Exhibit 1.2
EXECUTION COPY
BRE PROPERTIES, INC.
Debt Securities
UNDERWRITING AGREEMENT
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1. Introductory. BRE Properties, Inc., a Maryland corporation
("Company"), proposes to issue and sell from time to time certain of its
unsecured debt securities registered under the registration statements referred
to in Section 2(a) ("Registered Securities"). The Registered Securities will be
issued under an indenture, dated as of June 23, 1997, as amended by a first
supplemental indenture dated April 23, 1998 (collectively referred to herein as
the "Indenture"), between the Company and X.X. Xxxxxx Trust Company, National
Association (successor to Chase Manhattan Bank and Trust Company, National
Association), as successor trustee ("Trustee"), in one or more series, which
series may vary as to interest rates, maturities, redemption provisions, selling
prices and other terms, with all such terms for any particular series of the
Registered Securities being determined at the time of sale. Particular series of
the Registered Securities will be sold pursuant to a Terms Agreement referred to
in Section 3, for resale in accordance with terms of offering determined at the
time of sale.
The Registered Securities involved in any such offering are hereinafter
referred to as the "Offered Securities". The firm or firms which agree to
purchase the Offered Securities are hereinafter referred to as the
"Underwriters" of such securities, and the representative or representatives of
the Underwriters, if any, specified in a Terms Agreement referred to in Section
3 are hereinafter referred to as the "Representatives"; provided, however, that
if the Terms Agreement does not specify any representative of the Underwriters,
the term "Representatives", as used in this Agreement (other than in Sections
2(b), 5(c) and 6 and the second sentence of Section 3), shall mean the
Underwriters.
2. Representations and Warranties of the Company. The Company, as of
the date of each Terms Agreement referred to in Section 3, represents and
warrants to, and agrees with, each Underwriter that:
(a) A registration statement on Form S-3 (No. 333-47469), and a
registration statement on Form S-3 (No. 333-68914) including a combined
prospectus, relating to the Registered Securities has been filed with
the Securities and Exchange Commission ("Commission") and has become
effective. Such registration statements, each as amended at the time of
any Terms Agreement referred to in Section 3, are hereinafter
collectively referred to as the "Registration Statement", and the
prospectus included in registration statement No. 333-68914, as
supplemented as contemplated by Section 3 to reflect the terms of the
Offered Securities and the terms of offering thereof, as first filed
with the Commission pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") under the Securities Act of 1933, as amended ("Act"),
including all material incorporated by reference therein, is
hereinafter referred to as the "Prospectus". No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(b) On the effective date of the registration statement relating to
the Registered Securities and certain other securities, such
registration statement, and on the date of each Terms Agreement
referred to in Section 3, the Registration Statement, complied in all
material respects to the requirements of the Act, the Trust Indenture
Act of 1939 ("Trust Indenture Act") and the rules and regulations of
the Commission under the Act and the Trust Indenture Act ("Rules and
Regulations"), and the Registration Statement did not include 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 the Prospectus does not and, on the date of
each Terms Agreement referred to in Section 3, the Prospectus will not,
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein in light of the circumstances under which
they were made, not misleading, except that the foregoing
representations and warranties do not apply to statements in or
omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the
Representatives, if any, specifically for use therein.
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Maryland; the Company has corporate 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 Oregon, the State of Utah and the State of
Washington; 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 other), or the earnings,
business, properties or results of operations of the Company and its
subsidiaries considered as one enterprise ("Material Adverse Effect").
(d) Attached hereto as Annex I is a true and complete list of all
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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. Annex I accurately sets forth the
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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 Annex I and, except as set forth in Annex I, the Company does
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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. Annex I also
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correctly indicates whether each such subsidiary and other entity
listed thereon is a corporation, partnership, limited liability company
or other type of entity.
(e) 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;
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 Annex I, are and, at all times since the date on which
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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 Annex I, are owned by the
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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 Annex I, are owned by the Company, directly or
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through subsidiaries free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(f) 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.
(g) The Indenture has been duly authorized by the Company and has
been duly qualified under the Trust Indenture Act and, at the Closing
Date (as hereinafter defined), will have been duly executed and
delivered by the Company and will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by
bankruptcy,
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insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditor's rights generally or by general equitable
principles.
(h) The Offered Securities have been duly authorized and, at the
Closing Date, will have been duly executed by the Company and, when
authenticated in the manner provided for in the Indenture and delivered
against payment of the purchase price therefor specified in the Terms
Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles, and will be entitled to the benefits of the Indenture.
(i) The Offered Securities and the Indenture will conform in all
material respects to the respective statements relating thereto
contained in the Prospectus and will be in substantially the respective
forms filed or incorporated by reference, as the case may be, as
exhibits to the Registration Statement.
(j) The Offered Securities rank and will rank on a parity with all
unsecured indebtedness of the Company (other than subordinated
indebtedness of the Company) that is outstanding on the date hereof or
that may be incurred hereafter, and senior to all subordinated
indebtedness of the Company that is outstanding on the date hereof or
that may be incurred hereafter.
(k) The Company has notified the Lender (as defined in the
Prudential Agreements (as hereinafter defined)) of the terms and
conditions of the Offered Securities and the offering made hereby and
the Company has obtained a written consent from the Lender to the
issuance of the Offered Securities (the "Written Consent"), which
Written Consent is in full force and effect.
(l) The Offered Securities and the indebtedness evidenced thereby
do not and will not constitute "Funding Debt" (within the meaning of
the LLC Agreement (as hereinafter defined)) and no portion of the
proceeds from the issuance of the Offered Securities will be applied to
make any "Managing Member Loan" (within the meaning of the LLC
Agreement).
(m) No holders of outstanding shares of capital stock of the
Company has any registration rights with respect to such shares which
would or could require such shares to be included in the Registration
Statement.
(n) The Terms Agreement (including the provisions of this
Agreement) has been duly authorized, executed and delivered by the
Company.
(o) 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 operate their respective properties and to carry on
their respective business as contemplated in the Prospectus.
(p) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or
presently employed by them.
(q) 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 Effect
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 Act,
the Rules and Regulations, the Exchange Act (as hereinafter defined) or
the rules and regulations of the Commission thereunder which have not
been so filed.
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(r) The financial statements of the Company included in the
Registration Statement and Prospectus in each case, together with the
related notes and supporting schedules (if any), present fairly the
financial position of the Company and its consolidated subsidiaries as
of the dates shown and their results of operations and cash flows for
the periods shown, and such financial statements and related notes and
schedules have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent
basis; and with respect to the pro forma financial statements included
in the Registration Statement and Prospectus, the assumptions used in
preparing the pro forma financial statements included in the
Registration Statement and the Prospectus are reasonable, the related
pro forma adjustments have been applied, in accordance with the
applicable accounting requirements of the Act and the Rules and
Regulations (including, without limitation, Regulation S-X promulgated
by the Commission), and such pro forma adjustments have been properly
applied to the corresponding historical amounts in the compilation of
such statements.
(s) 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 Act
and the Rules and Regulations.
(t) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, earnings, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus and except for
regular quarterly dividends payable on our common stock and our
preferred stock, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(u) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(v) 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; and the execution, delivery and performance of
the Terms Agreement (including the provisions of this Agreement), the
Indenture and the Offered Securities, the consummation of the
transactions contemplated herein and therein (including, without
limitation, the incurrence of the indebtedness evidenced by the Offered
Securities), and compliance by the Company with its obligations
hereunder and thereunder, 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 hereinafter
defined) 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 the Organizational
Documents of the Company or 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 the Terms Agreement (including the
provisions of this Agreement), the Indenture or the Offered Securities,
except such as have been obtained and made under the Act and the Trust
Indenture Act and 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 Offered Securities
by the Underwriters. "Subject Agreements" means (i) the Loan Agreement
dated as of January 31, 1994 between
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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 Amendment to Loan Agreement dated as of April 30, 1996, the
Second Amendment 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
Second Amended and Restated Unsecured Line of Credit Loan Agreement
dated December 19, 2000 (the "Credit Agreement") among the Company,
Bank of America, N.A. ("Bank of America"), Bank One, N.A., Commerzbank
AG and Banc of America Securities, LLC, as amended by the First
Amendment to the Second Amended and Restated Unsecured Line of Credit
dated as of June, 2001, together with all guarantees entered into by
any subsidiaries of the Company in connection therewith, (iv) 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
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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 and (v) the Amended and
Restated Limited Liability Company Agreement of the Operating Company
(the "LLC Agreement"); "Prudential Agreements" means the Loan
Agreements, as amended, referred to in clauses (i) and (ii) of this
sentence. All amendments, supplements and restatements of the Subject
Agreements are listed in clauses (i) through (v) 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 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.
(w) The Company was and is organized to qualify as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended
(the "Code"); the Company at all times since its organization has
elected to be taxed as a "real estate investment trust"; the Company
has qualified as a "real estate investment trust" under the Code for
its taxable years ended July 31, 1995, its short taxable year ended
December 31, 1995, its taxable year ended December 31, 1996, its
taxable year ended December 31, 1997 and its taxable year ended
December 31, 1998, 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. The United States Federal Income Tax Returns of
the Company have been closed through the fiscal year of the Company
ended December 31, 1996; and the Company has filed United Stated
Federal Income Tax Returns for each of its fiscal years through and
including the fiscal year ended December 31, 2000. As used in this
paragraph (w), 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.
(x) Each entity listed on Annex I, other than BRE/Alliance
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Services, Inc., a Maryland corporation ("BRE/Alliance"), BRE
Investments, Inc., a Maryland corporation ("BRE Investments") and
VelocityHSI, Inc., a Delaware corporation ("Velocity"), 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 and the securities the Company owns of
BRE/Alliance, BRE Investments or Velocity will not cause the Company to
be treated as owning securities of BRE/Alliance or Velocity in excess
of the permissible limits under Section 856(c)(4) of the Code.
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(y) The Company is eligible to use a Form S-3 registration
statement under the 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.
(z) The Company has full right, power and authority to enter into
the Terms Agreement (including the provisions of this Agreement), the
Indenture and the Offered Securities.
(aa) 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) and have acquired
title insurance with respect to each of the properties described in the
Prospectus as being owned by the Company or its subsidiaries; (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; (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; 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.
(bb) 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.
(cc) Except as otherwise disclosed 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 xxxxx, 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, (B) to the best knowledge
and information of the Company, no seepage, leak, escape, xxxxx,
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, (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
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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, and (D) to the best of
Company's knowledge and information, no part of the Premises is
included or proposed for inclusion on the National Priorities List
issued pursuant to CERCLA (hereinafter defined) by the United States
Environmental Protection Agency (the "EPA") or on the inventory of
other potential "problem" sites issued by the EPA and has not otherwise
been identified by the EPA as a potential CERCLA site or included or
proposed for inclusion on any list or inventory issued pursuant to any
other Environmental Statute or issued by any other Governmental
Authority (hereinafter defined). As used herein "Hazardous Material"
shall include without limitation, any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related materials, asbestos or any material containing
asbestos, or any other substance or material as defined by any Federal,
state or local environmental law, ordinance, rule, or regulation
including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections
6901 et seq.) and in the regulations adopted and publications
promulgated pursuant to each of the foregoing (individually, an
"Environmental Statute") or by any Federal, state or local governmental
authority having or claiming jurisdiction over the Premises (a
"Governmental Authority").
(dd) The issuance, sale and public offering of the Offered
Securities to be issued and sold by the Company 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).
(ee) 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 Exchange 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 Exchange 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.
3. Purchase and Offering of Offered Securities. The obligation of the
Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at the
time the Company determines to sell the Offered Securities. The Terms Agreement
will incorporate by reference the provisions of this Agreement, except as
otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the principal amount to be
purchased by each Underwriter, the purchase price to be paid by the Underwriters
and the terms of the Offered Securities not already specified in the Indenture,
including, but not limited to, interest rate, maturity, any redemption
provisions and any sinking fund requirements. The Terms Agreement will also
specify the time and date of delivery and payment (such time and date, or such
other time not later than seven full business days thereafter as the Underwriter
first named in the Terms Agreement (the "Lead Underwriter") and the Company
agree as the time for payment and delivery, being herein and in the Terms
Agreement referred to as the "Closing Date"), the place of delivery and payment
and any details of the terms of offering that should be reflected in the
prospectus supplement relating to the offering of the Offered Securities. For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, as amended
("Exchange Act"), the Closing Date (if later than the otherwise applicable
settlement date) shall be the date for payment of funds and delivery of
securities for all the Offered Securities sold pursuant to the offering. The
obligations of the Underwriters to purchase the Offered Securities will be
several and not joint. It is understood that the Underwriters propose to offer
the Offered Securities for sale as set forth in the Prospectus.
If the Terms Agreement specifies "Book-Entry Only" settlement or
otherwise states that the provisions of this paragraph shall apply, the Company
will deliver against payment of the purchase price the Offered Securities in the
form of one or more permanent global securities in definitive form (the "Global
Securities") deposited with the
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Trustee as custodian for The Depository Trust Company ("DTC") and registered in
the name of Cede & Co., as nominee for DTC. Interests in any permanent global
securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Offered
Securities shall be made by the Underwriters in Federal (same day) funds by
official check or checks or wire transfer to an account previously designated by
the Company at a bank acceptable to the Lead Underwriter, in each case drawn to
the order of the Company at the place of payment specified in the Terms
Agreement on the Closing Date, against delivery to the Trustee as custodian for
DTC of the Global Securities representing all of the Offered Securities.
4. Certain Agreements of the Company. The Company agrees with the
several Underwriters that it will furnish to counsel for the Underwriters, if
available, one signed copy of the registration statement relating to the
Registered Securities, including all exhibits, in the form it became effective
and of all amendments thereto and that, in connection with each offering of
Offered Securities:
(a) The Company will file the Prospectus with the Commission
pursuant to and in accordance with Rule 424(b)(2) (or, if applicable
and if consented to by the Lead Underwriter, subparagraph (5)) not
later than the second business day following the execution and delivery
of the Terms Agreement.
(b) The Company will advise the Lead Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Lead Underwriter a reasonable
opportunity to comment on any such proposed amendment or supplement;
and the Company will also advise the Lead Underwriter promptly of the
filing of any such amendment or supplement and of the institution by
the Commission of any stop order proceedings in respect of the
Registration Statement or of any part thereof and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company promptly will notify the Lead Underwriter of such event and
will promptly prepare and file with the Commission, at its own expense,
an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Neither the
Lead Underwriter's consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 5 hereof.
(d) As soon as practicable, but not later than 16 months, after
the date of each Terms Agreement, the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the later of (i) the
effective date of the registration statement relating to the Registered
Securities, (ii) the effective date of the most recent post-effective
amendment to the Registration Statement to become effective prior to
the date of such Terms Agreement and (iii) the date of the Company's
most recent Annual Report on Form 10-K filed with the Commission prior
to the date of such Terms Agreement, which will satisfy the provisions
of Section 11(a) of the Act.
(e) The Company will furnish to the Representatives one copy each
of the Registration Statement, including all exhibits, one copy each of
any related preliminary prospectus, if available, and copies of any
related preliminary prospectus supplement related to the Offered
Securities, the Prospectus and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as
the Lead Underwriter reasonably requests. The Company will pay the
expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions of the United
States as the Lead Underwriter designates and will continue such
qualifications in effect so long as required for the distribution.
8
(g) During the period of five years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to
the Representatives (i) as soon as available, a copy of each report and
any definitive proxy statement of the Company filed with the Commission
under the Exchange Act or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as the Lead
Underwriter may reasonably request.
(h) The Company will pay all expenses incident to the performance
of its obligations under the Terms Agreement (including the provisions
of this Agreement), including but not limited to any filing fees or
other expenses (including reasonable legal fees and disbursements of
counsel) in connection with qualification or exemption of the
Registered Securities for sale under the securities and real estate
syndication laws of such jurisdictions as the Lead Underwriter may
designate and the printing of memoranda relating thereto, for any fees
charged by investment rating agencies for the rating of the Offered
Securities, for any applicable filing fee and expense incident to, any
review by the National Association of Securities Dealers, Inc. of the
Registered Securities, for all expenses incident to the registration of
the Offered Securities and the printing and the wordprocessing of
copies of the Registration Statement, any prospectus and this
Agreement, for the fees and expenses of the Trustee, including if
required the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Offered Securities, for the fees
and expenses of any depositary in connection with holding the Offered
Securities in book-entry form, for any travel expenses of the Company's
officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective
purchasers of Registered Securities and for expenses incurred in
distributing the Prospectus, any preliminary prospectus supplements or
any other amendments or supplements to the Prospectus to the
Underwriters.
(i) The Company will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, United States
dollar-denominated debt securities issued or guaranteed by the Company
and having a maturity of more than one year from the date of issue
without the prior written consent of the Lead Underwriter for a period
beginning at the time of execution of the Terms Agreement and ending on
the date specified under "Blackout" in the Terms Agreement.
(j) The Company will use the net proceeds received by it from the
sale of the Offered Securities sold by it in the manner specified in
the Prospectus Supplement under "Use of Proceeds".
(k) The Company will use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust" under the
Code.
5. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Offered Securities will
be subject to the accuracy of the representations and warranties on the part of
the Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of
delivery thereof, of Ernst & Young LLP confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating in
effect that:
(i) in their opinion the financial statements and any
schedules and any summary of earnings examined by them and
included in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on any unaudited financial statements included in
the Registration Statement;
9
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements, if any, and any
summary of earnings included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations or any material modifications should be made to such
unaudited financial statements and summary of earnings for them
to be in conformity with generally accepted accounting
principles;
(B) if any unaudited "capsule" information is contained in
the Prospectus, the unaudited consolidated net sales, net
operating income, net income and net income per share amounts or
other amounts constituting such "capsule" information and
described in such letter do not agree with the corresponding
amounts set forth in the unaudited consolidated financial
statements or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited
statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of the such letter,
there was any change in the capital stock or any increase in
long-term debt of the Company and its consolidated subsidiaries
or, at the date of the latest available balance sheet read by
such accountants, there was any decrease in consolidated net
assets or shareholder's equity, as compared with amounts shown on
the latest balance sheet included in the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year, in consolidated total or per-share
amounts of income or net income;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Prospectus (in each case to the extent that such
dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus
for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other),
10
business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a majority
in interest of the Underwriters including any Representatives, is material
and adverse and makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance
or review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any change in
U.S. or international financial, political or economic conditions or
exchange rates or exchange controls as would in the judgment of a majority
in interest of the Underwriters including any Representatives be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or in
respect of dealings in the secondary market; (iv) any material suspension
or material limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (v) any banking moratorium
declared by U.S. Federal or New York authorities; (vi) any major disruption
of settlements of securities; or (vii) any attack on, outbreak or
escalation of hostilities or acts of terrorism in which the United States
is involved, any declaration of war by Congress or any other national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including any Representatives, the effect of
any such attack, outbreak, escalation, act, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with completion of
the public offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated the
Closing Date, of Xxxxxx & Xxxxxxx, counsel for the Company, substantially
to the effect set forth in Annex II hereto.
(e) The Representatives have received an opinion, dated the Closing
Date, of Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP, Maryland counsel for the
Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland.
(ii) The Company has the corporate power 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 Company's 2001 Annual Report
on Form 10-K (except for subsequent issuances, if any, of Common Stock
pursuant to the employee benefit, employee and director stock option and
dividend reinvestment plans 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, otherwise.
(iv) The Indenture has been duly authorized, executed and
delivered by the Company.
(v) The Securities have been duly authorized and executed by the
Company.
(vi) The Terms Agreement (including the provisions of this
Agreement) and the Indenture have been duly authorized, executed and
delivered by the Company; and the execution, delivery and performance of
the Terms Agreement (including the provisions of this Agreement), the
Indenture and the Offered Securities, the consummation of the transactions
herein and therein contemplated, and compliance by the Company with its
obligations hereunder and thereunder, will not result in a breach or
violation of any of the terms or provisions of or constitute a default
under the Company's charter or by-laws or, to the best of such counsel's
knowledge, any Maryland law
11
or any order, rule or regulation of any Maryland court, governmental
agency or body having jurisdiction over the Company or any of its
properties.
(vii) No filing with, or consent, approval, authorization or
order of, any Maryland court, governmental authority or agency is
required in connection with the execution, delivery or performance of
the Terms Agreement (including the provisions of this Agreement), the
Indenture or the Offered Securities by the Company, or in connection
with the issuance or sale of the Offered Securities to the
Underwriters, except such as may be required under Maryland securities
laws or real estate syndication laws.
(viii) The information in the Company's 2001 Annual Report on Form
10-K under the caption "Risk Factors-Provisions Which Could Limit a
Change in Control or Deter a Takeover", to the extent that it
constitutes matters of Maryland law or legal conclusions under
Maryland or summaries of provisions of the Company's charter or
by-laws, the Indenture, the Offered Securities or of any other
documents specifically referred to therein is correct in all material
respects.
(ix) The issuance, sale and public offering of the Offered
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).
Such opinion shall be rendered to the Underwriters at the request of the
Company and shall so state therein. In giving their opinion, Xxxxx Xxxxxxx
Xxxxxxx & Xxxxx LLP (i) may rely as to matters of fact, to the extent not
independently verified by such counsel, upon certificates and written statements
of officers and accountants for the Company, (ii) shall state that such opinion
is limited to matters arising under the laws of the State of Maryland and that,
insofar as such opinion concerns any instrument, agreement or other document
which by its terms is not governed by the laws of the State of Maryland, such
counsel has assumed that such instruments, agreements and other documents are
governed by the laws of the State of Maryland and (iii) shall expressly state
that Xxxxxx & Xxxxxxx and Milbank, Tweed, Xxxxxx & XxXxxx LLP, in rendering
their opinions pursuant to Sections 5(d) and 5(f) of this Agreement, may rely on
such opinion as to all matters arising under the laws of the State of Maryland
as if such opinion were addressed to them.
(f) The Representatives shall have received from Milbank, Tweed,
Xxxxxx & XxXxxx LLP, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities, the Registration
Statement, the Prospectus and other related matters as the Representatives
may require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion, Milbank, Tweed, Xxxxxx & XxXxxx
LLP may rely as to the incorporation of the Company and all other matters
governed by Maryland law upon the opinion of Xxxxx Xxxxxxx Xxxxxxx & Xxxxx
LLP referred to above.
(g) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, that no stop order suspending the
effectiveness of the Registration Statement or of any part thereof has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission and that, subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the Prospectus
or as described in such certificate.
(h) At the date of this Agreement and at the Closing Date, the Offered
Securities shall be rated at least Baa2 by Xxxxx'x Investors Service, BBB
by Standard & Poor's Ratings Services, and the Company shall
12
have delivered to the Representatives evidence satisfactory to the
Representatives, confirming that the Offered Securities have such ratings.
(i) The Representatives shall have received a letter, dated the
Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to the
Closing Date for the purposes of this subsection.
(j) The Company shall have furnished to the Representatives, prior to
the Closing Date, a copy of the Written Consent and the Written Consent
shall be in full force and effect on the Closing Date with the same force
and effect as though expressly given by the Lender at and as of the Closing
Date.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. The Lead Underwriter may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters under this Agreement and the Terms Agreement.
6. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives, if any, specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in the Terms
Agreement.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives, if any, specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof,
13
with counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action 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 (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or behalf of an indemnified party.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Offered
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 Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which 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 Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of Offered Securities (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities under the Terms Agreement and
the aggregate principal amount of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount of Offered Securities, the Lead Underwriter may make
arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments under the
Terms Agreement (including the provisions of this Agreement), to purchase the
Offered Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate
principal amount of Offered Securities with respect to which such default or
defaults occur exceeds 10% of the total principal amount of Offered Securities
and arrangements satisfactory to the Lead Underwriter and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, the Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the
14
Company, except as provided in Section 8. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If the Terms Agreement is terminated pursuant to Section 7 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of the Terms
Agreement pursuant to Section 7 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 5(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
9. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
them at their address furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at BRE Properties, Inc., 00 Xxxxxxxxxx
Xxxxxx, 00/xx/ Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000, Attention: Chief
Financial Officer.
10. Successors. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and such
Underwriters as are identified in the Terms Agreement and their respective
successors and the officers and directors and controlling persons referred to in
Section 6, and no other person will have any right or obligation hereunder.
11. Representation of Underwriters. Any Representatives will act for the
several Underwriters in connection with the financing described in the Terms
Agreement, and any action under such Terms Agreement (including the provisions
of this Agreement) taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
12. Counterparts. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to the Terms Agreement (including the
provisions of this Agreement) or the transactions contemplated thereby.
15
ANNEX I
Company's
Percentage
Ownership
A. Subsidiaries of the Company Interest
--------------------------- --------
1. Corporate Subsidiaries of the Company
BRE Builders, Inc., a Delaware corporation .................................... 100%
BRE/Alliance Services, Inc., a Maryland corporation ........................... 95.2%
BRE Investments, Inc., a Maryland corporation ................................. 100%
2. Limited Liability Company Subsidiaries of the Company
BRE Property Investors LLC, a Delaware limited liability company .............. 83.4%
Meridian Apartments LLC, a Delaware limited liability company ................. 95%
BRE Properties of Colorado LLC, a Delaware limited liability company ......... 80%
Cambridge Park LLC, a California limited liability company .................... 85%
Home Plan LLC, a Delaware limited liability company ........................... 100%
B. Non-Subsidiary Entities in Which the Company Owns an Interest
-------------------------------------------------------------
Westbar Limited Partnership, an Arizona limited partnership ................... 25%
CREA/XXX XxxXxxxxx, LLC, a Delaware limited liability company ................. 40%
CREA/BRE Creek, LLC, a Delaware limited liability company ..................... 40%
Pinnacle BlueRavine LLC, a Delaware limited liability company ................. 40%
Pinnacle Sonata LLC, a Delaware limited liability company ..................... 40%
Pinnacle Queen Creek LLC, a Delaware limited liability company ................ 50%
Stone Creek Communities, LLC, a Delaware limited liability company ............ 40%
Pinnacle Galleria LLC, a Delaware limited liability company ................... 50%
VelocityHSI, Inc., a Delaware corporation ..................................... 9.9%
Woodlake Holdings LLC, an Arizona limited liability company/(1)/ .............. 4.9%
Vallejo Highlands Associates, a California limited partnership/(1)/ ........... 1%
Vallejo Somerset LP, a Texas limited partnership/(1)/ ......................... 1%
ITCR Villa Verde LP, a Texas limited partnership/(1)/ ......................... 1%
Palm Shadows LLC, a California limited liability company/(1)/ ................. 1%
Riverview LLC, a California limited liability company/(1)/ .................... 1%
--------
/(1)/ The remaining interests in this entity are owned by BRE Property Investors
LLC.
16
