selling Stockholder as contemplated by the Underwriting
Agreement is not completed prior to December 31, 1997 or if the Underwriting
Agreement shall be terminated pursuant to the provisions thereof, on or after
that date you are to return to the Selling Stockholder the certificates
deposited with you, together with any stock powers which were delivered with the
deposited certificates. In addition, if the Firm Shares are sold to the
Underwriters pursuant to the Underwriting Agreement and the Underwriters do not
elect to exercise fully their over-allotment option with respect to the
Additional Shares by December 25, 1997, after that date you are to return to the
Selling Stockholder that portion of the certificate or certificates deposited
with you representing that number of Shares by which 2,475,000 exceeds the
number of Additional Shares the U.S. Underwriters elected to purchase, if any,
together with any stock powers which were delivered with such deposited
certificate or certificates.
The certificates deposited with you hereunder and this Custody Agreement
and your authority are subject to the interests of the Company and the
Underwriters, and this Custody Agreement and your authority hereunder are
irrevocable and shall not be subject to termination by the Selling Stockholder
or by operation of law, whether by dissolution, winding up, distribution of
assets or other event affecting the legal existence of the Selling Stockholder.
If any of the foregoing events should occur before the delivery of the Shares to
the Underwriters to be sold by the Selling Stockholder under the Underwriting
Agreement, certificates for those Shares shall be delivered by you on behalf
2
<PAGE> 3
of the Selling Stockholder in accordance with the terms and conditions of the
Underwriting Agreement and this Custody Agreement, and action taken by you
pursuant to this Custody Agreement shall be as valid as if any of the foregoing
events had not occurred, regardless of whether or not you shall have received
notice of any such events.
Until payment of the purchase price for the Shares to be sold by the
Selling Stockholder to the Underwriters has been made to you by or for the
account of the Underwriters, the Selling Stockholder shall remain the owner of
the Shares represented by the certificates deposited and shall be entitled to
all rights of a stockholder with respect thereto, including, without limitation,
the right to vote such Shares and to receive all dividends and distributions
thereon, subject only to limitations provided for herein.
You shall be entitled to act and rely upon any statement, request,
notice or instructions respecting this Custody Agreement given to you by or on
behalf of the Selling Stockholder; provided, however, that you shall not be
entitled to act or refrain from acting on any statement or notice to you with
respect to the Closing Date or the Option Closing Date under the Underwriting
Agreement, or with respect to the non-effectiveness or termination of the
Underwriting Agreement, or advising that the Underwriting Agreement has not been
executed and delivered or advising that the Firm Shares or Additional Shares to
be sold have not been purchased and paid for by the Underwriters in accordance
with the terms of the Underwriting Agreement, unless such statement or notice
shall have been confirmed in writing to you by the Underwriters.
In taking any action requested or directed by the Underwriters under the
terms of this Custody Agreement, you will be entitled to rely upon a writing
duly executed by or on behalf of Morgan Stanley & Co. Incorporated or Morgan
Stanley & Co. International Limited.
It is understood that you assume no responsibility or liability to any
person other than to deal with the certificates deposited with you hereunder and
the proceeds from the sale of the Shares represented thereby in accordance with
the provisions of this Custody Agreement, and the Selling Stockholder agrees to
indemnify and to hold harmless you, your employees, your partners and each
person, if any, who controls any of the foregoing persons within the meaning of
Section 15 of the Securities Act of 1933, as amended, or any of them from and
against any and all loss, damage or liability which they, or any of them,
sustain as a result of anything done by you or any of them in good faith in
connection with the foregoing instructions.
3
<PAGE> 4
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, (i) the validity, legality
and enforceability of the remaining provisions of this Agreement (including
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby, and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
This Custody Agreement shall be governed by, and construed in accordance
with, the laws of the State of California.
IN WITNESS WHEREOF, the Selling Stockholder has caused this Custody
Agreement to be executed this 25th day of November, 1997.
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By:/s/ David Gilbert
-------------------------------------
David Gilbert
Senior Investment Officer
4
<PAGE> 5
CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
First Chicago Trust Company of New York, as Custodian, hereby
acknowledges acceptance of the duties of the Custodian under the foregoing
Custodian Agreement and receipt of the certificates referred to therein.
Dated: November 25, 1997
FIRST CHICAGO TRUST COMPANY
OF NEW YORK, as Custodian
By: /s/ Thomas McDonough
-------------------------------------
Name: Thomas McDonough
Title: A.V.P.
5
