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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 1997
BRE PROPERTIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 0-5305 94-1722214
- ------------------------- -------------------------- --------------------
(STATE OR OTHER (COMMISSION FILE (I.R.S. EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION
INCORPORATION OR NUMBER)
ORGANIZATION)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, California 94104-5525
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 445-6530
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS
On May 8, 1997, BRE Properties, Inc. (the "Company") executed an Underwriting
Agreement (the "Underwriting Agreement") in connection with the previously
announced public offering of 4,600,000 shares of its Common Stock ($0.01 par
value per share) including 650,000 shares sold by a certain non-management
shareholder (the "Selling Stockholder"), under the Company's shelf
registration statement on Form S-3 (File No. 333-24915), effective May 7, 1997
(the "Registration Statement"). The Company is filing the Current Report on
Form 8-K in order to include the Underwriting Agreement as an exhibit to the
Registration Statement.
This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any offer of the Common Stock
in any state in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
state.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit No. Description
1.1 Underwriting Agreement, dated May 8, 1997, with respect to the
Common Stock, by and among the Company, the Selling Stockholder,
Morgan Stanley & Co. Incorporated, Alex. Brown & Sons
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Prudential Securities Incorporated.
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SIGNATURE
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.
BRE PROPERTIES, INC.
Date: June 12, 1997 By: /s/ LeRoy E. Carlson
________________________________
LeRoy E. Carlson
Executive Vice President,
Chief Financial Officer and
Secretary
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EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement, dated May 8, 1997, with respect to the
Common Stock, by and among the Company, the Selling Stockholder,
Morgan Stanley & Co. Incorporated, Alex. Brown & Sons
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Prudential Securities Incorporated.
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BRE PROPERTIES, INC.
4,000,000 Shares of
Class A Common Stock
(Par Value $.01 Per Share)
UNDERWRITING AGREEMENT
May 8, 1997
Morgan Stanley & Co. Incorporated
Alex. Brown & Sons Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
1. INTRODUCTORY. BRE Properties, Inc., a corporation organized
under the laws of the State of Maryland (the "Company"), proposes to issue and
sell, pursuant to the terms of this Agreement, to the several Underwriters named
in Schedule A hereto (the "Underwriters" which term also shall include any
underwriter substituted as hereinafter provided in Section 12), and a certain
stockholder of the Company (the "Selling Stockholder") named in Schedule B
hereto proposes to sell to the several Underwriters, an aggregate of 4,000,000
shares of Common Stock, par value $.01 per share ("Common Stock"), of the
Company (the "Firm Shares"), of which 3,350,000 shares are to be issued and sold
by the Company and 650,000 shares are to be sold by the Selling Stockholder.
The Company also proposes to issue and sell to the several Underwriters, on
a pro rata basis, at the option of the Underwriters, an aggregate of not more
than 600,000 additional shares of Common Stock (the "Optional Shares") as
provided in Section 4 of this Agreement. The Firm Shares and the Optional
Shares are collectively referred to herein as the "Shares." Morgan Stanley &
Co. Incorporated, Alex. Brown & Sons Incorporated, Merrill Lynch, Pierce Fenner
& Smith Incorporated and Prudential Securities Incorporated are acting as
representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives." The Company and the Selling Stockholder
are hereinafter sometimes collectively referred to as the "Sellers."
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2. (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the several Underwriters, as of the date hereof, as
of the First Closing Date (as defined in Section 4), and as of the Option
Closing Date (as defined in Section 4), if any, and agrees with the several
Underwriters, as follows:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(No. 333-24915) for the registration under the Securities Act of 1933, as
amended (the "1933 Act"), of the Shares and certain other securities and
has filed such amendments thereto, if any, as may have been required to the
date hereof. Such registration statement (including all exhibits thereto,
and all documents incorporated or deemed to be incorporated by reference
therein and the information, if any, deemed to be a part thereof pursuant
to Rule 430A(b) of the rules and regulations of the Commission under the
1933 Act (the "Rules and Regulations")), as amended (if applicable) at the
time such registration became effective, and as from time to time amended
or supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), or otherwise, is hereinafter referred to
as the "Registration Statement." The Company proposes to file with the
Commission pursuant to Rule 424(b) of the Rules and Regulations the
Prospectus Supplement (as defined in Section 5(j) hereof) and the related
prospectus dated May 7, 1997 (the "Base Prospectus"), and has previously
advised you of all information (financial and other) set forth therein.
The Base Prospectus and the Prospectus Supplement, each in the form first
provided to the Underwriters by the Company for use in connection with the
offering of the Shares (being the forms in which they are to be filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations),
including all documents incorporated or deemed to be incorporated by
reference therein, are hereinafter referred to, collectively, as the
"Prospectus", except that if any revised prospectus or prospectus
supplement shall be provided to the Underwriters by the Company for use in
connection with the offering and sale of the Shares which differs from the
Prospectus first provided to the Underwriters for such purpose (whether or
not such revised prospectus or prospectus supplement is required to be
filed by the Company with the Commission pursuant to Rule 424(b) of the
Rules and Regulations), the term "Prospectus" shall refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the
time it is first provided to the Underwriters for such use. Unless the
context otherwise requires, all references in this Agreement to documents,
financial statements and schedules and other information which is
"contained", "included", "stated", "described in" or "referred to" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such documents, 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 mean and include the filing of any document under the 1934 Act after the
date of this Agreement which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may
be. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus supplement, any preliminary
prospectus, the Prospectus Supplement, the Prospectus 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 ("EDGAR").
(ii) 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
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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 respective times the Registration Statement and any
post-effective amendments thereto became or become effective, as the case
may be, and at the First Closing Date (and, if any Optional Shares are
purchased, at the Option Closing Date), the Registration Statement complied
and will comply in all material respects with the requirements of the 1933
Act and the Rules and Regulations, and did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus does 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; PROVIDED, HOWEVER, that the
foregoing representations, warranties and agreements shall not apply to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter, directly or
through the Representatives, specifically for use in the preparation
thereof.
Any preliminary prospectus supplement, any preliminary prospectus
and the Prospectus and any amendment or supplement thereto delivered to the
Underwriters for use in connection with the offering of the Shares was
identical to the respective electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, when they were
filed with the Commission, complied in all material respects to the
requirements of the 1934 Act and the published rules and regulations of the
Commission thereunder, and none of such documents 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, in the
light of the circumstances under which they were made, not misleading; and
any further documents so filed and incorporated or deemed to be
incorporated by reference, when they are filed with the Commission, will
comply in all material respects to the requirements of the 1934 Act and the
published rules and regulations of the Commission thereunder 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, in the light of the circumstances under which they were made, not
misleading.
(iv) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement). Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), except as otherwise stated
therein or contemplated thereby, (A) there has been no change in the
consolidated capital stock or the consolidated long-term debt of the
Company, (B) there have been no transactions entered into by the Company or
any of its subsidiaries which are material to the Company and its
subsidiaries considered as one enterprise, other than those entered into in
the ordinary course of its business, and (C) except for regular quarterly
dividends, there has been no dividend or distribution of any
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kind declared, paid or made by the Company on its shares of capital stock.
(v) The financial statements of the Company, of Promontory Point
Apartments ("PPA"), of Red Hawk Ranch ("RHR"), and of Foster's Landing
Apartments ("FLA"), included in the Registration Statement and the
Prospectus, in each case, together with the related notes and supporting
schedules (if any), present fairly the financial position of the Company,
of PPA, of RHR, and of FLA, respectively, at the dates indicated and the
results of operations, cash flows and shareholders' equity or partners'
capital, as the case may be, of the Company and the gross income and direct
operating expenses of PPA, of RHR, and of FLA, respectively, as at the
respective dates and for the respective periods therein indicated, and such
financial statements and related notes and supporting schedules have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved,
except as may be set forth therein or in the Prospectus. The selected
financial data and the summary financial information included in the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the Company's audited financial
statements included in the Registration Statement. The Company's ratios of
earnings to fixed charges (actual and, if any, pro forma) included in the
Prospectus and as an exhibit to the Registration Statement have been
calculated in compliance with Item 503(d) of Regulation S-K of the
Commission.
(vi) The accountants who have certified the financial statements
and supporting schedules included in the Registration Statement and the
Prospectus are independent public accountants as required by the 1933 Act
and the Rules and Regulations.
(vii) The pro forma condensed financial statements, together with
the related notes and any supporting schedules, included in the
Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared on a basis substantially consistent with
the audited financial statements of the Company set forth therein, the
assumptions on which such pro forma financial statements have been prepared
are reasonable and are set forth in the notes thereto, and such pro forma
condensed financial statements have been prepared, and the pro forma
adjustments set forth therein have been applied, in accordance with the
applicable accounting requirements of the 1933 Act and the Rules and
Regulations (including, without limitation, Regulation S-X promulgated by
the Commission), and such pro forma adjustments have been properly applied
to the historical amounts in the compilation of such statements.
(viii) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Maryland;
the Company has power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus; the Company is duly qualified as a foreign
corporation to transact business and is in good standing in the State of
Arizona, the State of California, the State of Washington, the State of
Nevada and the State of Oregon; the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, except where the
failure to be so qualified or in good standing 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; and, except for its limited partnership
interest in Westbar Limited Partnership, Metro Village Limited Partnership
and Chateau De Ville Apt. Fund Ltd., the capital stock of the Company's
subsidiaries referred to in paragraph (ix) below and, the Company owns no
material amounts of capital stock or other beneficial interest in any other
corporation, partnership, joint venture or other business entity.
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(ix) Each subsidiary of the Company has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has power and authority to own, lease
and operate its property and conduct its business as described in the
Registration Statement and the Prospectus, and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, except where the
failure to be so qualified or in good standing would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and all of the issued and
outstanding capital stock of each such subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is and, at all
times since the date on which such subsidiary was organized, has been owned
by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(x) The Company and its subsidiaries own or possess or have
obtained all material governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to lease or own, as the case
may be, and to operate their respective properties and to carry on their
respective businesses as contemplated in the Prospectus.
(xi) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xii) The authorized, issued and outstanding shares of capital
stock of the Company are as set forth in the Prospectus under the caption
"Capitalization" (except for subsequent issuances, if any, of Common Stock
pursuant to employee benefit, employee and director stock option and
dividend reinvestment plans or upon conversion of convertible securities
referred to in the Prospectus); the shares of issued and outstanding Common
Stock (including the Firm Shares to be sold by the Selling Stockholder)
have been duly authorized and validly issued, are fully paid and non-
assessable; the Shares to be issued and sold by the Company have been duly
authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be
validly issued and fully paid and non-assessable; the Common Stock, the
Company's charter and bylaws, and the Rights Agreement (as hereinafter
defined) conform in all material respects to all statements relating
thereto contained in the Prospectus; the form of certificate used to
evidence the Common Stock is in due and proper form and complies with all
applicable statutory requirements; and the issuance of the Shares to be
issued and sold by the Company is not subject to preemptive or other
similar rights.
(xiii) The Company is not in violation of its charter or by-laws;
neither the Company nor any of its subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which it is a party or by which it or
any of its property or assets may be bound, except for such defaults which
would not, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise) or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise; and the execution, delivery and performance
of this Agreement, the consummation of the transactions contemplated
herein, and compliance by the Company with its obligations hereunder, have
been duly authorized by all necessary corporate action and will not
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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 the Company or any of its subsidiaries may be bound or to which any
of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any applicable law, administrative
regulation or administrative or court decree; and no consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Company of the transactions
contemplated by this Agreement, except such as may be required under state
securities or Blue Sky laws of any jurisdiction or real estate syndication
laws in connection with the purchase and distribution of the Shares by the
Underwriters.
(xiv) The Company was and is organized to qualify as a "real
estate investment trust" under the Internal Revenue Code of 1986, as
amended (the "Code"); the Company at all times since its organization has
elected to be taxed as a "real estate investment trust"; the Company has
qualified as a "real estate investment trust" under the Code for its
taxable years ending July 31, 1994, July 31, 1995, its short taxable year
ending December 31, 1995 and its taxable year ending December 31, 1996 and
will continue to qualify as a "real estate investment trust" under the Code
after consummation of the transactions contemplated by the Prospectus; and
the Company's present and contemplated operations, assets and income will
enable the Company to meet the requirements for qualification as a "real
estate investment trust" under the Code. United States Federal income tax
returns of the Company have been closed through the fiscal year of the
Company ended July 31, 1993. As used in this paragraph (xiv), the term
"Company" includes BankAmerica Realty Investors, a California business
trust and predecessor to BRE Properties, Inc., a Delaware corporation.
(xv) Each subsidiary of the Company is a "qualified REIT
subsidiary" within the meaning of the Code.
(xvi) 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 or any of its subsidiaries, which is required to be disclosed in
the Registration Statement or 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 of the Company or any of its subsidiaries; and there are no
contracts or documents of the Company or any of its subsidiaries which are
required to be filed as exhibits to the Registration Statement or any
document incorporated or deemed to be incorporated therein by the 1933 Act,
the Rules and Regulations, the 1934 Act or the rules and regulations of the
Commission thereunder which have not been so filed.
(xvii) The Company is eligible to use a Form S-3 registration
statement under the 1933 Act. The Company is also eligible to use Form S-3
pursuant to the standards for that Form in effect prior to October 21,
1992.
(xviii) Neither the Company nor any of its subsidiaries nor any of
their respective officers or directors has taken nor will any of them take,
directly or indirectly, any action resulting in a violation of Regulation M
under the 1934 Act, or designed to cause or result in, or which has
constituted or which reasonably might be expected to constitute, the
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stabilization or manipulation of the price of the shares of Common
Stock or facilitation of the sale or resale of the Shares.
(xix) Neither the Company nor any of its subsidiaries is required
to own or possess any trademarks, service marks, trade names or copyrights
in order to conduct the business now operated by it.
(xx) The Company has full right, power and authority to enter
into this Agreement; this Agreement has been duly authorized, executed and
delivered by the Company.
(xxi) The outstanding shares of Common Stock are listed on the New
York Stock Exchange and the Shares to be sold by the Company have been
approved for listing, subject to official notice of issuance, on the New
York Stock Exchange.
(xxii) Except as otherwise disclosed in the Prospectus: (A) the
Company and its subsidiaries have good and marketable title in fee simple
to all real property and improvements described in the Prospectus as being
owned by the Company (none of which is leased by the Company or any of its
subsidiaries, as lessee); (B) all liens, charges, encumbrances, claims or
restrictions on or affecting the real property and improvements of the
Company or any of its subsidiaries which are required to be disclosed in
the Prospectus are disclosed therein; (C) neither the Company nor any of
its subsidiaries nor any lessee of any portion of the real property or
improvements of the Company or any of its subsidiaries is in default under
any of the leases pursuant to which the Company or any of its subsidiaries
leases (as lessor) its real property or improvements and the Company knows
of no 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 that would not, individually or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or on earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise; (D) no tenant under any of the leases
pursuant to which the Company or any of its subsidiaries leases any of its
real property or improvements has an option or right of first refusal to
purchase the premises demised under such lease; (E) all of the real
property and improvements of the Company and its subsidiaries comply with
all applicable codes and zoning laws and regulations, except for such
failures to comply which would not, individually or in the aggregate, have
a material adverse effect on the condition, financial or otherwise, or on
the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and (F) the Company has no
knowledge of any pending or threatened condemnation, zoning change or other
proceeding or action that would in any manner affect the size of, use of,
improvements on, construction on, or access to any of the real property of
the Company or any of its subsidiaries, except such proceedings or actions
that would not, individually or in the aggregate, have a material adverse
effect on the condition, financial or otherwise, or earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xxiii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorizations; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any
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differences. Neither the Company nor any of its subsidiaries nor any of
their respective employees or agents has made any payment of funds of the
Company or any of its subsidiaries or received or retained any funds in
violation of any law, rule or regulation which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectus.
(xxiv) Except as otherwise set forth in the Registration Statement,
(A) to the best knowledge and information of the Company, neither the
Company nor any of its subsidiaries has at any time, and no other party has
at any time, handled, buried, stored, retained, refined, transported,
processed, manufactured, generated, produced, spilled, allowed to seep,
leak, escape or leach, or pumped, poured, emitted, emptied, discharged,
injected, dumped, transferred or otherwise disposed of or dealt with
Hazardous Materials (hereinafter defined) on, to or from real property
owned, leased or otherwise utilized by the Company or any of its
subsidiaries or in which the Company or any of its subsidiaries has any
ownership interest, including without limitation any subsurface soils and
ground water (the "Premises"), except for such cases as (u) are not
required to be disclosed in the Registration Statement and (v) would not,
individually or in the aggregate, 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) to the best knowledge and information of the Company, no
seepage, leak, escape, leach, discharge, injection, release, emission,
spill, pumping, pouring, emptying or dumping of Hazardous Materials from or
to the Premises has occurred, except for such cases as (w) are not required
to be disclosed in the Registration Statement and (x) would not,
individually or in the aggregate, 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, (C) neither the Company nor any of its subsidiaries has
received notice of any claim, or has knowledge of any occurrence or
circumstance which with notice or passage of time or both would give rise
to a claim, under or pursuant to any Environmental Statute, except for such
claims as (y) are not required to be disclosed in the Registration
Statement and (z) would not, individually or in the aggregate, 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, and (D) to the best of Company's
knowledge and information, no part of the Premises is included or proposed
for inclusion on the National Priorities List issued pursuant to CERCLA
(hereinafter defined) by the United States Environmental Protection Agency
(the "EPA") or on the inventory of other potential "problem" sites issued
by the EPA and has not otherwise been identified by the EPA as a potential
CERCLA site or included or proposed for inclusion on any list or inventory
issued pursuant to any other Environmental Statute or issued by any other
Governmental Authority (hereinafter defined). As used herein "Hazardous
Material" shall include without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or
toxic substances, or related materials, asbestos or any material containing
asbestos, or any other substance or material as defined by any Federal,
state or local environmental law, ordinance, rule, or regulation including,
without limitation, the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, ET SEQ.)
("CERCLA"), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, ET SEQ.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sections 6901 ET SEQ.) and in the regulations adopted
and publications promulgated pursuant to each of the foregoing
(individually, an "Environmental Statute") or by any Federal, state or
local governmental authority having or claiming jurisdiction over the
Premises (a "Governmental Authority").
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(xxv) The issuance, sale and public offering of the Shares to be
issued and sold by the Company have been approved by all of the "Continuing
Directors" and do not constitute a "Business Combination" (as such terms
are defined in Article IX of the Company's Articles of Incorporation).
(xxvi) Attached hereto as Schedule E is a true and complete list of
all subsidiaries of the Company and all partnerships in which the Company
holds an interest. The Company has no other subsidiaries other than those
listed in Schedule E, and it holds no other interests in any partnerships
other than those listed in Schedule E.
(xxvii) To the extent applicable, the Company has complied and will
comply with the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively,
the "Cuba Act") or is exempt therefrom.
(xxviii) The common share purchase rights (the "Rights") issuable
pursuant to the Rights Agreement dated as of August 14, 1989, as
supplemented (the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C. have been duly authorized by the Company and,
when the Shares are issued by the Company pursuant to this Agreement, the
Rights attached to such Shares will be validly issued.
(b) Any certificate signed by any officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
3. (a) REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER.
The Selling Stockholder represents and warrants to and agrees with each of the
Underwriters that:
(i) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
(ii) The execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations under,
this Agreement, the Custody Agreement signed by the Selling Stockholder and
ChaseMellon Shareholder Services, L.L.C., as Custodian, relating to the
deposit of the Firm Shares to be sold by the Selling Stockholder (the
"Custody Agreement") and the Power of Attorney appointing certain
individuals as the Selling Stockholder's attorneys-in-fact to the extent
set forth therein, relating to the transactions contemplated hereby and by
the Registration Statement (the "Power of Attorney") will not contravene
any provision of applicable law, or the Trust Agreement of the Selling
Stockholder, or any agreement or other instrument binding upon the Selling
Stockholder or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Selling Stockholder, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Selling
Stockholder of its obligations under this Agreement or the Custody
Agreement or Power of Attorney of the Selling Stockholder, except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Firm Shares by the Selling
Stockholder.
(iii) The Selling Stockholder has, and on the Closing Date will
have, valid title to the Firm Shares to be sold by the Selling Stockholder
and the legal right and power, and all authorization and approval required
by law, to enter into this Agreement, the Custody Agreement and the Power
of Attorney and to sell, transfer and deliver the Firm
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Shares to be sold by the Selling Stockholder.
(iv) The Custody Agreement and the Power of Attorney have been
duly authorized, executed and delivered by the Selling Stockholder and are
valid and binding agreements of the Selling Stockholder.
(v) Delivery of the Firm Shares to be sold by the Selling
Stockholder pursuant to this Agreement will pass title to such Firm Shares
free and clear of any security interests, claims, liens, equities and other
encumbrances.
(vi) (A) The information in the Prospectus under the caption
"Selling Stockholder" at the time the Registration Statement became
effective, did not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) the information in the Prospectus
under the caption "Selling Stockholder" does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Any certificate signed by any officer or trustee of the Selling
Stockholder and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Selling
Stockholder to each Underwriter as to matters covered thereby.
4. PURCHASE BY AND SALE AND DELIVERY TO, THE UNDERWRITERS; CLOSING DATE.
On the basis of the representations, warranties, covenants and agreements herein
contained, and subject to the terms and conditions herein set forth, each
Seller, severally and not jointly, hereby agrees to sell to the Underwriters and
the Underwriters agree, severally and not jointly, to purchase from such Seller
at the price per share set forth in Schedule C hereto, that proportion of the
number of Firm Shares set forth in Schedule B opposite the name of the Company
and the Selling Stockholder which the number of Firm Shares set forth opposite
their respective names in Schedule A bears to the total number of Firm Shares,
subject to adjustment in accordance with Section 12 hereof.
The Sellers will deliver the Firm Shares to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given not later
than one full business day prior to the First Closing Date or, if no such
direction is received, in the names of the respective Underwriters), against
payment of the purchase price therefor by wire transfer of immediately available
funds, at the offices of Brown & Wood LLP, 555 California Street, San Francisco,
California 94104. The time and date of delivery and closing shall be at 10:00
A.M., New York time, on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day), business day after the date hereof; PROVIDED,
however, that such date and time may be accelerated or extended by agreement
between the Company, the Selling Stockholder and the Representatives or
postponed pursuant to the provisions of Section 12 hereof. The time and date of
such payment and delivery are herein referred to as the "First Closing Date".
The Sellers shall make the certificates for the Firm Shares available to the
Representatives for examination on behalf of the Underwriters not later than
10:00 A.M., New York time, on the business day preceding the First Closing Date
in New York, New York.
In addition, on the basis of the representations, warranties, covenants and
agreements
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herein contained, and subject to the terms and conditions herein set forth, the
Company hereby grants the Underwriters an option to purchase, severally and not
jointly, up to an additional 600,000 shares of Common Stock for the purpose of
covering any over-allotments in connection with the distribution and sale of the
Firm Shares as contemplated by the Prospectus. The purchase price per share to
be paid for the Optional Shares shall be the same price per share as for the
Firm Shares, less an amount per share equal to any dividends or distributions
declared by the Company and payable on any Firm Shares and not payable on such
Optional Shares. The option granted hereby may be exercised as to all or any
part of the Optional Shares at any time not more than 30 days subsequent to the
date of this Agreement. No Optional Shares shall be sold and delivered unless
the Firm Shares previously have been, or simultaneously are, sold and delivered.
The right to purchase the Optional Shares or any portion thereof may be
surrendered and terminated at any time upon notice by the Representatives to the
Company.
The option granted hereby may be exercised by the Representatives on behalf
of the Underwriters by giving written notice to the Company setting forth the
number of Optional Shares to be purchased by them and the date and time for
delivery of and payment for the Optional Shares. Such date and time for
delivery of and payment for the Optional Shares (which may be the First Closing
Date) is herein called the "Option Closing Date" (the First Closing Date and the
Option Closing Date are herein called, collectively, the "Closing Dates" and,
individually, a "Closing Date") and shall not be later than seven full business
days after written notice is given. Optional Shares shall be purchased for the
account of each Underwriter in the same proportion as the number of Firm Shares
set forth opposite such Underwriter's name in Schedule A hereto bears to the
total number of Firm Shares (subject to adjustment by the Representatives to
eliminate fractional shares or odd lots). Upon exercise of the option by the
Representatives, the Company agrees to sell to the Underwriters the number of
Optional Shares set forth in the written notice of exercise and the Underwriters
agree, severally and not jointly, subject to the terms and conditions herein set
forth, to purchase such Optional Shares.
The Company will deliver the Optional Shares to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given not later
than one full business day prior to the Option Closing Date or, if no such
direction is received, in the names of the respective Underwriters), against
payment of the purchase price therefor by wire transfer of immediately available
funds, at the offices of Brown & Wood, 555 California Street, San Francisco,
California 94104. The Company shall make the certificates for the Optional
Shares available to the Representatives for examination on behalf of the
Underwriters not later than 10:00 A.M., New York time, on the business day
preceding the Option Closing Date in New York, New York.
It is understood that Morgan Stanley & Co. Incorporated, Alex. Brown & Sons
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated or Prudential
Securities Incorporated, individually and not as Representatives of the several
Underwriters, may (but shall not be obligated to) make payment to the Sellers on
behalf of any Underwriter or Underwriters, for the Shares to be purchased by
such Underwriter or Underwriters. Any such payment by Morgan Stanley & Co.
Incorporated, Alex. Brown & Sons Incorporated, Merrill Lynch, Pierce, Fenner &
Smith Incorporated or Prudential Securities Incorporated, shall not relieve such
Underwriter or Underwriters from any of its or their other obligations
hereunder.
After the Registration Statement becomes effective, the several
Underwriters propose to make an initial public offering of the Shares at the
initial public offering price.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the several Underwriters that:
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(a) The Company will advise the Representatives promptly of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose, and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible the lifting thereof, if issued. The
Company will advise the Representatives promptly of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for additional information, and will not at any time file any
amendment to the Registration Statement or supplement to the Prospectus which
shall not previously have been submitted to the Representatives a reasonable
time prior to the proposed filing or use thereof or to which the Representatives
shall reasonably object in writing or which is not in compliance with the 1933
Act and the Rules and Regulations. The Company will advise the Representatives
promptly when the Prospectus has been filed pursuant to Rule 424(b) of the Rules
and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon the request of the Representatives, any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the
Representatives may be necessary to enable the several Underwriters to continue
the distribution of the Shares and, in the case of any such amendments to the
Registration Statement, will use its best efforts to cause the same to become
effective as promptly as possible. The Company will promptly file all reports
and any definitive proxy or information statements required to be filed with the
Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act for so long as
the delivery of a prospectus is required in connection with the offering or sale
of the Shares.
(c) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any event occurs as a result of
which the Prospectus would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the 1933 Act or
the Rules and Regulations, the Company will promptly notify the Representatives
thereof and will prepare an amended or supplemented Prospectus (in form and
substance reasonably satisfactory to counsel to the Underwriters) or, with the
consent of counsel to the Underwriters, make an appropriate filing pursuant to
Section 13 or 14 of the 1934 Act which will correct such statement or omission;
and, in case any Underwriter is required to deliver a prospectus relating to the
Shares nine months or more after the date of this Agreement, the Company upon
the request of the Representatives and at the expense of such Underwriters will
prepare promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the 1933 Act.
(d) The Company will deliver to the Representatives, at or before the
First Closing Date, signed copies of the Registration Statement and all
amendments thereto (including all financial statements and exhibits thereto and
all documents incorporated or deemed to be incorporated by reference therein)
and will deliver to the Representatives such number of copies of the
Registration Statement, including such financial statements and all documents
incorporated or deemed to be incorporated by reference therein but without
exhibits, and of all amendments thereto, as the Representatives may reasonably
request. The Company will deliver or mail to or upon the order of the
Representatives on the date of the initial public offering, and thereafter from
time to time during the period when delivery of a prospectus relating to the
Shares is required under the 1933 Act, as many copies of the Prospectus, in
final form or as thereafter amended or supplemented, as the Representatives may
reasonably request; PROVIDED, however, that the expense of the preparation and
delivery of any prospectus required for use nine months or more after the date
of this Agreement, shall be borne by the Underwriters required to deliver such
prospectus. The copies of the Registration Statement and each amendment thereto
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<PAGE>
and the copies of any preliminary prospectus and any preliminary prospectus
supplement and the Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(e) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 60 days after the close
of the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) which will be in reasonable detail
(but which need not be audited) and which will comply with Section 11(a) of the
1933 Act, covering a period of at least twelve months 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.
(f) The Company will cooperate with the Representatives to enable the
Shares to be qualified for sale under the securities laws and real estate
syndication laws of such states and other jurisdictions as the Representatives
may reasonably designate and at the request of the Representatives will make
such applications and furnish such information as may reasonably be required of
it as the issuer of the Shares for that purpose; PROVIDED, HOWEVER, that the
Company shall not be required to qualify to do business or to file a general
consent to service of process in any such jurisdiction. The Company will, from
time to time, prepare and file such statements and reports as are or may be
required of it as the issuer of the Shares to continue such qualifications in
effect for so long a period as the Representatives may reasonably request for
the distribution of the Shares.
(g) The Company will furnish to its shareholders annual reports
containing financial statements certified by independent public accountants and
with quarterly summary financial information, in reasonable detail which may be
unaudited. During the period of five years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the other
Underwriters, copies of each annual report of the Company and each other report
furnished by the Company to its shareholders; and will deliver to the
Representatives, as soon as they are available, copies of any other reports
(financial or other) which the Company shall publish or otherwise make available
to any of its security holders as such and, as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange.
(h) The Company will use its best efforts to effect the listing of
the Shares to be issued and sold by the Company on the New York Stock Exchange.
(i) The Company will use the net proceeds received by it from the
sale of the Shares sold by it in the manner specified in the Prospectus
Supplement under "Use of Proceeds".
(j) Immediately following the execution of this Agreement, the
Company will prepare a prospectus supplement, dated the date hereof (the
"Prospectus Supplement"), containing the public offering price of the shares,
the underwriting discounts and commissions, the plan of distribution of the
Shares and such other information as may be required by the 1933 Act or the
Rules and Regulations or as the Representatives and the Company deem
appropriate, and will file or transmit for filing with the Commission in
accordance with Rule 424(b) of the Rules and Regulations copies of the
Prospectus (including such Prospectus Supplement).
(k) During the period of 90 days from the date of this Agreement, the
Company agrees that it will not, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Underwriters, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right
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<PAGE>
or warrant to purchase or otherwise transfer or dispose of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 Act with respect
to any of the foregoing or (ii) enter into any swap or any other agreement or
any transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock, other securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Shares to be sold hereunder, or (B) any shares of Common Stock
issued by the Company pursuant to any employee stock option, director stock
option or dividend reinvestment plan of the Company, or the shareholder rights
plan of the Company, referred to in the Prospectus.
(l) The Company will use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust" under the Code.
(m) In accordance with the provisions of that certain Florida Act
relating to disclosure of doing business with Cuba, codified as Section 517.075
of the Florida statutes thereunder (collectively, the "Cuba Act"), if
applicable, and without limitation to the provisions of Section 8 hereof, the
Company will indemnify each Underwriter against any and all losses, claims,
damages, liabilities and expenses (including attorneys' fees) arising out of or
based upon any violation by the Company of the Cuba Act.
6. COVENANTS AND AGREEMENTS OF THE SELLING STOCKHOLDER. The Selling
Stockholder covenants and agrees with the several Underwriters that:
(a) During a period of 90 days from the date of this Agreement, the
Selling Stockholder agrees that it will not, without the prior written consent
of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock, other securities, in cash or otherwise. The foregoing sentence shall not
apply to the Shares to be sold hereunder.
7. PAYMENT OF EXPENSES. The Company will pay (directly or by
reimbursement) all expenses incident to the performance of their and the Selling
Stockholder's obligations under this Agreement, including but not limited to all
expenses and taxes incident to delivery of the Shares to the Representatives,
all expenses incident to the registration of the Shares under the 1933 Act and
the printing of copies of the Registration Statement, any preliminary
prospectus, any preliminary prospectus supplement, the Prospectus, any
amendments or supplements thereto, all expenses incident to the preparation,
word processing, printing and delivery of all "Blue Sky" memoranda and this
Agreement and furnishing the same to the Underwriters and dealers except as
otherwise provided in Sections 5(c) and 5(d), the fees and disbursements of the
Company's counsel and accountants, all filing and printing fees and expenses
(including reasonable legal fees and disbursements of counsel for the
Underwriters) incurred in connection with qualification or exemption of the
Shares for sale under securities laws and real estate syndication laws of such
jurisdictions as the Representatives may designate, all fees and expenses paid
or incurred in connection with any filings made with the National Association of
Securities Dealers, Inc., the fees and expenses incurred in connection with the
listing of the Shares on the New York Stock Exchange, the costs of preparing
certificates evidencing the Shares, the costs and fees of any custodian,
registrar or transfer agent and all other costs and expenses incident to the
performance
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of its obligations hereunder which are not otherwise specifically provided for
in this Section. Notwithstanding the foregoing, the Selling Stockholder will
pay (i) the fees and disbursements of the Selling Stockholder's counsel and
(ii) any other expenses incident to the performance of the Selling Stockholder's
obligations under this Agreement which, as between the Selling Stockholder and
the Company, the Selling Stockholder has agreed to bear.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, any preliminary prospectus supplement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; PROVIDED, HOWEVER, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (excluding documents
incorporated by reference therein) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (excluding documents incorporated by reference therein) would
have cured the defect giving rise to such losses, claims, damages or
liabilities.
(b) The Selling Stockholder agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus,
any preliminary prospectus supplement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to the
Selling Stockholder furnished in writing by or on behalf of the Selling
Stockholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
Notwithstanding the foregoing provisions of this subsection (b), with respect to
all claims pursuant to this subsection (b) the liability of the Selling
Stockholder shall in no event exceed the amount of total net proceeds received
by such Selling Stockholder from the sale of the Shares pursuant to this
Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholder, each of the Company's
directors, each of the Company's officers who sign the Registration Statement
and each person, if any, who controls the Company or the Selling Stockholder
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection
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with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus, any
preliminary prospectus supplement or the Prospectus (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use in the Registration Statement, any preliminary prospectus, any
preliminary prospectus supplement, the Prospectus or any amendments or
supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a), (b) or (c) of this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, (ii) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its directors,
its officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Selling Stockholder and all persons, if any, who control the
Selling Stockholder within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Morgan Stanley & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Stockholder and such control persons of the Selling Stockholder,
such firm shall be designated in writing by the Selling Stockholder. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior
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written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in paragraph (a),
(b) or (c) of this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by each Seller and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate Public Offering
Price of the Shares. The relative fault of the Sellers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sellers or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (e) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 8, and the representations, warranties and other statements of the
Company and the Selling Stockholder contained in this Agreement shall remain
operative and in full force and effect regardless of (i)
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any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, the Selling
Stockholder or any person controlling the Selling Stockholder, or the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof, the date of this
Agreement, the First Closing Date and, if applicable, the Option Closing Date,
of the respective representations and warranties made herein by the Sellers, of
the statements of the Company's officers or directors in any certificates
furnished pursuant to the provisions hereof, of the statements of the Selling
Stockholder's officers or directors in any certificates furnished pursuant to
the provisions hereof, to compliance at and as of the First Closing Date or
Option Closing Date (if any), as the case may be, by the Sellers with their
respective covenants and agreements herein contained and other provisions hereof
to be satisfied at or prior to such First Closing Date or Option Closing Date,
as the case may be, and to the following additional conditions:
(a) The Registration Statement shall be effective and, at such
Closing Date (i) no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been
initiated or, to the knowledge of the Company or the Representatives,
threatened by the Commission, and any request for additional information on
the part of the Commission (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives, and (ii) there shall not
have come to the attention of the Representatives any facts that would
cause them to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of the Shares, contained any untrue statement
of a material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If the Company has elected to rely
upon Rule 430A of the Rules and Regulations, the price of the Shares and
any price related information previously omitted from the Registration
Statement pursuant to Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and before the First Closing Date the
Company shall have provided evidence satisfactory to the Representatives of
such timely filing, or a post-effective amendment providing such
information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) At the date of this Agreement, the Representatives shall have
received from Ernst & Young LLP a letter, dated the date of this Agreement,
in form and substance previously approved by the Representatives, together
with signed or reproduced copies of such letter for each of the
Underwriters, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the Prospectus (including, without limitation,
as to any pro forma financial statements and as to all historical financial
statements of the Company, PPA, RHR and FLA).
(c) The Representatives shall have received from Ernst & Young LLP a
letter dated the First Closing Date to the effect that they reaffirm the
statements made in the letter furnished pursuant to Section 9(b) above,
except that the specified date referred to therein shall be a date not more
than three business days prior to the First Closing Date.
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(d) The Representatives shall have received from Farella, Braun &
Martel LLP, counsel for the Company, a favorable opinion dated the First Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) To the best of such counsel's knowledge and
information, the Company and its subsidiaries are operating in
compliance with all material franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders
required for the conduct of their respective businesses, all of which
are valid and in full force and effect.
(ii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in the State of Arizona,
the State of California, the State of Washington, the State of Oregon
and the State of Nevada; the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, except where the
failure to be so qualified or in good standing 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.
(iii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and
the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, except where the failure to be
so qualified or in good standing 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; all of the issued and
outstanding capital stock of each subsidiary that is a corporation has
been duly authorized and validly issued, is fully paid and
non-assessable and, to the best knowledge of such counsel, is and, at
all times since the date on which such subsidiary was organized, has
been owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity;
(iv) The authorized, issued and outstanding shares of
capital stock of the Company are as set forth in the Prospectus under
"Capitalization" (except for subsequent issuances, if any, of Common
Stock pursuant to employee benefit, employee and director stock option
and dividend reinvestment plans referred to in the Prospectus or
pursuant to this Agreement);
(v) The execution, delivery and performance of this
Agreement, the consummation of the transactions herein contemplated,
and compliance by the Company with its obligations hereunder, will not
result in a breach or violation of any of the terms or provisions of
or constitute a default under any material contract, indenture,
mortgage, deed of trust, note, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of their respective properties
or assets are subject, the Company's charter or by-laws, or, to the
best of such counsel's knowledge and information, any law, order, rule
or regulation of any court or governmental
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agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties (provided that such
counsel need express no opinion as to state securities or real estate
syndication laws).
(vi) The Registration Statement is effective under the 1933
Act and, to the best of such counsel's knowledge and information, 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.
(vii) At the time the Registration Statement became effective
and at the date of this Agreement, the Registration Statement (other
than the financial statements and supporting schedules and other
financial and statistical data included therein or omitted therefrom,
as to which no opinion need be rendered) complied as to form in all
material respects with the requirements of the 1933 Act and the Rules
and Regulations; and nothing has come to such counsel's attention that
would lead it to believe that the Registration Statement, at the time
it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as of its date or at the date of such opinion, 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 no statement need be made as to financial
statements or supporting schedules or other financial or statistical
data included or incorporated by reference in the Registration
Statement or the Prospectus).
(viii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus (other than the financial statements
and supporting schedules and other financial and statistical data
included therein or omitted therefrom, as to which no opinion need be
rendered), as of the dates they were filed with the Commission (or, if
such incorporated documents were amended, when such amendment was
filed or became effective), complied as to form in all material
respects with the requirements of the 1934 Act and the published rules
and regulations thereunder.
(ix) No filing with, or consent, approval, authorization,
license, registration, qualification, decree or order of, any court or
governmental authority or agency is required in connection with the
issuance or sale of the Shares to be issued and sold by the Company to
the Underwriters, except such as has been obtained under the 1933 Act
or the Rules and Regulations or such as may be required under state
securities laws or real estate syndication laws (provided that such
counsel need express no opinion as to consents, approvals,
authorizations or orders of any foreign court or governmental
authority or agency).
(x) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xi) The Company is eligible to use a Form S-3 registration
statement under the 1933 Act and is also eligible to use a Form S-3
registration statement pursuant to the standards for that Form as in
effect prior to October 21, 1992.
(xii) The Company has all legal right, power and authority
necessary to qualify as a "real estate investment trust" under the
Code; the Company was
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reorganized in Delaware in 1987; the Company has elected to be treated
as a "real estate investment trust" since its organization; the
Company has qualified as a "real estate investment trust" for its
fiscal years ended July 31, 1994 and July 31, 1995, its short taxable
year ended December 31, 1995 and its taxable year ended December 31,
1996 (the years, to the best knowledge of counsel, that are still
subject to audit by the Internal Revenue Service); the Company is
organized and operates in a manner that will enable it to qualify to
be taxed as a "real estate investment trust" under the Code for its
taxable year ending December 31, 1997 and thereafter provided the
Company continues to meet (through actual annual operating results,
distribution levels and diversity of stock ownership) the various
qualification tests imposed by the Code necessary for the Company to
qualify as a "real estate investment trust". As used in this
paragraph (xii) and paragraph (xiii) below, the term "Company"
includes BankAmerica Realty Investors, a California business trust and
predecessor to BRE Properties, a Delaware corporation.
(xiii) Each subsidiary of the Company is a "qualified REIT
subsidiary" within the meaning of the Code.
(xiv) The information in the Prospectus under the captions
"Description of Common Shares", "Restrictions on Transfers of Capital
Stock; Redemption" and "Federal Income Tax Considerations" and the
information in the Company's 1996 Annual Report on Form 10-K under the
caption "Legal Proceedings", to the extent that it constitutes matters
of law or legal conclusions, or summaries of provisions of the
Company's charter or by-laws, the Rights Agreement (as defined below)
or of other documents, agreements or instruments, has been reviewed by
such counsel and is correct in all material respects; and the opinion
of such counsel under the caption "Federal Income Tax Considerations"
is confirmed.
(xv) There are no legal or governmental proceedings pending
or, to the best of such counsel's knowledge and information,
threatened against the Company or any of its subsidiaries which are
required to be disclosed in the Registration Statement, 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 of which any of the property of the Company or any of its
subsidiaries is the subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material.
(xvi) To the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or in the
documents incorporated by reference therein or to be filed as exhibits
thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, the descriptions
thereof or references thereto are correct in all material respects,
and, to the best of such counsel's knowledge and information, no
default exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other instrument
so described, referred to or filed.
(xvii) The issuance, sale and public offering of the Shares to
be issued and sold by the Company have been approved by all of the
"Continuing Directors" and do not constitute a "Business Combination"
(as such terms are defined in
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Article VIII of the Company's amended and restated articles of
incorporation).
(xviii) The Rights have been duly authorized by the Company
and, when the Shares are issued by the Company pursuant to this
Agreement, the Rights attached to such Shares will be validly issued.
Such opinion shall be rendered to the Underwriters at the request of
the Company and shall so state therein. In giving their opinion, Farella,
Braun & Martel LLP may rely (i) as to the qualification of the Company and
its subsidiaries to do business in any state or jurisdiction, upon
certificates of appropriate government officials, (ii) as to matters of
fact, upon certificates and written statements of officers of and
accountants for the Company, (iii) as to matters arising under the laws of
the State of Maryland, upon the opinion of Piper & Marbury L.L.P. delivered
pursuant to Section 9(e) hereof, and (iv) as to matters arising under the
laws of the State of Arizona, upon the opinion of Jennings, Strouss and
Salmon.
(e) The Representatives have received from Piper & Marbury
L.L.P., Maryland counsel for the Company, a favorable opinion dated the
First Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Maryland.
(ii) The Company has the corporate power and authority to
own, lease and operate its properties and conduct its business as
described in the Registration Statement and the Prospectus.
(iii) The authorized, issued and outstanding shares of
capital stock of the Company are as set forth in the Prospectus under
"Capitalization" (except for subsequent issuances, if any, of Common
Stock pursuant to employee benefit, employee and director stock option
and dividend reinvestment plans referred to in the Prospectus or
pursuant to this Agreement); and the shares of issued and outstanding
Common Stock (including the Firm Shares to be sold by the Selling
Stockholder) outstanding prior to the issuance of the Shares to be
sold by the Company have been duly authorized and validly issued, are
fully-paid and non-assessable, and are not subject to any preemptive
or other similar rights arising by operation of law, under the charter
or by-laws of the Company, under any resolution adopted by the board
of directors of the Company or any committee thereof or, to the best
of such counsel's knowledge and information, otherwise.
(iv) The Shares to be sold by the Company have been duly
authorized by the Company for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid
and non-assessable; and the issuance of such Shares is not subject to
preemptive or other similar rights arising by operation of law, under
the charter or by-laws of the Company or under any resolution adopted
by the board of directors of the Company or any committee thereof.
(v) The Common Stock conforms to the description thereof
contained in the Prospectus in all material respects, and the form of
certificate used to evidence the Common Stock is in due and proper
form and complies in all material respects with all applicable
statutory requirements.
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(vi) This Agreement has been duly authorized, executed and
delivered by the Company; and the execution, delivery and performance
of this Agreement, the consummation of the transactions herein
contemplated, and compliance by the Company with its obligations
hereunder, will not result in a breach or violation of any of the
terms or provisions of or constitute a default under the Company's
charter or by-laws or, to the best of such counsel's knowledge and
information, any law, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their respective properties
(provided that such counsel need express no opinion as to state
securities or real estate syndication laws).
(vii) No consent, approval, authorization or order of any
court or governmental authority or agency is required in connection
with the issuance or sale of the Shares to the Underwriters, except
such as has been obtained under the 1933 Act or the Rules and
Regulations or such as may be required under state securities laws or
real estate syndication laws (provided that such counsel need express
no opinion as to consents, approvals, authorizations or orders of any
foreign court or governmental authority or agency).
(viii) The information in the Prospectus under the captions
"Description of Common Shares", "Restrictions on Transfers of Capital
Stock; Redemption" and "Risk Factors--Provisions Which Could Limit a
Change in Control or Deter a Takeover", and the information in the
Company's 1996 Annual Report on Form 10-K under the caption "Risk
Factors--Provisions Which Could Limit a Change in Control or Deter a
Takeover", to the extent that it constitutes matters of law or legal
conclusions, or summaries of provisions of the Company's charter or
by-laws, or of other documents, agreements or instruments, has been
reviewed by such counsel and is correct in all material respects.
(ix) The issuance, sale and public offering of the Shares
have been approved by the "Continuing Directors" and do not constitute
a "Business Combination" (as such terms are defined in Article VIII of
the Company's restated certificate of incorporation).
(x) The Rights have been duly authorized by the Company
and, when the Shares to be sold by the Company are issued by the
Company pursuant to this Agreement, the Rights attached to such Shares
will be validly issued.
Such opinion shall be rendered to the Underwriters at the request of
the Company and shall so state therein. In giving their opinion, Piper &
Marbury L.L.P. (i) may rely as to matters of fact, to the extent not
independently verified by such counsel, upon certificates and written
statements of officers and accountants for the Company and (ii) shall state
that Farella, Braun & Martell LLP and Brown & Wood LLP, in rendering their
opinions pursuant to Sections 9(d) and 9(g) of this Agreement, may rely on
such opinion of Maryland counsel as to all matters arising under the laws
of the State of Maryland.
(f) The Representatives shall have received on the Closing Date an
opinion of Chapman and Cutler, counsel for the Selling Stockholder, dated
the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder;
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(ii) the execution and delivery by the Selling Stockholder
of, and the performance by the Selling Stockholder of its obligations
under, this Agreement and the Custody Agreement and Power of Attorney
of the Selling Stockholder will not contravene any provision of
applicable law, or the Trust Agreement of the Selling Stockholder, or,
to the best of such counsel's knowledge, any agreement or other
instrument binding upon the Selling Stockholder or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Selling Stockholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by the Selling Stockholder of its obligations
under this Agreement or the Custody Agreement or Power of Attorney of
the Selling Stockholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Firm Shares by the Selling Stockholder;
(iii) the Selling Stockholder has the legal right and power,
and all authorization and approval required by law, to enter into this
Agreement and the Custody Agreement and Power of Attorney of the
Selling Stockholder and to sell, transfer and deliver the Firm Shares
to be sold by the Selling Stockholder;
(iv) the Custody Agreement and the Power of Attorney of the
Selling Stockholder have been duly authorized, executed and delivered
by the Selling Stockholder and are valid and binding agreements of the
Selling Stockholder;
(v) delivery of the Firm Shares to be sold by the Selling
Stockholder pursuant to this Agreement will pass title to such Firm
Shares free and clear of any security interests, claims, liens,
equities and other encumbrances, assuming that the Underwriters have
acquired the Firm Shares in good faith without notice of any adverse
claim; and
(vi) such counsel has no reason to believe that the
information in the Prospectus under the caption "Selling Stockholder"
at the time the Registration Statement 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.
Such opinion shall be rendered to the Underwriters at the request of
the Selling Stockholder and shall so state therein.
(g) The Representatives shall have received from Brown & Wood
LLP, counsel for the Underwriters, their favorable opinion or opinions
dated the First Closing Date with respect to the organization of the
Company, the validity of the Shares to be sold by the Company, this
Agreement, the Registration Statement, the Prospectus and such other
related matters as the Representatives may require, and the Company shall
have furnished to such counsel such documents as they may request for the
purpose of enabling them to pass upon such matters.
(h) Subsequent to the execution and delivery of this Agreement
and prior to the applicable Closing Date (1) there shall not have occurred
any downgrading, nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded any
of the Company's securities by any "nationally recognized statistical
rating
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organization," as such term is defined for purposes of Rule 436(g)(2) under
the 1933 Act; and (2) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Shares on the terms
and in the manner contemplated in the Prospectus. At the applicable
Closing Date (i) the Registration Statement and the Prospectus shall
contain all statements which are required to be stated therein in
accordance with the 1933 Act and the Rules and Regulations and in all
material respects shall conform to the requirements of the 1933 Act and the
Rules and Regulations, and neither the Registration Statement nor the
Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and no action, suit or proceeding at
law or in equity shall be pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries which would be
required to be set forth in the Registration Statement or the Prospectus
other than as set forth therein, (ii) no proceeding shall be pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries before or by any Federal, state or other court, commission,
board or administrative agency wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business, property,
financial condition or income of the Company and its subsidiaries
considered as one enterprise other than as set forth in the Registration
Statement and the Prospectus, (iii) neither the Company nor any of its
subsidiaries shall be in default in the performance or observance of any
contract to which it is a party, except such defaults that would not have a
material adverse effect on the condition, financial or otherwise, of the
Company and its subsidiaries considered as one enterprise or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, (iv) no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act and no proceeding therefor shall have been instituted or
threatened by the Commission and (v) the Representatives shall have
received, at such First Closing Date, a certificate of the President and
the Chief Financial Officer of the Company, dated as of the First Closing
Date, evidencing compliance with the appropriate provisions of this
subsection (h).
(i) The Representatives shall have received a certificate, dated
the First Closing Date, of the President and the Chief Financial Officer of
the Company to the effect that the representations and warranties of the
Company contained in Section 2(a) are true and correct with the same force
and effect as though expressly made at and as of the First Closing Date.
(j) The Representatives shall have received a certificate, dated
the First Closing Date, of the Selling Stockholder to the effect that the
representations and warranties of the Selling Stockholder contained in
Section 3 are true and correct with the same force and effect as though
expressly made at and as of the First Closing Date.
(k) The Sellers shall have furnished to the Representatives such
additional certificates as the Representatives may have reasonably
requested as to the accuracy, at and as of the relevant Closing Date, of
the respective representations and warranties made herein by the Sellers,
as to compliance at and as of such Closing Date by the Sellers with its
respective covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to such Closing Date and as to other
conditions to the obligations of the Underwriters hereunder.
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(l) At the date of this Agreement, the Representatives shall
have received an agreement substantially in the form of Exhibit A hereto
signed by the persons listed on Schedule D hereto.
(m) In the event the Underwriters exercise the option granted in
Section 4 hereof to purchase all or any portion of the Optional Shares, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any of its
officers or directors hereunder shall be true and correct as of the Option
Closing Date, and the Representatives shall have received:
(i) A letter from Ernst & Young LLP in form and substance
satisfactory to the Representatives and dated the Option Closing Date,
substantially the same in scope and substance as the letter furnished
to the Representatives pursuant to Section 9(c), except that the
specified date in the letter furnished pursuant to this Section
9(m)(i) shall be a date not more than five days prior to the Option
Closing Date.
(ii) The favorable opinion of Farella, Braun & Martel LLP,
counsel for the Company, in form and substance satisfactory to the
Representatives, dated the Option Closing Date, relating to the
Optional Shares and otherwise to the same effect as the opinion
required by Section 9(d).
(iii) The favorable opinion of Piper & Marbury L.L.P.,
Maryland counsel for the Company, in form and substance satisfactory
to the Representatives, dated the Option Closing Date, relating to the
Optional Shares and otherwise to the same effect as the opinion
required by Section 9(e).
(iv) The favorable opinion of Brown & Wood LLP, counsel for
the Underwriters, dated the Option Closing Date, relating to the
Optional Shares and otherwise to the same effect as the opinion
required by Section 9(g).
(v) A certificate, dated the Option Closing Date, of the
President and the Chief Financial Officer of the Company confirming
that the certificate or certificates delivered at the First Closing
Date pursuant to Section 9(h) and Section 9(i) remains or remain true
as of the Option Closing Date.
(vi) Such additional certificates, dated the Option Closing
Date, as the Representatives may have reasonably requested pursuant to
Section 9(k).
If any of the conditions hereinabove provided for in this Section shall not
have been satisfied when and as required by this Agreement, (i) this Agreement
may be terminated by the Representatives by notifying the Sellers of such
termination in writing or by telegram or telecopy at or prior to the First
Closing Date, and (ii) the obligations of the Underwriters to purchase Optional
Shares may be terminated by the Representatives by notifying the Company of such
termination in writing or by telegram or by telecopy at or prior to the Option
Closing Date.
10. TERMINATION. This Agreement may be terminated by the Representatives
by notice to the Sellers at or prior to the First Closing Date, and the
obligations of the Underwriters to purchase Optional Shares may be terminated by
the Representatives by notice to the Company at or prior to the Option Closing
Date, if (a) after the execution and delivery of this Agreement and prior to the
First Closing Date or the Option Closing Date, as the case may be, (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of
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Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activates in New York or California shall have been declared by either Federal,
New York State or California State authorities or (iv) there shall have occurred
any outbreak or escalation of hostilities or any change in financial markets or
any calamity or crisis that, in your judgment, is material and adverse and (b)
in the case of any of the events specified in clauses (a)(i) through (iv), such
event, singly or together with any other such event, makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
11. REIMBURSEMENT OF UNDERWRITERS. Notwithstanding any other provisions
hereof, if this Agreement shall be terminated by the Representatives under
Section 9, Section 10 or Section 13, the Sellers will bear and pay the expenses
specified in Section 7 hereof and, in addition to its obligations pursuant to
Section 8 hereof, the Company will reimburse the reasonable out-of-pocket
expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
Agreement and the proposed purchase and offers of the Shares, and promptly upon
demand the Company will pay such amounts to you as Representatives. In
addition, the provisions of Section 8 hereof will survive any termination of
this Agreement.
12. DEFAULT BY UNDERWRITERS. If any Underwriter or Underwriters shall
default in its or their obligations to purchase any of the Shares which it or
they are obligated to purchase under this Agreement on the First Closing Date
(including, without limitation, any Optional Shares to be purchased on the First
Closing Date), and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total number of Shares which the Underwriters are obligated to purchase at
the First Closing Date, the other Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Shares
which such defaulting Underwriter or Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters shall so default and the aggregate number of
Shares with respect to which such default or defaults occur is more than 10% of
the total number of Shares which the Underwriters are obligated to purchase at
the First Closing Date and arrangements satisfactory to the Representatives and
the Company for the purchase of such Shares by other persons are not made within
48 hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted underwriters are required
hereby or agree to take up all or part of the Shares of a defaulting Underwriter
or Underwriters as provided in this Section 12, (i) the Company shall have the
right to postpone the First Closing Date for a period of not more than five full
business days, in order that the Company may effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of Shares to be
purchased by the remaining Underwriters or substituted underwriters shall be
taken as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Company or the Underwriters for damages occasioned by its
default hereunder. Any termination of this Agreement pursuant to this Section
12 shall be without liability on the part of any non-defaulting Underwriter or
the Company, except for expenses to be paid or reimbursed pursuant to Section 7
and except for the provisions of Section 8.
13. DEFAULT BY THE SELLERS. If the Sellers shall fail at the First
Closing Date to sell and deliver the number of Shares which each is obligated to
sell hereunder, then this Agreement shall
27
<PAGE>
terminate without any liability on the part of any non-defaulting party. No
action taken pursuant to this Section shall relieve the Sellers from liability,
if any, in respect of such default.
14. NOTICES. All communications hereunder shall be in writing and, if
sent to the Underwriters shall be mailed, delivered or telecopied and confirmed
to you, as their Representatives c/o Morgan Stanley & Co. Incorporated at 1585
Broadway, New York, New York 10036, except that notices given to an Underwriter
pursuant to Section 8 hereof shall be sent to such Underwriter at the address
furnished by the Representatives or, if sent to the Company shall be mailed,
delivered or telecopied and confirmed at BRE Properties, Inc., One Montgomery
Street, Telesis Tower, Suite 2500, San Francisco, California 94104, attention:
LeRoy E. Carlson or, if sent to the Selling Stockholder shall be mailed,
delivered or telecopied and confirmed at State Farm Insurance Companies Employee
Retirement Trust, - , attention: Kurt Moser, One State Farm Plaza, Bloomington,
Illinois, 61710-0001.
15. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company, the Selling Stockholder and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Sellers contained in
this Agreement shall also be for the benefit of the person or persons, if any,
who control any Underwriter or Underwriters within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act, and the indemnities of the several
Underwriters shall also be for the benefit of each director or trustee of the
Sellers, AS APPLICABLE, each of the Company's officers who has signed the
Registration Statement and the person or persons, if any, who control the
Sellers within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act.
16. APPLICABLE LAW. This 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. Unless otherwise expressly stated, specified
times of day refer to New York City time.
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement,
the Representatives will act for and on behalf of the several Underwriters, and
any action taken under this Agreement by the Representatives jointly as
representatives of the several Underwriters, will be binding on all the
Underwriters.
28
<PAGE>
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
BRE PROPERTIES, INC.
By:
----------------------------------------
Name:
Title:
STATE FARM INSURANCE COMPANIES
EMPLOYEE RETIREMENT TRUST
By:
----------------------------------------
Name: Attorney-in-Fact
Accepted and delivered, as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
ALEX. BROWN & SONS INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
Acting severally on behalf of themselves and the several
Underwriters named herein.
BY: MORGAN STANLEY & CO. INCORPORATED
By:
-----------------------
Name:
Title:
29
<PAGE>
SCHEDULE A
Number of
Firm Shares
to be
Purchased
------------
Morgan Stanley & Co. Incorporated.......................... 700,000
Alex. Brown & Sons Incorporated............................ 700,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 700,000
Prudential Securities Incorporated......................... 700,000
A.G. Edwards & Sons, Inc................................... 100,000
Montgomery Securities...................................... 100,000
PaineWebber Incorporated................................... 100,000
Robertson, Stephens & Company LLC.......................... 100,000
Salomon Brothers Inc....................................... 100,000
Smith Barney Inc........................................... 100,000
EDWARD D. JONES & CO., L.P................................. 50,000
EVEREN Securities, Inc..................................... 50,000
Hampshire Securities Corporation........................... 50,000
Janney Montgomery Scott Inc................................ 50,000
Jefferies & Company........................................ 50,000
Legg Mason Wood Walker, Incorporated....................... 50,000
Raymond James & Associates, Inc............................ 50,000
The Robinson-Humphrey Company, Inc......................... 50,000
Sands Brothers & Co., Ltd.................................. 50,000
Scott & Stringfellow, Inc.................................. 50,000
Stifel, Nicolaus & Company, Incorporated................... 50,000
Sutro & Co. Incorporated................................... 50,000
-------
Total...................................................... 4,000,000
---------
---------
Sch. A-1
<PAGE>
SCHEDULE B
Number of
Firm Shares
to be
Sold
-----------
THE COMPANY................................................ 3,350,000
THE SELLING STOCKHOLDER
State Farm Insurance Companies Employee Retirement Trust... 650,000
------
Total.................................................. 4,000,000
---------
---------
Sch. B-1
<PAGE>
SCHEDULE C
1. The initial public offering price per share for the Shares shall
be $24.50 (the "Public Offering Price").
2. The purchase price per share for the Shares to be purchased by
the several Underwriters shall be $23.215, being an amount equal to the
Public Offering Price set forth above less $1.285 per share; provided that
the purchase price per share for any Optional Shares purchased upon the
exercise of the over-allotment option described in Section 4 shall be
reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Firm Shares but not payable on
the Optional Shares.
Sch. C-1
<PAGE>
SCHEDULE D
1. John McMahan
2. Frank C. McDowell
3. Jay W. Pauly
4. LeRoy E. Carlson
5. Byron M. Fox
6. John H. Nunn
7. William E. Borsari
8. C. Preston Butcher
9. L. Michael Foley
10. Roger P. Kuppinger
11. Malcolm R. Riley
12. Gregory Simon
13. Arthur G. von Thaden
Sch. D-1
<PAGE>
SCHEDULE E
SUBSIDIARIES OF THE COMPANY:
BRE Camino Seco, Inc., a Delaware corporation
BRE Colonia del Rio, Inc., a Delaware corporation
BRE Fountain Plaza, Inc., a Delaware corporation
BRE Hacienda del Rio, Inc., a Delaware corporation
BRE Oracle Village, Inc., a Delaware corporation
BRE Springhill, Inc., a Delaware corporation
PARTNERSHIPS IN WHICH THE COMPANY HOLDS INTERESTS:
Westbar Limited Partnership, an Arizona partnership
Metro Village Limited Partnership, an Arizona partnership
Chateau De Ville Apt. Fund Ltd., a California partnership
Sch. E-1
<PAGE>
Exhibit A
[FORM OF LOCK-UP AGREEMENT]
_______________, 1997
Morgan Stanley & Co. Incorporated
Alex. Brown & Sons Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated ("Morgan
Stanley") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with BRE Properties, Inc., a Maryland corporation (the "Company"),
and State Farm Insurance Companies Employee Retirement Trust (the "Selling
Stockholder"), providing for the public offering (the "Public Offering") by the
several underwriters named therein, including Morgan Stanley (the
"Underwriters"), of 4,000,000 shares (the "Shares") of the Common Stock, par
value $.01 per share of the Company (the "Common Stock").
To induce the Underwriters to continue their efforts in connection with the
Public Offering, the undersigned hereby agrees that, without the prior written
consent of Morgan Stanley on behalf of the Underwriters, the undersigned will
not, during the period commencing on the date hereof and ending 90 days after
the date of the final prospectus relating to the Public Offering (the
"Prospectus"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are now owned by the undersigned or are hereafter acquired), or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the sale of any Shares to
the Underwriters pursuant to the Underwriting Agreement. In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the Prospectus, make any demand
for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company, the Selling Stockholder and the Underwriters.
The terms of this agreement shall be of no further force and effect if the first
date that any shares of Common Stock are released by the Underwriters for sale
to the public pursuant to the Public Offering does not occur prior to July 31,
1997.
A-2
<PAGE>
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
---------------------------------------------
(Name)
---------------------------------------------
(Address)
A-3
