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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report: SEPTEMBER 9, 1997
(Date of earliest event reported) (September 4, 1997)
ESSEX PROPERTY TRUST, INC.
(Exact name of Registrant as
Specified in its Charter)
MARYLAND
(State or Other Jurisdiction
of Incorporation)
1-13106
(Commission File Number)
77-0369576
(IRS Employer Identification No.)
777 CALIFORNIA AVENUE
PALO ALTO, CA 94304
(650) 494-3700
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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Item 5. OTHER EVENTS.
Essex Property Trust, Inc. (the "Company"), Essex Portfolio, L.P. and
Lehman Brothers Inc. ("Lehman Brothers") have entered into a Purchase Agreement
dated September 4, 1997, and the Company, and Lehman Brothers have entered into
a Pricing Agreement dated September 4, 1997, pursuant to which (i) Lehman
Brothers has agreed to purchase a total of 1,300,000 shares of Common Stock (the
"Shares") of the Company (and up to an additional 195,000 shares pursuant to an
over-allotment option) for a purchase price of $31 per share, resulting in
aggregate net proceeds to the Company of approximately $40.2 million (and
$46.245 million if the over-allotment option is exercised in full); (ii) Lehman
Brothers will offer the Shares for sale to the public at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices, and (iii) Lehman Brothers has committed to
purchase all such Shares if any are purchased.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The exhibits listed in the accompanying Index to Exhibits are filed as
part of this Current Report on Form 8-K.
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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.
ESSEX PROPERTY, INC.
September 8, 1997 By: /s/ Mark J. Mikl
------------------------------
Mark J. Mikl
Controller (Authorized Officer
and Principal Accounting Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT DESCRIPTION
- -------------------- -------------------------------------------------------------------
1.1 Purchase Agreement dated September 4, 1997 by and between Essex
Property Trust, Inc. and Lehman Brothers Inc.
1.2 Pricing Agreement dated September 4, 1997 by and between Essex
Property Trust, Inc. and Lehman Brothers Inc.
</TABLE>
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EXHIBIT 1.1
ESSEX PROPERTY TRUST, INC.
(a Maryland corporation)
Common Stock
PURCHASE AGREEMENT
September 4, 1997
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Essex Property Trust, Inc., a Maryland corporation (the
"Company"), hereby confirms its agreement with Lehman Brothers Inc. (the
"Underwriter"), with respect to the sale by the Company and the purchase by the
Underwriter of 1,300,000 shares of common stock of the Company, par value
$0.0001 per share (the "Common Stock"), and with respect to the grant by the
Company to the Underwriter of the option described in Section 2(b) hereof to
purchase all or any part of 195,000 additional shares of Common Stock to cover
over-allotments, in each case except as may otherwise be provided in the Pricing
Agreement, as hereinafter defined. The aforesaid 1,300,000 shares of Common
Stock (the "Initial Securities") to be purchased by the Underwriter and all or
any part of the 195,000 shares of Common Stock subject to the option described
in Section 2(b) hereof (the "Option Securities") are collectively hereinafter
called the "Securities."
Prior to the purchase and public offering of the Securities by
the Underwriter, the Company and the Underwriter shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Company and the Underwriter, and shall
specify such applicable information as is indicated in Exhibit A hereto. The
offering of the Securities will be governed by this Agreement, as supplemented
by the Pricing Agreement. From and after the date of the execution and delivery
of the Pricing Agreement, this Agreement shall be deemed to incorporate the
Pricing Agreement.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-21989) for the registration of certain securities under the Securities Act
of 1933, as amended (the "1933 Act"), and the offering thereof from time to time
in accordance with Rule 415 of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations"). The Company will file such additional
amendments thereto and such amended or supplemental prospectuses as may
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hereafter be required prior to the execution of the Pricing Agreement. Such
registration statement, as so amended, has been declared effective by the
Commission. Such registration statement (as amended, if applicable) including
the information, if any, deemed to be part thereof pursuant to Rule 430A(b) of
the 1933 Act Regulations or Rule 434(d) of the 1933 Act Regulations, is referred
to herein as the "Registration Statement"; and the final prospectus and the
prospectus supplement relating to the offering of the Securities, in the form
first furnished to the Underwriter by the Company for use in connection with the
offering of the Securities, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the Pricing
Agreement; and provided, further, that if the Company elects to rely on Rule 434
of the 1933 Act Regulations, all references to the "Prospectus" shall be deemed
to include the final prospectus or preliminary prospectus, as the case may be,
and the term sheet or abbreviated term sheet (the "term sheet"), as the case may
be, in the form first furnished to the Underwriter by the Company in reliance on
Rule 434 of the 1933 Act Regulations, and all references in this Purchase
Agreement to the date of the Prospectus shall mean the date of the term sheet.
For purposes of this Agreement, all references to the Registration Statement,
the Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system.
All references in this Agreement to the financial statements
and schedules and other information that is "contained," "included" or "stated"
in the Registration Statement or the Prospectus (or other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to include the filing
of any document under the 1934 Act which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be.
The terms "subsidiary" and "subsidiaries," as used herein,
shall mean Essex Portfolio, L.P., a California limited partnership (the
"Operating Partnership") and any other corporation, partnership or entity of
which the Company has the right or power, directly or indirectly, to elect a
majority of the board of directors in the case of a corporation or as to which
the Company, directly or indirectly, has a majority economic ownership interest
in, in the case of a partnership or entity.
The Company understands that the Underwriter proposes to make
a public offering of the Securities as soon as it deems advisable after the
Pricing Agreement has been executed and delivered.
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SECTION 1. Representations and Warranties.
(a) Each of the Company and the Operating Partnership
represents and warrants, jointly and severally, to the Underwriter as of the
date hereof, as of the date of the Pricing Agreement, as of the Closing Time (as
defined below) and, if applicable, as of each Date of Delivery (as defined
below) (in each case, a "Representation Date") as follows:
(i) Compliance with Registration
Requirements. The Company meets the requirements for use of Form S-3
under the 1933 Act. The Registration Statement has become effective
under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the time the Registration Statement
became effective and at each Representation Date, the Registration
Statement complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus, at each
Representation Date, did not and will not include an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used in connection
with the offering of the Securities, the Company will comply with the
requirements of Rule 434. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by the
Underwriter expressly for use in the Registration Statement or the
Prospectus.
(ii) Incorporated Documents. The documents
incorpo- rated or deemed to be incorporated by reference in the
Registration Statement and the Prospectus, at the time they were or
hereafter are filed with the Commission (the "Incorporated Documents"),
complied and will comply in all material respects with the requirements
of the 1934 Act and the rules and regulations of the Commission under
the 1934 Act (the "1934 Act Regulations"), and, when read together with
the other information in the Prospectus, at the date of the Prospectus
and at each Representation Date, will not contain an untrue statement
of a material fact or omit to state a material fact required to be
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stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(iii) Independent Accountants. The
accountants who certified the financial statements and supporting
schedules included in the Registration Statement are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial
statements included in the Registration Statement and the Prospectus
present fairly the financial position of the respective entity or
entities at the dates indicated and the results of their operations for
the periods specified; except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis; the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein; and the
pro forma financial statements included in the Registration Statement
and the 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.
(v) No Material Adverse Change in Business.
Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
or contemplated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise or of the Company's properties taken as a
whole, whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its stock.
(vi) Good Standing of the Company. The
Company has been duly organized and is validly existing as a
corporation under, and is in good standing under, the laws of the State
of Maryland with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement and the Pricing Agreement; and the Company is duly
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qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business.
(vii) Good Standing of Subsidiaries. Each
subsidiary of the Company has been duly formed and is validly existing
and in good standing under the laws of the jurisdiction of its origin,
has the power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and
qualified to transact business and will be in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business;
except as otherwise stated in the Prospectus, all of the issued and
outstanding capital stock or other ownership interests in each such
subsidiary have been duly authorized, validly issued, are fully paid
and non-assessable and are owned by the entities described in the
Prospectus, in each case free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(viii) Capitalization. The authorized and
issued and outstanding shares of all of the classes of the Company's
capital stock are as set forth in the Prospectus; the issued and
outstanding shares of all the classes of the Company's capital stock
have been duly authorized and validly issued and are fully paid and
non-assessable; the Securities have been duly authorized for issuance
and sale to the Underwriter pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth in the Pricing Agreement, will be
validly issued, fully paid and non-assessable; the Company has duly
reserved a sufficient number of shares of Common Stock for issuance
upon exchange of outstanding Operating Partnership interests and the
conversion of the Company's 8.75% Convertible Preferred Stock, Series
1996A (the "Convertible Preferred Stock"); the shares of Common Stock
conform to all statements relating thereto contained in the Prospectus;
and, except for the preemptive rights of Tiger/Westbrook Real Estate
Fund, L.P. and Tiger/Westbrook Real Estate Co-Investment Partnership,
L.P. (collectively, "Tiger/Westbrook") as described in the Prospectus,
the issuance of the Securities is not subject to preemptive or other
similar rights.
(ix) Absence of Defaults and Conflicts.
Neither the Company nor any of its subsidiaries is in violation of its
organizational documents, including, as applicable, its charter,
bylaws, partnership, trust and joint venture agreements; neither the
Company nor any of its subsidiaries is or will be, upon application of
the proceeds of the offering described in the Prospectus, in default in
the performance or observance of any material duty (in-
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cluding any material obligation, agreement, covenant or condition)
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it or any of them is a party or by
which it or any of them may be bound, or to which any of their
properties or assets is subject which default would have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or would, either immediately
or with the passage of time, allow any material indebtedness of the
Company to be accelerated; and the execution, delivery and performance
of this Agreement and the Pricing Agreement, and the consummation of
the transactions contemplated herein and therein and compliance by the
Company with its obligations hereunder and thereunder have been duly
authorized by all necessary action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, which default would have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, or would, either
immediately or with the passage of time, allow any material
indebtedness of the Company to be accelerated, nor will such action
result in any violation of the provisions of the charter or bylaws of
the Company or any applicable law, administrative regulation or
administrative or court decree.
(x) Due Authorization; Binding Agreement.
This Agreement and the Pricing Agreement have been duly authorized,
executed and delivered by the Company and the Operating Partnership, as
applicable, and constitute a binding agreement of the Company and the
Operating Partnership, enforceable against the Company and the
Operating Partnership in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and
the effect of general principles of equity.
(xi) Absence of Labor Disputes. No labor
dispute with the employees of the Company or any subsidiary exists or,
to the knowledge of the Company, is imminent, which may reasonably be
expected to result in a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise.
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(xii) Absence of Proceedings. There is no
action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge
of the Company, threatened, against or affecting the Company, any of
its subsidiaries or any of their respective properties, which is
required to be disclosed in the Prospectus (other than as disclosed
therein), or which might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise, or which might materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated by this Agreement; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party
or of which any of their respective properties or assets is the subject
which are not described in the Prospectus, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material; and there are no contracts or documents of the
Company or any of its subsidiaries required to be filed as exhibits to
the Registration Statement by the 1933 Act or the 1933 Act Regulations
which have not been so filed.
(xiii) REIT Status. The Company has been
organized and operated in conformity with the requirements for
qualification as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), for each of its
taxable years beginning with the taxable year ended December 31, 1994,
and the Company's present and proposed method of operation will enable
it to continue to meet the requirements for qualification as a REIT
under the Code.
(xiv) NYSE Listing. The shares of Common
Stock, including the Securities, have been approved for listing on the
New York Stock Exchange.
(xv) Absence of Further Requirements. No
authorization, approval, consent or waiver of, or filing,
registration or qualification with, or notice to any court or
governmental authority or agency or any other person on the part of the
Company is required to be made, obtained or given in connection with
the execution, delivery and performance of this Agreement and the
Pricing Agreement and the offering, issuance or sale of the Securities
hereunder, except (i) to the extent such will be made, obtained or
given prior to the Closing Time and (ii) such as may be required under
the 1933 Act or the 1933 Act Regulations, state securities laws or the
National Association of Securities Dealers, Inc.
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(xvi) Possession of Licenses and Permits.
The Company and its subsidiaries have complied with all laws
applicable to the conduct of their respective businesses and the
ownership, use and operation of their respective properties except as
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as one enterprise. The
Company and its subsidiaries, directly or indirectly, possess such
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them and proposed to be conducted by them
as described in the Prospectus, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(xvii) Absence of Registration Rights.
Except as described in the Prospectus, there are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
(xviii) Properties. (A) Except as described
in the Prospectus, the Company or its subsidiaries has good and
marketable title in fee simple to all real property and interests in
real property owned by each of them, including, but not limited to, the
properties described in or incorporated by reference into the
Prospectus (collectively, for purposes of this Section 1(a)(xviii), the
"Properties"); in each case, such title is free and clear of all liens,
encumbrances, claims, security interests and defects of any kind
(including, without limitation, options to purchase and rights of first
refusal), other than those referred to in the Prospectus or which would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as one enterprise; (B) all
liens, charges, encumbrances, claims, or restrictions on or affecting
the Properties which are required to be disclosed in the Prospectus are
disclosed therein; (C) neither the Company (nor any of its
subsidiaries) nor, to the best of the knowledge of the Company (or any
of its subsidiaries), any lessee under a lease relating to any of the
Properties is in default under any of the leases relating thereto, and
the Company (or any of its subsidiaries) does not know of any event
which, but for the passage of time or the giving of notice, or both,
would constitute a default under any of such leases, except such
defaults
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that would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise; (D) each of the Properties is in compliance with all
applicable codes, ordinances, zoning laws and regulations, and neither
the Company nor any of its subsidiaries has received a notice of
violation of any of the foregoing, except for such failures to comply
or violations which would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as
one enterprise; (E) neither the Company nor any of its subsidiaries has
any knowledge of any pending or threatened condemnation or zoning
change with respect to all or any portion of any of the Properties, or
of any other proceeding or action that will affect the size of, use of,
improvements on, construction on, or access to all or any portion of
any of the Properties, except such proceedings or actions that would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as one enterprise; (F) the
maintenance, service, advertising and other like contracts and
agreements with respect to the ownership and operation of Properties
other than any property management agreement (the "Service Contracts")
are in full force and effect and have been entered into with third
parties that are not affiliated with the Company or any of its
subsidiaries in the ordinary course of business of the Company and its
subsidiaries, as applicable, and are incidental and reasonably related
to the ownership and/or operation of their respective Properties and
neither the Company nor its subsidiaries is in default under any of the
Service Contracts except for such defaults that would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise; (G) all of the leases
and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company
or any of its subsidiaries holds Properties are in full force and
effect, and neither the Company nor any of its subsidiaries has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease; and (H) there exist no liens, encumbrances, claims, security
interests and defects of any kind on the Company's or any subsidiary's
ability to collect rents from its Properties, except for such liens,
encumbrances, claims, security interests and defects that would not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as one
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enterprise, and the Company's collection of such rents is in accordance
with all applicable laws, rules and regulations and neither the Company
nor any of its subsidiaries has received a notice of violation of any
of the foregoing, except for such violations that would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise.
(xix) Title Insurance. Each of the Operating
Partnership and its subsidiaries has title insurance on all of its
properties and assets in an amount at least equal to the purchase price
of such property, subject only to liens, encumbrances, claims, security
interests and defects that customarily encumber comparable properties;
such title insurance is in full force and effect; and no notice of
cancellation has been received with respect thereto and, to the
knowledge of the Company, none is threatened.
(xx) Mortgages. The mortgages and deeds of
trust encumbering the properties and assets described in the Prospectus
are not convertible into an equity ownership interest in the Company or
any of its subsidiaries (except for mortgages existing on the date
hereof encumbering the properties commonly known as the Shores and
Bristol Commons) and neither the Company nor any of its subsidiaries
holds a participating interest therein and such mortgages and deeds of
trust are not cross-defaulted or cross-collateralized to any property
not owned or leased by the Company or any of its subsidiaries.
(xxi) Stabilization. The Company has not
taken and will not take, directly or indirectly, any action designed
to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Common Stock.
(xxii) Investment Company Act. Neither the
Company nor any of its subsidiaries is subject to registration as an
"investment company" under the Investment Company Act of 1940.
(xxiii) Restrictions of Sales of Securities.
The Company and the Operating Partnership have obtained the agreement
of The Marcus & Millichap Company and each of George M. Marcus, Keith
R. Guericke and Michael J. Schall to the effect that during a period of
90 days from the date of the Prospectus, such entity or persons will
not, without the Underwriter's prior written consent, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise transfer or dispose of (whether directly or synthetically),
or enter into any agreement to sell or otherwise dispose of (whether
directly or synthetically) any Common Stock or any security convertible
into or exchangeable into or exercisable for Common Stock; except that
such entity or persons may pledge any shares of Common Stock or
securities convertible into or
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exchangeable into or exercisable for shares of Common Stock, provided,
that such pledged shares of Common Stock or pledged securities
convertible into or exchangeable into or exercisable for shares of
Common Stock may not be sold or otherwise transferred or disposed of by
the respective pledgee without the prior written consent of the
Underwriter during such 90-day period.
(xxiv) Environmental Matters. Except as
described in the Prospectus and except such violations as would not,
singly or in the aggregate, result in a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries, considered
as one enterprise or otherwise would require disclosure in the
Prospectus, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of
its subsidiaries relating to any Hazardous Materials or the violation
of any Environmental Laws.
(xxv) Taxes. (i) The Company has filed when
due all Federal, state and local returns for "Taxes" (as hereinafter
defined) that are required to be filed by it for all taxable periods
through and including December 31, 1996; all such returns were prepared
in the manner required by applicable
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law and were true, correct and complete in all material respects; and
the Company has paid all Taxes reported as due in such returns, and has
paid any other taxes for which it may be liable; (ii) the Company is
not in material default in respect of the payment of Taxes levied or
assessed against it or any of its assets for all taxable periods
through the date hereof, and there are no material liens or claims for
Taxes outstanding upon or against or threatened upon or against it or
any of its assets (other than liens for Taxes which are not yet due and
payable); and (iii) no audit, inquiry, investigation or similar
proceeding with respect to Taxes of which the Company is aware to the
best of its knowledge is currently pending or threatened against the
Company or any of its assets, an adverse outcome of which could have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company.
As used in the above paragraph, the term
"Tax" or "Taxes" shall include all United States federal, state, local
and foreign taxes, assessments or other governmental charges (whether
imposed directly or through withholding), including any interest,
penalties and additions to taxes applicable thereto.
(b) Any certificate signed by any officer of the
Company in his or her capacity as an officer of the Company and delivered to the
Underwriter or to counsel for the Underwriter shall be deemed a representation
and warranty by the Company to the Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter, and the Underwriter agrees
to purchase from the Company, at the price per share set forth in the Pricing
Agreement, the Initial Securities.
(b) In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriter to purchase up
to all of the Option Securities at the purchase price per share set forth in the
Pricing Agreement, less an amount per share equal to any dividends declared by
the Company and payable on the Initial Securities but not payable on the Option
Securities. The option hereby granted will expire 30 calendar days after the
date of the Pricing Agreement and may be exercised in whole or in part from time
to time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Underwriter to the Company setting forth the number of Option
Securities as to which the Underwriter is then exercising the option and the
time and date of payment and delivery for such Option Securities. Any such time
and
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<PAGE> 13
date of delivery (a "Date of Delivery") shall be determined by the Underwriter,
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to Closing Time, unless otherwise agreed by the
Underwriter and the Company.
(c) Payment of the purchase price and delivery of
certificates for the Initial Securities shall be made at the offices of Morrison
& Foerster LLP, 755 Page Mill Road, Palo Alto, CA 94304-1018, or at such other
place as shall be agreed upon by the Underwriter and the Company, at 10:00 A.M.
New York time on the third business day after execution of the Pricing
Agreement, or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriter and the Company (such time and date
of payment and delivery being herein called "Closing Time"). In addition, in the
event that any or all of the Option Securities are purchased by the Underwriter,
payment of the purchase price and delivery of certificates for such Option
Securities shall be made at the above mentioned offices, or at such other place
as shall be agreed upon by the Underwriter and the Company, on each Date of
Delivery as specified in the notice from the Underwriter to the Company. Payment
shall be made to the Company by wire transfer payable in same day funds, to the
order of the Company. Payment shall be against delivery to the Underwriter for
the account of the Underwriter of certificates for the Securities to be
purchased. Certificates for the Initial Securities and the Option Securities, if
any, shall be in such denominations and registered in such names as the
Underwriter may request in writing at least one full business day before the
Closing Time or the relevant Date of Delivery, as the case may be. The
certificates for the Initial Securities and the Option Securities, if any, will
be made available for examination and packaging by the Underwriter not later
than 10:00 A.M. on the last business day prior to Closing Time or the relevant
Date of Delivery, as the case may be.
SECTION 3. Covenants. The Company covenants with the
Underwriter as follows:
(a) The Company will notify the Underwriter
immediately, and confirm the notice in writing, (i) of the effectiveness of
any post-effective amendment to the Registration Statement filed after the date
of this Agreement in connection with the offering of the Securities, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order by any state securities administrator
suspending the qualification of the Securities in such state or the initiation
of any proceedings for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order or
suspension is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) The Company will give the Underwriter notice of
its intention to file or prepare any post-effective amendment to the
Registration Statement filed after the date of
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<PAGE> 14
this Agreement in connection with the offering of the Securities or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Company proposes for use by the Underwriter in connection with the
offering of the Securities or any term sheet, whether or not such revised
prospectus or term sheet is required to be filed pursuant to Rule 424(b) or Rule
434 of the 1933 Act Regulations), will furnish the Underwriter with copies of
any such amendment or supplement or term sheet a reasonable amount of time prior
to such proposed filing or use, as the case may be, and will not file any such
amendment or supplement or term sheet or use any such prospectus to which the
Underwriter or counsel for the Underwriter shall object.
(c) The Company will deliver to the Underwriter one
signed copy of any post-effective amendment to the Registration Statement made
in connection with the offering of the Securities (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and will also deliver to the
Underwriter a conformed copy of the Registration Statement as originally filed
and of each amendment, post-effective amendment or supplement or term sheet
thereto (without exhibits).
(d) The Company will furnish to the Underwriter, from
time to time during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) and the term sheet, if any, as the Underwriter may
reasonably request for the purposes contemplated by the 1933 Act or the 1934 Act
or the respective applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it
is necessary, in the reasonable opinion of counsel for the Underwriter, to amend
or supplement the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, or if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the 1933 Act or the 1933 Act
Regulations, the Company will forthwith amend or supplement the Prospectus (in
form and substance reasonably satisfactory to counsel for the Underwriter) so
that, as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, and will comply with
the 1933 Act and the 1933 Act Regulations, and the Company will furnish to the
Underwriter a reasonable number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with
the Underwriter, to qualify the Securities for offering and sale under the
applicable securities laws and real estate syndication laws of such states and
other jurisdictions of the United States as the Underwriter may designate;
provided, however, that the Company shall not be obligated to (i) file any
gen-
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<PAGE> 15
eral consent to service of process, (ii) qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or (iii) take any action that would
subject it to income taxation in any such jurisdiction. In each jurisdiction in
which the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one year
from the date of the Pricing Agreement.
(g) The Company will make generally available to its
security holders as soon as practicable, but not later than fifty (50) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the "effective date" (as defined in said Rule 158)
of the Registration Statement.
(h) Immediately following the execution of the
Pricing Agreement, the Company will prepare, and file or transmit for filing
with the Commission in accordance with Rule 434 and Rule 424(b) of the 1933 Act
Regulations, copies of the amended Prospectus supplement and term sheet, if any,
to the Registration Statement, containing all information so omitted.
(i) The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(j) During a period of 90 days from the date of the
Pricing Agreement, the Company and the Operating Partnership will not, without
the Underwriter's prior written consent, directly or indirectly, sell, offer to
sell, grant any option for the sale of, or otherwise transfer or dispose of
(whether directly or synthetically), or enter into any agreement to sell or
otherwise dispose of (whether directly or synthetically) any Common Stock or any
security convertible into or exchangeable into or exercisable for Common Stock,
except for shares of Common Stock issued (i) pursuant to this Agreement, (ii)
pursuant to the Company's stock option plans as described in the Prospectus,
(iii) pursuant to the terms of the Convertible Preferred Stock, and (iv)
pursuant to the exchange of outstanding limited partnership interests in the
Operating Partnership in accordance with the terms of the Operating Partnership
as of the date hereof.
(k) The Company, consistent with the best interests
of its shareholders, will use its best efforts to continue to meet the
requirements to qualify as a REIT under the Code.
(l) The Company will file, prior to any
Representation Date, all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the 1934 Act within the time periods
required by the 1934 Act and the 1934 Act Regulations.
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<PAGE> 16
(m) If the Company uses Rule 434 of the 1933 Act
Regulations in connection with the offering of the Securities, it will comply
with the requirements of Rule 434 of such regulations.
(n) The Company will comply with all the provisions
of any undertakings contained in the Registration Statement.
SECTION 4. Payment of Expenses. The Company shall pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the printing and filing of the Registration Statement and any
post-effective amendment thereto, (ii) the printing of this Agreement and the
Pricing Agreement, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriter, including the payment of any
stock transfer taxes, stamp duties and similar taxes, if any, payable upon the
issuance of any Securities and the sale of the Securities to the Underwriter,
(iv) the fees and disbursements of the Company's counsel and accountants, (v)
the qualification of the Securities under securities and real estate syndication
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the fees and disbursements of counsel in connection therewith and in
connection with the preparation of any Blue Sky Survey and any Legal Investment
Survey, (vi) the printing and delivery to the Underwriter of copies of the
Registration Statement as originally filed and of each amendment thereto, of
each preliminary prospectus supplement, and of the Prospectus and any amendments
or supplements thereto, (vii) the printing and delivery to the Underwriter of
copies of any Blue Sky Survey and any Legal Investment Survey, (viii) the fees
of the National Association of Securities Dealers, Inc., if any, and (ix) the
fees and expenses incurred in connection with the listing of the Securities on
the New York Stock Exchange; provided, however that the Company shall have no
obligation to reimburse the Underwriter for (i) fees, disbursements and
out-of-pocket expenses of legal counsel to the Underwriter if the offering, as
contemplated hereby, closes, or (ii) expenses in connection with the offering,
as contemplated hereby, (other than legal fees and disbursements as aforesaid)
that are customarily borne by the representatives in public offerings managed by
the Underwriter.
If this Agreement is terminated by the Underwriter in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriter for all of its reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The
obligations of the Underwriter hereunder are subject to the accuracy of the
representations and warranties of the Company and the Operating Partnership
herein contained, to the performance by each of the Company and the Operating
Partnership of its obligations hereunder, and to the following further
conditions:
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<PAGE> 17
(a) The Registration Statement, as amended, shall
have become effective on or prior to the date of this Agreement; and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission. The price of the Securities and any
price-related information previously omitted from the effective Registration
Statement and any term sheet used pursuant to Rule 434 of the 1933 Act
Regulations shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) of the 1933 Act Regulations within the prescribed time period and,
prior to the Closing Time the Company shall have provided evidence satisfactory
to the Underwriter of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective.
(b) At Closing Time the Underwriter shall have
received:
(1) The favorable opinion, dated as of Closing Time,
of Morrison & Foerster LLP, counsel for the Company, in form and
substance, and subject to qualifications, exceptions and assumptions,
satisfactory to counsel for the Underwriter, to the effect that:
(i) The Company has been duly organized and
is validly existing as a corporation under the laws of the State of
Maryland and is in good standing under the laws of the State of
Maryland.
(ii) The Company is duly qualified as a
foreign corporation to transact business in and is in good standing
under the laws of each jurisdiction in which such qualification is
required and permitted or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction.
(iii) Each of the Company, the Operating
Partnership, Essex Bristol Partners, L.P., Essex San Ramon Partners,
L.P. and Essex Meadowood, L.P. has been duly formed and is validly
existing and in good standing under the laws of the jurisdiction of its
origin, has the power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and, to such counsel's knowledge and information, is duly qualified as
a foreign entity to transact business in and is in good standing under
the laws of each jurisdiction in which such qualification is required
or is subject to no material liability or disability by reason of
failure to be so qualified in any such jurisdiction; all of the
outstanding ownership interests of each subsidiary of the Company have
been duly authorized and validly issued, are fully paid, and the
Company's ownership interest in each subsidiary of the Company is owned
directly or through subsidiaries by the
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<PAGE> 18
Company as described in the Prospectus, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(iv) Each of the Company and the Operating
Partnership has the power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and, each of the Company and the Operating Partnership, as the case may
be, has the power and authority to enter into and perform its
obligations under this Agreement and the Pricing Agreement.
(v) The Securities have been duly authorized
for issu- ance and sale to the Underwriter pursuant to this Agreement
and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth in the Pricing
Agreement, will be validly issued, fully paid and non-assessable.
(vi) The Company has an authorized
capitalization as set forth in the Prospectus, and the issued and
outstanding shares of all classes of the Company's capital stock have
been duly authorized and validly issued and are fully paid and
non-assessable.
(vii) The issuance of the Securities is not
subject to pre- emptive or other similar rights arising by operation of
law, the Company's charter or bylaws or, to such counsel's knowledge,
otherwise, other than the preemptive rights of Tiger/Westbrook, as
described in the Prospectus, which have been waived.
(viii) The Securities conform in all
material respects as to legal matters to the description thereof
contained in the Prospectus and the form of certificate used to
evidence the Common Stock is in due and proper form and complies with
all applicable statutory requirements.
(ix) This Agreement has been duly
authorized, executed and delivered by the Company and the Operating
Partnership.
(x) The Pricing Agreement has been duly
authorized, executed and delivered by the Company.
(xi) The Registration Statement is effective
under the 1933 Act, and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement
has been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
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<PAGE> 19
(xii) At the time the Registration Statement
became effective and at each Representation Date, the Registration
Statement (other than the financial statements and supporting schedules
and other financial data included therein, as to which no opinion need
be rendered) complied as to form in all material respects with the
applicable requirements of the 1933 Act and the 1933 Act Regulations.
(xiii) To such counsel's knowledge, there
are no legal or governmental proceedings pending or threatened which
are required to be disclosed in the Prospectus, other than those
disclosed therein, and all pending legal or governmental proceedings to
which the Company or any of its subsidiaries is a party or to which any
of their properties is subject which are not described in the
Prospectus, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material.
(xiv) The statements in the Prospectus under
the headings "Description of Common Stock," "Certain Provisions of
the Company's Charter and Bylaws," "Federal Income Tax Considerations,"
"Description of Preferred Stock - Right of Tiger/Westbrook to
Participate in Offerings," "Description of Capital Stock of the
Company" and "Risk Factors - Risks Associated with Convertible
Preferred Stock," to the extent that they constitute matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, have been reviewed by such counsel and are in all material
respects accurate summaries and fairly and correctly represent in all
material respects the information required with respect to such legal
matters, documents or proceedings.
(xv) To such counsel's knowledge, there are
no contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement other than those
described therein or filed as exhibits thereto, and the descriptions
thereof or references thereto are correct in all material respects.
(xvi) No authorization, approval, consent or
order of any court or governmental authority or agency is required in
connection with the offering, issuance or sale of the Securities to the
Underwriter, except such as may be required under the 1933 Act or the
1933 Act Regulations or securities laws of any state; and the
execution, delivery and performance of this Agreement and the Pricing
Agreement and the consummation of the sale of the Securities
contemplated herein and therein and compliance by the Company with its
obliga-
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<PAGE> 20
tions hereunder and thereunder will not result in any violation of the
provisions of the Company's charter or bylaws or the organizational
documents of any subsidiary, or any applicable law, administrative
regulation or administrative or court decree, nor will any such action,
to such counsel's knowledge, conflict with, or constitute a breach of,
or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary, as the case may be, pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any subsidiary is a party or by which any of them may be
bound, or to which any of their properties or assets is subject.
(xvii) Except as disclosed in the
Prospectus, there are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
(xviii) Neither the Company nor any of its
subsidiaries is an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
(xix) The Company has qualified as a REIT
under the Code as of the Closing Time and for each of its taxable years
beginning with the taxable year ended December 31, 1994, and is
organized in conformity with the requirements for qualification as a
REIT under the Code and its present and proposed method of operation
will enable it to meet the requirements for qualification as a REIT
under the Code.
(xx) Each document filed pursuant to the
1934 Act (other than financial statements and schedules included
therein, as to which no opinion need be rendered) and incorporated or
deemed to be incorporated by reference in the Prospectus complied when
so filed as to form in all material respects with the 1934 Act and the
1934 Act Regulations.
In giving its opinions, Morrison & Foerster
LLP may rely as to matters of fact upon certificates of officers of the
Company, its subsidiaries and the Operating Partnership, and as to
matters of Maryland law on the opinion of Ballard Spahr Andrews &
Ingersoll, which opinion shall be in form and substance satisfactory to
counsel for the Underwriter.
In addition such counsel shall state that
they have participated in conferences with officers and other
representatives of the Company, the Underwriter, counsel for the
Underwriter and the Company's independent accountants, at which
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<PAGE> 21
conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although they are
not passing upon, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus, and they have not made any
independent check or verification thereof, on the basis of the
foregoing, no facts have come to their attention that would lead them
to believe that the Registration Statement, as amended, (except for
financial statements and schedules and other financial or statistical
data included therein, as to which counsel need make no statement), at
the time it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and schedules and
other financial or statistical data included therein, as to which
counsel need make no statement), at the date of the Pricing Agreement
and at the Closing Time, included any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(2) The favorable opinion, dated as of Closing Time,
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Underwriter, with respect to the matters set forth in paragraph (xi),
of subsection (b)(1) of this Section.
In addition such counsel shall state that they have
participated in conferences with officers and other representatives of
the Company, the Underwriter, counsel for the Company and the Company's
independent accountants, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were
discussed and, although they are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus,
and they have not made any independent check or verification thereof,
on the basis of the foregoing, no facts have come to their attention
that would lead them to believe that the Registration Statement, at the
date of the Pricing Agreement and at the Closing Time, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, at the time it is first
provided to the Underwriter for such use or at the Closing Time,
included or includes an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that in each case counsel need
express no opinion or belief with respect to the Incorporated Documents
or the financial statements, schedules and other financial or
statistical data included or incorporated by reference therein or
excluded therefrom or the exhibits to the Registration Statement.
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<PAGE> 22
(c) At Closing Time, there shall not have been, since
the date hereof or since the respective dates as of which information is given
in the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company (or the Operating Partnership, as the case may be) and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Underwriter shall have received a certificate of the Chief
Executive Officer and of the Chief Financial Officer of the Company (or, in the
case of the Operating Partnership, the Company as the general partner of the
Operating Partnership, as the case may be), dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of Closing Time, (iii)
the Company (or the Operating Partnership, as the case may be) has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) with respect to the certificate
delivered by the Company only, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission. As used in this Section 5(c),
the term "Prospectus" means the Prospectus in the form first used to confirm
sales of the Securities.
(d) At the time of the execution of this Agreement,
the Underwriter shall have received from KPMG Peat Marwick LLP a letter dated
such date, in form and substance satisfactory to the Underwriter and the
officers and directors of the Company, to the effect that (i) they are
independent public accountants with respect to the Company and its subsidiaries
within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is
their opinion that the financial statements and supporting schedules included in
the Registration Statement and covered by their opinions therein comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations; (iii) based upon limited procedures set
forth in detail in such letter, and except as otherwise set forth in such
letter, nothing has come to their attention which causes them to believe that
(A) at a specified date not more than five days prior to the date of this
Agreement, there has been any change in capital stock or long-term debt of the
Company or any decrease in consolidated net assets or stockholders' equity of
the Company as compared with the amounts shown in the audited December 31, 1996
consolidated balance sheet of the Company included in the Registration Statement
or, during the period from January 1, 1997 to a specified date not more than
five days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period in the preceding year, in consolidated
revenues or net income of the Company, except in all instances for changes,
increases or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur or (B) the unaudited combined pro forma
financial statements included in the Registration Statement do not comply as to
form in all material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X of the Commission or that the pro forma adjustments
have not been properly applied to the historical amounts in the compilation of
such statements; and (iv) in addition to the examination referred to in their
opinion and the limited procedures referred to
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<PAGE> 23
in clause (iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information included in the Registration Statement and Prospectus that
are specified by the Underwriter, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting, financial
and other records of the Company, or Essex Partners Properties, as the case may
be, identified in such letter.
(e) At Closing Time, the Underwriter and the officers
and directors of the Company shall have received from KPMG Peat Marwick LLP,
dated as of Closing Time, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (d) of this Section, except that
the specified date referred to shall be a date not more than five days prior to
Closing Time and, to the further effect that they have carried out procedures as
specified in clause (iv) of subsection (d) of this Section with respect to
certain amounts, percentages and financial information specified by the
Underwriter and have found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (iv).
(f) At Closing Time the Securities shall be listed on
the New York Stock Exchange.
(g) At the date of this Agreement, the Underwriter
shall have received an agreement signed by The Marcus & Millichap Company and
each of George M. Marcus, Keith R. Guericke and Michael J. Schall as to the
matters set forth in Section 1(a)(xxiii).
(h) At Closing Time and at each Date of Delivery, if
any, counsel for the Underwriter shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Underwriter and counsel for
the Underwriter.
(i) At Closing Time, any and all waivers and consents
necessary to consummate the offering of the Securities and the transactions
contemplated by this Purchase Agreement shall have been received.
(j) At Closing Time, the Company and any buyers of
the Securities shall have complied with Article EIGHTH(a)(9) of the Company's
charter.
(k) In the event that the Underwriter exercises its
option provided in Section 2(b) hereof to purchase all or any portion of the
Option Securities, the representations
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<PAGE> 24
and warranties contained herein and the statements in any certificates furnished
by the Company hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Underwriter shall have received:
(1) A certificate, dated such Date of Delivery, of
the Chief Executive Officer of the Company and of the Chief Financial
Officer of the Company confirming that the certificate delivered at
Closing Time pursuant to Section 5(c) hereof remains true and correct
as of such Date of Delivery.
(2) The favorable opinion of Morrison & Foerster LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriter, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b)(1)
hereof.
(3) The favorable opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Underwriter, dated such Date of
Delivery, to the same effect as the opinion required by Section 5(b)(2)
hereof.
(4) A letter from KPMG Peat Marwick LLP, in form and
substance satisfactory to the Underwriter and the officers and
directors of the Company, dated such Date of Delivery, substantially
the same in form and substance as the letter furnished by such firm to
the Underwriter pursuant to Section 5(e) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
5(i)(4) shall be a date not more than five days prior to such Date of
Delivery.
If any condition specified in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement, or, in the case of any
condition to the purchase of Option Securities on a Date of Delivery which is
after the Closing Time, the obligations of the Underwriter to purchase the
relevant Option Securities, may be terminated by the Underwriter by notice to
the Company at any time at or prior to Closing Time or such Date of Delivery, as
the case may be, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof and except that Sections
1, 6 and 7 shall survive any such termination and remain in full force and
effect.
SECTION 6. Indemnification.
(a) The Company and the Operating Partnership,
jointly and severally agree to indemnify and hold harmless the Underwriter, its
officers, directors, employees and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
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<PAGE> 25
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental or regulatory agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below)
any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense
whatsoever, as incurred (including, subject to Section 6(c) hereof, the
fees and disbursements of counsel chosen by the Underwriter),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that (i) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or any preliminary prospectus supplement or the
Prospectus (or any amendment or supplement thereto), and (ii) that the Company
shall not be liable to the Underwriter under the indemnity agreement in this
subsection (a) with respect to any preliminary prospectus or preliminary
prospectus supplement to the extent that any such loss, claim, damage or
liability of the Underwriter results from the fact the Underwriter sold
Securities to a person as to whom there was not sent or given, at or prior to
written confirmation of such sale, a copy of the Prospectus as then amended or
supplemented in any
25
<PAGE> 26
case where such delivery is required by the 1933 Act if the Company has
previously furnished copies thereof to the Underwriter and the loss, claim,
damage or liability of the Underwriter results from an untrue statement or
omission of a material fact contained in the preliminary prospectus or
preliminary prospectus supplement which was corrected in the Prospectus or in
the Prospectus as then amended or supplemented.
(b) The Underwriter agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus supplement or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by the Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
supplement or the Prospectus (or any amendment or supplement thereto). The
Company acknowledges that the statements set forth in the first two sentences of
the last paragraph of text on the cover page and in the second paragraph under
the caption "Underwriting" in the Prospectus constitute the only information
furnished in writing by or on behalf of the Underwriter expressly for use in the
Registration Statement relating to the Securities as originally filed or in any
amendment thereof, any related preliminary prospectus supplement or the
Prospectus or in any amendment thereof or supplement thereto, as the case may
be.
(c) Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such indemnifying
party from any liability which it may have under this indemnity agreement to the
extent such indemnifying party was not materially prejudiced by such failure or
otherwise than on account of this indemnity agreement. In the case of parties
indemnified pursuant to Section 6(a) above, counsel to the indemnified parties
shall be selected by the Underwriter, and, in the case of parties indemnified
pursuant to Section 6(b) above, counsel to the indemnified parties shall be
selected by the Company. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body,
26
<PAGE> 27
commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 6(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
effected without its written consent if such indemnifying party (x) reimburses
such indemnified party in accordance with such request to the extent it
considers such request to be reasonable and (y) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then the Company and the Operating
Partnership, on the one hand, and the Underwriter on the other hand, shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by the Company and the Operating Partnership, on the one
hand, and the Underwriter on the other hand, as incurred, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Operating Partnership on the one hand and the Underwriter on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Operating Partnership on the one hand and of the Underwriter on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
27
<PAGE> 28
The relative benefits received by the Company and the
Operating Partnership on the one hand and the Underwriter on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company as set forth on the cover of the Prospectus
and the total underwriting discount received by the Underwriter; provided, that,
such underwriting discount shall be calculated by using the difference between
(x) the price per share set forth in the Pricing Agreement at which the
Underwriter purchased the Securities from the Company and (y) the actual price
per share at which the Securities were sold to the public.
The relative fault of the Company and the Operating
Partnership on the one hand and the Underwriter on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Operating Partnership and the Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which the Underwriter has otherwise been required to pay by reason of
any such untrue or alleged untrue statement or omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any,
28
<PAGE> 29
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriter or controlling person, or by or on behalf of the Company, and
shall survive delivery of the Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a) The Underwriter may terminate this Agreement, by
notice to the Company at any time at or prior to Closing Time (i) if there has
been, since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which is such as to make it,
in the judgment of the Underwriter, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in the
Common Stock has been suspended by the Commission, or if trading generally on
either the American Stock Exchange or the New York Stock Exchange has been
suspended, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by either of said exchanges
or by order of the Commission or any other governmental authority, or if a
banking moratorium has been declared by either federal, New York or California
authorities. As used in this Section 9(a), the term "Prospectus" means the
Prospectus in the form first used to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this
Section, such ter- mination shall be without liability of any party to any other
party except as provided in Section 4 hereof.
SECTION 10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to Lehman Brothers Inc., 555 California Street,
30th Floor, San Francisco, CA 94101, Attention: Catherine D. Rice; notices to
the Company shall be directed to it at Essex Property Trust, Inc., 777
California Avenue, Palo Alto, California 94304, attention of Keith R. Guericke,
with a copy to Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto,
California 94304-1018.
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<PAGE> 30
SECTION 11. Parties. This Agreement and the Pricing Agreement
shall each inure to the benefit of and be binding upon the Underwriter, the
Company and the Operating Partnership and their respective successors. Nothing
expressed or mentioned in this Agreement or the Pricing Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriter, the Company, the Operating Partnership and their respective
successors and to the extent provided in Sections 6 and 7, the controlling
persons and officers and directors referred to in such Sections 6 and 7 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein or therein contained. This Agreement and the Pricing Agreement
and all conditions and provisions hereof and thereof are intended to be for the
sole and exclusive benefit of the Underwriter, the Company and the Operating
Partnership and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
the Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE
PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN
SAID STATE. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER
TO NEW YORK TIME.
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<PAGE> 31
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriter, the Company and the Operating Partnership in accordance with
its terms.
Very truly yours,
ESSEX PROPERTY TRUST, INC.
By: ____________________________________
Name: Michael J. Schall
Title: Executive Vice President and
Chief Financial Officer
ESSEX PORTFOLIO, L.P.
By: ____________________________________
Name: Keith R. Guericke
Title: Chief Executive Officer and
President
CONFIRMED AND ACCEPTED,
as of the date first above written:
LEHMAN BROTHERS INC.
By: ____________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 1.2
1,300,000 Shares of Common Stock
ESSEX PROPERTY TRUST, INC.
(a Maryland corporation)
(Par Value $0.0001 Per Share)
PRICING AGREEMENT
September 4, 1997
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Reference is made to the Purchase Agreement dated September 4,
1997 (the "Purchase Agreement") among Essex Property Trust, Inc., a Maryland
corporation (the "Company"), Essex Portfolio, L.P., and Lehman Brothers Inc.
(the "Underwriter"). The Purchase Agreement provides for the purchase by the
Underwriter from the Company, subject to the terms and conditions set forth
therein, of the above shares of Common Stock (the "Initial Securities") and an
aggregate of 195,000 additional shares (the "Option Securities") of the
Company's Common Stock, par value $0.0001 per share. The Initial Securities and
the Option Securities are collectively hereinafter called the "Securities."
Pursuant to Section 2 of the Purchase Agreement, the Company
agrees with the Underwriter as follows:
(1) The purchase price per share for the Securities to be
paid by the Underwriter shall be $31.00.
1
<PAGE> 2
(2) The public offering price per share for the
Securities shall be at market prices prevailing at
the time of sale, at prices related to prevailing
market prices, or at negotiated prices.
2
<PAGE> 3
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriter and the Company in accordance with its terms.
Very truly yours,
ESSEX PROPERTY TRUST, INC.
By: ____________________________________
Name: Michael J. Schall
Title: Executive Vice President and
Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
LEHMAN BROTHERS INC.
By: ____________________________________
Name:
Title:
