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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): JULY 9, 1998
BRE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 0-5305 94-1722214
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
44 MONTGOMERY STREET, SUITE 3600
SAN FRANCISCO, CALIFORNIA 94104-4602
(Address of principal executive offices) (Zip Code)
(415) 445-6530
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On July 9, 1998, BRE Properties, Inc. (the "Company") executed an Underwriting
Agreement (the "Underwriting Agreement") in connection with the public offering
of up to 2,012,500 shares (the "Shares") of the Company's common stock, par
value $0.01 per share, including 262,500 Shares subject to an over-allotment
option granted to the Underwriter, under the Company's shelf registration
statement on Form S-3 (File No. 333-47469).
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 Shares 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.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
1.1 Underwriting Agreement dated July 9, 1998, by and between the
Company and Morgan Stanley & Co. Incorporated.
4.1 Form of Certificate for Common Shares (1)
_________________
(1) Incorporated by reference to Exhibit 4.12 to the Company's Amendment No. 1
to Registration Statement on Form S-3 dated March 27, 1998 (File No. 333-
47469).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRE PROPERTIES, INC.
By: /s/ LeRoy E. Carlson
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LeRoy E. Carlson
Executive Vice President,
Chief Financial Officer and Secretary
Date: July 15, 1998
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1.1 Underwriting Agreement dated July 9, 1998, by and between the
Company and Morgan Stanley & Co. Incorporated.
4.1 Form of Certificate for Common Shares (1)
____________
(1) Incorporated by reference to Exhibit 4.12 to the Company's Amendment No. 1
to Registration Statement on Form S-3 dated March 27, 1998 (File No. 333-
47469)
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EXHIBIT 1.1
BRE PROPERTIES, INC.
1,750,000 SHARES OF
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
----------------------
July 9, 1998
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 Morgan Stanley & Co. Incorporated
(the "Underwriter") an aggregate of 1,750,000 shares of common stock, par value
$.01 per share ("Common Stock"), of the Company (the "Firm Securities").
The Company also proposes to issue and sell to the Underwriter, at the
option of the Underwriter, an aggregate of not more than 262,500 additional
shares of Common Stock (the "Optional Securities") as provided in Section 3 of
this Agreement. The Firm Securities and the Optional Securities are
collectively referred to herein as the "Securities."
2. (a) Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to the Underwriter as of the date hereof, as of the
First Closing Date (as defined in Section 3), and as of the Option Closing Date
(as defined in Section 3), if any, and agrees with the Underwriter, as follows:
(i) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333-47469) for
the registration under the Securities Act of 1933, as amended (the "1933
Act"), of the Securities 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
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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) ("Rule
424(b)") of the Rules and Regulations the Prospectus Supplement (as defined
in Section 4(j) hereof) and, if required pursuant to Rule 424(b), the
related prospectus dated April 16, 1998 (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 Underwriter by the Company for use in connection
with the offering of the Securities (being the forms in which they are to
be filed with the Commission pursuant to Rule 424(b) or, solely in the case
of the Base Prospectus, if the Base Prospectus is not required to be re-
filed with the Commission pursuant to Rule 424(b), being the form in which
the Base Prospectus was most recently filed with the Commission pursuant to
Rule 424(b)), 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 Underwriter by the Company
for use in connection with the offering and sale of the Securities which
differs from the Prospectus first provided to the Underwriter 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 Underwriter 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 Base Prospectus, 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 pending or, to the knowledge of the
Company, are contemplated by the Commission, and
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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 Securities 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 with the Trust Indenture Act of 1939,
as amended (the "1939 Act"), and the Rules and Regulations of the
Commission under the 1939 Act (the "1939 Act 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 any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
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however, that the foregoing representations, warranties and agreements
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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 the
Underwriter 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
Underwriter for use in connection with the offering of the Securities was
and will be 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
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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 kind declared, paid or made by the Company
on its shares of capital stock.
(v) The financial statements of the Company included in the
Registration Statement and the Prospectus, together with the related notes
and supporting schedules (if any), present fairly the consolidated
financial position of the Company and its subsidiaries at the dates
indicated and the consolidated results of operations, cash flows and
shareholders' equity of the Company and its subsidiaries 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, if applicable, 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 included as
an exhibit to the Registration Statement and, if applicable, to certain of
the documents incorporated or deemed to be incorporated by reference
therein 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) [Intentionally omitted.]
(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 Colorado, the State of Nevada, the State
of New Mexico, the State of Oregon, the State of Washington and the State
of Utah; and 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.
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(ix) Attached hereto as Schedule C is a true and complete list of
all subsidiaries of the Company and all other corporations, partnerships,
joint ventures, limited liability companies and other entities in which the
Company directly or indirectly owns capital stock or any other equity or
ownership interest. Schedule C accurately sets forth the jurisdiction of
organization of, and the Company's approximate percentage ownership
interest in, each such subsidiary and other entity. The Company does not
have any subsidiaries other than those listed on Schedule C and, except as
set forth in Schedule C, the Company does not directly or indirectly own
any capital stock or other equity or other ownership interests in any
corporation, partnership, joint venture, limited liability company or other
entity. Schedule C also correctly indicates whether each such subsidiary
and other entity listed thereon is a corporation, partnership, limited
liability company or other type of entity.
(x) Each subsidiary of the Company has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of
its organization, 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 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 (A) all
of the issued and outstanding shares of capital stock of each such
subsidiary that is a corporation have been duly authorized and validly
issued, are fully paid and non-assessable and, except as set forth on
Schedule C, are and, at all times since the date on which such subsidiary
was organized, have been owned by the Company, directly or through wholly-
owned subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, (B) all of the issued and
outstanding limited liability company interests of each such subsidiary
that is a limited liability company have been duly authorized and validly
issued (under applicable law and the limited liability company agreement of
such subsidiary), are fully paid and non-assessable and, except as set
forth on Schedule C, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, and (C) all of the issued and
outstanding limited and general partnership interests of each such
subsidiary that is a partnership have been duly authorized (if applicable)
and validly issued and, except as set forth on Schedule C, are owned by the
Company, directly or through subsidiaries free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(xi) 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.
(xii) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
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(xiii) 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 or
upon exchange of exchangeable securities referred to in the Prospectus or
other subsequent issuances of Common Stock referred to in the Prospectus).
The shares of issued and outstanding Common Stock have been duly authorized
and validly issued, are fully paid and non-assessable, and none of the
outstanding shares of Common Stock was issued in violation of any
preemptive or other similar rights arising by operation of law, under the
charter or by-laws of the Company, under any agreement or instrument to
which the Company or any of its subsidiary is a party or otherwise. The
Securities have been duly authorized for issuance and sale to the
Underwriter pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the consideration
set forth herein, will be validly issued, fully paid and non-assessable;
the Common Stock, the Company's authorized but unissued preferred stock,
par value $.01 per share (the "Preferred 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 and sale of the Securities is 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 agreement or instrument to
which the Company or any of its subsidiaries is a party or otherwise.
(xiv) Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws, certificate of limited partnership,
limited partnership agreement, certificate of formation of a limited
liability company, limited liability company agreement or other similar
organizational certificates, instruments, agreements or documents
(collectively, "Organizational Documents"), as the case may be; 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 (including, without
limitation, the issuance and sale of the Securities), and compliance by the
Company with its obligations hereunder, have been duly authorized by all
necessary corporate action and will not conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any Subject Agreement (as defined
below) or any other material 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
is 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
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the Organizational Documents of the Company or any of its subsidiaries 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 Securities by the Underwriter. "Subject Agreements"
means (i) the Loan Agreement dated as of January 31, 1994 between The
Prudential Insurance Company of America and the Company (as successor by
merger to Real Estate Investment Trust of California), as amended by the
First Amendment to Loan Agreement dated as of July 7, 1995, the Second
Amendment to Loan Agreement dated as of April 30, 1996, the Third Amendment
to Loan Agreement dated as of November 20, 1996, the Fourth Amendment to
Loan Agreement dated as of February 25, 1997 and the Fifth Amendment to
Loan Agreement dated as of June 30, 1997, (ii) the Loan Agreement dated as
of July 7, 1995 between The Prudential Insurance Company of America and the
Company (as successor by merger to Real Estate Investment Trust of
California), as amended by the First Agreement to Loan Agreement dated as
of April 30, 1996, the Second Agreement to Loan Agreement dated as of
November 20, 1996, the Third Amendment to Loan Agreement dated as of
February 25, 1997 and the Fourth Amendment to Loan Agreement dated as of
June 30, 1997, (iii) the Unsecured Line of Credit Loan Agreement dated as
of November 17, 1997 (the "Credit Agreement") between Bank of America
National Trust and Savings Association ("Bank of America") and the Company,
as amended by the Modification Agreement to Syndicate Loan dated as of
January 20, 1998 between the Company and Bank of America, as agent for the
several financial institutions a party thereto, together with all
guarantees entered into by any subsidiaries of the Company in connection
therewith, (iv) the Amended and Restated Credit Agreement between the
Company and Sanwa Bank California dated as of December 31, 1997 (the "Sanwa
Credit Agreement"), together with all guarantees entered into by any
subsidiaries of the Company in connection therewith, (v) the Contribution
Agreement dated as of September 29, 1997, as amended (the "Contribution
Agreement"), between the TCR signatories named on Schedule A thereto, the
Company and BRE Property Investors LLC, a Delaware limited liability
company (the "Operating Company"), together with the guarantee entered into
by the Company pursuant to the Contribution Agreement, as amended by
Amendment No. 1 to the Contribution Agreement dated November 18, 1997, (vi)
the Amended and Restated Limited Liability Company Agreement of the
Operating Company, and (vii) the Amended and Restated Limited Liability
Company Agreement of Blue Ravine Investors, LLC, a Delaware limited
liability company ("Blue Ravine"); "Prudential Agreements" means the Loan
Agreements, as amended, referred to in clauses (i) and (ii) of this
sentence; and "LLC Agreements" means the Amended and Restated Limited
Liability Company Agreements referred to in clauses (vi) and (vii) of this
sentence. All amendments, supplements and restatements of the Subject
Agreements are listed in clauses (i) through (vii) of the preceding
sentence. Except as otherwise described in the Prospectus, no subsidiary of
the Company is a guarantor of, or is a party to or bound by any instrument
or agreement pursuant to which it has guaranteed or may be required to
guarantee or cause another subsidiary of the Company to guarantee, any
borrowings or other indebtedness of the
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Company. Except as otherwise described in the Prospectus, the Company is
not a party to or bound by any instrument or agreement pursuant to which it
is or may be required to cause any of its subsidiaries to guarantee any
borrowings or other indebtedness of the Company.
(xv) 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 year ended
July 31, 1995, its short taxable year ended December 31, 1995, its taxable
year ended December 31, 1996 and its taxable year ended December 31, 1997,
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, 1994; and the Company has filed United States
Federal Income Tax Returns for each of its fiscal years through and
including the fiscal year ended December 31, 1996 but has not yet filed a
United States Federal Income Tax Return for the fiscal year ended December
31, 1997. As used in this paragraph (xv), the term "Company" includes
BankAmerica Realty Investors, a California business trust, and BRE
Properties, Inc., a Delaware corporation, which are both predecessors to
BRE Properties, Inc., a Maryland corporation.
(xvi) Each entity listed on Schedule C either qualifies as a
partnership for federal, state and local income tax purposes or as a
"qualified REIT subsidiary" within the meaning of Section 856(i) of the
Code or qualifies to be disregarded as an entity separate from the Company
or one of its subsidiaries for federal, state and local income tax
purposes.
(xvii) 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.
(xviii) 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 immediately prior to
October 21, 1992.
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(xix) 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
stabilization or manipulation of the price of the Securities or
facilitation of the sale or resale of the Securities.
(xx) 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.
(xxi) The Company has full right, power and authority to enter into
this Agreement and this Agreement has been duly authorized, executed and
delivered by the Company.
(xxii) The outstanding shares of Common Stock are listed on the New
York Stock Exchange (the "NYSE") and, prior to the issuance and sale to the
Underwriter of the Firm Securities, the Securities will have been approved
for listing, subject to official notice of issuance, on the NYSE.
(xxiii) 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
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condition, financial or otherwise, or earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
(xxiv) 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 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.
(xxv) 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 (as hereinafter
defined), 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
10
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(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 (as 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").
(xxvi) The issuance, sale and public offering of the Securities
have been approved by a majority of all of the "Continuing Directors" and
do not constitute a "Business Combination" (as such terms are defined in
Article IX of the Company's charter).
(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 terms and provisions of the Prudential Agreements do not
require the Company to notify the Lender (as defined in the Prudential
Agreements) of the terms and conditions of the Securities or the offering
made hereby or to obtain a consent or waiver from the Lender with respect
to the issuance of the Securities.
(xxix) No portion of the proceeds from the issuance of the
Securities will be applied to make any Managing Member Loan (within the
meaning of the LLC Agreements).
(xxx) Immediately prior to the issuance of the Securities on the
First Closing Date, securities with an aggregate initial public offering
price of $10 million will have been issued under the Registration
Statement.
(xxxi) The Company has previously issued and sold all of the
securities registered under its Registration Statement on Form S-3
(Registration No. 333-24915).
(xxxii) 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
11
<PAGE>
been duly authorized by the Company and, when the Securities are issued by
the Company pursuant to this Agreement, one Right will be attached to each
share of Common Stock so issued and each such Right will be validly issued.
(xxxiii) All of the Company's executive officers and directors are
listed on Schedule E hereto.
(b) Any certificate signed by any officer of the Company and delivered to
the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
3. Purchase by, and Sale and Delivery to, the Underwriter; Closing Dates.
---------------------------------------------------------------------
On the basis of the representations, warranties, covenants and agreements herein
contained, and subject to the terms and conditions herein set forth, the Company
hereby agrees to sell to the Underwriter, and the Underwriter agrees to purchase
from the Company, at the price set forth in Schedule B hereto, the aggregate
number of Firm Securities set forth opposite the Underwriter's name in Schedule
A.
The Company will deliver the Firm Securities to the Underwriter (in the
form of definitive certificates, issued in such names and in such denominations
as the Underwriter 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 name of the Underwriter), 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 and the Underwriter. The time and date of such payment and delivery are
herein referred to as the "First Closing Date". The Company shall make the
certificates for the Firm Securities available to the Underwriter for
examination 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 herein contained, and subject to the terms and conditions herein set
forth, the Company hereby grants the Underwriter an option to purchase up to an
additional 262,500 shares of Common Stock for the purpose of covering any over-
allotments in connection with the distribution and sale of the Firm Securities
as contemplated by the Prospectus. The purchase price per share to be paid for
the Optional Securities shall be the same price per share as for the Firm
Securities, less an amount per share equal to any dividends or distributions
declared by the Company and payable on any Firm Securities and not payable on
such Optional Securities. The option granted hereby may be exercised as to all
or any part of the Optional Securities at any time not more than 30 days
subsequent to the date of this Agreement. No Optional Securities shall be sold
and delivered unless the Firm Securities previously have been, or simultaneously
are, sold and delivered. The right to purchase the Optional Securities or any
portion thereof may be surrendered and terminated at any time upon notice by the
Underwriter to the Company.
12
<PAGE>
The option granted hereby may be exercised by the Underwriter by giving
written notice to the Company setting forth the number of Optional Securities to
be purchased by the Underwriter and the date and time for delivery of and
payment for the Optional Securities. Such date and time for delivery of and
payment for the Optional Securities (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. Upon exercise of the option by the
Underwriter, the Company agrees to sell to the Underwriter the number of
Optional Securities set forth in the written notice of exercise and the
Underwriter agrees, subject to the terms and conditions herein set forth, to
purchase such Optional Securities.
The Company will deliver the Optional Securities to the Underwriter (in the
form of definitive certificates, issued in such names and in such denominations
as the Underwriter 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 name of the Underwriter), 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 Securities available to
the Underwriter for examination not later than 10:00 A.M., New York time, on the
business day preceding the Option Closing Date in New York, New York.
After the execution and delivery of this Agreement, the Underwriter
proposes to make a public offering of the Securities at the initial public
offering price set forth in Schedule B hereto.
4. Covenants and Agreements of the Company. The Company covenants and
---------------------------------------
agrees with the Underwriter that:
(a) The Company will advise the Underwriter 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 Underwriter 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 Underwriter a reasonable time prior to the
proposed filing or use thereof or to which the Underwriter shall reasonably
object in writing or which is not in compliance with the 1933 Act and the Rules
and Regulations or the 1934 Act and the rules and regulations of the Commission
hereunder, as applicable. The Company will advise the Underwriter 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 Underwriter, any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the Underwriter
may be necessary to enable the Underwriter to continue the distribution of the
Securities 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
13
<PAGE>
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
Securities.
(c) If at any time when a prospectus relating to the Securities 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 Underwriter thereof and will
prepare an amended or supplemented Prospectus (in form and substance reasonably
satisfactory to counsel to the Underwriter) or, with the consent of counsel to
the Underwriter, make an appropriate filing pursuant to Section 13 or 14 of the
1934 Act which will correct such statement or omission; and, in case the
Underwriter is required to deliver a prospectus relating to the Securities nine
months or more after the date of this Agreement, the Company upon the request
and at the expense of the Underwriter 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 Underwriter, 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 Underwriter 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 Underwriter may reasonably request. The Company will
deliver or mail to or upon the order of the Underwriter 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 Securities is required under the 1933
Act, as many copies of the Prospectus, in final form or as thereafter amended or
supplemented, as the Underwriter 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
Underwriter required to deliver such prospectus. The copies of the Registration
Statement and each amendment thereto and the copies of any preliminary
prospectus and any preliminary prospectus supplement and the Prospectus and any
amendments or supplements thereto furnished to the Underwriter 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.
14
<PAGE>
(f) The Company will cooperate with the Underwriter to enable the
Securities to be qualified for sale under the securities laws and real estate
syndication laws of such states and other jurisdictions as the Underwriter may
reasonably designate and at the request of the Underwriter will make such
applications and furnish such information as may reasonably be required of it as
the issuer of the Securities 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 Securities to continue such qualifications
in effect for so long a period as the Underwriter may reasonably request for the
distribution of the Securities.
(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 Underwriter copies of each annual report of the Company and
each other report furnished by the Company to its shareholders; and will deliver
to the Underwriter, 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
Securities on the NYSE.
(i) The Company will use the net proceeds received by it from the sale of
the Securities 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 Securities, the
underwriting discounts and commissions, the plan of distribution of the
Securities and such other information as may be required by the 1933 Act or the
Rules and Regulations or as the Underwriter 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 such Prospectus Supplement and, if
required by Rule 424(b) or requested by the Underwriter, the Base Prospectus.
(k) During the period of 60 days from the date of this Agreement, the
Company agrees that it will not, without the prior written consent of the Morgan
Stanley & Co. Incorporated, 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 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
15
<PAGE>
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities 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 the Cuba Act, if applicable, and
without limitation to the provisions of Section 6 hereof, the Company will
indemnify the 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.
5. Payment of Expenses. The Company will pay (directly or by
-------------------
reimbursement) all expenses incident to the performance of its obligations under
this Agreement, including but not limited to all expenses and taxes incident to
delivery of the Securities to the Underwriter, all expenses incident to the
registration of the Securities 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
Underwriter and dealers except as otherwise provided in Sections 4(c) and 4(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 Underwriter) incurred in connection with
qualification or exemption of the Securities for sale under securities laws and
real estate syndication laws of such jurisdictions as the Underwriter 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 Securities on the NYSE,
the costs of preparing certificates evidencing the Securities, the costs and
fees of any custodian, registrar or transfer agent, and all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section.
6. Indemnification and Contribution. (a) The Company agrees to indemnify
--------------------------------
and hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of 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 the Underwriter furnished to the Company in writing by the
Underwriter expressly for use therein; provided, however, that the foregoing
-------- -------
indemnity agreement with respect to any preliminary prospectus shall not inure
to the
16
<PAGE>
benefit of the Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased Securities, 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 Securities 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 Underwriter agrees to indemnify and hold harmless the Company, each
of the Company's directors, each of the Company's officers who signed the
Registration Statement and each person, if any, who controls the Company 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
Underwriter furnished to the Company in writing by the Underwriter expressly for
use in the Registration Statement, any preliminary prospectus, any preliminary
prospectus supplement, the Prospectus or any amendments or supplements thereto.
(c) 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) or (b) of this Section 6, 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 the Underwriter and all persons, if any, who
control the Underwriter within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act and (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 signed the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section. In the case of
any such separate firm for the Underwriter and such control persons of the
Underwriter, such firm
17
<PAGE>
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. 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 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.
(d) To the extent the indemnification provided for in paragraph (a) or (b)
of this Section 6 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
Securities 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 Company on the one hand and the Underwriter on the other hand in
connection with the offering of the Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Securities
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriter, in each case as set forth
in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price (as defined in Schedule B hereto) of the Securities. The
relative fault of the Company on the one hand and the Underwriter on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Underwriter agree that it would not be just or
equitable if contribution pursuant to this Section 6 were determined by pro rata
--- ----
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in
18
<PAGE>
paragraph (d) of this Section 6. 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 6, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that the Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 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 6 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.
(f) The indemnity and contribution provisions contained in this Section 6,
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Underwriter or any person controlling the Underwriter or
the Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Securities.
7. Conditions of Underwriter's Obligations. The obligations of the
---------------------------------------
Underwriter hereunder shall be subject to the accuracy, at and as of the date of
this Agreement, the First Closing Date and, if applicable, the Option Closing
Date, of the representations and warranties made herein by the Company and of
the statements of the Company's officers or directors in any certificates
furnished pursuant to the provisions hereof, to compliance at and as of the
First Closing Date and the Option Closing Date (if any), as the case may be, by
the Company with the covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to the First Closing Date or the
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 Underwriter, 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 Underwriter, and
(ii) there shall not have come to the attention of the Underwriter 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 Securities, 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 Securities 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 Underwriter of such timely filing, or a post-
effective amendment providing such information
19
<PAGE>
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
(b) The Underwriter shall have received from Ernst & Young llp a letter,
dated the First Closing Date, in form and substance previously approved by the
Underwriter, 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.
(c) The Underwriter shall have received from Paul, Hastings, Janofsky &
Walker LLP, counsel for the Company, a favorable opinion dated the First Closing
Date, in form and substance satisfactory to the Underwriter, 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 or upon conversion of convertible securities or upon
exchange of exchangeable securities referred to in the Prospectus or other
subsequent issuances of Common Stock referred to in the Prospectus); and
the shares of issued and outstanding Common Stock 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 Securities have been duly authorized by the Company for
issuance and sale to the Underwriter pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable; and the issuance of the Securities is not
subject to 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.
(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.
(vi) This Agreement has been duly authorized, executed and delivered
by the Company.
20
<PAGE>
(vii) 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.
(viii) 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 Colorado, the State of Nevada, the State
of New Mexico, the State of Oregon, the State of Washington and the State
of Utah; 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.
(ix) Each Covered Subsidiary (as hereinafter defined) has been duly
organized and is validly existing and in good standing under the laws of
the jurisdiction of its organization and has power and authority as a
corporation, limited partnership or limited liability company, as the case
may be, to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus;
each Covered Subsidiary of the Company is duly qualified 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;
and (A) all of the issued and outstanding shares of capital stock of each
Covered Subsidiary that is a corporation have been duly authorized and
validly issued, are fully paid and non-assessable and, to the best
knowledge and information of such counsel and except as otherwise set forth
on Schedule C, are and, at all times since the date on which such
subsidiary was organized, have been owned by the Company, directly or
through wholly-owned subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity, and (B) all of the
issued and outstanding limited liability company interests of each Covered
Subsidiary that is a limited liability company have been duly authorized
and validly issued (under applicable law and the limited liability company
agreement of such Covered Subsidiary), are fully paid and non-assessable
and, to the best knowledge and information of such counsel and except as
set forth on Schedule C, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, and (C) all of the issued and
outstanding partnership interests of each Covered Subsidiary that is a
partnership have been duly authorized (if applicable) and validly issued
and, to the best knowledge and information of such counsel and except as
set forth on Schedule C, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. As used herein, the term "Covered
Subsidiary" means each corporation, limited partnership, limited liability
company and other entity listed under Item A of Schedule C, other than
those entities designated on Schedule C as an "Excluded Subsidiary."
21
<PAGE>
(x) The execution, delivery and performance of this Agreement, the
consummation of the transactions herein (including, without limitation the
issuance and sale of the Securities), 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 (A) any Subject
Agreement, (B) any other 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 subsidiary is a party or by which the
Company or any subsidiary is bound or to which any of their respective
properties or assets are subject, (C) the Company's charter or by-laws, (D)
the Organizational Documents of the Covered Subsidiaries, or (E) 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 of the various jurisdictions
where the Securities are to be offered).
(xi) Assuming that the net proceeds from the issuance of the
Securities are used solely to repay indebtedness under the Credit
Agreement, none of the proceeds from the Securities will constitute a
Managing Member Loan.
(xii) 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.
(xiii) 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 or incorporated by reference therein or omitted
therefrom and any trustee's Statement of Eligibility on Form T-1 (a "Form
T-1"), 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 them to believe that the Registration Statement, at the time it became
effective or at the date of this Agreement, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
or that the Prospectus, at the date of the Prospectus Supplement 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 or
omitted from the Registration Statement or the Prospectus or any Form T-1).
(xiv) 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 or
incorporated by reference therein or omitted therefrom, as to which no
opinion need be rendered), as of the dates they were filed with
22
<PAGE>
the Commission (or, if such incorporated documents were amended, when such
amendment was filed), complied as to form in all material respects with the
requirements of the 1934 Act and the published rules and regulations
thereunder.
(xv) 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 execution, delivery
or performance of this Agreement by the Company, or in connection with the
issuance or sale of the Securities to the Underwriter, except such as has
been obtained under the 1933 Act, the Rules and Regulations, the 1939 Act
or the 1939 Act 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 filings with, or consents, approvals,
authorizations, licenses, registrations, qualifications, decrees or orders
of, any foreign court or foreign governmental authority or agency).
(xvi) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xvii) 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
immediately prior to October 21, 1992.
(xviii) The Company has all legal right, power and authority
necessary to qualify as a "real estate investment trust" under the Code;
the Company was reorganized in Delaware in 1987 and reincorporated in
Maryland in 1996; the Company has elected to be treated as a "real estate
investment trust" since its original organization; the Company has
qualified as a "real estate investment trust" for its fiscal years ended
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 and
information of counsel, that are still subject to audit by the Internal
Revenue Service); it is anticipated that the Company will qualify to be
taxed as a "real estate investment trust" under the Code for its taxable
year ended December 31, 1997; and the Company was and is organized and was
operated and is operating in a manner that enabled and will enable it to
qualify to be taxed as a "real estate investment trust" under the Code for
its taxable year ended December 31, 1997 and its taxable years ending
December 31, 1998 and thereafter provided the Company met (in the case of
its taxable year ended December 31, 1997) and continues to meet (in the
case of its taxable years ending December 31, 1998 and thereafter), 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 (xviii) and paragraph (xix) below, the term "Company"
includes BankAmerica Realty Investors, a California business trust and BRE
Properties, Inc., a Delaware corporation, which are both predecessors to
BRE Properties, Inc., a Maryland corporation.
(xix) Each entity listed on Schedule C either qualifies as a
partnership for federal income tax purposes and for California, Maryland or
Delaware, as the case may be, income tax purposes or as a "qualified REIT
subsidiary" within the meaning of
23
<PAGE>
Section 856(i) of the Code or qualifies to be disregarded as an entity
separate from the Company or one of its subsidiaries for federal income tax
purposes and for California, Maryland or Delaware, as the case may be,
income tax purposes.
(xx) The information in the Prospectus and in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 (the "1997 10-K")
under the captions "Risk Factors--Real Estate Investment Risks--
Restrictions in the Operations of the Operating Company", "Risk Factors--
Real Estate Investment Risks--Limited Indemnification" (only with respect
to the first, second and third paragraphs under such caption), "Risk
Factors--Provisions Which Could Limit a Change in Control or Deter a
Takeover", the information in the Prospectus under the captions "The
Operating Company", "Description of Common Shares," "Restrictions on
Transfers of Capital Stock; Redemption" and "Federal Income Tax
Considerations", and the information in the Company's 1997 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, the Subject Agreements, the
Common Stock or of other documents, agreements or instruments, has been
reviewed by such counsel and is correct in all material respects; and the
opinions of such counsel in the Prospectus under the caption "Federal
Income Tax Considerations" are confirmed.
(xxi) 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.
(xxii) 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 or deemed to be
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 and 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.
(xxiii) The issuance, sale and public offering of the Securities 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 charter).
(xxiv) The Rights have been duly authorized by the Company and, when
the Securities to be sold by the Company are issued by the Company pursuant
to this Agreement, the Rights attached to such Securities will be validly
issued.
24
<PAGE>
Such opinion shall be rendered to the Underwriter at the request of the
Company and shall so state therein. In giving their opinion, Paul, Hastings,
Janofsky & Walker LLP (A) shall state that such opinion covers matters arising
under the laws of the State of California, the General Corporation Law of the
State of Maryland, the General Corporation Law of the State of Delaware and the
Limited Liability Act of the State of Delaware, (B) shall state that insofar as
such opinion concerns any instruments, agreements or other documents which by
their terms are not governed by the laws of the State of California, the General
Corporation Law of the State of Maryland, the General Corporation Law of the
State of Delaware or the Limited Liability Company Act of the State of Delaware,
such counsel has assumed that such instruments, agreements and other documents
are governed by the laws of the State of California, (B) 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 and (ii) as
to matters of fact, upon certificates and written statements of officers of and
accountants for the Company, and (C) shall state that Brown & Wood llp may rely
upon such opinion as to all matters governed by or arising under the General
Corporation Law of the State of Maryland in rendering their opinion pursuant to
this Agreement.
(d) The Underwriter shall have received from Brown & Wood llp, counsel for
the Underwriter, their favorable opinion or opinions dated the First Closing
Date with respect to the organization of the Company, the validity of the
Securities to be sold by the Company, this Agreement, the Registration
Statement, the Prospectus and such other related matters as the Underwriter 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.
(e) Prior to the First Closing Date, the Securities shall have been
approved for listing on the NYSE, subject to official notice of issuance.
(f) 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 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 Securities 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
25
<PAGE>
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 Underwriter 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 provisions of
this subsection.
(g) The Underwriter 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.
(h) The Company shall have furnished to the Underwriter such additional
certificates as the Underwriter may have reasonably requested as to the
accuracy, at and as of the relevant Closing Date, of the representations and
warranties made herein by the Company, as to compliance at and as of such
Closing Date by the Company with its 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 Underwriter hereunder.
(i) Prior to the date of this Agreement, the Underwriter shall have
received an agreement substantially in the form of Schedule D hereto signed by
the persons listed on Schedule E hereto.
(j) In the event the Underwriter exercises the option granted in Section 3
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 Underwriter shall have received:
(i) A letter from Ernst & Young llp in form and substance satisfactory
to the Underwriter and dated the Option Closing Date, substantially the
same in scope and substance as the letter furnished to the Underwriter
pursuant to Section 7(b), except that the specified date in the letter
furnished pursuant to this subparagraph shall be a date not more than five
days prior to the Option Closing Date.
(ii) The favorable opinion of Paul, Hastings, Janofsky & Walker llp,
counsel for the Company, in form and substance satisfactory to the
Underwriter, dated the Option
26
<PAGE>
Closing Date, relating to the Optional Shares and otherwise to the same
effect as the opinion required by Section 7(c).
(iii) The favorable opinion of Brown & Wood llp, counsel for the
Underwriter, dated the Option Closing Date, relating to the Optional Shares
and otherwise to the same effect as the opinion required by Section 7(d).
(iv) 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 7(f) and Section 7(g) remains or remain true as of the Option
Closing Date.
(v) Such additional certificates, dated the Option Closing Date, as
the Underwriter may have reasonably requested pursuant to Section 7(h).
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 Underwriter by notifying the Company of such
termination in writing or by telegram or telecopy at or prior to the First
Closing Date, and (ii) the obligations of the Underwriter to purchase Optional
Securities may be terminated by the Underwriter by notifying the Company of such
termination in writing or by telegram or by telecopy at or prior to the Option
Closing Date.
8. Termination. This Agreement may be terminated by the Underwriter by
-----------
notice to the Company at or prior to the First Closing Date, and the obligations
of the Underwriter to purchase Optional Securities may be terminated by the
Underwriter 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 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 Securities on the terms and in
the manner contemplated in the Prospectus.
9. Reimbursement of Underwriter. Notwithstanding any other provisions
----------------------------
hereof, if this Agreement shall be terminated by the Underwriter or shall
otherwise terminate under Section 7 or Section 8, the Company will bear and pay
the expenses specified in Section 5 hereof and, in addition to its obligations
pursuant to Section 6 hereof, the Company will reimburse the reasonable out-of-
pocket expenses of the Underwriter (including reasonable fees and disbursements
of counsel for the Underwriter) incurred in connection with this Agreement and
the proposed purchase and offers of the Securities, and promptly upon demand the
Company will
27
<PAGE>
pay such amounts to the Underwriter. In addition, the provisions of Section 6
hereof will survive any termination of this Agreement.
10. Notices. All communications hereunder shall be in writing and, if
-------
sent to the Underwriter shall be mailed, delivered or telecopied and confirmed
to Morgan Stanley & Co. Incorporated at 1585 Broadway, New York, New York 10036,
attention: Blake Baird, or, if sent to the Company shall be mailed, delivered or
telecopied and confirmed at BRE Properties, Inc., 44 Montgomery Street, Suite
3600, San Francisco, California 94104-4602, attention: LeRoy E. Carlson.
11. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Underwriter, the Company 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 Company contained in this Agreement shall also
be for the benefit of the person or persons, if any, who control the Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
and the indemnities of the Underwriter shall also be for the benefit of each
director of the Company, each of the Company's officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act.
12. 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.
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: /s/ LeRoy E. Carlson
_______________________________
Name: LeRoy E. Carlson
Title: EVP
Accepted and delivered, as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Gary Palmer
______________________________
Name: Gary Palmer
Title: Principal
29
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Firm Securities
to be
Purchased
------------------
<S> <C>
Morgan Stanley & Co. Incorporated.......................................... 1,750,000
=========
</TABLE>
<PAGE>
SCHEDULE B
1. The initial public offering price per share for the Securities shall be
$27.82 (the "Public Offering Price").
2. The purchase price per share for the Securities to be purchased by the
several Underwriters shall be $26.89688, being an amount equal to the Public
Offering Price set forth above less $0.92312 per share; provided that the
purchase price per share for any Optional Securities purchased upon the exercise
of the over-allotment option described in Section 3 shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on any Firm Securities but not payable on the Optional Securities.
<PAGE>
SCHEDULE C
<TABLE>
<CAPTION>
A. Subsidiaries of the Company Company's
--------------------------- Percentage
Ownership
Interest
----------------
<S> <C>
1. Corporate Subsidiaries of the Corporation
-----------------------------------------
BRE Camino Seco, Inc., a Delaware corporation 100%
BRE Colonia Del Rio, Inc., a Delaware corporation 100%
BRE Fountain Plaza, Inc., a Delaware corporation 100%
BRE Hacienda Del Rio, Inc., a Delaware corporation 100%
BRE Oracle Village, Inc., a Delaware corporation 100%
BRE Springhill, Inc., a Delaware corporation 100%
Alliance Property Management Company, a Delaware corporation 100%
BRE Builders, Inc., a Delaware corporation 100%
BRE/Alliance Services Inc., a Maryland corporation 95%
2. Partnerships Subsidiaries of the Company:
----------------------------------------
Vallejo Highlands Associates, a California limited partnership 100%
Vallejo Somerset Limited Partnership, a Texas limited partnership* 100%
ITCR Villa Verde Limited Partnership, a Texas limited partnership* 100%
3. Limited Liability Company Subsidiaries of the Company:
-----------------------------------------------------
BRE Property Investors LLC, a Delaware limited liability company 70%
Blue Ravine Investors LLC, a Delaware limited liability company 88.45%
Palm Shadows LLC, a California limited liability company 100%
Riverview LLC, a California limited liability company 100%
Woodlake Holdings LLC, an Arizona limited liability company* 100%
B. Non-Subsidiary Entities in Which the Company Owns an Interest
-------------------------------------------------------------
Westbar Limited Partnership, an Arizona limited partnership 25%
Metro Village Limited Partnership, an Arizona limited partnership 37.5%
</TABLE>
_____________________________
* Excluded Subsidiary
<PAGE>
SCHEDULE D
FORM OF LOCK-UP AGREEMENT
Dated as of July 9, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 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"), providing for the public offering (the "Public Offering") by Morgan
Stanley of shares (the "Shares") of the Common Stock, par value $.01 per share
of the Company (the "Common Stock").
To induce Morgan Stanley to continue their efforts in connection with the
Public Offering, the undersigned hereby agrees that, without the prior written
consent of Morgan Stanley, the undersigned will not, during the period from and
including the date hereof through and including the sixtieth day after the date
hereof, (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. In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley, it will not, during the period from and including the
date hereof through and including the sixtieth day after the date hereof, 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 and Morgan Stanley. 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 Morgan Stanley for sale to the public pursuant to
the Public Offering does not occur prior to September 30, 1998.
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This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
_________________________________
(Name)
_________________________________
(Address)
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SCHEDULE E
1. John McMahon
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. Edward Mace
12. Gregory Simon
13. Arthur G. von Thaden
14. Robert Fiddaman
15. Bruce C. Ward
16. Patrick W. Dukes
