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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 17, 1997
PACIFIC GULF PROPERTIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MARYLAND 1-12546 33-0577520
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
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4220 VON KARMAN AVENUE
NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 223-5000
363 SAN MIGUEL DRIVE, SUITE 100
NEWPORT BEACH, CALIFORNIA 92660
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On March 19, 1997, Pacific Gulf Properties Inc. (the "Company") filed a
registration statement (File No. 333-23611) on Form S-3 with the Securities and
Exchange Commission (the "Commission") relating to the public offering, pursuant
to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"),
of an aggregate of up to $250,000,000 in equity and debt securities of the
Company (the "Registration Statement"). On April 11, 1997, the Commission
declared the Registration Statement, as amended, effective. The Registration
Statement and definitive prospectus contained therein are collectively referred
to as the "Prospectus."
The Company filed with the Commission on October 31, 1997 a preliminary
prospectus supplement dated October 31, 1997 to the Prospectus, relating to the
issuance and sale of shares of the Company's common stock, $.01 par value per
share. On November 19, 1997, the Company filed with the Commission a prospectus
supplement relating to the sale of 4,250,000 shares of the Company's common
stock (plus an additional 637,500 shares of common stock issuable upon the
exercise by the underwriters of an over-allotment option granted by the Company)
("Common Stock Supplement"). In connection with the filing of the Common Stock
Supplement with the Commission, the Company is filing certain exhibits as part
of this Form 8-K. See "Item 7. Financial Statements and Exhibits."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed with this report on Form 8-K:
Exhibit No. Description
----------- -----------
1.1 Underwriting Agreement between the Company and the
several underwriters named therein, dated November
17, 1997, with respect to the issuance and sale by
the Company of up to 4,250,000 shares of the
Company's common stock (plus an additional 637,500
shares of common stock issuable upon the exercise
by the underwriters of an over-allotment option
granted by the Company).
5.1 Opinion of Piper & Marbury, L.L.P. regarding the
validity of the common stock.
8.1 Opinion of Gibson, Dunn & Crutcher LLP regarding
certain tax matters.
23.1 Consent of Piper & Marbury, L.L.P. (included as
part of Exhibit 5.1).
23.2 Consent of Gibson, Dunn & Crutcher LLP (included as
part of Exhibit 8.1).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PACIFIC GULF PROPERTIES INC.
Date: November 20, 1997 By: /s/ DONALD G. HERRMAN
-----------------------------------
Donald G. Herrman
Chief Financial Officer
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EXHIBIT 1.1
Pacific Gulf Properties Inc.
4,250,000 Shares(1)
Common Stock
UNDERWRITING AGREEMENT
----------------------
November 17, 1997
PRUDENTIAL SECURITIES INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
A.G. EDWARDS & SONS, INC.
As Representatives of the several Underwriters
c/o PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
Pacific Gulf Properties Inc., a Maryland corporation (the
"Company"), hereby confirms its agreement with the several underwriters named in
Exhibit A hereto (the "Underwriters"), for whom you have been duly authorized to
act as representatives (in such capacities, the "Representatives"), as set forth
below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the several Underwriters an
aggregate of 4,250,000 shares (the "Firm Securities") of the Company's Common
Stock, par value $.01 per share (the "Common Stock") as set forth on Exhibit A
hereto. The Company also proposes to issue and sell to the several Underwriters
not more than 637,500 additional shares of Common Stock if requested by the
Representatives as provided in Section 3 of this Agreement. Any and all shares
of Common Stock to be purchased by the several Underwriters pursuant to such
option are referred to herein as the "Option Securities," and the Firm
Securities and any Option Securities are collectively referred to herein as the
"Securities."
2. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, the several Underwriters
that:
- --------
(1) Plus an option to purchase from Pacific Gulf Properties Inc. up to
637,500 additional shares to cover over-allotments.
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(a) The Company meets the requirements for use of
Form S-3 under the Securities Act of 1933, as amended (the "Act"). A
registration statement on such Form (File No. 333-23611) with respect to the
Securities, including a basic prospectus, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Act, and one or
more amendments to such registration statement may have been so filed. Such
registration statement, as so amended, has been declared by the Commission to be
effective under the Act. Such registration statement, as amended at the date of
this Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the
Act and complies in all other material respects with said Rule. The Company will
next file with the Commission either (A) if the Company relies on Rule 434 under
the Act, a Term Sheet (as hereinafter defined) relating to the Securities that
shall identify the Preliminary Prospectus (as hereinafter defined) that it
supplements and, if required to be filed pursuant to Rules 434(c)(2) and 424(b),
an Integrated Prospectus (as hereinafter defined), in either case, containing
such information as is required or permitted by Rule 434, 430A and 424(b) under
the Act or (B) if the Company does not rely on Rule 434 under the Act, pursuant
to Rule 424(b) under the Act a final prospectus supplement to the basic
prospectus included in such registration statement, as so amended, describing
the Securities and the offering thereof, in such form as has been provided to,
or discussed with, and approved by the Representatives as provided in Section
5(a) of this Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, as amended at the time when it was
declared effective, including (i) all financial schedules and exhibits thereto,
(ii) all documents incorporated by reference or deemed to be incorporated by
reference therein and (iii) any information omitted therefrom pursuant to Rule
430A under the Act and included in the Prospectus (as hereinafter defined) or,
if required to be filed pursuant to Rule 434(c)(2) and 424(b) under the Act, in
the Integrated Prospectus; the term "Basic Prospectus" means the prospectus
included in the Registration Statement as amended by any form of prospectus
filed thereafter pursuant to Rule 424; the term "Preliminary Prospectus" means
any preliminary form of the Prospectus (as hereinafter defined) specifically
relating to the Securities, in the form first filed with, or transmitted for
filing to, the Commission pursuant to Rule 424 under the Act; the term
"Prospectus Supplement" means any prospectus supplement specifically relating to
the Securities, in the form first filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 under the Securities Act; the term "Prospectus"
means (A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7) under
the Act, together with the Preliminary Prospectus identified therein that such
Term Sheet supplements; (B) if the Company does not rely on Rule 434 under the
Act, the Preliminary Prospectus;
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or (C) if the Company does not rely on Rule 434 under the Act and if no
Preliminary Prospectus is required to be filed, the Basic Prospectus, including,
in each case, the Prospectus Supplement; "Basic Prospectus," "Prospectus,"
"Preliminary Prospectus" and "Prospectus Supplement" shall include in each case
the documents, if any, filed by the Company with the Commission pursuant to the
United States Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and incorporated by reference therein; the term "Integrated Prospectus" means a
prospectus first filed with the Commission pursuant to Rules 434(c)(2) and
424(b) under the Act; and the term "Term Sheet" means any abbreviated term sheet
that satisfies the requirements of Rule 434 under the Act. Any reference in this
Agreement to an "amendment" or "supplement" to any Preliminary Prospectus, the
Prospectus, or any Integrated Prospectus or an "amendment" to any registration
statement (including the Registration Statement) shall be deemed to include any
document incorporated by reference therein that is filed with the Commission
under the Exchange Act after the date of such Preliminary Prospectus,
Prospectus, Integrated Prospectus or registration statement, as the case may be.
For purposes of the preceding sentence, any reference to the "effective date" of
an amendment to a registration statement shall, if such amendment is effected by
means of the filing with the Commission under the Exchange Act of a document
incorporated by reference in such registration statement, be deemed to refer to
the date on which such document was so filed with the Commission; any reference
herein to the "date" of a Prospectus that includes a Term Sheet shall mean the
date of such Term Sheet.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus. When any
Preliminary Prospectus and any amendment or supplement thereto was filed with
the Commission, it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements of,
the Act, the Exchange Act and the respective rules and regulations of the
Commission thereunder, and (ii) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. When the Registration Statement or any amendment thereto
was declared effective, it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and (ii) did not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus or any Term
Sheet that is a part thereof or any Integrated Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or part thereof or such amendment or supplement is
not
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required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective), on the date when the Prospectus is otherwise amended or
supplemented and on the Firm Closing Date and any Option Closing Date (both as
hereinafter defined), each of the Prospectus, and, if required to be filed
pursuant to Rules 434(c)(2) and 424(b) under the Act, the Integrated Prospectus
as amended or supplemented at any such time, (i) contained or will contain all
statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus or any
amendment or supplement thereto, the Registration Statement or any amendment
thereto, the Prospectus or, if required to be filed pursuant to Rules 434(c)(2)
and 424(b) under the Act, the Integrated Prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.
(c) If the Company has elected to rely on Rule
462(b), (i) the Company has filed a Rule 462(b) Registration Statement in
compliance with and that is effective upon filing pursuant to Rule 462(b) and
has received confirmation of its receipt and (ii) the Company has given
irrevocable instructions for transmission of the applicable filing fee in
connection with the filing of the Rule 462(b) Registration Statement, in
compliance with Rule 111 promulgated under the Act or the Commission has
received payment of such filing fee.
(d) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Maryland. PGP Inland Communities, L.P., a Delaware limited partnership (the
"Limited Partnership"), Pacific Inland Communities, LLC, a California limited
liability company (the "LLC"), PGP Von Karman Properties, a California general
partnership (the "General Partnership"), and PGP Newport Corp., a California
corporation ("PGP Newport"), Terrace Gardens-PGP L.P., a Delaware Limited
Partnership ("Terrace Gardens"), Morning View Terrace-PGP L.P., a Delaware
Limited Partnership ("Morning View Terrace") and PGP Northern Industrial, L.P.,
a Delaware Limited Partnership ("Northern Industrial, " and together with the
Limited Partnership, the General Partnership, the LLC, PGP Newport, Terrace
Gardens, and Morning View Terrace, the "Subsidiaries") are the only subsidiaries
(direct or indirect) of the Company, each has been duly formed and is
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validly existing and in good standing under the laws of its jurisdiction of
formation. The Company and the Subsidiaries are duly qualified to transact
business as foreign entities, and are in good standing under the laws of all
other jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified does not amount to a
material liability or disability to the Company and the Subsidiaries, taken as a
whole.
(e) None of the Subsidiaries is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such Subsidiary's equity interests, from repaying to
the Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or any
other Subsidiary of the Company, except as described in the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus).
(f) The Company and each of the Subsidiaries have
full power (corporate and/or other) to own or lease their respective properties
and conduct their respective businesses as described in the Registration
Statement and each of the Prospectus and any Integrated Prospectus or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus; and the Company has full power (corporate and
other) to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it.
(g) The outstanding equity interests of each
Subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable and to the extent shown in Exhibit B hereto are owned by the
Company free and clear of all liens, encumbrances, equities and claims; and no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligations into ownership interests in
each Subsidiary are outstanding.
(h) The Company has an authorized, issued and
outstanding capitalization as set forth in the Prospectus and any Integrated
Prospectus or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus. All of the issued shares
of capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. The Firm Securities and the Option Securities
have been duly authorized and at the Firm Closing Date or the related Option
Closing Date (as the case may be), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. No holders of
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outstanding shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Securities, and no holder
of securities of the Company has any right which has not been fully exercised or
waived to require the Company to register the offer or sale of any securities
owned by such holder under the Act in the public offering contemplated by this
Agreement.
(i) The capital stock of the Company conforms to the
description thereof contained in the Registration Statement and each of the
Prospectus and any Integrated Prospectus or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus.
(j) Except as disclosed in the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus), there
are not outstanding (i) securities, partnership interests or obligations of the
Company or any Subsidiary convertible into or exchangeable for any capital stock
of the Company or ownership interest in the Subsidiaries, (ii) warrants, rights
or options to subscribe for or purchase from the Company or any Subsidiary any
such capital stock or ownership interest or any such convertible or exchangeable
securities, partnership interests or obligations, or (iii) obligations of the
Company or any Subsidiary to issue any shares of capital stock or ownership
interest, any such convertible or exchangeable securities, partnership interests
or obligations, or any such warrants, rights or options.
(k) The consolidated financial statements and
schedules of the Company and the Subsidiaries included in the Registration
Statement, Prospectus and any Integrated Prospectus (or, if the Prospectus and
any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the Company and
the Subsidiaries and the results of operations and changes in financial
condition as of the dates and periods therein specified. Such financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein). The selected financial data set
forth under the caption "Selected Financial Information" in the Registration
Statement and each of the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) fairly present, on the basis stated in the
Registration Statement and each of the Prospectus and any Integrated Prospectus
(or such Preliminary Prospectus), the information included therein. The pro
forma financial statements and other pro forma financial information included in
the Registration Statement, Prospectus and any Integrated Prospectus
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(or, if the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus) comply in all material
respects with the applicable requirements of Rule 11-02 of Regulation S-X of the
Commission and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of such statements and the assumptions
used in the preparation thereof are, in the opinion of the Company, reasonable.
(l) Ernst & Young LLP, who have certified certain
financial statements of the Company and the Subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and each of the Prospectus and
any Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act, the Exchange Act and the
related published rules and regulations thereunder.
(m) The execution and delivery of this Agreement have
been duly authorized by the Company and this Agreement has been duly executed
and delivered by the Company and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws relating to creditors' rights generally and to
the application of equitable principles in any proceeding, whether at law or in
equity and except as rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or principles of public policy.
(n) No legal or governmental proceedings are pending
to which the Company or any of the Subsidiaries is a party or to which the
property of the Company or of any of the Subsidiaries is subject that are
required to be described in the Registration Statement or each of the Prospectus
and any Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus), and
are not described therein, and no such proceedings which may be material with
respect to the Company and the Subsidiaries taken as a whole have been
threatened against the Company or any of the Subsidiaries or with respect to any
of their respective properties; and no contract or other document is required to
be described in the Registration Statement or the Prospectus or any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus) or to be filed as an
exhibit to the Registration Statement that is not described therein or filed as
required.
(o) The issuance, offering and sale of the
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Securities to the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (i) require
the consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, such as may be required
(and shall be obtained as provided in this Agreement) under the Act, or (ii)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their respective properties are bound, or the charter documents (or other
formation documents) or by-laws of the Company or any of the Subsidiaries, or
any statute or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Company or any
of the Subsidiaries.
(p) Subsequent to the respective dates as of which
information is given in the Registration Statement and each of the Prospectus or
any Integrated Prospectus or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus, neither
the Company nor any of the Subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, or from any labor dispute or any legal or
governmental proceeding and there has not been any material adverse change, or
any development involving a prospective material adverse change, in the
condition (financial or otherwise), management, business prospects, net worth,
or results of operations of the Company and the Subsidiaries considered as a
whole, except in each case as described in or contemplated by the Registration
Statement and each of the Prospectus and any Integrated Prospectus or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus.
(q) The Company has not, directly or indirectly, (i)
taken any action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or (ii) since the filing of the Registration
Statement (A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company other than with respect to the offering of the Class A Senior
Cumulative Convertible Preferred Stock pursuant to the Prospectus Supplement
dated December 31, 1996 to the Prospectus, dated May 26, 1996,
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and the offering of Class B Senior Cumulative Convertible Preferred Stock
pursuant to the Prospectus Supplement dated May 29, 1997 to the Basic
Prospectus.
(r) The Company has not distributed and, prior to the
later of (i) the Firm Closing Date and (ii) the completion of the distribution
of the Securities, will not distribute any offering material in connection with
the offering and sale of the Securities other than the Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or other materials, if any permitted by the
Act.
(s) Subsequent to the respective dates as of which
information is given in the Registration Statement and each of the Prospectus or
any Integrated Prospectus (or, if the Prospectus or any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus), (i)
none of the Company or any of the Subsidiaries have incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock; and (iii)
there has not been any material change in the capital stock, ownership interest,
short-term debt or long-term debt of the Company and the Subsidiaries, except in
each case as described in or contemplated by the Prospectus or any Integrated
Prospectus (or, if the Prospectus or any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus).
(t) The Company and each Subsidiary have good and
marketable title in fee simple to all items of real property and marketable
title to all personal property owned by each of them, in each case free and
clear of any security interests, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the value of such
property and do not interfere with the use made or proposed to be made of such
property by the Company and each Subsidiary, and any real property and buildings
held under lease by the Company or by any Subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or by any Subsidiary, in each case except as described
in or contemplated by the Prospectus or any Integrated Prospectus (or, if the
Prospectus or any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus).
(u) The Company and each Subsidiary are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary
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in the businesses in which they are engaged; and none of the Company or any of
the Subsidiaries have any reason to believe that they will not be able to renew
their existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue their
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company and its Subsidiaries taken as a whole, except as described in or
contemplated by the Prospectus or any Integrated Prospectus (or, if the
Prospectus or any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus).
(v) The Company and each Subsidiary possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and none of the Company or any of the Subsidiaries 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,
if the subject of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and the
Subsidiaries taken as a whole, except as described in or contemplated by the
Prospectus or any Integrated Prospectus (or, if the Prospectus or any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(w) The Company will conduct its operations in a
manner that will not subject it to registration as an investment company under
the Investment Company Act of 1940, as amended, (the "1940 Act") and this
transaction will not cause the Company to become an investment company subject
to registration under such act.
(x) The Company and each Subsidiary have filed all
foreign, federal, state and local tax returns that are required to be filed or
have requested extensions thereof (except in any case in which the failure so to
file would not have a material adverse effect on the Company and the
Subsidiaries taken as a whole) and have paid all taxes required to be paid by
them and any other assessment, fine or penalty levied against them, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or
as described in or contemplated by the Registration Statement and each of the
Prospectus or any Integrated Prospectus (or, if the Prospectus or any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus). Such tax returns are true, correct, and complete in all material
respects.
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(y) The Company and each Subsidiary maintain 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; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) the Company is complying with the REIT
requirements of the Internal Revenue Code of 1986, as amended.
(z) Except as would not have a material adverse
effect or otherwise require disclosure in the Prospectus or any Integrated
Prospectus (or, if the Prospectus or any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), (i) the Company and the
Subsidiaries are not in violation of any federal, state or local laws and regula
tions relating to pollution or protection of human health or the environment or
the use, treatment, storage, disposal, transport or handling, emission,
discharge, release or threatened release of toxic or hazardous substances,
materials or wastes, or petroleum and petroleum products ("Materials of
Environmental Concern") (collectively, "Environmental Laws"), including, without
limitation, noncompliance with or lack of any permits or other environmental
authorizations, and (ii) (A) the Company and the Subsidiaries have not received
any communication from any person or entity alleging any violation of or
noncompliance with any Environmental Laws, and there are no past, present or
reasonably foreseeable circumstances that could reasonably be expected to lead
to any such violation in the future, (B) there is no pending or threatened
claim, action, investigation or notice by any person or entity against the
Company or any Subsidiary or against any person or entity for whose acts or
omissions the Company or any Subsidiary are or may reasonably be expected to be
liable, either contractually or by operation of law, alleging liability for
investigatory, cleanup, or govern mental response costs, or natural resources or
property damages, or personal injuries, attorney's fees or penalties relating to
any Materials of Environmental Concern or any violation or potential violation,
of any Environmental Law (collectively, "Environmental Claims"), and (C) there
are no actions, activi ties, circumstances, conditions, events or incidents that
could reasonably be expected to form the basis of any such Environ mental Claim.
In the ordinary course of business, each of the Company and the Subsidiaries (i)
conducts a periodic review of the effect of Environmental Laws on its business,
operations and properties, and the Company and the Subsidiaries have identified
and evaluated associated costs and liabilities, and any capital
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<PAGE> 12
or operating expenditures, required for cleanup, 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, and (ii) consistent with industry standards have conducted
environ mental investigations of, and reviewed information regarding, its
business, properties and operations; on the basis of such reviews,
investigations and inquiries, the Company and each Subsidiary have reasonably
concluded that, except as disclosed in the Prospectus or any Integrated
Prospectus, any costs and liabilities associated with such matters would not
have a material adverse effect on the Company or any Subsidiary or otherwise
require disclosure in the Prospectus or any Integrated Prospectus.
(aa) The Company and each Subsidiary are in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any Subsidiary would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" in which employees or former employees of
the Company or any Subsidiary participate that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether through any action or by failure to act, which would cause
the loss of such qualification.
(ab) The Company has been and is organized and
operated in conformity with the requirements for qualification as a real estate
investment trust (a "REIT") under Sections 856 through 860 of the Code and the
rules and regulations thereunder and the Company's proposed method of operation
will enable it to continue to meet the requirements for taxation as a real
estate investment trust under the Code.
3. Purchase, Sale and Delivery of the Securities.
----------------------------------------------
(a) On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $19.70 per share, the Firm
Securities, as set forth in Exhibit A hereto. One or more certificates in
definitive form for the Firm Securities that the
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<PAGE> 13
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company to the Representatives
for the respective accounts of each of the Underwriters, against payment by or
on behalf of the Underwriters of the purchase price therefor by wire transfer in
same-day funds (the "Wired Funds") to the account of the Company. Such delivery
of and payment for the Firm Securities shall be made at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, 34th Floor, Los
Angeles, California 90071, at 9:30 A.M., New York time, on November 21, 1997, or
at such other place, time or date as the Representatives and the Company may
agree upon, such time and date of delivery against payment being herein referred
to as the "Firm Closing Date." The Company will make such certificate or
certificates for the Firm Securities available for checking and packaging by
Prudential Securities Incorporated at the offices in New York, New York of the
Company's transfer agent or registrar or of Prudential Securities Incorporated
at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments
in connection with the distribution and sale of the Firm Securities as
contemplated by the Prospectus, the Company hereby grants to the several
Underwriters an option to purchase, severally and not jointly, the Option
Securities, in the amounts set forth in Exhibit A hereto. The purchase price to
be paid for any Option Securities shall be the same price per share as the price
per share for the Firm Securities set forth above in paragraph (a) of this
Section 3, plus if the purchase and sale of any Option Securities takes place
after the Firm Closing Date and after the Firm Securities are trading
"ex-dividend," an amount equal to the dividend payable on such Option
Securities. The option granted hereby may be exercised as to all or any part of
the Option Securities from time to time within thirty days after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange is open for
trading). Each Underwriter shall be under no obligation to purchase any of the
Option Securities prior to its exercise of such option. The Representatives may
from time to time exercise the option granted hereby by giving notice in writing
or by telephone (confirmed in writing) to the Company setting forth the
aggregate principal amount of Option Securities as to which the Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the
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<PAGE> 14
Representatives and the Company may agree upon, is herein called the "Option
Closing Date" with respect to such Option Securities. Upon exercise of the
option as provided herein, the Company shall become obligated to sell to each of
the Underwriters, and, subject to the terms and conditions herein set forth,
each of the Underwriters, severally and not jointly, shall become obligated to
purchase from the Company, the same percentage of the total number of the Option
Securities as to which each of the Underwriters is then exercising the option.
If the option is exercised as to all or any portion of the Option Securities,
one or more certificates in definitive form for such Option Securities, and
payment therefor, shall be delivered on the related Option Closing Date in the
manner, and upon the terms and conditions, set forth in paragraph (a) of this
Section 3, except that reference therein to the Firm Securities and the Firm
Closing Date shall be deemed, for purposes of this paragraph (b), to refer to
such Option Securities and Option Closing Date, respectively.
(c) It is understood that any of you, individually
and not as one of the Representatives, may (but shall in no way be obligated to)
make payment on behalf of any Underwriter or Underwriters for any of the
Securities to be purchased by such Underwriter or Underwriters. No such payment
shall relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
(d) The Company hereby acknowledges that the wire
transfer by or on behalf of each of the Underwriters of the purchase price for
any Securities does not constitute closing of a purchase and sale of the
Securities. Only execution and delivery of a receipt for Securities by the
Underwriters indicates completion of the closing of a purchase of the Securities
from the Company. Furthermore, in the event that the Underwriters wire funds to
the Company prior to the completion of the closing of a purchase of Securities,
the Company hereby acknowledges that until the Underwriters execute and deliver
a receipt for the Securities, by facsimile or otherwise, the Company will not be
entitled to the wired funds and shall return the wired funds to the Underwriters
as soon as practicable (by wire transfer of same-day funds) upon demand. In the
event that the closing of a purchase of Securities is not completed and the wire
funds are not returned by the Company to the Underwriters on the same day the
wired funds were received by the Company, the Company agrees to pay to each of
the Underwriters in respect of each day the wire funds are not returned by it,
in same-day funds, interest on the amount of such wire funds in an amount
representing the Underwriters' cost of financing as reasonably determined by the
Underwriters.
4. Offering by the Underwriters. Upon your authorization of
the release of the Firm Securities, the
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<PAGE> 15
Underwriters propose to offer the Firm Securities for sale to the public upon
the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will file the Prospectus or any Term
Sheet that constitutes a part thereof, any Integrated Prospectus, Prospectus
Supplement, as the case may be, and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the Exchange Act and
the respective rules and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and of the Prospectus and any Integrated
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the Prospectus, Term Sheet any Integrated Prospectus or any amendment
or supplement thereto or any amendment to the Registration Statement or any Rule
462(b) Registration Statement of which the Representatives shall not previously
have been advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the Representatives shall
not have given its consent. The Company will prepare and file with the
Commission, in accordance with the rules and regulations of the Commission,
promptly upon request by the Representatives or counsel for the Underwriters,
any amendments to the Registration Statement or amendments or supplements to the
Prospectus and any Integrated Prospectus that may be necessary or advisable in
connection with the distribution of the Securities by the Underwriters, and will
use its best efforts to cause any such amendment to the Registration Statement
to be declared effective by the Commission as promptly as possible. The Company
will advise the Representatives, promptly after receiving notice thereof, of the
time when any amendment to the Registration Statement has been filed or declared
effective or the Prospectus, any Integrated Prospectus or any amendment or
supplement thereto has been filed and will provide evidence satisfactory to the
Representatives of each such filing or effectiveness.
(b) The Company will advise the Representatives,
promptly after receiving notice or obtaining knowledge thereof, of (i) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or any
post-effective amendment thereto or any order directed at any document
incorporated by reference in the Registration Statement, the Prospectus or any
Integrated Prospectus or any order preventing or suspending the use of any
Preliminary Prospectus, the
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<PAGE> 16
Prospectus and any Integrated Prospectus or any amendment or supplement thereto,
(ii) the suspension of the qualification of the Securities for offering or sale
in any jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Registration Statement or any Rule 462(b) Registration Statement,
for amending or supplementing any Preliminary Prospectus or the Prospectus and
any Integrated Prospectus or for additional information. The Company will use
its best efforts to prevent the issuance of any such stop order and, if any such
stop order is issued, to obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of
the Securities for offering and sale under the securities or blue sky laws of
such jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the
final date when a prospectus relating to the Securities is required to be
delivered under the Act or (ii) the Option Closing Date, any event occurs as a
result of which the Prospectus or any Integrated Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Prospectus or any Integrated Prospectus to comply with the Act, the Exchange Act
or the respective rules or regulations of the Commission thereunder, the Company
will promptly notify the Representatives thereof and, subject to Section 5(a)
hereof, will prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus or any Integrated Prospectus that corrects such statement or omission
or effects such compliance.
(e) The Company will, without charge, provide (i) to
each of the Representatives and to counsel for the Underwriters a conformed copy
of the registration statement originally filed with respect to the Securities or
any Rule 462(b) Registration Statement and each amendment thereto (in each case
including exhibits thereto), and (ii) so long as a prospectus relating to the
Securities is required to be delivered under the Act, as many copies of each
Preliminary Prospectus, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto as the Representatives may reasonably request;
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<PAGE> 17
without limiting the application of clause (ii) of this sentence, the Company,
not later than (A) 6:00 PM, New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 10:00
AM, New York City time on such date or (B) 2:00 PM, New York City time, on the
business day following the date of determination of the public offering price,
if such determination occurred after 10:00 AM, New York City time, on such date,
will deliver to the Representatives, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as the Representatives may
reasonably request for purposes of confirming orders that are expected to settle
on the Firm Closing Date.
(f) The Company, as soon as practicable, will make
generally available to its security holders and to the Representatives a
consolidated earnings statement of the Company and its subsidiaries that
satisfies the provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the
sale of the Securities as set forth under "Use of Proceeds" in the Prospectus or
any Integrated Prospectus.
(h) The Company will not, directly or indirectly,
without the prior written consent of Prudential Securities Incorporated, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of any option to purchase or other sale or disposition)
of any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 90 days
after the date hereof, except (i) pursuant to this Agreement, (ii) for issuances
pursuant to the Company's Dividend Reinvestment Plan, (iii) for issuances
pursuant to the Company's 1993 Share Option Plan, (iv) for issuances to Five
Arrows Realty Securities L.L.C. of Class A Senior Cumulative Convertible
Preferred Stock and Class B Senior Cumulative Convertible Preferred Stock
(including shares of Common Stock issuable upon conversion of such Class A and
Class B Senior Cumulative Convertible Preferred Stock) pursuant to purchase
agreements entered into as of December 31, 1996 and May 27, 1997, (v) for
issuances of restricted shares of Common Stock issuable upon the purchase or
conversion of partnership units in the Limited Partnership, provided, that, no
registration statement relating to such restricted Common Stock shall become
effective for a period of 90 days from the date hereof and (vi) for issuances of
partnership units in connection with the potential acquisition by the Company of
the Garden Grove Industrial Park and the Baywood Business Center, which
partnership units may be convertible into shares of Common Stock, provided,
that, no registration statement relating to such
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<PAGE> 18
restricted Common Stock shall become effective for a period of 90 days from the
date hereof; provided, that, Prudential Securities Incorporated, on behalf of
the Underwriters, may in its sole discretion and at any time without notice,
release all or any portion of the securities subject to the lock-up agreements.
(i) The Company will not, directly or indirectly, (i)
take any action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or (ii) (A) sell, bid for, purchase, or pay anyone
any compensation for soliciting purchases of, the Securities or (B) pay or agree
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(j) The Company will obtain the agreements described
in Section 7(f) hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the
Registration Statement becomes effective or the period prior to the Option
Closing Date, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which in your opinion the market price of the
Common Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus and any Integrated Prospectus), the Company will,
after notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you concerning the substance of, and disseminate
a press release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
(l) The Company will use its best efforts to cause
the Securities to be duly authorized for listing by the New York Stock Exchange
prior to the Firm Closing Date.
6. Expenses. The Company will pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Preliminary Prospectus, the Prospectus and any Integrated Prospectus and any
amendment or supplement thereto, this Agreement and any blue sky memoranda, (ii)
all arrangements relating to the delivery to Underwriters of copies of the
foregoing documents, (iii) the fees and
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<PAGE> 19
disbursements of the counsel, accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission (and the National Association of Securities Dealers,
Inc.) relating to the Securities, and (vii) the listing of the Securities on the
New York Stock Exchange, (viii) meetings with prospective investors in the
Securities (other than shall have been specifically approved in writing by the
Representatives to be paid for by the Underwriters) and (ix) advertising
relating to the offering of the Securities (other than shall have been
specifically approved in writing by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because this Agreement is terminated
pursuant to Section 10 (other than Section 10(v)) hereof or because of any
failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder other than by reason of a default by the Underwriters, the Company
will reimburse the Underwriters upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities. The
Company shall not in any event be liable to the Underwriters or the loss of
anticipated profits from the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters to purchase and pay for the Firm Securities
shall be subject, in the Representatives' discretion, to the accuracy of the
representations and warranties contained in Section 2 hereof as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the statements of the Company's officers made pursuant
to the provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) The Prospectus, any Term Sheet that constitutes a
part thereof, any Integrated Prospectus or the Prospectus Supplement, as the
case may be, and any amendment or supplement thereto shall have been filed with
the Commission in the manner and within the time period required by Rules 434
and 424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration
Statement, the Prospectus or any
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<PAGE> 20
Integrated Prospectus or any amendment or supplement thereto shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company or the Representatives, shall be
contemplated by the Commission; and the Company shall have complied with any
request of the Commission for additional information (to be included in the
Registration Statement, the Prospectus or any Integrated Prospectus or
otherwise).
(b) The Representatives shall have received an
opinion, dated the Firm Closing Date, of Piper & Marbury, LLP, Maryland counsel
for the Company, to the effect that:
(i) the Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Maryland;
(ii) the Company has the corporate power
to own or lease its properties and conduct its businesses as described
in the Registration Statement and the Prospectus or any Integrated
Prospectus, and the Company has corporate power to enter into this
Agreement and to carry out all the terms and provisions hereof and
thereof to be carried out by it;
(iii) the Company has authorized, issued
and outstanding capitalization as set forth in each of the Prospectus
or any Integrated Prospectus; all of the issued shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid and nonassessable, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities; the Firm Securities have been duly authorized by
all necessary corporate action of the Company, and when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be validly issued, fully paid and nonassessable;
(iv) the statements set forth under the
heading "Description of Common Stock" in each of the Prospectus and any
Integrated Prospectus, insofar as such statements purport to summarize
certain provisions of the capital stock of the Company, provide a fair
summary of such provisions; and the statements set forth under the
headings "Restrictions on Transfer of Capital Stock" and "Certain
Provisions of Maryland Law and of the Company's Articles and Bylaws" in
each of the Prospectus and any Integrated Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to
20
<PAGE> 21
therein, provide a fair summary of such legal matters, documents and
proceedings;
(v) the execution and delivery of this
Agreement have been duly authorized by all necessary corporate action
of the Company; and
(vi) the issuance, offering and sale of
the Securities to the Underwriters by the Company pursuant to this
Agreement, the compliance by the Company with the other provisions of
this Agreement and the consummation of the other transactions herein
contemplated do not conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under the
charter documents or bylaws of the Company.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus
and any Integrated Prospectus in this paragraph (b) shall include any amendment
or supplement thereto at the date of such opinion.
(c) The Representatives shall have received an
opinion, dated the Firm Closing Date, of Gibson, Dunn & Crutcher LLP, counsel
for the Company, to the effect that:
(i) The LLC has been duly formed and is
validly existing in good standing under the laws of the State of
California. The Limited Partnership has been duly formed and is validly
existing as a partnership in good standing under the laws of the State
of Delaware. The General Partnership has been duly formed and is
validly existing as a partnership in good standing under the laws of
the State of California. PGP Newport has been duly formed and is
validly existing as a corporation in good standing under the laws of
the State of California. Terrace Gardens has been duly formed and is
validly existing in good standing under the laws of the State of
Delaware. Morning View Terrace has been duly formed and is validly
existing in good standing under the laws of the State of Delaware.
Northern Industrial has been duly formed and is validly existing in
good standing under the laws of the State of Delaware. The Company and
the Subsidiaries are duly qualified to transact business as a foreign
entity, respectively, and are in good standing under the laws of all
other jurisdictions
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where the ownership or leasing of their respective properties or the
conduct of their respective businesses requires such qualification,
except where the failure to be so qualified does not amount to a
material liability or disability to the Company and the Subsidiaries,
taken as a whole;
(ii) the Subsidiaries have the power
(corporate and/or other) to own or lease their respective properties
and conduct their respective businesses as described in the
Registration Statement and the Prospectus or any Integrated Prospectus;
(iii) the outstanding shares of stock of
PGP Newport have been duly authorized and validly issued, are fully
paid and nonassessable and, except as otherwise set forth in the
Prospectus and any Integrated Prospectus, such shares of stock and the
Company's other interests in the Subsidiaries are owned beneficially to
the extent shown in Exhibit A hereto by the Company free and clear of
any security interests perfected by possession or, to the best
knowledge of such counsel, any other security interests, liens,
encumbrances, equities or claims, except as otherwise disclosed in the
Prospectus Supplement;
(iv) no holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Securities; and no holders of
securities of the Company are entitled to have such securities
registered under the Registration Statement;
(v) this Agreement has been duly executed
and delivered by the Company;
(vi) to the best knowledge of such
counsel, no legal or governmental proceedings are pending to which the
Company or any of the Subsidiaries are a party or to which the property
of the Company or any of the Subsidiaries is subject that are required
to be described in the Registration Statement, the Prospectus and any
Integrated Prospectus and are not described therein, and, to the best
knowledge of such counsel, no such proceedings have been threatened
against the Company or any of the Subsidiaries or with respect to any
of their respective properties;
(vii) the issuance, offering and sale of
the Securities to the Underwriters by the Company pursuant to this
Agreement, the compliance by the Company with the other provisions of
this Agreement and
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the consummation of the other transactions herein contemplated do not
(A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained and such as may be required under state securities
or blue sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or other
agreement or instrument, known to such counsel, to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary or
any of their respective properties are bound, charter or bylaws of
either of the Subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority
or any arbitrator known to such counsel and applicable to the Company
or any of the Subsidiaries;
(viii) the Registration Statement is
effective under the Act; any required filing of the Prospectus, or any
Term Sheet that constitutes a part thereof, and any Integrated
Prospectus pursuant to Rules 434 and 424(b) has been made in the manner
and within the time period required by Rules 434 and 424(b); and to the
best knowledge of such counsel no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement, the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto has been
issued, and no proceedings for that purpose have been instituted or
threatened or, are contemplated by the Commission;
(ix) the Registration Statement originally
filed with respect to the Securities and each amendment thereto and any
Rule 462(b) Registration Statement, the Prospectus and any Integrated
Prospectus (in each case, including the documents incorporated by
reference therein but not including the financial statements, notes
thereto and other financial information and schedules contained
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements of the
Act, the Exchange Act and the respective rules and regulations of the
Commission thereunder;
(x) if the Company elects to rely on Rule
434, the Prospectus is not "materially different,"
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<PAGE> 24
as such term is used in Rule 434, from the prospectus included in the
Registration Statement at the time of its effectiveness or any
effective post-effective amendment thereto (including such information
that is permitted to be omitted pursuant to Rule 430A);
(xi) except as described in or
contemplated by the Registration Statement, the Prospectus and any
Integrated Prospectus, to the best knowledge of such counsel, there are
no outstanding securities of the Company convertible or exchangeable
into or evidencing the right to purchase or subscribe for any shares of
capital stock of the Company and there are no outstanding or authorized
options, warrants or rights of any character obligating the Company to
issue any shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe for
any shares of such stock; and except as described in the Registration
Statement, the Prospectus and any Integrated Prospectus, to the best of
knowledge of such counsel, no holder of any securities of the Company
or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell
or otherwise issue to them, or to permit them to underwrite the sale
of, any of the Securities or the right to have any Common Stock or
other securities of the Company included in the Registration Statement
or the right, as a result of the filing of the Registration Statement,
to require registration under the Act of any shares of Common Stock or
other securities of the Company;
(xii) to such counsel's best knowledge
there are no contracts or documents required to be filed as exhibits to
or incorporated by reference in the Registration Statement or described
in the Registration Statement, the Prospectus and any Integrated
Prospectus which are not so filed, incorporated by reference or
described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus and any
Integrated Prospectus are fairly summarized in all material respects;
(xiii) the Company was organized in
conformity with the requirements for qualification as a REIT for
federal income tax purposes, and, based on the facts and assumptions
set forth in the Basic Prospectus, the Preliminary Prospectus and the
Prospectus Supplement and certain representations by the Company,
including but not limited to those set
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<PAGE> 25
forth in the Officer's Certificate regarding certain federal income tax
matters, its method of operation has enabled it, and its proposed
method of operation will enable it, to meet the requirements under the
Code for qualification and taxation as a REIT; and
(xiv) The Company is not, and will not
become, as a result of the consummation of the transactions
contemplated by this Agreement, and application of the net proceeds
therefrom as described in the Prospectus and any Integrated Prospectus,
required to register as an investment company under the 1940 Act.
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus and any Integrated Prospectus, as of its date or the date of such
opinion, included or includes any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus
and any Integrated Prospectus in this paragraph (b) shall include any amendment
or supplement thereto at the date of such opinion.
(d) The Representatives shall have received an
opinion, dated the Firm Closing Date, of Skadden, Arps, Slate, Meagher & Flom
LLP, counsel for the Underwriters, with respect to the Registration Statement,
the Prospectus or any Integrated Prospectus, and such other related matters as
the Representatives may reasonably require, and the Company shall have furnished
to such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(e) The Representatives shall have received from
Ernst & Young LLP, a letter or letters dated, respectively, the date hereof and
the Firm Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) they are independent accountants with
respect to the Company and the Subsidiaries within
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<PAGE> 26
the meaning of the Act, the Exchange Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited
consolidated financial statements and schedules examined by them and
included in the Registration Statement, the Prospectus and any
Integrated Prospectus comply in form in all material respects with the
applicable accounting requirements of the Act, the Exchange Act and the
related published rules and regulations thereunder;
(iii) on the basis of a reading of the
latest available interim unaudited consolidated and combined financial
statements of the Company and the Subsidiaries, carrying out certain
specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees thereof of the
Company and each of the Subsidiaries, and inquiries of certain
officials of the Company and the Subsidiaries who have responsibility
for financial and accounting matters, nothing came to their attention
that caused them to believe that:
(A) the unaudited consolidated financial statements
of the Company and the Subsidiaries included in the
Registration Statement, the Prospectus and any Integrated
Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act, the
Exchange Act and the related published rules and regulations
thereunder, or are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial
statements included in the Registration Statement, the
Prospectus and any Integrated Prospectus;
(B) at a specific date not more than five business
days prior to the date of such letter, there were any changes
in the capital stock or long-term debt of the Company and the
Subsidiaries or any decreases in net current assets or
shareholders' equity of the Company and the Subsidiaries, in
each case compared with amounts shown on the December 31, 1996
unaudited consolidated balance sheet included in the
Registration Statement, the Prospectus and any Integrated
Prospectus, or for the period from January 1, 1997 to
26
<PAGE> 27
such specified date there were any decreases, as compared with
the corresponding period in the preceding year, in sales, net
revenues, net income before income taxes or total or per share
amounts of net income of the Company and the Subsidiaries,
except in all instances for changes, decreases or increases
set forth in the Registration Statement, related Prospectus
Supplement or in such letter; and
(iv) they have carried out certain
specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information that are derived
from the general accounting records of the Company and the Subsidiaries
and are included in the Registration Statement, the Prospectus and any
Integrated Prospectus and in Exhibit 12 to the Registration Statement,
including the information included or incorporated in the Company's
most recent Annual Report on Form 10-K under the captions "Business"
(Item 1), "Selected Financial and Operating Data" (Item 6) and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" (Item 7), the information included or
incorporated in the Company's Quarterly Reports on Form 10-Q under the
caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations," Current Report on Form 8-K, filed with the
Commission on January 13, 1997 (as amended by Current Report on Form
8-K, filed with the Commission on January 17, 1997); Current Report on
Form 8-K, filed with the Commission on January 21, 1997; Current Report
on Form 8-K, filed with the Commission on February 18, 1997; Current
Report on Form 8-K, filed with the Commission on April 18, 1997;
Current Report on Form 8- K, filed with the Commission on May 29, 1997;
Current Report on Form 8-K, filed with the Commission on June 10, 1997;
Current Report on Form 8-K, filed with the Commission on June 26, 1997;
Current Report on Form 8- K, filed with the Commission on August 1,
1997; and Current Report on Form 8-K, filed with the Commission on
October 31, 1997. With respect to the items identified in the beginning
of this paragraph having proved the mathematical accuracy, they make no
representations regarding the sufficiency of the aforementioned
procedures for your purposes and have compared such amounts,
percentages and financial information with such records and with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretations; and
(v) on the basis of a reading of the
27
<PAGE> 28
unaudited pro forma consolidated condensed financial statements
included in the Registration Statement, the Prospectus and any
Integrated Prospectus, inquiries of certain officials of the Company
and the Subsidiaries who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the unaudited pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to believe that the
unaudited pro forma consolidated condensed financial statements do not
comply in form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of such statements.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus and any
Integrated Prospectus in this paragraph (d) with respect to either letter
referred to above shall include any amendment or supplement thereto at the date
of such letter.
(f) The Representatives shall have received a
certificate, dated the Firm Closing Date, of the Chief Executive Officer and the
Chief Financial Officer of the Company to the effect that:
(i) the representations and warranties of
the Company in this Agreement are true and correct as if made on and as
of the Firm Closing Date; the Registration Statement, as amended as of
the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading, the Prospectus and any Integrated
Prospectus, as amended or supplemented as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and the Company has performed all
28
<PAGE> 29
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
(ii) the Registration Statement has become
effective under the Act and no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto
and no order directed at any document incorporated by reference in the
Registration Statement or the Prospectus or any amendment or supplement
thereto has been issued, and no proceedings for that purpose have been
instituted or threatened or, to the best of the Company's knowledge,
are contemplated by the Commission;
(iii) subsequent to the respective dates
as of which information is given in the Registration Statement, the
Prospectus and any Integrated Prospectus, none of the Company or any of
the Subsidiaries has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, except
as to damage caused by recent storms on the West Coast for which
uninsured losses do not exceed $100,000, or from any labor dispute or
any legal or governmental proceeding, and there has not been any
material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise),
management, business prospects, net worth or results of operations of
the Company or any of the Subsidiaries, except in each case as
described in or contemplated by the Prospectus and any Integrated
Prospectus; and
(iv) all filings required to have been
made pursuant to Rules 424 or 430A under the Act have been made.
(g) The Representatives shall have received from each
person who is a director or officer of the Company an agreement to the effect
that such person will not, directly or indirectly, without the prior written
consent of Prudential Securities Incorporated, on behalf of the Underwriters,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, pledge, grant of an option to purchase or other sale or
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock for a period of 90
days after the date of this Agreement.
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<PAGE> 30
(h) On or before the Firm Closing Date, the
Representatives and counsel for the Underwriters shall have received such
further certificates, documents or other information as they may have reasonably
requested from the Company.
(i) Prior to the commencement of the offering of the
Securities, the Securities shall have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriters and counsel
for the Underwriters. The Company shall furnish to the Representatives such
conformed copies of such opinions, certificates, letters and documents in such
quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The obligations of the Underwriters to purchase and pay for any Option
Securities shall be subject, in its discretion, to each of the foregoing
conditions to purchase the Firm Securities, except that all references to the
Firm Securities and the Firm Closing Date shall be deemed to refer to such
Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution.
---------------------------------
(a) The Company agrees to indemnify and hold harmless
the Underwriters and each person, if any, who controls any of the Underwriters
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter or such controlling person may become subject under the Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue
statement made by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus and any Integrated Prospectus or any amendment or supplement
thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or any Subsidiary or based
upon written information furnished by or on behalf of the Company
30
<PAGE> 31
filed in any jurisdiction in order to qualify the Securities under the
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to
state in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus and any Integrated Prospectus or
any amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or
(iv) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual
materials used in connection with the marketing of the Securities,
including without limitation, slides, videos, films, tape recordings
and will reimburse, as incurred, the Underwriters and each such
controlling person for any legal or other expenses reasonably incurred by the
Underwriters or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus and any Integrated Prospectus or any amendment or supplement thereto,
or any Application in reliance upon and in conformity with written information
furnished to the Company by the Underwriters through the Representatives
specifically for use therein. This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of the Underwriters, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not the Underwriters or any person who controls any of the
Underwriters within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) The Underwriters, will indemnify and hold harmless the
Company, each of its directors, each of its officers
31
<PAGE> 32
who signed the Registration Statement and each person, it any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities, joint and
several, to which the Company or any such director, officer or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, or any Application or (ii)
the omission or the alleged omission to state therein a material fact required
to be stated in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or any Application or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Underwriters specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which the Underwriters
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which on the advice of counsel for the
indemnified party may conflict with those available to the indemnifying party,
the indemnifying party shall not have the right to direct the defense of such
action on behalf of such
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<PAGE> 33
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Representatives in
the case of paragraph (a) of this Section 8, representing the indemnified
parties under such paragraph (a) who are parties to such action or actions) or
(ii) the indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 8 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect (i) the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other from the offering of the Securities or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that 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 on the one hand
and the Underwriters on the other shall be deemed to be in the same
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<PAGE> 34
proportion as the total proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total public offering
price of the Securities purchased by such Underwriter under this Agreement, less
the aggregate amount of any damages that the Underwriters have otherwise been
required to pay in respect of the same or any substantially similar claim, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls any of the Underwriters within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Underwriters, and each director of the Company,
each officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
9. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers or directors and the Underwriters set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement shall remain
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Company or any Subsidiary, any of its officers or directors, the
Underwriters or any controlling person referred to in Section 8 hereof and (ii)
delivery of and payment for the Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6 and 8 hereof
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
10. Termination. (a) This Agreement may be terminated with
respect to the Firm Securities or any Option Securities in
34
<PAGE> 35
the sole discretion of the Representatives by notice to the Company given prior
to the Firm Closing Date or the related Option Closing Date, respectively, in
the event that the Company shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Firm Closing
Date or such Option Closing Date, respectively,
(i) the Company and the Subsidiaries as a
whole shall have, in the sole judgment of the Representatives,
sustained any material loss or interference with its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding or there shall have been any material
adverse change, or any development involving a prospective material
adverse change (including without limitation a change in management or
control of the Company), in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company
and its subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto);
(ii) trading in the Common Stock shall
have been suspended by the Commission or the New York Stock Exchange;
(iii) trading in securities generally on
the New York Stock Exchange shall have been suspended or minimum or
maximum prices shall have been established on such exchange;
(iv) a banking moratorium shall have been
declared by California, Maryland, New York or United States
authorities; or
(v) there shall have been (A) an outbreak
or escalation of hostilities between the United States and any foreign
power, (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or (C) any other calamity or
crisis or material adverse change in general economic, political or
financial conditions having an effect on the U. S. financial markets
that, in the judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
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<PAGE> 36
(b) Termination of this Agreement pursuant to this Section 10
shall be without liability of any party to any other party except as provided in
Section 9 hereof.
11. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus (to the extent such statements relate to each of the Underwriters)
constitute the only information furnished by each such Underwriter to the
Company for the purposes of Sections 2(b) and 8 hereof. Each Underwriter
confirms that such statements (to such extent) are correct.
12. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to Prudential
Securities Incorporated, One New York Plaza, New York, New York 10292,
Attention: Equity Transactions Group; and if sent to the Company, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Company at 4220 Von Karman, Second Floor, Newport Beach,
California 92660-2200, Attention: Glenn L. Carpenter.
13. Successors. This Agreement shall inure to the benefit of
and shall be binding upon each of the Underwriters, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control each of the
Underwriters within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of each of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from the Underwriters shall be deemed a successor because of such
purchase.
14. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED
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<PAGE> 37
ENTIRELY WITHIN THE STATE OF NEW YORK, EXCLUDING (TO THE GREATEST EXTENT
PERMISSIBLE BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. THE COMPANY, ON BEHALF OF
ITSELF AND THE SUBSIDIARIES, HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURIS
DICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE
CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE
CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS
AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY IRREVOCABLY WAIVES ANY
DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. THE COMPANY, ON BEHALF OF ITSELF AND THE SUBSIDIARIES, IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJEC TION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 38
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and the
Underwriters.
Very truly yours,
PACIFIC GULF PROPERTIES INC.
By:
-------------------------------
Glenn L. Carpenter
Chief Executive Officer
and President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
A.G. EDWARDS & SONS, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By:
----------------------------------
Jean-Claude Canfin
Managing Director
For itself and on behalf of
the Representatives
38
<PAGE> 39
EXHIBIT A
<TABLE>
<CAPTION>
Number of Number of
Firm Securities Option Securities
Representatives to be purchased to be purchased
- --------------- --------------- ---------------
<S> <C> <C>
Prudential Securities Incorporated 1,416,668 212,500
BancAmerica Robertson Stephens 1,416,666 212,500
A.G. Edwards & Sons, Inc. 1,416,666 212,500
--------- -------
Total 4,250,000 637,500
========= =======
</TABLE>
39
<PAGE> 40
EXHIBIT B
Ownership of PGP Inland Communities, L.P.
At least 78 % ownership by the Company.
Ownership of Pacific Inland Communities, LLC
As reflected in the Articles of Organization and in the
Operating Agreement for Pacific Inland Communities, LLC, a
California Limited Liability Company.
Ownership of PGP Newport Corp.
100% ownership by the Company.
Ownership of PGP Von Karman Properties
As reflected in the General Partnership Agreement of PGP Von
Karman Properties.
Ownership of Terrace Gardens-PGP L.P.
As reflected in the Agreement of Limited Partnership of
Terrace Gardens-PGP L.P.
Ownership of Morning View Terrace-PGP L.P.
As reflected in the Agreement of Limited Partnership of
Morning View Terrace-PGP L.P.
Ownership of PGP Northern Industrial, L.P.
As reflected in the Agreement of Limited Partnership of
PGP Northern Industrial, L.P.
40
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF PIPER & MARBURY]
November 21, 1997
Pacific Gulf Properties, Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as Maryland counsel to Pacific Gulf Properties Inc., a
Maryland corporation and a self-administered and self-managed equity real
estate investment trust (the "Company"), in connection with the issuance and
sale by the Company of 4,250,000 shares of common stock of the Company, $.01
par value per share (the "Common Stock") (plus an additional 637,500 shares of
Common Stock subject to an over-allotment option) (collectively, the "Shares")
pursuant to a Registration Statement on Form S-3 (No. 333-23611), filed by the
Company with the Securities and Exchange Commission on March 19, 1997 (together
with and any post-effective amendments, the "Registration Statement") and the
Prospectus Supplement relating thereto.
In this capacity, we have reviewed the Charter documents and By-laws of
the Company, the Registration Statement and the Prospectus Supplement. In
addition, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of such other documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary for the purpose of rendering this opinion. In such examination, we
have assumed, without independent investigation, the genuineness of all
signatures, the legal capacity of all individuals who have executed any of the
aforesaid documents, the authenticity of all documents submitted to us as
originals and the conformity with originals of all documents submitted to us as
copies (and the authenticity of the originals of such copies), that there has
been no substantial change in the final documents from documents submitted to
us as drafts and that all public records reviewed are accurate and complete. As
to factual matters, we have relied upon the above-referenced certificates of
officers of the Company and have not independently
<PAGE> 2
Pacific Gulf Properties, Inc.
November 21, 1997
Page 2
verified the matters stated therein. This opinion is also based upon the
assumption that the Registration Statement has become effective under the Act,
and that the Prospectus was filed with the Commission pursuant to Rule 424(b)
under the Securities Act.
Based upon the foregoing, and limited in all respects to applicable
Maryland law, we are of the opinion and advice you that the Shares have been
duly and properly authorized for issuance by all necessary corporate action on
the part of the Company and, upon payment of the consideration specified in the
Registration Statement and the Prospectus Supplement relating thereto, the
issuance and delivery of the Shares in accordance with the terms therefor and
the countersigning of the certificate or certificates representing the Shares
by a duly authorized officer of the registrar for the Company's Common Stock,
the Shares will be validly issued, fully paid and nonassessable.
The opinions expressed herein: (i) are limited to the matters set forth
herein, and no other opinion should be inferred beyond the matters expressly
stated; (ii) are subject to the qualification that we express no opinion as to
the laws of any jurisdiction other than the laws of the State of Maryland; and
(iii) concern only the effect of the laws (excluding the principles of conflict
of laws) of the State of Maryland as currently in effect. We assume no
obligation to supplement this opinion if any applicable laws change after the
date hereof or if we become aware of any facts that might change the opinion
expressed herein after the date hereof.
In addition, the opinions expressed herein are solely for the benefit
of the persons to whom this opinion is addressed and, without our prior written
consent, may not be quoted in whole or in part or otherwise referred to in any
legal opinion, document, or other report, and may not be furnished to any
person or entity, except that Gibson, Dunn & Crutcher LLP is authorized to
rely on this opinion in rendering any opinion to the Company which is to be
filed as an exhibit to the Registration Statement. In addition, we hereby
consent to the filing of this opinion as Exhibit 5 to the Registration
Statement and to the reference to our firm in the Registration Statement and
the Prospectus Supplement relating thereto.
Very truly yours,
<PAGE> 1
EXHIBIT 8.1
November 21, 1997
(213) 229-7000 C 72764-00018
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Re: Pacific Gulf Properties Inc.
Gentlemen:
We have acted as special tax counsel to Pacific Gulf Properties Inc., a
Maryland corporation (the "Company"), in connection with the offering of Four
Million Two Hundred and Fifty Thousand (4,250,000) shares of common stock, $.01
par value (plus an additional 637,500 shares issuable upon the exercise of the
over-allotment option granted by the Company to the underwriters of such
offering), of the Company pursuant to that certain Registration Statement filed
on Form S-3 with the Securities and Exchange Commission (File No. 333-23611)
(the "Registration Statement") and the Prospectus (the "Base Prospectus")
forming a part thereof, as amended and supplemented by the Prospectus Supplement
dated November 17, 1997 (the Prospectus Supplement collectively with the Base
Prospectus, the "Prospectus").
You have requested our opinion concerning certain of the federal income
tax considerations described in the Base Prospectus. This opinion is based on
various assumptions, and is conditioned upon the accuracy of certain oral and
written representations made by the Company as to factual matters relating to
the Company's organization, operations, income, assets, distributions and stock
ownership. In addition, this opinion is based upon the factual representations
of the Company concerning its business and properties as set forth in the
Registration Statement and the Prospectus. We have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments as we have deemed necessary or
appropriate for purposes of this opinion.
<PAGE> 2
Pacific Gulf Properties Inc.
November 21, 1997
Page 2
We are opining herein only as to the effect of the federal income tax
laws of the United States and we express no opinion with respect to the
applicability or effect of other federal laws, the laws of any other
jurisdiction or as to any matters of municipal law or the laws of any other
local agencies within any state.
In light of the foregoing, it is our opinion that:
(1) Commencing with the Company's taxable year ending December 31,
1994, the Company was organized in conformity with the requirements under the
Internal Revenue Code of 1986, as amended (the "Code") for qualification as a
real estate investment trust and, based on the facts, assumptions and
representations of the Company referred to above, its method of operation has
enabled, and its proposed method of operation will enable, it to meet the
requirements under the Code, for qualification and taxation as a real estate
investment trust.
(2) Based on the facts, assumptions and representations of the Company
referred to above, the information in the Base Prospectus under the caption
"Federal Income Tax Considerations," to the extent that it constitutes matters
of law, summaries of legal matters or legal conclusions, has been reviewed by us
and is accurate in all material respects.
This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all as of the date
hereof. We caution that such authorities are subject to change and that any such
change may be applied retroactively. Also, any variation or difference in the
facts from those included in the Company's representations may affect the
conclusions stated herein. Moreover, the Company's qualification and taxation as
a real estate investment trust depends upon the Company's having met and
continuing to meet -- through annual operating results, distribution levels and
diversity of stock ownership -- the various qualification tests imposed under
the Code, the results of which will not be reviewed by Gibson, Dunn & Crutcher
LLP. Accordingly, no assurance can be given that the actual results of the
Company's operations, distribution levels or diversity of stock ownership for
any one taxable year have satisfied or will satisfy such requirements.
We hereby consent to filing of this opinion as an exhibit to the
Company's current report on Form 8-K dated November 20, 1997, and to the
reference to this firm under the heading "Legal Matters" in the Base Prospectus
and the Prospectus Supplement and under the heading "Federal Income Tax
Considerations" in the Base Prospectus.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP
